The Delhi Metro Rail Corporation (DMRC) has launched a rights issue of Rs 7131.28 crore for both its equity stakeholders – the government of India (GOI) and the Delhi government. The funds raised will be utilised in satisfying the arbitral award in favour of Delhi Airport Metro Express Pvt. Ltd. (DAMEPL).
The DMRC is a 50:50 joint venture between the GOI and the Delhi Government. Through the rights issue, DMRC expects both its stakeholders to infuse Rs. 3565.64 crore each via their equity contribution. The rights issue, that opened today on 15 December, will conclude on 11 January 2023.
A rights issue is a means by which a company can raise funds from its existing shareholders by selling them additional shares. In this case, DMRC is offering a total of 7.13 crore new shares, having a face value of Rs 1000 each, to GOI and Delhi government.
The DMRC owes Rs 4,500 crore to DAMEPL, arising out of an arbitral award from May 2017. This award was upheld in favour of DAMEPL by the Supreme Court in September 2021. Following this, top officials of the Ministry of Housing and Urban Affairs (MOHUA), the Delhi Government, and leading banks met on 10 November, 2022 to discuss DMRC’s funding option.
After both GOI and Delhi government refused to give funds to DMRC as capital expenditure, the public sector metro company sought the approval of its board of directors to offer a rights issue. This was approved in a meeting held on 13 December.
Just yesterday, the Supreme Court had directed the Delhi high court to expedite the execution of the arbitral award. Further, the apex court gave a time frame of 3 months within which this has to be executed.
