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The central public sector enterprises (CPSEs) tied to Indian Railways, many of which are now Navratna companies, are looking for alternative revenue streams beyond railway projects. They are exploring opportunities in road and infra development, overseas construction projects, and consultancy projects for other government departments. In fact, even for railway projects, many CPSEs now find themselves competing with private companies.
A 2021 order of the Railway Board had actually mandated that PSUs should compete with private entities for rail contracts, replacing a 2019 order issued during former rail minister Piyush Goyal’s tenure. “..
.policies may change, but, as of now, this is a policy (de-commit from Railways with respect to old legacy projects). We have seen a lot of policies changing.
It is up to the government how it sees it...
Now the policy is, you please go to the market and get the works,” said Pradeep Gaur, Chairman and Managing Director, Rail Vikas Nigam Ltd (RVNL), during a recent investor call. Interestingly, RVNL was established exclusively for executing railway projects assigned by the ministry. IRFC and IRCTC receive Navratna CPSE status Railways’ delay in Indo-Russian JV costs RVNL ₹76 crore RailTel poised for ₹1,000 crore Kavach bids Railways plans to take over debt-ridden RINL’s forged wheel plant Gaur even recalled a time when the company wanted to “venture beyond Railways” but was disallowed.
“Now, depending on how the capex is spent by zonal Railways...
the government is free to take decisions,” he said. The government may revert to the old policy or retain the existing one, he said, adding, “Everything is on the table, nothing can be said for sure.” Apart from competitive bidding for railway contracts, RVNL has ventured out to bid for overseas contracts — both on nomination as well as competitive basis.
These include solar projects in Uzbekistan and Saudi Arabia; a transmission line project in Congo, Africa; and railway and metro projects in Turkey. The company is also scouting for railway projects in Peru through government-to-government contracting. “Already one international harbour project is under execution in the Maldives,” a senior official told businessline .
After some disruptions due to strained bilateral relations, the work has restarted, the source added. In Kyrgyzstan, RVNL has formed a joint venture with Kyrgyzindustry to execute a railway project. The Kyrgyzstan government is negotiating with foreign bankers to arrange funding for the project; RVNL has submitted a detailed project report.
“We have started bidding in the last two to three years. So, domestically it was easy to get. International, I am not saying it is difficult, but we were less exposed to that.
Now we are getting into a lot of partnerships...
So, we are finding our feet there and, definitely, this is one of the important areas for us,” Gaur said. RVNL had an order book of ₹97,000 crore (as of December 31 quarter) — assigned projects from Railways account for ₹47,600 crore, while the rest is spread across sectors such as metros, national highways, Railways (on bidding basis), and irrigation. The share of international projects is around ₹4,500 crore.
This is expected to grow to 40-50 per cent in the near future, Gaur said. In the case of IRCON International Ltd, another railway CPSE, the order book — as on December 31 — stands at ₹22,000 crore, of which 53 per cent is on competitive basis and the rest on nomination basis. In terms of domestic-international split, it is 90-10.
IRCON has 11 subsidiaries and seven joint venture companies. During a recent investor call, Ragini Advani, Director (Finance), said the company’s core segments remain railways and roads. In the case of roads, it is focusing more on EPC (engineering, procurement, and construction) projects.
“And in railways...
we have started pitching for smaller bid values also,” she said. (The company had previously decided against bidding for orders valued below ₹500 crore.) “Earlier I used to take mostly jobs on consolidated basis, which means I would be in charge for civil, plus electrical, plus signalling and telecommunications (S&T).
Now, I am even getting into a pure electrical job or S&T job,” Advani said. In terms of asset monetisation, the company’s board has given a go-ahead for four completed road projects. However, the approval process involves multiple stages.
After IRCON’s approval, it went to the Ministry of Railways, and is currently awaiting a nod from the Department of Investment and Public Asset Management (DIPAM). The company’s cash balance stood at ₹820 crore in the December 31, 2024, quarter. IRCON has so far invested ₹2,300 crore as equity in public-private partnership (PPP) projects and plans to invest ₹900 crore more in a phased manner, including ₹200 crore in Q4FY25.
A report by IDBI Securities mentioned that Q3FY25 was relatively subdued for IRCON as major cost-plus jobs were completed. “The company’s core EBITDA margins were impacted as the major USBRL project (Srinagar Rail project) was completed, and the execution of new projects has begun, which do not have margins as high as older projects. The company has provided a cautious outlook on EBITDA margins for the medium term,” it said.
Indian Railway Finance Corporation — the borrowing-and-lending arm of Railways — is also looking at alternative revenue sources by funding high-margin projects within the Railways ecosystem. Manoj Kumar Dubey, CMD, IRFC, said, “We are recalibrating our growth plans for steady AUM (asset under management) numbers, with plans to harness better deals and margins in coming quarters.” Railway business accounts for nearly 99 per cent of the corporation’s AUM.
Over the years, the Navratna PSU has funded railway infrastructure projects worth ₹5.5 lakh crore. It mainly raises money from domestic and overseas markets for rolling stock acquisitions, which are leased out to the transporter, alongside financing project assets.
Indian Railways has not sought fresh funding from IRFC since FY24 as part of a plan to cut its indirect debt burden — its capex is largely met through budgetary support. “Our intent is to diversify beyond our direct leasing model to Indian Railways,” Dubey said. Comments.
