RVNL’s multiple tracks journey
For anyone with a basic understanding of the country’s economy and businesses (including Public Sector Units), labelling Rail Vikas Nigam Ltd (RVNL) as a railway pure play would hardly seem a misplaced assumption. One might ask: is there any reason to question that assumption? Based on a general understanding, RVNL, as a PSU, was set up in 2003 (during the late Atal Bihari Vajpayee’s tenure) primarily to undertake and execute railway projects on a commissioned basis. It functions under the aegis of the Ministry of Railways, and the government still holds a 72 per cent equity stake in the company, which was listed in 2019. More importantly, when seen through the lens of recall, its abbreviation – RVNL – unambiguously suggests that it is an entity with roots firmly embedded in developing railway infrastructure.
But look beyond the surface, and you may well observe a significant transition underway. Not something intended to fundamentally alter its character, but rather to enhance the core engineering capability that has developed as an inherent strength over the past two decades – now being more aggressively deployed in non-railway verticals, as government support begins to recede. ‘Fend for yourself’ is, more or less, the new mantra for all railway PSUs, and RVNL, under the chairmanship of Pradeep Gaur (who has been associated with the company for nearly 20 years and has led it since 2019), appears to have responded swiftly to this new reality.
As an engineering organisation now focusing increasingly on competitive bidding for larger projects (both within India and abroad), RVNL has built a portfolio that includes non-railway sectors such as telecoms, solar energy, irrigation, and others. Simultaneously, it has emerged as an aggressive bidder for railway-centric projects such as metro systems, electrification upgrades, and even locomotive manufacturing. Speak to the top leadership, and they will tell you there is a well-laid plan to branch out in new directions in the near future to evolve into a more robust enterprise. Expansion of its international wing is a top priority, as the company has already seen reasonable success in its initial forays abroad.
The medium-term goal, according to Gaur, is to double the company’s size within the next 5 years. “Given the extent of our diversification, we are confident of achieving a doubling effect across all metrics by 2030,” he says. The company’s current revenue stands close to Rs20,000 crore – a more than nineteen-fold increase from the base of around Rs1,100 crore recorded in 2010. Observers too have acknowledged the agility displayed by RVNL in recent years, though there is some concern that the company may be spreading itself too thin, moving in all directions as if in a great hurry.
Formative years
There is no gainsaying that, in terms of railway networks, India holds the distinction of being the fourth largest market in the world. To reach this scale, the foundational structure has involved a host of PSUs that have made consistent contributions. IRCON (1976), RITES (1974), IRCTC (1999), IRFC (1986), CONCOR (1988), RailTel (2000), among others, are some of the well-known names that have helped shape Indian Railways into what it is today. From time to time, due to their affiliation with the government, these PSUs have faced questions regarding their management style and ability to respond to market challenges. Nevertheless, their strategic importance remains undeniable.
However, most of the leading railway PSUs have existed for several decades. In that sense, RVNL is somewhat different. It is a truly 21st-century railway PSU (the Dedicated Freight Corridor was also launched later, in 2006). The point is: by the time RVNL came onto the scene, the railway landscape had already begun expanding significantly, and much larger opportunities were on the horizon – both in terms of project volume and execution style.
RVNL was incorporated as a PSU in January 2003 with the primary mandate of expediting railway infrastructure projects. For a long time, the media often referred to the company as the construction arm of the Ministry of Railways. “It was created as a Schedule ‘A’ PSU. In fact, older PSUs like IRCON and RITES were still Schedule ‘B’ at the time. RVNL was launched with a larger capital base. Its paid-up capital in 2003 was around Rs2,085 crore,” says MP Singh, Director (Operations), who joined the company in 2006. According to Singh, RVNL was established because the government felt that the pace of new railway infrastructure creation and upgrades was insufficient.
Going beyond the corridors
Traditionally, railway infrastructure was broadly defined around the diamond quadrilateral connecting the four major metros and the diagonals: Delhi-Mumbai, Delhi-Kolkata, Chennai-Mumbai, Chennai-Kolkata, and Delhi-Chennai. These routes represented only about 16-17 per cent of the total railway length at the time but carried nearly 50-60 per cent of total traffic volume. Given the growing momentum of the Indian economy, it had become increasingly necessary to expand beyond these corridors with a series of new projects. It was in this context that RVNL took its first steps.
“Initially, RVNL was handling no more than four or five projects, but it ultimately ended up delivering 30-35 per cent of the annual projects commissioned by Indian Railways,” Gaur points out. Some of the first completed projects included the Diva-Kalyan doubling project near Mumbai and the Delhi-Rewari gauge conversion-cum-doubling project. However, the project that marked the emergence of RVNL as a major player took place in the backwaters of Kerala.
“One of our earliest and most challenging projects was in Kerala, connecting the new international container transshipment terminal at Vallarpadam, developed by Dubai Ports. It was India’s first SEZ port,” Gaur notes. At the time, this was India’s longest railway bridge (4.62 km) over the sea, completed in just 27 months. Notably, the project was not financed by the Ministry of Railways but by the Ministry of Shipping.
That was an era when integrated infrastructure development was also a top priority for the government, which led to the creation of several large-scale, port-related projects. Here, synergy with the railways was essential in the quest to establish seamless connectivity with the country’s hinterland – and this brought the newly formed RVNL into the picture. It became involved in a number of port-related projects.
“One of the early port-related projects involved connecting two important ports in Gujarat – Kandla and Mundra – which were being served by a very circuitous railway line running through Ahmedabad. However, there was another possible route via Palanpur to Samakhiali and Gandhidham. This line needed to be converted from metre gauge to broad gauge to improve port connectivity,” Singh recalls.
There were other such prestigious projects too, such as creating railway connectivity for the upcoming Krishnapatnam Port in Andhra Pradesh. In Odisha, Haridaspur Port also needed improved access. Another project involved linking Dahej Port to Bharuch in Gujarat. “For these projects, Special Purpose Vehicles (SPVs) were created. A financial model was developed, and strategic shareholders were identified who could contribute. In these SPVs, RVNL was the prime mover. Other companies, organisations, and state governments also joined by contributing equity,” Singh adds (see box: Fingers in many pies).
RVNL’s rise to prominence was also aided by the fact that many of the projects it was assigned were funded by multilateral agencies such as the Asian Development Bank (ADB). Since Indian Railways could not directly borrow from such agencies, RVNL was designated as the executing agency for ADB-funded projects.
As a result of these developments during its formative decade, RVNL had, by the end of 2010, achieved a topline of around Rs1,100 crore.
Early years: Differentiators
Gaur, who was previously with Southern Railways before joining the newly formed RVNL in 2006 (like Singh, he later opted for absorption and was appointed CMD in 2019), believes that much of RVNL’s early and ongoing success stemmed from the strategic operational ethos established by its founding directors – particularly Vishwesh Chaube (Director - Projects, 2003-2006), who was driven by a bold, large-scale vision.
“He advocated for mega-projects and full-scale contracts. This attracted some of the country’s top infrastructure firms. Traditionally, contracts were worth Rs3-7 crore, broken into many parts, and handled by multiple agencies. That discouraged major players. But with larger contracts, companies like L&T and others were drawn into conventional railway projects for the first time,” Gaur explains.
When you speak with Chaube – now retired after a long and distinguished career with Indian Railways – he offers some fascinating insights into RVNL’s foundational strategies.
“There were a couple of things we did early on that were aimed at creating long-term differentiation. At that time, any project exceeding Rs50 crore required permission from the Railway Board. We laid the groundwork for larger projects. Then, we began awarding complete packages to selected agencies. Rather than splitting projects into many smaller contracts, it became easier to monitor and execute them swiftly. We also developed our own contract terms and introduced FIDIC,” Chaube recalls.
FIDIC contracts refer to standards set by the International Federation of Consulting Engineers, widely used in large-scale, high-value international construction and engineering projects. They are often prerequisites for securing financing from multilateral development banks.
The eligibility criteria for supporting vendors were also revised, shifting from similar work experience to a focus on linear contracts. These operational cornerstones have remained embedded in the organisation as it expanded in scope and ambition.
Interestingly, Chaube – credited with laying a robust foundation for the company – and Gaur – seen as having driven the business model transformation post-listing – appear to hold each other in high regard. “Gaur has definitely shown the ability to take bold decisions at a time when the company needed to progressively adapt its character. He is a project-oriented leader,” Chaube remarks.
Opening multiple tracks
Created with a bold vision – which arguably became ingrained in its DNA – RVNL’s journey has, for a long time, resembled an uninterrupted story of consistent growth.
“Our CAGR was around 30-35 per cent during the last decade. This was also a result of policy shifts. From 2014 onwards, when the current NDA government came to power, it began allocating more funds to railway projects,” Singh notes, pointing out that, previously, allocations were fragmented – released in bits and pieces – making long-term planning difficult. In a typical project of 200-300 km costing Rs2,000-3,000 crore, the executing company needs assured funding over 4-5 years. That is precisely what happened, with rising capex for railway projects resulting in an increase in both project volume and turnover.
Today, RVNL has a profile with many strengths. Awarded Navratna status in 2023 (upgraded from Miniratna status in 2013), the company went public in 2019 at Rs19.50 per share, divesting a 12.5 per cent stake. Subsequent offers for sale (OFS) of around 16 per cent in two tranches have since reduced the government’s holding to 72 per cent.
However, a critical policy shift in 2021 altered the game for railway PSUs: the Railway Board issued an order withdrawing the protective project commissioning provision that had ensured work for organisations like RVNL on a cost-plus model. Initially, limited competition among PSUs was introduced, but even that was later withdrawn. The initiative was intended to foster competition and reduce execution costs by favouring the lowest bid. For railway PSUs, as observers point out, it meant being pulled out of their comfort zones.
However, as RVNL’s top brass explains, the company chose to respond by initiating large-scale diversification at a rapid pace. “By then, the company had developed its own capacity and capabilities. So, diversification was encouraged,” says Singh, adding that the first project won through open bidding outside Indian Railways was the Indore Metro.
“Very few organisations in India have undergone what RVNL has. From 2005 to 2021, we operated under a completely different model. Then suddenly, we were told, ‘You’re on your own now – find your own business.’ But this organisation is resilient. We were confident because we’ve executed some of the most complex infrastructure railway projects,” Gaur explains.
Since then, the organisation has made swift moves to open new doors for itself. A look at its current operational footprint reveals RVNL’s presence across diverse sectors: urban infrastructure (metro systems, transport projects, buildings), highways (bridges, tunnels, stations, irrigation), communications (Telecom BharatNet with BSNL), maritime and power (hydro, electrification, transmission, harbours), and sustainability (solar energy and carbon emissions reduction).
Taking responsibility across the entire project value chain – from concept to commissioning – the company has also entered the manufacturing domain in a significant way. It is part of a consortium awarded the manufacturing-cum-maintenance contract for 120 Vande Bharat Sleeper trains (the first prototype is expected around the middle of next year). RVNL’s partners in this venture are JSC Metrowagonmash and JSC Locomotive Electronic Systems, which together form the Special Purpose Vehicle, Kinet Railway Solutions.
So, if one were to assess RVNL’s cumulative profile – comparing its earlier role as the construction arm of Indian Railways with its current participation in open bidding – one would find a long list of achievements. These include the execution of 157 projects, many of which are considered industry benchmarks: the Rishikesh-Karnaprayag rail link through Himalayan terrain; the new Pamban Bridge (Asia’s longest vertical-lift span and India’s first vertical-lift railway sea bridge); and the Gudur railway yard flyover, which sits atop a high water table and stretches over 2.2 km.
Cumulatively, RVNL has electrified 7,744 km of railway lines and commissioned over 17,000 km of railway infrastructure. It is now actively involved in the rapid expansion of metro projects in cities including Kolkata, Chennai, Indore, Ahmedabad, Nagpur, Pune, Surat, Bengaluru, and Mumbai.
Strategic cornerstone
“We are transitioning from #LocalRailInfra to #GlobalAllInfra.” This line, appearing in the introductory section of the company’s most recent annual report, offers a clear indication of RVNL’s direction. And this vision is no longer confined to boardroom deliberations – it is now playing out on overseas turf, in regions such as Africa and the Middle East. RVNL has established wholly owned subsidiaries in Dubai, Africa, Uzbekistan, and Oman. It has also secured projects in the Maldives, UAE, Uzbekistan, Saudi Arabia, Kyrgyzstan, and across Africa.
According to MP Singh, over the last 12 months, the company has participated in around 10 international project bids (a space currently dominated by Chinese firms), winning three contracts.
So, as part of its strategic foundation, RVNL is not only adding more ‘product lines’ (or sectoral verticals) to its portfolio, but is also clearly focused on building a solid overseas presence. In a wide-ranging conversation, Gaur offers several glimpses into the future growth model he envisions.
“At RVNL, we’ve decided to evolve in a way similar to L&T. They began as a core infrastructure company and then diversified. That’s what we’re doing,” he says. In practice, this means the company will continue aligning itself with large-scale projects, both within India and abroad.
However, Gaur has been quite vocal about the norms that allow non-serious players to enter the domestic sector by quoting the lowest possible price under the current bidding system. “The broader problem is that infrastructure bidding has swung to the extreme. Some companies are quoting unsustainable rates, which isn’t healthy for the sector,” he cautions.
Meanwhile, even as RVNL has grown significantly in recent years, the organisation has consciously worked towards becoming leaner by reducing its employee strength – a move the company describes as ‘rightsizing’. At a recent investor call (following the FY25 results), the senior leadership stated that the company’s workforce had been reduced to 1,040 from 1,221 during the previous financial year. The rationale, they explained, was that with a growing share of non-railway projects, it has become necessary to bring in people from outside the traditional railway domain.
When asked, Anupam Ban, Director (Personnel), offers a comprehensive explanation: “At RVNL, we believe in rightsizing – not merely expanding the workforce, but maintaining an optimal balance that ensures high productivity without unnecessary overheads. Many of our staffing requirements are project-specific and contractual in nature. Once a project concludes, the associated personnel are either released or redeployed. This agile staffing model helps us remain lean, focused, and cost-effective,” she says, adding that despite the reduction in headcount, the company’s institutional strength has grown, driven by smart planning, innovation, and strategic resource management.
It is no secret that, despite being operational for two decades and gaining significant momentum over the past 10 years – largely due to increased public expenditure creating more opportunities – RVNL has drawn greater public attention since 2023, thanks to the strong performance of its share in the stock market. It has been one of the leading multibagger stocks in recent years, rising from the Rs50-Rs60 range to an all-time high of Rs647 in July 2024. With the company aggressively pursuing new projects, RVNL had almost got into the habit of announcing new contracts with predictable regularity.
Its share price, however, has since dropped by almost 40 per cent from that peak (currently trading in the Rs340-Rs350 range), and this may reflect some setbacks in growth figures. For example, after consistently expanding – almost doubling between 2018-19 and 2023-24 – its revenue declined to Rs19,869 crore in 2024-25, down from an all-time high of Rs21,733 crore in the previous fiscal year. Market observers believe this may be a result of transitional challenges. Asked about this, MP Singh maintains that the growth trajectory has only experienced a temporary pause, and figures will rise again soon, given the company’s robust order book of around Rs1 lakh crore.
“Of our current order book, the railways account for roughly Rs46,000-Rs47,000 crore. The remainder comes from diversified bidding. To break it down: approximately Rs10,000 crore is from the metro sector; another Rs10,000 crore is from RDSS, transmission lines, and 2x25 kV electrification projects. Our share in the Vande Bharat manufacturing project, along with our partner, is around Rs8,500 crore. In the telecom sector, the capital project size is around Rs7,000 crore, excluding maintenance costs. Our international projects account for roughly Rs4,000 crore. Irrigation contributes around Rs2,500 crore. We also handle some HAM road projects, four-laning, and multi-laning initiatives. That adds up to around Rs7,000 crore,” he explains. At its peak, the order book from the railways alone used to exceed Rs1 lakh crore.
Assuming normal conditions prevail, there will certainly be many growth drivers for an entity like RVNL in the near to medium term. For instance, its Rs120 crore per train Vande Bharat contract is expected to become part of the regular revenue stream (which also includes a 35-year maintenance contract) from FY27. The company’s senior leadership stresses that their pace in tapping new verticals will accelerate, with data centres being a key area of interest.
“The outlook for RVNL is expected to be ‘stable’, backed by its strong financial flexibility due to the Government of India’s 72.84 per cent holding. A healthy order book supported by reputable counterparties and strong liquidity is expected to provide stability to the company’s risk profile,” noted credit rating agency CARE Edge Ratings in its report on the company released in March this year.
Overseas forays
Moreover, the current management is equally eager to turn its recent international forays into major gains. “Our target is to generate about 25 per cent of our revenue from international markets over the next 3-4 years. We’re targeting several countries in both railway and non-railway sectors,” says Singh.
For instance, in Peru, under a government-to-government arrangement, the Government of India has recommended a 280 km railway project worth about Rs20,000 crore. It would involve project conceptualisation, developing operational systems, and creating manuals. The company is also becoming active in Albania, working on railway tunnelling projects. In Kyrgyzstan, where RVNL has established a subsidiary, it is exploring a new railway line to coal-bearing areas. Additionally, it is participating in the bidding process for major projects in countries such as Uzbekistan (roads), Armenia (tunnels), and Ethiopia (transmission and thermal power projects). The company is also preparing to execute the development of two jetties at Beira Port in Mozambique, in partnership with Container Corporation and Indian Oil.
Looking further ahead, there is a projection that the government will spend Rs25 lakh crore on railway infrastructure development by 2047. A player like RVNL, given its track record, is well positioned to secure a substantial share of that investment.
“RVNL has made rapid moves towards diversification, which is a wise strategy. In developed countries, some companies that relied solely on publicly funded infrastructure projects suffered when such expenditure slowed or the infrastructure cycle matured. It makes sense to leverage railway project execution expertise across other sectors and explore broader opportunities, including international ones,” observes Vinod Asthana, Vice Chairman, Chartered Institute of Logistics & Transport (CILT) India.
Meanwhile, after putting RVNL on several new tracks, Gaur is set to retire at the end of this month. He maintains that he will step down with a deep sense of satisfaction. “When I took over, I had one simple vision: we should perform so well in railway projects that we’d never be short of work. And that’s exactly what happened. Back in 2018, we were executing just 300 km of work annually. We ramped that up to 1,050 km within just 3-4 years,” he says. But considering the high-paced momentum he and his team have achieved, his successor will need to be someone ready to hit the ground running.
Box
Fingers in many pies
During RVNL’s two-decade journey, a critical element of its operations has been forging stronger alliances with other stakeholders. Through a slew of Special Purpose Vehicles (SPVs) and Joint Ventures (JVs), the organisation has likely established a robust foundation for future growth. Market observers believe it has demonstrated deftness in building the right partnerships – both with other public sector entities and private players. In the process, it has become part of several prestigious infrastructure projects (with the clear dominance of railway undertakings) that have shaped development across the country in recent decades.
The Kutch Railway Company (KRC) marked its first foray into SPVs (it became operational in 2006), with RVNL as the lead partner holding a majority stake of 50 per cent. Other stakeholders include the Deendayal Port Trust, Adani Ports and SEZ, and the state government. Similarly, when Krishnapatnam Port was being developed in the 2000s, RVNL assumed a leadership role (around 49 per cent stake) in an SPV mandated to create a new line between Obulavaripalli and the port site. Sagarmala Development Company, NMDC and the Andhra Pradesh government were the other major partners. In the Bharuch-Dahej Railway Company, RVNL led the initiative (with a 35 per cent share), joined by stakeholders such as the Gujarat Maritime Board, Gujarat Industrial Development Corporation, Adani Petronet, Hindalco, and Jindal Rail Infrastructure.
In recent years, the company has also taken a leading role in the evolving multi-modal logistics park ecosystem, becoming a stakeholder in SPVs created for three such parks in Bengaluru, Chennai, and Indore.
A consistent pattern across these SPVs has been RVNL’s strategy of aligning with the best in infrastructure development and upgradation. For instance, the Haridaspur-Paradip Railway Company SPV, formed in 2020 and led by RVNL (30 per cent stake), includes nearly a dozen major players. These include: Sagarmala Development Company, the Government of Odisha, Paradip Port Trust, Odisha Mining Corporation, Essel Mining & Industries, Rungta Mines, Mundra Steel Power, Jindal Steel & Power, Steel Authority of India, and the Odisha Industrial Infrastructure Development Corporation.
RVNL is now extending its collaborative model into the roadways sector, where it is keen to make a mark. For example, it is supporting Tracks and Towers Infratech in an SPV (formed in 2023) for the construction of the six-lane Greenfield Varanasi-Ranchi-Kolkata Highway. The project, which costs nearly R1,500 crore, is being executed under the Bharatmala Pariyojna scheme in Jharkhand, under the hybrid annuity model.
In addition to a clutch of subsidiaries in other countries where it is exploring new opportunities, RVNL also formed a joint venture in 2022 in the Kyrgyz Republic – Kyrgyzindustry-RVNL CJSC. Its mandate is to undertake infrastructure development, particularly the construction of railways within and across the Central Asian republic.
However, the most prestigious collaborative entity RVNL is involved in today is Kinet Railway Solutions. It is led by Russian rolling stock major Metrowagonmash (holding a 70 per cent stake), with RVNL holding 25 per cent. Kinet Solutions is set to produce Vande Bharat trains in large numbers in the coming years and will significantly enhance RVNL’s manufacturing capabilities. It is also expected to contribute substantially to RVNL’s medium-term revenue prospects.
According to MP Singh, while the assigned project model had long been RVNL’s mainstay, SPVs operated outside its core ambit, as they were not directly funded by Indian Railways. Nevertheless, they have proven to be a successful supplementary channel. “Over the years, RVNL’s equity infusion into these SPVs has been roughly R1,430 crore. Partner equity was about the same, making the total equity investment around R2,900 crore. On top of that, the debt component was approximately R8,900 crore. These projects were commissioned with a combined investment of around R12,000 crore in debt and equity. Over the years, they have generated more than R1,30,000 crore in revenue for Indian Railways. These were all high-density projects, connecting ports or mineral-rich regions,” he explains.