REC, RVNL seal Rs 350 bn deal for five-year infrastructure boost

10 Jan 2024 CW Team

REC, a power sector financier, and Rail Vikas Nigam (RVNL) have inked a Memorandum of Understanding, committing to provide financial support of up to Rs 350 billion for infrastructure projects slated for execution over the next five years.

Having successfully commissioned 140 projects, RVNL envisions a considerable pipeline of future projects that require financing. Opting for an alternative to traditional banking avenues, Rajesh Prasad, RVNL's Director of Operations, expressed the company's confidence in REC as a preferred choice due to its government affiliation, providing a sense of security. Prasad highlighted the mutually beneficial nature of the collaboration, deeming it a win-win situation for both entities.

Shifting from the nomination model to the hybrid entity model, RVNL has witnessed improved profit margins. Prasad anticipates further enhancements in margins in the near future. As the company experiences a surge in project orders, its primary focus is on railway projects, followed by expansion into the metro segment. With metro lines slated for development in over 52 cities, RVNL, currently active in only seven, aims to capitalise on this opportunity. The company is exploring key projects such as coach wagon maintenance and capacity augmentation.

Prasad projects RVNL's order book for the fiscal year 2024 to reach Rs 800 billion, reflecting the company's positive outlook and growth trajectory.

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