REC Financing Rail Vikas Infra Projects Is A 'Win-Win Situation For Both'

Power sector financier REC Ltd. and Rail Vikas Nigam Ltd. have signed a Memorandum of Understanding to finance up to Rs 35,000 crore for infrastructure projects that will be executed in the next five years.

The company has commissioned 140 projects and foresees a large number of projects in the future, for which it needs some financing. Instead of going to banks, it decided to go with the option that works best for it, Rajesh Prasad, director (operations) of RVNL, told NDTV Profit.

"We thought REC was one of the better options, and being a government department, we feel comfort... So, it is a win-win situation for both companies," he said.

The rail infrastructure company used to initially receive projects through nomination, but now it is using the hybrid entity model. Under the nomination model, margins were fixed, but now they are higher than earlier, he said. Prasad expects the margins to improve in the near future.

With the increasing number of orders, the first target for the company is railway projects, followed by the metro segment, he said. However, the metro segment will have large numbers as over 52 cities will soon have metro lines, and currently the company's presence is only in seven. It is looking to enter key projects like maintenance of coach wagons and capacity augmentation.

RVNL expects its orderbook for FY24 to stand at Rs 80,000 crore, Prasad said.

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