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By delaying its proposed Indo-Russian joint venture with Kinet Railway Systems for manufacturing Vande Bharat sleeper trains and associated coach configurations, the Railways have caused an estimated ₹76 crore loss to Rail Vikas Nigam Ltd (RVNL), the Railway CPSE executing the project. Also, due to these delays, designs are now expected only in the first half of 2026, with manufacturing commencing at a later stage.
Kinet Railway Solutions is a joint venture between Rail Vikas Nigam (RVNL) and Transmashholding (TMH) that manufactures and maintains electric passenger trains, including Vande Bharat trains. TMH — the largest manufacturer of locomotives and rail equipment in Russia — is one of the five largest manufacturers of new rolling stock globally.
RVNL lists Kinet as an associate company. Per intial plans, the JV was to manufacture 120 trainsets, each with a coach count of 16, with the first prototypes expected in 2025, and a 35 years maintenance contract. The contract was pegged at $6.5 billion. Each trainset was to be manufactured at ₹120 crore, including a price variation of 2-4 per cent.
Incidentally in June-July 2024, the Railways sought a design change with the contract then being reworked into 80 trains of 24 coaches each. The logic put forward was in all 1,920 coaches will be manufactured, keeping the initial contract numbers intact.
The demand for toilets and a pantry car have become a sticking point for the Indian Railways and Russian rolling stock manufacturer Transmashholding (TMH), which “potentially delayed” the project, sources said. Between July and December, the Indian Railways had not approved the design.
In the process, RVNL suffered a ₹76 crore-odd notional loss because of the failure of the project to take-off. The fact was confirmed by RVNL top brass in their post results investor call.
“....Because in this one we are showing minus ₹76 crore under Kinet. This is our joint venture for manufacturing. So, here the revenue stream is going to start maybe after an year or so. So, this is a notional negative because manufacturing is still to start, and we have invested a lot of money. So, this is going to get return,” Pradeep Gaur, CMD, RVNL, said during the investor call.
RVNL auditors, Gandhi Minocha & Co, in their review report has mentioned: “The consolidated unaudited financial results also include the Group’s share of net profit after tax of ₹56.92 crore and ₹43.04 crore and total comprehensive income of ₹56.92 crore and ₹43.04 crore for the quarter and nine months ended December 31, 2024, respectively, as considered in the consolidated unaudited financial results in respect of one associate (Kinet) and 14 joint ventures (including two JVs having no reportable financial data) based on their interim financial results/information, which have not been reviewed by their respective auditors”.
Talking on the project profitability, Gaur explained: “Definitely it is a profitable venture and when the production unit of Railways can do it at that cost (₹90 crore by ICF), definitely in a joint venture with Russians and with much improved working, it will improve.”
“....suppose this Kinet JV minus (₹) 76 was (crore) not there, the profit itself should have been almost (₹) 130 crore from this.... So, immediately when the revenue starts, it will come into profit, the Kinet JV,” he said.
India’s Railway Ministry and the Minister’s office did not respond to queries by businessline.
In fact, the RVNL top brass explained that the production of Vande Bharat under the JV continues to be weak.
“Railways wanted some change in the configuration of the train from 16 coaches to 24 coaches. This decision was taken somewhere in June or July of 2024, which led to change in design and all those things,” Gaur said adding that: “Railways have gone back to again original 16 coach train.”
According to him, this has sort of put back the whole initiative by around 8 to 9 months.
“As far as Vande Bharat is concerned, actually we were on stream, and everything was moving quite smoothly....The factory is completely ready to do manufacture,” he said. So the first prototype, which was supposed to be in September-October 2025, will now take place “somewhere in the first half of the next year”.
Kinet sources said they are yet to get formal notification from the Railways. The company, however, is yet to respond to queries.
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