Modified Railway Association Modifies Joint Venture to Reduce Potential Risks of Vande Bharat Sanctions
The Indian Railways has made a significant move to improve the efficiency and project management of the Vande Bharat sleeper train projects by transferring majority control from Metrowagonmash to Locomotive Electronic Systems (LES). This decision aims to streamline the project management and enhance operational effectiveness in manufacturing and maintenance of the trains.
The joint venture, named Kinet Railway Solutions, combines technological prowess from both partners. However, with LES taking the lead, it is expected to optimize the entire project value chain—from concept design through commissioning and maintenance.
This restructure supports Indian Railways' goal of timely delivery and high-quality production of the 120 Vande Bharat sleeper trains under contract. The changes aim to further strengthen project execution, accelerate industrialisation efforts within the 'Make in India' initiative, and enhance technology exchange.
The shift in control is likely to accelerate the delivery and quality assurance processes, as LES can bring specialized expertise in electronic systems crucial for modern train operations. The change in shareholding pattern, from Metrowagonmash's 70% to 35% and LES's 5% to 40%, was done to ensure unhindered supplies and increase vendor and business partner availability.
The restructuring was done with the approval of the Ministry of Railways (MoR) and in compliance with the Contract. European component suppliers reportedly expressed reluctance in dealing with a sanctioned entity, which may have prompted the change.
RVNL (Rail Vikas Nigam Ltd), the Indian partner, continues to hold its unchanged 25% stake. The Ministry official has stated that the change in JV shareholding will not have a material impact on the functioning or manufacture of Vande Bharat sleeper trains or the project outcomes.
The notification to the bourses was made by RVNL on August 12. Kinet Railway Solutions has confirmed that the changes were in compliance with the Contract and with the consent of Indian Railways.
Amidst tariff tension, a meeting between foreign ministers Jaishankar and Lavrov is scheduled in Moscow on August 21. The reshuffle was initially decided upon in 2023 but is being taken on record now. According to PM Sharma, the reshuffle was solely intended for cost optimisation purposes and has more options and availability of critical sub-assembly manufacturing.
The Vande Bharat sleeper train projects, managed by Indian Railways, have transferred majority control from Metrowagonmash to Locomotive Electronics Systems (LES). With an estimated equity of over ₹8,600 crore, RVNL's equity in the JV remains unchanged. The changes in the JV were done to address the high maintenance demands and the need for critical sub-assemblies. This move is expected to optimize the entire project value chain and ensure the timely delivery of high-quality Vande Bharat sleeper trains.
- The Indian Railways aims to optimize the project value chain of the Vande Bharat sleeper train projects by transferring majority control from Metrowagonmash to Locomotive Electronic Systems (LES).
- The joint venture, Kinet Railway Solutions, will combine technological strengths from both partners, with LES taking the lead to streamline the project management and enhance operational effectiveness.
- This restructure supports Indian Railways' goal of timely delivery and high-quality production of the 120 Vande Bharat sleeper trains, as LES can bring specialized expertise in electronic systems crucial for modern train operations.
- The shift in control was done to ensure unhindered supplies and increase vendor and business partner availability, with European component suppliers reportedly expressing reluctance in dealing with a sanctioned entity.
- RVNL, the Indian partner, continues to hold its unchanged 25% stake in the joint venture, Kinet Railway Solutions, and believes the changes will not have a material impact on the functioning or manufacture of Vande Bharat sleeper trains or the project outcomes.
- Stakeholders are confident that the changes will help address the high maintenance demands and the need for critical sub-assemblies, ensuring the timely delivery of high-quality Vande Bharat sleeper trains and further strengthening the finance, business, and technology aspects of the project.
