New Delhi: The government is taking a big step to give new impetus to the infrastructure in the country. Preparations are underway to merge two major government companies of the railway sector, Rail Vikas Nigam Limited and IRCON International. The purpose of this proposed merger is to end the competition between the two companies and make them a strong and integrated entity.
Till now the situation has been that these two companies have been bidding against each other in many projects. This not only reduces the rates but also leads to wastage of resources. The government believes that after the merger this duplication will end and the strength of both the companies will be concentrated at one place.

The capacity of the new company formed after the merger will be quite large. According to current data, the market cap of RVNL is around Rs 53877 crore while the value of IRCON is around Rs 11159 crore. If both come together, the joint order book can exceed Rs 1.5 lakh crore. With this, this new unit will be in a position to give tough competition to the big infra companies of the country.

The effect of this decision was immediately visible in the stock market also. As soon as the news of the merger came, there was a rise in the shares of both the companies. Investors hope that becoming a bigger and stronger company will improve both valuations and growth.

This step of the government is also considered strategically important. Recently, Nirmala Sitharaman hinted at improvements in the PSU sector. This merger is being considered as another big step in the same direction in which the emphasis is on making government companies strong and competitive.

The biggest advantage after the merger will be that the new company will be able to handle large and complex projects easily. Along with expanding the railway network within the country, it will also help in getting big contracts abroad. There will also be an increase in both manpower and technical capacity so that projects can be completed on time.

However, this process will not be completed immediately. For this, approval will have to be taken at several levels which includes the approval of the ministries and the final approval of the cabinet. But if this plan is successful then a big change can be seen in the field of Indian Railways infrastructure.

The government’s focus is clear not only to strengthen the Railways within the country but also to strengthen the hold of Indian companies at the global level. This possible merger of RVNL and IRCON is being considered an important step towards the same bigger vision.