Express Interview | Delhi Metro arm has bid for 5 overseas projects, behind foreign competition: CEO

This is not new for DMRC. It has been doing so for the last 20-25 years. Many of the Metro networks built in India have had direct or indirect support from DMRC. Now DMRC wants to concentrate in a subsidiary so that such activities can be be scaled up.

This is good for Delhi, too, because DMRC, through DMIL, will reach out to other countries and come back with their best practices. If we bid for work in a developed country, we are also looking at what they are doing better than us.

Will DMIL do everything — from planning and construction to operations and financing, or focus on specific sectors?

We looked at the market and we looked at ourselves: what is it that we are good at? Start with operation and maintenance. We are good at it because we are operating over 400 km in the NCR alone, plus Mumbai… we are going to operate in Chennai. We are in a way helping the network to operate in Noida and Gurgaon, and we are operating one train in Patna.

So, we are operating in five cities in India apart from Delhi. That should be our first service offer.

We also looked at the global market, which has many established players, but we concluded that it is big enough for a new actor to enter.

The next step is advisory: we advise other governments on how they should plan or advise lenders on what they should be looking for if they are financing a project. This is not limited to Metros — it is mobility, which includes other modes as well, such as bus systems.

But DMIL is not going to get involved in construction or in creation of assets because we are focusing on becoming an asset-light, pure service business. Service contracts are multi-year contracts, so we are focusing on contracts that give us income over multiple years.

Will existing DMRC contracts outside Delhi be moved to DMIL?

That is the intention. DMIL will start consolidating DMRC contracts under one subsidiary so that international clients are able to consider us. The target is that this should happen by the end of this financial year, March 2027. The process has already started.

How many bid have you participated in so far?

We have put in five international bids in three months, which is a very high for a new business. Two of them are in Europe, one in West Asia and one in an Indian Ocean country. The nature of these bids is confidential because they are by invitation — only those entities that have been given access can bid. Two-three are in the pipeline. Also, six domestic proposals have been submitted to different state governments.

Is DMIL meant to be profitable?

Yes. There are three pillars that define us. The first is profitability — this is going to work on commercial principles, and creating a subsidiary helps DMRC focus attention on it. The second is that we do not create assets. The third is where we are mandated to operate, which is predominantly outside Delhi.

A service business is a multi-year business and does not generate very high profits, but it also does not generate the very low margins you see in some construction sectors in European countries. It is mid-range profitability. On those parameters, we selected operation and maintenance contracts, general consultancy, advisory and programme management consultancy.

Do you have a revenue target?

In five-six years, if we are able to exceed Rs 2,000-3,000 crore in annual income, that should be a good measure of our success.

What are your major challenges in international markets? DMRC MD Vikas Kumar had told us that countries prefer domestic players.

First of all, we are competing with very large and established entities that have a proven track record. To give you a sense of scale, there are three prominent French companies in this market. The biggest one, Transdev, has an annual income of over Rs 1 lakh crore, and the second largest is about Rs 70,000 crore.

We have a track record in India but not a foreign operation on our CV… Although we have done some work in Dhaka and Jakarta, our competitors have worked in 25-30 countries, and for a long time. We are significantly behind them.

The competitors are also watching us, and they are a bit worried. They would like to prevent us from breaking into the market so that we don’t eat into their share, or reduce the price offer — that is their biggest worry. They will try to influence the competition in a way that it does not favour us. So, we are conscious of our weaknesses. Internationally speaking, we are not on the strongest wicket. It will take a lot of effort to convince a client in a foreign country that DMRC will deliver what it is promising.

On domestic preference, it depends on where you are. In Europe, there are many domestic players and they may have a natural advantage in their home country. In West Asia, not many are there, so foreign actors have a level-playing field. In the US, the market is large, and in Canada as well, and the number of domestic actors is low. So that situation is favourable for foreign actors. There are also companies in partnership with financial institutions, they have a lot of financial resources and a different way of working. We are a government organisation and our way of working is less fluid than the private sector’s.

Do you have target countries in mind?

Initially, our targets are countries that have English as their primary working language, because that gives us a key advantage. We also look at countries known for transparency and openness, which are open to Indian businesses. West Asia is a good one — it is in our neighbourhood, there is a large Indian presence, and Indian businesses have done well there. We are looking selectively at European countries where the market is relatively open, and over a period of time we will look at North America.

We are interested in Africa as well, but in partnership with local companies and in association with the Union Government. Companies that bring finance along with their service offer have a preference in Africa, because funding is the issue there. Right now we don’t have access to funds the way some European companies may have. So, Africa is on a watch list — if we can muster enough financial resources, we will go in.