The visitors, who were bowled out for 166 in the first innings, came back strongly to restrict the hosts to 180 runs this morning.
And when their two openers T Suman (32) and Daniel Manohar (63 not out) went about their task with clinical precision, it looked like the young Hyderabad side would bat out the former champions of the contest.
But in stead they suffered a batting collapse to finish the day at a sorry looking 131 for five, for a lead of just 117 runs with five wickets in hand. At close, Arjun Yadav (5) was giving company to Manohar.
Suman and Manohar added 68 runs for the first wicket to give the side a rousing start. But when it looked like Railway's skipper Sanjay Bangar was running out of ideas, Suman gave a simple catch to T P Singh off left-arm spinner Murali Kartik.
This started a top order collapse with Bangar, who missed out with the bat, playing a crucial role in keeping his team's hopes alive as he bowled a brilliant spell claiming two wickets in successive balls.
The match also witnessed some heated arguments between the players of both the sides as the Hyderabad batsmen took objection to some excessive appealing by their rivals while the Railways player were seemed unhappy with some of the umpiring decisions.
Earlier, resuming at the overnight score of 103 for four, Railways batsmen surrendered without much fight as the visitors came back strongly.
Apart from J P Yadav (40) and Kartik (28 not out), none of their batsmen showed the will to stay at the crease as the side collapsed from 139 for 4 to 180 all out.
While Yadav would consider himself unlucky to have been given out caught behind off Pragyan Ojha, the other batsmen were themselves to be blamed for the dismal performance.
Yadav's wicket gave Ojha (5-55) a five-wicket haul in his Ranji trophy debut.
Another debutant, leg spinner P S Niranjan, also made his mark claiming two wickets in his very first over to finish with figures of two for four.