Demand from Railways will stay strong, says Titagarh Wagons

The demand for railway wagons has gone up in the last six months and it will continue to be strong, helped by metro and the dedicated freight corridors, said Titagarh Wagons executive chairman Jagdish Prasad Chowdhary in an interview with Pooja Tripathi. He also spoke the order book, Cimmco's offer for sale and his expectations from the upcoming Budget.

What are your expectations for the railway sector from the Union Budget 2019?

I feel the Budget will bring an improvement in the infrastructure sector. Although, the railway sector was quite ignored for past three-four years. But huge demand has propped up in the last six months, mainly after Piyush Goyal took charge of the railway ministry. This demand will continue in future as well. The advancement of metro railways will also boost demand. Secondly, our company is also into shipbuilding and I feel there will be a very good demand in the segment. The defence demand, under Make in India, will also help us a lot. So we hope that the Budget is going to be a good one. But at the same time, I would like to attract the government's attention to certain things. We don't receive any input credit in the segment. I hope the government will look at it. Apart from this, I hope the government will announce a Budget to support its pragmatic policies. Improved infrastructure will improve the economy.

Are you expecting any specific announcement related to wagon procurement? Update us on your expansion strategy and the capex needed for it?

It is difficult to tell how much capex will be needed as it is dependent on overall budgetary provisions. In addition, the ongoing demand for railway wagons has increased production in the last two-three months. Despite this, there is an increase in consumer demand and that is why I think that it will lead to good demand and it will be maintained, but it is difficult to quantify it.

Titagarh Wagons had recently secured a big order from Italy. How will it benefit the company? Tell us about the order book.

Our order book is quite good now due to the last order that was placed with us. Our parent company, Titagarh Wagons, has an order book of Rs 2,200 crore and Titagarh Cimmco has an order book of Rs 800 crore. Apart from this, our Italian order book stands around Rs 2,000-2,500 crore.

The government has plans to strengthen the Eastern and the Western corridors by doubling freight capacity. Are you expecting any orders?

Several wagons being developed by us, Titagarh Wagons, will move to the dedicated freight corridor. It will be very helpful. In fact, improvement in railway transportation will boost its demand, which in turn, will also improve profitability. It will also decrease the fund shortage issues of Railways.

Have the legacy order issues related to the acquisition of Italy-based Firema Trasporti SpA in 2015 ended? if yes, update us on the kind of turnaround or its contribution to your company?

The legacy orders can be termed as a part of the purchasing price. You will be happy to know that our legacy orders have been completed. The company's performance this year has been better than the previous year and I hope that it will get better in future. Besides, we have also received an order of Rs 1,700 crore from Catania Railway. Based on the same, we have started quoting for future tenders as well. Looking at everything, it seems that the Italian unit will perform well. However, we have faced certain problems in the French unit and that's why we have to go for an overhaul of the local management of the unit. In fact, we along with the government, have designed a restructuring scheme and the French government will be helping us in it and I hope that the scheme will be approved.

What are your views on the OFS of Cimmco?

The Board of Directors met on Cimmco and decided to approach the government and the Securities and Exchange Board of India, asking it to allow Cimmco's merger in Titagarh as the two companies share good synergies with each other. Interestingly, we will avoid duplication in it. Cimmco will be concentrated in specialised wagons, defence products, locomotive shells. On the other hand, we are building ships, wagons and defence work at Titagarh. Division of the work will help us in increasing our efficiency.

— Zee Media Newsroom