Titagarh Wagons Ltd has decided to hive off its rail coach division into a subsidiary.
The proposed coach-making subsidiary will issue 12 shares for every 100 shares of TWL as consideration. The earth moving and mining equipment business, however, will be transferred to an existing wholly owned subsidiary Titagarh Cranes against fresh shares, Umesh Chowdhary, Vice-Chairman and MD of TWL, told Business Line.
TWL expects to complete the proposed restructuring through a scheme of arrangement sometime before the second half of FY 2014.
TWL currently has five other subsidiaries – Titagarh Wagons AFR, Greysham and Co Pvt Ltd, Titagarh Marine Ltd, Titagarh Singapore Pte Ltd and Titagarh Capital Pvt Ltd.
Apart from wagons, TWL is currently into coach making, steel castings, heavy earth moving and mining equipment and steel bridges.
The restructuring will see wagon, casting and bridge segments remain with TWL.
The company’s board had decided to undertake the restructuring exercise last July.
Wagons contributed 88 per cent to the TWL’s FY 2012 turnover of Rs 644.33 crore and around 80 per cent of the operating profit of around Rs 120 crore.
According to sources, coach-making businesses have bagged orders for 12 rakes of MEMU and 11 EMU rakes from the railways. TWL now has equipped its manufacturing capability for AC/EMU coaches too. The castings division reported a PBIT of Rs 16.92 crore in 2011-12.
The heavy earth moving machinery and steel bridge segments, however, need strategic refocus.
The TWL stock is ruling at Rs 332, after a steep climb-down from 52-week-high of Rs 485 less than a month ago.