Having forged an alliance with the US-based GATX for leasing of rakes, Arshiya Rail Infrastructure is likely to renegotiate a supply order placed with Titagarh Wagons, potentially putting up to Rs 450 crore at risk for the Kolkata-based wagon maker, a senior official has said.

“We may renegotiate the contract we had signed with Titagarh Wagons for supplying rakes as we move to the asset-light leased system of operations from the owned-model we had in the past,” Arshiya chief executive Mr Sajal Mittra told PTI here.

He said the company had already taken delivery of 20 rakes of the total order of 75, costing Rs 10 crore each, while 10 more were procured from Titagarh Wagons by the American leasing major GATX, which tied up with Arshiya Rail last month, to be deployed to Arshiya.

Supply of 45 more rakes, each worth around Rs 10 crore, is still pending and as it moves to having 70 per cent of its fleet leased, Arshiya may have to renegotiate on the earlier contract, Mittra said.

Arshiya Rail might have to renegotiate the contract in case its leasing partner GATX prefers to source the rakes it will be deploying to Arshiya from some other manufacturer, he said.

“We have the flexibility with Titagarh, I am sure that they will be willing to renegotiate. They are also aware that there are other opportunities (of business coming from Arshiya) as well,” Mr Mittra said.

Elaborating on other opportunities which can help the relationship, Mr Mittra said Arshiya is actively considering making a foray into the speciality cargo vertical which involves ferrying commodities like caustic soda, oil, liquid chemicals and bulk cement for which it will require new rakes.

Mr Mittra said the company expects some movement from rail authorities on allowing private participants into the area controlled by state-owned companies at present, just as it did with the leasing of rakes business due to which its deal with GATX could go through.

“I am sure, the Railways will consider us as a partner in the speciality cargo space given our experience of delivering in the general cargo,” he said.

On expansion plans, he said work was already underway to get a rail terminal near Chennai and the third one near Nagpur, each of which will entail an investment of up to Rs 100 crore each only for the facilities.

The company, which will be operationalising its first such rail terminal at Khurja near the national Capital next month, plans to have one such rail terminal each in the North, West, South, East and Central regions.

(This article was published on June 24, 2012)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.