Titagarh Wagons looks to expand after subsidiary turnaround

Abhishek Law Kolkata | Updated on August 16, 2021

Reduction in loss making legacy contracts led to positive EBITDA change after five quarters of losses

Kolkata-based Titagarh Wagons, one of the largest wagon-makers in the country, scripted a turnaround in its Italian operations – with the subsidiary turning EBITDA positive – while it looks at “internationalisation” of its freight wagon business by targeting new export markets such as Africa and Australia.

According to Umesh Chowdhary, Vice-Chairman and Managing Director, Titagarh Wagons, a reduction in loss-making legacy contracts of the Italian entity (Titagarh Firema SPA Italy) helped it turn profitable at the EBITDA-level after five quarters of losses. Nearly 80-90 per cent of these – which the company had to deliver at the time of acquisition of the subsidiary – are already through. Delivery of the remaining 10-20 per cent is expected to be completed in Q2 and Q3 of FY22.

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“Italian operations had a turnover of €22-23 million in Q1FY22. We are expecting a similar run-rate for the full year, say around €100 million. While August is seen as a slower month as it is the holiday season in Italy, I believe, the full year outlook is still positive in terms of orders. We expect operations to be EBITDA positive, provided the pandemic does not derail plans,” he told BusinessLine.

The company has already won orders for Sicily Metro and deliveries are expected in September-October. It will also participate in upcoming tenders in Europe and the African region, Chowdhary said.

Titagarh’s order book stands at around ₹5,000 crore; with nearly ₹2,400-2,500 crore coming from Italian operations.

Export market

According to Chowdhary, the company will tap export markets for both the freight wagon and transit business. International certification and application for accreditation of services have already been carried out.

Over the last few quarters, upgrades have been carried out at its manufacturing units in India.

“It will take 6-12 months for the certification to come through. We have been exploring plans for a global footprint. The ‘interanationalisation’ of the business is something that we are looking at over the next 30-36 months,” he said adding that the move is aimed at a “geographical expansion” and “risk mitigation”.

Similar plans are being explored in the transit business (passenger rake making).

“We have an established reputation in the freight wagon making business; while in the transit business we will be building our name next year onwards,” Chowdhary said.

India business

In case of India operations, Titagarh’s propulsion prototype is expected to be ready (for the Indian Railways) by Q4FY22. The company recently announced that it had entered into an exclusive cooperation agreement with ABB, a leading global engineering company, to address the large and growing business of propulsion equipment (traction converters) for the Indian railway electric multiple units/mainline electric multiple units market.

The Pune Metro order is also being executed.

“We are also bidding for other Metro orders in the country,” he said, adding “outlook (for India) looks buoyant” with heavy investments being made on infrastructure and increased capacity utilisation by Railways leading to increased wagon requirements”.

Published on August 16, 2021

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