Titagarh Wagons suspends operations at Italy unit amid coronavirus outbreak

Abhishek Law Kolkata | Updated on March 17, 2020 Published on March 17, 2020

Umesh Chowdhary, Vice-Chairman and Managing Director of Titagarh Wagons   -  Debasish Bhaduri

Wagon-maker Titagarh Wagons Ltd has temporarily suspended operations at its wholly-owned Italian subsidiary, Titagarh Firema SpA, in view of the coronavirus outbreak there.

While manufacturing activities remain suspended for at least 15 days as of now, the employees of some departments — such as the design team — have been asked to work from home. The company has directed the Chief Executive Officer to “closely monitor the situation” and take steps to ensure that operations are restored “at the earliest”.

According to Umesh Chowdhary, Vice-Chairman and Managing Director, supply disruptions have also taken place in the region. Many German suppliers have issued “force majeure notices” because of the Covid-19 threat, leading to disruptions.

The financial implications of this suspension of work are yet to be ascertained.

“It is a classic case of force majeure. Manufacturing activities are difficult to carry out in view of the current conditions and some departments like design and development are working from home wherever possible,” Chowdhary told BusinessLine.

The company, in a notice to the bourses on Monday, said that the board has authorised the CEO of the Italian subsidiary to “discuss with the employees and workers’ union in line with the government advisory to deal with Covid-19”.

“In view of the force majeure conditions, the financial impact of the above is not ascertainable at this stage. However, the government of Italy is contemplating evolving a system to support the entities impacted by such conditions,” the filing said.

Operations revamp

The Italian subsidiary has an order book of €300 million.

The Kolkata-based company had, in a recent filing to the exchanges, said that Titagarh Firema SPA has been awarded the ‘Letter of Acceptance’ for design, manufacture and supply of 54 units of Metro for Ferrovia Circumetnea, Italy. The total value of the letter-of-acceptance is €216 million (approximately ₹1,741 crore).

The Italian subsidiary was also developing the prototype of the new aluminium bodied coaches for Pune’s Metro rail. The inauguration of the prototype was due next fiscal and is likely to be delayed.

Titagarh Wagons is the largest private sector company in India manufacturing coaches for Indian Railways, apart from bailey bridges and mining equipment. It has been working towards making its Italian operations net profit positive. The management there had been revamped recently and the company was looking to be PAT positive by FY21.

For the first nine months of this fiscal, the Italian subsidiary pared its operational losses to ₹9 crore (apprx), from over ₹17 crore in the year-ago period, sources said.

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Published on March 17, 2020
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