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Titagarh Wagons Ltd in its latest directors’ report has confirmed that its joint venture with FreightCar America, Inc. is off.
In a regulatory filing earlier to the Securities Exchange Commission, the Chicago (Illinois) head-quartered company had informed about the termination of the agreement.
On January 22, 2008, the two companies had entered into a joint venture agreement, principally to develop and manufacture aluminium rail cars in India.
TWL said that the India incorporated 49:51 joint venture – Titagarh FreightCar Pvt Ltd – has “lately withdrawn its proposal for design approval submitted to RDSO (Research Design & Standard Organisation).” It also said the joint venture “is in (the) course of being terminated, subject implementation of concluding agreement amongst the parties.”
On August 1, 2011, FreightCar America, Inc. had said that it terminated the term of the joint venture agreement that it entered into with TWL to develop railcars for the Indian market.
It further had said the joint venture entity was formed to initially develop prototype cars based on FreightCar’s designs and assess the market opportunity for railcar production in India. “On May 26, 2011, pursuant to the terms of the joint venture agreement, the company (FreightCar) notified Titagarh that it was not in compliance with certain of the covenants, terms and conditions of the agreement and provided Titagarh with an opportunity to cure," the US company said.
According to FreightCar, on August 1, 2011, due to Titagarh’s failure to cure its non-compliance with the agreement, it notified Titagarh that FreightCar was exercising its unilateral right to terminate the pact, “effective immediately”.
“The company did not incur a material early termination penalty by reason of this termination,” the FreightCar disclosure had noted.
Nasdaq-listed FreightCar specialises in manufacturing of aluminium and stainless steel-bodied commodity railcars, particularly for coal, in North America. BSE-NSE listed TWL is one of the leading wagon manufacturer of India and also has a French specialised wagon-making subsidiary under its fold.
>jayanta.mallick@thehindu.co.in
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