Texmaco Rail & Engineering is looking to ramp up production at its existing plant and expand capacity following a steady rise in demand for wagons from Indian Railways. The company, which witnessed a sequential drop in gross profit margins, expects improved operational margins in the coming quarters.

The company is also undertaking strategic restructuringto focus on its core strengths.

AK Vijay, Executive Director, Texmaco, said the company’s board has appointed a committee to determine the future strategy needed to focus on core strengths.

“Strategic restructuring is an important area of concern and also a focus area of the operations to make sure that the company is, operation-wise, more efficient and, company-wide, more effective,” Vijay said, according to an earnings call transcript.

Production touched 500 wagons last month, which is “reasonably good” in comparison to the previous year or the previous quarters. It aims to improve the numbers steadily.

“We have big plans for next year also, to make sure productivity levels go up, overall production goes up,” he said, adding that he hoped that improved infrastructure would lead to improved overall performance, in both top line and bottom line.

Robust demand

The demand for wagons, both from railways and industry, is “robust”, he said, and the company is focusing on strengthening its production base and improving the overall efficiency of the plant to meet delivery requirements.

“What really happens in any industry.... when the load is down, inefficiency creeps in…. so our first job is to take care of those inefficiencies and debottleneck the present plant. And of course, we have in mind expansion of capacity... because we want to be a major player in this game,” Indrajit Mookerjee, Executive Vice-Chairman, said in the transcript.

The company moved into the growth path from the third quarter ended December 2022 and expects the future to be “much brighter”.

“We have turned out a much better volume from the previous quarter…. the number of freight cars or wagons manufactured and sold is almost more than double what we have done in the earlier quarter. And obviously, when you start ramping up production, there is also improvement in the efficiency factors. But this is just (the) starting... and miles to go. We have tried to prune and focus more on our EPC business... We want to do only projects where we can make profit or where we can perform well,” Mookerjee said.

The company’s order book is close to ₹9,000 crore, of which a major portion — nearly ₹7,000 crore — comes from rolling stockand ₹1,300 crore from Rail EPC. While it is currently not manufacturing wagons for the passenger segment it eyes it for the future.