Chowdhary family-promoted Titagarh Wagons, the flagship company of the Titagarh Group, is eyeing a turnaround of its European operations, thanks to improved market conditions and an entry into new markets.

It expects the turnaround to happen in phases, most likely by FY21.

According to Umesh Chowdhary, the company’s Vice-Chairman and Managing Director, plans are afoot to enter new geographies such as Africa (through its European ventures). This apart, the resolution of legacy issues in Italy and resumption of production at the French unit are seen to help.

The two European subsidiaries, Italy’s Titagarh Firema SpA (Firema) and France’s Titagarh Wagons AFR (TWA), were in the red as on March 31, 2018. Firema had a net loss of ₹80 crore while that of TWA was ₹44 crore, said Titagarh Wagons’ annual report.

While the group’s Indian operations contribute 32 per cent of the consolidated revenue, 68 per cent comes from overseas.

Back in black

“The wagon-making market in Europe has picked up. With this, and new orders coming in, the Italian company is likely to be back in black by FY21, while the French one is expected to deliver positive results in FY20,” Chowdhary told BusinessLine .

A technical problem witnessed in the bogies fitted into the freight cars supplied in the past affected production in France. The problem has been resolved and production has resumed. TWA took negative margins with revenues to regain entry into the stainless steel wagons market, Chowdhary said.

The actual cost (of wagon making) was higher than what was estimated. However, the order has now been fully executed and work is on to bring down the cost of production, thereby improving margins, he added. A management rejig has already been initiated there.

According to him, a one-time provision was required to be made in respect of certain legacy contracts (and penalties) accrued at the time of acquisition of the Italian business from Firema Trasporti SpA. This saw operations slip into a loss.

While Firema has participated or has been pre-qualified for several tenders in Europe, it is also participating in bids in African nations.

A management recast is already under way. While Chowdhary himself is heading the company as its interim chief, Titagarh is on the lookout for a new CEO there.