Titagarh Wagons bullish about demand; to ramp up capacity

Kolkata, March 26 Titagarh Wagons is looking to increase its wagon manufacturing capacity by nearly 15-20 per cent so as to produce between 800 and 900 wagons a month. Against a capacity of close to 700 wagons currently, it has achieved a production of 630 to 650 wagons a month.

The company, which incurred a capex of around Rs 300 crore in the last three years, including the development of product intellectual properties, expects to spend Rs 650-700 crore over the next four-to-five years to ramp up capacities.

According to Prithish Chowdhary, Director, Marketing and Business Development, Titagarh Wagons, demand looks strong and the company is hopeful of benefitting from it. The Railways is likely to have its highest ever budget allocation of Rs 2.4 lakh crore, a lot of which would go into capital expenditure such as Vande Bharat Train sets as well as freight wagons, both of which are areas of interest for the company. It also foresees a huge market for production of metro cars.

“Against the existing capacity of 700 wagons per month, we have already achieved production of 630 to 650 wagons per month. This is almost the entire assessed capacity, according to the Indian Railways. We are, however, working towards increasing this capacity further,” Chowdhary said in an earnings call transcript.

The company is confident of touching a production of 700 wagons in the next couple of months and, thereafter, enhance it to between 800 and 900 wagons, enabling it to meet its contractual commitment to the Indian Railways and also have additional capacity to meet the demand from the private sector or to get additional share from the Railways in future tenders.

Titagarh Wagons recently proposed a change in name to Titagarh Rail Systems Ltd subject to necessary approvals, as it not only occupies the top spot in private sector wagon manufacture, but has also become a leading supplier of passenger rolling stock, including metro coaches, and is growing in the transit and propulsion systems space.

New orders

The consortium of Titagarh Wagons and Bharat Electricals Ltd (TWL-BHEL consortium) recently emerged as the second lowest bidder (L2) for manufacture-cum-maintenance of Vande Bharat Trainsets, including upgradation of government manufacturing units, and trainset depots.

According to market sources, the overall contract value for the consortium could work out to around Rs 25,000 crore, for the manufacture of 80 trainsets and their maintenance for 35 years.

Titagarh Wagons in consortium with Ramkrishna Forgings Ltd has also been declared the Lowest Bidder (L1) for the manufacture and supply of forged wheels under the ‘Atmanirbhar Bharat’ initiative.

This tender is aimed at reducing the Indian Railway’s import-dependence by inviting the industry to set up a facility to produce these wheels, which will primarily be used for semi-high speed trains (Vande Bharat) and high-speed trains (bullet train).

The consortium has to set up a wheel test centre at a railway site for prototype testing of newly designed wheels. It set up a manufacturing facility in India for forged wheel production and will supply approximately 1.6-million-wheel discs of different rolling stock of Indian Railways over a period of 20 years, at about 80,000 wheels per annum.

The company has an order book of close to Rs 10,130 crore as on date, of which close to Rs 8,600 crore is for the freight business, Rs 1,176 crore for passenger rolling stock, and Rs 341 crore for Ship-Building Bridges and Defence (SBD).

It expects to maintain its EBITDA margin between 8 and 10 per cent, and does not foresee any pressure on margins as most of its contracts are with the price variation clause, which means that an increase or decrease in raw material prices is passed on to consumers.

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