कोलकाता Kolkata (KOAA): Warren Buffet is bullish on railways, having bought Burlington Northern Santa Fe for $34 billion four years ago.
The same logic that the railroad makes good economic sense in a country as vast as the US also applies to India and its largest wagon manufacturer Texmaco Rail, which provides the best investment in the rail industry.
Texmaco had a bad FY14 though. Under the previous government, very few orders were placed and in the previous fiscal there were none, resulting in FY14 revenue plunging 46%. But with a new government at the Centre, things are changing.
The government has highlighted increasing wagon demand by 25% to 25,000 from the current year onwards.
In June, Indian Railways resumed wagon orders — 3,000 from Texmaco to be delivered in the current year.
The Texmaco management believes that this is just the beginning and is already seeing big demand, not only from the government but also from the private sector.
With a capacity of 10,000 wagons, it has a 25% market share and is the only company in India with an in-house engineering department. “We are likely to get an order for 1,000 wagons from defence services in the next one month for moving tankers and artillery,” chief financial officer AK Vijay told ET.
Vijay was also upbeat on passenger coaches. “The present capacity of the railways cannot meet the demand for passenger coaches. We have supplied the prototype to Indian Railways.
Once approved, we will be eligible for future orders.” Demand from the private sector, which dropped to 1,000 wagons in 2013 from 5,000 earlier, is expected to rise.
“We have already started supplying specialised wagons to Hyundai and Ford and intend to supply to others as well. Going ahead, demand from the private sector will gradually improve and you will also see that white goods will also be transported by rail,” Vijay said.
In addition to this, the recent acquisition of Kalindee Rail makes the combined entity a complete rail solutions provider.
While Texmaco is present in wagon manufacturing, Kalindee is engaged in infrastructure and signaling.
The company is also planning to enter the railway infrastructure segment, with plans to build steel castings for railway lines.
“The Indian railway system is in dire need of renovation and expansion. In addition to this, we are confident of securing international orders as well. Our quality of products is acceptable to the US, Australian and Scandinavian railroads,” said Vijay.
Given its capacity and orders, the future looks impressive.