Titagarh Wagons collaborate with Titagarh France to establish global footprints

MD TitagarhThe French company is into manufacturing wagons and with this acquisition, Titagarh Wagons is now catering to the demands of various European markets, says vice-chairman Umesh Choudhary. Titagarh Wagons is collaborating with Titagarh France to spearhead foray into global metros. Titagarh France is a supplier of wagons to various African countries. The move will enhance the Indian company’s global presence. Titagarh France is a 100 percent subsidiary of Titagarh Wagon, which the Indian-listed company acquired in 2010. The French company is into manufacturing wagons and with this acquisition, Titagarh Wagons is now catering to the demands of various European markets, says vice-chairman Umesh Choudhary.  Titagarh France will also help Titagarh Wagon with new technology.  Titagarh Wagon has also bagged a contract from Kolkata Metro for metro refurbishment, he adds. Choudhary is expecting forward-looking announcements in the Rail Budget.  Below is the verbatim transcript of Umesh Choudhary’s interview

Question: Could you tell us what this tie-up is about and is this going to add any kind of revenues to the listed company in India?

Answer: This is not a joint venture. This is a 100 percent subsidiary that we acquired in France in 2010 which we have been able to successfully turnaround and while it will not add any direct revenue to the listed company in India in Titagarh but it being a subsidiary would get reflected in the consolidated results and the other advantage that we get from this acquisition that we had made is the design in the technology that we are able to acquire and the foreign markets with that design in technology that we can target.

Question: Can you elaborate what the plans of Titagarh France is? You are planning to foray into global metro, monorail as well as high speed rail markets. What is the opportunity, have you bagged orders already?

Answer: Both are different. The French company is into wagons and what we are doing over there is catering to various European countries for their requirement of wagon and using the design and technology from France. We are also trying to get into the African market because many of the countries in Africa are francophone, so they use the same specification, but that’s a different story.

As far as metro is concerned, what we are doing in India is we are already manufacturing the electrical multiple units (EMUs) and the passenger coaches. So as a forward movement to that what we are doing is we got into metro refurbishment, we got a contract from Kolkata Metro and we would be attempting to move into the metro and monorail manufacturing but that’s something which we will require technology tie-up for and we have been scouting for proper technology partner for that.

Question: We will be running into the Railway Budget in about a month time and we have a dynamic railways minister now in charge, are you hopeful of some big announcements in the Railway Budget?

Answer: I am very hopeful. After a considerable period of time we have a decisive government and railway minister who is from the ruling party and person of the stature of the current railway minister. So we are hopeful that there would be certain very forward looking announcements and statements made in the recent Make in India conclave that was held, the presentation that was taken by the honourable Prime Minister three days ago, two or three ministries in their presentation mentioned about the requirement for additional railway infrastructure and in regional wagons, if their growth has to be met. So this basically brings us back to the point that I have always made in the discussion that I have had on your channel in the past that the growth in railways or investment in railways is not only required to grow railway industry but it’s the backbone for the entire Indian economy and if Indian economy needs to come back and needs to grow then there is no way that the railways can be left behind.

Question: We have Anil Swarup talk to us earlier in the day and he alluded to coal evacuation and maybe rail infrastructure upgrade as well. In your sense do you think that will be a big opportunity coming in 2015?

Answer: Absolutely. If you look at about 40-45 percent of railways’ traffic freight revenue comes from coal. If coal evacuation goes up, transportation of coal essentially has to go up.

Question: What will it mean specifically for your company?

Answer: We are the largest wagon manufacturer as a group if you compare the capacity between us and our subsidiary Cimmco; we are one of the largest manufacturers in the country and if the market size increases we would benefit from that.

Question: How much will you supply in terms of wagons. Do you estimate in 2015 as oppose to 2014?

Answer: The irony has been that on one side the ministries have been saying that there is a wagon shortage but on the other side the wagon requirements have not picked up from the railways. If you look at the planning commission document or Vision 2020 by the railways, the estimated wagon requirement was between 25,000-29,000 wagon whereas the actual procurement on an annualised basis over the last three-four years have been 6,000-7,000 wagons. If the railways do catching up on that requirement then the overall business will grow but for me to tell you the number today without the railways having announced its plan, would be very speculative.

Titagarh Wagons stock price

On January 01, 2015, Titagarh Wagons closed at Rs 314.50, down Rs 2.4, or 0.76 percent. The 52-week high of the share was Rs 356.30 and the 52-week low was Rs 91.10. The latest book value of the company is Rs 315.49 per share. At current value, the price-to-book value of the company was 1.00.