Interview with Umesh Chowdhary, Vice Chairman and Managing Director of Titagarh Rail Systems Limited

The government's proposal outlined in the recent interim budget to enhance 40,000 conventional coaches to meet Vande Bharat standards is poised to deliver a significant uplift to the railway wagons industry

The company experienced a remarkable 25 per cent year-on-year revenue growth in Q3FY24, accompanied by a surge of over 90 per cent in net profit. What were the key factors driving this significant success?

The remarkable growth can be attributed to our sustained operational momentum. The substantial development in both freight rolling stocks and passenger rolling stocks on a yearover-year basis played a pivotal role. Additionally, the government's unwavering initiative to develop world-class rail infrastructure in India has been a driving force, inspiring and fuelling our continued growth momentum.

How will the strategic partnership with ABB India Limited and Amber Group benefit the business in the long term?

Both collaborations are purposefully designed to produce a significant amount of value and foster a situation where everyone benefits. The collaboration with Amber Group spans two projects. The first is the current Titagarh Firema, in which Amber Group is a co-investor, providing them with access to the Italian market through Firema. The second one is to branch out into the railway subsystem and component market. To enhance our footprint in Europe and India, we have also established a special purpose vehicle (SPV). With an emphasis on producing subsystems and train interiors for both India and the European Union (EU), this collaboration aims to progressively open doors throughout Europe.

The collaboration with ABB contributes significantly to reinforcing India's self-reliance in rail technology, emphasising energy-efficient solutions and advanced propulsion systems. In essence, the partnership positions our business for sustained growth and technological leadership in the railway sector in the long run. Focused on supplying propulsion systems for metro projects in India, the collaboration is in line with the ‘Make in India’ and ‘Atmanirbhar Bharat’ initiatives of the Indian government. It has shown early success by winning contracts to create and supply metro coach equipment for the state of Gujarat.

Through this strategic alliance, both companies will be able to capitalise on our combined strengths as well as grow our customer base to include additional projects in India and other nations.

Could you provide insights into the company's current order book and any future capital expenditure plans?

The company's current order book stands at Rs 27,466 crore as per the Q3, demonstrating a favourable diversification across both business segments – Freight Rolling Stock and Passenger Rolling Stock.

In terms of future capital expenditure plans, we have strategically outlined an investment strategy ranging from Rs 800 to 1,000 crore. A substantial portion of this investment has already been made, yielding positive results. The primary focus of these investments is to bolster our production capacities and align with global quality standards. This approach is geared towards not only enhancing the nation's rail infrastructure but also positioning ourselves as a global leader in the field. We are focused on actively contributing to the industrial advancement goals set by our Prime Minister. These efforts reflect our commitment to sustained growth and excellence in the railway industry.

How does the company intend to leverage the government's heightened focus on railway infrastructure, as evidenced by increased budget allocations and significant project announcements in the recent budget?

The Indian Railways budget unveils a transformative vision for our country's rail network, introducing three new corridors - the Energy, Mineral, and Cement Corridor, Port Connectivity Corridor, and a High Traffic Density Corridor. These corridors aim to contribute to GDP growth and reduce logistic costs.

As a company, we are actively aligning our capabilities with government priorities, placing a strong emphasis on our expertise, innovation, and unwavering commitment to ensuring the successful implementation of these transformative projects. The transformation of 40,000 more rail bogies to Vande Bharat coaches opens a new horizon for growth for us. We aim to contribute to the realisation of multi-modal connectivity, foster a sustainable and efficient transportation system, and play a pivotal role in shaping the future landscape of Indian railways.

What are your thoughts on the future outlook for the railway and railway wagons industry in India?

The future outlook for the railway and railway wagons industry in India appears promising, with significant developments in both the passenger and freight segments. In the passenger segment, the addition of 40,000 Vande Bharat coaches stands out as a noteworthy highlight. This, coupled with a comprehensive overview of the Indian Government's substantial capital expenditure on rail infrastructure development, as outlined in budget outcomes, indicates a positive trajectory for passenger rail services.

In the freight segment, a notable growth projection is observed. Indian Railways aims to elevate freight volume from 1.2 billion tonnes in 2019 to an impressive 3.3 billion tonnes by 2030. This ambitious goal is substantiated by the PM Gati Shakti initiative and associated policies, reflecting a strategic approach to boosting freight transportation and logistics. Furthermore, the railway and railway wagons industry in India is characterised by substantial investments, ambitious targets, and government initiatives, signalling a period of growth and expansion in the coming years.