Umesh Chowdhary, VC & MD, Titagarh Wagons, talks about government’s plan for private participation in railways, acquisition of 50 per cent stake of its French joint venture partner Matiere SAS, the pact with ABB to make railway propulsion systems in India, order book and plan to be debt-free by end of FY21 during an exclusive interview with Swati Khandelwal, Zee Business. Edited Excerpts: 

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Q: The government is pushing ahead with increased private participation in Railways and to have more than 100 privately operated trains in the country. What does this mean for the sector and how does it change the way the system functions?

A: The railways plan to allow private sector in passenger movement will not only benefit the railways directly but also to the general public as it is going to introduce comfortable and safe journey along with punctual trains. As far as, we, Titagarh Wagons is concerned then we are going to participate in it. 

We have played an important role in the creation of Indian or International luxury trains, which can be termed as modern trains, through our Italian subsidiary, and we are recognized well globally. We are engaged in developing aluminium body train for Pune Metro. Right now, we are evaluating whether we should engage in train operation as well or should stay in rolling stakes manufacturing and cater to those who will get into train operation. The decision in that respect will be taken at a later stage but we are moving ahead with an open mind in this relation. We also participated in the pre-bid meeting.

Q: I would like to know something about the Vande Bharat trains as there are reports that it hasn’t fetched great response from the global or Indian players for Made in India trains and also called for bids for that. What is an update on it and do you think that the opportunity is being missed out as you were also an interested party in it?

A: Vande Bharat Train is one of the biggest pride of India but when the train was developed then a limited number of sources was available for it. But the incumbent minister and the railway board called a meeting last year. I will salute the honourable minister, who called a meeting of all global players and conducted a meeting for two to two and a half and asked them to participate in it and informed that we have a long-term vision for it. He also said that we want to introduce modern technology in India but it should be brought under ‘Made in India’ scheme. So if you make it in India, we welcome you. 

But unfortunately, the specifications of the tender were finalized in March. And as you know, the world has been under a stir due to this COVID or Corona since March itself in which some of the other countries were entering into lockdown in different phases. Even two days before the opening of the tender, Integral Coach Factory (ICF) called a pre-bid through a video conference and was participated by all the big companies like us, Titagarh Wagons, Siemens, Alstom and Bombardier among others. And, each of them said that we will not be able to bid for the tender at this point or time. They asked to provide a few weeks so that they can prepare a good bid for the same as it is an important bid. But in the view of its timelines, the railways didn’t forward the due date for the bid due to which limited bids were made for it. But, I would like to confirm on behalf of our company that we possess this technology - propulsion system and bogies of trains like Vande Bharat - at our end. We are interested in and committed to developing such trains under Make in India if such an opportunity is provided to us. 

Q: You recently bought out your JV partner's 50% stake in the JV MTBPL and made it a wholly-owned subsidiary. What was the rationale for this move? What benefits does it accrue for you?

A: We formed a joint venture of 50:50 with a company named Matiere, in which Matiere was a technology provider partner for us in the JV. Under the JV, we were manufacturing modular steel bridges – both permanent bridges and semi-permanent bridges. But, we felt that the 50:50 joint venture was not a very effective way and that’s why we converted it into a technology license agreement. The relationship that we shared with them is intact it has become even stronger. We have bought those shares and converted into a 100% owned subsidiary. We are also providing technology license to them and also buying certain components from them. We believe that these 

We have active business orders worth Rs 100 crores, which are either signed or are under signature or have reached the final stage of negotiations. We also executed business worth Rs 70-80 crore in the World Bank-funded list of Nepal, last year. I believe that bridge business is very attractive because the time for construction of bridges has shortened up to a great extent worldwide but it hasn’t happened in India due to concrete bridges. These bridges will not replace the concrete bridges but will complement it. That’s why I think it can become an important part of Titagarh’s top line and the bottom line. Turning it into a 100% subsidiary will give an end to the day-to-day difference in opinions between the two. 

Q: You have also signed a pact with ABB to make Railway Propulsion systems in India. What kind of investments will be made in it and what kind of orders do you expect for this? What will be the mail clientele for these orders?

A: We have signed an agreement with ABB for EMU/ MEMU propulsion. We also manufacture EMU/ MEMU and Indian railways will be our main clientele. The interesting part in this is that we would have extended the agreement with ABB and taken it to Vande Bharat propulsion if we would have got time to prepare for the tender. 

ABB is a global leader of technology and has played an important role in propulsion in the global railway business. We also have our propulsion, designing and manufacturing facility in Italy but we want to strengthen it by engaging with ABB. And, we have already in India started creating a propulsion manufacturing facility in Uttarpara works. We have a developmental order of propulsion of around Rs 60-70 crore. But this, EMU/ MEMU and locomotive propulsion is big annual business. We have plans to use our propulsion in the metro coaches that we are manufacturing similarly as we use our propulsion in metro coaches of Italy. However, we have used Mitsubishi’s propulsion in the coaches of Pune metro in India. We have a plan and target to use our propulsion in the next 2-3 years to ensure that the cost of the metro coach comes down so that we can turn Atmanirbhar (self-reliant) in true sense. It will also create a great difference in the costs of the metro coaches 

It will cause advantage (i) a big difference in the prices of metro coaches will be created. The eligibility criteria created by the previous governments’ were quite restricted. However, the government has encouraged manufacturing a lot since the launch of the ‘Make in India’ policy and ‘Amtmanirbhar Bharat’ policy and we are a product of the same. If they wouldn’t have relaxed the norms and haven’t permitted Indian companies then we would have not been able to reach at the high-end of the value chain or to the higher spectrum of the value chain. And propulsion manufacturing is a step forward in that direction.

Q: Where does your order book stand currently? Do you see any spike in it in the coming quarters, if yes, then where it can reach by the end of the year? 

A: We haven’t received too many orders in the last few months due to the lockdown as tenders have not been finalized yet. Works were started several times in the railway board but were stopped for sanitization purposes due to the emergence of certain COVID cases and so on. 

Our last declared order book that announced with December quarter results and it stands at Rs 2,500 crore for India and Rs 4,500 to Rs 5,000 crore globally. As far as Indian business is concerned then there are three-four clear lines of businesses. Wagons in which the last year’s tender is under finalization and I feel that it will be finalized in the next few days, which means we will have some orders from it. The dedicated freight corridor orders are likely to be finalized by the end of this year. It is a healthy business. I am quite bullish about metro and private train businesses because they are a new business in which very few Indian companies qualify in it and they are those who have such technology with them. We are focusing a lot on it and propulsion is involved in it. Besides, we will also have a focus on bridges and defence. Much has not happened in Defense but it seems that new tenders will be out soon. However, the main focus will be on railways both passenger sides, i.e. passenger and metro trains, and wagon and wagon components.

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Q: You had plans to be debt-free by the end of FY21? Is that on track or has COVID lockdown delayed it?

A: So far, we expect that we should be net debt free in FY21 and have worked a lot in this direction and taken a lot of steps. Of course, COVID has been a big setback but we will try to get net debt-free by March 31, 2021, it may go up by a few months. At the same time, I would like to make clear that I am talking at Indian level and it doesn’t include the Italian subsidiary and its debt will be serviced by the subsidiary itself and it has nothing to do with the Indian entity.