Production now normal post fire incident: Titagarh Wagons

Titagarh Wagons had a fire last quarter and there production suffered. In an interview to CNBC-TV18, JP Chowdhary, Chairman of Titagarh Wagons informed that the fire was a temporary aberration and it did not affect them in a major way.

"Fire was in a godown which was isolated from the factory. The reason is the shortage of inputs like wheel sets was that railways have one factory that produces wheel sets and they had some maintenance issues. Thus, they could not meet the entire demand for the industry," says Chowdhary. Also read: Steel division to perform better going forward: Gujarat NRE Talking about the flow or orders in the FY13, he said that the current year was a little sluggish, compared to the expectations and the potential of this sector. Below is the edited transcript of his interview to CNBC-TV18 Q: What percentage of your revenues come from orders from the railways itself? How was the flow or orders in the current year FY13? A: The current year was a little sluggish compared to the expectations and the potential of this sector. However, now that the railways have started on a bold path of putting their finances right, we expect things will improve substantially. Q: In terms of order inflows in the last year how exactly has it been from the railways?  How much are you executing at this point in time if you are executing any amount of orders? A: The railways introduced some new designs of railway wagons which took sometime to finalize. That affected the performance of the industry in the first part of the year. However, things are now picking up, the deliveries are picking up. Orders were almost at the same level. The potential was for the orders to grow. Now we expect things to be much more improved and much more positive. Q: You had a fire last quarter and your production of wagons suffered. Are things back in order and in the third quarter how many wagons could you produce? A: Things are much, much better. Our production is now not the bottleneck. We can produce quite substantial number of wagons. The fire was a temporary aberration. It did not affect us in a major way. It was in a godown which was isolated from the factory. So, that was not the reason. The reason is the shortage of certain inputs like wheel sets. Railways have one factory that produces wheel sets. They were having some maintenance issues and they could not meet the entire demand for the industry. The production is now good. _PAGEBREAK_ Q: Are the wheel sets an in-house unit? A: Yes, it is an in-house unit, a department of the railways. Q: What exactly does your order backlog stand at? What can we see in terms of earnings for the remaining part of the fiscal? For FY13 how much do you think Titagarh Wagons can do based on your current order book? A: The first part of this year was quite sluggish because of the new design of wagons that we had introduced. Also the industry had taken a little amount of downturn in production because of the finalization issues. Now the issues are related to some input, but barring that we expect that to be absolutely normal in the coming period. Maybe the year as a whole may not be as good in performance as it was last year. Q: You said that orders from railways were more sluggish than usual. What is the money that they normally set aside for wagons and how was it this time? A: I will not be able to tell you, because that all depends on the type of wagons that they procure. However, in terms of numbers they procure between 20,000-25,000 wagons in a year. With the economy growing in the last five years, we expected that the demand for wagons will also jump up. It has not jumped in the same expectation as far as the railways are concerned, but here are some export orders. Our company has been very aggressive in the export marketing. We have been able to execute some good orders from overseas markets also. Q: What is the percentage of non-Indian Railway orders you execute? What percentage of your revenues are not dependent on Indian Railways? A: In the coming period we expect about 20-25 percent to be non-railway revenue Q: How margins are panned out? Did you feel the pressure of any expensive raw material or was it on the contrary a little easier in terms of raw material prices? A: There is a lot of competition in the industry. One has to be very efficient. This is a process which the industry also welcomes. There should be a healthy competition within the industry. The margins are not comfortable, the margins are under pressure. However, those units which are efficient can tackle this situation.