Setting up of Rail Development Authority may lead to more orders: Titagarh Wagons

Below is the verbatim transcript of the interview.

Ekta: Eventually how would you be a potential beneficiary because this particular Rail Development Authority (RDA) is going to focus on regulation of tariffs which eventually would improve the financials and hopefully there would be more wagon orders for you all. What is your thought?

A: We have not been able to understand exactly the details of what this Rail Development Authority will do but we understand is that it is basically the regulator that has been spoken to by every government or every ministry in the last almost 17 years and if you know that Rakesh Mohan Committee in 2001 had actually recommended that there needs to be a regulator for allowing open access, for setting up of the tariffs, for reducing the cross-subsidisation, for making the freight loading more market oriented rather than regulation oriented and that is what this RDA is supposed to do.

Therefore, if my assumption is correct then this is going to be a game changer for the railways because I have always been saying that the railways have concentrated in the last two-two and a half years fantastically in creating capacity and now the focus needs to be in utilising capacity.

Utilising capacity by railways themselves is not going to be feasible enough; they need to have private participation and for that there needs to be an independent level playing field. So, if you really put all the entire pieces of the puzzle together, it is going to be very interesting thing and something that the industry has been waiting for 17 years.

Prashant: How does it link back to you as a company, I mean to wagon ordering, tendering etc.

A: It is actually directly linking to us because in Titagarh itself, in our best period we had between 2007 and 2010-2011 almost 60-70 percent of our total wagon orders were coming from private sector. That had completely dried down because railways on one side a facility provider or infrastructure provider to the private operators and we know the conditions of these container train operators that they had to go through so much of issues and on the other side they were also competitors.

So, with this independent regulatory authority or rail development authority coming in, I presume that the business of the rail operators, the third party logistic operators on rail will increase and will be much better and that would directly mean more wagon orders.

Ekta: Right now how much is yours total order book, how much is from the railways because last time we spoke to you I think the total order book was Rs 2,700 and railways was only around Rs 100 crore?

A: That is absolutely right; the order book really doesn’t change too much. In January what we had announced, I can’t give you the update but based on the last announced order book it was around Rs 2,700-3,000 crore but bulk of it was coming from the passengers segment, from the overseas subsidiaries etc, and Indian railway orders were not very large. So we were expecting that on one side the Indian railways will start buying wagons but what will happen with this RDA is that the private sector buying will improve a lot.