Aim to maintain 13-15% EBITDA margin: Titagarh Wagons

Latha: I know your numbers are not comparable so you have to tell us how good your numbers are, net sales of Rs 103 crore?

A: We lost in one of our plants, in wagons manufacturing plant we lost about a month of revenue in this quarter, so the numbers are not comparable on two counts. Number one, one of the wagons manufacturing plants operated only two months. Secondly, on the other side that is not comparable because large corresponding quarters the order book intakes particularly from the private sector and railways which is not there. So, we had mentioned at that time that we are hoping things will improve.

Things have started showing the positive trend so there are privates wagon orders that have started coming in. The other segment that is our coach business to some extent has started, defense has started so now I believe that the business cycle which we were hoping that would start turning around we can see some green shoots over there.

Latha: What is your order book? How much better is it?A: The private sides of the wagon orders have improved quite substantially. The orders if we compared to the last three and a year they were no orders coming across. In the last three years the quantum of orders that we booked we would have booked at least 3 or 4 times in the last three months.Sonia: So interms of margins, going forward in Q4 what are the average adjusted margins that the company could deliver?A: From the wagon contract of last year it was an onerous contract and we took a hit last quarter. So the margins and the Indian railway wagon contract were not healthy. However, as I have always maintained on an average side I would say between all our businesses combine our target EBITDA margins are between 13-15 percent. We are hopeful that we will be able to maintain the same kind of margin levels.

Latha: Your nine months profits stands at only Rs 1.7 crore?A: That is because of our extra ordinary loss of Rs 15-16 crore that we had to take on account of that onerous contract that I just mentioned about. If you really look at the first six months sales also it is not been that great and that is the issue that not only the last six months the first six months of this current financial year but even if you look at the last 6 or 8 quarters the company has been struggling on account of low orders flow. Essentially what we were able to do in the last two and a half years if all our facilities whether it is the foundry, whether it is the coach, the defense or the wagon we have kept that up in readiness for the business cycle to turn. So we are hoping that the business cycle turns, we are expecting good Railway Budget this year. Lot of expectations are there and if that happens then we can really start sweating all the assets that we have created over the last several years. Latha: Is it possible to have something like a capacity utilisation number? A: It is quite dismal if you look at last year we did hardly about less than a thousand wagons as against the capacity of about 6,500-7,000 in Titagarh and about 2,400 in Cimmco so peak year which is like say to 2008-2009 or so we were doing already about 4,500 wagons. The capacity that we can go between Titagarh and Cimmco the assets capacity of the Indian Railways is 8,400 wagons which is one of the largest capacities that they have allocated to any Indian company.

Latha: In this quarter how much do you think your revenues can be in the January-March quarter again another Rs 100-110 crore or could you do better?A: I would not make any forward looking commitment here but yes we are hoping that the trend of improvement should carry on may be not in the comparative because the base number was lower in the corresponding quarter so from 30 we have gone to 107 so we do not expect that kind of a growth happening. However, we do expect that we should be able to do better in successive quarters going forward Sonia: How much of your business comes form exports and what is the performance been over there?A: Exports historically has not been a very large chunk. However, this year we have got some export orders and as I had mentioned last time that we are focusing on the export markets. Primarily trying to work very closely with our French subsidiary and use the marketing network and branding of the French subsidiary to get into the African market. I am hopeful that the order inflow from the export side will increase quite substantially in the coming fiscal. However, this year we would have ended up doing about Rs 40-50 crore worth of exports.