The central government has slowed new orders for the Train Collision Avoidance System (TCAS) aka Kavach in the past few months as the Indian Railways looks for other options to the indigenous system, Vimal Kejriwal, MD & CEO of KEC International, told Moneycontrol.
"The Indian Railways is looking at alternative train protection systems and is testing them out as well, which is why orders for Kavach systems have slowed," Kejriwal said. He said the Kavach manufacturing capacity in India is limited due to which completion of past orders is taking time.
Only three vendors - Medha Servo Drives, HBL Power Systems, and Kernex Microsystems have the rights to deploy Kavach on Indian Railway tracks. KEC International, the flagship company of the RPG Group, has tied up with Kernex Micro to provide cutting-edge Kavach systems. Last year, the company got two orders for the Kavach system worth Rs 600 crore.
Kejriwal said he expects the next government to come out with orders for more Kavach systems, but they will have to consider ways to boost manufacturing in the country.
Tenders for the installation of Kavach systems over 3,000 km were awarded in December 2022 and the railway minister said that tenders for another 2,500 km would be awarded soon, but they have not materialised.
Effective safety measure
Railway minister Ashwini Vaishnaw also said that close to 2,000 km of railway lines have the Kavach system installed, and the aim is to extend this safety measure to at least 5,000 km of tracks over three years.
Kavach is an automatic train protection system developed by the Research Design and Standards Organisation in collaboration with the Indian industry. According to the Indian Railways, it is a cost-effective Safety Integrity Level 4 certified technology.
Kavach uses electronic devices installed in locomotives, signalling systems and on the tracks to control the brakes of trains and alert drivers, based on programmed parameters. If a train exceeds a designated speed limit and the driver fails to intervene, the system automatically engages the train's braking mechanism.
The Indian Railways asserts that Kavach effectively prevents collisions between two trains equipped with this operational safety feature.
Kejriwal said that he expects the Indian Railways to focus more on infrastructure orders in FY25. In railways, the focus of the government is expected to shift towards conventional infrastructure development, the company said in an investor presentation.
"Once the new government comes in, our view is that the railways will now start focusing more on infrastructure build, which would mean more tracks, upgrading signal, speed degradation," Kejriwal said, adding that once the new tenders start coming in, KEC's order pipeline will improve.
Railway projects accounted for 11 per cent of KEC's Rs 29,644 crore order book on March 31.
Kejriwal said he does not see a slowdown in orders from Saudi Arabia or the United Arab Emirates due to the conflicts in West Asia.
"I don't think we have seen any slowdown, at least in these two large countries, which is where we operate. In the last two or three months, we have seen a significant number of new tenders coming in and also tenders being quoted," Kejriwal said.
Capital expenditure
He said private sector capital expenditure has started coming in from metals, mining, steel, cement, and data centres.
"We have started seeing a lot more inquiries on the private side. It is better than, let's say, the first six months of FY24. We got a couple of orders also from industries. The major orders are still coming in from metals and mining," Kejriwal said.
Kejriwal expects private sector capital expenditure to get a boost following the Lok Sabha elections, which end on June 1. He said the company's civil works division is set to benefit from the residential housing segment.
"On the residential side, there are a huge number of inquiries. So, I think the way things are going, probably residential sector will become my biggest segment in civil," Kejriwal said.
Kejriwal said there's a large opportunity in cable manufacturing in India and the government should look to boost cable manufacturing in line with infrastructure expansion.
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