The last word Titagarh’s French division to spur growth


Titagarh Wagons, India, is eyeing opportunities for growth in both domestic and overseas markets. Vice chairman and managing director Umesh Chowdhary outlined the company’s future strategy to Kevin Smith in Delhi.


freight infrastructure, epitomised by the Dedicated Freight Corridors (DFCs) (IRJ March p18), is a potentially lucrative opportunity for domestic suppliers, including Titagarh Wagons.


I Mr Umesh Chowdhary,


Titagarh Wagons’ vice chairman and managing director, told IRJ at the International Heavy Haul Association conference in Delhi in February, that his company is watching developments very closely. “The DFCs will change the face of Indian Railways (IR) and the wagon manufacturing segment of our business,” Chowdhary says. “We have a huge database of products from our French operations which have the potential to have a big impact on what we could supply the new lines.” Specifically Chowdhary says


that French designs for grain and tank wagons, which the company acquired following its purchase of Arbel Fauvet Rail (AFR) in 2010, could be adapted to India, while his company is in talks with car manufacturers about developing new wagons for use on the lines. “They are extremely


interested in what we could provide,” he says. “Currently automotive traffic accounts for less than 3% of railfreight transport, but this could rise to 25-30% once the DFCs open. This is a huge opportunity.” In India Titagarh has capacity to produce 10,000 wagons per year at three factories across two companies: Titagarh Wagons and Cimmco. It has a steel casting capacity of 30,000-35,000 tonnes and manufactures bogies, couplers, and draft gears, as well as container wagons. While the DFCs offer substantial future


opportunities, Chowdhary 52


NDIA’s substantial upcoming investment in


“The DFCs will change the face of Indian Railways (IR) and the wagon manufacturing segment of our business.” Umesh Chowdhary


one way of overcoming this disadvantage and has saved É500,000 in heating costs alone.


Another is refocusing efforts on securing orders for higher- yielding products such as grain, cement and aggregate wagons which bring in 50-70% more than petroleum tank wagons. Sourcing components from India, particularly steel, is also proving successful in reducing manufacturing costs. Chowdhary hopes TWAFR


said in an interview with CNBC on February 26 that delays in orders from the domestic market has hit its current margins. And with further delays expected in 2013, and additional revenues from rail fare and tariff increases allocated towards long-term capacity enhancements, he expects only marginal market growth in the near future.


Further afield


With the domestic market seemingly stagnant, Titagarh is looking further afield and has already sold wagons to Myanmar, Bangladesh and countries in Africa. “We see big opportunities


in Africa, particularly in the Francophone areas, as well as in Europe,” he says. European activities are conducted through its Titagarh Wagons Arbel Fauvet Rail (TWAFR) subsidiary, a company which Chowdhary says was bankrupt when Titagarh took it over in July 2010, but is now once again on the road to becoming a profit making entity. Titagarh actually worked with AFR on a joint wagon design project in 2008, and it was from this collaboration that Titagarh noticed that if managed properly, the company’s intellectual property would be


of great benefit to an emerging market wagon manufacturer. Chowdhary says that since


the É15m takeover, É2m of which was for the company’s assets, TWAFR has received orders worth É150m from clients in Switzerland, Germany and France, including a É39m order from French National Railways (SNCF) for 400 hopper wagons which was announced on March 13. TWAFR is relying on its advanced models and design capabilities to compete in the European market with products such as its AFR-22 lightweight bogie. It has more than doubled the number of employees at its Douai plant in northern France from 85 to 220 since the takeover. However, Titagarh still has to overcome the challenges which were undermining AFR and resulted in it losing É19m in the year prior to the sale. In particular TWAFR is at a financial disadvantage from its competitors, which are mostly situated in Eastern Europe and pay employees around É1500 per month, substantially less than the É2000-2200 plus social security of up to 50% which TWAFR’s French employees receive. Streamlining the manufacturing process to concentrate work sites and production units into a single area in the factory is


will record its first profit this year as production capacity ramps up. “Current capacity at the plant is for 400 wagons in 2013, and we hope to increase this to 600 in 2014,” he says. In addition to wagons,


Titagarh manufactures passenger coaches, and secured its first order from IR in 2007. Titagarh Trains was


subsequently established as a subsidiary responsible for manufacturing passenger coaches and Chowdhary says separating this sector is allowing it to develop independently. The company also manufactures emus, securing an order for 30 trains from IR in 2008, and Chowdhary hopes it will produce 50 trains per year at its plant in Kolkata. “We are gradually expanding the range of products we offer, including expanding into the metro sector due to demand in the domestic market,” Chowdhary says, adding that the company is open to working with strategic partners to support this venture and develop this side of the business. “We are not a novice in this field and we can certainly bring some value to the table for any party that might want to work with us,” he says. “However, there needs to be value for both parties in this arrangement. It can’t be one- way traffic.” IRJ


IRJ April 2013


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