I just wanted to know our full year revenue guidance and our long-term revenue guidance for the company.
So, we do not give any revenue guidance per se on the company long-term, but what we have mentioned in the guidance note that has been issued alongside with the results, is the freight business of the company we expect in the current year to remain in line with what we have done last year. So, we do not expect any significant growth on the freight side. But on the passenger side, what we had done was 12 cars in metros and about 300 traction motors in the full year in the propulsion. And we are expecting this year to grow that 12 cars to 120 cars, which is a ten-fold jump. And the propulsion system also we are expecting to have a significant jump as we have already disclosed in our press note. In terms of the long-term potential, the first phase expansion of our passenger coach plant will take this capacity, which we expect to reach maybe in the next year or end of next financial year to about 50 cars per month between Vande Bharat and metros subsequently increased to about 72 cars a month in another two to three quarters thereafter. And the long-term target for the passenger is to reach 100 cars per month, which we expect to reach in about three to four years' time, particularly with the acquisition of the new facility or the new asset that we have acquired. As far as the wagon is concerned, our capacity is now between the Calcutta unit and the Bharatpur unit is at about 1,000 to 1,200 wagons. And the business volume that we expect should be in the vicinity of about 900 to 1,000 wagons per month till the new power plants which have been planned, come up or the substantive growth in the railway freight revenue goes, which we expect also should happen once the overall CAPEX of the railways develops and all the DFCs start operations. But till that time, we expect that we will be able to maintain the current run rate of between 900 plus/minus something.
And sir, this 120 metro cars target that we have, out of that, will it be possible to bifurcate how much is from Bangalore metro and how much is from Gujarat?
We would not be able to do that for competitive reasons, but in terms of the overall numbers, because that is very important in the current phase of the company, what is important is to see the ramp up. And if we are able to do which we are very, very hopeful and confident of being able to do 120 cars, that in itself with the Mumbai line having come and with the Gujarat Metro and the Vande Bharat and all of that, is a clear indication of how the company's PRS can scale up. As is well known, the metro coach sells at about 11 crores a piece. And the capacity that is being created once that is operationalized and stabilized, that completely changes the dynamics of the overall company as such.
My first question is around the dispatch of nine coaches which has been done in this quarter. Can you let us know for which metro project was this done for?
We do not disclose the customer name for competitive reasons. But we have disclosed that our first rake was flagged off by the Hon'ble Prime Minister day before yesterday, and some of you may have also seen the visuals wherein it was a moment of pride for the company to see that the Titagarh name was prominently displayed where the Prime Minister was flagging off the coach.
All right. So, from the government's order perspective, we are not seeing any slowdown as such, the orders are flowing in well?
So, the orders for the passenger side have been very robust. For the freight, as I had mentioned earlier also, the small tenders from the railways and private sectors are continuously coming. The large tenders were to be done on a three-year basis. So, the last one was done about three years ago. And we are expecting or I would say in all probability, the railway should come back with their renewed demand somewhere this year.
And secondly, on the shipbuilding business, what sort of a vision do we have in that segment, what sort of a business are we looking at creating?
That is a very interesting segment. So, what we have declared in our press release also that the facility that we are creating in Palta, we would have a capacity to do around 12 to 14 or 14 to 16 vessels per year of up to 150-160 meters. And that is quite significant in terms of the facility that this company, this SPV will create, we would like to do all sorts of ships, including all sorts of naval ships and other ships. And while the details of this project or the business plan of this project will be issued in due time, we believe, considering the number of policies that the government has come out with on the shipbuilding sector, and also based on interaction that we have had with the various departments of the government, the government has clearly identified shipbuilding or specialized shipbuilding, particularly as a very core niche sector for the country's development and growth.
Just wanted to have a clarity, that is from Q2 FY26 onwards, do we exactly plan to deliver on our metro orders? I mean, if you could help us understand by when we will be completing the Bangalore Metro and how the revenue will reflect for other metro orders in our books of accounts?
So, as I mentioned, sir, for competitive reasons, we cannot really give customer-wise bifurcation, but we can give the overall plan production and dispatch targets, which is for the current year, we are targeting and we are expecting to deliver 120 cars. This will be a mix of both Bangalore and Gujarat, which is Ahmedabad and Surat, because these are the two contracts that are being executed, which will be followed by the Mumbai and the Pune option clause.
Sir, you told us that we are in a signaling system. So, are we into kavach system also? And our turnover for FY27 and FY28 total?
We are not into kavach system as of now, sir. We do not give any forward-looking projections of that nature. We have given quantitative projections in our press note, sir.
So, I just want to clarify regarding your Vande Bharat sleeper train prototype that you have some comments regarding expected by Q2 of 2027. So, how is the company mitigating potential delays especially given the complexity of the design and manufacturing lines on this site?
So, we have a very robust system of monitoring, sir, and project management. We have a full team which is working on that. And in a project of this, it also involves many things, many, many, let us say, steps that have to be taken by the counterpart, which is the railways. They have to be very closely managed and dealt with the customer themselves. So, as of now, we are not expecting any delays from the schedule that we have shared in our presentation.
So, my first question would be just to understand the long-term strategic goals for Titagarh Naval Systems Private Limited following the transfer of the shipbuilding business. Like, is the company actively considering external investors or strategic partnership to scale the operations?
Yes, thank you very much for your question. So, as far as the shipbuilding business or the naval business is concerned, we have very clearly mentioned and would like to restate that we are open to all sorts of options, both in terms of strategic partnerships or joint ventures, primarily in order to capture the growth potential and the opportunities in this segment. And as we go along, this will be defined in terms of the timeline for the defense and what we exactly intend to do, that is what the board committee has been constituted for. And we expect that over the next maybe two to three months time, we will be able to have the final deliberation, and then, of course, subject to the approval of the board, we will communicate the final outcome to yourself as well as to the markets.
So, with the new land acquisition in Uttarpara, could you just provide the timeline for full operationalization of that extended facilities, that is including the 1.6 kilometer test track, and what would be the investment that is required?
We just acquired this land maybe two to three weeks ago, and we have already started the working on that. And once the entire plan is finalized, we will definitely announce it. In terms of the timeline for implementation, we expect to do it in phases. As I had mentioned, the phase of production increase as well as backward integration and the test track. So, all of that we will share in due course of time. But I can share that we will be moving very fast, particularly for the phase-I, wherein the immediate requirement of the test track and the expansion in order to achieve the current first level of targeted production for 50 cars a month, which is 25 metros and 25 Vande Bharat, we are targeting to implement that within the next 12-months.
And my second question is related to the order book that we have on the wagon side of roughly 10,700-odd wagons. So, if you could provide a rough mix between the share of Indian railways and private orders?
I do not think we normally share that due to competitive reasons, and whatever the data has been given in our investor presentation is what I can share at this point of time.
The propulsion that we co-develop with ABB, are we going to use the same for our Gujarat Metro projects and the Mumbai Line 6 as well?
Mumbai Line 6, we have just received the LoA about just less than 10 days ago. So, we are still evaluating what exactly we will be doing as far as that is concerned. But Gujarat Metro, the propulsion that we are using is a mixture. So, the TCMS is something that we have acquired the transfer of technology from ABB, and the traction converter is something that we are buying from them.
Wanted to get your views on wagon tendering, both from Indian railways and private sector, while obviously private sector, I mean, we have seen small size orders both from private sector and Indian railways, but do we expect any large size tender from Indian railways? And if yes, I mean, when do we expect that -- will it come in FY26 or there is a possibility that it may shift to FY27?
So, we are, Parvez, seeing a lot of small tenders being floated by the railways and by the private sector alike. And there is of late a good flow of enquiries and traction from various private sector customers or potential customers for wagons. As far as the large tender is concerned, this is something which is very difficult to predict. But based on our expectations and assessment, hoping that the tender should get issued by end of this financial year or beginning of next financial year. I would say more we hope that it should come towards the end of this financial year. But that is something which is only something which we can assume. And ultimately, this is a decision that follows many aspects or many considerations of the government.
The first question was regarding the wheel set issue that we have faced. You say that it has been resolved. So, from August onwards, can we expect 900 to 1,000 wagons per month volume that you have added?
So, the wheel set problem has been resolved, in fact, from the last week of July, first week of August. We expect to now produce in the vicinity of 900 wagons a year. As we have given in the press note, we would be able to reach the same numbers or maybe make a marginal improvement over last year. And in order to do that, we should be producing in a ballpark of 900 wagons plus/minus 50 wagons every month and we are confident of being able to do that.
And the second question is regarding the margins in the passenger wagon segment. So, is it so that the margin for propulsion is better than the margin for cars or nothing like that?
No, propulsion is a higher margin business, sir. We have always maintained that propulsion is a higher margin business. But of course, right now, it is in a nascent stage. As I have always explained that it is only the operational leverage that is not available. Once we start delivering a certain volume, then the margins that we should be able to get in both operations as well as services should be significantly more than what we should be able to get in the rolling stock.
Okay. And lastly, you have done nine coaches in this first quarter and you are expecting to complete 120 coaches by end of this financial year, which is about 111 coaches in the rest of the year. So, that is about 12 coaches per month that you will be doing and that will be around, I think, close to 50% capacity utilization. So, what is driving this change -- is it the operationalization of the new plant or is the ramp up of your facilities, if you can give some sense on that?
It is a host of that, sir. So, it will not be on an equated basis, I mean, it is not going to be an average run rate. It is going to be ramped up. So, it is not going to be on every quarter the same. The idea is that every quarter there has to be an improvement versus the previous one. As we have written also, that it marks the beginning for the stainless steel coach production of Titagarh, so our entire stainless steel production line is now fully operational. And that in itself is going to be the game changer for us.
So, I want to understand how the order pipeline scenario is looking in the next nine months, both in the freight railway systems and the passenger rail systems, what sort of demand are we looking at?
Yes, good afternoon, sir. So, we have already given some details about the order book that we have. And you can see that for the Vande Bharat, we have a very healthy order book. For the metro, because of the development time, we are looking at booking further orders, although we have about 440-odd coaches in order with us now. But we have participated and we are continuing to participate in additional tenders to get further metro business. And the same is the story with the propulsion. While we have some orders, we have an order book of about Rs.550-odd crores in the propulsion, which in itself is a very big thing because all these businesses combined were contributing to less than single digit in terms of the past revenues of the company. As far as the freight business is concerned, we have declared an order book which is outstanding order book of about 10,500 wagons. And continuously, during the quarter also, we booked an order of about 900 or close to 900 wagons. And we believe that considering the overall cost advantage and the policy of the government to move the transportation from road to rail, the wagon tenders should be issued somewhere this year.
So, a couple of questions from my side on the passenger business. So, we mentioned in a press release that we expect the dispatch of Ahmedabad Metro coaches to start in Q3. So, by when do we expect to kind of complete this order -- will it be in one year or will it be slightly longer?
Yes, hi Parvez. So, yes, we will complete it within a year because Ahmedabad is only 30 cars. So, we have already started the production of two trains, that is six cars, and we will deliver the two trains one after the other in Q3, Q4 timeframe, and thereafter, we intend to deliver, maybe two to three trains in a month and complete this. So, yes, to answer your question, we expect that based on the delivery timelines of the contract, once we start the delivery, we should be able to complete it in about a year to 16 months time, both Ahmedabad and Surat.
For the Mumbai Metro Line 6 order that we have recently received for 108 coaches, the execution timeframe is I think about 24-odd months. So, from when does this 24-month start?
It started on the 2nd of August, the day we received the LoA.
And lastly, Pune Metro, the additional order that we got is scheduled to be delivered in 30-odd months. So, when do we expect delivery of that to start?
So, it starts in 24 months. That is another significant thing. I am sorry, I missed that in my opening comments. Thank you very much for asking this question. So, the Pune repeat order that we have received during this period is a very significant development for two reasons. Number one, it kind of establishes the confidence of the customer on the company. To receive a repeat order is always a kind of validation of confidence. And the second is that these are aluminum coaches. So, what we have gone ahead this time and done is, we have used this order to set up our complete aluminum manufacturing lines. As you may be aware that in the past, we were getting the flat packs from our associate in Italy and we were doing the final assembly of the aluminum coaches in Calcutta. But with this order, we have already now placed the order. And in fact, as a matter of fact, the equipments are already on the high seas and they should be arriving within this month for making the complete aluminum coaches in Calcutta. This would make us the only company in India to have both aluminum and stainless-steel manufacturing, complete manufacturing facilities. To answer your question, that the first train for Pune under the auction should get delivered between 18 to 24 months and complete thereafter within the next six to nine months.
So, sir, as we expect our first prototype of Vande Bharat to be ready by Q2 FY27, is it subject to approval after that from Indian railways?
So, there is a concurrent approval process, sir. And as a matter of fact, we had the delegation from the railways headed by the concerned member even today, which is there in our social media. So, this is a concurrent approval process. And then after the train is delivered, it has to go through an oscillation trial. This is a very standard process. So, the terms of the contract is that once the prototype is delivered, in two months thereafter, we have to deliver the second prototype. And thereafter, in two or three months, something like that, we can start the regular production and dispatches. That is the time that is normally required for the oscillation trials.
So, basically, we can expect the regular production of Vande Bharat from Q4 FY27, and that is around 20 to 25 cars as guided earlier per month?
That is after we submit the two prototypes. Yes. So, 20 to 25 cars per month goes in a phase. The delivery schedule of the contract is the first year we have to deliver them eight trains, then 12 trains, then 16, and then 25 trains per year.
So, I think earlier in one of our calls, you had alluded that in the Vande Bharat and the metro coaches, we will be doing somewhere margins of around 8% to 10%, right, and propulsion will be significantly higher, almost around 16% to 18%. So, is my understanding right?
So, on a metro, I had mentioned that the margins are similar to the one in the freight business, which is between 10%, 12%. And then of course the operating leverage comes in. So, being a nascent business, we do expect that we will only be able to improve upon this as we go along. And as far as the propulsion is concerned, you are absolutely right. It is between 15% to 20% of margin. Again, this is something that we will be able to achieve once we are able to achieve the desired volumes, which we are ramping up and we should be getting to each one of the targets over the next, I would say in different aspects, in different quarters, but on an overall basis, between the next four to six quarters, we should be able to stabilize all the SBUs significantly.
What would be the break-even volume at which we should be able to manage these margins, like what capacity we need to function to be able to consistently clock a double-digit margin? And similarly on the propulsion side, what would be the break-even volume?
So, I had mentioned this earlier in the last call also, once we are able to reach between 15 to 20 cars production, we should be able to get the optimum margin. And thereafter, the operating leverage or advantage once we add on the volume, will only improve the margin from there. As far as propulsion is concerned, there are different business segments. The traction motor, we should be able to get that at about 120 to 150, which we have almost reached now. So, at 150 traction motor a month, which we are expecting to, and we have mentioned this in our press release also, by end of this year, we should be able to stabilize at 150 traction motors a month, that is 450 traction motors a year, we should be able to get to the desired margin. As far as propulsion is concerned, which is the propulsion system, we should be able to do that between one to one and a half rakes a month, and of course, our target is to get to two rakes a month.
Good afternoon, sir. My first question is basically on the wheels. Sir, the wheels were owned by a different factory. What is its status now? How much will we manufacture per year? And will we give it to the railways or will we keep it for our own use?
Sir, the status of our wheels, which we have also given in our press release, that this trial production will be Q4 this year or Q1 next year. That is, between January to June, it will get stabilized, the trial production. And the total capacity that we are envisaging in that unit will be about 220,000 wheels. We have an assured offtake of 80,000 wheels from the railways. And we can use the rest and we can sell it to people as well.
There is one news which is coming out, which is the risk of losing Rs.173 crores linked with Italian subsidiary, Firema. Can you clarify this?
Sure, sir. This is the investment that we have made in our Italian associate, Firema. And we have given the disclosure both in our press note as well as in our results, both March and in June, that Firema has been facing certain challenges, financial and operational challenges. As is well known that we had invested into Firema and initially acquired it as a 100% subsidiary and subsequently, it became a jointly owned company between us and the government of Italy, where the government of Italy also along with the other investors. So, government of Italy owns about 30%, other investors also own certain percentage. And it seems to be a subsidiary of the company and it remains as an associate. So, the standing value of investment is the value which has been disclosed in our financial results. Over a period of time, the primary purpose or the goal of acquiring technology credentials and setting up our passenger rail system business has already been achieved. And today, the company is fully independent in terms of the passenger rail system business and able to execute the orders with no support required from Firema. The company Firema is now under what is called a CNC process. And we are inactive. The company is in active dialogue through the ministry to explore if the government can either enhance their stake or there can be other equity investors. So, this is a situation which is uncertain. And therefore, clarity should emerge on that by the end of this calendar year or Q3 or Q4 of this financial year. The amount which has been disclosed in the results is the amount which has already been invested in the past by the company. So, there is no cash loss or potential cash loss.
Have you mentioned the land acquired by the company from the government, right? So, could you just clarify that what is the purpose of the land and how it is going to be utilized?
I have already mentioned this in my opening comments, sir, is that this is the land which is contiguous to our existing passenger rail system factory. In fact, as I mentioned that it is just the boundary wall had to be removed in order to take possession of the land. And this is going to be used for expanding both the production as well as backward integration, but more importantly, the testing and commissioning of rakes that are going to be produced in the passenger rail system. We have acquired this land, which is about 40-acres in size on a total payment of around Rs.136 crores or Rs.137 crores to the government.
I have two questions. One is related to the CAPEX that we would incur for this financial year and FY27. While we do understand that we would do a CAPEX of around Rs.140-odd crores for the land, but in terms of capacity addition, any additional CAPEX do we assign here?
Yes. Hi, Pranjal. So, yes, Rs.140 crores is what we have already spent for the land, that is not going to be spent in the future. In terms of building the facility on that plant, we will have to incur CAPEX, but this will be within the overall CAPEX plan that was already presented. We had mentioned in the past that we will be spending about a total of Rs.1,000 crores or so, and this will be forming a path. Additional CAPEX if required, will be something that we are still working on, and we will share with you. But because we are moving in phases in terms of putting the CAPEX alongside with the business growth, we do not envisage for the current levels to have significantly higher CAPEX than what we had already budgeted for.