We have received approval for wagon leasing company. So I'm trying to understand like what is the initial fleet size target? And what is the expected leasing yield on wagons under this scheme? And whether this will be the asset-heavy model requiring significant debt funding? Or is there any different capital structure? And like how do you look at in this business in terms of revenue and margins over the next 3 to 5 years?
So this is a business which will be a part of our existing company itself. We are looking at this as expanding our offering to the customer. Primary business would continue to remain sale of or offering of wagons. This is only an enabler to increase our market share in the private sector wagon business. This will be blended along with our overall margin, and we'll not be looking at it as a separate business in the sense of buying wagons and then leasing them. This is only an extension for our own product offering and maybe a stronger bridge between us and our potential customers existing and potential customers.
Defence and bridges order book nearly INR38 crores. So I'm trying to understand what kind of order book is this? And like how do you take this business over the next 3 to 5 years, whether we have opportunities of INR500-plus crores kind of revenue maybe next 3 to 5 years? What kind of opportunity size we have? And secondly, Titagarh Naval Systems Limited, are you planning to list separately once it reaches on sizable scale?
As far as the defence is concerned, we have already announced that this is something which is under evaluation of a Board committee. We will then, at an appropriate stage, once the Board has decided on the way forward, definitely announce that to the market. For the Titagarh Naval Systems, we are going to build this business. And yes, the idea would be to separately list this company at an appropriate stage. When that will happen, the timing is something which is not yet clear, but we will definitely build the business before we take that step. It is a Board-level committee, which has been constituted. Once the deliberation is finalized and once we have a clear approval of the Board, we will definitely announce that to the market.
And as you mentioned, the bills shortages are now normalized. So can we expect to see a significant jump in top line as well as bottom line considering the low base effect due to these separately?
So we would not like to give a forward-looking statement. But definitely, you see the capacity of the wagon as far as Freight Rail Systems is concerned. The company is not limited by capacity. We have proven ourselves to and we have set the backward facility also, the foundry facility to be able to produce 1,000 wagons a month. The only constraining factor is the wheel set. And now we are hoping that the future orders or future tenders come in, which we hope should come out in the early part of next financial year. The railways target of achieving the 3 billion tons of freight loading by 2030 remains intact. So while there may be some blips in the requirement over 1 or 2 quarters, but on the midterm basis, the demand for wagons, we do not see them to become a challenge. The growth in terms of the ramp-up will really start coming in from the Passenger segment - FY '27 and FY '28 are going to be the defining years.
What's your current order book?
It is there in the presentation, yes.
Actually, when I saw the balance sheet of 31st March '25, it shows that the net worth of the company was some INR158-odd crores. And maybe in these 9 months, whatever losses will come, netting out those losses, will there be a positive net worth? And will we realize something after because you had given a guarantee of the land parcel, etcetera. So that impact, we are not in a position to understand what will happen?
So as I just mentioned, sir, that the total worst-case scenario, now the company has been offered by the State Railways of Italy to be acquired. We do not expect very large equity payback, if at all, from the Italian railways. And what will be the final impact of that? The worst case has been disclosed in our balance sheet. So whatever happens will be better than the worst case. Apart from what has been mentioned in our balance sheet or in the results. So it is there as a part of the results. So there is some part of it has been provided and some part of it has been disclosed.
Sir, I have a small question. What is the approximate cost of the aluminum coaches and SS coaches?
Metro coaches are sold for approximately INR10 crores to INR12 crores. It depends on the specifications. That will become hypertechnical. I would avoid getting into that. (On aluminum being more than metro) Yes, sir.
Sure. And the second and the last question is in terms of numbers, what kind of order book will we have in the wagon segment now? Would it be closer to about 8,000 wagons?
We have not disclosed that number, so I'm not sure. I can't give you that number right now. But, I will definitely in terms of the details, we will try to share in the presentation or by way of further addendum to presentations as far as possible.
Sir, as you have mentioned, that there is a growth that is coming from the Passenger Rail segment, and there is still uncertainty prevailing as far as freight wagon is concerned. By considering all this facts, what kind of just as a not a number, but the growth as far as top line we can expect over the next 2 years? And second question, sir, what kind of margin that we expect from over the next 2 years in general?
So in general, what I can answer your question is what is the potential of the business that is there. As far as the freight is concerned, I do not see uncertainties in the midterm. We have orders till first half of the next financial year. We are pretty hopeful that orders should start flowing in by that time. The overall freight loading targets are intact, they have not been scaled down by the government. The overall potential that we have for the freight wagon of 1,000 wagons a month remains intact or 12,000 wagons a year remains intact. We believe that the demand sooner or later will come in, and we will be able to cater to that demand. As far as the passenger segment is concerned, we have very clearly and very explicitly elaborated the growth trajectory in our strategic plan. The Passenger Systems business still has the potential of overtaking substantively the freight business in a few years' time from now. The margin freight wagon margins remain stable at 11%, 12%, 12.5% like we have always done. The passenger business, once we achieve the basic economies of scale, we should be at about 11%, 12%, which is what we are at this quarter. Going forward, once we have our own propulsion, and we are able to fully backward integrate, we will be able to enhance that margin by additional maybe 3%, 4%. So our ultimate target on the passenger side is to be able to get to about 15% EBITDA levels.
Okay. And sir, my second question that as far as your other vertical is concerned, that is your shipbuilding and maritime system and some of the defence related that's sort of showing in your current order book. So any kind of opportunity you are looking and growth prospects on these 2 segments?
The shipbuilding business is a very large opportunity. The Government of India is also identified as a key growth sector. We will be focusing on that in the new company that has been formed to take the business of the shipbuilding forward. The defence, we have constituted a Board level committee, which the strategy for the defence is something which is still under deliberation. Once the decision is taken, we will definitely report back.
Got it. Also, you mentioned about the MRVC tender. So wanted to understand what additional capex needs to be done in the coming years for the timely execution of Vande Bharat and MRVC simultaneously?
We will not be able to speculate on that right now, and it is too premature to say about MRVC or any new tenders that we are participating. These are all opportunities that are there in the market, and there will be competitive biddings in each one of them. So we would only come up with financial estimates of what is the opportunity for us and what is the capex requirement, etcetera, if and when we have been able to successfully win the project. What we can mention is about the Vande Bharat, which is already included in the capex.
Right. Also, are we looking to bid with some strategic partner or we have the required credentials now to bid individually for the MRVC tender?
We are open to every option. We are evaluating. These are all complex tenders. There are many aspects that need to be studied. The tender is still in the pre-bid query stage. Once this is finalized, only then, we will be able to say whether we are able to qualify ourselves or qualify with somebody else and whether we would like to go by ourselves or with somebody else. So these are things that will be getting clearer over a period of time. The prebid queries are still not being answered by the customer, and it is still when it's in the prebid stage, it would be almost like the tender document discussion stage.
Sir, my first question, in passenger coaches side, we have seen significant improvement on the execution side. In this quarter, we did nearly 18 metro cars compared to last Q3 around 3 metro cars. Overall, in this 9 months FY '26, we did 39 metro cars, but we have guided 100 to 120 metro cars as our aspirational target by FY '26? So I'm trying to understand whether in Q4, we can make it 20, 25 additional metros, we can end up 60, 65 kind of range. And if you could share more details because we are running multiple projects, running concurrently, especially Pune aluminium, Gujarat, Mumbai, Bangalore and Vande Bharat. So could you please share a detailed time line of the production ramp-up of each major program?
Sure, absolutely. Thank you for your question. The target we had set for ourselves this year was between 100 to 120 cars. There is a significant improvement that we have made. We may not be able to get to 100 or 120, but we'll be pretty close to that. There will be a significant improvement in Q4. We have already started ramping up. In January, we were much higher than what we were in December, and we are looking at continuing the trend in February and March as well. Pune is an aluminium metro coach - production will start only after completion of the aluminium coach line - the car body production will start in Q3 or Q4 of this coming financial year. Vande Bharat production has already started. We expect by the end of this financial year, that is March 2026, to be able to complete the car bodies of the first rake, which is 16 cars. We are already in production. The first train is likely to be ready in Q3 of the coming financial year. Bangalore is continuously being executed, and Gujarat now has started execution. Mumbai will start execution from Q3 of the next financial year.
My question was with regards to the new facility for components. So when it will be commissioned and in the line for backward integration you are planning?
So it is already going on, sir, both the expansion in terms of the aluminium that I mentioned, the backward integration for all the car body components and also the test track, which is going to be a big game changer for us, even for our ambitions to get into the high speed or the bullet train segment, the 1.6 kilometre test track. So all of that work is going on at full pace, and we expect all of these projects to be completed in the first half of the next financial year.
And the orders from Vande Bharat will contribute from next financial year or you're expecting some of these to start by this quarter?
No. Some of them the dispatches will start only next financial year, but the production has already started. We would have completed the car bodies almost completed the entire car bodies for the first rake within this financial year. So to that extent, being a percentage of completion accounting, some revenue will likely flow in this quarter as well in this year itself also.
I have a couple of questions. First, how much is the backlog of CRRC, the Bangalore Metro? And when are we expecting it to be clear? Do we see any spill over in FY '28? That's my first. And second, what is your current production run rate for metros specifically?
So the backlog of CRRC is likely to be over in FY '27. At most, if it does, then it may be spilling over to the first month or first 1.5 months of the FY '28. But bulk of it will be over in FY '27. As far as the run rate of metro is concerned, last quarter, we improved. This quarter, we are further likely to improve. Our target is to get to 20 cars per month, which is what we will get within the next few months. So it is a process. It is a new business line, which we are ramping up. There are always teething troubles when you go for such a steep ramp-up. Most of them, we have been able to overcome. The result is already in front of us that the ramp-up is already visible.
Sir, the execution has improved to some extent with the availability of the wheel set. And last time, you had mentioned that the imports have been permitted. So still, are we not in a position to execute to the fullest extent?
So import of wheel set takes a little bit of time once we get the orders, and this is only permitted for the NRC or the private sector wagon requirement, not for the wagons that we produce for the Indian Railways. So therefore, the even when we start import process, from the day we place the order till the time we receive the wheels and we are able to use, it takes between 4 to 5 months. So that's the reason we were unable to ramp up the production to the desired level. But right now, till we receive the new tenders to be able to produce around about 800 wagons is what we are targeting per month, and we should be able to get there. As I said, this was an unexpected blip that we faced from the rail wheel factory.
But our production in the joint venture is expected to start from the next year Q1?
Yes. The trial production is expected to start by March or April and then stabilize in another couple of quarters. It's premature to say. The trial production will start now and then to stabilize whatever time it takes. It generally takes anything between 1 to 2 quarters.
And regarding this Titagarh Firema joint venture, where they held about 41% stake. And I think the balance 59% was held by Titagarh, can you explain what is the situation now?
So our share Titagarh's share in Firema was minority. It was not 50 or whatever percent you were mentioning, sir. It was a minority shareholding and then there were other partners also in this. As far as the what we have already reported, the company had run into difficulties. There were two objectives of investing into Firema. One was to set up our business in India for the Passenger Rail Systems. And as you can very clearly see, that has met with thumping success. We have an order book of INR11,000 crores directly and about another INR7,000 crores indirectly through our joint venture with BHEL that is all in the passenger segment. So that has paid very rich dividends. The second one was to produce in Europe for Europe. That unfortunately could not succeed and the company continued to make losses. Now the Italian State Railways have made an offer to buy out that company, and that is a deal which is under progress.
Sir, we have a total order book of around INR28,000 crores, INR27,755 crores in which we have for wagons 3,126. How much is the monthly load of the wagons?
Sir, this is almost like I said, for half of next financial year, we should be able to cater to with the existing orders. To go beyond, we are looking at the new tenders, including the new orders that we will be able to receive on account of this wagon leasing license that we have obtained.
Till when are the government's wagon inquiries coming, sir? Sir, what is the positive effect of this budget? And what will be the positive impact of the trade agreements that we can expect in as far?
This is not in our hands, but we are expecting it to come in Q1. The railway is still determined that it will carry 3 billion tons of traffic by 2030. The vision that the Prime Minister said in the national rail plan, 40% market share will be in logistics. The budget is very positive. The first is for our business on the passenger rail system. The biggest thing the company is working on with great focus is additional high-speed corridors. 7 new high-speed corridors have been announced. Because Titagarh is the only self-reliant company, which can be called a make-in-India company, which has the capacity to build high-speed trains. As far as freight is concerned, there have been some media reports about some wagon procurement, which is there, which is about 30,000-32,000 wagons. But the railways have not officially confirmed that to us as of now. On the trade agreement: Neither positive nor negative. Trade agreement has no direct impact on our business, sir. Of course, it does improve the general sentiment. The indirect advantage that we will get is that if there is higher GDP growth, it is going to enhance the GDP growth and the size of the economy.
Good afternoon, sir. Thanks for taking my question. So my first question is on the passenger business. I mean, we have multiple orders now. Based on your commentary, production on most of them will start at some point in FY'27. So are we looking for more orders in this segment? Or do we first want to stabilize and start work on the existing orders?
So, Parvez, we are absolutely looking at more orders. In the last 6 months or less than 6 months, I would say, we have booked orders of about INR 4,000 crores for metros, as you are aware, Mumbai Line 5 and Line 6. We are looking at participating in a spate of tenders that are in the offing. So in terms we are doing both simultaneously. We are continuing to build up our order book and participating in new tenders, and riding the wave of opportunity that this sector presents. Simultaneously, as we keep on building up our order book, we are also enhancing capacities.
First one being, what is the planned capacity capex allocation for FY'27? And how will it be funded, say, through internal accruals or debt?
The overall capex that we had announced for the Passenger Rail Systems to achieve the capacity or the production that we have projected right now was about INR1,000 crores. The capex that we are envisaging to make within FY'27 is within that amount. Part of it was funded through the equity raise that we had done and the internal accruals, and part of it through the funding, through the debt. So there is no new capital requirement per se that will be there, apart from the further expansions if we take up. If there are, for example, the expansions for opportunities like high-speed or MRVCs or some other additional large projects that come up, that may take up new capex requirements. But outside that, the current levels that we have, the current orders that we have will be catered to by the capex that was already announced, which is underway and will be completed in the first half of FY'27.