Titagarh Rail Systems Ltd — Q3 FY26

Titagarh Rail Systems Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=9V0LeuPzTI4 Published: 2 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to the Titar Rail Systems Limited Q3 FYI26 earnings conference 0:09 9 seconds call. As a reminder, all participant lines will be in the listenon mode and there will be an opportunity for you to 0:16 16 seconds ask questions after the presentation concludes. Should you need assistance during the conference call, please 0:23 23 seconds signal an operator by pressing star 10 on your touchstone phone. Please note that this conference has been recorded. 0:31 31 seconds I now hand the conference over to Miss Raji Amre from MUFG in time investor relations thing. Thank you and over to you ma'am. 0:42 42 seconds Thank you Anushka. On behalf of Titaga Rail Systems Limited, I extend a very warm welcome to all the participants on 0:49 49 seconds Q3 and 9 months FI26 financial results discussion call. Today on the call we have Mr. Romesh Chri vice chairman and 0:58 58 seconds managing director Mr. Anil Aerwal deputy managing director Mr. Pritish Chri deputy managing director and Mr. Sorav 1:06 1 minute, 6 seconds Singana, Chief Financial Officer to provide the operational and financial insights. Before we begin the call, I would like to give a short disclaimer. 1:15 1 minute, 15 seconds This call may contain some of the forward-looking statements which are completely based upon our beliefs, expectations, and opinions. As of today, 1:23 1 minute, 23 seconds this uncertainties are not a guarantee of our future performance and involve unforcing risks and uncertainties. With this, I would like to hand over the call to Mr. Ome for his opening remarks. 1:34 1 minute, 34 seconds Thank you. 1:36 1 minute, 36 seconds Thank you. Uh thank you Rachi and uh very good afternoon everybody and uh thank you for joining the Q3 FI26 1:44 1 minute, 44 seconds earnings call. Uh the uh before I get into the questions uh which I'll be very happy to answer along 1:53 1 minute, 53 seconds with my team. Uh I would just like to give you certain perspective highlights of the quarter. 2:00 2 minutes uh the uh the quarter uh in terms of the two businesses of the company, the freight rail systems and the passenger 2:09 2 minutes, 9 seconds rail systems. The freight rail systems if you see on a year-on-year basis has 2:15 2 minutes, 15 seconds uh the overall revenue has been uh muted uh from 800 crores to around 600 odd 2:22 2 minutes, 22 seconds crores as being the uh overall revenue for the freight trail system. This was primarily because of the reset uh 2:31 2 minutes, 31 seconds problem that used to was sort sorted out but has been a little bit of a seessaw uh in the s in the last month of the 2:38 2 minutes, 38 seconds quarter again there was a problem of the reset. So overall industrial uh overall industry production has been in 2:51 2 minutes, 51 seconds Hello. Yes. 2:54 2 minutes, 54 seconds Overall industry production has been impacted. 3:03 3 minutes, 3 seconds It seems like the line for the management has been disconnected. Please stay connected till I rejoin the management. 4:28 4 minutes, 28 seconds Wonder. 5:11 5 minutes, 11 seconds Heat. Heat. 5:53 5 minutes, 53 seconds Thank you for waiting patiently. The management's line has been connected. Sir, you may proceed. 5:58 5 minutes, 58 seconds My deep apologies. The line got disconnected. Uh so uh I was mentioning about the the overall uh situation on 6:07 6 minutes, 7 seconds the freight rail systems. Uh in the Q3 again there was a little bit of a seessaw on the wheel set and supply 6:13 6 minutes, 13 seconds chain of the freight business. Uh overall industry performance has been impacted and we were no exceptions. Uh 6:21 6 minutes, 21 seconds there was a typewise mismatch between the 840 di wheel and the thousand di wheel between production and requirement of the industry. 6:29 6 minutes, 29 seconds uh of course it has again normalized from the current quarter but this is a bit of a seesaw which is going on and we 6:36 6 minutes, 36 seconds see that uh going forward uh by March we will be we are expecting to start trial production of our joint venture for the 6:45 6 minutes, 45 seconds wheel sets and maybe in another uh quarter or so or couple of quarters our internal wheel sets is going to get fully available to us so we should not 6:54 6 minutes, 54 seconds have uh problems on wheel sets but uh having said that now the wheel set production is again normalized and for 7:01 7 minutes, 1 second the private wagon we have also started importing some of the wheel sets so we should be able to recover to uh to an extent the loss production of the last 7:11 7 minutes, 11 seconds quarter. Uh the uh silver lining for the quarter has been that the passenger a system which constitutes on a standalone 7:19 7 minutes, 19 seconds basis at almost 75 plus% of our order book has shown a huge jump. uh we have 7:26 7 minutes, 26 seconds grown our revenue from 40 crores to uh 40 odd crores to 160 odd crores and the 7:33 7 minutes, 33 seconds AITA has also jumped from about less than 5 crores to about 22 crores uh which is uh very reflective of our 7:42 7 minutes, 42 seconds strategy of growing the passenger business. We are continuing to uh ensure that we stabilize and grow this business 7:50 7 minutes, 50 seconds and going forward uh in maybe in about uh year two years time we clearly see that the passenger business will be the 7:59 7 minutes, 59 seconds dominating part uh dominant part of our overall uh business between the two which is the passenger and the rail and 8:06 8 minutes, 6 seconds which is uh quite well supported not only by the order book but also the tailwind in the industry. Uh some of the 8:14 8 minutes, 14 seconds highlights of the quarter uh it was uh we were able to flag out flag off the first uh train for Ahmedabad Metro. Uh 8:23 8 minutes, 23 seconds the honorable by the honorable chief minister of Gujarat who visited our plant to uh um to uh flag off this rake. 8:32 8 minutes, 32 seconds Uh very well received. Uh now the series production of Ahmedabad Metro has started. Uh the other highlight of the 8:39 8 minutes, 39 seconds quarter is we have been uh awarded the wagon leasing license. So this will uh uh further strengthen our presence in 8:47 8 minutes, 47 seconds the private sector wagon market. So we'll be able to offer wagons on lease uh to some of the uh important 8:55 8 minutes, 55 seconds customers. Uh this also would mean that we would be able to make an entry into uh the wagon maintenance market which uh 9:04 9 minutes, 4 seconds effectively would be uh as we understand based on our interactions and based on the reports that will be initially 9:12 9 minutes, 12 seconds opened for the private wagons which are uh offered on lease or owned by the uh private customers. So in this case uh 9:19 9 minutes, 19 seconds through the leasing license we will be able to own and maintain the wagons as well. um 9:27 9 minutes, 27 seconds the uh uh de merger of the ship building business has been completed and we have 9:34 9 minutes, 34 seconds I don't we' already announced the order that we received for the coastal research vessel but that business is picking up very well uh and we expect 9:44 9 minutes, 44 seconds that uh although it's a 100% subsidiary now but that business is going to pick up very well and uh uh there is a lot of 9:51 9 minutes, 51 seconds tailwind available in that business And uh the first propulsion uh uh the first 9:58 9 minutes, 58 seconds propulsion uh set for EMU is also been approved by RDSO and the company has an order book of about close to 500 crores 10:07 10 minutes, 7 seconds on propulsion and this also is going to start kicking in into the revenue from FI27 onwards. Uh the other uh highlight 10:16 10 minutes, 16 seconds that I would be happy to share is uh the agreement that we signed with ABB. uh as uh we had reported a couple of years 10:24 10 minutes, 24 seconds ago, we had signed an agreement with ABB to uh get the transfer of technology for the 750 KVA uh TCMS system uh which has 10:34 10 minutes, 34 seconds been used in the Gujarat metro. Uh this agreement further expands and gives us the transfer of technology for the 25 10:43 10 minutes, 43 seconds KVA. There are only two type of metros that operate in India which will complete our ownership range of the 10:50 10 minutes, 50 seconds TCMS. So this is another very important building block in our overall business which we are uh being able to complete. 10:58 10 minutes, 58 seconds Uh so that the idea is that on the passenger rail system business uh like we did in the past for the freight rail 11:06 11 minutes, 6 seconds system business we should be very uh uh integrated. we should have a complete grip over the value chain uh right from 11:15 11 minutes, 15 seconds the critical components up to the service. So this gives us a big leverage on having a grip over the value chain. 11:23 11 minutes, 23 seconds Uh this also includes that uh we will be producing the some of the traction motors and traction converters in uh our 11:32 11 minutes, 32 seconds own plant. uh we already have the production setup where we are producing the traction motors for the locomotive 11:39 11 minutes, 39 seconds uh locomotives and also for the EMUs uh which I mentioned a little while ago. 11:44 11 minutes, 44 seconds But this will also have a transfer of manufacturing from AB for their uh production standards in uh production 11:51 11 minutes, 51 seconds technologies for the traction converter and traction motor for the metro business. Uh the last but not the least 12:00 12 minutes is that uh the aluminium metro line is uh is u being established. The pro 12:07 12 minutes, 7 seconds project is already uh on way and we should be able to complete it by Q2 of FY27. 12:14 12 minutes, 14 seconds Uh this line will then earlier we used to get flat packs or sub assemblies from Europe and then do the final metro coach 12:24 12 minutes, 24 seconds manufacturing assembly in India. But this again would give us a backwards integration and we'll be able to end manufacture end-to-end aluminium metro 12:32 12 minutes, 32 seconds coaches right from the raw material or extrusions uh down upwards to the complete metro coach. This would also 12:39 12 minutes, 39 seconds enable us to make car bodies and coaches for u uh aluminium coaches for highspeed or semi- highspeed trains. And we are 12:48 12 minutes, 48 seconds preparing ourselves for the uh massive investment that the government of India has announced under the highspeed 12:55 12 minutes, 55 seconds network. And the idea is to also uh use this line to further expand and progress 13:02 13 minutes, 2 seconds ourself to be able to do highspeed trains in the future. So this is uh overall picture and then I'm happy to take any questions that may be there. 13:12 13 minutes, 12 seconds Thank you. 13:14 13 minutes, 14 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press 13:22 13 minutes, 22 seconds star in one on their touchstone telephone. If you wish to remove yourself from the question queue, you 13:29 13 minutes, 29 seconds may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will 13:37 13 minutes, 37 seconds wait for a moment while question assembles. 13:46 13 minutes, 46 seconds We take the first question from the line of Balas Subramanyan from Aryan Capital Markets Limited. Please proceed. 13:54 13 minutes, 54 seconds Good evening sir. Uh thank you so much for the opportunity sir. My first question in passenger coaches side we have seen significant improvement on the 14:03 14 minutes, 3 seconds execution side. In this quarter we did nearly 18 metro cars compared to last Q3 around three metro cars. 14:12 14 minutes, 12 seconds uh overall in this 9 month FI26 we did 39 metro cars but we have guided 100 to 14:19 14 minutes, 19 seconds 120 metro cars uh uh like as our aspirational target by by FI26. So I'm trying to understand whether in Q4 we 14:28 14 minutes, 28 seconds can make it 20 25 additional metros we can end up 60 65 uh kind of range and if 14:35 14 minutes, 35 seconds we could uh uh uh like share more details uh because we are running multiple projects uh running concurrently especially Pune aluminium 14:43 14 minutes, 43 seconds Gujarat Mumbai Bangalore and Nadarat. So could you please share detailed timeline of the production ramp up of each major program? 14:53 14 minutes, 53 seconds Sure absolutely. Uh thank you for your question. Uh now let me explain this to you that uh the target that we had set 15:02 15 minutes, 2 seconds for ourselves this quarter this year was between 100 to 120 cars uh and uh there is a significant 15:11 15 minutes, 11 seconds improvement that we have made as you have uh uh as you have already noted and we may not be able to get to 100 or 120 15:19 15 minutes, 19 seconds but we'll be pretty close to that which in itself will be a very uh can I request to go on mute please because I'm listening myself again. 15:29 15 minutes, 29 seconds Yeah. Uh uh there will be a significant improvement that we will see uh in the Q4. Uh we have already started uh uh 15:38 15 minutes, 38 seconds 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. 15:46 15 minutes, 46 seconds uh as far as the Pune is concerned, Pune is an aluminium metro coach and as mentioned that the production of that will start only after completion of the 15:55 15 minutes, 55 seconds project or the line that we are setting up for the aluminium coach which will be somewhere in uh Q3 of this the car body 16:02 16 minutes, 2 seconds production will start in Q3 or Q4 of this financial year of the coming financial year. uh and Wandhara's 16:09 16 minutes, 9 seconds production has already started. Uh we expect uh by the end of this financial year that is March 2026 16:18 16 minutes, 18 seconds to be able to complete the car bodies of the first rake uh which is 16 cars. Uh we are already in production and uh uh 16:27 16 minutes, 27 seconds which will be again a milestone and the first train is likely to be ready in the Q3 of uh this financial of the coming financial year. I'm sorry. 16:38 16 minutes, 38 seconds As the Gujarat, Mumbai and Bangalore that update Bangalore is Bangalore is continuously being executed and Gujarat now has 16:46 16 minutes, 46 seconds started execution and Mumbai will start execution from Q3 of the next financial year. 16:54 16 minutes, 54 seconds Okay sir. So my next question I think we have received approval for wagon leasing company. So I'm trying to understand uh 17:01 17 minutes, 1 second like what is the initial uh fleet size target and what is the expected uh leasing yield on veans under this scheme 17:10 17 minutes, 10 seconds and uh like uh whether this will be the asset heavy model requiring significant debt funding or is there any different 17:17 17 minutes, 17 seconds capital structure and like how do you look at in this business in terms of revenue and margins over next 3 to 5 years? address actually. 17:27 17 minutes, 27 seconds So this is a business which will be a part of our existing company itself and uh we are looking at this as expanding 17:33 17 minutes, 33 seconds our offering to the customer. Primary business would continue to remain sale of or uh offering of wagons. This is 17:43 17 minutes, 43 seconds only an enabler to increase our market share in the private sector uh wagon business. Uh as far as the other details that you have mentioned, this will be 17:51 17 minutes, 51 seconds blended along with our overall margin and we will not be uh we will not be looking at it as a separate business in 17:59 17 minutes, 59 seconds the sense of uh buying wagons and then leasing them. This is this is only an extension for our own product offering and maybe a stronger bridge between us 18:08 18 minutes, 8 seconds and our potential customers existing and potential customers. 18:14 18 minutes, 14 seconds Okay sir. Say my last question defense and uh bridges order book nearly 38 cr. 18:20 18 minutes, 20 seconds So I'm trying to understand what kind of uh order book is this and uh like how do you how do you take this uh business 18:29 18 minutes, 29 seconds over next three to five years whether we have opportunities of 5,000 500 plus kind of uh revenue maybe next 3 to 5 18:37 18 minutes, 37 seconds years what kind of opportunity size we have and the secondly uh Takarat Naval Systems Limited are you planning to list 18:45 18 minutes, 45 seconds separately once it reaches on sizable scale As far as the defense is concerned, we 18:52 18 minutes, 52 seconds have already announced that this is something which is under evaluation of a board committee and uh we will then uh at an appropriate stage uh once we the 19:01 19 minutes, 1 second board has decided on the way forward we would definitely uh announce that to the market and uh for the Tagar naval 19:10 19 minutes, 10 seconds systems also we had already I had already mentioned uh in the uh interactions over media and otherwise uh 19:19 19 minutes, 19 seconds uh we are going to build this business and yes the the idea would be to separately list this company at an appropriate stage when that will happen 19:26 19 minutes, 26 seconds the timing is something which is not yet clear but we will definitely build the business before we take that step 19:34 19 minutes, 34 seconds sir you can also elaborate more specific opportunities and defense and bridges segment side I already mentioned sir that uh we it is 19:43 19 minutes, 43 seconds a board level committee which has been constituted and once the deliberation is finalized and once Once we have a clear 19:51 19 minutes, 51 seconds approval of the board, we will definitely announce that to the market. 19:55 19 minutes, 55 seconds Thank you so much for the detailed explanation, sir. All the best. Thank you. Thank you. 20:02 20 minutes, 2 seconds Before we proceed with the next question, a reminder to the participants, please limit your questions to two per participants as there are several 20:11 20 minutes, 11 seconds participants waiting for their turn. We take the next question from the line of Anik Madavani from Pep Trade Capital. 20:18 20 minutes, 18 seconds please proceed. Yeah, I'm able. 20:25 20 minutes, 25 seconds Yes sir, you are audible. Please go ahead. 20:28 20 minutes, 28 seconds Yeah, just uh so my question was with regards uh to the new facility for uh components. So uh when it will be 20:37 20 minutes, 37 seconds commissioned and in the line for uh integration or planning. 20:44 20 minutes, 44 seconds So it is already going on sir the both the the expansion in terms of the aluminium that I mentioned the backward 20:53 20 minutes, 53 seconds integration for all the car body components and also the test track which is going to be a uh a big uh gamecher 21:03 21 minutes, 3 seconds for us even for our ambitions to get into the highspeed or the bullet train segment the 1.6 kilometer test track. So 21:10 21 minutes, 10 seconds all of that is work is going on at full pace and we expect all of these projects to be completed in the first half of the 21:17 21 minutes, 17 seconds next financial year because of the next financial year. Okay. 21:25 21 minutes, 25 seconds and uh and the uh orders from one day bar will be contributed from next financial year 21:33 21 minutes, 33 seconds or you're expecting some of these to uh start by this quarter? 21:40 21 minutes, 40 seconds No, some of them in ter the the dispatches will start only next financial year but it is a the production has already started as I 21:48 21 minutes, 48 seconds mentioned that we would have completed the car bodies uh almost completed the entire car bodies for the first rake within this financial year. So to that 21:56 21 minutes, 56 seconds extent being a percentage of completion accounting some revenue will likely flow in this quarter as well in this uh year itself also. 22:10 22 minutes, 10 seconds And uh as you mentioned the uh pills shortages are now uh normalized. So can 22:17 22 minutes, 17 seconds we expect uh to see a significant jump in uh top line and as well as bottom line considering the low basis. 22:29 22 minutes, 29 seconds So we would not like to give a a forward-looking statement but definitely you see the capacity of the wagon as far 22:36 22 minutes, 36 seconds as freight uh rail system is concerned the company is not limited by capacity. 22:41 22 minutes, 41 seconds We have proven ourselves to uh and we have uh set the backward uh facility also the foundry facility to be able to 22:51 22 minutes, 51 seconds produce a thousand wagons a month. uh the only constraining factor is the wheel set and of course then now we are 22:58 22 minutes, 58 seconds hoping that the uh future orders or future tenders come in which we hope should come out in the early part of 23:06 23 minutes, 6 seconds next financial year. uh I had mentioned uh that uh we are uh having workload uh 23:14 23 minutes, 14 seconds till about uh first half of uh the next financial year but beyond that we are hoping the new tenders to come in and on 23:22 23 minutes, 22 seconds the new tenders I may uh I'm sure that this question would also come up so maybe I'll adv answer it in advance uh 23:29 23 minutes, 29 seconds the railways target of achieving the 3 billion ton of freight loading by 2030 23:35 23 minutes, 35 seconds remains intact and So does the target of ach attaining 40% uh market shares in 23:43 23 minutes, 43 seconds the overall logistics of the country which is currently about 25 26%. So while there may be some uh blips u in 23:51 23 minutes, 51 seconds the requirement over one or two quarters but on the uh midterm basis I would say 23:58 23 minutes, 58 seconds that uh the demand for wagons we do not see them to become a challenge and we are fully ready to be able to cater to 24:05 24 minutes, 5 seconds that demand at the rate of a thousand wagons if there is enough business in the market. uh the growth in terms of 24:13 24 minutes, 13 seconds the ramp up uh will really start coming in from the passenger segment which is already started seeing a ramp up but we 24:21 24 minutes, 21 seconds will now next year FI27 and FI28 are going to be the defining years wherein 24:28 24 minutes, 28 seconds uh the real ramp up of the passenger rail system is going to happen uh both in terms of the metro segment in the 24:36 24 minutes, 36 seconds wand segment as well as in the propulsion segment. What's your current? 24:45 24 minutes, 45 seconds Sorry to interrupt Mr. It is there in the presentation. Yeah. 24:52 24 minutes, 52 seconds Mr. Aniket, I would request you to join back the queue as there are several participants waiting for their sure. 24:59 24 minutes, 59 seconds Thank you. We take the next question from the line of Anand Kulkarnney from Frontwave Research. Please proceed. 25:08 25 minutes, 8 seconds Hi, thank you for the opportunity. I have a couple of questions. First, how much is the backlog of CRS in the Bangalore metro and when we are are we 25:17 25 minutes, 17 seconds expecting it to be clear? Do we see any spillover in FY28? That's my first and second, what is the current production for metro specifically? 25:29 25 minutes, 29 seconds So, the backlog of CRC is likely to be over in FI27 at most. If it does then it may be spilling over to the first month 25:38 25 minutes, 38 seconds or first month and a half of the FI28 but bulk of it will be over in FI27. 25:45 25 minutes, 45 seconds Uh as far as the run rate of metro is concerned I we just spoke about it that last quarter uh we uh improved and this 25:54 25 minutes, 54 seconds quarter we are further likely to improve. Our target is to get to 20 cards per month uh which is what uh we will uh get within the next few months. 26:05 26 minutes, 5 seconds So it is a process it is a new business line which we are ramping up and there are always uh teething troubles that are 26:13 26 minutes, 13 seconds there when you go for such a steep ramp up. Uh most of them we have been able to overcome and uh the result is already in 26:22 26 minutes, 22 seconds front of us that the ramp up is already uh visible and we will continue to uh uh to pursue this uh ramp up and get to 20 26:31 26 minutes, 31 seconds cars per month within uh the next few months. 26:37 26 minutes, 37 seconds Thank you all the very best. That was very helpful. Thank you. 26:43 26 minutes, 43 seconds Thank you. The next question is from the line of Vin Samir Desh Pande from Alpha Peak Investments. Please proceed. 26:53 26 minutes, 53 seconds Hello sir. Uh the execution has improved u to some extent with the availability of 27:01 27 minutes, 1 second the wheel sets and last time you had mentioned that the imports have been permitted. So still uh are we not in a 27:10 27 minutes, 10 seconds position to execute to the fullest extent? 27:15 27 minutes, 15 seconds So the it's import of wheel set takes a little bit of time once we get the orders and this is only permitted for 27:22 27 minutes, 22 seconds the NRC or the private sector wagon requirement not for the wagons that we produce for the Indian railways. Um so 27:31 27 minutes, 31 seconds therefore you know the uh even even when we start import process uh from the day we uh place the order for till the time 27:39 27 minutes, 39 seconds we receive the wheels and we are able to use it takes between uh four to 5 months. Uh so uh that's the reason we 27:47 27 minutes, 47 seconds were unable to ramp up uh the production to the desired level but uh right now till we receive the new tenders to be 27:56 27 minutes, 56 seconds able to produce round about uh 800 wagons uh is what we are targeting per month and we should be able to get 28:04 28 minutes, 4 seconds there. Uh as I said this was an unexpected blip uh that we faced from the rail wheel factory. the production had normalized 28:13 28 minutes, 13 seconds uh but then again there were some problems but this this is a very shortlived one but our production in the joint venture 28:22 28 minutes, 22 seconds uh is expected to start from the next uh year of uh Q1. 28:28 28 minutes, 28 seconds Yeah, the trial production is expected to start by March or April and then stabilize by in another couple of quarters. 28:36 28 minutes, 36 seconds So it may be in after Q2 only. 28:41 28 minutes, 41 seconds It's premature to say as I said the trial production will start now and then to stabilize whatever time it takes. So it generally takes anything between it 28:49 28 minutes, 49 seconds can happen in uh anything between one to two quarters. 28:54 28 minutes, 54 seconds Yeah. And uh regarding this titar FMA joint venture where they held about 41% 29:02 29 minutes, 2 seconds stake and I think the balance 59% was uh held by Tagar the uh can you uh explain uh what is the situation now? 29:14 29 minutes, 14 seconds So our share uh Tagar shares in Perema was minority. It was not 50 uh whatever 29:22 29 minutes, 22 seconds percent you were mentioning sir. It was a minority shareholding and then there were other partners also in this. 29:27 29 minutes, 27 seconds Uh as far as the we what we have already reported uh the company had run into difficulties u and as uh there were two 29:36 29 minutes, 36 seconds objectives of investing into FMA. One was to set up our business in India for the passenger rail systems and as you 29:43 29 minutes, 43 seconds can very clearly see that has met with uh thumping success. We have an order book of 11,000 crores directly and about 29:52 29 minutes, 52 seconds uh another 7,000 crores indirectly through our joint venture with BHL that is all in the passenger segment. Uh so that has uh paid uh very rich dividends. 30:03 30 minutes, 3 seconds The second one was to produce in Europe for Europe that unfortunately could not succeed and the company continued to 30:10 30 minutes, 10 seconds make losses and considering the opportunities available in India and the difficulties prevalent in Europe, we had 30:18 30 minutes, 18 seconds decided not to uh take further exposure and therefore now the company uh the Italian state railways have made an 30:25 30 minutes, 25 seconds offer to buy out that company and that is a deal which is under uh progress. So once it is done then we will be able to 30:34 30 minutes, 34 seconds assertain exactly what will be the status or the losses but mostly the the the entire worst case scenario or the 30:41 30 minutes, 41 seconds losses that can happen to the company have been uh disclosed in our uh results and most of it is non-cash. So the cash 30:48 30 minutes, 48 seconds is already uh spent. Uh it does not impact 30:56 30 minutes, 56 seconds sorry it does not impact uh if I may just complete it does not impact our business in India. So therefore it is not so much synergistic 31:03 31 minutes, 3 seconds anymore. Yeah please go ahead sir. Uh actually uh when I saw the balance sheet of 31st March uh 25 uh it shows that the 31:12 31 minutes, 12 seconds net worth of the company was some 158 odd crores and uh maybe in this 9 months 31:19 31 minutes, 19 seconds whatever losses will come netting out those losses will there be a positive net worth and will we realize 31:26 31 minutes, 26 seconds something after because you are given a guarantee of the land parcel etc. So that impacts we are not in a position to understand what will happen. 31:36 31 minutes, 36 seconds So as as I just mentioned sir that the total worst case scenario now the the company has been offered to by to by the state railways of Italy to be acquired. 31:47 31 minutes, 47 seconds We do not expect very large equity uh payback or if at all from uh the Italian 31:54 31 minutes, 54 seconds 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. 32:05 32 minutes, 5 seconds So we are not expecting any charges uh uh significant charges of impairments etc happening in our books 32:14 32 minutes, 14 seconds apart from what has been mentioned in our balance sheet or in the results uh they have been already provided no so it is there as a part of the results. 32:24 32 minutes, 24 seconds So there is a some part of it has been provided and some part of it has been disclosed. 32:29 32 minutes, 29 seconds So if you go through the details of the financials you will be able to find that okay in the notes etc. Okay. Okay. And 32:37 32 minutes, 37 seconds all the best to you. Hope we are in a position to have a very good next year 26 27 because this year has been a very 32:46 32 minutes, 46 seconds stormy one for us because of the factors beyond our control also. Though we have been on track uh we are not in a 32:53 32 minutes, 53 seconds position to deliver because of certain things beyond our control. Hope this year and the next 272 26 27 and 2728 will be very good year for us. 33:04 33 minutes, 4 seconds We are also very hopeful and optimistic about that sir. Thank you. All the best on the rest. Thank you. 33:12 33 minutes, 12 seconds Thank you. Before we proceed with the next question, a reminder to the participants in order to ask a question 33:20 33 minutes, 20 seconds you may press star and one on your touchstone telephone. We take the next question from the line of Rajesh Bandari from Nakoda Engineers. Please proceed. 33:30 33 minutes, 30 seconds Good afternoon sir. 33:33 33 minutes, 33 seconds Siral order 33:43 33 minutes, 43 seconds 3,126 33:54 33 minutes, 54 seconds First half of next financial year we should be able to cater to with the existing orders. And to go beyond we are 34:01 34 minutes, 1 second looking at the new tenders including the new orders that we will be able to receive on account of this uh wagon leasing license that we have obtained. 34:12 34 minutes, 12 seconds government or inquiries 34:22 34 minutes, 22 seconds Q1 billion trafficway. 34:49 34 minutes, 49 seconds National Plan Market 35:08 35 minutes, 8 seconds investment. 35:20 35 minutes, 20 seconds Billion traffic. 35:40 35 minutes, 40 seconds expect 35:54 35 minutes, 54 seconds system budget document 36:16 36 minutes, 16 seconds Additional highspeed corridors 36:34 36 minutes, 34 seconds coach Highspeed trains 37:01 37 minutes, 1 second future road map passenger system. Achet that has been established. As far as 37:08 37 minutes, 8 seconds freight is concerned, there has been newspaper reports about uh or there have been some media reports about some wagon procurement which is there which is 37:16 37 minutes, 16 seconds about 30 32,000 wagons. But the railways have not officially confirmed that to us as of now. Uh having said that as I as I 37:25 37 minutes, 25 seconds mentioned 37:38 37 minutes, 38 seconds motor 37:54 37 minutes, 54 seconds sir. Madam, I would expect you to join back the queue as No, no. My my my question has not been 38:01 38 minutes, 1 second fully replied. Ma'am, it was budget and trade agreement also. 38:07 38 minutes, 7 seconds Trade agreement turn trade agreement direct impact. 38:16 38 minutes, 16 seconds Uh there is no direct impact of the trade agreement in our business. Neither positive nor negative. 38:25 38 minutes, 25 seconds uh of course it does improve the general sentiment and uh you see the indirect advantage that we will get is that if 38:32 38 minutes, 32 seconds there is higher uh GDP growth which is definitely going to be the case because of these trade agreements it is going to 38:39 38 minutes, 39 seconds enhance the GDP uh growth and the size of the economy. So therefore there will be an impact on the overall freight loading and there thereby on our 38:48 38 minutes, 48 seconds business. As far as the turnover growth is concerned, we have already given the uh we have already given the order book 38:56 38 minutes, 56 seconds that is available. We have also given in our strategic plan uh which you can download from the website the uh way we are looking at moving forward. So while 39:04 39 minutes, 4 seconds we cannot give you any forward-looking uh projections uh as a matter of policy uh we have given you the directional framework of how the company intends to go in the next couple of years. 39:16 39 minutes, 16 seconds agreement. May I just mention that uh probably you know in terms of our uh if if the overall uh uh uh logistics and 39:25 39 minutes, 25 seconds all of those procurement cost comes down then there will be some cascading impact or advantages but there is no meaningful 39:33 39 minutes, 33 seconds direct impact to us 39:43 39 minutes, 43 seconds just small very small aluminum coaches or SS coaches Metro coaches one per coach 39:50 39 minutes, 50 seconds approximately metro coach approximately 39:58 39 minutes, 58 seconds sir aluminium depend specifications that will become hyper technical I would avoid getting 40:05 40 minutes, 5 seconds into that but it will be it will be more than metro g sir thank you sir thank you very much 40:14 40 minutes, 14 seconds thank you thank Thank you. Before we proceed with the next question, a reminder to the participants. Please limit your questions to two per participant. 40:24 40 minutes, 24 seconds We take the next question from the line of PVE Kazi from Nwama Group. Please proceed. 40:30 40 minutes, 30 seconds Uh hi, good afternoon sir. Thanks for taking my question. Uh so my first question is on the passenger business. 40:37 40 minutes, 37 seconds Uh I mean we have multiple orders now. 40:40 40 minutes, 40 seconds uh based on your commentary uh production on most of them will start at some point in FI27. 40:46 40 minutes, 46 seconds uh so are we looking for more orders in this segment or do we first want to stabilize and start work on the existing orders. 40:57 40 minutes, 57 seconds So uh I purve we are absolutely looking at more orders in the last 6 months or less than 6 months I would say uh we 41:05 41 minutes, 5 seconds have booked orders of about 4,000 crores for metros as you are aware Mumbai line five and line six uh and we are uh 41:13 41 minutes, 13 seconds looking at participating in a spate of tenders that are in the offing uh uh so you know in terms we are both we are 41:22 41 minutes, 22 seconds doing both simultaneously and u uh since you have seen the facility you seen the kind of expansion that is continuously 41:30 41 minutes, 30 seconds going on. Uh it on one side we are continuous continuing to build up our order book and participating in new 41:37 41 minutes, 37 seconds tenders and riding the wave of opportunity that this sector presents and simultaneously we as we as we keep 41:44 41 minutes, 44 seconds on building up our order book we are also enhancing capacities. 41:50 41 minutes, 50 seconds Sure. Uh and the second and the last question is uh in terms of numbers what kind of order book will we have in the 41:58 41 minutes, 58 seconds wagon segment now? Would it be closer to about 8,000 wagons? Uh we have not uh disclosed that number. 42:06 42 minutes, 6 seconds So I'm not sure I can give you that number right now. But uh I will uh I will definitely you know in terms of the 42:13 42 minutes, 13 seconds details we will try to share uh in the presentation or uh by way of further addendum to presentations as far as possible. 42:22 42 minutes, 22 seconds Sure sir. Thanks and all the best. Thank you so much. 42:27 42 minutes, 27 seconds Thank you. We take the next question from the line of Dwang Sha from All West Investment Managers Private Limited. 42:34 42 minutes, 34 seconds Please proceed. 42:36 42 minutes, 36 seconds Uh sir uh as you have mentioned that there is a you know u uh you know growth that is coming from the passenger rail 42:44 42 minutes, 44 seconds segment and there is a still uncertainty prevailing as far as you know freight wagon is concerned. By considering all this fact what kind of you know just as 42:53 42 minutes, 53 seconds a not a number but the growth as far as you know top line we can expect over a next two years and uh second question so 43:02 43 minutes, 2 seconds what kind of margin that we expect from you know over the next two years in general. 43:09 43 minutes, 9 seconds So in general I what I can answer your question is what is the potential of the business that is there as far as the freight is concerned uh I do not see 43:18 43 minutes, 18 seconds uncertainties in the midterm as I mentioned to you that we have orders till first half of the next financial year and we are pretty hopeful that 43:27 43 minutes, 27 seconds orders should start flowing in by that time and uh considering that the overall uh freight loading uh targets are intact 43:36 43 minutes, 36 seconds they have not been scaled down by the government uh considering that the Indian economy is still growing at a very healthy pace and considering that 43:44 43 minutes, 44 seconds the logistics cost of the country has to be brought down and uh the railways have continued to invest in building up 43:53 43 minutes, 53 seconds capacity in terms of tracks, signaling capacity, locomotives and all of that. 43:58 43 minutes, 58 seconds We believe that the wagon uh demand has to follow you know on a on a metaphoric basis uh wagon always follow follows the 44:07 44 minutes, 7 seconds locomotives uh both physically and uh business-wise. 44:12 44 minutes, 12 seconds So the locomotive production has been ramped up. You have seen the production numbers. Railways have ordered new 44:19 44 minutes, 19 seconds locomotives on uh Seammens and and stuff like that. So the wagon demand we do not see that it'll uh plummet over a longer 44:28 44 minutes, 28 seconds period of time. Uh there can be blips over a quarter or a couple of quarters but not more than that. That is our 44:36 44 minutes, 36 seconds expectation. So having said that the overall potential that we have for the freight wagon of a,000 wagons a month 44:43 44 minutes, 43 seconds remains intact or 12,000 wagons a year remains intact and we believe that uh the demand sooner or later will come in 44:50 44 minutes, 50 seconds and we will be able to cater to that uh demand. As far as the passenger segment is concerned, we have very clearly and 44:57 44 minutes, 57 seconds very uh explicitly elaborated the growth trajectory that we are invisaging and how we are invisaging that growth 45:04 45 minutes, 4 seconds trajectory in our strategic plan. So I would request you to refer to that. That will give you an overall view of where the potential lies for this business. 45:12 45 minutes, 12 seconds Also I can only sum it up by saying that uh considering even the full potential of the wagons or the freight business, 45:19 45 minutes, 19 seconds the passenger systems uh business still has the potential of overtaking uh substantively the 45:28 45 minutes, 28 seconds uh uh the freight business uh in in few years time from now. 45:34 45 minutes, 34 seconds And uh yes sir uh and as far as margin uh you know uh the margins freight wagon margins remain 45:40 45 minutes, 40 seconds stable at uh 11 12% 12% like we have always done and as far as the passenger business is concerned again because of 45:49 45 minutes, 49 seconds the scales we have always maintained that uh once we receive achieve the the basic economies of scale we should be at 45:57 45 minutes, 57 seconds about 11 12% which is what we are at this quarter. uh and going forward once we have our own propulsion and we are 46:05 46 minutes, 5 seconds able to fully backward integrate which is a process that should take us another 12 uh sorry uh another two uh years or 46:13 46 minutes, 13 seconds so uh we will be able to enhance that margin by additional maybe 3 4%. So our ultimate target on the on the passenger 46:21 46 minutes, 21 seconds side is to be able to get to about 15% EIA levels uh which will take us maybe another couple of financial years to get there. 46:31 46 minutes, 31 seconds Okay. Answer my second question that as far as your other vertical is concerned that is your ship building and you know 46:39 46 minutes, 39 seconds uh maritime system and some of the defense related uh that sort of showing in your current order book. So any kind 46:46 46 minutes, 46 seconds of you know opportunity you are looking and growth prospects on that these two segments. 46:54 46 minutes, 54 seconds The ship building business I mentioned to uh somebody just a few minutes ago. 46:59 46 minutes, 59 seconds This a uh very large opportunity. The government of India is also identified as a key growth uh sector and we will be 47:08 47 minutes, 8 seconds uh focusing on that in the new company that has been uh formed to take the business of the ship building uh forward. 47:18 47 minutes, 18 seconds The defense we have constituted a board level committee which uh the strategy for the defense is something which is still under deliberation. Once the 47:26 47 minutes, 26 seconds decision is taken we will definitely report back. Okay. Thank you sir. Thank you. Thank you. 47:34 47 minutes, 34 seconds Thank you. We take the next question from the line of Dwanchi Sha from HUF Capital. Please proceed. 47:42 47 minutes, 42 seconds Hi thank you for the opportunity. So I had a couple of questions to ask. First one being what is the planned capacity 47:50 47 minutes, 50 seconds uh capeex allocation for fi27 and how will it be funded say through internal acrals or debts? 48:07 48 minutes, 7 seconds Hello sir are you on the line? So we are not able to hear you. 48:20 48 minutes, 20 seconds Hello Dwani ma'am are you on the line? 48:23 48 minutes, 23 seconds Yes I'm on the line but I cannot hear the management. Please hold join. 48:29 48 minutes, 29 seconds Hello. Yes sir. Are you on the line? Hello. Can you hear me? Yes sir. 48:36 48 minutes, 36 seconds Yeah. Sorry. I'm sorry. It was uh there was a connection problem. Uh I was mentioning uh sorry ma'am I I don't know 48:43 48 minutes, 43 seconds at what point I lost you or do you hear me at all or not uh but I'll start from the beginning. You at all sir. 48:49 48 minutes, 49 seconds Okay. So I I'll start from the beginning. uh uh the overall capeex that we had announced for the passenger rail 48:56 48 minutes, 56 seconds systems to achieve the capacity or the production that we have projected right now was about a,000 crores and the 49:03 49 minutes, 3 seconds capeex that we are invisaging to uh make within FI27 is within that amount. Uh 49:10 49 minutes, 10 seconds part of it was uh funded through the equity raise that we had done and the uh internal acrals and part of it through 49:18 49 minutes, 18 seconds the funding through the debt. So there is no new cap cap uh capital requirement per se that will be there apart from the 49:27 49 minutes, 27 seconds further expansions if we take up. So if there are uh for example the expansions for opportunities like u highspeed or u 49:35 49 minutes, 35 seconds MRVC's or some other additional large projects that come up that may uh take 49:42 49 minutes, 42 seconds uh the take up new capeex requirements but outside that the current levels that we have the current orders that we have 49:50 49 minutes, 50 seconds will be uh catered to by the uh capeex that was already announced which is on the underway and will be completed in first half of FI27. 50:02 50 minutes, 2 seconds Got it. Also, you mentioned about uh the MRVC tender. So, wanted to understand what additional capeex needs to be done 50:10 50 minutes, 10 seconds in the coming years for the timely execution of Bandai Bharat and MRVC simultaneously. 50:17 50 minutes, 17 seconds Uh we will uh not be able to speculate on that right now and it is too premature to say about MRVC or any new 50:24 50 minutes, 24 seconds tenders that we are participating. These are all opportunities that are there in the market and there will be competitive 50:31 50 minutes, 31 seconds biddings uh in each one of them. So we would only uh come up with financial estimates of what is the opportunity or 50:40 50 minutes, 40 seconds for us and what is the capex requirement etc. if and one when we have been able to successfully win a project. uh what 50:49 50 minutes, 49 seconds we can mention is about the wand bharat which is already included in the capeex uh which uh we have I just explained to 50:57 50 minutes, 57 seconds you about right also um are we looking to bid with some strategic partner or we have the 51:06 51 minutes, 6 seconds required credentials now to bid individually for the MRVC tender we are open to every uh option we are 51:13 51 minutes, 13 seconds evaluating these are all complex tenders there are u many aspects that need to be studied. Uh the state tender is still in 51:21 51 minutes, 21 seconds the pre-bid uh query stage. Uh once this is finalized only one then we will be able to uh say whether we are able to 51:30 51 minutes, 30 seconds 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. 51:41 51 minutes, 41 seconds the pre-bid queries are still not being answered by the customer and it is still uh when it's in the pre-bid stage, it would be almost like the tender uh document discussion stage. 51:52 51 minutes, 52 seconds Got it. That answers my question. Thank you. That's it from my Thank you so much, ma'am. Thank you. 52:00 52 minutes Ladies and gentlemen, due to time constraints, we take that as the last question and would now like to hand the conference over to the management for closing comments. Over to you, sir. 52:10 52 minutes, 10 seconds Thank you very much prai and thank you for the very insightful questions uh that were put forward. Uh I hope we were 52:18 52 minutes, 18 seconds able to answer them. If there are any uh further questions that anybody any of the investors uh would like to have, 52:27 52 minutes, 27 seconds please feel free to reach out to our investor relation teams and we would be uh most happy to answer all of your 52:34 52 minutes, 34 seconds questions that may be there. uh and my team and myself are always available to do so. Uh just at the cost of 52:42 52 minutes, 42 seconds repetition, we believe FI27 and FI28 for the passenger rail system is going to be a very important year. It is going to be 52:49 52 minutes, 49 seconds very exciting uh year. So we will be working on uh uh building up the ramping 52:56 52 minutes, 56 seconds up the production in the passenger rail systems and we are hoping that uh the freight w rail system business also 53:04 53 minutes, 4 seconds continues to uh get ramped up by way of the new orders uh coming in by the railways in the first half of next year. 53:13 53 minutes, 13 seconds So with that hope and expectation uh I once again thank everybody for joining this uh earnings call and I hope to uh interact again soon. Thank you. 53:23 53 minutes, 23 seconds Thank you. Thank you. 53:27 53 minutes, 27 seconds Thank you on behalf of Tagar Rail Systems Limited. That concludes this conference. Thank you for joining us and you will now disconnect your lines.