Key takeaways of the conference call

Order book is Rs 600 crore of which about 36% is for wagon (of with 20% is railway orders and balance 16% is private orders), 25% defence and special orders, railway coach is 25-27% and balance are refurbishment of Kolkata Metro Coaches. The wagon order book will be executed over next 12 months.

Wagons sold in 9mFY15 is 500 numbers and of which about 150-200 numbers in Q3FY15.

Fresh capex is required only for defence and metro verticals, which are new focus area of the company.

The EBITDA margin on an average will be 13-15% and in bad year it will go down to 10% and best year it can touch 17%.

The company is in dialogue with various people for pre qualification for metro rakes order. Tenders for Lucknow, Kanpur and Kolkatta are already out.

Coal India allocating Rs 5000 crore for wagon acquisition is floating around and not yet confirmed and this is necessity for the company.

The railway wagon procurement in the last 3 years was abysmally low at about 5500-6000 wagons. Traditionally the tenders will get finalized in first quarter of a fiscal.

Both Titagarh and Cimmco together have a wagon manufacturing capacity of 8800 wagons with former having a capacity to produce 6400 wagons a year and latter 2400 wagons a year.

Of the group casting capacity of 2500tonne per month 50% will be used captive and 50% is for non captive sales. The foundry acquired from Hyderabad Industries is fully used for non captive and the capacity of this plant is now expanded to 700 tonnes a month.

Against a capacity of 8800 wagons the group did wagon production to the tune of 700 wagons in 2013-14.

Currently Indian Railways has a fleet of 225000 wagons and has 32% market share in domestic cargo traffic with balance accounted by Roads. The average life of a wagon is 25 years. As the fleet was build over a period about 4% of wagon to be replaced every year and this give an average demand of 10000 wagons. If the GDP of the country grew by 5% and IR maintains its current market share that will need another 12000 wagons. Every 1% shift in traffic from road to railways entails addition wagons.

The company brought down the inventory levels from about Rs 210 crore to Rs 145 crore.

Wagon prices - Since Railways issues free material the normal value excluding the free material will be about Rs 10 lakh and for private orders it will range from Rs 20-35 lakhs. Given shrinking pie of wagon orders, the prices went down unrealistically and that hurt the profitability.

Forayed into Shipbuilding with an aim to optimum utilization of fabrication capacity of Titagarh which is close to river in Kolkatta. To prequalify for defence orders the company acquired a small company for design and license for navy & coast guard.