For the last couple of days most railways related stocks have been buzzing around. Umesh Choudhary, MD, Titagarh Wagons said r ailway traffic has been doing reasonably well. He feels this would be the right time to add capital assets to the company as steel prices are lower. He informed CNBC-TV18 that the company has received orders for 2,000 wagons. The company’s order book is close to Rs 800 crore.

Here is a verbatim transcript of the exclusive interview with Umesh Choudhary on CNBC-TV18. Also watch the accompanying video.

Q: What can you reasonably expect from the railway budget, do you think you could get a substantial boost to your orders?

A: I believe that the railway traffic is still doing reasonably well. The target this year was USD 850 million tonne and despite the slowdown I don’t think the railway is likely to fall too short of its target, even if they do fall a little short. So, the railway should continue to add on to the capital asset. This would be the right time for them because steel prices are not that high, and they should be able to add on to the capital base or the wagon base, which is long overdue. We have heard the Railway Minister speak over the last four years- four budget that he had presented, that he wants to add on to the railway wagon fleet. So, I don’t think that trend should slowdown at all.

Q: Reports indicate that you might get an order from the Indian Railways to the tune of 1,500 wagons. Do you think that is a likely number?

A: We have already received that and there would be in fact an option quantity also, which they have already cleared. So, we have received kind of an Letter of Intent (LoI), for around 2,000 wagons that would be coming in.

Q: So, what is your total order book right now and what kind of a revenue run rate are you working on annually?

A: As far as the current year is concerned in the first six months, that is upto the December quarter, we did about Rs 620 crore in gross sales. Of course, Q3 was much slower than the first two quarters for the current financial year because private orders are getting deferred to some extent, because of the credit crunch and the liquidity crisis that the private sector was facing, they have pushed back their deliveries a little. But our saving grace is that the majority of our orders that we are now concentrating on is on the railway side. For example about 50% of our sales in the Q3 was to the railways, as against almost 30% in the full year.

So, today we have an order book of close to Rs 800 crore, and out of which the government order book. We have other two divisions as well, so the government, defence and others alone are about Rs 500-600 crore. So, to that extent we are insulated from the private sector by being deferred to some extent. But of course the huge fillip that we expect in our business to come in would definitely come in by the private sector buying, which we believe is a temporary stoppage that has happened or a delay that has happened in the private sector buying.

Q: So, has that private deferral being shifted to Q4 or later than that and for Q4 you think you would do a lot better than the Q3 revenue figure of Rs 130 crore?

A: I wouldn’t make any guesstimate here on the Q4. But I believe that the situation is so dynamic right now, as we are all seeing all over the world that one cannot say about the next month or maybe the next fortnight as well. So, the private sectors that have gone into the container movement business don’t have an option but to add on to their fleet because they just can’t sustain with the small fleet. So, whether that happens this quarter, whether that happens quarter after that or the quarter after that is anybody’s guess, and it would depend on the macro level economic situation but it has to happen for sure.

source: Moneycontrol

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