Texmaco Rail, Titagarh, Cimmco, and unlisted entities such as Modern Industries, Hindustan Engineering, Besco get 50% of withheld orders
The Narendra Modi government has released its first order for railway wagons, keeping its promise of taking quick steps to give necessary boost to the Railways sector.
The Railways board issued orders to listed wagon manufacturers including Texmaco Rail, Titagarh, Cimmco, and also to unlisted entities such as Modern Industries, Hindustan Engineering, Besco and Jupiter Wagons, informing them of the decision to release 50% of their respective withheld allocations.
This is good news for wagon makers like Texmaco and Titagarh as they are in the midst of executing the earlier contract awarded in April by the previous government just before the model code of conduct kicked off on the eve of the Lok Sabha polls.
"We have received the order release letter a day back. The wagon allocation is good news for the industry in general which had suffered long drought in order flows," Texmaco Rail's chief finance officer Ashok Vijay told dna.
The allocation to individual manufacturers were done in April when 50% of that allocation was immediately ordered and the balance withheld, to be issued at a future date at the discretion of the Railways board.
To illustrate, Texmaco was allocated 2,400 wagons and order for 1,200 wagons were released on April 29.
Now, 50% of this balance 1,200 order is now being issued.
Similarly, Titagarh has been issued order for 385 wagons, or 50% of its withheld 769 units.
With this, order for a total of 2,924 wagons have been issued, with Texmaco, the largest player in the field, getting the highest number of 600 units, a study of the order issuance revealed.
The industry-wide wagon allocation by the Railways happened after a long gap of two years, when many of the wagon makers like Texmaco operated at low capacity utilisation or some like Jessop & Co were forced to close.
The biggest beneficiary in the allocation is Saroj Poddar-owned listed entity Texmaco, which got orders for 2,400 wagons while Titagarh Wagons bagged orders for 1,538 wagons in April.
Apart from the wagon manufacturers, the latest order release is good news for the core sector segments like coal, power, steel and cement, which has been suffering due to poor availability of rakes.
To address the issue the government would spend about $1 billion by 2019 to buy railway wagons and transport coal from remote mines, coal secretary Anil Swarup told a news agency on Thursday.
Its also good news for Texmaco in particular as it has just closed qualified institutional placement of shares.
"We had a target to raise Rs 300 crore and the issue has been oversubscribed," Vijay said, adding a board meeting would be held on Friday to allot the shares to the successful bidders.
"There's a good mix of domestic and foreign investors," the Texmaco CFO said.
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