FreightCar calls off JV with Titagarh

FreightCar America Inc has called off its joint venture with Titagarh Wagons due to latter’s failure to get approval from Indian Railways for a prototype of an aluminium wagon, which the US-based wagon maker specialises in.

Chicago-based FreightCar is a leading manufacturer of aluminium railcars having more than 70% market share of coal wagons and a majority share of aluminum wagons in the US. It has a capacity to manufacture 15,000 units a year in its plants at Danville and Roanoke.

The Nasdaq-listed company has informed Kolkata-based Titagarh of its decision of excercising unilateral right under the pact to terminate the venture, citing Titagarh’s failure to “cure its non-compliance with the JV agreement,” sources told DNA.

FreightCar held a majority 51% stake in the joint venture, Titagarh FreightCar Pvt Ltd, formed in 2008 to develop high-axle load and low tare-weight aluminium wagons.

Under the JV, Titagarh was responsible for getting approval for the prototype from Indian Railways’ Research Designs & Standards Organisation (RDSO) and orders while FreightCar America was to provide design and manufacturing technology.

If approved, the JV would have set up a manufacturing plant in India at an investment of $40 million.

However, aluminium coal carrying wagons, though common in US, are not in use in India, and problems arose when RDSO, after much deliberation, did not find the prototype acceptable in the Indian context because of reasons like possible pilferages of aluminium and design code difference between Indian and US standards.

After failure to get it approved, Titagarh asked for more time, requesting FreightCar to prolong the design and prototype development phase.

However, Titagarh has obtained patent for Roll-On-Roll-Off wagons, on which loaded trucks are ferried to destinations.

These kind of wagons have been introduced by Konkan Railways.

It has also forayed into making of passenger train coaches, and has already set up a facility at its Uttarpara plant. It is currently making 23 such rakes for the Indian Railways to begin with. Titagarh’s efforts to get a foreign partner for another of its ventures, steel bridges, however, hasn’t fructified yet. It’s business for short steel bridges, known as bailey bridges supplied to the defence, had halved in the last fiscal.