Texmaco plans greenfield plant for metro coaches

The K K Birla Group company Texmaco Ltd is weighing options of setting up a greenfield plant in Bengal, Orissa or Gujarat through a joint venture with a Japanese consortium led by Kawasaki to manufacture electric multiple unit (EMU) and metro coaches.

The company, which has roped in the three Japanese firms — Kawasaki, Toshiba and Itochu — as technical partners, has been shortlisted in the bid for the Kolkata Metro Rail Corporation (KMRC) tender.

According to AK Vijay, chief financial officer (CFO) of the company, if Texmaco was awarded the contract, the new plant could be set up in any of the three states. “The KMRC bids are likely to be finalised by the end of the fiscal,” he added.

Vijay, however, declined to comment on the investment in the new greenfield plant and said the amount would depend on the infrastructure support provided by the JV partners. Industry sources, however, said such a unit would typically require an investment of around Rs 200-300 crore.

The project, if materialises, could also be funded with the amount raised through a qualified institutional placement (QIP) on Tuesday. According to Vijay, Texmaco raised Rs 170.56 crore through the QIP, though it had an enabling resolution to garner up to Rs 200 crore. The company actually required around Rs 150 crore, he said, adding, “The minimum amount we could allocate, based on our advisors, was Rs 170 crore, which we have mopped up.”

He further said the money raised through the QIP will be used to fund the company’s “future expansion plans and have nothing to do with Texmaco’s current working capital.”

The future projects include manufacturing of locomotives and bogeys for the domestic and export market as well as wagon components for exports under the joint venture with United Group of Australia. The JV will also manufacture new-design and hi-tech wagons.

Texmaco has been approved by the Association of American Railroads to manufacture and supply bolsters, side frames and centre plates to the US market, while it targets the Australian market for industrial castings for mining equipment makers.

While most of the manufacturing work under the JV with the United Group will happen out of Texmaco’s facilities in Kolkata, Vijay did not rule out the possibility of setting up a new facility, if required, in the future.

The amount raised through the QIP will also fund expansion of Texmaco’s foundry in Kolkata from the present 28,000 million tonnes per annum (mtpa) to 40,000 mtpa, as well as expansion of the heavy engineering division.

Texmaco is engaged in a diversified range of precision and heavy engineering products, including new generation commodity freight cars, high-speed bogeys and hydro-mechanical equipment for mega power plants, etc.