Texmaco reported a loss of Rs 8.65 crore for June quarter against a profit of Rs 6.56 crore a year ago
Beneath the grandiose plans to spend Rs 8.5 lakh crore to beef up Indian Railways, the wagon makers, a key component of the department's freight revenue generation, are bleeding profusely primarily due to lack of adequate orders.
"Performance during the quarter was adversely affected due to poor wagon orders and other consequential-related issues," Texmaco executive director said in a statement post reporting a dismal first quarter for the country's largest wagon maker.
Texmaco on Monday plunged into losses, reporting a negative bottomline of Rs 8.65 crore for June quarter against a profit of Rs 6.56 crore a year ago and Rs 5.93 crore profit during the previous quarter.
Texmaco is not suffering alone. Titagarh Wagons, the second-largest wagon maker, which is yet to announce its quarterly earnings, is apprehensive about the sustainability of erratic government orders.
"Wagons procurement order by Indian Railways for the current year is yet to be announced and uncertainty in this area has become a norm," said executive chairman J P Chowdhary in his report to shareholders prior to the forthcoming annual general meeting of the company.
"Financial performance for the past three years had been impacted mainly due to successive lack of orders for procurement of wagons from Indian Railways during the past 3-4 years, the largest customer, compounded by predatory pricing resorted to by some of the manufacturers aimed at securing larger allocation in the tender rendering the wagons business unremunerative," Titagarh said in its annual report.
The predicament contrasts with the statistics handed out by the government and the plans announced by it.
Spending by the Railways has risen from a low of Rs 58,718 crore in FY15 to Rs 121,000 crore in FY17, the highest so far while the railway ministry plans to invest Rs 8.56 lakh crore in the next five years, including Rs 1.02 lakh crore towards improving supplies of locomotives, coaches and wagons, things that are outsourced to the private sectors.
But before that materialises, wagon makers are banking on diversification and eagerly waiting for a tender to procure 9,500 wagons to be opened by month-end, according to Texmaco sources.
"Diversification in various segments is expected to contribute from the second half of the year and order from the upcoming wagon order scheduled to be opened on July 31," Texmaco finance head and executive director A K Vijay said.
Titagarh, too, is looking at diversification, raising supplies to private sector wagon users like cement and coal mining companies, making metro coaches by acquiring the coach-making business of Firema Trasporti of Italy and also making components and naval barges for the defence sector.
The export market is being aggressively eyed and efforts are on to secure order for limestone carrying wagons in Malaysian railway, sources said.
THE RED LINE
- Texmaco reported a loss of Rs 8.65 crore for June quarter against a profit of Rs 6.56 crore a year ago
- Titagarh Wagons is apprehensive about the sustainability of erratic government orders
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