Wagon Maker Gets Zero Orders, Says India Policy Key to Revival
Titagarh Wagons hasn’t received a single order since the new fiscal year started on April 1
(Bloomberg) -- Titagarh Wagons Ltd., the biggest private sector manufacturer of wagons for the Indian Railways, hasn’t received a single order since the new fiscal year started April 1 and said the government policy is crucial to reviving its business.
The Kolkata-based company typically targets as many as 500 wagons a month, and has existing orders to last through December, Managing Director Umesh Chowdhary said by phone this week. He estimates it would take at least four months to return to normal production after India’s stay-at-home order is lifted.
“But if, for some reason, the government decides to cut down on its capital expenditure or infrastructural expenditure, then it is going to be quite a problem for all industries like us,” he said. “Everyone has turned to a wait-and-watch, conserve-your-resources mode.”
Businesses across India are seeking a freeze on loan disbursals and refusing to accept delivery of orders citing uncertainty stemming from the coronavirus. The government has pledged $265 billion in aid -- including cash injections and other monetary measures -- to revive an economy headed for a rare contraction.
Crisil Ltd., the Indian unit of S&P, on April 1 revised the outlook on Titagarh Wagons’ long-term bank facilities to positive from negative, citing significant improvement in operating performance of its domestic entities, substantial decrease in overall debt, and easing liquidity pressure.
Chowdhary foresees an impact on earnings this financial year, given that a month and a half has passed without any production. While the company has permission from the government to resume some operations, its supply chain isn’t back up yet due to staffing restrictions and disruptions in inter-state transport.
Titagarh Wagons had a number of components coming in from China “but nothing as such which cannot be done minus China,” Chowdhary said. It has shifted purchases of wheel sets to Europe from China. Brake components will also now be sourced from Germany or locally.
“Wherever there is material available we want to buy it in India, provided the quality is the same,” Chowdhary said.
©2020 Bloomberg L.P.