Texmaco Rail and Engineering Ltd (NSE:TEXRAIL) Q2 2023 Earnings Conference Call dated Nov. 09, 2022
Corporate Participants:
Navin Agarwal — Head Institutional Equities
Indrajit Mookerjee — Executive Vice-Chairman
A.K. Vijay — Executive Director
Hemant Bhuwania — VP, Corporate Finance
Analysts:
Shambhu Rathod — Aamara Capital — Analyst
Kaustav Bubna — BM SPL Capital — Analyst
Nalin Shah — NVS Wealth Managers — Analyst
Dhaval Sheth — Dhaval Sheth Financials — Analyst
Balasubramanian — Arihant Capital Markets — Analyst
Sarvesh Gupta — Maximal Capital — Analyst
Pranav — Omkara Capital — Analyst
Anurag Patil — Roha Asset Managers — Analyst
Hari Kumar — — Analyst
Presentation:
Operator
Good day, ladies and gentlemen. Welcome to the Texmaco Rail Q2 FY23 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the management’s opening remarks. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Navin Agarwal, Head Institutional Equities at SKP Securities Limited. Thank you and over to you, sir.
Navin Agarwal — HEAD INSTITUTIONAL EQUITIES
Good afternoon, ladies and gentlemen. Apologies for the delayed start. It’s my pleasure to welcome you to this earnings conference call on behalf of Texmaco Rail and SKP Securities. We have with us Mr. Indrajit Mookerjee, Executive Vice-Chairman, along with his colleagues, Mr. A.K. Vijay, Executive Director; Mr. Hemant Bhuwania, VP, Corporate Finance and Mr. Ravi Varma, VP, Corporate Affairs and Company Secretary. We will have the opening remarks from Mr. Mookerjee followed by a Q&A session. Thank you and over to you, sir.
Indrajit Mookerjee — Executive Vice-Chairman
Good afternoon to all of you and at the very outset, let me, congratulate you for your patience and being present for this call. I also apologize for the delay which happened because of technical reasons on the communication side. I also would like to wish you all the best because we are talking after the period of celebrations in India which includes both Durga Puja as well as Diwali. So my warm greetings to all of you.
Just to give a little bit of overview of what’s happening. We all are aware that the sector once again has come back to a very promising one with orders being already been awarded to from Indian Railways to the wagon manufacturers. Also, there are lots of demand from the private customers including exports. There is — there seems to be a worldwide shortage but there seems to be also many challenges because in order to gear up to higher volume, it requires lots of Inputs like components and people, etc. which take time to gear up. So it’s — while it’s a good problem to have, it also has its own challenges. As far as Texmaco is concerned, I’m happy to say that it took almost a quarter and two months to really to overcome the initial challenges of availability of key materials, key components. etc. But at the same time we see that apart from the wagons as we call ourselves we are a rail solution provider, so all the other connected areas or affiliated area also are showing good signs of recovery.
So our current focus is very much on to keep our focus into our production, improve the productivity, quality, efficiency and debottleneck our existing two plants to the highest possible level to meet the demand. The demand is pretty high and our production are ramping up. In fact the run-rates are pretty up now and we hope to achieve much more. I don’t think we’re there where we want to be but I think I’m very hopeful that by next month we should be in a position or a maximized position on our production of wagons. As the wagon production goes up, it also puts lots of pressure onto our foundry because that’s — that most of the key components come from our own foundry and there also we are very highly focused to improve efficiencies and productivity. So having said this, I think it’s the time to talk about some specific topics and to say what we are doing. We are just in the path of recovery. I think it is the beginning of a good run. So we can’t expect anything to come in one month but I think we see a bright future and I would request my colleague, Mr. Vijay, our Executive Director, Finance to explain to you the numbers in a nutshell. Vijay?
A.K. Vijay — Executive Director
Thank you, sir. I must say you summed it up so well covering the entire gamut of the operations also and also how the outlook and other things are there. In brief, I’d like to just share with the shareholders that the company as explained by Mr. Mookerjee also it’s not turning the corner which is very vital and important and as Mr. Mookerjee pointed out we are no more only a wagon company, it is basically a rail solution provider and fortunately for us in all segments of railway there is robust demand coming both from railways rail segment and also from non-rail segment which is a very good thing to happen and we have been talking about this for quite some time. And all the vision documents of Government of India these were focused upon but somehow it was not acted upon by the government. This is the first time we are noticing that yes, the government is walking the talk and also ensuring this thing that whatever is required to be done for rail segment should be done, not only expeditiously but if possible, within a very short span of time.
Now with this, basically. I would like to clarify for academic purpose the gross revenue of the company for quarter 2 is INR497 crores as compared to INR379 crores in the corresponding quarter of the previous year and INR305 crores in the previous quarter of quarter 1. The EBITDA and net profit-after-tax for the quarter are INR55.21 crores and INR13.5 crores respectively as against INR44.04 crores and INR5.85 crores respectively of the corresponding quarter and negative of INR3.62 crores and negative that is the loss of INR22.53 crores in the quarter 1.
The gross revenue for the half year ended September is INR802 crores compared to INR716 crores in the corresponding quarter of the previous year. The EBITDA and net profit loss after tax for the quarter are INR51.59 crore and negative INR8.99 crores against INR85.61 crores and INR10.5 crores respectively in the H1 of the previous year. These are the basic financial numbers which are there in front of you and certainly you can take cognizance of that. Accordingly we also like to inform along with this that yes, we are getting a very good robust demand scenario whereby we are not only getting orders from the railway which is one of the largest order we received. Also, getting a large number of orders from the private segment on non-rail segment and also now to our delight we are getting a lot of export inquiries also which is very-very heartening thing and we are gearing up ourselves to make sure that we reach to the level of production whereby we can meet all the requirements which are coming our way and encash upon the opportunity which is being thrown open in the present booming rail segment.
Total order book as on date is close to INR9,300 crores. And basically post-approval of the prototypes that was sometime in July we started the production activities from August whereby initially 10, 15 days were required for the purpose of build-up of the WIP and thereafter we are going full swing. We already reached a level of close to 300 wagons a month and we expect to be much higher levels in the coming months as was explained by Mr. Mookerjee that our aim is to go much higher and we are working towards that direction.
Our other division like steel foundry also has to gear up and we are accordingly gearing it up. And we basically had a lot of inventory because the previous months, suction was not there from Wagon plant for the reason that wagons were under prototype approvals. Since that happened now we are getting up the foundry production and hope to expand the foundry production also substantially in line with the requirement from our wagon division. Similarly my other division including Rail EPC, they seeing now the traction. Recently we have won an order, we have not won, sorry. We are the L1 [Phonetic] in an order for INR252 crores which is basically for ballastless track for Indore Metro. And that’s how basically we explained earlier also the aim of Rail EPC now to go for smaller duration contracts and also contracts where we are not stuck because of activities relating to land, civil or governmental actions. Fortunately these things are not there in the Metro segment. They are primarily basically existing only in the Railtrack segment and that is how the company is now focusing not on the Railtrack segment but on the ballastless track signaling and other allied area where the core strength of the company is there.
With these statements, I submit it the investors to have proper evaluation of the company’s performance and in case they have some queries and questions we are open to to answer that. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] First question is from the line of Shambhu Rathod from Aamara Capital. Please go ahead. Shambhu, your line is on muted. Request you to please unmute your line and proceed. Shambhu, may I please request you to unmute your line. Yes, you are now audible.
Shambhu Rathod — Aamara Capital — Analyst
Yeah. I wanted to know the status of the Kalindee. So, is it profitable now.
A.K. Vijay — Executive Director
Yeah. I would like to answer to you in affirmative. In the previous quarter, Kalindee is on positive side.
Shambhu Rathod — Aamara Capital — Analyst
Okay. So. not the Rail EPC, only the Kalindee segment?
A.K. Vijay — Executive Director
Yeah, in rail EPC we have two divisions, one is Kalindee and other one is Bright Power. Bright Power all along has been very positive and that business is always growing fast. As far as Kalindee was concerned, we had certain setbacks and we — that’s the reason why we have not owned money during the few previous quarters but this quarter we are on positive side.
Shambhu Rathod — Aamara Capital — Analyst
Okay, thank you. That’s it from my side.
Operator
Thank you. The next question is from the line of Kaustav Bubna from BM SPL Capital. Please go ahead.
Kaustav Bubna — BM SPL Capital — Analyst
You can hear me?
Operator
Yes.
Kaustav Bubna — BM SPL Capital — Analyst
Great. So I had a few questions. Firstly you’ve hired a new professional. So could you just speak about its qualification then. Very honestly I wanted to ask how much role does the professional play in terms of decision-making versus the top promoters. Could you speak a little bit about the culture of the company as top how much, how much would the promoters give the professional to run the company and make decision. And then the second question is could you state your current Rail EPC order book and just some ambitions and internal targets on where you would like to take the order book given the opportunities, India is seeing in the railways space right now we don’t have, we haven’t captured any of that growth in our Rail EPC order book right now. I understand we’ve got one small order recently but obviously internally our ambitions has been much higher. Co could you speak a little bit about some internal targets and where you’d like to take this order book. Those two questions.
A.K. Vijay — Executive Director
Yeah. I would like to answer the second question first. Regarding your Rail EPC order book and where we would like to take it. Now, the present situation of Rail EPC order book is about INR1325 crores. Now as far as our — the question where you would like to see it over there. We explained the last investor conference also and even in this conference, I mentioned briefly, our focus is only in areas where our number one, our core strength is there. Number 2, where we are relatively certain that the project will not be delayed beyond a limit because we have seen in past that projects relating to the track work laying and all they normally get delayed beyond limits and ultimately the companies have to lodge a large claim on the customer and this settlement in Indian condition is really very long and by the time the settlement actually comes in force the company always face a cash crunch and liquidity crisis. So we have decided consciously that yes, our focus will remain in the core strength which is signaling, ballastless track, rail electric overhead and also the auto fare collection systems. So these are the things that it is — the financial remain under control, the projects are done expeditiously and we actually come in play much later than when the civil works and other related work on the ground is completed. So that’s how basically we are focused. We are moving very cautiously. We are only booking those orders which are basically number 1, profitable number 2, which again we completed within reasonable time span and number 3, which basically related to the core strength which we had.
We’re also now exploring possibilities to get into the export market albeit in a very small way but Africa is a market where a lot of options are available to us and that is what we are exploring and we are very hopeful before the year end, we will be able to book some orders for exports from African continent. So this is how the company is focused for Rail EPC will remain. As far as the target for order book and all concerned we will be going cautious but then I can assure you our target is to at least maintain the level of turnover which we have been achieving over the year which is INR500 crores, INR600 crores and that is going forward our order book also commensurate to beat this order book requirement, our achievements requirement. This is it. As far as the question number one is concerned, I would request Mr. Mookerjee to respond to you.
Indrajit Mookerjee — Executive Vice-Chairman
Thank you, Vijay. Just give me one second please. Yeah. The question number one if I have got it correctly is about how professionally the organization, how professional the organization is. Now, I have to say that our organization has always been very professional and it’s always being run by the professional managers. If you look at the organization, it’s hardly there is any — the promoters which are the majority shareholders are always hands-off from the operations of the company unless it’s at the strategic level but at the operating level, I think they are totally hands off and all our company is run highly professionally. We have the professional managers. We have the professional Managing Directors. In fact all of us including me and Mr. Vijay and all, Hemant and everyone present there all of us are professionals and we try to bring in whatever best we can do in the organization. So, I don’t know whether I have answered, addressed to all concerns and all the points which was raised but I can only tell you that we are a higher very professional company. We are also trying to bring in fresh blood but in places where it’s required so as to bring, so as to modernize ourselves, renew ourselves as much as possible with the experience and also the competencies of people from outside. So we are constantly looking at where the gaps are and we are trying to fill that in. In addition to that we have a very pretty robust performance appraisal as well as personal development program so under which the high potential candidates are been seeing and we see their future path, successions. So these are all a part of the drive which is ongoing. I don’t think I have anything more to add.
Kaustav Bubna — BM SPL Capital — Analyst
I’d just like to end by saying that as you know the industry is split and I hope this actually converts into your P&L which has not been able to be seen up till now but I hope you do a good job and we can see industry opportunity in your P&L eventually.
Indrajit Mookerjee — Executive Vice-Chairman
Yes, thank you very much for your good wishes and I think we have aligned thoughts on that and our actions are in that direction.
Kaustav Bubna — BM SPL Capital — Analyst
Okay, thanks.
Operator
Thank you. Our next question is from the line of Vansh Jain from NVS Wealth Managers. Please go ahead.
Nalin Shah — NVS Wealth Managers — Analyst
Good afternoon. And congratulations to the management, this is the Mr. Nalin Shah, Director of NVS Brokerage and NVS Wealth Managers, for the excellent set of reports as well as the very-very encouraging. I think note after many-many years. Now my questions are two very simple questions. One, sir, you mentioned about that both the plants were in the process of debottlenecking and trying to take the maximum out of it. So just wanted to ask you know that what is the at the full level of 100% capacity utilization level, what is the maximum topline which can be generated by the company because of these two plants without having much, you know, fresh capex. That was first and second, you had some. I think order book of around INR9,300 crores or so. This will be implementable over what period of time. These two questions if you can just throw some light, it will be very good.
A.K. Vijay — Executive Director
Yeah. I would like to take your questions and try to give answer which can be satisfactory to you basically. Now while the full level of production basically for the — our plant size and all this thing depending upon what the batch mix of production is there, what kind of wagon we are producing, what kind of orders we are booking, we can always step it up from the present level to the level of 8000 to 9000 wagons, in fact the capacity which we have, excess capacity is in excess of 7,800 numbers. So, that is the capacity of the our plant in respect of the wagons. Similarly my other plant which is foundry, the capacity is 42,000 tons per annum. So these are the capacities and given the opportunity to us which is we are getting — this is for the first time our efforts of the management is all the way to reach closer to those levels because now we have the opportunity to scale up the production to those levels. Of course there at times are bottlenecks like for wagon production, ability of wheel sets has always remains a challenge and if there is a break-in production naturally it affects our installation of capacity. Similarly in the foundry area also there are certain specific bottlenecks which we face in this like in case we have to produce different various types of castings because we are also doing a large number of export casting business. But that must be changed, the batch mix and all these things the production is bound to get a little down at that point in time but of course, we can pick it up. So we are hopeful that the capacity of the company which is there already recorded in system we are closer to achieving that when now since we have the full run of this thing. The second question that you asked INR9,300 order book what is the timeline. The railway order book basically is 39 months and accordingly we target to achieve within that period, so it is three years, three months and that is what the target line we have for achieving this order book.
Nalin Shah — NVS Wealth Managers — Analyst
So. I just want to extend the question that what is the value of the topline from the two plants which we can generate as you explained to me about the physical production, in terms of value what will it be and 39 months you count from when.
A.K. Vijay — Executive Director
Thirty nine months, we count from the date of the order which was in the month of May 2022. Accordingly, it goes up to next three years. This is this year and then further 2.5 years the order book is basically for and the second question topline the average price for the wagon if you see what is prevailing today in the market on today’s basis is 35 lakhs on an average and accordingly the capacity explained to you. So the top-line relates to for the wagons, the top-line multiplied by the capacity and for the foundry it is 42,000, 40,000 tons capacity and average relation price for a foundry products is including without the component is in excess of INR1,50,000 and the component can be closer to INR200,000 so accordingly the number of foundry can be — so basically the capacity-wise we can certainly see that but then achieving 100% capacity, I explained to you what are the issues which need to be addressed to and which is attended by the management.
Nalin Shah — NVS Wealth Managers — Analyst
Thank you very much and my all the best wishes for achieving the superlative performance in the years to come. Thank you very much.
A.K. Vijay — Executive Director
Thank you so much.
Operator
Thank you and our next question is from the line of Dhaval Sheth from Dhaval Sheth Financials. Please go ahead.
Dhaval Sheth — Dhaval Sheth Financials — Analyst
Good afternoon sir. Hello, am I audible?
Operator
Go ahead, you’re audible.
Dhaval Sheth — Dhaval Sheth Financials — Analyst
Yeah. Couple of questions. One is the inclusion of Rakesh Tripathi as a director. So what will be the role of him going forward and any update on regarding 6,500 wagons of Indian Railway and what is the work in process. How much wagons we have produced till date. And the third one is clarity for the future business and of our revenue guidelines. Thank you, sir.
A.K. Vijay — Executive Director
I’ll cover the point number second first. The number of wagons produced in the first quarter was nearly 120 numbers. The reason being this thing that we didn’t have any orders from the railways and whatever order from private were there we have never been able to get the wheelsets from Rail Wheel Factory which we are giving priority only for railway orders and not for any private orders. So that was a big suffering which we had in the first quarter. Second quarter once we had our proto approved in the month of July we started the production right on this from the month of August only and roughly about from mid of August we were getting into the full schedule. So accordingly in the second quarter we produced about 477 number of wagons. This is what we have been able to produce during the first half of the year. And as far as your next question is concerned, regarding what is the top-line and all, I think I’ve already answered to Mr. — when I was replying to question of Mr. Shah, that how the order book is today and what is our execution plan for that and what is the timeline for it.
And as per your question for the MD, Mr. Tripathi is concerned, I’ll request Mr. Mookerjeee to highlight that. Thank you.
Indrajit Mookerjee — Executive Vice-Chairman
Mr. Tripathi is joining as a Managing Director of the company. So the entire company’s operations. Including profitability and all other effects which are required to be managed and governed will be under the leadership of Mr. Tripathi. He is going to be the Managing Director of the Company. Is there any other clarification on that that’s required, I’ll be most happy to give it.
Dhaval Sheth — Dhaval Sheth Financials — Analyst
Thank you very much.
Operator
Thank you. [Operator Instructions] We have the next question from the line of Balasubramanian from Arihant Capital Markets. Please go ahead.
Balasubramanian — Arihant Capital Markets — Analyst
Good afternoon sir. The order book mentioned around INR9,300 crore. Could you please give the breakup for that in terms of Heavy Engineering, Steel Foundry and Bright Power division.
A.K. Vijay — Executive Director
Any other question?
Balasubramanian — Arihant Capital Markets — Analyst
Sir, could you please give the order breakup for Heavy Engineering, Steel Foundry, Bright Power division.
A.K. Vijay — Executive Director
Any other question you have?
Balasubramanian — Arihant Capital Markets — Analyst
Sir, and last call you have mentioned, these wheelsets are expected to come from November onwards. What is the status right now from China? These are the two questions, sir.
A.K. Vijay — Executive Director
Okay, yeah, you wanted to know the order book position. I mentioned about INR9,300 crores. It comprises like INR7,500 for Heavy Engineering division. Steel Foundry division is INR260 crores, of course the order book of steel foundry will further swell once the supply for the wagon start making because this wagon includes a large number of order for the Steel Foundry division. As far as the Rail EPC division concerned I earlier also mentioned our order book is INR1,325 crore rupees and others are roughly about INR200 crores. So this is how the complete order book of INR9300 crores comprises of. The wheelset import we mentioned last time that yes November, November it is not coming because of some China problem of COVID and also that as a result of the lockdown — sorry shut-down because of the COVID impact the inspection and all they have put on hold. Finally, it has not been done and we are glad to share with the people that yes, the first consignment has left the factory to the port for shipment to India. So now we expect that it will come in sometime in the month of December only but not in November but yes, now the pipeline has started and from December onwards, we will be getting a regular consignment from import from China and which will be used primarily for our private wagon production for which we have a sizable bulk orders. Thank you.
Balasubramanian — Arihant Capital Markets — Analyst
Yeah, Sir, I have one more question. Like is there any changes in guidance for delivering in wagon about 3,300 wagons in next six months and 6,000 is [Indecipherable] wagons in next financial year. Is there any changes or you are considering the same guidance?
A.K. Vijay — Executive Director
There is no change. We are targeting to keep what we have advised you and we are working towards that direction given, barring certain untoward situation or some critical political situation all this thing, we think that we remain on track.
Balasubramanian — Arihant Capital Markets — Analyst
Sir, could you please throw some light on capex part, so what kind of plan.
A.K. Vijay — Executive Director
We are very conservative as far as the capex plan is concerned. Our target was to invest in excess of INR100 crores to augment balancing capacity and also improve on the production capacity but our right now endeavor is invest only in the balancing equipment so that we have that first opportunity to test our existing infrastructure and asset and allow them to set to full and thereafter then invest on the further major expansion and all these things. So we are following this principle and going accordingly. Roughly our estimation is the thing that yes we should be in a position to control the expenditure on capital account to something around INR50 crores to INR70 crore rupees in this financial year.
Balasubramanian — Arihant Capital Markets — Analyst
Okay, sir, got it. Thank you so much, sir.
Navin Agarwal — HEAD INSTITUTIONAL EQUITIES
Thank you.
Operator
Thank you. Our next question is from the line of Sarvesh Gupta from Maximal Capital. Please go ahead.
Balasubramanian — Arihant Capital Markets — Analyst
Good afternoon sir and thanks a lot for taking the question. So sir, for this year’s target of 3,300 odd wagons since we have just turnaround 600 odd wagons in the first-half so we are targeting around 2500 to 2700 wagons for the remaining six months.
A.K. Vijay — Executive Director
Any other questions?
Sarvesh Gupta — Maximal Capital — Analyst
Yeah, second is on the debt side. So what are our plans in terms of debt reduction or interest cost reduction or any other plans on reduction of the debt that we are planning to pursue because we have a relatively high debt on the balance sheet.
A.K. Vijay — Executive Director
Is that — these are two questions. Should I answer that?
Sarvesh Gupta — Maximal Capital — Analyst
Yeah and my last question is sir. this quarter so if we do the maths out of around 240 odd crores in the Heavy Engineering division, around INR170 crore is through the wagon, so if you can explain the split of the remaining revenue in the Heavy Engineering division and how much of Foundry division revenues is accounted in the Heavy Engineering division.
A.K. Vijay — Executive Director
Right. I’ll go in seriatim. Number one, you asked that I’d be targeting 2500 number of wagons in the remnant part of the year that is in quarter three and quarter four. I explained in my opening remark also that post-approval of the prototype we have geared up the production lines and we have been able to achieve close to 300 number of wagons in the month of September. Going forward we will be only improving on this. So even by that standard of what we have achieved in the month of September which is 300 numbers, you can always understand that 1800 numbers are anyway within that range only and since we are going forward we are going to improve on the production and as Mr. Mookerjee also explained in his opening remarks, the steps taken by us company to allow company to produce much at a greater production levels by improving the efficiency and also the management structure. So all these things are certainly going to contribute in a significant way and in a positive manner. So accordingly achieving closer to 3,300 which we are indicating about this thing it’s certainly feasible. Of course there had been some delay in the initial start-up production because of the reason we need to vent into the prototyping. So we are — we have of course we would have wanted to be in a better situation than what we are today but yes we will be closer to that. Your question number 2, debt interest and your question number 3, the breakout of this thing. I will request my colleagues, Hemant Bhuwania, to throw some light on this to the extent it’s feasible in this.
Hemant Bhuwania — VP, Corporate Finance
Hello. So, working capital debt if you see our balance sheet as on September we have a debt of around INR660 crores, INR670 crores. I think this will continue to be at same level since we are executing this bulk orders from railways. In fact if you go on a realistic, it will go, it will move upward only, it will not go down for this bulk orders of railways and your third question was on interest rate. So interest rate with the current increase in interest rate across country we do not see any foresee that interest would come down, although we are at constant touch with our institutional bankers and others to bring it down but I doubt that within this year unless there is certain radical change by the government there would be certain reduction in finance cost as well.
A.K. Vijay — Executive Director
I would like to add what my colleague, Hemant, has just shared with you that although we have a large debt but if you see my debt the maximum debt is regarding working capital only. The long-term debt in our books is very small. It is — if I’m correct, Hemant, correct me, it is nearly INR200 crores. So, the long-term debt is merely a INR200 crore rupees. So that you can say the company is not highly leveraged as far as the long-term debts are concerned and there is opportunity for company also in case somebody requires for major expansion and all these things to look forward to go for a long-term debt also which will enable the company to do this thing. Policy-wise, we are generally relying upon the promoters also who are basically very generous to support us and have been putting in the money in the company by way of preferential issue as well as for the right issue, so that way the company is fortunate enough to bank upon the promoter group who are basically bullish on the company and are providing required funds as and when the company needs that. So that is basically the debt side story is concerned. As far as the last question of your the breakup of turnover. The breakup of turnover, Hemant, will like to just add to it.
Hemant Bhuwania — VP, Corporate Finance
We had from Heavy Engineering we had around INR50 crore of turnover from our hydro mechanical and bridges division and the remaining part what you see is from rolling stock. The Foundry turnover is there in the result. So Foundry if you see we had a turnover of around just — just one minute. So Foundry we had a turnover of INR191 crores in September.
Sarvesh Gupta — Maximal Capital — Analyst
Understood, sir. Thank you and all the best.
Operator
Thank you. The next question is from the line of Pranav from Omkara Capital. Please go ahead.
Pranav — Omkara Capital — Analyst
Hello, am I audible?
Operator
Yes you’re audible.
Pranav — Omkara Capital — Analyst
Hello. Thank you for the opportunity. Sir, just wanted to understand based on your opening remarks, you were saying that you want to shift your focus on building of railways tracks towards signaling and other projects. A) Why are you wanting to not shift right now from the EPC side of it of railway tracks to signaling and what is the opportunity size there that you’re seeing and second is like you said for FY ’23 you are targeting 3,300 wagon. What is the target for FY ’24 and beyond.
A.K. Vijay — Executive Director
What we mentioned is very clear. In fact rather let me again clarify you. We are not moving from one to other. Signaling is the core of this company, the Rail EPC company which we are operating. The core business of that is signaling so that will be more focus now. We are only trying not to get into a long-term track laying project which are basically as I explained in my statement also. Number one, long time taking, number two, there are a number of local situation which influences the project completion including the land acquisition, the bridges construction, the land development. And for one or other litigation if we are stuck, then our money remains blocked and invariably we need to go for lodging claims and then settling claims which is again a very time-consuming process and it affects my liquidity and cash flow. I don’t want to get into a situation whereby my liquidity and cash flow is blocked for long as you see in the Kalindee balance sheet today we are heavily blocked on the liquidity and cash flow because of these reasons. Of course we will be realizing much larger sums of money but then yes that will take time and by that time I need liquidity today and I don’t — can’t wait for that. So that’s why the focus today is now to getting into smaller kind of contracts in there where the end-to-end is tied up or otherwise our core strength, signaling, ballastless track and auto fare collection as well as the overhead electrification. The future of this segment is also considerable bright for the reason that yes, railway is looking for opportunities to open the maintenance segment also where we have a good strength and once it opens up, definitely that is the area they will be focusing more on this thing which will be giving us a little better liquidity and our turnover revision will be faster. Thank you.
Pranav — Omkara Capital — Analyst
So just on the wagon side, like you mentioned 3300 wagons is what you will produce for FY ’23. What are your targets for ’24 and ’25.
A.K. Vijay — Executive Director
I think our requirement is to produce 6600 and we will try to achieve that levels.
Pranav — Omkara Capital — Analyst
And just one last question. Like you said the maintenance side, another opportunity that will open up. So, the maintenance side will be on which segment. I mean where will the maintenance come. Will it only be on the signaling side or will it also be on other segment as well.
A.K. Vijay — Executive Director
It can you possible for other segment also. What I was referring to was basically in respect of the Rail EPC segment which is signaling or electrification or for that reason even the repairing of the Metro tracks and all. So all those basically is relative to the EPC segment only. Opportunities will be opening up. If they open up in this segment they will be opening with other segment also.
Pranav — Omkara Capital — Analyst
Okay sir, thank you.
Operator
Thank you. The next question is from the line of Anurag Patil from Roha Asset Managers. Please go ahead.
Anurag Patil — Roha Asset Managers — Analyst
Thank you for the opportunity. Sir, in Heavy Engineering division once our utilization touches optimum level what kind of EBIT margins we can expect on a conservative basis.
A.K. Vijay — Executive Director
I will refrain from this answer because this is a very forward-looking statement and I hope you will understand and appreciate my situation in this aspect.
Anurag Patil — Roha Asset Managers — Analyst
Okay sir. Just from another perspective, so current margins can we say further improvement is still possible across all three divisions.
A.K. Vijay — Executive Director
Normally yes, because the reason this thing that’s standard if you will go for improving our production and all the thing your overhead cost doesn’t go commensurate to that and automatically reflect near bottom-line. So the answer is affirmative.
Anurag Patil — Roha Asset Managers — Analyst
Okay. That’s it from my side.
Operator
Thank you. The next question is from the line of Hari Kumar as an Individual Investor. Please go ahead.
Hari Kumar — — Analyst
Yeah, good afternoon, sir. My question sir, is regarding this other current assets. Can you throw some light in detail because nearly if I’m not mistaken INR1,000 crores are blocked and when will they be released, sir. And second thing is rationale for continuing Rail EPC like in spite of this poor return on capital the current interest rates and also there are large number of new players like construction players are entering is there any long-term rationale.
A.K. Vijay — Executive Director
Sorry. Your second question is not very clear to us. Will you kindly repeat it?
Hari Kumar — — Analyst
As for rationale for continuing this Rail EPC like in spite of very poor return on capital ROC and also there are large number of new players entering this field, in the current interest rate scenario is it rational for continuing in this segment, sir.
A.K. Vijay — Executive Director
Sorry, I’ll start by answering your question number two first. The rationale for continuing with the Rail EPC business being the largest also, it is true that large number of people are coming and all this thing but your strength also comes a lot and fortunately for us, our both Kalindee division and Bright Power division have core strength in signaling and telecommunication and also in the Bright Power on the rail or electrification. So this core strength is critical for us and we’d like to capitalize to the maximum strength possible on this thing. As explained earlier also we don’t want to get involved into long-term, very long-term contracts where and mainly relating to where certainty is not there like track laying and all and that is how basically the structure of the company is being done. Moreover, it is very evolving, the Rail EPC business is very evolving business and the kind of focus which the government is presently putting on rail infrastructure this is a business to be there in for next 10, 15, 20 years. So this certainly gives us a lot of hope and with the opening of a segment of maintenance it will open grander opportunities for this segment, so we’d like to remain in this segment and also expand but of course our interest is very focused that we don’t want to get our working capital involved in a very large manner in this business. So accordingly we are becoming choosy in acceptance of the order and also in doing of the jobs. As far as the second question this is my answer. Your first question was why other current assets. It also linked to my answer to your second question which is basically my major money is in others are currently blocked into the unbilled revenue which is relating to the Rail EPC business where my — I have done the job but I cannot bill because the milestone can be achieved and milestone cannot be achieved for the simple reason of this thing that some other agencies have not completed the task or the Railway has not be able to provide that particularly area free from all of the encumbrances. So accordingly although have proceeded for certain steps but then I cannot proceed with the final step. So that’s how basically we are finding and that is why we have changed our gear to make sure that this start coming down and in future our money rotation is much faster which will also help me in managing my interest burden. So this is why the reason for this thing. Apart from that, about INR200 crores is the GST which is certainly realizable but since earlier they invest in wagon segment, the rates were 5%, in Q2 12% and now to 18%. So accordingly the things are changing also and realization will much faster. We expect that within a matter of one year or one-and-half year this money will certainly be realized by the company. That will also give additional resource for liquidity to the company. Thank you.
Hari Kumar — — Analyst
Mainly is the old money coming with interest, sir, this legacy business money.
A.K. Vijay — Executive Director
It doesn’t come with the interest, I explained that in the case of the Rail EPC business, it is all basically depends on the success of the claims which we keep lodging with the vendors but it takes very long time for settlement of those claims.
Hari Kumar — — Analyst
Thank you, sir.
Operator
Thank you. Ladies and gentlemen we be able to take the last two questions from the participants. The next question is from the line of Sarvesh Gupta from Maximal Capital. Please go ahead.
Sarvesh Gupta — Maximal Capital — Analyst
Thank you, sir. So, sir, my question was on the margins only. So if you can indicate some the major order that we have received from the railways, what kind of gross margins and EBITDA margins are we expecting from this project.
A.K. Vijay — Executive Director
I think, Sarvesh, you were there earlier also and you have already certain questions and as to some of the other shareholders question, I have also said. I will refrain from coming across on the margin levels and all this thing and since this is a very forward-looking statement, the company as a policy don’t want to make. So, I certainly refrain. You have to basically draw your own conclusion based on the results which have been published and provided to you.
Sarvesh Gupta — Maximal Capital — Analyst
Understood sir, thank you.
Operator
Thank you. We will take the last question from the line of Balasubramanian from Arihant Capital Markets as a follow-up question. Please go ahead.
Balasubramanian — Arihant Capital Markets — Analyst
Thank you so much for taking my questions again. Sir, I wanted to understand about the payment cycle for general as well as specifically for EPC projects. Is there any challenges because of the new budget allocation in railways in this quarter.
A.K. Vijay — Executive Director
To answer your question in on line is that fortunately for us, once we achieve the milestones which are billable milestones, the payments in Railway is normally fast because budget allocation has been done on a priority basis for this segment. The challenge remains where basically the payment terms are defined in a manner whereby you realize 70% on completion of the jobs first stage, then also the 10% realized on the preliminary stage, the 10% realized on the final acceptance stage and the 10% realized after completion of certain duration that is a warranty period. So that is how the money remains blocked for long until the project is completed and if the project is not completed within time span of three years which basically is being allotted to and it goes beyond five, six, seven years your money remains blocked for that reason and that is the biggest hurdle we are facing in the Rail EPC segment and primarily in the railway track laying business and that’s the focus of the company’s management how to manage it in a manner whereby we are into the business where the money is rotating much faster compared to what in that these kind of businesses are there. So that’s the focus of management. We explained in quite detail in our opening statement also. We also explained during question-answer session also and that management is very conscious about it and going forward efforts are there not to allow the other current assets, debtors and inventory to rise beyond certain levels in this level. It will certainly start coming down which will be providing additional liquidity to the organization. Thank you.
Balasubramanian — Arihant Capital Markets — Analyst
Thank you, sir. Sir, my last question about what kind of ramp-up we may expect in steel foundry division for next two years.
A.K. Vijay — Executive Director
We have never allowed to test our capacity. That is why we were basically producing very leisurely that whatever is required to produce, we’re producing but now that scenario has changed where we will be required to produce much more then what today is we can produce. So accordingly we are gearing up and as I mentioned in my statement that yes we are adding certain balancing equipment making sure that we are able to achieve and meet the requirement in respect on number one, wagons and number two, the committed export orders. So that’s how we’re going about this thing and this will certainly give a traction and we can see much improved performance for our steel foundry division in the coming days.
Balasubramanian — Arihant Capital Markets — Analyst
So it would be anywhere 40,000 tons per annum.
A.K. Vijay — Executive Director
That’s the capacity but then to achieve the capacity you understand if I can make one type of production day in, day out it is achievable but in practical life it is not possible. I have to do a lot of combination. So combination certainly make an impact on the production. In normal standard speaking that the target is that if you’re achieving 80% you are doing very good.
Balasubramanian — Arihant Capital Markets — Analyst
So is 30,000 tons in that range.
A.K. Vijay — Executive Director
That’s the company’s endeavor and the company’s effort towards that direction and also then why not, we go beyond that also.
Balasubramanian — Arihant Capital Markets — Analyst
Okay, thank you so much, sir.
A.K. Vijay — Executive Director
Thank you.
Operator
Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference over to Mr. Indrajit Mookerji for closing remarks. Thank you and over to you, sir.
Indrajit Mookerjee — Executive Vice-Chairman
I would like to thank all our well wishes as well as the investors for asking very constructive question. As you know that, and I think it has come up very clearly that we have a very fast sort out strategy for the future. We know the market is very big. Like we discussed of EPC many questions came up. But we don’t want to go over all over the business and spread ourselves like a wall to wall carpet. We want to be very strategic. We have defined. We have done exercises to find out where our competencies lie, where we have credentials which others don’t have and we only take those strategies which where we don’t have the problems of getting stuck. This is what, I think has been explained by Mr. Vijay. Similarly, we can always go and invest but we would not like to do that. We have to have — we want to do the best resources utilization of our own assets and that’s the reason why we are trying to debottleneck through automation, through lessening the re-work, improving the quality, etc. all the management tool that’s available, the lean manufacturing so as to get the highest numbers of production out of the wagons and of course, the same is true for Foundry. So. I can only, I only — we need your good wishes. So that we, the march that we have started, we can take it forward to a different height, a height for which all of us will be happy and we will be rejoicing. So thank you very much for your interest in the company.
A.K. Vijay — Executive Director
Thank you, everyone.
Indrajit Mookerjee — Executive Vice-Chairman
Can we log out now?
Operator
Yes, sir. [Operator Closing Remarks]
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