Titagarh Rail Systems Limited (NSE: TWL) Q1 2026 Earnings Call dated Aug. 12, 2025
Corporate Participants:
Unidentified Speaker
Parth Patel — Investor Relations
Umesh Chowdhary — Vice Chairman, MD & CEO
Analysts:
Unidentified Participant
Vedant Sarda — Analyst
Amay Sharda — Analyst
Mohit Motwani — Analyst
Aryamaan Agarwal — Analyst
Parvez Qazi — Analyst
Sudeep Anand — Analyst
Akash Vora — Analyst
Rajesh Bhandari — Analyst
Rehan Saiyyed — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Titagarh Rail Systems Limited Q1 FY26 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 presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing10.0 on your Touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Parth Patel from MUFG. In time ir thank you. And over to you sir.
Parth Patel — Investor Relations
Thank you Palak. On behalf of KeyTago Rail Systems Ltd. I extend a very warm welcome to all the participants on Q1FY26 financial results discussion call today. On the call we have Mr. Umesh Chaudhary, Vice Chairman and Managing Director, Mr. Kritesh Chaudhary, Deputy Managing Director and Mr. Saurav Singh, Chief Financial Officer. Before we begin the call, I would like to give a short disclaimer. This format contains some of the forward looking statements which are completely based upon our belief, expectations and opinions as of today. These uncertainties are not a guarantee of our future performance and involve unforeseen risks and uncertainties.
With this I would like to hand over the call to Umesh. Sir. Over to you sir.
Umesh Chowdhary — Vice Chairman, MD & CEO
Thank you Parth and a very good afternoon to everybody and thank you very much for joining this earnings call of Q1FY26. We have already shared by both the press release alongside with the results yesterday as well as the investor presentation, a lot of details and we have tried to segmentize the details this time and we would intend to follow this format in periods to come to be able to give the complete picture of the progress of the different projects.
But in a nutshell, I would like to say that as far as the overall company is concerned, there have been significant developments during the period. The company. I had mentioned in the last call that our focus is going to be a lot on booking orders and I’m happy to share that the company was able to book orders worth almost 2,500 crores during this period including GST, both some NPR in the passenger rail segment as well as in the freight rail segment and this is a trend that we intend to continue. This is an effort that we will continue to pursue to build up a stronger order book to have a larger visibility both in the freight side and the passenger side.
Apart from that, a very significant development during the period has been the acquisition of the land from West Bengal government. This was the land which was a part of earlier, a part of Hindustan water which the government has resumed on account of the closure of their unit. And this is contiguous to our existing passenger rails factory. In fact, the only thing we had to do to take possession of the land once we were allotted was to break open the boundary wall. It is that contiguous with our existing facility. This enables us in many ways. One, of course, it helps us to expand capacity and to pursue backward integration in the same premises.
But more than that, it enables us to become a comprehensive, create a comprehensive facility for testing and commissioning of rakes, including the modern rakes and probably in the future high speed rakes which as India is moving towards the high speed trains and being a leader or emerging as a leader of the rolling stock, we would definitely also like to evaluate the that opportunity in years to come. So this will give us a test track of about 1.6 km, a level test track which is unique because that is not available with any of the private sector or coach manufacturers in India and will be a huge advantage to us in years to come.
So that is a very, very significant development because it’s not very easy to get land contiguous to your existing factory. And of course the promoters have infused 200 crores into the company or have committed to infused 200 crores in the company against a preferential issue. And of course all the other highlights have been given. But on the challenges faced by the company, the severe challenge that has been shared also with the investors in the last quarter was the poor wheel set supply from the railways, which actually was quite a big setback for the company and for the industry as a whole.
I’m happy to share. Over the last two, three weeks the position has normalized and we are getting adequate wheel sets now from the railways. But during the quarter the production fell to almost 1600 wagons, which was a significant drop over the earlier period or the corresponding period. The company is extremely confident. We are almost certain that we will be able to recover this loss of production and maintain volumes which are in line with what we did last year and also the EBITDA margins in line with what we did last year. So we don’t see much of a concern on that as far as the full year is concerned.
However, the biggest growth story which we have also mentioned in our press, not press release is the passenger rail system. The all the SBUs and we have divided this time the disclosure on the different SBUs within the main business unit of passenger rail system. All the SDUs have actually started functioning. While the Vande Bharat revenue will start accumulating only next year. But all the other SBUs, which is the propulsion and electrical as well as the Metro, will start contributing in a meaningful manner within the current financial year. I think that in a nutshell sums up the overall picture.
And of course one very important development is also that the company has decided to focus on on the core sector of its business which is railway systems. And we had announced that we had constituted a board committee to evaluate what we have to do for the shipbuilding, bridges and defense business. So the board has decided to demerge the shipbuilding business into a wholly owned subsidiary which will then pursue its growth with or without induction of strategic stroke financial partners. But the idea is that to grow that business, which is also a very core sector of the government, the government has identified that as a core growth sector for the country.
And considering that our company has all the credentials and is currently also delivering several vessels to the Indian Navy, has delivered vessels to the Coast Guard and National Institute of Ocean Technology and all of that, we believe that this is going to be a business that can grow significantly in its own accord. But since there is not much synergy with our railway business, we would like to pursue it in a separate. Separate style and separate company. And the company intends to continue to focus on the railway business which is both the passenger rail system and the freight rail system for the signaling system, signalling and safety system which is a subset of the passenger rail system.
The company has participated in a few tenders and is also pursuing certain strategic partnership or tie ups or technology tie ups with certain international companies. But that will be folded into the overall business growth of the passenger aid system. So with that I would conclude my opening remarks and I’d be very happy to take any questions. Any suggestions. Thank you.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may please press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Please note, ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference call, please limit your questions to two or three per participant.
The first question is from the line of Vedant Sarda from Nirmal Bank Securities Private Limited. Please go ahead.
Vedant Sarda
Thank you for the opportunity. I just wanted to know our full year revenue guidance and our long term revenue guidance for the company.
Umesh Chowdhary
So we do not give any revenue guidance per se on the company long term. But what we have mentioned in the guidance note that has been alongside with the result is the freight business of the company. We expect in the current year to remain in line with what we have done last year. So we do not expect any significant growth on the freight side. But on the passenger side what we had done was 12 cars in metros and about 300 traction motors in the full year in the propulsion.
And we are expecting this year to grow the 12 cars to 120 cars which is a tenfold jump. And the propulsion system also we are expecting to have a significant jump. As we have already disclosed in our press note in terms of the long term potential, the first phase expansion of our passenger coach plant will take this capacity to about which we expect to reach maybe in the next year or end of next financial year to about 50 cars per month between Vande Bharat and Metros subsequently increased to about 72 cars a month in another two to three quarters thereafter.
And the long term target for the passenger Is to reach 100 cars per month which we expect to reach in about three to four years time. Particularly with the acquisition of the new facility or the new asset that we have acquired. As far as the wagon is concerned, our capacity is now between the Calcutta unit and the Bharatpur unit is at about 1000 to 1200 wagons and the current expected business volume that we expect should be in the vicinity of about 9002000 wagons per month till the new power plants which have been planned come up or the substantive growth in the railway freight revenue goes which we expect also should happen once the overall capex of the railways develops and all the BFCs had start operation.
But till that time we expect that we will be able to maintain the current run rate of between 900 plus minus something.
Vedant Sarda
Okay, thank you so much.
operator
Thank you sir. The next question is from the line of Amir Sharda from Punata Investment Advisory Private Limited. Please go ahead.
Amay Sharda
Hi sir. Thank you for the opportunity. So the first question was regarding the real estate issue that you received. You say that it has been resolved. So from August onwards can we expect 900 to 1000 variants per month volume that you have added.
Umesh Chowdhary
So the real side problem has been resolved. In fact from the last week of July, first week of August and there is a lot of static. If you can kindly go on mute, that will be easier. Yeah, yeah, sure, just a sec. Yeah. So we expect to now produce in the vicinity of 900 wagons a year, as we’ve given in the press note, we would be able to reach the same numbers or maybe make a marginal improvement over last year.
And in order to do that, we should be producing in a ballpark of 900 wagons plus minus 50 wagons every month. And we are confident of being able to do that.
Amay Sharda
Okay, thank you for that, sir. And the second question is regarding the margins in the passenger bag and segment. So is it so that the margin for propulsion is better than the margin for cars or nothing like that?
Umesh Chowdhary
No, propulsion is a higher margin business. We’ve always maintained that propulsion is a higher margin business. But of course, you know, right now it’s in a nascent stage.
As I’ve always explained that it is only the operating operational leverage that’s not available. Once we start delivering a certain volume, then the margins that we should be able to get in both operations as well as services should be significantly more than what we should be able to get in the rolling stock.
Amay Sharda
Okay, and for the 120 metro cost target that we have out of that, will it be possible to bifurcate how much will be for Bangalore Metro and how much for Gujarat?
Umesh Chowdhary
We would not be able to do that for competitive reasons. But in terms of the overall numbers, because that is very important in the current phase of the company.
What is important is to see the ramp up. And if we are able to do, which we are very, very hopeful and confident of being able to do, 120 cars, that in itself, with the Mumbai line having come and with the Gujarat Metro and the Vande Bharat and all of that is a clear indication of how the company’s PRs can scale up. As is well known, Metro coach sells at about 11 crores apiece. And the capacity that is being created once that is operationalized and stabilized, that completely changes the dynamics of the overall company as such.
Amay Sharda
Absolutely. The Bangalore Metro is also 11 crores or is that lower Bangalore Metro?
Umesh Chowdhary
Bangalore Metro is as a manufacturer of crrc. So there the material is all free supply. So that doesn’t. The entire revenue does not flow into our books.
Amay Sharda
Okay. Thank you.
operator
Sir, may we request you to return to the question queue for follow up?
Amay Sharda
Absolutely. Yeah. Yeah, sure. Thank you. Thank you so much.
Umesh Chowdhary
Thank you.
operator
Sir, the next question is from the line of Mohit Motwani from Tara Capital. Please go ahead.
Mohit Motwani
Hi sir. Thank you for the opportunity. My first question is around the dispatch of nine coaches which has been done in this quarter. Can you let us go? For which Metro project was this done for?
Umesh Chowdhary
W e do not disclose the customer name for competitive reasons. But we have disclosed that our first rake was flagged off by the honorable Prime Minister day before yesterday. And some of you may have also seen the visuals wherein, you know, it was a moment of pride for the company to see that the name was prominently displayed where the prime minister was flagging off the coach.
Mohit Motwani
Sure. And in terms of as you mentioned that you know we kept share the 120 coaches working with the split. But if you can, you know, let us know. Now you have four to five Metro orders. When do you expect, is there any completion timeline for each of these that you can share with us?
Umesh Chowdhary
We have already said that the Mumbai Metro has to be completed. I think if my memory serves me correct, between 24, around 24 months or so. So each one of them have a different delivery timeline and we have done our balancing of the capacity accordingly.
Mohit Motwani
Okay. Okay. And lastly you have done nine coaches in this first quarter and you are expecting to complete 120 coaches by end of this financial year which is about 111 coaches in the rest of the year. So that is about 12 coaches per month that you’ll be doing. And that will be around I think close to 50% capacity utilization. So what is, you know, driving this change? Is it the operationalization of the new plant or is the ramp up of your facilities, if you can give some sense on that.
Umesh Chowdhary
It’s a host of that, sir.
So it will not be an equated basis. I mean it’s not going to be an average run rate. It is going to be ramped up. So it is not going to be on a. Every quarter the same. The idea is that every quarter there has to be an improvement versus the previous one. Sure. As we have written also that it marks beginning for the stainless steel coach production of the. So our entire stainless steel production line is now fully operational. And that in itself is. Is going to be the game changer for us.
Mohit Motwani
Thank you for those answers.
So I’ll come back in the few. Thank you.
operator
Thank you. Sir. The next question is from the line of Aryaman Agarwal from Money Stories Asset Management. Please go ahead.
Aryamaan Agarwal
Good afternoon. So I want to understand how the order pipeline scenario is looking. So in the next nine months, both in the freight railway systems and the passenger rail system, what sort of demand are we looking at?
Umesh Chowdhary
Yeah. Good afternoon, sir. So we’ve already given some details about the order book that we have. And you can see that for the passenger rail system for the Vande Bharat, we have a very Healthy order book for the Metro. Because of the development time, we are looking at booking further orders, although we have about 440 odd coaches in order with us now.
But we are, we have participated and we are continuing to participate in additional tenders to get further Metro business. And the same is the story with the propulsion. While we have some orders, we have an order book of about 550 odd crores in the propulsion, which in itself is a very big thing because this is a. All these businesses were contributing to less than probably a single digit in terms of percentage. All these businesses combined were contributing to less than single digit in terms of the past revenues of the company. And the very fact that the business of each one of the SBU under the passenger has actually started developing on its own is quite significant.
So to answer your question, the order pipeline in the investor presentation has been given for the Metro and we have seen it in media about the large tenders that are expected both in terms of Metro as well as suburban transport like MrBC etc. And the company would definitely pursue these opportunities as we go along. As far as the freight business is concerned, we have declared an order book which is outstanding order book of about 10,500 wagons. And continuously we are during the quarter also we booked an order of about 900 or some substance, our cloak 900 wagons.
And we believe that considering the overall cost advantage and the policy of the government to move the transportation from rail to sort of road to rail, the wagon tenders should be, should be issued somewhere this year.
Aryamaan Agarwal
All right, so from the government’s order perspective, we’re not seeing any slowdown as such.
Umesh Chowdhary
So the orders for the passenger side have been very robust for the freight as I had mentioned earlier. Also the small tenders from the railways and private sectors are continuously coming. The last tenders were to be done on a three year basis. So the last one was done about three years ago.
And we are expecting, or I would say in all probability the railway should come back with their renewed demand somewhere this year.
Aryamaan Agarwal
Got it, Got it. And secondly on the shipbuilding business, what sort of a business, what sort of vision do we have in that segment? What sort of a business are we looking at creating?
Umesh Chowdhary
That’s a very interesting segment. So what we have declared in our press release also that the facility that we are creating in Falta, it has a capacity to do around 12 to 14 or 14 to 16 vessels per year of up to 15060 meters.
And that is quite significant in terms of the facility that this company, this SPV will create, we would like to do all sorts of ships, including all sorts of naval ships and other ships. And you know, while the details of this project or the business plan of this project will be issued in due time and it’s just a decision that was finalized yesterday and will be implemented over the next weeks. We believe considering, you know, the number of policies that the government has come out with on the shipbuilding sector and also based on interaction that we’ve had with the various departments of the government, the government has clearly identified shipbuilding, specialized shipbuilding, particularly as a very core niche sector for the country’s development and growth.
And particularly because we have the expertise, we have the qualifications of this business, we feel that this can be a very strategic business or a growth oriented business that we’d like to pursue independently.
Aryamaan Agarwal
Thank you. Look forward to having a great year with the prs ramp up.
Umesh Chowdhary
Thank you.
operator
Thank you sir. The next question is from the line of Parve Kazi from Nuvama Group. Please go ahead.
Parvez Qazi
Hi, good afternoon and thanks for taking my question. Couple of questions from my side on the passenger business. So we mentioned in a press release that we expect the dispatch of Endaban Metro coaches to start in Q3. So by when do we expect to kind of complete this order? Will it be in one year or will it take slightly from that?
Umesh Chowdhary
Yeah. Hi. So yes, we will complete it within a year because you know the Ahmedabad is only 30 cars. So we have already started the production of two trains, that is six cars and we will deliver the two trains one after the other in Q3, Q4 time frame and thereafter we intend to deliver, you know, maybe two to three cars in a two to three trains in a month and complete this.
So yes we will. To answer your question, we expect that based on the delivery timelines of the contract, once we start the delivery we should be able to complete it in about a year to 16 months time. Both Ahmedabad and the Surat.
Parvez Qazi
For the Mumbai Metro Line 6 order that we have recently received for 108 which is the execution time frame is I think about 24 odd months. So from when does this 24 months start?
Umesh Chowdhary
It started on the 2nd of August, the day we received the LOA.
Parvez Qazi
And when do we expect the dispatch to start here?
Umesh Chowdhary
The first train is likely to schedule to be dispatched, I think if my memory serves me right, in 62 weeks from the 2nd of August.
Parvez Qazi
And lastly Pune Metro, the additional order that we get that we got is I think scheduled to be delivered in 30 odd months. So when do we expect delivery of that to start.
Umesh Chowdhary
So it starts in 24 months. Yeah, that’s another significant thing. I’m sorry I missed that in my opening comments. Thank you very much for asking this question. So the Pune repeat order that we have received during this period is a very significant development for two reasons. Number one, it kind of establishes the confidence of the customer on the company. To have to receive a repeat order is always a kind of validation of confidence.
And the second is that these are aluminium coaches. So what we have gone ahead this time and done is we have used this order to set up our complete aluminium manufacturing line. As you may be aware that in the past we were getting the flat packs from our associate in Italy and we were doing the final assembly of the aluminium coaches in Calcutta. But with this order we have already now placed the order and in fact as a matter of fact the equipments are already on the high seas and they should be arriving within this month for making the complete aluminium coaches in Calcutta.
This would make us the only company in India to have both aluminum and stainless steel manufacturing complete manufacturing facilities. So we expect to answer your question, Bhavesh. That first train for the Pune under the auction should get delivered between 18 to 24 months and complete thereafter within the next six to nine months.
Parvez Qazi
Second question on the wagon side interrupt you.
operator
Sir, may we request that you return to the question queue for follow up. Thank you sir, the next question is from the line of Sudeep Anand from Systematic. Please go ahead.
Sudeep Anand
Yeah, thanks for taking my question. So just one question on as we expect from.
operator
Sorry, interrupting sir, your voice is very low and it’s breaking.
Sudeep Anand
Is it okay now?
Umesh Chowdhary
Yes, better.
operator
Better.
Sudeep Anand
So. So as we expect our first prototype to be maybe by Q2F37.
Umesh Chowdhary
I’m sorry, I’m sorry if your voice is again breaking. Yeah, if you can not be on speaker that would be easier.
Sudeep Anand
Yeah, yeah. I’m using the handset only. Yeah. So what I was asking. So since I was expecting the first prototype of Sunday part by 3 to FY27 is it subject to approval after that from Indian?
Umesh Chowdhary
So there is a concurrent approval process and as a matter of fact we had the delegation from the railways did by the member concerned. Member even today which is there in our social media.
So this is a concurrent approval process and then after the train is delivered it has to go through an oscillation trial. This is a very standard process. So the terms of the contract is that once the prototype is delivered in two months thereafter we have to deliver the second prototype and thereafter in two or three months, something like that. We can start the regular production and dispatches. That is the time that is normally required for the oscillation trials. Okay. So basically we can expect the regular production of one day bath from Q4FY27 and that around the 20 to 25 cars as guided earlier per month.
I’m sorry, can you repeat your question? So basically we can expect the Regular production of one day Bharat from Q4FY27. Submit the two prototypes. Yeah. And roughly about 20 to 25 cars per month as we had guided earlier. Yeah. So 20 to 25 cars per month goes in a phase. Okay. So that is the delivery schedule of the contract. In the first year we have to deliver them 8 year 8 trains, then 12 trains, then 16 and then 25 trains per year.
Sudeep Anand
That’s correct. Okay. Thank you so much sir. Thank them. All the best.
Umesh Chowdhary
Thank you.
operator
Thank you sir. The next question is from the line of Akash from Dalal and brochure please go ahead.
Akash Vora
Yeah, thanks for the opportunity. So basically my question is just an add on to the question one of my earlier participants asked you. So just wanted to have a clarity on from today onwards it is from Q2FY26 onwards. How do we exactly plan to deliver on our Metro orders? I mean if you could help us understand by when we’ll be completing the Bangalore Metro and how the revenue will reflect for other Metro orders in our books of accounts.
Umesh Chowdhary
So as I mentioned so that you know we for competitive reasons we cannot really give customer wise by for case.
But you know we can give the overall planned production and dispatch targets which is for the current year we are targeting and we are expecting to deliver 120 cars. This will be a mix of both Bangalore and Gujarat which is Ahmedabad and Surat. Because these are the two contracts that are being executed which will be followed by the Mumbai and the Pune option clause.
Akash Vora
Okay. And just one more confirmation I wanted. So I think earlier in one of our calls you had alluded that in the one day Bharat and the Metro coaches will be doing some margins around 8 to 10%.
Right. And propulsion will be significantly higher, almost around 16 to 18%. So is my understanding. Right.
Umesh Chowdhary
So on a Metro the business I had mentioned that the margins are similar to the one in the passenger in the freight business which is between 10 12%. And then of course the operating leverage comes in. So you know, being a nascent business we. We do expect that we will only be able to improve upon this as we go along. And as far as the Propulsion is concerned. You’re absolutely right. It is between 15 to 20% of margin. Again, this is something that we will be able to achieve once we are able to achieve the desired volumes which we are ramping up and we should be getting to each one of the targets over the next I would say in different aspects, in different quarters.
But on an overall basis between the next four to six quarters we should be able to stabilize all the SBUs significantly.
Akash Vora
Thank you sir. Just last follow up on this. What would be the breakeven volume at which we should be able to manage these margins? Like what capacity we need to fish in to be able to consistently clock a double digit margin. And similarly on the propulsion side, what will be the breakeven volume?
Umesh Chowdhary
So I had mentioned this earlier in the last call. Also that we should be able to reach. Once we are able to reach between 15 to 20 cars production we should be able to get the optimum margin.
And thereafter the operating leverage or advantage once we add on the volume will only improve the margin from there. O n the propulsion. As far as propulsion is concerned, there are different business segments. The traction motor, we should be able to get that at about 120 to 150 which we have almost reached now. So at 150 traction motor amount which we are expecting to. And we’ve mentioned this in our press release also by end of this year we should be able to stabilize at 150 traction motors a month. That is 450 traction motors a year. We should be able to get to the desired margin as far as propulsion is concerned which is the propulsion system, we should be able to do that at between one to one and a half rakes a month.
And of course our target is to get to two rakes a month.
Akash Vora
Okay. And for propulsion I don’t have any more revenue share with abb, right?
Umesh Chowdhary
No, we never had a revenue share with abb.
Akash Vora
For propulsion and technology?
Umesh Chowdhary
W e had a technology transfer but we never had a revenue share. We. We have some components which we buy from them and we have already paid them for the transfer of technology that we have to do.
Akash Vora
So that’s just a one time.
operator
I mean maybe request that you return to the question queue for follow Akash sir.
Akash Vora
Yeah. Yeah. Okay.
operator
Yes sir. Thank you. Sir. The next question is from the line of Rajesh Pandari from Nakoda engineers. Please go ahead.
Rajesh Bhandari
Good afternoon sir. My first question is basically on the wheels [Foreign Speech].
Umesh Chowdhary
[Foreign Speech] in from let’s say January to June. Between January to Tu Joan, it will get stabilized. The travel, production and total capacity that we Are in which in that unit will be about 220000 wheels. [Foreign Speech]
Rajesh Bhandari
We’ll be able to manufacture means 1 lakh set [Foreign Speech].
Umesh Chowdhary
Approximate selling price [Foreign Speech]. So we’ll check it is a mixture of that. But it’s a primarily wheel plant. And then subsequently we can start making wheel set also over there, sir.
Rajesh Bhandari
Okay. Forging will be supplied by this RQ forging.
Umesh Chowdhary
No, this is a plant which will forge itself.
So they’ll be. We’ll be buying. It’s a joint venture between us and RK4G. So this will be an end to end plant.
Rajesh Bhandari
Any reason? Because I understand they also got approval from rights.
Umesh Chowdhary
I would not like to comment on that. This is a plan that has been set up in a record time. I can only tell you that this is my second.
Rajesh Bhandari
This is my second question. Please let me ask. Please.
operator
Okay.
Rajesh Bhandari
Yeah. Are we into coverage system also? And our turnover for FY27 and 28 total?
Umesh Chowdhary
We are not into cover system as of now, sir.
Rajesh Bhandari
Turnover for 27 and 28, sir. FY27 and FY28.
Umesh Chowdhary
We do not give any forward looking projections of that nature. We’ve given quantitative projections in our next notes. Thank you. Thank you. Thank you sir.
operator
Thank you, sir. The next question is from the line of Aniket from Step Trade Capital. Please go ahead.
Unidentified Participant
Hello.
operator
Yes sir. Please go ahead.
Unidentified Participant
I just want to clarify the news coming out of losing 173 crore. Hello.
operator
Yes sir.
Unidentified Participant
There is one news which is coming out which is a risk of losing 173 crore rupees linked with Italian subsidiary. Can you clarify this?
Umesh Chowdhary
Sure sir. This is the investment that we have made in our Italian associate Fiirema and we have given the disclosure both in our press note as well as in our results both March and in June that Fyrema has been facing certain challenges, financial and operational challenges. As is well known that we had invested into Fyrama and initially acquired it as a hundred percent subsidiary and subsequently became a jointly owned company between us and the government of Italy where the government of Italy also along with other investors.
So government of Italy owns about 30%. Other investors also own certain percentage and it seems to be a subsidiary of the company and it remains as an associate. So the value of investment, the standing value of investment is the value which has been disclosed in our financial results over a period of time. The primary purpose or the goal of acquiring technology credentials and setting up our passenger rail system business has already been achieved and today the company is fully independent in terms of the passenger rail system business and we are able to execute the orders with no support required from Serema.
The company Fihrama is now under what is called a CNC process and we are inactive. The company is in active dialogue through the Ministry to explore if the government can either enhance their stake or there can be other equity investors. So this is a situation which is uncertain and therefore clarity should emerge on that. By the end of this calendar year or Q3 or Q4 of this financial year. The amount which has been disclosed in the results is the amount which has already been invested in the past by the company. So there is no cash loss or potential cash loss.
But considering the overall size of the company, the size of the asset and the strategic nature of the asset to the government, we are hopeful of finding a positive resolution as we go along.
Unidentified Participant
Okay. Okay. So there is one more question. Have you mentioned the land acquired by the company? Right. So could you just clarify that what is the purpose of the land and how it is going to be utilized?
Umesh Chowdhary
I’ve already mentioned this in my opening comments. Is that this is the land which is contiguous to our existing passenger rail system factory. In fact we, as I mentioned that it is just the boundary wall had to be removed in order to take possession of the land.
And this is going to be used for expanding both the production as well as backward integration. But more importantly the testing and commissioning of rakes that are going to be produced in the passenger rail system. We have acquired this land which is about 40 acres in size on a total payment of around 136 or 137 crores to the government.
Unidentified Participant
So could you please specify what kind of backward integration the company is planning to do?
Umesh Chowdhary
It is backward integration of the coach manufacturing. So the components that go into the coach manufacturing, whether it is the various components or CRF or things like that.
Unidentified Participant
Okay, thanks.
operator
Thank you, sir. The next question is from the line of Rehan Sayyat from 3Netra Asset Managers. Please go ahead.
Rehan Saiyyed
Execution. Regarding your.
Umesh Chowdhary
Yes, you are sir.
Rehan Saiyyed
Yes.
Umesh Chowdhary
Yeah, to start in. So sorry, your voice is echoing. If you can just not be on the speaker mode, it will be easier. I
Rehan Saiyyed
will just repeat my question again. Yeah. I want to clarify regarding your Valley Maharaj paper train prototype that you have regarding expected by quarter two FY27. So how is the company mitigating potential delays especially given the complexity of the design manufacturing lines on this site?
Umesh Chowdhary
So we have a very robust system of monitoring and project management. We have a full team which is working on that. And in a project of this, it also involves many things.
Many, many, let’s say steps that have to be taken by the counterpart which is the railways. They have to be very close man, closely managed and dealt with the customer themselves. So as of now we are not expecting any delays from the schedule that we have shared in our presentation. And of course, you know, if there are certain areas we will suitably, I mean there is no one, one medicine for all problems. So depending on if there are problems, we will resolve them as we go along.
Rehan Saiyyed
Okay. As of now we are on the line for that, right?
Umesh Chowdhary
That’s right.
Rehan Saiyyed
Yeah. Okay. Thank you for. This is helpful.
Umesh Chowdhary
Thank you.
operator
Thank you sir. The next question is from the line of Vivek Gupta from Start Investment. Please go ahead.
Unidentified Participant
Yeah. Hi. Am I audible?
Umesh Chowdhary
Yes, sir, you are.
operator
Yes.
Unidentified Participant
So my first question would be just to understand the long term strategic goals for the TAG system Private limited following the transfer of the ship building business like is the company actively considering external investors or strategic partnership to scale the operations? Additionally, what is expected timeline for finalizing the strategy for the defense and bridge business segment and whether this involves full divestment or a joint venture or another form of strategic collaboration?
Umesh Chowdhary
Yeah, thank you very much for your question. So as far as the shipbuilding business of the naval business is concerned, we have very clearly mentioned and I would like to restate that we are open to all sorts of options both in terms of strategic partnerships or joint ventures primarily in order to capture the growth potential and the opportunities in this segment.
And as we go along this will be defined in terms of the timeline for the defense and what we exactly intend to do. That is what the board committee has been constituted for. And we expect that over the next maybe two to three months time we will be able to have the final deliberation and then of course subject to the approval of the board will communicate the final outcome to yourself as well as to the markets. Whether we would look at a complete divestment, joint venture strategic partnership, this is something exactly what we would evaluate.
But what the board has very clearly identified that for Titagarh Rail Systems our core business has been the railways and should be the railways and we should not have non core businesses within the company which end up taking away from both financial and managerial resources. As a matter of fact, when we had ramped up the passenger rail system two years ago, about two years ago when we got the Vande Bharat, I had in fact mentioned it that time also in my investor presentations and calls that we had decided not to allocate any business or any capital or managerial time to this business, the shipbuilding business for the next couple of years and thereafter we will formulate the strategy of what we have to do with this.
Having spent a lot of time, effort and energy in coming to the stage where we are on the shipbuilding business where we are meeting with lot of eligibility credentials and we have developed a very good brand name in the customer fraternity for the vessels that have been manufactured by us. Some of them have also been featured in the presidential fleet review of the government of India which is a very significant recognition. We felt that it was not in the interest of the company to just let that be and walk out of that business but to grow it in a separate manner without disturbing or without taking away from the importance of the rail business but according to separate importance to this business as well.
The same will be the motivation for the defense and the bridges business where the deliberation will be done keeping the same considerations.
Unidentified Participant
Okay. Okay. So with the new land acquisition in Uttarpara, could you just provide the timeline for full operationalization of of that extended facilities I.e. including the 1.6 kilometer test test track and what would be the investment that is required?
Umesh Chowdhary
We just acquired this land a couple of weeks ago, maybe two to three weeks ago and we already started the working on that. And once the entire plan is finalized we will definitely announce it in terms of the timeline for implementation.
We expect to do it in phases. As I mentioned, the phase of production increased as well as backward integration and the test track. So all of that we will, we will share in due course of time. But I can share that we will be moving very fast particularly for the phase one wherein the immediate requirement of the test track and the expansion in order to achieve the current first level of targeted production for 50 cars a month which is 25 metros and 25 Vande Bharat. We are targeting to implement that within the next 12 months.
Unidentified Participant
Okay, thank you. That’s it from my side. Thank you.
operator
Thank you. Sir, the next question is from the line of Pranjal from Morgan Stanley. Please go ahead.
Unidentified Participant
Thanks for taking my question. Sir, I have two questions. One related to the capex that we would incur for this financial year and FY27. While we do understand that we would do a capex of around 140 odd crores for the land but in terms of capacity addition, any additional capex do we assign here?
Umesh Chowdhary
Yes. Hi Kandal. So yes, 140 crore is what we have already spent for the land that is not going to be spent in the future in terms of building the facility on that plant we will have to incur Capex. But this will be within the overall Capex plan that was already presented. We had mentioned in the past that we will be spending about a total of thousand crores or so and this will be forming a path. Additional Capex if required will be something that we are still working on and we will share with you. But because we are moving in phases in terms of putting the Capex alongside with the business growth, we don’t envisage for the current levels to have significantly higher Capex than what we had already.
Unidentified Participant
Budgeted for this one clarification here. So this thousand crores would be spent over the next three years is what I recollect.
Umesh Chowdhary
Including what we have already spent in the last year. So yes, that’s right. Over the next couple of years, the last year plus this year and next year. So this will all be completed by FY27.
Unidentified Participant
And so related. My second question is related to the order book that we have on the wagon side of roughly 10,700 odd wagons. So if you could provide a rough mix between the share of Indian Railways and private orders.
Umesh Chowdhary
I don’t think we normally share that due to competitive reasons. And whatever the data has been given in our investor presentation is what I can share at this point, point of time.
Unidentified Participant
And so one last question with just one clarification here as well. The propulsion that we co developed with abbs, are we going to use the same for our Gujarat Metro projects and the Mumbai Line 6 as well?
Umesh Chowdhary
Mumbai Line 6. We have just received the LoA about just less than 10 days ago. So we are still evaluating what exactly we will be doing as far as that is concerned. But Gujarat Metro the propulsion that we are using is a mixture. So the TCMS is something that we have acquired. The transfer of technology from ABB and the traction converter is something that we are buying from them.
Unidentified Participant
Sure. So these were my questions. Thank you and all the best.
Umesh Chowdhary
Thank you so much.
operator
Thank you ma’a m. The next question is from the line of Parviz Kazi from Nuvama Group. Please go ahead.
Parvez Qazi
Hi. Thanks for taking my follow up question. We wanted to get your views on wagon tendering both from Indian Railways and private sector. While obviously private sector, I mean we have seen small size orders both from private sector and Indian Railways. But do we expect any large size tender from Indian Railways and if. Yes, I mean when do you expect that? Will it come in FY26 or there’s a possibility that it may shift to FY27. Thank you.
Umesh Chowdhary
So we are seeing a lot of small tenders being floated by the railways and by the private sector alike and there is, there is off late some good flow of inquiries and traction from various particular private sector customers or potential customers for wagons. As far as the large tender is concerned, you know, this is something which is very difficult to predict. But we are based on our expectations and assessment hoping that the tender should get issued by end of this financial year or beginning of next financial year. I would say more we hope that it should come towards the end of this financial year.
But that is something which is only something that. Which we can assume and ultimately this is. This is a decision that follows many aspects or many considerations of the government.
Parvez Qazi
Sure sir. Thanks.
operator
Thank you sir. Ladies and gentlemen, due to interest of time, that was the last question. I now hand the conference over to Mr. Umesh Chaudhary, Vice President, Chairman and Managing Director of Titagarh Rail Systems Limited for closing comment. Over to you sir.
Umesh Chowdhary
Yeah, thank you very much and once again thank you everybody for joining this call. Taking time out to ask so many relevant questions. As I mentioned in the beginning, you know, this year is a very important year for us. This year and the next year are very important years for us. Particularly because of the takeoff stage of the passenger rail system business. These two years are going to see significant developments on the SBUs of the passenger rail system. We have given in our press note the way we are developing this business, particularly from being a pure manufacturing company, we are actually becoming a technology company.
We have invested significantly on design and engineering in R and D and we are continuing to do so and grow upon that investments. This will be a paradigm shift in the future of the company because in the two segments of the company, the freight rail segment and the passenger rail segment, while the freight rail segment is more. I mean I could classify it as almost like an annuity business because the wagon demand, considering the GDP growth, etc. Barring few quarters here or there, you know, like we had this year, this quarter of wheel set challenges.
There could be other challenges as we have faced in the past also, but by and large this is a steady business. But the real growth driver for the company on an overall basis will start coming in from the passenger A segment segment which if we compare simply the order book today out of a 26,000 crore order book, including our share of joint venture, the wagon business order book is just about 4,400 crore. Whereas that was the business that contributed to more than 90% of our revenue. Historically or maybe 95% of our revenue. Historically. That extrapolated kind of gives us the confidence and the expectation to be able to completely change the trajectory of the company with the stabilizing of the passenger aid system.
So thank you very much for the support, for the interest in the company, and look forward to our future interactions.
operator
Thank you, sir. On behalf of Titagarh Rail Systems, that concludes this conference call. Thank you for joining us. And you may now disconnect your lines.