00:00 Twitter Wagons is a stock on a roll and with reason.
00:02 It's locked on an upper circuit because the company delivered a very strong top-down performance,
00:06 over 150% uptick in sales and 200 basis points expansion in margins, which on that basis
00:14 is impressive.
00:15 But the jump in net profit as a result of the top-down beat and the uptick in margins
00:20 is pretty stupendous.
00:21 Vivek Lohia must be a pleased Manny Johnson right now to talk about the quarter gone by
00:25 and what does this imply for the quarters ahead?
00:27 Vivek, you know it behooves a journalist to talk in such good fashion about a company's
00:33 results but it's been an exceptional quarter for you, congratulations.
00:38 What went right in the quarter and what does this hold for you for the quarters ahead?
00:45 Thank you Neeraj.
00:47 So as I've been telling you earlier also, in terms of order books, you know, it's not
00:56 a challenge at all.
00:57 We have had very strong order books.
01:00 So the key to everything is I think is the execution piece, which we have been getting
01:07 it right and we are making the execution, the infrastructure or the framework which
01:13 we have in place, we are strengthening it further.
01:16 So the idea is to see there is a lot of tailwind in the sector and with the Gati Shakti and
01:25 the government's clear direction that they want to bring the logistics cost down as I've
01:31 been telling you earlier.
01:33 And railway is the only means to do it because motorways in India is not, it can happen in
01:42 pockets but you know, given the size of the country and the kind of GDP jump which we
01:48 are expecting, 5 trillion, 7 trillion, 10 trillion, it cannot happen without the railway
01:55 piece being in place.
01:56 And you are seeing now the government's commitment strengthening, you know, they have been, when
02:04 initially when the government had committed it, people were taking it with a pinch of
02:07 salt.
02:08 So now the commitment is there.
02:10 Now it is for us to deliver and be part of that nation building exercise.
02:16 So that is what we are doing.
02:18 And you know, I'm very confident with the kind of systems and infrastructure which we
02:24 have in place that this journey is going to keep on in the next one, two years, you will
02:31 see a lot of strengthening both in terms of our revenues, in terms of our deliverables.
02:39 You know, that's true.
02:40 I mean, I'm guessing one thing, I wanted to ask a different question, but I'm compelled
02:44 to ask this to you, that let's assume that everybody believes that yes, things will be
02:48 materially different than what they've been in the past.
02:51 But it's difficult to kind of imagine what, how better can this be in the next two years
03:00 relative to what it is right now?
03:01 Can you help us imagine that?
03:04 Yeah, so definitely.
03:08 So I'll give you a small example.
03:12 Say in the next, in terms of again the infrastructure now, what I think the government has announced
03:22 is by the end of the year, the DSCC will be commissioned fully.
03:26 So that itself becomes a huge, you know, capacity augmentation because it's end of the day,
03:35 you know, it's about the track infrastructure.
03:40 So it's like once you build the highways, the cars automatically follow.
03:44 So it is about once you create the infrastructure and that this creation has been going on now
03:50 for the last five, six years, the government has been constantly pumping money towards
03:54 it.
03:55 And it's not only the DSCC.
03:56 Recently, the government has announced that they're going to create a cement corridor,
04:00 a steel corridor.
04:01 We're seeing a huge uptake in the EXIM traffic.
04:07 The India is building bigger and bigger ports.
04:11 The core sector, be it the steel, cement, they have committed, I think in the next,
04:16 I don't know the exact numbers, but in the next three, five years, all put together have
04:21 committed about 100, 200 million ton capacity expansion.
04:26 So these are like huge numbers.
04:29 So and you know, these cannot be possible without the railways falling into place.
04:39 Roads will not be able to, you will, if the, if the rail infrastructure is not growing
04:45 and if the contribution is not coming from the railway sector, you know, no matter how
04:50 much capacity you built in, there'll be a bottleneck because you will not be able to
04:56 bring in the raw materials, you will not be able to extract the finished goods.
05:00 So so, you know, I don't see there's a let up happening here.
05:06 And I think this is going to continue at least for the next three to five years.
05:11 Beyond that, you know, it's anybody's guess.
05:13 Okay.
05:14 So you're going to have a big picture.
05:15 One more thing that I would love to understand, we've seen a slew of large orders coming already,
05:19 right?
05:20 I mean, a tender of 40,000 wagons, 60,000, 30,000, one or two more coming in the pipeline.
05:26 But then I hear you say that there is a BFC, there is a steel cement corridor.
05:33 And this quarter, I see that in your case, more than the railway offtake, it has been
05:39 the private sector offtake for you.
05:42 So tell us now that will we see more such orders?
05:48 I'm not asking for the exact magnitude, but we've seen 30,000, 40,000, 50,000 wagon orders
05:53 already, and a few of them in the last 12 or 18 odd months.
05:58 Can the similar run rate continue?
06:00 Yeah, definitely.
06:02 I don't see a reason.
06:03 I think the run rate, it will not only continue, but I will, I would say that I expect the
06:10 momentum to increase as people in the, see for after a long time, there has been, there
06:18 is a lot of capital commitment from the private sector.
06:22 Actually, if you see the last five, seven years, most of the capital which was driving
06:28 the infrastructure was from the government.
06:31 So now you're seeing a lot of private capital coming in, a lot of foreign capital coming
06:36 in.
06:37 So I think this is what is driving and that is just the momentum has just started building
06:42 up.
06:43 So I'm not only, what the way I'm seeing things and the kind of inquiries which we are getting,
06:50 and not only it will continue, but I believe that there will be a huge momentum generated
06:59 for the, towards this business.
07:03 Should one read too much into what happens to your quarterly numbers in terms of in one
07:08 quarter you will do more for railways and less for private and one quarter you will
07:12 do more for private and less for railways?
07:15 See that, you know, it doesn't make, honestly, it depends on the kind of order books you
07:21 have and what is the execution timeline for each order book.
07:26 So I don't think you should read too much into it.
07:29 It is overall in terms of the, it's the overall volumes which you have and how effectively
07:37 are you able to deliver the volumes.
07:41 I think that is the key, but you should not read into how much is the railway order book
07:46 or the private order book because that will, it will keep on, it's a very dynamic thing.
07:53 It depends on at what time, whose deliveries are, the timelines are being met.
08:02 It's the equation of that.
08:04 So execution can change every quarter.
08:05 The second question is on the EBITDA margins, you improved them.
08:11 The question would be, would you look to, or would economies of scale improve these
08:15 further or do you believe you would maintain them at between 10 to 12%?
08:21 So our whole idea is to, I have been again consistently telling everybody that it will,
08:28 for us it will be, I think anything between 12 to 13% is the kind of EBITDA margin which
08:34 we are looking at.
08:36 And we believe that we will be able to constantly maintain that.
08:43 And obviously like this quarter you have seen that our brake disc business has started,
08:48 you started delivering to the railways, those volumes now every quarter is going to keep
08:53 on increasing.
08:54 We are going to be starting export business there.
08:58 From by end of this year, you know, our brake system supplies are going to start.
09:04 On the freight side, we'll be, we'll start using our own brake systems.
09:08 So these will again have the impact on the EBITDA margins.
09:15 So you may see a positive impact on the numbers, but I think anything between 12 and 13% kind
09:26 of an EBITDA is something which we are happy with.
09:29 And I think we can, that is something which can be sustained.
09:32 Got it. I'll have three quick questions if you have the time.
09:37 One, have you given a formal guidance about what you would do in FY24 or FY25?
09:43 Sorry if I missed that.
09:45 No, we have not.
09:47 And we don't believe in giving forward numbers because, but yes, as I could, I can tell you
09:54 very clearly that we have a very strong order book.
09:58 As you have seen quarter on quarter, we are increasing execution capabilities.
10:03 I've been very clear that by end of this year, we are looking to take our supplies to about
10:09 800 wagons a month.
10:12 And you know, for us, it's not a single type of, because we are not only just doing a railway
10:17 order book.
10:18 So we are doing railway and private.
10:21 Private is a very big part of order book.
10:23 So it does not, we are doing much more complex wagons and multiple types of wagon at one
10:30 time.
10:31 So that is why you see also impact in terms of EBITDA margins.
10:36 So for us, it's not that the, since we are not doing a single type of wagon, so the,
10:43 in terms of the volumes, it will not become very high, but 800 is something which we are
10:50 looking at by end of this year.
10:51 And next year, as I've told you, we are looking to produce close to 1000 wagons.
10:56 Okay.
10:57 Last question you've done, and I have it noted with me that I wanted to ask this to you.
11:02 You've done an MOU with rights for international expansions, but some of your peers are also
11:07 doing something beyond wagons as well.
11:09 I would love to understand the beyond India piece or the beyond wagons piece, if any,
11:15 or a combination of both that you may have in your plans over the next 24 to 36 months.
11:20 What would this international piece mean for you?
11:23 So beyond wagons, so rights MOU is fully directed towards the export market.
11:30 So the idea was that, there is a potential on the export market side and we wanted to
11:36 tap into that.
11:37 We have, along with them, we have participated in two tenders and we are hopeful to get some
11:43 order books.
11:44 These are large tenders?
11:46 These are decent size.
11:48 Yeah, each tender would be close to about 600 odd wagons.
11:52 So these are decent tenders sizes and these are at a global level.
11:57 So we are competing with all global players.
12:00 So yeah, we expect to, and there is a huge pipeline of tenders also.
12:05 It's because globally the demand for freight is going up.
12:10 So that is one piece of the business now, which we have added.
12:15 And that I think, again, I've told you on the export side, it's on the brake side, which
12:20 we are looking to focus our exports on.
12:24 And now on the EV business, that is the new piece which we want to add, because again,
12:30 we want to be a complete mobility solution provider.
12:33 And we believe that outside of railways, we have a lot of strength on the commercial vehicle
12:41 segment.
12:42 So that is, and our first commercial vehicle will get launched this December.
12:48 And parallel to that, what we have also started doing is that using our technology strength
12:56 and we have started trials for battery packs also on the railway side.
13:03 So our first trial has now started for the coaches.
13:08 Simmons has given us an order for the Vande Bharat.
13:12 So that itself is a big piece.
13:15 And right now, if you look at the railway side of the battery business, it is still
13:23 a very old technology.
13:25 It's mainly driven by lead acid batteries, which are again, very heavy.
13:32 They are again, it's a big concern in terms of disposing those batteries and those are
13:40 like very old technology.
13:41 So basically, we want to replace those batteries with intelligent batteries, which are much
13:48 lighter.
13:49 So the weight of the rolling stock reduces and they have a higher effective life cycle.
13:58 Well, that's tremendous.
14:00 Lots of things in the offing.
14:01 Wishing you all the best for that.
14:02 Vivek, thanks for taking the time out and congrats on a great quarter.
14:05 Yeah, thank you.
14:06 Thank you.
14:07 Thank you so much.
14:08 And viewers, thanks for tuning in.
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