In an interview to CNBC-TV18, Umesh Chowdhary, VC and MD, Cimmco shares his outlook for the company. Cimmco, which is now a subsidiary of the Titagarh group with the latter holding a 75 percent stake in the company, has been bidding aggressively for defence orders.
Titagarh group has an order book of nearly Rs 130 crore from the defence orders. "Nearly, Rs 130-140 crore worth of order book is something that we already have on hand today and this not in Cimmco, this is for the Titagarh group and so, some are in Cimmco and some in Titagarh Wagon," he adds.
Below is verbatim transcript of the interview:
Q: Cimmco is now a subsidiary of Titagarh Wagons. How exactly the assets of Cimmco are going to be utilised? Is it going to be focused more towards defence space and if so how?
A: Absolutely, Cimmco turned into a subsidiary. Earlier, it was a joint holding company between us and 12 promoters. So, it turned into a 75 percent subsidiary of Titagarh earlier this year and we have been able to completely restructure the balance sheet of Cimmco.
When we acquired Cimmco or stepped into the company, it had a negative net worth of about Rs 500-600 crore, secured debt of almost Rs 500 – 600 as of now it has a positive net worth of Rs 160 crore and it has practically no debt. The debt including working capital debt is less than Rs 35 crore.
So, we have been able to acquire a large manufacturing infrastructure. It is spread over 200 acres of plant area which is two or two and half hours from Delhi in the NCR region of Bharatpur and apart from doing wagons there which have been the traditional business of Cimmco we are focusing to develop the infrastructure for the defence business that is coming up pretty well.
Also, one portion of Cimmco we have started doing the agricultural tractors the venture that we have created to do the tractors.
Essentially, the whole idea is that what we acquired in way of acquiring Cimmco is very large infrastructure of such large parcels of land and machinery.
Q: Have you done any kind of valuation for Cimmco as well as the kind of assets it is sitting on including the large land parcel as well as the various manufacturing facilities?
A: No, we have not really got a valuation done as such but to replace an asset of this nature today it is going to be more than the valuation.
It is going to be more like an impossibility to create a factory of 200 acres in the NCR, it is not going to be possible in the foreseeable future to say the least and the advantage that I see is that we have the base available.
We have the hardware available, what we need is the software and the software will come by way of technology partners or developing new products and so on.
Q: How much progress have you made within the defence space already? Have you started bidding for orders? If so, what kind of orders are you bidding for, what is the pipeline looking like, when do you start execution?
A: As a group Titagarh group we already have order book of Rs 130-140 crore from the defence segment. We are doing specialised defence equipments and have participated in many tenders, we have been shortlisted and have achieved RFIs for pretty much all the large defence programs that are going on.
Q: Give us a number?
A: The order book is the number that I can give you, which is about Rs 130 crore odd. Nearly, Rs 130-140 crore worth of order book is something that we already have on hand today and this not in Cimmco, this is for the Titagarh group and so, some are in Cimmco and some in Titagarh Wagon.
The RFIs that we have received will run into several thousands of crores but I don't think that will be fair to make any assessment or take that as a benchmark because of an RFI.
But we have participated in many tenders, I would not like to disclose that we have participated in unless they convert into order book.
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