New Delhi (Metro Rail News): An essential strategic alliance was announced by Titagarh Rail Systems of Kolkata and Amber group of Delhi-NCR, where both companies agreed to enter the railway component and subsystem business through a joint venture/SPV. Under this agreement, both TRSL and Amber group, via its wholly owned subsidiary Sidwal Refrigeration Industries Pvt Limited, will invest approximately INR 120 crores each to obtain around 50% each in the SPV for setting up the new railway component business as well as fresh equity investment in Firema, Italy. This SPV will set up a new facility in India to manufacture critical railway components & subsystems used in the manufacture of Railway & Metro coaches and will also make fresh equity investments into Titagarh Firema SpA, Italy, an associate of the Titagarh Group, along with new investment to be made by the Government of Italy for which an in-principle nod has already been obtained from the Government of Italy’s investment arm, Invitalia. Under the agreement, Firema will grant Sidwal, Titagarh Rail, and the JVC- SPV a preferred supplier status and Right of first refusal (ROFR) for all their products.
Titagarh Rail is a leader in the Railway rolling stock space for freight and passenger rolling stock. Titagarh, apart from being an established railway wagon and metro coach manufacturer, is also currently executing the prestigious projects of Vande Bharat trains, Surat and Ahmedabad metro, and Pune metro, and as well as currently executing its first export order for passenger rail components received from Firema. Titagarh is targeting a capacity of almost 800-850 coaches per year in the coming years.
The Amber group is a diversified B2B company with three business verticals: Consumer Durables, Electronics (EMS) and Railway Subsystems & Mobility. Sidwal, an Amber group company, has emerged as a leader in the train air conditioner market and has also signed a technology licensing agreement with Ultimate Group to manufacture passenger coach doors and gangways. After establishing its leadership position in the Indian market, Sidwal intends to enter the European market for its product portfolio. The strategic partnership with Firema will facilitate Sidwal’s entry into the European market and give Sidwal preferred access to Firema’s own demand.
Both companies are investing in growing capabilities and capacities for various products that can be exported to Europe, such as Train mechanical and electrical components by TRSL and HVAC, doors, gangways and pantry systems by Sidwal.
Firema is one of Italy’s largest and most reputed designers and manufacturers of passenger trains and has a legacy of several decades, having executed marquee projects in Italy and other parts of Europe. Firema has an order book of almost Euro 1 billion for producing new coaches, has an existing capacity to produce upwards of 240 coaches per year, and plans to double this capacity. Firema recently signed a framework contract for the design and supply 370 sleeping coaches to Trenitalia for Euro 732 million (with an option of full service valued at about Euro 220 million) in consortium with Skoda apart from the trains for the Lazio (Rome) region. Titagarh Rail and Sidwal will jointly support the growth of Firema via combined management expertise and improve the cost competitiveness of Firema by supplying critical components from India, which both groups produce.
Under this strategic alliance, the two groups will set up facilities in India to manufacture critical components and subsystems for the Railway industry. The groups are already in the advanced stage of discussions to obtain technology for such components from global leaders, including Europe. While the JVC-SPV will announce the list of these components in due course, they would include coach interiors, coach toilets, kitchens, seats and other essential railway subsystems. The JVC would aim to achieve a wallet share of at least 20% value or INR 150-200 lacs per passenger coach by developing components and subsystems that are fitted on these coaches.
Under the Strategic alliance, Sidwal and TRSL will also grant each other a Preferred Supplier and a Preferred Customer status for TRSL’s requirements for Sidwal’s product on an arm’s length basis. Sidwal has received a Letter of Intent under this cooperation agreement for the components manufactured by Sidwal for the existing and future projects by Titagarh Rail, including the prestigious Vande Bharat project.
Commenting on the deal, Mr Jasbir Singh of Amber said, “this will be a game changer for Amber as not only will it give us a very strong foothold to make customer base global, it will also give us a preferred access to the demands of one of the strongest and fast emerging rolling stock manufacturers in the country. Through this new SPV, we shall be able to provide comprehensive integrated solutions to rolling stock manufacturers for railway subsystems in India & overseas while addressing almost 20-25% of BOM of passenger coach. This alliance exponentially increases the total addressable market for both Sidwal & SPV. We intend to leverage on this alliance to get market and technology access to Europe and the rest of the world. This will also be our first overseas foray into manufacturing and will give us the knowledge and experience of making the company global.”
Commenting on the partnership, Mr Umesh Chowdhary of Titagarh said, “we are indeed delighted to join hands with a like minded and passionate group like Amber. Coming together of our groups adds immense value to our independent business strategies where the sum of the parts will be much larger that the parts themselves. Joining of a strong group like Amber in Firema will accord strength to the overall business development and growth of Firema and the fact that the Italian government has agreed to co invest is a strong sign of the importance of the venture. It has been our stated business strategy and objective to achieve backward integration into key components and subsystems and this partnership with the Amber group will enable us to achieve our goals”.
“Both our companies are fully committed to the Make in India and Atmanirbhar Bharat policies of our honourable prime minister and this partnership is our humble contribution towards the success of these policies”, said Singh and Chowdhary.
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