Texmaco Rail & Engineering Ltd

- The company plans to invest further capex in the steel foundry segment, with production expected to increase in the next 3 months (Page 13). - Funds from a proposed capital raise of INR 400-500 crores will be used primarily for: - Working capital requirements for Heavy Engineering and Steel Foundry divisions. - Supporting the Rail EPC division. - Reducing high-cost borrowings. - Capital expenditures as required for business growth (Page 10-11). - The approach to growth is selective and well-structured, focusing on parts of EPC and electrification businesses that fit future strategy and offer good profitability, rather than expanding indiscriminately (Page 17). - The company is preparing to enter the passenger movement segment steadily but cautiously, to avoid losses and ensure sustainable business entry (Page 9).

- The company expects a brighter future with stepped-up organization and capacity improvements. - Rail EPC divisions are anticipated to perform much better going forward. - Production capacity targets around 450-500 wagons per month for Indian Railways, aiming to consistently meet or exceed this. - Plans to ramp up production potentially up to 700-800 wagons per month by end of FY '24. - Expected significant share (20-25%) in upcoming large wagon orders (40,000-50,000 wagons). - Focus on high-margin orders and better resource allocation away from low-margin track laying. - Expansion into new areas like component business for railways, considered a substantial future revenue stream. - Export markets (Africa, Europe, Sri Lanka, Bangladesh) seen as growth opportunities. - Steady growth in Bright Power division, aiming to more than double its scale. - Overall focus on capacity enhancement, cost reduction, and tapping new market areas to drive revenue and volume growth.

- Texmaco Rail & Engineering is optimistic about a brighter future with expected improvement in capacity, cost reduction, and entry into new business areas such as components (Page 16). - The company aims to consolidate and strategically expand in EPC and electrification segments, focusing on profitable opportunities rather than aggressive market coverage (Page 17). - Production capacity for wagons is ramping up to around 500 wagons/month with plans to grow further, aiming to meet or surpass Indian Railways’ requirements, potentially increasing revenues (Page 5, 7). - Margins are expected to improve with better efficiency, capacity enhancements, and targeted order selection focused on higher-margin business (Page 14, 17). - The company is preparing for large upcoming railway wagon orders (40,000-50,000 wagons) and targets a 20-25% share, indicating significant future order book expansion (Page 13). - Fundraising plans are in place to support working capital, expansion, and debt reduction, facilitating profit growth (Page 11).

- Current order book stands at approximately INR 8,000 crores. - Rolling stock orders: INR 5,400 crores. - Rail EPC - Kalindee division: INR 1,000 crores. - Bright Power overhead electrification division: INR 550 crores. - Hydromechanical and Bridges division: INR 100 crores. - Steel Foundry: INR 500 crores. - Other subsidiaries/joint ventures: INR 450 crores. - Recent quarters saw order intake of around 1,500–1,600 wagons, primarily from private sector. - Upcoming major tender from Indian Railways expected for 40,000 to 50,000 wagons. - Texmaco targets approximately 20-30% share in new railway tenders (about 10,000 to 12,500 wagons). - Orders currently executing include a prior 20,000+ wagon order with staggered tranches. - Additional private rake orders of around 200 rakes expected in the market.

- Texmaco Rail & Engineering Limited has received in-principle board approval to raise up to INR 500 crores in one or more tranches. - The company is currently in discussions with financial advisers to decide the mode of raising the capital (debt or equity). - The raised funds will be primarily used for: - Working capital requirements for Heavy Engineering and Steel Foundry divisions. - Rail EPC division needs. - Reduction of high-cost borrowings. - Capital expenditures planned by the company. - As per management, no additional fundraise will be required in the near term to handle incremental orders such as new wagon tenders expected within 18 months. - Equity infusion will also help in reducing high-cost debt.