Titagarh Rail plans to foray into wagon leasing business

Titagarh Rail Systems Ltd is planning to foray into the wagon leasing business, aiming to capture a larger share of the private sector market by offering long-term lease models, a top company official said on Tuesday.

The company has progressed in securing the licence for this strategic business venture and is evaluating how to structure it, he said.

It will be executed either through the company's own balance sheet or through a special purpose vehicle (SPV).


"We are evaluating whether to carry out leasing business from the company itself or through an SPV. Since wagon leasing will be categorised as operating leasing and not a financial one, an NBFC (Non-Banking Financial Company) license is not a necessity," Titagarh Rail Systems Vice Chairman and Managing Director Umesh Chowdhary told PTI.

Chowdhary highlighted opportunities in the segment, noting the potential to target a market of around 1,500-2,000 wagons that are procured on lease annually.

"We believe this is a very interesting business to be in. We are targeting this segment," he remarked, underscoring the company's ambition to become a key player in the wagon leasing ecosystem and suggesting a path to recurring revenue streams.

The rationale behind the move is multifaceted. The private sector is increasingly showing a preference for acquiring wagons on an operational lease basis rather than through capital expenditure.

According to Chowdhary, recent policy discussions indicate that wagon leasing companies may be permitted to maintain the wagons they own.

This strategic pivot towards leasing is supported by the company's past experience, having previously executed leasing transactions for wagons with the Indian Railways, which helped it qualify for the new licence.

The move into leasing is part of Titagarh Rail's broader strategy to diversify its revenue streams and deepen its market penetration, the official said.

The foray into wagon leasing is expected to not only boost sales but also establish long-term relationships with private sector players in the logistics chain, he said.

The management announced that the long-standing issue of wheel set availability has been resolved, allowing production to normalise to a run rate of 800-850 wagons per month.

Wagon production had suffered in the previous two quarters.

With a robust order book of approximately Rs 28,000-29,000 crore providing visibility for the near term, the company is looking to leverage its manufacturing prowess and financial strength to create new growth avenues in the evolving rail logistics landscape.