Titagarh Wagons Ltd
NSE:TWL
Titagarh Wagons Ltd
NSE:TWL
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Ladies and gentlemen, I'm Palcia, moderator for the conference call. Welcome to Q1 FY '24 Results Conference Call of Titagarh Rail Systems Limited. [Operator Instructions] Please note this conference is recorded. I would now like to hand over the floor to Mr. Mohit Kumar from ICICI Securities Limited. Thank you, and over to you, sir.
Thank you. On behalf of ICICI Securities, I would like to welcome you all for the Q1 FY '24 Earnings Call of Titagarh Wagons. We have with us today Mr. Umesh Chowdhary, Vice Chairman and Managing Director; Mr. Prithish Chowdhary, Director, Marketing and Business Development; Mr. Anil Kumar Agarwal, Director of Finance, CFO and CBRO; Mr. Saurav Singhania, Joint CFO and Group Finance Controller.
Without much delay, I would now like to hand over the call to the management for the opening remarks, which will be followed by Q&A. Thank you, and over to you, sir.
Thank you very much. Very good afternoon, and thank you to all the participants for yet again joining the earnings conference call of Titagarh Rail Systems. I'm Umesh Chowdhary, and I'm joined by my colleagues, Anil Agarwal, Prithish Chowdhary, Saurav Singhania and [ Dinesh Arya ].
This quarter has been an interesting quarter. A number of developments have taken place, some follow-on developments and some continuing progress. So as far as the follow-on developments are concerned during the quarter, the company signed major contracts of the Vande Bharat trains as well as the wheel project, the Vande Bharat in consortium with BHEL and the wheel project in joint venture with Ramkrishna Forgings. Of course, the letter of award of these were received earlier, but the final contract timing happened during this quarter.
During the quarter, we also received a letter of award for from Gujarat Metro for -- sorry, there is a [ statistics ] call, can be put on mute by the organizers, please? The company received a letter of award from Gujarat Metro for 72 cars of Surat Metro, which is a major development because this is a stainless steel metro, and this is the first direct stainless steel metro contract that the company has won. As we had already shared in the past that the company is setting up the stainless steel metro line, which -- for which the first contract, which will be executed will be the Bangalore Metro contract in subcontract from CRRC. So that gives us the capability to manufacture stainless steel lines and this will be only a follow-through.
In terms of the numbers, the numbers have already been shared. We've been able to deliver numbers that have been as per our expectation. And I would say that in the coming quarters, we would continue to develop on both the freight rolling stock and the passenger rolling stock vehicle.
With these opening comments, I'm most happy to [Technical Difficulty] along with my team, we'd try to answer them to the best of our ability. Thank you.
[Operator Instructions] The first question comes from Balasubramanian from Arihant Capital.
Good evening, sir. Congratulations for a good set of numbers. Sir, my first question as per railway volume data, we did INR [indiscernible] June FY '24. And how much total volume is expected by -- for FY '24? And is there any seasonality in the executions for that freight reconcile? And my second question, could you please share the total volume, including railway volumes and private volumes breakup with the realization, that will be really helpful?
As far as the total requirement of the wagons from the railways and the private sector is concerned, we consider them as one bucket because indirectly, the private sector wagons also go back to the railway circle. So the total offtake of the railways is expected to be around 30,000 wagons per year, out of which 15% to 20% is going through the private purchase route and balance is going to go -- through the railways' direct purchase. We believe that this momentum should continue.
As regards seasonality is concerned, traditionally, Q1 is a little slower because of various reasons, which has traditionally been there. But now the level of seasonality has come down quite substantially. In the earlier years, we would see that Q1 because orders were normally earlier placed on a year-to-year basis. Now orders are placed on a 3-year basis. So in the earlier years, orders in the Q1 were hardly available as a result of which the Q1 used to be a poor one. But now I would say that it will only be a marginal improvement apart from improvement in capacities and performances in -- going from Q1 to the other quarters.
Okay, sir. Sir, is there any possibility to share a breakup for India railway volumes and private volumes with realizations?
We do not give that data because these are competitive in nature, but I would only like to state that we still have a very healthy order book in the private sector segment also. We are perhaps the leaders in terms of order books in the private wagon space, also in the country and, of course, the leader in the railway wagon orders also.
In terms of realization, the price at which it is sold to private sector is slightly higher, but then there is a higher risk because these orders are a, smaller in quantity but more importantly, fixed price in nature. So -- but beyond that, specific details, we would be unable to share at this time.
Okay, sir. So we have finalized private wagons for INR 43 crores. Could you please share more details about these orders, which are the industries we are witnessing on the private sector side?
Apologies, I didn't get your question.
Sir, we got -- we have finalized private wagons for INR 43 crores. So like which are the industries we are witnessing traction for these private wagons?
All 4 sectors of the industry, whether it is steel, whether it's mining, whether it's containers, logistics, so we always have that.
Okay, sir. Sir, on that passenger railing stock side, like how much cars per month we are doing right now? Is there any ramp-up plan we have the next couple of months? The margins also have been slower down on the passenger rolling stock side. Is there any specific reason for that?
The ramp-up plan of -- we are hardly utilizing -- our current capacity is about 20 cars per month, which we have announced that we will be ramping up to 70 cars per month. As of now, the capacity utilization is very small. We are hardly doing maybe 20%, 25% capacity utilization. But we will be ramping up now going from Q2 onwards, the ramp-up will be visible and more in Q3 then. And then it will -- every quarter continue to increase.
And the margins, right now, since we are at a very low level of capacity utilization, a couple of percentage of margins here and there is not really relevant because the denominator and the factor of the revenue itself is very small. So in terms of a few areas of fixed costs going here or there or other costs going here and there, the margin of 1% or 2% changes in the quarter because of the base being sourced.
Sir, could you please join back the queue for more questions, sir?
Sure, mam. Thank you.
[Operator Instructions] Next question comes from Bhavin Chheda from Enam Holdings.
Congrats on a very good set of numbers and continuous margin expansion. So a few questions on the order book. So if I see the present year rolling stock order book, you've declared INR 13,612 crores. And if I exclude passenger rolling stock [Technical Difficulty]. Can you hear me?
Yes. Yes.
Yes. I was coming to the order book. So passing the rolling stock of order book of INR 13,612 crores includes Vande Bharat of INR 12,716 crores. So if I exclude that, your metro order is INR 896 crores. So this INR 896 crores breakup would be how much is Pune Metro pending? And whether you have included recently one Surat Metro also in this order? I just wanted a few clarification of this balance of INR 896 crores?
I'm sorry. We will not be able to disclose contract-wise value. We can only give you segmental values, which has already been given. The INR 857 crores value, but I mean, if you just look at the presentation, INR 857 crores value is of Surat Metro alone, plus we have the Bangalore Metro subcontracting of CRRC plus the Pune Metro. So definitely, we have a larger than the amount that we just mentioned in terms of the...
No, sir. I was looking at your order book only. What I did was excluded Vande Bharat, then the balance comes to INR 896 crores, and the Surat Metro one itself is INR 857 crores. So is that INR 857 crores is included in INR 896 crores, that I wanted the clarification because...
That's what, I can give a clarification, sir, that the numbers that whatever is the calculation that is being performed of exclusion of Vande Bharat, et cetera. Probably there is an error in that calculation because if the Surat Metro in itself is INR 857 crores, then obviously, the others will be there, the Bangalore as well as the Pune. So I would not be able to break down this INR 14,217 crores of the total order book for you contract wise. But I would only like to state that the metro order is larger than the number that you just mentioned.
Okay. But the Surat is already included in the order. That's what I wanted to confirm but that's fine. Okay. And again, on the private sector order, if I see the Indian Railways wagon offtake, there was a substantial increase in wagon sales to the private sector in the last 2 quarters, and you have received a new order of 443 also. So you expect the last 2 quarters momentum to continue going forward in this fiscal, particularly this fiscal sales to the private sector will also be substantially higher?
So the orders from the railways have been placed last year, and those orders are for long term, they will continue till August 2025. So definitely, we expect that the visibility is there, so the momentum should continue.
Next question comes from [ Akash Vora ] from Dalal and Broacha.
Sir, greater numbers in the quarter. My question comes more from on an execution point of view. So how are you trying to execute in the metro orders in the coming quarters? I mean, so what has been the production of coaches in this quarter? And how will it shape up in the coming few quarters and let's say, by next year as well?
Sure. As far as -- thank you very much, firstly. As far as the execution is concerned, wagons, the freight rolling stock is now stabilized at 650, 700 wagons per month, and we believe we will be able to take it to 1,000 wagons per month by the end of this year or within this financial year. As far as the passenger rolling stock is concerned, we are still at a very low number. We are still at about -- on an average, if you look at it, about 20%, 25% of our current capacity utilization.
And -- but the challenge is only in the beginning was to set up the lines and to stabilize production, there are many feeding troubles. We are fairly confident that by third quarter and fourth quarter, we will be able to stabilize the metro production also. The facilities are coming up very well, both for metro and for Vande Bharat.
Got it, sir. Sir, just to clarify what you said, so let's say, a 650 to 700 run rate of wagon production per month. So we must have produced around, let's say, 1,800 to somewhere between 2,000 wagons this quarter?
That's right.
Yes. so -- but just -- I had one question. So why is the freight rail segment -- is the total revenue falling like dipping from a sequential basis on a quarter-on-quarter basis. Like if we have ramped up on the production, then why is the total revenue falling?
As I explained to the -- in the previous question, there is always -- Q1 always tends to be a little softer than the other quarters in terms of offtake and in terms of production and all those things. Of course, the seasonality used to be much more profound in earlier years because order placements used to be delayed. Now the seasonality is much lesser than before.
But nevertheless, this first quarter to second or third or fourth quarter seasonality, to some extent, would always be there. So I would not say that it is a fair comparison to see the growth only from Q1 of last year to Q1 of this year, but it will not be also an equal apple-to-apple comparison to compare Q4 of last year to Q1 of this year.
Okay, sir. And the 20% to 25% capacity utilization that you said for passenger coach, so current year capacity for passenger coach sits at around 20 to 25 couches per month. So are you saying -- yes. So are you saying that we are producing around 5 to 6 coaches per month currently. Is it?
That's right.
Okay. And so -- and by what -- I mean, by what time we plan to ramp this up to -- the capacity to be ramped up to 70 to 75 coaches?
So the complete capacity utilization will come in another 1 year, but we will ramp up from Q2 itself. We will start to ramp up through...
So let's say, by the end of this year, we will be at 20 to 25 coaches per month [Foreign Language].
Yes. We should be able to get...yes.
And eventually, our target is to reach that 75 per month, right?
That 70 cars per month, that will be when we start Vande Bharat full swing. So that is going to take at least another 2.5, 3 years.
Got it. Got it. And this year, for the metro, we are planning to execute these 2 orders, Pune and the Bangalore one, right?
Yes, part of that. So there is a schedule for all the contracts, and we are going to be pretty much as per the schedule.
Okay. Just last question from my side. So Pune Metro will be done this year itself, if I'm not wrong?
That's right.
And the Bangalore Metro will be like how much percentage ideally will be completed by the time, sir?
We will be doing it as per the contractual terms. We started this year, and we'll be finishing it over the next year or maybe a little bit to the following year.
Okay. So it's almost 30 months, total execution?
I would not be able to give the exact number of months. But as I said, there is a contractual delivery period based on which we will be pretty much on track.
Next question comes from Ashwani Sharma from ICICI Securities Limited.
Congratulations for the strong performance. Sir, my first question is on the tender pipeline, in the Vande Bharat. How is the tender pipeline looking like now? And the second question is on the opportunities that you see on the traction motor side?
Yes. So as far as the Vande Bharat is concerned, whatever one reads from the media, so there was -- there is an announcement for additional Vande Bharat, The Vande Metro and all of that. So of course, now we have the existing order, which we are focusing on executing. But we believe that there will be a very healthy pipeline, as I always believe that Vande Bharat is a symbol of aspirational India and of new India. So there should be the transformation from the old coaches to the Vande Bharat coaches. So we feel that there should be adequate business in the future.
As of now, of course, we have these 80 trains to produce. So that in itself is a handful. We will be concentrating on executing that. As regard the traction motor is concerned, I think that's another important event that happened in the last quarter that a trial period for the first set of traction motors that we had supplied with the railways was over, and we've been able to start the limited cities supply. There are 3 phases of supplies for traction motors. The first is the prototype. The second is the limited cities and the third is the bulk.
So we graduated from the prototype to the limited cities supplies. And it's a matter of time that we will be able to graduate to the bulk supplies. The capacity that we have created for traction motors is about 180 traction motors per month. And we believe that the demand is enough to be able to manufacture as per capacity.
So is it possible to put a number to it just to do the modeling as well as overall demand is concerned in the industry?
So the traction motors are required a different thing, locomotive, EMUs, Vande Bharat [Audio Gap] requires a traction motor when each metro coach is required so -- when there are replacement demand. So I will not be able to for lack of, I would say, ready reference, ready reckoning answer, be able to give you a complete market size. But in terms of the overall demand perception and the overall demand visibility, there seems to be enough demand, and we will also be producing a lot of traction motors for our own consumption in our own coaches.
Right. So also if you can just speak on metro ordering, metro tendering, how is the pipeline looking like?
Very strong. There are already many pipeline orders in the -- tenders in the pipeline. There is a Chennai Metro, there are Bombay Metro. So there should be other metros also coming up. Metro -- a lot of metro projects have already been announced and have already been taken up. Rolling stock is always the last end of the spectrum. So now that a number of civil infrastructure work has already started, the rolling stock tenders are the next to follow.
Sir, what was the wagon volume during the quarter?
We've been able to produce around 600 to -- 650 to 700 wages per month, and that's the run rate we are maintaining.
Next question comes from Shrinidhi Karlekar from HSBC.
Congratulations on good set of numbers. Sir, a couple of questions on the payment terms and the price variation clause in your metro business. Can you help us understand how does it compare with your trade business as in both receivable days cycle as well as how comprehensive is the price variation clause in your order?
Sure, sir. So as far as the metro orders are concerned, some of them have a price variation. Some of them are fixed costs. It's not standard kind of a formula that is followed across the metro corporations. As regards payment terms are concerned, metro corporation normally give an advance bearing between 10% and 20%, and the balance is paid on supply of the metro coaches. Normally, the metro tenders are funded through multilateral funding agencies or through the government equity funding. And therefore, payments for the supplies can be expected in a period of 3 to 6 weeks of the supply.
And do these contracts have milestones or it is like shipments on car basis? Like if you ship a set of coaches, you get the payment or you need to complete it like it's 20%, 40%, 80%? Do they have like milestones?
No, no. It's on a per car basis.
Okay. Fair enough. And second, sir, on this incremental order you won from the private wagon market, would it be fair to say that they have come at significantly better pricing as well as payment terms?
So we will not be able to say better or worse pricing. We would say that they have come at market pricing. And normally, market pricing is a factor of risk and reward. So each contract is gained by us and priced by us on the merit of that particular contract. So we will not be able to speak on a contract by contract basis, and we can appreciate, but they are pretty much in line with market pricing.
And last one, sir, if I may. Would it be possible to comment on Firema performance this quarter? And how is likely to be outlook for the rest of the financial year?
Firema results are no longer consolidated as it is on the equity accounting method. And the company is no longer a subsidiary of Titagarh Rail Systems. But Firema performance has been picking up. I mean I can only share that much that the ramp-up of production is happening, but to give detailed numbers at this point of time may not be possible.
Next question comes from Parvez Qazi from Nuvama.
Congratulations for a great set of numbers. So my question is regarding the propulsion system while you did comment on the traction motor part. I just wanted to get your views on propulsion system. And how do we see our development trajectory there?
Sure. Propulsion system is going to be a very important part of our strategy. It is a long gestation development. So to be able to be fully in the propulsion business is going to take at least another 2 years for us. But this is going to be a very important part of our strategy going forward, and we are focusing a lot on the propulsion business.
Sure. And media reports do say that we expect -- I mean, Indian Railways is likely to come up at a significantly large wagon all the way going ahead, just wanted to get your views on that.
So as far as the media reports are concerned, we have also seen that, but we would not like to comment on media reports. All we can say is that whether the tender will come out month, year or 4 months there, it doesn't really make a difference because the overall demand is very healthy. And as of now, we already have order books seeing us through for the next couple of years. So the tenders -- the tender pipeline or the demand pipeline, I would say, looks very healthy. So the tender pipeline will have to follow the demand pipeline.
[Operator Instructions] Next question comes from [ Ray Batija from JV Investments ].
I had a question regarding the margin point of view. How do you expect the margins to be maintained over a period of years like 2, 3 years from now?
Margins, as I have always mentioned that in our business, a sustainable level of margin for EBITDA is between 8% to 10%. Let us say, this is the volume that we have been able to achieve, we would be targeting to keep at least 10%. The current quarter has seen better margin, but the margin assessment on a quarter-to-quarter basis may not be very relevant in our business. It's the capital goods sector. Most of our contracts are back with price variation clauses and the way the commodity price and the wholesale price index goes is not completely on a day-by-day pattern, but sometimes it can take a month or 2 months to catch up.
Then also the difference in terms of the customer profile and the contract executed changes the quarter-by-quarter margin. So as a guidance, I would still say that 10% EBITDA margin is a fair EBITDA margin to kind of model over a period of 6, 8 quarters. As far as that improvement of margin that is likely to take place will take place once we are fully done with our component business, which is an important part of our strategy that includes the propulsion and other components that we are trying to develop from [indiscernible].
Next question comes from Pankaj Gupta from Ratnabali Investments.
Congratulations, sir, for the excellent set of numbers and historic orders as well. Sir, I have a couple of questions. Sir, can you just give us any status on the progress of the wheel factory? Have we identified any locations? Or when are we planning to start and finish this factory capacity?
The wheel production as per the contract that we have signed has to start in 3 years of the signing of the contract, which means by 2026 April or May. And we are pretty much on track to be able to achieve that or even better than [ time ] and slightly. In terms of the location, in terms of the retail, as and when things are functional, they would be announced to the market, and we'll definitely be sharing it at an appropriate time.
Okay. Sir, and one more thing. Sir, is there any difference in the wagon design or structures for the dedicated seat corridor, double stack and normal? Or is the same wagon is being used?
Again, it depends on the wagon-to-wagon basis. There are different types of wagons. Many of the wagons are common. Some of the wagons are special. But there is nothing fundamentally different in the wagon design. They are by and large the same. Our company is doing all the designs for that.
Okay. Okay. And sir, last question from my side. Sir, there are some media articles regarding 2 tenders of Vande Bharat, 100 trains each being more floated maybe on the aluminum side. Are we in those tenders also?
The new tender that means the new tenders between floaters?
So sir, media articles says about it, we have seen.
I'm not sure what media people you're referring to but if you are talking about new tenders that will be floated, definitely, we will be evaluate and we will decide based on the merits of the tender and other suitability for the product. In regards to earlier tenders, one of the major tenders that was floated, we have already got the contract. The other one, which was an aluminum one, that was floated, we did not participate in that.
Next question comes from Siddharth Purohit from InvesQ Investment Advisors Private Limited.
Yes. Sir, just one data point. In the recent quarters and years, particularly the number of wagons procured has gone up. Sir, any data points, sir, like what percentage is going for replacing the old wagons and what is the actual addition to the fleet of wagons by the railway?
No, sir. There is no way to figure that out because it is like ocean of wagons out there. So you cannot really calculate what wagons has worked for replacement and what for additional traffic because it all gets into the common pool.
Okay. And sir, with regards to the new contract that we received for Vande Bharat, we are supposed to start the contract in a specific time period of time and deliver it. Is there any clause where or any penalty clause is there if there is a substantial delay in delivery from our side? How is it?
Every government contract has a delivery period and consequential damages and penalties in the event of delay. So this is not for Vande Bharat alone, but every single contract that we signed has similar clause.
Next question comes from [ Manish Maheshwari from Manu Family Office ].
Sir, I would like to understand how are you going to scale your passenger rail system business because your mainstream business is factory and systems, right?
I'm sorry, I didn't get your question.
I'm saying how are you going to scale your passenger rail system business? Passenger rail system is about INR 13,600 crores order book, right?
That's right.
So how are you going to scale this business? Because you are extremely [Foreign Language] in this particular business and you are envisaging that the next leg of growth is going to come from this particular business? I heard you talking about this in the media channel today morning.
That's right. So I didn't get your question, sir.
So how are you going to scale it?
So how are -- so I only mentioned that we are putting up a facility, we already have a capacity to make 20 cars a month, which we are enhancing. So we started delivering the Pune Metro. We will start delivering Bangalore Metro, et cetera. And we are further adding on to capacity to get to 70 cars per month. So that is the way we will scale it.
And this INR 13,600 crores order book that you're carrying as in your books right now, what is the time line for the execution of the order?
Different orders have different time lines for execution. The Vande Bharat's execution is over the -- first contract in 2 years and then 4.5 years for supply and then there is 35 years of maintenance. Surat, we have already announced in the market, the delivery in about 170 -- my memory serves me correct, objective correction. So there are different contracts as well as different delivery period. And that is how our capacity utilization is being planned.
So what is the capacity utilization in passenger right now?
As I mentioned a few minutes ago, right now, we are in the initial stage, at the beginning stage. So we are at about this 20% capacity utilization of the current capacity. On one side, we are adding the capacity. On the other side, we are doing -- we are increasing the capacity utilization.
No, I heard you saying that the capacity utilization would increase from Q2 and Q3. I mean...
Every quarter, subsequent -- we will be improving upon the capacity utilization. And we will be able to reach our capacity up to the current installed capacity of 20 cars a month by end of this year or beginning of the coming year.
20 cars a month by end of this year?
Yes, please.
And your -- I mean, the current contribution from your passenger business is about 18%, 19% of the total top line, right?
Yes, it's 18% to 19% as of the current quarter.
Okay. Can you give us some -- I mean, can you -- is there any guidance that you can give us in terms of...
We don't give any guidance as a matter of policy, but we've already disclosed the capacity and our plans in the presentation and also in the remarks. But as far as our future numbers are concerned, the policy, we do not give any guidance.
So you said that the current capacity is about 20% to 25%, and you hope to reach about 20 cars a month by the end of this particular calendar year. So what is it that you are...
This particular financial year.
This particular financial year, got it. So now, I mean, at this juncture, what is the capacity that we are producing right now?
I already mentioned to you, sir, 20% to 25%.
Next question comes from Kunal Sheth from B&K Securities.
Congratulations on a great set of numbers. Am I audible, sir?
Yes, yes, absolutely, Kunal.
Sir, first question was relating to gross margin. We have seen some within gross margins this quarter. So is it more related to mix or anything that we can talk about?
So it is relating to mix and also the -- as I mentioned, Kunal, about the price variation, the commodity prices have been soft in the first quarter, whereas the PVC always follows. So quarter-by-quarter margin assessment is probably not going to be very relevant in our sector. But this trend might continue for a couple of quarters or 3 quarters. But when you look at overall 12 -- 8 to 12 quarter period, a 2- to 3-year period, margins are about 10%.
For the -- yes, sir, that is for the segment. I was more talking about the gross margin. So okay, it could be probably a mix of these 2 things. And sir, in the passenger car segment, sir, and this is slightly medium [indiscernible], you did mention earlier you're currently running at 20%, 25% utilization. So once we probably by the end of this year, start of next year, reach 20 cars per month kind of a target, would it be fair to assume that the margins will meaningfully scale up? And probably there are 2 levers to margin. One is scale and another is the equipment strategy that you have in terms of propulsion systems and traction motors. So would you believe that large part of the margin uptick will come post the equipment strategy? Or leverage will also a play an equally important part?
So as far as the normalization of the margin, as you can see that the margin, I just mentioned that the normal margin for our business is about 10% of an EBITDA. Now the margins are much lesser than 10%. That is primarily on account of the volumes. Once we are able to reach the normal volumes, we should be able to be 8% to 10% of EBITDA levels. And in order to go to a higher EBITDA level, which the passenger rail system business can give us, that is going to come through the strategy of the component. So once we are able to develop, that would integrate into more of components, whether it is propulsion, traction motors or others, that is going to enhance the margin because the wallet share of the train in terms of the make or buy will increase.
[Operator Instructions] Next question comes from [ Nayak Bandari ] from SBI Capital Securities. I'm sorry sir, he's withdrawn his questions. [Operator Instructions] Next question comes from [ Rahul Maheshwari ] from Ambit Asset Management.
Good evening. Am I audible?
Yes, you are, please.
Congratulations for good set of numbers. Just one question about in the current quarter, as you have highlighted in your presentation that you have signed the order for the forged wheels order. Apart from the freight rolling stocks and passenger rolling stocks, what is the opportunity in the next 2, 3 years the company plan can tap like they have tax for the forged wheels? Any bigger opportunity size if you can highlight that would be very helpful.
So there are several opportunities in relation to the forged. Today, we are importing wheels for the -- to be used for the passenger segment and also for the private wagons as well, we are importing these. So there is -- in fact, this initiative, which has been taken by the Indian Railways to have in like [indiscernible] wheels factory in India. So being a net importer, we are planning to be net exporter. So even the fact that we are planning to put up is for capacity, which is much more than the mandatory offtake that is required by the Indian Railways. So I believe there's going to be a huge export opportunity that we foresee from this particular opportunity that we have.
How big is the size for forged wheels market currently? What we are important currently and you are expecting to export?
So the current -- as per the media reports, the current import of wheels in the last year was about INR 500-odd crores in India. In terms of the total size of the project that we are setting up, the potential revenue is going to be approximately INR 2 lakh crores -- sorry, INR 2,000 crores per year. So -- and we believe that because forged wheel is something which is used all over the world, primarily in the passenger train for sure, but also in the freight train in Europe, et cetera.
The cart wheel, which is the other technology is not prevalent in many countries except for America, China -- slightly in China and slightly in India. So we believe that the forged wheel market is going to grow, and there should not be a demand challenge to cover up this capacity of 200,000 wheels, which is about [ half ] of INR 2,000 crores a year.
And apart from the wheels, what other components the company can tap into by following the government's larger program flagship scheme of Vande Bharat when we look at in terms of wheels, wagons, et cetera? What other opportunity is in the pipeline, which you can look for?
So we can -- we are always in the lookout and evaluating new options for enhancing our product offering, as we call ourselves, Titagarh Rail Systems. So whatever is in the rail system arena is something we evaluate. In terms of disclosing [Audio Gap] them once they are mature and ready. But the work in progress for evaluation is something that we continuously do on an ongoing basis.
Thank you, sir. That would be the last question for the day. Now I hand over the floor to management for closing comments.
So I would like to -- so I think this quarter has been very good in terms of the performance. The numbers are as it is where we have seen. And the questions that have been raised by all the participants were very insightful, and we take note of some of the suggestions also, which has been given by the analysts and investors. So we look forward for the good set of numbers going forward as well. And with this, we close the -- we'll close the earnings call. Thank you so much.
Thank you. Ladies and gentlemen, this concludes the conference for today. Thank you for your participation and for using Door Sabha's Conference Call service. You may disconnect your lines now. Thank you and have a pleasant evening.