Titagarh Rail Systems Ltd Management Discussions

Titagarh Rail Systems Limited (TRSL) operates in Freight Rail Systems (FRS) comprising mainly Railway Wagons and Steel Castings and Passenger Rail Systems (PRS) which includes Metro Coaches, Passenger Coaches and Propulsion Systems. TRSL is Indias only private-sector company engaged in manufacturing both freight wagons and passenger rolling stock ranging from metro coaches to Vande Bharat (Sleeper Trains) and EMU trainsets. Established in 1997, TRSL has built a strong leadership position in the freight rolling stock space. It commands roughly 25% market share in freight wagon manufacturing, consistently leading Indias tender awards in this segment.

TRSLs order book as of Financial Year ended March 31, 2025 (FY 2025) stood at approximately _24,500 crore, representing around 11,500 freight wagons and approximately 1583 metro & Vande Bharat coaches. Passenger rail has rapidly gained importance from just 5 to 6% of business in FY 2023 to now comprising approximately 62% of its total order book, with freight rail systems accounting for up to 38%. This transformation positions TRSL as a well-diversified rail mobility systems provider with deepening strength in both freight and passenger rail verticals.

In FY 2025 TRSL achieved a remarkable performance milestone by becoming the only company in its segment to cross 1,000 wagon dispatches twice in consecutive quarters (Q3 & Q4). The Company maintains a high production capacity, targeting a steady output of 1,000 wagons per month, or approximately 12,000 units per year.

TRSL from its PRS vertical continues to deliver metro coaches at a significant scale viz. completing 33 of 34 Pune Metro trains from its Uttarpara facility. The Company is also executing orders placed for manufacture of Metro Coaches by Metro Authorities of Bengaluru, Pune, Surat, Ahmedabad and Mumbai. Additionally, TRSL has successfully made a foray into propulsion systems, winning contracts for traction converters (€7.18 million / _65 crore). TRSL has set up a new design centre in Bengaluru for advanced Train Control and Monitoring System (TCMS) and propulsion systems development. The Board of TRSL during the FY 2025 took a strategic decision to rename its shipbuilding activity hitherto part of FRS, as Shipbuilding & Maritime Systems (SMS) to expand and tap its true potential and also venture into Signalling & Safety Systems (SSS), a space aligned with the Companys presence in railway sector, that has huge growth prospects Metro trains being the preferred choice of Urban Rapid Transport in India will continue to generate substantial demand for TRSLs PRS vertical which in addition to the Governments determination to encourage movement of cargo through rail route in Wagons and strengthen the countrys railway infrastructure. The aforesaid would propel long term growth potential going forward, and with its strong fundamentals TRSL is expected to further accelerate growth in the segments it operates.

Passenger rail business has the potential to grow and account for up to 50-60% of total revenues over the next 4–5 years, indicating substantial strategic shift and scale-up in metro and Vande Bharat coach production. Thus TRSL would continue to occupy and strengthen its leading position in the FRS and PRS as the only private sector company that is poised to successfully implement its growth strategy with focus on seizing excellent opportunities offered by railway sector under the "Atma Nirbhar Bharat" initiatives of the Government of India.

(a) Overall Review

TRSL delivered its highest-ever annual wagon production, manufacturing 9,431 units in FY 2025 a record in Indias rail rolling stock industry. The Companys foundry operations also scaled new heights, achieving 27,240 metric tonnes of output- the highest ever recorded by TRSL. Revenue from operations stood at _3,865.82 crore, with net profit at _303.43 crore for the full year under review. The performance of FRS would have been significantly better had the wheelsets shortage not impacted the production and supply.

However, despite industry-wide constraints, particularly supply chain issues at Rail Wheel Factory (Bangaluru) in FY2025, we managed to maintan production a steady level and although it was expected that the supply of wheelsets would become normal by June, the same may materialize by the end of second quarter of FY 26. In accordance with the Companys policy on the subject, the Board has proposed a final dividend of Re. 1 per share (50%), subject to shareholders approval at the ensuing Annual General Meeting.

The Company has undertaken strategic expansion in its foundry, as a part of backward integration and is consistently endeavouring to optimize utilisation of resources as well as exercise cost control, a key enabler of achieving record output.

TRSL is installing completely modern foundry production facilities in both its foundries situated at Titagarh and Uttarpara respectively, and this is expected to enhance production to a substantially higher number. TRSL is reaonably confident of achieving the target of around

40,000 tonnes of castings, on a monthly run rate basis within the current financial year.

The Passenger Rolling Stock (PRS) segment of Titagarh Rail Systems Limited (TRSL) sustained its strong growth momentum in FY 2024–25, with the order book standing at _6,850 crore as of March 2025, reflecting the Companys strategic shift towards passenger mobility solutions. The portfolio comprised 1,583 coaches, covering marquee projects such as the 80-trainset Vande Bharat contract executed through the BHEL–TRSL consortium, alongside metro orders for Bengaluru, Pune, Ahmedabad, and Surat. Execution was supported by the modernisation of the Companys Uttarpara facility, the subsequent acquisition of adjacent land for a dedicated test track and infrastructure augmentation, adoption of Industry 4.0 systems, and the scale-up of in-house propulsion and electrical capabilities, all of which enhance localisation and would enable the desired value capture. Current installed capacity of 300 coaches per annum is being progressively expanded towards 850 coaches per annum through phased investment in infrastructure. In parallel, TRSL is strengthening its design and engineering capabilities to support complex rolling stock programmes and deepen technology ownership. With the Governments continued emphasis on "Atmanirbhar Bharat," rising opportunities in metro and intercity trainsets, and long-term maintenance revenues embedded in the Vande Bharat programme, the PRS segment is positioned as the principal growth driver for TRSL, expected to deliver stronger revenue visibility, margin expansion, and annuity streams over the next 4–5 years.

(b) Segment Review

The Company operates under two segments reported under the applicable accounting standards, namely:

(i) Freight Rail Systems (FRS) - Consists of manufacturing of Wagons, Loco Shells, Bogies, Couplers and its components. This segment encompasses our "Shipbuilding, Bridges and Defence" (SBD) business, in which we manufacture products including (i) coastal research vessels, naval vessels, passenger ships and cargo ferry vessels, and tugs; (ii) metal canisters, and integrated field shelters for the Indian Air Force; and (iii) bailey bridges, steel modular bridges and unibridges.

(ii) Passenger Rail Systems (PRS) - Consists of designing and manufacturing of Metro, Passenger Coaches for semi-high-speed trains, EMUs, Mono Rail, Propulsion and its equipments, Traction Motors and its components.

The segment wise performance is as follows:

(Rs. in Crores)

During the year under review, the revenue from Freight Rail Systems segment (FRS) is higher by 5.64% and PBIT is lower by 1.26% as compared to the previous financial year. About 93.39% of the Companys standalone revenue has come from this segment. The Company has the largest installed capacity of 12,000 wagons per annum with state-of-the-art facility at its Plant in Titagarh, W.B. and Bharatpur, Rajasthan.

During the year under review, the revenue from Passenger Rail Systems (PRS) is lower by 41.35% and PBIT is higher by 60.76% as compared to the previous financial year, since the Pune metro project reached near completion and the other orders under PRS were in the initial stage i.e. design phase. The Company is uniquely positioned to capture growth with its modern-day Passenger Rail Systems Technology and installed capacity of 250 coaches per annum. The targeted capacity of traction motors is 2,400 per annum.

The following significant developments took place during the FY 24-25: The Company marked a significant achievement by commencing production and subsequently delivering its first driverless, Made-in-India trainset for the Bengaluru Metro Rail Corporation Limiteds (BMRCL) Yellow Line project, under a contract with China Railway Rolling Stock Corporation (CRRC). The trainsets, manufactured at the Companys state-of-the-art metro manufacturing facility in Uttarpara, West Bengal, are stainless steel, fully automated, and designed to operate on the 19-kilometre stretch connecting the Electronics City technology and business hub to the rest of Bengaluru. The offcial handover in January 2025 underscores Titagarhs growing capabilities in high-tech urban mobility solutions and reinforces its position as a leading manufacturer of world-class rolling stock. These milestones not only demonstrate the Companys commitment to strengthening Indias urban transportation infrastructure but also reflect its pivotal role in propelling Indias emergence as a global hub for railway manufacturing.

In line with its strategic focus on innovation and indigenous technology development, the Company inaugurated a state-of-the-art Engineering Centre in Bengaluru during the year under review. The facility is dedicated to the development of advanced Train Control & Monitoring Systems (TCMS) and Propulsion Systems, supporting critical projects such as the Surat and Ahmedabad Metros, Vande Bharat Sleeper trains, and ICF EMU/MEMU programs. This expansion reflects the Companys commitment to the Governments ‘Make-in-India and ‘Aatmanirbhar Bharat initiatives. The Centre is equipped with cutting-edge infrastructure and is envisioned to become a hub for engineering talent and product innovation in rolling stock systems, further strengthening Titagarhs role as a leader in the Indian rail manufacturing ecosystem.

In line with its renewed strategic focus, the Company formally established a dedicated business vertical, Shipbuilding and Maritime Systems (SMS) to capitalise on emerging opportunities in Indias maritime and defence manufacturing space. The Company has a proven track record in this domain, having delivered various vessels including Fast Patrol Vessels, Coastal Research Vessels, and international ferry projects. With approvals from key authorities such as the Indian Navy, Indian Coast Guard, and the other institutes like National Institutes of Ocean Technology, company is well-positioned to scale up operations. The SMS vertical, led by Mr. Saket Kandoi as Director and CEO, will focus on enhancing shipyard capacity, pursuing strategic collaborations, and expanding into larger and more complex vessel manufacturing aligned with the Governments emphasis on Atmanirbharta and the revamped Shipbuilding Financial Assistance Policy.

The Joint Venture (JV) between Titagarh Rail Systems Limited and Ramkrishna Forgings Limited is progressing in line with planned timelines and strategic objectives. The capex rollout is on track, and the facility is expected to commence commercial production by end of FY26. The collaboration combines Ramkrishnas core strength in forging with Titagarhs deep expertise in rail systems. Once fully operational, the JV is expected to contribute meaningfully in annual revenues, supporting the Groups broader goals of import substitution and value-added exports.

The Companys order book stands at Rs. 24,526 crore as at March 31, 2025, of which _ 11,200 crore is the Companys share and _ 13,326 crore is the Companys Share in the JV. The order book is well diversified across the different segments of the Company and going forward the revenue mix of the Company will undergo a substantial change with the increase of share of passenger rail systems.

(c) Industry overview of Business Segments

Indian Railways

In FY 2024–25, Indian Railways continued receiving strong fiscal backing, with _2.65 lakh crore in capital expenditure, financed predominantly through 95% central budget support, augmented by extra-budgetary and internal resources.Thisensuredsustainedinfrastructuremomentum, as freight loading crossed 1.62 billion tonnes, marking a 1.7% year-on-year rise, while freight revenue alone reached approximately _1.75 lakh crore constituting about 62–65% of internal revenue. Simultaneously, modernization initiatives saw the rollout of 136 Vande Bharat trainsets, and Kavach safety upgrades installed, while 103 stations were redeveloped under the Amrit Bharat Scheme by May 2025 collectively reinforcing railway infrastructure upgrade at scale. This robust systemic foundation creates fertile conditions for Titagarh Rail Systems Limited, especially across its two core divisions.

These robust macro trends strong freight performance, sustained budget allocation, modernization investments, and large-scale station upgrades create a compelling growth environment. They reinforce Titagarh Rail Systems Limiteds strategic positioning as a leading supplier in both freight wagons and passenger coaches, ready to meet Indias accelerating demand across rail segments.

In summary, FY 2024–25 represented marked financial growth, operational resilience and strategic positioning. Continued focus on electrification, safety systems like Kavach, infrastructure upgrades, freight corridor utilization, and Vande Bharat expansion reafirm Indian Railways role as both a transportation leader and a global modernization benchmark.

Freight Rolling Stock

In FY 2024–25, Indian Railways demonstrated strong operational and financial performance, driven by infrastructure expansion and modernization. The national transporter moved approximately 1,617 million tonnes (MT) of freight. This volume secures its position as the second-largest rail freight carrier globally, following China [Railways breaks freight loading, revenue records for 4th year - The Economic Times] The sweeping railway advancements create a compelling environment for Titagarh Rail Systems Limited, aligning directly with its Freight Rail Systems (FRS) segment strategy. With freight loading rising and projected wagon demand, TRSLs robust 12,000 wagon annual manufacturing capacity and integrated foundry operations position it to deliver high-scale freight solutions. TRSLs strong execution capabilities and dual-segment focus enable it to capture sustained opportunity from Indias freight-led growth powering long-term sector leadership and visibility.

Outlook

Indias freight rail network continued strong growth, backed by steady investments and ongoing modernization. Electrification, safety upgrades, and dedicated freight corridors are improving speed, capacity, and reliability. The focus on infrastructure and efficiency is strengthening overall freight movement. This growth is driving long-term demand for wagons and rolling stock. TRSL is well positioned to meet this demand through its strong freight manufacturing capabilities.

As rail emerges as a backbone of national mobility and logistics infrastructure, TRSLs integrated capabilities will allow it to capitalize on sustained, multi-year demand growth cementing its role as a key enabler of Indias modern railway ecosystem.

Passenger Rolling Stock

Parallel to its freight focus, TRSL is aggressively building its presence in the Passenger Rolling Stock segment, aligned with Indias passenger rolling stock market which is slated for transformative expansion, driven by a commitments of _57,693 crore in the Budget 2025–26 specifically toward rolling stock acquisition including 200 Vande Bharat trains, 100 Amrit Bharat non-AC trains, 50 Namo Bharat rapid rail sets, including general sleeper coaches. (Budget 2025: 100 Amrit Bharat, 50 Namo Bharat, and 200 Vande Bharat trains to be manufactured - The Economic Times) and the company rolled out production of 34 out of 36 trainsets for Bengaluru Metros Phase 2 Yellow Line at its Uttarpara facility during the year under review.

This ambitious push positions the sector to reach a projected _4.75 lakh crore market value by FY 2029, growing at a CAGR of 46% for passenger rail and 39% for metro systems, signalling surging demand for coaches, propulsion systems, and rail subsystems. (Indias Expanding Rolling Stock Market presents significant opportunity for Suppliers to boost production capabilities) TRSLs growing share of passenger orders within its overall order book highlights its strong positioning in this expanding market. The company has already delivered metro coaches to major cities such as Bengaluru, Ahmedabad, Surat, and Pune, and has begun production of Vande Bharat sleeper trainsets at its rapidly scaling Uttarpara facility. Backed by supportive policies and rising infrastructure investment, TRSLs Passenger Rolling Stock division is becoming a key growth driver, well aligned with Indias broader push for modern urban transit and rail transformation.

Outlook

TRSLs Passenger Rolling Stock (PRS) division is rapidly emerging as a core growth driver, buoyed by Indias ambitious urban transit and rail modernization initiatives. As of mid-2025, PRS made up 62% of TRSLs order book a significant shift from its historical freight focus. The Company is expanding its Uttarpara facility to boost coach production to 1200 units annually up from 300 units, to service major metro and Vande Bharat contracts and standardize delivery of metro trains for cities like Bengaluru, Ahmedabad, Surat, and Pune. With a fund allocation for rolling stock in the 2025–26 Budget that includes Vande Bharat, Amrit Bharat, and Namo Bharat trains, PRS is well-positioned to become a key revenue generator and capitalize on sustained demand in Indias modern rail ecosystem.

TRSLs Passenger Rolling Stock (PRS) division is rapidly emerging as a core growth driver, supported by Indias aggressive push toward urban transit expansion and high-speed rail modernization. As of mid 2025, PRS constitutes approximately 62% of TRSLs _24,500 crore consolidated order book, marking a decisive strategic shift from its historical freight focus. The Company is currently ramping up manufacturing capacity at its Uttarpara facility including leased expansion of approx. 40 acres with plans to scale coach production to 850 units annually, up from 300 units, to service major metro and Vande Bharat contracts. Supported by a _58,800 crore allocation in Budget 2025–26 for rolling stock which includes new Vande Bharat, Amrit Bharat, and Namo Bharat trains PRS is projected to grow at a CAGR of 38–39% through 2029, (Rail Budget 2025: Indian Railways allocates Rs 58894.93 crore for advanced rolling stock including Vande Bharat, Amrit Bharat trains - Infrastructure ET Now). The company expects the PRS segment to grow significantly, with the potential to contribute 50–60% of TRSLs total business over the next 4–5 years—a notable shift from its earlier freight-dominated focus. [Times of India] With momentum across coach orders, propulsion systems, and urban rail demand, TRSLs PRS business is well-aligned to capture in summary: From March 2025 onward, Indias rolling stock ecosystem driven by rail, metro, and export programmes is set for explosive growth. With sustained CAPEX, robust government mandates, and major manufacturing ramp-ups, demand for coaches and rail systems is expected to sustain high double-digit CAGR, fundamentally transforming domestic mobility infrastructure and supporting Indias emergence in global rail markets.

(d) Discussion on Financial Performance with respect to Operational Performance

The Company has incurred a substantial portion of the capex of Rs. 250 crore in the year under review and balance of proposed 1,000 crores in the next two years on capacity/infrastructure building including development of new metro trains coaches and propulsion con_gurations and the balance is set to be deployed in the next fiscal. The capex is aimed at streamlining the supply chain and improving the operating margins through appropriate backward integration of components in both the segments. All plants of the Company are ISO 9001: 2015 and ISO 14001:2015 certified. Continuing focus of the management is consistently on undertaking cost rationalization, better manufacturing processes, improved productivity and optimization of resource for improvement in performance aimed at achieving results better than the trend witnessed in the industries in which the Company operates. Viewed in this backdrop, the Companys performance for the year under review is satisfactory.

(e) Overall outlook for the current year

TRSL is strategically positioned to capitalise on Indias intensifying rail modernisation momentum, with both Freight Rolling Stock (FRS) and Passenger Rolling Stock (PRS) set to be growth engines. On the freight side, sustained expansion of Dedicated Freight Corridors and rising freight volumes boost demand for high-capacity wagon production a domain where TRSLs integrated foundry and large-scale manufacturing capabilities offer compelling advantage. Meanwhile, PRS is rapidly emerging as the future frontier: with passenger-related contracts now representing the majority of TRSLs order book, and capacity expansion underway at its modern Uttarpara facility, the Company is geared to capture growing demand from metro expansions and Vande Bharat programmes. This strategically balanced dual-segment positioning, combined with strong execution capabilities and alignment with government-led initiatives, underpins a confident growth outlook for TRSL in the coming years.

The Board has at its meeting held on 11th August, 2025 accordedinprincipleapprovaltothetransferofShipbuilding & Maritime Systems (SMS) business/undertaking as a going concern on a slump sale basis to a Wholly Owned Subsidiary of the Company, subject to necessary compliances. The move will enable the Company to continue to focus on its core business activities in rolling stock systems (FRS and PRS), and facilitate pursuit of tapping true potential for growth of the SMS vertical independently and/or through strategic partner at an appropriate point of time, to seize the opportunities presented by the Government of Indias initiatives to the shipbuilding and maritime industry.

(f) Key Financial Ratios

As stipulated in the Regulation 34(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), as amended, the Company reports as follows: (i) Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios or sector specific ratios, along with detailed explanations therefor:

Notes on significant changes in financial ratios where change is > 25%:

• Debtors Turnover Ratio (days): variation is mainly due to increase in trade receivables during the current year.

• Current Ratio: Variation is due to increase in current assets and current liabilities, with the latter experiencing a larger rise. This larger rise due to the Companys increased utilization of its working capital limits at the end of the period, which was subsequently released.

• Debt Equity Ratio: Variation is mainly due to increase of debt and decrease in Cash and Cash Equivalents during the current year. Further NA in previous year denotes negative debt equity ratio.

(ii) Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof:

Notes on significant changes in financial ratios where change is > 25%:

• Return on Net Worth (%): Variation is mainly due to increase is primarily due to increase in profitability during the current year and equity shares issued during the previous year.

Forward Looking Statement

The statements in this report describing the Companys policy, strategy, projections, estimation and expectations may appear forward looking statements within the meaning of applicable securities laws or regulations. These statements are based on certain assumptions and expectations of future events and the actual results could materially differ from those expressly mentioned in this Report or implied for various factors including those mentioned in the paragraph "Risks and Concerns" herein above and subsequent developments, information or events.