Mumbai: Titagarh Wagons Ltd said on Monday it will invest €15 million to buy French rail wagon maker IGF Industries-Arbel Fauvet Rail (AFR), its first overseas buy as it looks to tap new markets.
The deal will give Titagarh an additional capacity of up to 5,000 wagons a year and help the Indian wagon maker tap the European as well as global markets, it said.
AFR is based in Douai, in northern France, and designs and makes tank cars, containers, bogies and wagons.
“We have committed an investment of €15 million, of which about €2 million is for the assets,” Dinesh Arya, Titagarh’s company secretary, told Reuters.
“We are expecting an order for about 300-odd wagons for this French unit.
Once we get that order, manufacturing can start,” he said. Arya said the order is expected to come within a week to 10 days, adding “but it can take longer too”.
Once the manufacturing begins the firm would invest the remaining €13 million, he said.
“AFR has large number of patented designs of specialised wagons which will help the group gain a leadership position in India,” Titagarh chairman J P Chowdhary said in the statement.
Axis Bank was the sole financial adviser fro Titagarh on the bid.
The Kolkata-based firm also has a joint venture with US-based FreightCar America to make lighter aluminium rail cars with more pay load for the local market.
Titagarh plans to jointly bid with ABB and Stadler Rail AG to build rail coaches for the Indian Railways.
Two analysts with coverage on this stock has rated Titagarh as a ‘strong buy’, according to ThomsonReuters I/B/E/S, with average target price of Rs424.
At 2:17 p.m., Titagarh shares were up 0.44% at Rs378.95 in a firm Mumbai market.