New Delhi : An important strategic alliance was announced by Titagarh Rail systems of Kolkata and Amber group of Delhi-NCR where both companies agreed to enter the railway component and subsystem business by way of a joint venture/SPV. Under this agreement, both TRSL and Amber group, via its wholly owned subsidiary Sidwal Refrigeration Industries Pvt Limited, will invest approximately INR 120 crores each to obtain around 50% each in the SPV for setting up the new railway component business as well as fresh equity investment in Firema, Italy. This SPV will set up a new facility in India to manufacture critical railway components & subsystems used in the manufacture of Railway & Metro coaches and will also make fresh equity investments into Titagarh Firema SpA, Italy an associate of the Titagarh Group, along with new investment to be made by the Government of Italy for which an in principle nod has already been obtained from the Government of Italy’s investment arm, Invitalia. Under the agreement, Firema will grant Sidwal, Titagarh Rail as well as the JVC- SPV a preferred supplier status and Right of first refusal (ROFR) for all their products.

Titagarh Rail is a leader in the Railway rolling stock space for both freight and passenger rolling stock. Titagarh, apart from being an established railway wagon and metro coach manufacturer, is also currently executing the prestigious projects of Vande Bharat trains, Surat and Ahmedabad metro, Pune metro, and as well as currently executing its first export order for passenger rail components received from Firema. Titagarh is targeting a capacity of almost 800-850 coaches per year in the coming years.

The Amber group is a diversified B2B company having three business verticals: Consumer Durables, Electronics (EMS) and Railway Subsystems & Mobility. Sidwal, an Amber group company, has emerged as a leader in the train air conditioner market and has also signed a technology licensing agreement with Ultimate group to manufacture passenger coach doors and gangways. After establishing its leadership position in the Indian market, Sidwal intends to enter the European market for its products portfolio. The strategic partnership in Firema will not only facilitate Sidwal’s entry into the European market, but will also give Sidwal a preferred access to Firema’s own demand.

Both companies are investing to grow capabilities and capacities for various products that can be exported to Europe such as Train mechanical and electrical components by TRSL and HVAC, doors, gangways and pantry systems by Sidwal.

Firema is one of the largest and most reputed designer and manufacturer of passenger trains in Italy and has a legacy of several decades having executed marquee projects in Italy and other parts of Europe. Firema has an order book of almost Euro 1 billion for producing new coaches and has an existing capacity to produce upwards of 240 coaches per year and has plans to double this capacity. Firema recently signed a framework contract for design and supply of 370 sleeping coaches to Trenitalia for Euro 732 million (with an option of full service valued at about Euro 220 million) in consortium with Skoda apart from the trains for the Lazio (Rome) region. Titagarh Rail and Sidwal will jointly support the growth of Firema via combined management expertise as well as improving cost competitiveness of Firema by supplying critical components from India which are produced by both the groups.

Under this strategic alliance, the two groups will set up facilities in India to manufacture critical components and subsystems for the Railway industry.  The groups are already in advanced stage of discussions for obtaining technology for such components from global leaders including from Europe. While the list of these components will be announced by the JVC-SPV in due course, they would include coach interiors, coach toilets, kitchens, seats and other important railway subsystems. The JVC would target to achieve a wallet share of at least 20% value or INR 150-200 lacs per passenger coach by way of developing components and subsystem which are fitted on these coaches.

Under the Strategic alliance, Sidwal and TRSL will also grant each other a Preferred Supplier and a Preferred Customer status for TRSL’s own requirements for Sidwal’s product, at arm’s length basis. Sidwal has received a Letter of Intent under this cooperation agreement for the components manufactured by Sidwal for the existing and future projects by Titagarh Rail including the prestigious Vande Bharat project.

Commenting on the deal, Mr Jasbir Singh of Amber said “this will be a game changer for Amber as not only will it give us a very strong foothold to make customer base global, it will also give us a preferred access to the demands of one of the strongest and fast emerging rolling stock manufacturers in the country. Through this new SPV, we shall be able to provide comprehensive integrated solutions to rolling stock manufacturers for railway subsystems in India & overseas while addressing almost 20-25% of BOM of passenger coach. This alliance exponentially increases the total addressable market for both Sidwal & SPV. We intend to leverage on this alliance to get market and technology access to Europe and the rest of the world. This will also be our first overseas foray into manufacturing and will give us the knowledge and experience of making the company global.”

Commenting on the partnership, Mr. Umesh Chowdhary of Titagarh said, “we are indeed delighted to join hands with a like minded and passionate group like Amber. Coming together of our groups adds immense value to our independent business strategies where the sum of the parts will be much larger that the parts themselves. Joining of a strong group like Amber in Firema will accord strength to the overall business development and growth of Firema and the fact that the Italian government has agreed to co invest is a strong sign of the importance of the venture. It has been our stated business strategy and objective to achieve backward integration into key components and subsystems and this partnership with the Amber group will enable us to achieve our goals”.

“Both our companies are fully committed to the Make in India and Atmanirbhar Bharat policies of our honourable prime minister and this partnership is our humble contribution towards the success of these policies” said Singh and Chowdhary.