Texmaco Rail & Engineering Ltd has entered into a joint venture agreement with Rail Vikas Nigam Ltd (RVNL) to establish a new company focused on railway manufacturing and infrastructure initiatives. The joint venture will be supported by an investment of ₹4.90 crore from Texmaco Rail, provided through cash contributions.
The company’s board meeting conducted earlier today approved the agreement, which was signed immediately following the conclusion of the meeting. Under the joint venture agreement, RVNL will possess a majority stake of 51%, whereas Texmaco Rail will hold a 49% share.
The new company will be involved in the manufacturing and maintenance of freight and passenger rolling stock, which includes locomotives, wagons, coaches, trainsets, metro coaches, and other specialized railway equipment. It will also engage in engineering, procurement, and construction projects within the rail infrastructure domain, manage railway workshops and depots, and compete in both domestic and international tenders.
The establishment of this joint venture holds strategic importance for both Texmaco Rail and RVNL. Through the combination of Texmaco Rail’s extensive manufacturing experience and RVNL’s project execution capabilities, the two firms aim to enhance their operations and market reach both in India and internationally. This venture is also in close alignment with the government’s vision for railway modernisation and the Make in India initiative, which focuses on promoting local manufacturing and infrastructure development.
On Tuesday, shares of Texmaco Rail ended 2.88% lower at ₹138.40 apiece on BSE, and Rail Vikas Nigam closed at ₹312.80 apiece, down 2.74%.
Q1 Results
Texmaco Rail & Engineering experienced a 50.5% year-on-year decrease in consolidated net profit, amounting to ₹29 crore for the June quarter, which was affected by a shortage of wagon wheelsets from the Railways. Revenue from operations fell 16.3% to ₹911 crore, down from ₹1,088 crore in the same quarter last year, which placed pressure on margins.
The reduction in revenues for the quarter was attributed to a lack of wagon wheelsets from Indian Railways, a challenge faced by the entire industry. However, supplies have since improved, and revenues have started to recover, according to Executive Director and Vice-Chairman Indrajit Mookerjee.
Rail Vikas Nigam reported a 4.1% decrease in its revenue for the quarter, totaling ₹3,908 crore, while its Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) for the quarter experienced a significant drop of 71% compared to the same period last year, amounting to ₹52 crore.
The EBITDA margin for the quarter fell by over 300 basis points, reducing to just 1.4% from the previous 4.5%.
Net profit for the quarter decreased by 40% compared to the same quarter last year, dropping to ₹134 crore from ₹224 crore.
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