Titagarh Rail associate Firema sells business unit to Italian state firm for 66mn EUR

Kolkata, Mar 5 (PTI) Titagarh Rail Systems Ltd (TRSL) on Thursday announced that its Italian associate, Titagarh Firema SpA, has completed the sale of its business unit to the Italian government-owned Fabbrica Italiana Treni S.p.A for a net consideration of 66.09 million EUR.

The strategic divestment is aimed at stemming the financial drain on the Indian parent company, as Firema had been incurring substantial losses despite repeated cash infusions from TRSL over the last few years.

In a regulatory filing, the Kolkata-based railway major stated that the proceeds from the sale have been utilised to settle payments for Firema’s secured and unsecured creditors. This settlement was conducted under the CNC (Composizione Negoziata della Crisi) — a negotiated crisis settlement framework — under the supervision of the Court of Naples.

Vice chairman and MD Umesh Chowdhary told PTI that Titagarh has around 45 per cent stake in the company, and this deal would protect them from future losses from the associate firm to the tune of Rs 40-50 crore, which used to be losses in the past.

Titagarh acquired Firema in 2015 to bolster its capabilities in the passenger rolling stock segment. While the associate played a pivotal role in helping TRSL establish its aluminium car body manufacturing facility in India, its persistent losses necessitated a decoupling.

"This transfer will eventually help in the stoppage of such a cash need from TRSL," the company said in the filing.

TRSL clarified that the transfer would have no impact on its domestic operations. The company noted that it has already established independent manufacturing facilities and the technical competence required to execute its current projects without overseas assistance.

The buyer, Fabbrica Italiana Treni S.p.A, is a subsidiary of Ferrovie dello Stato (State Railways), which is entirely owned by the Government of Italy.

Despite the restructuring in Italy, TRSL’s Indian operations remain on a strong footing with a significant pipeline of high-profile projects.

TRSL's total order book for the passenger rolling stock segment stands at Rs 10,791 crore. Current projects include the manufacturing of Metro coaches, Vande Bharat trains, and advanced propulsion systems. PTI BSM NN