Titagarh Wagons expects a turnaround of its European operations with its Italian subsidiary - Titagarh Firema - likely to be operational (EBITDA) break-even in 2022-23 and net positive in 2023-24.With the impact of the Covid-19 pandemic easing, bottomline is expected to improve.

Besides, the company is focussing on clearing its legacy order book and restructuring its operations and personnel in Italy.In an interaction with The Telegraph, Umesh Chowdhary, vice-chairman and managing director, Titagarh Wagons said that when the company took over the operations of Firema in 2015, there were two major commitments.

“We could not let go of any employees for two years and old contracts, including some which were 15 years old, we would execute. We had an order book of euro 220 million when we acquired the company. Out of this, there were some good contracts and we executed them quickly. As a result in FY2017, which was our first financial result, we had a positive EBITDA (earnings before interest, depreciation, taxes and amortisation,” Chowdhary said.However, with spiralling costs, EBITDA went into the red in FY2018.

Chowdhary said a decision was taken to start cleaning up the company and execute the contracts, which were technologically obsolete.“In December 2019, we had turned EBITDA positive and then Covid happened which was a disaster for Italy and for us as well. For 1.5-2 years, the company went into a tailspin. None of us from India were allowed to travel to Italy for two years,” said Chowdhary.

With the pandemic restrictions easing, the company has taken certain strategic calls.“In January we shut down one site (Tito) and moved all the operations to a single location at Caserta. There was a hit on the balance sheet but the payback is in less than a year and the efficiency has improved significantly. We will also go for new contracts and I will finalise the appointment of a CEO soon. Also by June, we expect to close the legacy contracts,” said Chowdhary.“Because of the restructuring we have done and the execution of the end-of-life contracts, this year we should be able to come to be almost EBITDA breakeven. Next fiscal year we should be able to achieve net breakeven,” he said.

New orders

The company currently has euro 500 million of new orders, including a contract for the Rome and Latvia region of about euro 280 million.Earlier this month, Titagarh Wagons had announced that it had received assurance of support from the Italian government, which could aid in the company securing new orders in the coming months.“The Italian operations are starting to look up and barring no other external surprises, we should be able to grow from here on,” said Chowdhary.