RITES sets sights on Africa for export of refurbished and underutilized railway diesel locos

The national transporter’s export arm has already bagged two orders worth ₹90 crore this year for suppling diesel locomotives to South Africa. And based on the interest from other markets, RITES is looking at striking deals for these diesel locos, which still have 15-20 years of life left, from other neighbouring countries in Africa, RITES chairman and managing director Rahul Mithal said in an interview.

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“The South African orders for diesel locos is a huge breakthrough for us as the Cape gauge converted diesel locos also have a demand in about 12-13 countries which also run railways on similar systems. Our two pilots in South Africa will determine the pace at which we capture opportunities for exports of 200-300 diesel locos or more to other African markets," Mithal said.

RITES is looking to scale up the share of exports in its revenue to 20-25% in the next couple of years, and orders for diesel locos would help it fast-track scaling up export revenue. These engines remains largely underutilized after Indian Railways’ electrification drive that has now covered almost its entire network of 70,000km.

Apart from diesel locos, RITES also proposes to export its rolling stock and consultancy services to Southeast Asia, Africa, West Asia and Latin America.

The company, which started FY24 with an export order book of less than ₹100 crore, received another export order ₹300 crore last year and has been on a roll in the current financial year. It received export orders in each quarter, beginning with a ₹900 crore order to supply 200 passenger coaches to Bangladesh, a ₹35 crore order in Q2FY25 and a ₹54 crore order in the first month of Q3FY25 from South Africa.

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“So, we have roughly ₹1,300 crore export orders now. These orders will take a few more quarters to mature. Thus, we are expecting that our revenues should start picking up from FY26. In the current fiscal, we are growing quarter-on-quarter and hope to take up revenues closer to FY24 levels by March," Mithal said.

RITES, which declared its Q2 results on Wednesday, has reported a significant decline in profitability and revenue.

The company's profit decreased by 7.13% year-over-year to ₹540.86 crore, as compared to ₹582.36 crore during the same period last year. Its quarterly net profit stood at ₹72.98 crore in July-September, down 27.85% from ₹101.15 crore in the year-ago period.

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Mithal said revenue has grown quarter-on-quarter and by FY25 the company should report numbers similar to those of the last fiscal. “Growth would come in FY26, when several of our orders taken over previous couple of years, mature," Mithal said.

“Our order book closed on 30 September at ₹6,580 crore. We maintained our pace of getting one order a day in Q2. In fact, the 90-odd orders we received in Q2 worth ₹729 crore was more than ₹635 crore worth of orders received in H1 of last fiscal. The ₹2,000 crore orders in H1 of this fiscal so far is equivalent to the oders received in entire FY24," Mithal said.

He said that company’s success in bagging orders under global tenders in the case of Bangladesh and a few other projects has reduced dependence on line-of-credit projects facilitated by Exim Bank and the external affairs ministry, and RITES would bid for consultancy and rolling stock opportunities across the globe.