Texmaco Acquires JRIL: Enhances Market Reach and Wagon Capabilities

Texmaco Rail & Engineering Limited announced in July 2024 that it had entered into definitive agreements with Jindal Rail & Infrastructure Limited (JRIL) and its existing shareholders – JITF Urban Infrastructure Services Limited and Siddeshwari Tradex Private Limited – to acquire 100% of JRIL’s share capital on a fully diluted basis. After completing all precedent conditions, Texmaco informed the exchanges on September 3 that it has now acquired all rights, titles, and interests in JRIL’s securities, making JRIL a wholly-owned subsidiary of Texmaco.

JRIL is renowned for its R&D, design, and manufacturing capabilities in commodity-specific freight wagons. With this acquisition, Texmaco significantly enhances its international product portfolio and solidifies its position as an industry leader, particularly in design innovation. As demand for new rolling stock designs grows, especially from the private sector, this transaction propels Texmaco forward in offering comprehensive solutions.

JRIL, which began operations in 2012, specialises in manufacturing special-purpose wagons primarily for India’s private sector. The company has delivered over 8,600 wagons to both domestic and international clients. Its manufacturing facility in Vadodara, Gujarat, spans 123 acres, with half currently in use. JRIL meets the technical and pre-qualification criteria for major wagon tenders in India and abroad. In FY 2024, JRIL produced over 1,650 wagons and has the capacity to further increase production. The company’s current order book exceeds 2,000 wagons, expected to be delivered over the next 12 to 14 months. For FY 2024, JRIL reported total revenues of ₹750.11 crore, an EBITDA of ₹84.88 crore, and a profit before tax of ₹57.37 crore.

The strategic rationale for this acquisition is compelling:

1. JRIL, a G-105-certified entity, focuses on commodity-specific special-purpose wagons for the private sector and has the capability to supply Indian Railways.
2. Texmaco’s technical expertise will enhance JRIL’s wagon production with minimal capital expenditure.
3. JRIL’s 60+ acres of surplus land offer rapid expansion and flexible manufacturing opportunities for both passenger and freight wagons, as well as a components ecosystem.
4. Texmaco’s foundry expertise will drive future vertical integration at JRIL.
5. Significant cost savings will be unlocked through bulk material purchases for both Texmaco and JRIL.
6. Enhanced EBITDA margins on a consolidated basis will be driven by increased private sector freight car orders.
7. The strategic expansion into Western India strengthens Texmaco’s national presence.

The company stated that this acquisition represents a key milestone in their journey to expand its strategic capabilities and market presence, positioning the company for sustained growth and innovation in the railway manufacturing industry.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.