Leading Australian train manufacturer and engineering firm, UGL, has a joint venture with India's rail freight car manufacturer and diversified engineering services company, Texmaco Rail & Engineering of the K K Birla Group, to establish a manufacturing plant in Belgharia, Kolkata. UGL's Chairman, Trevor Rowe, speaks to Neena Bhandari about the plant, set to start production by July 2012, initially for the Australian market. Edited excerpts:
When did you start thinking about establishing a manufacturing facility in India and why?
The idea crept in about two years ago when UGL was thinking of its long-term procurement strategy. While the other Australian manufacturer of rolling stock and locomotives have been making bogies and wagons sourced from China, we, too, needed an alternative venue to source them. Consequently, we entered into a joint venture with Texmaco. Ours is an equal partnership signed last December, and since then we have had people involved in management, design and engineering of the plant visit India several times.
Is the construction of the plant going according to plan? Will production start by July 2012?
We have had some teething problems, but matters are shaping up fine. Production will begin from July 2012. This joint facility will initially build bogies for the Australian market followed by rail bogie frames and platforms, wagons and wagon components, and locomotives for the Australian, Indian and the overseas Asian markets.
How many people would you employ at Belgharia?
Initially 300, but that number would grow as we increase production. The state-of-the-art equipment and technology will give opportunity to local employees to learn new skills. Operations personnel are being sourced from local training institutes. Texmaco is also providing the support of its in-house technical training institute to develop the skills of these personnel.
Has there been any technology transfer agreement in terms of product design?
The joint venture agreement involves UGL providing certain technology and mutual training arrangements. The bogies would be based on Australian designs and manufactured at the facility in India. UGL is providing systems and procedural support across all business facets, including financial, health safety, quality, risk, information technology management and corporate governance.
Texmaco is firming up multiple joint ventures with foreign partners. What is unique about your partnership?
This partnership is significant in the context of an Indo-Australian joint venture, given India's importance as a growing trade partner and export destination for Australia. We are going to see more Indian companies investing in resources and technology in Australia. Also, the equipment that we make would be relevant to India's interest in coal, out of Australia.
Under this partnership, rolling stock would be procured to meet requirements for Asia-Pacific. And hopefully, provide us access to the Indian market. These specialised steel bogies and wagons would be of high quality and cost-effective.
The facility is an integral part of UGL rail's supply chain and produce low-cost components and sub-assemblies to support UGL rail's manufacturing business in Australia. The facility will ultimately produce locomotive platforms, locomotive cab structures, bogie frames and iron ore and coal wagon components. The venture facility would also support UGL rail's international bogie business and provide opportunities to compete in new markets across the product range.
What kind of opportunities will you explore in rolling stock, maintenance and refurbishment?
India has enormous opportunity, but it would be a little early for us to explore now. Initially, we would go for exports. We hope the Indian Railways would be interested in our product line.
Did you face any challenges in doing business with India?
We haven't faced any trouble apart from the usual problems of getting approvals.
It has been a pleasure working with Texmaco Chairman Saroj Poddar, and his team. I have personally known Poddar for several years. Although as a company, we don't have any other collaboration with the Birla Group.
