About Quadrant Future Tek Limited

BUSINESS OVERVIEW

Quadrant Future Tek specializes in next-generation Train Control and Signaling Systems under the Indian Railways' KAVACH project, delivering high safety and reliability. The company also manufactures specialty cables using advanced Electron Beam Irradiation technology for applications in railways, naval defense, solar, and EV industries.

The state-of-the-art facility in Mohali integrates manufacturing, testing, and R&D for specialty cables and train control hardware. These cables are engineered with low-smoke fire-resistant polymers, offering superior thermal and mechanical properties, essential for critical applications like rail vehicles, naval ships, and EVs. Certified with NQA and ROHS, the company's portfolio includes railways rolling stock cables, marine cables, solar PV cables, automotive cables, and wiring harness solutions.

Quadrant leverages the modernization initiatives of Indian Railways, offering the world’s most economical Train Collision Avoidance System (KAVACH) at ₹7 million per kilometer. The SIL-4-compliant, LTE-compatible system ensures interoperability and high safety standards. A notable contract includes a ₹9,786.06 million order for installing KAVACH equipment in 1,200 locomotives, with a maintenance charge of 3% annually for 11 years post-warranty.

The company’s MoU with RailTel Corporation strengthens its position as an OEM for KAVACH technology, targeting Indian and international markets. Quadrant’s independent ownership structure, shared by MV Group, NEC Group, ISG Group, and Abrol Group, ensures balanced decision-making and innovation. As of October 31, 2024, they had 295 employees at their manufacturing facility, Railway Signalling & Embedded System Design centre and corporate function. The Bankers to the Company are HDFC Bank Limited and ICICI Bank Limited.

INDUSTRY ANALYSIS

Indian Specialty Power Cables Industry
Cable is a conductor used for transmitting electric power or telecommunication signals from one place to another. A regular power cable can be used for standard applications which are compatible with most equipment and setups. Sometimes, these regular power cables cannot quite fit the requirements of special applications. Engineers and Designers often need to meet the specific requirements which are well suited by specialty power cables. Specialty cables have unique properties and special structures which are specifically designed for more industrial applications like railways, defence, automobiles etc.

Evidently, with technology expanding rapidly worldwide, connectivity is a priority. Also, there is a growing demand for a wide range of cables given the increasing traffic on communication and power networks. Such rising network traffic needs specialty cables with cutting-edge coatings and cabling materials, resistant to radiation, chemicals, abrasion, high temperature, vibration, and shock.

In terms of market share, with wide application field, medium voltage speciality cable held a major share of about 68% in CY24EE, followed by low voltage speciality cable (28%) and high voltage speciality cable (4%). The domestic market size of specialty cables was valued at USD 589 million in CY24EE which is expected to reach USD 599 million in CY24E. For the projected period CY24E-CY30, the market is forecasted to register a CAGR of 9.8%. This is attributed to infrastructural developments in the country. Accordingly, the projected growth drivers include renewable power generation, expansion and revamping of transmission & distribution infrastructure, expansion & improvement in the railway network, and increasing investments in metro projects.

Specialty cables are used across an extensive range of applications like railway, defence, shipping, electric vehicle, solar and others. Growing inclination towards the expansion and developments in these segments bodes well for specialty cables industry. Moreover, increasing investment in metro railways and smart grid projects, increasing awareness about the potential of renewable power and significant increase in adoption of renewable energy are also estimated to propel growth of specialty power cable market.

Railways
The railway sector is consistently evolving. Railways is one of the key consumer segments in the specialty cable industry. Wherein, specialty cables are used in signalling and control system, power supply and communication system. Among the rail transit cables, specialty cables with DC tractions, flame-retardant, fire-resistance, green environment friendly and self-temperature control cables are used in railway construction. The rail transit construction has an extensive impact on the specialty cable industry. Moreover, the railway sector has been the recipient of more than ₹ 1 lakh crore investment allocation in the previous three budgets, with the government focusing on improving connectivity across the country.

Further, Indian Railways has set out massive network expansion and decongestion targets. It had planned to undertake 17,000 track km of new lines, doubling and gauge conversion work by FY24. Of this, 5,243 km was achieved during FY23 compared to 2,909 km during FY22.

Further, as of April 2022, across the Indian Railways, 452 railway projects (183 New Lines, 42 Gauge Conversion and 227 Doubling) of total length 49,323 Km, costing approx. Rs 7.33 lakh crore are in different stages of planning/sanction/execution, of this, 11,518 Km length have been commissioned and an expenditure of approx. 2.35 lakh crore has been incurred up to March, 2022.

Moreover, it is essential to strengthen the rail network and build efficient warehouses to improve the share of freight traffic by rail. In CY20, the Indian Railways established a ‘National Rail Plan (NRP) for India – 2030’. This plan is aimed at formulating strategies based on both operational capacities and commercial policy initiatives to increase the modal share of the railways in freight to 45% by CY30. This is anticipated to support fright traffic increase in the coming years.

Accordingly, a pipeline of capacity enhancement work was envisaged for easing the bottleneck/constrains and augmenting the network to make it capable of moving 3600 MT of cargo by 2030. For which, ‘Mission 3000MT’ has been formulated as an intermediate milestone toward achieving the aforesaid ambitious target of NRP. Similarly, the passenger traffic is expected to grow at a CAGR of 2.6% between FY21 and FY31, driven by population growth and a growing workforce.

Indian Railways is rapidly progressing to accomplish Mission 100 Percent Electrification and become the largest green railway network in the world. A historic 6,542 RKMs have been achieved during FY23, registering an increase of 2.76% from FY22. The previous highest electrification was 6,366 RKMs during FY22. It also plans to become a net zero carbon emitter by CY30 as part of the country's strategy to combat climate change. Whereas it plans to source 1,000 MW of solar power and 200 MW of wind power across zonal railway and production units.

Further, Automatic Block Signalling is a cost-effective solution to increase the line capacity to run more trains on the existing High-Density Routes of Indian Railways. During FY24, Indian Railways have upgraded 582 Kms with automatic signalling as compared to 530 Kms during FY23, registering an increase of 10%. It is also the best figure achieved in automatic signalling in the history of Indian Railways.

Similarly, Electronic Interlocking is being adopted on a large scale to derive benefits of digital technologies in train operation and to enhance safety. During FY24, 551 stations were provided with Electronic Interlocking as compared to 538 stations during FY23, an increase of 2%.

Furthermore, the Indian government is focusing on operating more semi-high-speed trains. The production plans of trains like Vande Bharat are already on the rise. There are about 34 Vande Bharat trains serving passengers across the states and union territories. Out of which, 9 trains were added recently in September 2023. India’s firstever indigenously designed and manufactured semi-high speed Vande Bharat trains have provided a modern and comfortable rail travel experience to passengers. High Speed, enhanced Safety standards, and world-class service are the hallmarks of this train.

Moreover, as of August 2023, ₹ 1,343.7 crore fund has been utilised for manufacturing Vande Bharat trains. The introduction of trains, including Vande Bharat services, is an ongoing process on Indian Railways subject to operational feasibility and traffic justification. This bodes well for the specialty cable industry in the coming years.

The contribution from the railway segment in the specialty cable market was valued at USD 104 million in CY23 which is expected to reach USD 113 million registering a 9% y-o-y growth in CY24E. For the forecast period CY24E-CY30, the segment contribution is anticipated to grow at 7% CAGR. The Government of India has identified railways as a key focus area to boost GDP and make India more export competitive by reducing freight costs. This augurs well for the specialty cables industry overall.

KAVACH – Automated Train Protection (ATP) System
1. Material Updates for Kavach
The Union Ministry of Railways is set to accelerate the deployment of Kavach 4.0, an indigenous anti-collision system, by issuing tenders for its installation in 20,000 locomotives. Two bulk tenders for 10,000 locomotives each are expected soon, with one closing by October 2024. The goal is to cover all geographical areas and locomotive types within four years, with new locomotives already coming equipped with Kavach 4.0.

Tenders have also been issued for Kavach installation on major railway sections, including the Delhi-Chennai and Mumbai-Chennai routes (3,300 Rkm), as well as 5,000 Rkm of automatic sections. Additionally, a plan is in place to implement Kavach at 8,000 stations to enhance communication between trains and stations, further improving safety.

Kavach, India's National Automatic Train Protection (ATP) system, gained renewed focus after recent train accidents, such as the Kanchenjunga incident in June 2024 and the Odisha triple-train crash in 2023, which highlighted its absence on certain routes. Currently, Kavach covers only 2% of the railway network, with deployment slow due to industrial capacity constraints. However, improvements have been made, with five domestic companies now ready to meet the growing demand.

The Kavach system includes five subsystems designed to monitor train speed and braking, enhancing safety in various conditions, such as poor weather or signaling issues. Three Indian manufacturers — HBL Power Systems, Kernex, and Medha — are currently approved to produce Kavach, with additional manufacturers in development.

2. Multiple Floated Tenders for Loco Kavach
Indian Railways has launched tenders worth over ₹2,200 crore for the deployment of Kavach, its indigenous automatic train protection system, covering nearly 7,228 route kilometers (rkm) across multiple states, including West Bengal, Tamil Nadu, Chhattisgarh, Karnataka, Kerala, and Uttar Pradesh. The tenders include components like towers, optical fibers, dashboards, and system integrators.

Kavach consists of key components such as RFID technology integrated into tracks, RFID readers in the locomotive's cabin, radio infrastructure with towers and modems, and cabin panels that display signals and speed limits. The system automatically applies brakes and alerts the pilot to red signals, enhancing safety in low visibility conditions.

The tenders, with values ranging from ₹100 crore to ₹340 crore, have deadlines between September and November 2024. This phase of Kavach installation will cover high-density routes, adding to the 3,000 rkm already under installation. Kavach is currently operational on 1,465 rkm, and its coverage is expected to expand to 10,000 locomotives, with work already underway.

In 2024, a total of 635 Kavach-related tenders have been published. Notable open tenders include installations on the Kharagpur–Chakradharpur division (₹200 crore) and the Dholpur–Bina section (₹207 crore).

3. Indian Railways target to Implement Kavach across 44,000 km by year 2029
In her interim budget for fiscal 2024-25, Finance Minister Nirmala Sitharaman allocated ₹2.55 lakh crore to Indian Railways, a 5.8% increase from the ₹2.41 lakh crore for fiscal 2023-24. The revised estimates for 2023-24 stood at ₹2.43 lakh crore, highlighting a strong commitment to strengthening railway infrastructure. As part of these efforts, Sitharaman announced the conversion of 40,000 regular rail bogies to Vande Bharat standards to enhance passenger experience, improve speeds, and reduce travel time.

In addition to this, the introduction of the Kavach system, an automatic train protection (ATP) technology developed by the Research Design and Standards Organisation (RDSO) with Indian firms, aims to improve railway safety. Currently operational on 1,445 km of routes, Kavach is set to expand to 4,500 km in the upcoming fiscal year, with plans to extend coverage to 44,000 km over the next five years. Tenders for an additional 6,000 km are expected by year-end.

Moreover, Indian Railways has ambitious plans to develop three economic corridors spanning over 40,000 km, supported by investments of more than ₹10 lakh crore. This initiative aims to enhance connectivity between major economic hubs, streamline freight movement, and boost logistical efficiency, playing a crucial role in the country’s economic growth.

Indian Train Control System Industry
India has wide track length of over 1,28,305 kms as on March 2022. Despite, such extensive railway network, the legacy signalling and safety solutions have outlasted their useful lives. Even though, the landmass of railway network increases, the concerns related to achieving higher operating ratio and increasing accidents needs a careful attention. In FY23, 48 train accidents were reported which includes 36 derailment cases, 6 collision and 4 fire accidents. This marks increase in accidents compared to the previous year FY22 (34 accidents). Such situation alarms for a need to focus on more contemporary solutions in signalling and train management as well as control.

Train Control System is an advanced and cost-efficient technology that ensures safety of human life and the rail infrastructure. These are the hardware and software equipment that monitor train locations and movements. The primary focus of the system is to enhance the efficiency and safety of the railway network. The Indian train control system industry plays a crucial role in ensuring the smooth and secure operation of trains across the Indian Railways network. For which, Indian Railways is developing and creating technology in areas such as signalling and telecommunication with 15,000 kms being converted into automatic signalling and 37,000 kms to be fitted with 'Kavach', the domestically developed Train Collision Avoidance System. In Union Budget 2024-25, allocation towards Kavach was amounting to ₹ 557 crores. This shows the increasing efforts for scaling up the implementation of Kavach and ensuring safety by the government.

The Indian train control system market size was estimated to be valued at USD 208 million in CY23, which is further expected to reach USD 208 million in CY24E. For the forecast period CY24E-CY30, the market anticipated to grow at a notable CAGR of 12.7%. Factors such as growing urbanization and rising population in India are leading to increasing demand for high speed railway transit and network. Such growing demand bodes well for the train control system market for the coming years.

In CY23, the Automatic Train Protection segment held the major share of about 71%, followed by Dispatch Centralized System 21% and remaining 13% by Centralized Monitoring System.

In Indian Railways, the implementation of these systems is part of ongoing efforts to modernize and improve safety in railway operations. Both ATP and Electronic Interlocking systems contribute to safer and more efficient train operations by reducing the risks associated with manual signalling and route management. These technologies are particularly important in a network as extensive and busy as the Indian Railways, where safety and efficiency are paramount. With automatic signalling, efficiency in the train management and seamless movement are facilitated.

Over the last decade, railways have seen a huge transition from conventional railway signalling systems to modern signalling systems including electronic signalling interlocking systems, automatic block signalling, and interlocking with signals at level crossing gates to enhance the safety at crossing.

Kavach is one of such indigenously developed an Automatic Train Protection System which is designed to automatically bring the train to a halt when it notices another train on the same line within a prescribed distance. In CY23, the market size of Automatic Train Protection System segment was valued at USD 113 million. While, the market size of Dispatch Centralized System was valued at USD 29 million. These two segments are forecasted to register a significant growth at a CAGR of 14% and 9%, respectively, during forecast period CY24E-CY30.

Furthermore, to meet the growing demand for rail transportation, the Indian Railways is working on increasing its capacity. This necessitates advanced signaling and train control systems to manage and optimize the movement of trains and reduce congestion. These factors supplement the Indian train control system market growth.

Indian Interconnect Products Industry
The Indian interconnect products industry refers to the sector involved in the design, manufacturing, and distribution of various interconnect solutions. Interconnect products play a critical role in facilitating electrical and electronic connections between different components or devices. These components enable the flow of signals, power, and data within electronic systems. The industry encompasses a wide range of products and technologies, including connectors and wire harnesses.

Further, electrical connectors and wire harnesses play a critical role in many electrical assemblies. A wire harness is a collection of cables or wires used to transmit electrical power, signals, and data, while connectors, also known as electrical connectors, are end components used to join wire.

Moreover, these connectors and wiring harnesses are widely used in sectors like automotive, rail vehicles, defense, telecom, and medical equipment. Accordingly, the growing thrust toward infrastructural development and the increasing industry size of these segments are expected to propel the interconnect products market growth in the coming years.

In CY23, the domestic interconnect products market was valued at USD 2,692 million, which is further expected to reach USD 2,948 million in CY24E. For the forecast period CY24E-CY30, the market is predicted to grow at a CAGR of 6.6%. Overall, technological innovations and advancements are projected to optimize the product performance, making it more widely used in downstream applications. This is further expected to support the interconnect products market growth.

BUSINESS STRENGTHS

1. Innovation in Automatic Train Protection Systems : Developed cutting-edge technology for building Automatic Train Protection Systems, enhancing rail safety and operational efficiency.

2. Strategic Collaboration with RailTel : Signed an exclusive MoU with RailTel to leverage KAVACH for Automatic Train Protection Systems in Indian and international railways, targeting safety and efficiency in rail operations.

3. In-House Product Development Capabilities : Possesses robust in-house design and development expertise for rail signaling products, addressing Indian Railways' focus on capacity optimization and operational safety.

4. Specialty Cables for Diverse Industries : Produces specialty cables tailored for railways, naval defense, renewable energy, and electric vehicles, meeting stringent fire safety, lightweight, and long-term performance requirements.

5. Advanced Manufacturing Facilities : Equipped with state-of-the-art facilities to produce power and control cables, including signaling cables for railway coaches and naval ships, with approvals from RDSO, DGQA, and Indian Register of Shipping.

6. Global Market for Specialty Cables : Serves the expanding global market for renewable energy and EV cables, supplying OEMs with high-quality specialty cables critical for high-voltage equipment and system safety.

7. Experienced Leadership Team : Managed by a skilled leadership team with deep expertise in railways, system integration, and emerging industry trends, driving successful development of advanced rail safety systems like Train Collision Avoidance Systems

BUSINESS STRATEGIES

1. Focus on Research and Development : Emphasis on R&D to track industry trends and develop innovative solutions in areas like renewable energy, electric vehicles, railway signaling systems, and defense modernization. Current priorities include environmental protection, enhanced train safety, fire safety in high-speed trains, and export expansion.

2. Promotion of Domestic Manufacturing : Alignment with government initiatives like "Make in India" and "Atmanirbhar Bharat" to enhance domestic manufacturing capabilities and reduce reliance on imports.

3. Expansion in Railway Safety Systems : Significant investment of ₹594.41 million in Automatic Train Protection systems, including Train Collision Avoidance Systems (TCAS), with plans for continuous upgrades and technological advancements.

4. Increasing Non-Promoter Business Share : Shift towards reducing dependency on promoter group clients, with non-promoter clients contributing 83.65% of total revenue in Fiscal 2024, up from 65.81% in Fiscal 2022. Plans include expanding the customer base and entering new industries.

5. Growth in Specialty Cable Applications : Development of Electron Beam Cross Linked cables to cater to industries like aerospace, aviation, renewable energy, and electric vehicles. These cables meet rigorous quality standards for high-temperature resistance and durability, with applications in solar power systems and other niche segments

BUSINESS RISK FACTORS

1. Limited Experience in Train Control Systems : Recent expansion into Train Control Systems lacks prior experience and operating history. Predicting performance, margins, and future prospects is challenging, with significant deviations between expected and actual results possible.

2. High-Value Contract with CLW : A purchase order worth ₹9,786.06 million from Chittaranjan Locomotive Works for supplying and maintaining Kavach equipment in 1,200 locomotives poses significant risk if obligations are not met, potentially affecting financial performance and future tender opportunities.

3. Revenue Dependence on Limited Customers : A substantial portion of revenue is derived from a small group of public and private sector clients. Any order cancellations, delays, or reductions by these customers could adversely impact financial performance.

4. Reliance on Indian Railways and Naval Units : Business operations heavily depend on Indian Railways and naval defense manufacturing, with revenue exposure exceeding 50% in recent years. Policy changes by the Ministry of Railways could significantly affect operations and profitability.

5. Technology Adaptation Challenges : Frequent modifications or upgrades to the TCAS platform may be required to remain compatible with evolving internet connectivity protocols like the transition to LTE networks. Adapting to new technologies may demand substantial investments and failure to do so could impact operations.

NOTE : Quadrant Future Tek faces key risks, including reliance on limited clients, dependency on Indian Railways and naval units, challenges in adapting to evolving technologies, and the uncertainty of new ventures like Train Control Systems. Effective risk management and strategic adaptation are critical to ensuring sustained growth and profitability.