Budget Signals Good Ride For Wagon Companies

Companies that depend on railways for business are cheering railway minister Dinesh Trivedi’s move to significantly increase allocation for locomotives and wagons, which boosts business opportunities. The minister painted a bright long-term picture for the wagon industry, saying annual procurement would rise to 29,000 units by 2020 from the current 16,000 to 18,000 a year.
Trivedi said the investment in rolling stock in the next five years is estimated to be 1.70 lakh crore. “I propose highest-ever allocation of 18,193 crore for the next year, which represents more than 30% of the annual Plan outlay… upgradation of coaches, including EMU coaches, locomotives and wagons will be one of the key areas of modernisation during the next five years for improving safety and convenience & comfort of passengers,” the railway minister announced on Wednesday.
Texmaco Rail & Engineering executive vice-chairman Ramesh Maheshwari said: “The budgeted expenditure for procurement of rolling stock at 18,193 crore — nearly 32 % higher against 13,824 crore last year — augurs well for the fortunes of the rolling stock manufacturers. The revival of the procurement plan for high power electric and diesel locomotives needs to be on fast track to make up for the lost time.”
Titagarh Wagons vice-chairman & managing director Umesh Chowdhary echoed a similar sentiment. “Increase in the budgetary allocation for acquisition of rolling stock is a positive move as we now manufacture both wagons and coaches,” he said. “One very positive aspect of the budget is the announcement of the Logistics Corporation to use and develop railway yards as freight terminals. This would increase the private train traffic significantly and will also have an impact on the wagon industry. These apart, reintroduction of the wagon investment scheme is another announcement expected to give a boost to a segment of our business lying dormant for the last two years,” Chowdhary added.
The Railway Budget’s focus on accelerated development of double-deck container flat wagons, autocars, and new design 25T axle load freight cars will benefit Texmaco, claims Maheshwari, as the company is in the process of developing designs of high axle load freight cars and modern doubledeck container flat wagons and autocars. Wagon manufacturing units at Kulti and fiat bogey frame unit at Budge are likely to commence production during 2012-13 while rail wheel plant at Chhapra and Rae Bareli Coach factory has already commenced production.
To meet the increased demand for wagons and passenger coaches, a new wagon manufacturing unit will be set up at Sitapali (Odisha). A rail coach factory at Palakkad with the help of Kerala government will also be set up. Two additional coach manufacturing units are also proposed to be built at Kutch area in Gujarat and at Kolar in Karnataka.
“If implemented practically, we will try to secure maximum orders from Indian Railways and thus, improve our bottom line,” said Kalindee Rail Nirman (Engineers) chairman Ram Dayal Sharma. The budget also announced the government decision to procure new generation electric locomotives of 4,500 hp and 6,000 hp to facilitate heavier and longer freight trains and higher speeds. The minister said with new investment in infrastructure, freight trains would be able to carry enhanced quantum of cargo, which would help the railway network increase its earnings. Rajeev Jyoti, CEO of L&T’s railway business, welcomed the budget. “This is a calibrated short-term budget with longterm vision. It is a good move for the wagon industry. The assumption of revenuegrowth model is tough but it will facilitate earnings,” said Jyoti.