The Hindu Business Line : KRCL project spend on track

KUTCH Railway Company Ltd (KRCL) has achieved financial closure and brought down the project cost by about 10 per cent. The cost is now down to Rs 499.7 crore with a debt element of Rs 300 crore. In August, the company board had approved a total project cost level of Rs 550.75 crore.

KRCL is a gauge-conversion project aimed at cutting short the rail transportation distance between Gujarat ports and the northern hinterland by about 28 per cent. The line is expected to be commissioned by March 31, 2006.

The reduction in project cost has been achieved through various measures. "I have tried to minimise the capital cost, construction time, cost of finance and operations and maintenance," said Mr Yogendra Sharma, KRCL's first Managing Director, who was appointed in September.

"The cost of construction is expected to be down by about Rs 15 crore following discussion with the Western Railways, which is constructing our line," he said. He added that the rest of the saving was achieved primarily by reducing finance cost. "We have tied up a term loan of Rs 300 crore from Oriental Bank of Commerce at an interest rate of 7.5 per cent. The loan is for a period of 13 years with a two year moratorium on the payment," he told Business Line.

"No other special purpose vehicle formed on similar lines has been able to raise debt at this rate of interest till date," said Mr Sharma. The company was in talks with other nationalised banks that were offering debt at about 8 per cent, but none of them was ready to offer loans at this competitive a rate. "As per our estimates, KRCL line is expected to get a minimum of 5-6 million tonnes of freight cargo during 2006-07, registering a Rs 95.6 crore revenue during the fiscal 2006-07," Mr Sharma said.

At present, trains move goods between various Gujarat ports and north India along a 434 km long route between Gandhidham and Palanpur. The KRCL rail route will reduce distance between these two points by 120 km to 314 km. Moreover, the KRCL route is expected to decongest the track as it would be used primarily by freight trains only. In the first phase, 248 km track between Samakhali and Palanpur is expected to be commissioned by March 31, 2006. Freight trains are expected to move after March 2006 since a broad gauge already exists between Samakhali and Gandhidham.

"The rest of 53 km track, which would form another broad gauge rail track between Samakhali and Gandhidham should be up by December 2006," informed Mr Sharma. KRCL, with an equity base of Rs 200 crore, is owned by the Rail Vikas Nigam Ltd (50 per cent), Kandla Port Trust (26 per cent), Gujarat Adani Port (20 per cent) and Gujarat Government (4 per cent).

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