The Hindu Business Line : Wagon manufacturers may witness surge in demand

WITH 14 players set to enter the rail container operations space, the wagon manufacturers are going to witness a sharp increase in demand, a situation that could lead to a possible increase in flat wagon prices, say experts.

The sector is also poised for a spate of collaborations and tie-ups where companies would seek alliances to have their container depots and rolling stock in place.

The Managing Director of Container Corporation of India (Concor), Mr Rakesh Mehrotra, said, "The demand for flat wagons would definitely move up. As a result, increase in wagon costs is almost certain, thus pushing up the cost of operations."

Mr Mehrotra added, "Tie-ups and collaborations in the sector are certain — among the players as well as outside.

All players have their respective core competencies and the best move forward is to synergise them."

In early January, Concor, Central Warehousing Corporation (CWC) and Pipavav Rail Corporation Ltd (PRCL) entered into a tie-up with each other for "synergising their strengths."

It is reliably learnt that several companies that have taken a plunge in the sector have approached Concor for tie-ups. When asked, Mr Mehrotra declined to comment.

PRCL, the only player withapproval from the Ministry as on date, feels wagon prices would also be affected by the way steel prices move after the Budget, apart from the increase in demand.

"The wheels have to be imported, so their prices would also play a role," said Mr R.C. Dubey, Managing Director, PRCL, adding that his company plans to acquire 10 rakes in 2006-07. Each rake usually has 45 flat wagons.

Mr Dubey added that there is bound to be tie-ups and consolidation between players who can complement each other as they might not have operations across all routes.

CWC, with its strength in container depots, may also tie up with several players who would like to use its depots.

Senior officials of CWC said, "We would be going in for wagon acquisitions. Several companies have approached us."

SICAL, the Chennai-based player that recently announced investments worth Rs 350 crore, is also in talks with various players for possible tie-ups at a later stage.

A top official of the company told Business Line, "We may subsequently have tie-ups with strategic stakeholders with strength on the input side that would help speed up the beginning of operations."

A top official from India Infrastructure said, "We are considering wagon acquisitions for 20 rakes — at about 45 wagons per rake. There would be a number of tie-ups in the short run and consolidation later."

Companies in the Rs 50-crore category include Adani Logistics, CWC, Concor, Dinesh International/ ETA (Emirates Trading Agency), Gateway Distriparks Ltd, Hind Terminals (MSC Group), India Infrastructure Logistics (a joint venture of Hindustan Infrastructure and APL, a subsidiary of Singapore-based NOL), Mundra International Container Terminal (with participation by P&O Ports), Reliance Infrastructure and SICAL Logistics.

Players in the Rs 10-crore category include Delhi Assam Roadways Corporation Ltd, Bothra Shipping, JM Baxi and Co, and PRCL.

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