The Hindu Business Line : Rlys hopes to gain nearly Rs 1,700 cr selling scrap

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New Delhi Feb. 5 Ask any Lalu Prasad loyalist and he would say that anything the Railway Minister touches turns to gold. So, taking advantage of rising steel prices, Indian Railways plans to earn nearly Rs 1,700 crore by selling scrap this year, which would include items like its worn-out rails, unserviceable items, condemned machinery and plant, rolling stock (wagons, coaches and locomotives), and the like.

This is about 21 per cent higher compared to the Rs 1,365 crore earned from scrap sales in 2005-06. A year prior to that, Indian Railways had earned Rs 1,032 crore from scrap sale.

Railways sells thousands of tonnes of scrap, over 12,000-16,000 wagons, 1,200-1,300 coaches, 50-100 locomotives every year through tenders or public auction.

Standard processes

But it is not just the Lalu Prasad magic that has resulted in higher earnings. The increase now is driven by several processes firmed-up by the Railway Ministry during the last few years to check leakages, apart from increase in prices of metal scrap. The steps include standardised collection methods, verification by Railways and vigilance officials after rails are collected, and faster lifting of rails.

Now it has been mandated to form lots of rails at a gap of one kilometre at least, so that while lifting a particular lot near a rail track, people do not lift rails from another lot nearby, explained an official.

Immediately after the formation of a lot, a team of engineering and finance officials are required to go and record quantifiable parameters of the rails that include the number of rails according to their length and the area where the lot is collected. This has to be followed by verification by a vigilance team and then the rails are lifted as soon as possible to avoid thefts.

In order to ensure a more transparent auction of scrap, Indian Railways is also moving towards Internet-based auction. "A pilot project for e-auction was successfully done in Southern Railways," said sources, adding that the process is likely to be adopted in other locations as well.

Possible earnings increase

With such standardised processes, Railways expects to increase its earnings from sale of scrap by another ten per cent in 2007-08.

Moreover, the Railway Ministry had stopped the sale of rails during 2004-05 and most of 2005-06 with an aim to find possible in-house utilisation by melting scrap. Late 2005-06 onwards, rails, which form a sizable share of total scrap, are also being sold.

In 2005-06, from the Rs 1,365 crore earned through the sale of scrap, 40 per cent earnings accrued from the sale of other ferrous material (that includes worn-out parts, junk from workshops), 37 per cent from the sale of rails and permanent way (rails, sleepers, joints), 12 per cent from the sale of worn-out rolling stock, 7 per cent from the sale of non-ferrous scrap (copper, tin, etc) and the rest from miscellaneous scrap sale.