The Hindu Business Line : Vizag Steel mulls barge movement of products

Cost-savings measure
An estimated 2.5-lakh tonnes annually can be dispatched by barges to Kandla
Cargo inducement to Chennai would be 2-lakh tonnes; to Kochi 80,000 tonnes; Kolkata, 50,000 tonnes annually

Kolkata April 11 Rashtriya Ispat Nigam Ltd (RINL), the Visakhapatnam-based public sector steel giant, proposes to opt for, as far as possible, barge movement along the coast as a means to evacuate its products for distribution across the country.

"Our first experiment in March with shipment of 1,000 tonnes of long products in containers for transportation by ship along the coast from Vizag to Kolkata revealed that the movement in boxes may not be cost-effective and therefore we're mulling barge movement," a spokesman for RINL told Business Line here.

"We are now examining the scope of barge movement of our products to Kandla for distribution through our stockyards in Ahmedabad, Jaipur, Indore and Mumbai."

Tenders to be floated

Several barge operators on the west coast have indicated to RINL that the barge movement will entail a lower landed cost of the products at the stockyards vis-à-vis the present rail movement.

"We'll soon float tenders and try to assess from the bids the actual cost savings," the spokesman said. "An estimated 2.5 lakh tonnes of products annually can be dispatched by barges to Kandla," he said.

The company, it was pointed out, might also consider barge movement of products to Chennai where the cargo inducement would be about two lakh tonnes annually and to Kochi (80,000 tonnes annually), depending on the cost savings in such movement.

The cargo inducement to Kolkata would not be much, an estimated 50,000 tonnes annually, which too could be sent by barges in preference to sea containers.

RINL sells about 3.2 million tonnes of products in the domestic market and the bulk of it is now transported by the Railways. With its production slated to rise to 6.8 mt in 2008-09, the demand for rakes will rise many times but it is not clear yet if the Railways will be able to meet the projected increase in demand. An alternative mode of evacuation therefore is being explored. Road movement is ruled out due to various reasons.

Minerals supply

There is another point. With no captive coal or iron ore mines, RINL has to depend on others for the supply of minerals - coal entirely on imports and iron ore from National Mineral Development Corporation (NMDC).

Worse, the company pays international price to NMDC for the ore in addition to three per cent commission to MMTC. All this naturally pushes up the cost.

Every effort therefore has to be made to reduce costs on other fronts.

If Transchart is bypassed and RINL is allowed to nominate vessels on its own for importing coal from Australia, the cost savings, it has been estimated, will be more than Rs 200 per tonne.

"We've taken up the matter with the Government but not with much success so far," the spokesman added.

RINL spends about Rs 1,100 crore annually on logistics covering rail and ocean freights and a meagre 10 per cent savings on it will make a difference, it is felt.