The Hindu Business Line : Wagon producers hope target procurement is met this year

In 2008-09, the actual wagons procurement was 11,000 against the targeted 20,000. Manufacturers hope that the same will not be repeated this year because of more requirement.

Santanu Sanyal

Kolkata, July 3 Not everyone in the wagon industry is ecstatic over the Railway Minister’s proposal for procurement of a larger number of wagons in 2009-10.

If past experience is any indication, the actual procurement, it is pointed out, generally falls of the target and this happens every year.

Thus, in 2007-08, the target was 10,200 but the actual procurement was 9,101. Similarly, in 2008-09, the actual procurement was 11,000 against the targeted 20,000.

The wagon manufacturers hoped that the same will not be repeated this year also, more so because the requirement of wagon this year, it is felt, will be more than projected.

Freight throughput

The target for the current year has been fixed presumably on the basis of freight target of 882 million tonnes or an additional 49 mt over last year’s 833 mt.

The circles feel that actual freight throughput should exceed the targeted figure if the GDP grows as projected. In that case, the Railways’ wagon procurement figure will require upward revision. The freight target in the interim budget was fixed at 910 mt.

The proposed acquisition, it is further hoped, should be of the newly designed high capacity types approved by the Railways a few months ago.

It is, however, not clear as to how many of the new acquisitions will be the new type wagons.

Traffic diversion

There is another point: With the rise in petrol and oil prices, it is only natural that a large chunk of the goods traffic now handled by the road sector will get diverted to the rail, pushing up the demand for wagons.

Raw materials

The wagon manufacturers are not unduly worried over the supply of raw materials such as steel and wheels by the Railways.

“If the orders for wagons are placed on time, we’ll have no problems,” observed Mr R. Maheswari, President, Texmaco, the largest wagon manufacturer — accounting for 25 per cent of the total orders placed by the Railways every year.

Some of the wagon manufacturers express their reservation about the Railways plans to acquire the wagon units of Burn Standards and to set up a new coach factory in Kanchrapara (West Bengal).

At a time when the Union Government is at its wit’s end about how to contain the ballooning fiscal deficit, such investments by the Railways are uncalled for, they felt.

Private involvement

The Railways, it is pointed out, will do much better if some private sector wagon manufacturers are involved in the revival of the Burn Standards units.

Similarly, the proposed coach factory should be set up by way of public-private partnership (PPP), it is emphasised.

The employees of Burn Standards are not clear about the nature of rehabilitation being planned for them — i.e. whether the company will be another PSU under the ministry of railways like Bharat Wagon or a captive production facility like Chittaranjan Locomotive Works or Diesel Locomotive Works. Given a choice, they would like to see themselves as employees of captive units.

The two wagon units of Burn Standards employ about 1,000 people — 700 in Burnpur factory and 300 in Howrah factory.

Together the units produce about 1,000 wagons a year.

In 2008-09, the company posted a cash profit of a little over Rs 5 crore (unaudited) on a turnover of about Rs 175 crore, of which the share of the wagon units will be about Rs 80 crore.

(The company’s Salem factory producing refractories and having a turnover of nearly Rs 100 crore is being transferred to Steel Authority of India Ltd).

The accumulated loss will be over Rs 1,500 crore.

EMU coach production

Meanwhile, Mr Pawan K. Ruia, Chairman, Jessop & Company, in a statement said, Jessop being a manufacturer of EMU coaches for several years would not only welcome the proposed an EMU coach factory at Kanchrapara but would also be keen to share the experience in this regard.

Improved designs

More than 60 per cent jump in the wagon procurement target would also be a boon to Jessop, now ready with improved designs of wagons and aluminium wagons.

According to Mr Umesh Chowdhury, Managing Director, Titagarh Wagons, the dedicated railway freight corridor project would be a game changer for the logistics industry and the economy.

Prototype

The project’s emphasis on light-weight specialised wagons is important for Titagarh Wagons set to enter the manufacture of aluminium wagons manufacturing.”

Titagarh Wagons, in collaboration with Freightcar America, is designing a prototype for aluminium wagons in the country. It is expected to be ready by December.

In case of EMU coaches, the company has bagged its first set of orders for six rakes from the Railways and expects order flow to increase in view of the Minister’s proposal to increase frequency of local and short-distance EMU trains.