The Hindu Business Line : Sharp fall in pending indents for iron ore rakes

Ground reality
Number of indents fell by 10,000 from around 15,000 within the past few days
Cancellation suggests indents placed with no firm commitment
Section of businessmen trying to corner rakes depriving genuine buyers

Santanu Sanyal

Kolkata, Aug. 29 It is surprising but true that the number of indents pending with South Eastern Railway for iron ore rakes dropped sharply, also dramatically, by more than 10,000 from around 15,000 within the past few days, i.e. between August 21 and 26.

This followed cancellation of indents by those, mostly exporters and private sponge iron manufacturing units known as Priority D customers in the railway parlance, who had earlier placed requisitions for these rakes by paying necessary charges.

It might be noted that the number of pending indents for iron ore rakes has been hovering around 15,000 for the past few years. SER was at its wit’s end as to handle it as the clearance of backlog alone, it was estimated, would take several years at the current rate of release of rakes for these customers.

Responsible factors

The large-scale cancellation, reportedly prompted by uncertainty over ore availability caused by rains, power-cut, bad roads, transporters’ strike and various other factors, only confirmed that the demand for rakes was inflated, according to railway sources.

The bulk of the 15,000 pending indents, as the railway sources seem convinced, were fictitious, having no relation to the actual demand.

Normally, an indent for a rake is supposed to be backed by firm commitment of supply of the material to be moved by the rake. The cancellation simply suggests that most of the indents were placed with no such commitment.

The inflated requisitions, it appears, were for speculative purposes, with a section of businessmen trying to corner the rakes such that others, many of them genuine customers, did not get their due shares.

“We’ve always felt that such a high demand for rakes as placed by the various iron ore exporters and private sponge iron manufacturers could not be real but we could hardly do anything in this regard because they deposit Rs 15,000 per rake,” observed railway sources pointing that the cancellation of indents would amount to forfeiture of the amount deposited, bringing a bonanza for the railways.

Indent ratio

Ideally, the number of pending indents, the railway sources estimate, should be three times the number of rakes released. That is to say, if the number of rakes released for exporters and Priority D customers is 10 per day, the number of pending indents should not exceed 30. “But what we’re having was “ridiculous’, observe the sources.

WIS, CBT customers

What surprises the railways is that cancellation has been made even by WIS and CBT customers, though the number is such cancellation is insignificant – 10 WIS and 136 CBT customers.

WIS customers are priority customers in the sense they acquire a rake on their own under the Wagon Investment Scheme and place it with the railways because such a placement would entitle them up to eight rakes a month.

Right now 15 rakes under WIS are in operation under SER – 10 supplied by iron ore exporters and five by those engaged in domestic transportation of ore. Together they are entitled to firm allotment up to 120 rakes a month.

The railways is also committed to allot rakes to CBT (Central Board of Traffic) customers. Originally, only integrated steel plants were CBT customers but subsequently others were allowed to join the list.

Right now there are 67 CBT customers and together they have a total demand for 46 rakes a day.