Feb 26, 2013 04:16 PM IST | Source: CNBC-TV18

Rail Budget 2013-14: Gateway Rail upset with only freight rate increase

Sachin Bhanushali, Gateway Rail Freight told CNBC-TV18 that increase in freight rate alone, is not a good thing to happen and he was expecting a bit of fuel surcharge on the passenger fare as well.

Railway Minister PK Bansal today announced a somewhat populist Railway Budget. He did not hike passenger fares, as that was done in January this year. However, he announced that a fuel-adjustment component will be introduced on freight rates from April 1, which will result in less than 5 percent increase in rates.

Sachin Bhanushali of Gateway Rail Freight told CNBC-TV18 that increase in freight rate alone is not a good thing to happen and he was expecting a bit of fuel surcharge on the passenger fare as well.

Below is the verbatim transcript of his interview to CNBC-TV18

Q: One did not hear much about containerization or those kinds of projects in speech itself? What are your thoughts?

I am a bit confused because the Budget speech started with the resource mobilization and trying to balance the difficult act of meeting expenditure out of the revenue. The operating ratio is reportedly down to 88.8, but how has this been achieved despite an increase in the operating cost. This has not been explained.

Increase in freight rate alone, is not a good thing to happen to all of us. I was expecting that at least a bit of a fuel surcharge on the passenger fare would also come in. however, that does not happened.

In addition to that, one more thing which comes to my mind is that railway accounting practices have always been on the cash basis. They have never followed the balance sheet approach, wherein accruals are considered. One has accounts receivables and accounts payables as a part of the balance sheet.

So, it is possible to have a lower operating ratio by not paying your expenses during the current financial year. I hope that is not the case here.

As far as the overall numbers for the Budget 2013-2014 are concerned, they look impressive.  But, so did the numbers for 2012-2013 look when the last Budget was presented.

So we will have to see what are going to be the revised estimates or the Budget estimates which had been given for the next year.

Q: I wanted to check with you on this coal mine connectivity projects and the port mine connectivity where Rs 4000 crore and Rs 9000 crore has been disbursed respectively. How much of a positive do you think that would really be going ahead?

Traditionally railways have been servicing both power as well as coal sector right up to the door. I don’t think there has ever been a problem of port connectivity as well as the mine connectivity.

There are some new ports which are coming up. There the rail connectivity is not available, for instance on western coast we have Hazira Port which doesn’t have rail connectivity. So, I am sure by investing in port connectivity projects and particularly attracting private capital into these projects, there will be a relief. As far as a resource mobilization effort of Indian Railways for network expansion and getting more freight traffic is concerned, it will definitely take place.

The container sector seems to have been spared because we have already been given two doses of rate increase in December and February. This in any case was expected.

Infact we were expecting that there would be some kind of relief which will be given to the container transport operation sector, train operator sector. That hasn’t come through. As far as dedicated freight corridor is concerned. I feel that after six years we are still in the stage of giving tenders. So, the gestation period here is going to be much longer than what we expected.

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