Reacting to the Railway Budget, Umesh Choudhary, vice chairman, Titagarh Wagons said that one positive was talk about a freight regulator, as if that comes in, a lot of the public private partnership (PPP) schemes that have not kicked off can fructify as the fare or freight structure would be handled in a more pragmatic manner.
Another positive was that the connectivity of port and mines and the returns for which would be given by way of freight rebates. He considers this a big plus for the wagon industry as it would ensure that a lot of projects that have been suffering from last mile connectivity or lack of it would seriously start attracting investments.
Here are edited excerpts of his talk with CNBC-TV18.
Q: What you have made of the Railway Budget?
A: On the passenger fare earnings, I guess the increase that happened in January would come in 2013-14. They just got one quarter of earning from those freight increase and extra outgo on account of the fuel hike is only 3300 crore, as was pointed out.
That, combined with the new suburban transport services are good revenue earners. The short distance intercity trains, that is, Mainline Electric Multiple Unit (MEMU) and the suburban train systems are good freight or passenger fare earners for the railways. So, that should give some bit of additional passenger earnings.
The positives that I saw in this Budget were, one, he has spoken about a freight regulator. If that comes in, a lot of the public private partnership (PPP) schemes that have not kicked off as they should have, can happen because then the fare or freight structure would be done on a more pragmatic or economically justifiable basis.
Q: Already you guys are suffering in terms of wagon orders that were not awarded last year, and now there was nothing that came through in terms of fresh orders etc – how much of an impact do you think it would have on the company itself and the earnings going ahead?
A: The very fact that wagon off take was not mentioned in the Budget speech would not mean that wagon procurement would not be there. It will form a part of the pink book that would be the detailed Budget presentation. There has been an enhancement in the freight loading by about 40 million tonne, so that would require additional wagons.
I would see that one positive was that the connectivity of port and mines which has been announced and the return for that to be given by way of freight rebates. This is a very big positive for the wagon industry because this would ensure that, a lot of projects that have been suffering from the last mile connectivity or lack of it would really start investing in the last mile connectivity. The only way that they would receive returns for their investments would be by way of freight loading, so there would have to be wagon requirement.
The second advantage that I see for our company is in the field of the EMUs or the additional suburban transport, because as of now also we have a substantial order book percentage which comprises the passenger coach segment, which is the EMU and MEMU. We are quite bullish about that segment being given a big thrust upon, and those orders also should start coming in.
Q: What was the volume of orders you got in terms of wagons from Indian railways in FY13 and how would it compare to the past three year average, volume not cost because obviously inflation distorts the cost?
A: The Budgetary announcements have been 18,000 wagons for the last three years and 16,000 for the last year. However, unfortunately the wagon order tenders, as I said, have not been finalised for FY13. That has been scaled down because of the past backlogs and the options etc to around 12,000-13,000. So, I do not know the numbers right now but I am expecting the numbers to be similar. It should be between 16,000 and 18,000 range for the current year. So it has been pretty flat for the last four years.
Q: How will you react to FY14 annual outlay, a plan of about Rs 63,400 crore? That is 20 percent higher after falling by 10 percent last year from the Budget estimate.
A: Choudhary: That is exactly why I was saying I do not see it so bad because if the planned expenditure is higher by about 20 percent vis-à-vis last year then would go into acquisition of some rolling stock or some assets or some developmental activity as such.
So, those fine prints need to be seen before we could say whether the wagon acquisition targets have been rolled down or scaled down as much as it seeming to be at the face of it.