Get More Info
  • STOCKSELECT
  • SECTOR REPORT
  • RELATED VIEWS
  • SPECIAL REPORT
  • INTERVIEW
  • MYSTOCKS

  • Views Search

    Portfolio Tracker
  • VIEW PORTFOLIO
  • Equitymaster.com : Railway Budget: Weight on freight!
     
  • PRINT THIS
  • E-MAIL THIS
  • FEEDBACK
  • OUTLOOK ARENA  >>   VIEWS ON NEWS >>  MARCH 2, 2006

    Railway Budget: Weight on freight!
    MYSTOCKS | FREE NEWSLETTER

    The 2006-07 Railway Budget announced a couple of day ahead of the Union Budget made some positive pronouncements for the rail freight industry. We delve deeper into the provisions of the railway budget and see how it impacts the freight carrying companies.

    Budget Announcements

    • Construction of a dedicated high axle-load freight corridor with an estimated investment of Rs 200 bn.

    • Better utilization of existing rolling stock by increasing the loading capacity of wagons from the current norm of 22.9 tonnes.

    • To increase the wagon manufacturing capacity by 25%. Introduction of corrosion resistant wagons to improve the availability and productivity of wagons.

    • Private sector-owned container trains to start by this fiscal. Plans to introduce double-stack container wagons on select routes.

    • To bring down the wagon turnaround time (average time between successive loadings for wagons) from the present 5.5 days.

    • To encourage a higher level of movement of perishable commodities like milk, vegetables and fruits and heavy machinery through rail. Freight rebate of 10% to be offered on movements of heavy machinery undertaken in special wagons owned by the customer.

    • Thrust on export-import connectivity traffic by providing hinterland rail connectivity to ports.

    Budget Impacts

  • Increasing the loading capacity of wagons will augment the total load capacity of existing rolling stocks. An increase of one tonne in loading capacity of a wagon will up the total capacity of railways for the year by 1 m tonnes (MT). During 2005-06, the loading capacity per wagon was increased from 20.3 tonnes to 22.9 tonnes, and the same is expected to go up to 25 tonnes. For 2006-07, the railways expect to move 726 MT of goods as compared to the expected 580 MT in 2005-06.

  • The proposed rail freight corridor will be developed in two phases - Delhi-Mumbai and Delhi-Howrah route in the first phase and Mumbai-Chennai and Chennai-Howrah in the second phase. The idea is to run high-speed freight trains with greater axle load of 30 tonne per wagon, with each train having around 200 wagons. Once operational, this corridor will provide adequate hinterland-port connectivity for the export-import traffic and thus result in significant increase in the volumes of goods transported through railways.

  • With the entry of new players in the container transport business, the container carrying capacity of railways is likely to go up significantly. Besides, competition will result in improved service quality and decreased freight rates (at present the charge to move a 20 feet container to Delhi From JNPT is around Rs 20,000). With 30%-35% of the total container traffic being moved by rail, the potential in this business is huge.

  • Railways are traditionally known for moving bulk commodities like cement, coal and fertilizers. With the introduction of more cold chains (refrigerated containers), it would be now possible to transport perishable products over long distances with minimum cost.

    Sector Outlook
    With the Indian economy growing at over 6% levels, demand for logistics services from industry users is likely to remain strong. The infrastructure measures announced in the Railway Budget are in line with the needs of the growing Indian economy. The Dedicated Freight Corridor Project coupled with the Golden Quadrilateral Project of national highways (5,846 kms) will provide the much-needed fillip to the infrastructure facilities and thereby improve the quality and cost of logistics services provided in the country. However delays in the implementation of these projects is likely to cap the growth momentum.

     Research ReportsTop 100 Indian companies with Buy/Sell price limits
     StockSelectBuy/Sell recommendation every week in your mailbox
     Mid-Cap SelectBuy/Sell recommendation every fortnight in your mailbox
     FundSelectMutual Fund Advisory with downloadable database

    More Views on News

    Data is the New Oil but It's Also the New Sugar. Here's How to Fight it (Profit Hunter)

    Jun 1, 2020

    Is too much data hurting your quest for market beating returns?

    Quantum Mutual Fund: Hum woh nahi hain (The Honest Truth)

    Apr 29, 2020

    Ajit Dayal on how the mutual fund industry robs you of your wealth.

    This One Trigger Could Turnaround Yes Bank's Stock Price (The 5 Minute Wrapup)

    Oct 16, 2019

    If Yes Bank manages to do this, it could be the start of a much-needed turnaround for the bank.

    Gold could Hit 40,000 Sooner Than Expected (Profit Hunter)

    Aug 16, 2019

    Domestic gold prices are firing on both engines now. Gold prices could touch 40,000 faster than you could imagine.

    3 Rebirth of India Opportunities Are Racing Ahead in These Gloomy Times... (Views On News)

    Jun 28, 2019

    Tanushree Banerjee shares an update on the Rebirth of India and reveals her top 3 trends...

    More Views on News

    Most Popular

    Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

    Sep 17, 2020

    This leading household brand will profit big time in a post covid world.

    My Top Stock to Buy in this Market Selloff (Profit Hunter)

    Sep 22, 2020

    The recent correction offers a great opportunity to buy this high conviction smallcap stock.

    Can the Nifty Fall to 10,200? (Fast Profits Daily)

    Sep 24, 2020

    The Nifty has reached an important support level today. If it breaks then we could see further downside.

    What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

    Sep 18, 2020

    Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

    More
  •  

    © Equitymaster Agora Research Private Limited
    www.personalfn.com | www.equitymaster.com
    Why Personalfn? | Why Equitymaster? | Terms of Use | Contact Us | About Us