Overcapacity has wagon makers tense

Written by fe Bureau | Kolkata | Updated: Feb 27 2013, 08:43am hrs
While the rail ministry has proposed a few greenfield projects in the Budget, wagon manufacturers are wary of an overcapacity situation. Industry insiders feel the announcements for new manufacturing units will put pressure on private players as many of them have idle capacity.

The rail ministry on Tuesday has proposed to start the work on the wagon factory in Ganjam district of Orissa at the earliest.

Moreover, Bikaner and Pratapgarh workshops would be converted to undertake POH of BG wagons. The government has also proposed a new wagon maintenance workshop in Kalahandi district in Orissa.

According to the industry insiders, there is already an overcapacity situation leading to lack of orders. We will be advised not to diverge their precious resources to create new capacities in the public sector, said Ramesh Maheshwari, executive vice-chairman of Texmaco, a KK Birla group company.

For the last few years, the rail ministry has made budgetary announcements for around 18,000 wagons.

Last year it planned to procure 16,000 wagons in two tranches, but it could procure 11,000 during the last fiscal. An almost 20% increase in the annual plan for 2013-14 to R63,400 crore has given some hope for enhanced off-take of rolling stock. This year the originating freight loading is also estimated to be 1,007 MT, almost 38 MT over 2011-12 levels. The announcement of almost R12,000 crore in last-mile connectivity to ports and mines and setting up of freight regulator is a shot in the arm for wagon manufacturers.

It has the potential of converting several non-rail users into rail users, thereby increasing the share of railways vis--vis road.

Freight regulator is something that the private train operators have been demanding for a long time and if this gets finalised, it is expected that the private train operators should be benefitted, thereby positively impacting our business by enhancement of wagon procurement, said Umesh Chowdhary, vice chairman & MD of Titagarh Wagons.

The implementation of PPP projects in 12th Plan needs greater focus to improve the rail services without straining railways' finances. In particular, the containerised freight movement warrants a big fillip, Maheshwari said.