Steel, cement & IT cos hail Rail Budget

Written by fe Bureau | Mumbai, Feb 26 | Updated: Feb 27 2008, 03:58am hrs
The Railway Budget 2008-09 is widely expected to benefit steel and cement companies, what with the freight rates untouched and the greater thrust on the use of stainless steel coaches. IT companies will also benefit from the move to leverage technology in the Indian Railways in a better way.

Even as the railway minister presented the budget, shares in steel, IT and railway equipment, likely to benefit from the budget, kept buzzing the entire trading session. Shares of Steel Authority of India (SAIL) moved by 3.03% or Rs 7.25 before closing at Rs 246.60, while Jindal Steel surged by 4.26% or Rs 99.30 to close at Rs 2,429.25 on the BSE on Tuesday.

J Mehra, CEO, Essar Steel Holdings Ltd, said the Railway Budget is both a balanced and a forward looking one. I commend the minister for his focus on developing exclusive freight corridors for iron ore and coal in order to meet the growing needs of emerging sectors like steel and power. The vision to transform the Indian Railways as a comprehensive logistics solutions provider is a great step forward, he said.

Saying that the proposed increase in investment on new railway lines and addition of 20,000 new wagons to the railway fleet augurs well for the Indian steel industry, Mehra added that, From Essar Steels point of view, the governments commitment towards creation of a special purpose vehicle for rail-port connectivity between Surat and Hazira is a welcome step. However, the steel industry has been expecting some relief from numerous additional levies like congestion surcharge which were imposed during past two years on iron ore movement. We hope the minister will revisit this issue in the days to come, Mehra said.

P Sengupta, vice president Tata Steel, said that the introduction of more railway lines is a heartening news, since the industry are craving for better infrastructure. We also see our ferro chrome business growing on account of induction of stainless steel coaches and wagons, he said.

The move to have only stainless steel coaches by 2010 will also provide a big boost to those firms making stainless steel. Says Pawan Burde, senior research analyst, Angel Broking,

Though the fixed cost is very high for stainless steel coaches, the maintenance cost would be low. Also stainless steel coaches will have aesthetic looks and is anti-corrosive in nature over carbon steel.