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Rlys may cut down wagon procurement orders

Hema Ramakrishnan

NEW DELHI, May 6

THE cash-strapped Indian Railways may scale down its wagon procurement orders by 15 per cent during the current fiscal as part of its overall expenditure compression exercise. It has budgeted a procurement of 23,000 wagons during 2001-02.

The Railway Board Chairman, Mr Ashok Kumar, told Business Line that expenditure projections under all heads -- including rolling stock procurement -- made in the Rail Budget are now under review due to paucity of funds. ``Pruning of allocations, particul arly on new investments, appear inevitable as finances are required for upkeep and maintenance of existing assets,'' he said.

Of the budgeted procurement of 23,000 wagons, 2,000 wagons are to be manufactured at the Railways' own units. Orders with wagon builders would work out to around 16,000 wagons after netting out wagons coming under the `own your wagon scheme'.

With higher rates received than last year, the Ministry has already exercised the option clause to procure close to 3,000 wagons -- implying that the supplies will be made at last year's rates. The remaining orders for purchase of around 13,000 wagons is now under review.

The Railway Ministry's move to reduce wagon purchases may impact the order book position of public and private sector units including Bharat Wagon and Engineering Ltd, Burn Standard, Braithwaite, Jessops and Southern Structurals, Texmaco, Cimmco Birla Lt d, Hindustan General Industries, Modern Industries, BESCO and Titagarh Wagons.

Apart from the availability of resources, the level of procurement is also largely based on the anticipated traffic flows. The Railway Ministry has projected a freight traffic haulage of 500 million tonnes during the current fiscal as against 473.25 mill ion tonnes hauled during 2000-01.

Preliminary estimates indicate that the incremental loading was lower in petroleum products and finished steel in April as compared to last year. While haulage of coal and fertilisers was same as last year, there has been an improvement in traffic moveme nt of cement, iron ore and raw materials for steel plants.

Achievement of growth projections in freight traffic would largely hinge on the performance of the core sector during the current fiscal.

Although wagon orders are under review, there are unlikely to be any changes in the procurement policy in the near term. Wagon procurement was completely liberalised last year, with the Railway Ministry scrapping the discrimination against new entrants.

As per the existing guidelines, 75 per cent of the total orders are placed on all wagon builders and the balance 25 per cent is on the basis of competitive bidding. However, preference was accorded to public sector units (PSUs) in the 75 per cent quota. The Wagon India Ltd (WIL) formula, which forms the basis of procurement, also underwent some alterations last year.