Calcutta, Feb. 26: Wagon makers are disappointed with the flat procurement target set by the rail minister for 2013-14. They want the railways to have a proper procurement plan in place and tap the existing unutilised capacity rather than increasing its own production.
The procurement target has been kept at 16,000 units for 2013-14, similar to last year’s budget by Dinesh Trivedi. However, the ministry is yet to float a tender for last year.
With just a month to go before the fiscal comes to a close, there is little clarity over when the tender will be floated.
Ramesh Maheshwari, executive vice-chairman of Texmaco Rail and Engineering, said, “The priority is to come up with the previous year’s tender. We have executed our order for 2011-12 and is awaiting the 2012-13 tender.”
Umesh Chowdhury, vice-chairman and managing director of Titagarh Wagons, attributed the flat wagon procurement target to the economic slowdown.
“The wagon procurement target is similar to last year. This is much lower than the estimates given by the Vision 2020 document and also the 12th Five-Year Plan, which envisages wagon procurement at around 25000 units per year,” Chowdhury said.
He also expressed concern over the railways’ plan to expand its own wagon making capacity.
“Creating a large surplus capacity will eventually increase the cost of the railways since both the existing as well as the new capacities will remain under-utilised,” he said.
“The industry’s capacity is going a begging and is almost in a perpetual state of crisis. It is necessary that the railways have a sustained credible wagon procurement plan to help the industry maintain uninterrupted production,” Maheshwari said.
The wagon industry has a capacity of over 25,000 units with private players’ share at about 75 per cent.
Chowdhury, however, draws hope from the railways wanting to increase the connectivity to ports and mines. This will result in higher freight loading and more demand of wagons. He was also upbeat on the additional demand for passenger coaches in the electric multiple segments.
Jessop owner Pawan Ruia said the railways needed to increase its wagon procurement. “As a billion-tonne freight club member, you need to induct at least 20,000 wagons every year into the system,” he said.
“The railway minister also said freight earning would grow 9 per cent but did not elaborate on the road map,” Ruia said.
Shares of Titagarh Wagons and Texmaco Rail fell sharply on the BSE on the news of the flat procurement target. The Titagarh Wagons scrip was down 8.14 per cent at Rs 245.45, while Texmaco shares fell 11.36 per cent to Rs 54.60.