Announcement in Budget

Impact

Freight rates for Coal hiked by Rs. 45.70 per Tonne (i.e., 6.3%). Freight rates effective from 1st April 2015 will be Rs. 768.60 per Tonne as against existing rate of Rs. 722.90 per Tonne

NEGATIVE

The main customers of freight trains in the eastern corridor are power plants in the NCR and Uttar Pradesh. Although, route expected to achieve Completion in current year is a small section of 55 Km, the impact is positive considering the pace of project implementation and power plants to which the DFC caters to.

Cement

Cement industry depends upon Railways for sourcing of coal as well as dispatch of cement. Therefore, Cement industry will be hit twice as not only the landed cost of coal may increase, the transportation cost of cement may also increase. Cement Industry may pass on this increase to the end users as the demand is stable.

Iron & Steel

Steel and Iron industry is already facing tough competition from rising imports as well as unstable demand. Therefore, industry is most likely to absorb the hike in freight rates as it cannot let the prices pass on to the consumers.

Freight rates for Scrap & Pig Iron hiked by Rs. 28.30 Per Tonne (i.e., 3.1%). Freight rates effective from 1stApril 2015 will be Rs. 930.50 per Tonne as against existing rate of Rs. 902.20 per Tonne.

The Government has given thrust in development of railway network, doubling, tripling and quadrupling of tracks as well as increasing the track capacity which would lead to spur in demand of iron and steel in near future.

Oil & Gas and Fertilizer

As the increase in the freight rate is quite marginal, overall impact on prices may remain neutral.

LNG utilizing engines are under development and around 100 diesel run trains to be enabled for dual fuel namely CNG and Diesel.

NEUTRAL

The Hon’ble Fertiliser Minister had already made a statement that urea prices will not increase and Urea will be provided at the existing rates. However, the hike in freight rate will increase the subsidy burden.

Coal

Freight rates are paid by consumers and may not have any impact on Coal India Ltd. However, the landed cost of coal may increase for the end users like Power, Aluminium and Cement industry.

Renewable Energy

Incumbent Government has kept focused approach towards development of renewable energy sector in the country. Installation of solar power plant on railway land is an affirmative to the same goal.

Railway

Revenue from the developed freight carrying capacity is a step towards self-sustainable operations of Railways.

Transport Logistics Corporation of India (TRANSLOC), to be set up.

POSITIVE

The implementation of DFC project has two goals

(a) increasing line capacity, thereby attracting more

freight traffic to the rail mode, and

(b) Reducing the unit costs of operations, savings which can then be passed on to customers.

Hike in Freight Rates as per Railway Budget 2015-16

Average Lead (Km)

Proposed Rates (Rs./Ton)

% Variation

551

805.60

2.7%

535

768.60

6.3%

897

1390.50

0.8%

1280

1556.60

10.0%

772

980.60

10.0%

575

834.30

-0.3%

645

930.50

3.1%

300

504.90

0.8%

723

1278.40

-1.0%

645

1023.50

0.8%

645

992.50

3.5%

575

805.60

2.7%

1600

2043.20

2.1%

 

     
Clients