Tata Rail Freight Foray

- The Telegraph, July 27, 2015

The Tatas are set to foray into freight operations in the railways as the Narendra Modi- government seeks private capital to spruce up the century- old infrastructure.

TM International Logistics (TMILL), a subsidiary of Tata Steel, has approached Indian Railways under the Special Freight Train Operators (SFTO) scheme to run goods carriages.

The Tata company, a joint venture with NYK Holding of Japan and IQ Martrade, also plans to develop a specialised wagon to carry steel coils and is waiting for the design to be approved.

The Tata offer may come as a shot in the arm for the Suresh Prabhu- led railways, which junked a radical proposal to privatise the sector for a cautious approach.

The company has entrusted leading wagon maker Texmaco to build the prototype, which has been sent to the Research Designs and Standards Organisation (RDSO) of the railways for approval.

"We hope to commence operation in 2017. There may be an investment of around Rs 150 crore in this project," said Sandipan Chakravorty, chairman of the Calcutta- based company.

A regular wagon can carry 45 tonnes even as a coil roll typically weighs 30 tonnes, resulting in the under- utilisation of capacity. The wagon can take weights of up to 68 tonnes, enabling it to carry two coils instead of one.

The new wagons will be custom- made for carrying Tata Steel's coils from its Jamshedpur and upcoming Kalinganagar plants.

The company, which reported a 17 per cent profit jump at Rs 42.15 crore last fiscal, hopes to build several rakes once the RDSO approves the wagon design.

Under the SFTO route, the rakes will be hauled by a railway engine and the rail will also provide the guard coupe.

The move will benefit Tata Steel on two counts - first, having its own rakes will ensure timely delivery of the material to the customer. Second, the logistics cost will be down since each wagon will carry twice the load.

"The company had made several representations to Indian Railways seeking certain modifications and revisions in the SFTO scheme as a result of which the railways had tweaked it to make it more attractive for operators," R. N. Murthy, managing director of TMILL, said.

In India, private sector participation in railways has been muted so far compared with areas such as ports, telecom, electricity, airports and roads. Attempts in the past to involve the private sector in rail infrastructure such as wagon procurement and leasing, freight trains and container operations have yielded little result because of opaque non- remunerative policies.

The Bibek Debroy committee on the restructuring of railways had initially proposed private entry in passenger operations as well, but the final report decided to restrict it to just freight.

NEW TRACK .. Tatas plan to run goods carriages in joint venture with NYK Holding of Japan and IQ Martrade. Will also develop specialised wagons to carry steel coils .. Wagons to carry coils from Tata plants in Jamshedpur and Kalinganagar .. Logistics cost will be reduced as each wagon will be able to carry twice the load