IMPACT ON STEEL INDUSTRY – A DEMAND BOOSTER
We expect the steel industry to be positively impacted because of the significant capex initiatives laid down by the budget. The target for construction of broad gauge lines in 2008-09 is 3500 km (against 2300 km this year). Target for new lines is 350 km at an outlay of Rs.17 bn, gauge conversion – 2,150 km at a capex of Rs.25 bn, doubling of tracks – 1000 km at a capex of Rs.36 bn. The investments are to be directed towards developing the New Delhi, Chhatrapati Shivaji Terminus, Mumbai, Patna and Secunderabad railway stations (Rs.150 bn capex outlay on these stations), setting up diesel loco, electric loco and rail coach factory at an estimated cost of Rs.40 bn, and towards container trains, container depot and multi-modal logistics parks (Rs.20 bn).
Stainless Steel and Ferro Alloys to be the major beneficiaries.22.9 tons axle load stainless steel wagons will be manufactured from 2008-09 instead of manufacture of 20.3 tons axle load BCN and BOXN wagons.
IMPACT ON FIRE PROTECTION EQUIPMENT INDUSTRY
The Railway Budget has proposed to set up on pilot project basis installation of fire detection, prevention and protection devices. Once this project is successful it would be implemented on all the coaches. This could translate into potential business of Rs.7 bn.
Nitin Fire protection is the leading player in this area and if the project is successful it would stand to benefit significantly.
IMPACT ON LOGISTICS INDUSTRY
Construction of the dedicated rail freight corridor to commence in FY09. Setting up terminals on railway land. Focus on port connectivity. Wagon leasing and investment policy. With a lot of thrust on increased freight traffic, availability of container depots near railways stations and commencement of work on dedicated freight corridor the Railway Budget is positive for companies like Concor and Gateway Distriparks.
IMPACT ON CEMENT INDUSTRY
Increased loading target of 200 MT from cement industry by 2011-12. No across the board increase in freight rates. Reduction in freight rate for fly ash by 14%.
IMPACT ON CAPITAL GOODS INDUSTRY
Procurement of rolling stock. Indian Rail Bijli Company Ltd, a JV with NTPC to set up 1000 MW thermal power plant at Nabinagar, Bihar. MUTP Phase II to be started at a cost of Rs.50 bn, financed jointly by Railways and State Government of Maharashtra, with multi-lateral funding. Among likely beneficiaries would be Siemens India, which has received several orders for propulsion systems, traction motors and other electrical equipment under the “Mumbai Rail Vikas Corp”.
