Hyderabad: Aircraft maker Gulfstream Aerospace Corp has garnered a big chunk of business jets business in the Asia-Pacific region and sees India as the next big opportunity along with China.
Taking part at the India Aviation Show 2012 being held at Hyderabad, top executives of Gulfstream stated that their business mix has changed over the last decade with non-US business going up.
They now have an overall order book of $17.9 billion as of 2011.
Mr Roger Sperry, Regional Senior Vice-President of Gulfstream, Aerospace, said business jets drive business and India is no exception. Of the 84-odd mid and large bodied jets in India, Gulfstream has 20 of them flying. Even in the Asia-Pacific region, Gulstream has a 48 per cent market share in the large cabin aircraft segment.
“We are optimistic as the Indian GDP is poised for growth so is the case with corporate entities. We see private jets driving economic growth,” Mr Sperry said.
G150
The company is showcasing entry-level G150 and another larger bodied aircraft G450 at the show.
The all-new G650 is ready for delivery later this year. About 20 of these are getting final touches and interiors done for delivery .
“Part of the General Dynamics, Gulfstream has grown its business through the downturn. If we delivered 94 jets in 2009, it was 99 in 2010 and 107 last year. In 2011, 90 were large cabin aircraft and 17 mid-cabin ones,” he explained.
The company has been investing heavily on its service organisation. In the $1.2 billion spare parts arm, over 3,500 engineers work. This includes 33 facilities of Jet Aviation, which had come through an acquisition.
Success in my Habit
Thursday, March 15, 2012
Singapore's GIC invests $100m in Vasan Healthcare
Chennai: Sovereign fund Government of Singapore Investment Corporation (GIC) has picked up a minority stake in Vasan Healthcare Enterprise, an eye care chain, for $100 million. Vasan will use the funds to "expand rapidly in new geographies, besides look at acquisitions", A M Arun, chairman of Vasan, said.
The company had earlier raised about $50 million from Sequoia and Westbridge in three rounds of investments in the last three years. Vasan, which started as a stand-alone pharmacy in Trichy in 1947, set up its first eye care hospital in 2002 in Trichy. Today, the company has over 100 hospitals in 11 states.
Arun did not divulge the stake diluted or the valuation at which the stake was sold. Cumulatively, all three investors still hold minority stake, he said. GIC will be offered one seat on the company's board. Spark Capital was the adviser to the transaction.
The company had earlier raised about $50 million from Sequoia and Westbridge in three rounds of investments in the last three years. Vasan, which started as a stand-alone pharmacy in Trichy in 1947, set up its first eye care hospital in 2002 in Trichy. Today, the company has over 100 hospitals in 11 states.
Arun did not divulge the stake diluted or the valuation at which the stake was sold. Cumulatively, all three investors still hold minority stake, he said. GIC will be offered one seat on the company's board. Spark Capital was the adviser to the transaction.
DLF inks pact with US accessories brand Claire
New Delhi: DLF Brands and American fashion accessories brand Claire have entered into a franchise agreement to open at least 30 stores in the next three years. The retail arm of DLF Group has a slew of international brands under its umbrella including Boggi Milano, DKNY, Alcott, Sunglass Hut, ELC, Mothercare. “The first-ever Claire store in Delhi is a 100 per cent franchised store and is part of our overall strategy of bringing new range of product lines to our customers. The fashion accessories market in India is largely dominated by unbranded players, therefore we see a huge market potential for branded players in this segment,” Mr Dipak Agarwal, Chief Executive, Operations and Strategy, DLF Brands, said. He said the market for accessories is estimated at Rs 1,000 crore and is growing at about 20 per cent. “We have seen a growth of about 23-28 per cent in the last two years. DLF Brands has always been very selective of the brands that we introduce to the Indian customers. We are hopeful of a good response for the Claire's store and plan to open over 30 such stores across India in the next three years.” Claire's products are priced between Rs 300 and Rs 3,000.
Infosys inks deal with Glaxo for digital marketing
Bangalore: IT major Infosys on Tuesday said it has bagged a deal to offer digital marketing services to pharma major GlaxoSmithKline (GSK).
As a part of the deal, Infosys will use the services of Fabric Worldwide, a WPP entity, to effectively deliver GSK's digital engagement with its stakeholders. Infosys did not disclose the size of the deal.
Infosys will also create a Global Digital Services (GDS), shared service to standardise processes and best practices across multiple digital channels, including social media. It will also build a ‘Digital Marketing Platform' to deliver the services on the cloud.
This platform will allow GSK to analyse as well as understand its consumers better and leverage that insight to drive more business. “In the coming years, pharmaceutical companies will be leveraging digital media to connect with their sales force, customers, physicians and others in the industry,” said Mr Dheeshjith V.G., Senior Vice-President and Global head of Life Sciences, Infosys.
An analyst who did not want to be identified said such a large deal will help Infosys catch up with its competitors such as Wipro, TCS and Cognizant which already have some exposure to this domain and have bagged some projects as well in the US and other markets. At present, Infosys' revenues from projects such as these constitute 2.5–3 per cent.
In September last year, Ms Sangita Singh, Senior Vice-President of Healthcare and Lifesciences Strategic Business Unit of Wipro, toldBusiness Linethat the IT major is “aggressively looking at inorganic growth, especially niche providers focused only on health and life-sciences and preferably in the analytics and mobility space.”
As a part of the deal, Infosys will use the services of Fabric Worldwide, a WPP entity, to effectively deliver GSK's digital engagement with its stakeholders. Infosys did not disclose the size of the deal.
Infosys will also create a Global Digital Services (GDS), shared service to standardise processes and best practices across multiple digital channels, including social media. It will also build a ‘Digital Marketing Platform' to deliver the services on the cloud.
This platform will allow GSK to analyse as well as understand its consumers better and leverage that insight to drive more business. “In the coming years, pharmaceutical companies will be leveraging digital media to connect with their sales force, customers, physicians and others in the industry,” said Mr Dheeshjith V.G., Senior Vice-President and Global head of Life Sciences, Infosys.
An analyst who did not want to be identified said such a large deal will help Infosys catch up with its competitors such as Wipro, TCS and Cognizant which already have some exposure to this domain and have bagged some projects as well in the US and other markets. At present, Infosys' revenues from projects such as these constitute 2.5–3 per cent.
In September last year, Ms Sangita Singh, Senior Vice-President of Healthcare and Lifesciences Strategic Business Unit of Wipro, toldBusiness Linethat the IT major is “aggressively looking at inorganic growth, especially niche providers focused only on health and life-sciences and preferably in the analytics and mobility space.”
GM to utilise Indian diesel facility globally
New Delhi: Driven by the robust demand for diesel vehicles in the Indian market, the US-based auto major, General Motors, is working on developing diesel engines for the range of vehicles lined up for launch in the country. The capability for which will then find its way to other diesel-intensive markets globally.
The company, which has already introduced a diesel version of small car Beat in mid-2011, is looking at introducing diesel variants of premium hatchback Sail and the new multi-purpose vehicle later in the year. The diesel engine technology for these vehicles has been developed by the car maker in India, and will later be made available to markets in North and South Africa to begin with.
Lowell Paddock, president and managing director, General Motors India, said, “The diesel development carried out on our future Sail and MPV programmes will certainly support entry into markets outside India where consumers have a strong preference for diesel engines.”
Though no destinations have been finalised for exporting diesel technology from India, company executives indicated that markets in North and South Africa would be considered initially.
While the company does not have any plans to manufacture the 1.0 litre diesel engine for the Beat elsewhere in the world, no final call has been taken as to whether diesel engines for the Sail and the MPV will be manufactured exclusively in India.
The 1.0 litre diesel engine for the Beat (the company’s smallest diesel engine globally) is manufactured at GM’s plant in Talegaon, Maharashtra. The capability for diesel engines is being developed by GM’s technical centre in Bangalore which currently has 2,100 employees. The company has five engineering centres, four design centres and nine satellite research and development facilities within GM International Operations. The technical centre India in Bangalore is a medium-sized engineering operation which specialises in tailoring vehicles for the Indian market while also undertaking engineering work for GM globally
P Balendran, vice-president (corporate affairs), informed, “Diesel vehicles constitute around 42-45 per cent of overall passenger vehicle sales today. But wherever, petrol and diesel variants are both available, 80 per cent of sales come from the diesel option. If I talk about the Beat alone, diesel sales used to be 40 per cent earlier, now it has gone up to 80 per cent. It has thus become important to develop the capability.”
Industry estimates say diesel variants accounted for 28 per cent of passenger vehicle sales in the last financial year. With petrol prices rising five times in the current financial year, the differential between the two fuels now stand at Rs 25.51 per litre, up from Rs 10 in April 2010, making an increasing number of consumers opt for diesel cars.
The company, which has already introduced a diesel version of small car Beat in mid-2011, is looking at introducing diesel variants of premium hatchback Sail and the new multi-purpose vehicle later in the year. The diesel engine technology for these vehicles has been developed by the car maker in India, and will later be made available to markets in North and South Africa to begin with.
Lowell Paddock, president and managing director, General Motors India, said, “The diesel development carried out on our future Sail and MPV programmes will certainly support entry into markets outside India where consumers have a strong preference for diesel engines.”
Though no destinations have been finalised for exporting diesel technology from India, company executives indicated that markets in North and South Africa would be considered initially.
While the company does not have any plans to manufacture the 1.0 litre diesel engine for the Beat elsewhere in the world, no final call has been taken as to whether diesel engines for the Sail and the MPV will be manufactured exclusively in India.
The 1.0 litre diesel engine for the Beat (the company’s smallest diesel engine globally) is manufactured at GM’s plant in Talegaon, Maharashtra. The capability for diesel engines is being developed by GM’s technical centre in Bangalore which currently has 2,100 employees. The company has five engineering centres, four design centres and nine satellite research and development facilities within GM International Operations. The technical centre India in Bangalore is a medium-sized engineering operation which specialises in tailoring vehicles for the Indian market while also undertaking engineering work for GM globally
P Balendran, vice-president (corporate affairs), informed, “Diesel vehicles constitute around 42-45 per cent of overall passenger vehicle sales today. But wherever, petrol and diesel variants are both available, 80 per cent of sales come from the diesel option. If I talk about the Beat alone, diesel sales used to be 40 per cent earlier, now it has gone up to 80 per cent. It has thus become important to develop the capability.”
Industry estimates say diesel variants accounted for 28 per cent of passenger vehicle sales in the last financial year. With petrol prices rising five times in the current financial year, the differential between the two fuels now stand at Rs 25.51 per litre, up from Rs 10 in April 2010, making an increasing number of consumers opt for diesel cars.
Tata Steel tops list of most-admired companies
Mumbai: Tata Steel topped the list of India's 50 most-admired companies in a survey compiled byFortune Indiaand global management consultancy Hay Group.
The list of admired companies was prepared on the basis of a survey of 507 executives across 291 companies.
The survey was carried out between October 2011 and January 2012.
Various factors, including corporate governance, financial soundness, leadership, talent management and corporate social responsibility were taken into consideration for the rankings.
To compile the list, 15 industries were selected on the basis of size, contribution to gross domestic product, growth rate and national presence, among others.
Mr H. M. Nerurkar, Managing Director, Tata Steel, said the company's primary business purpose was to improve people's quality of life.
This was the standard that had guided Tata Steel in all its activities for over a hundred years, Mr Nerurkar said.
“We are consistent in our pursuit of improvements in key areas that impact our business — innovation, talent management and, most importantly, community development,” he said.
Established in 1907 as Asia's first integrated private sector steel company, Tata Steel group of companiesis among the world's leading steel manufacturers, with an annual crude steel capacity of over 27 million tonnes a year.
It is now the world's second-most geographically-diversified steel producer, with operations in 26 countries and a commercial presence in over 50 countries.
The Tata Steel group of companies registered a turnover of $26.64 billion in FY2011.
It employs over 81,000 people across five continents.
The list of admired companies was prepared on the basis of a survey of 507 executives across 291 companies.
The survey was carried out between October 2011 and January 2012.
Various factors, including corporate governance, financial soundness, leadership, talent management and corporate social responsibility were taken into consideration for the rankings.
To compile the list, 15 industries were selected on the basis of size, contribution to gross domestic product, growth rate and national presence, among others.
Mr H. M. Nerurkar, Managing Director, Tata Steel, said the company's primary business purpose was to improve people's quality of life.
This was the standard that had guided Tata Steel in all its activities for over a hundred years, Mr Nerurkar said.
“We are consistent in our pursuit of improvements in key areas that impact our business — innovation, talent management and, most importantly, community development,” he said.
Established in 1907 as Asia's first integrated private sector steel company, Tata Steel group of companiesis among the world's leading steel manufacturers, with an annual crude steel capacity of over 27 million tonnes a year.
It is now the world's second-most geographically-diversified steel producer, with operations in 26 countries and a commercial presence in over 50 countries.
The Tata Steel group of companies registered a turnover of $26.64 billion in FY2011.
It employs over 81,000 people across five continents.
Mundra Power Plant emerges as the world's largest private power plant
New Delhi: Adani Power has synchronised the fifth unit of the Mundra power plant, taking its total generating capacity to 4,620 mega watt (MW), making it the world's largest single location coal-fired plant in the private sector and the fifth largest globally.
Adani ventured into power generation in 2009-10 and its current capacity is 15 per cent more than the ultra mega power projects (UMPPs) being executed by Reliance Power and Tata Power in states of Gujarat, Madhya Pradesh (MP), Andhra Pradesh (AP) and Jharkhand.
"When we started executing the power plant, our name didn't figure in Planning Commission's 2007-2012 five year plan period and now we contribute 10% of the planned target," according to Ravi Sharma, CEO, power business, Adani Power.
The company has signed long-term power purchase agreement (PPA) with Gujarat and Haryana for sale of 80 per cent of its capacity while the remaining 20 per cent the company intends to sell at merchant basis.
Adani Power intends to complete commissioning of 3,300 MW at Tiroda and another 1,320 MW at Kawai by March 31, 2013. The company intends to reach a capacity of 20,000 MW by 2020.
Adani ventured into power generation in 2009-10 and its current capacity is 15 per cent more than the ultra mega power projects (UMPPs) being executed by Reliance Power and Tata Power in states of Gujarat, Madhya Pradesh (MP), Andhra Pradesh (AP) and Jharkhand.
"When we started executing the power plant, our name didn't figure in Planning Commission's 2007-2012 five year plan period and now we contribute 10% of the planned target," according to Ravi Sharma, CEO, power business, Adani Power.
The company has signed long-term power purchase agreement (PPA) with Gujarat and Haryana for sale of 80 per cent of its capacity while the remaining 20 per cent the company intends to sell at merchant basis.
Adani Power intends to complete commissioning of 3,300 MW at Tiroda and another 1,320 MW at Kawai by March 31, 2013. The company intends to reach a capacity of 20,000 MW by 2020.
Tuesday, March 13, 2012
Edserv aims to add 250 schools for its Vidhyadhana offering
TIRUCHIRAPALLI (TN): Chennai based e-learning company EdServ is targeting to add 250 schools over the next 12-18 months for its Vidhyadhana offering, a top official of the company said.
Under the Vidhyadhana offering - called 'iClass' School Management System - EdServ provides requisite hardware, presentation equipments, multimedia kit and content materials to enable teachers to inculcate the syllabi knowledge in an effective manner.
Additionally, the software enables parents to know the location of the school bus or the transport systems about which alerts are regularly fed into the email system or SMSes are sent.
Already 250 schools in Tamil Nadu amd Andhra Pradesh have successfully implemented Vidhyadhana's School ERP Solutions, S Giridharan, Chairman and CEO, EdServ told reporters here.
"We are targeting to extend services to another 250 schools that will take the total schools covered to over 500. These additional schools will not only be in Metro cities but also in a number of Tier 2 and Tier 3 locations in India," he said.
While a majority of Vidhyadhana's school ERP solutions will be targeted at Schools in Andhra Pradesh, Karnataka and Tamil Nadu, the company will also expand its footprint in Maharashtra, Gujarat, Rajasthan and Delhi Capital area.
Under the Vidhyadhana offering - called 'iClass' School Management System - EdServ provides requisite hardware, presentation equipments, multimedia kit and content materials to enable teachers to inculcate the syllabi knowledge in an effective manner.
Additionally, the software enables parents to know the location of the school bus or the transport systems about which alerts are regularly fed into the email system or SMSes are sent.
Already 250 schools in Tamil Nadu amd Andhra Pradesh have successfully implemented Vidhyadhana's School ERP Solutions, S Giridharan, Chairman and CEO, EdServ told reporters here.
"We are targeting to extend services to another 250 schools that will take the total schools covered to over 500. These additional schools will not only be in Metro cities but also in a number of Tier 2 and Tier 3 locations in India," he said.
While a majority of Vidhyadhana's school ERP solutions will be targeted at Schools in Andhra Pradesh, Karnataka and Tamil Nadu, the company will also expand its footprint in Maharashtra, Gujarat, Rajasthan and Delhi Capital area.
Eurocopter to focus on new markets in India
HYDERABAD: Eurocopter, the global leader in helicopters, will focus on new markets in India in the emergency medical services, utility, law enforcement and search and rescue areas while maintaining its leadership position in the passenger, private, oil and gas and VIP markets, the company says.
Eurocopter India, a subsidiary of Eurocopter, will continue expansion of existing Indian markets with the largest range of helicopters.
Xavier Hay, chief executive officer, Eurocopter India, told reporters on the eve of India Aviation 2012, that the company would be working to develop new markets including emergency services like medical evacuation and fire fighting.
Eurocopter, which is the world leader in emergency medical services, has designed the EC135 and EC145 for Helicopter Medical Emergency Service (HEMS) and Disaster Management (DM) applications.
The firm has already started work with Indian companies, institutions, hospitals. He, however, wants India to relax regulations for this market to take off. Under the existing rules, an operator has to take flight permission 48 hours in advance.
It is also looking at freight, news gathering and construction in the utility market and police, customs, border patrol in law enforcement market and search and rescue market.
"There is huge potential for growth considering the fact that the civil helicopter fleets is just 260-strong against 6,857 in North America and 5,153 in Europe," said Hay.
Eurocopter currently has 29 customers in India operating 80 helicopters in the civilian market. Its market share in the civilian sector increased from 41 percent in 2010 to 65 percent in 2011
It delivered its 1,000th Dauphin helicopter to Pawan Hans Pvt Ltd in June 2011. Pawan Hans has 35 Dauphin in its fleet, making it the world's biggest civil operator of the Dauphin.
During 2011, Eurocopter India delivered nine helicopters of the 14 registered last year. Of these, five were twin-engined and the remaining four single-engined.
Eurocopter India, a subsidiary of Eurocopter, will continue expansion of existing Indian markets with the largest range of helicopters.
Xavier Hay, chief executive officer, Eurocopter India, told reporters on the eve of India Aviation 2012, that the company would be working to develop new markets including emergency services like medical evacuation and fire fighting.
Eurocopter, which is the world leader in emergency medical services, has designed the EC135 and EC145 for Helicopter Medical Emergency Service (HEMS) and Disaster Management (DM) applications.
The firm has already started work with Indian companies, institutions, hospitals. He, however, wants India to relax regulations for this market to take off. Under the existing rules, an operator has to take flight permission 48 hours in advance.
It is also looking at freight, news gathering and construction in the utility market and police, customs, border patrol in law enforcement market and search and rescue market.
"There is huge potential for growth considering the fact that the civil helicopter fleets is just 260-strong against 6,857 in North America and 5,153 in Europe," said Hay.
Eurocopter currently has 29 customers in India operating 80 helicopters in the civilian market. Its market share in the civilian sector increased from 41 percent in 2010 to 65 percent in 2011
It delivered its 1,000th Dauphin helicopter to Pawan Hans Pvt Ltd in June 2011. Pawan Hans has 35 Dauphin in its fleet, making it the world's biggest civil operator of the Dauphin.
During 2011, Eurocopter India delivered nine helicopters of the 14 registered last year. Of these, five were twin-engined and the remaining four single-engined.
Rail Budget 2012: Core sectors like power, steel & petroleum under pressure as Railways hike freights
New Delhi/Ahmedabad: Abrupt freight charge hike has put industries plying on Indian Railways in quandary. Key sectors like power, steel, petroleum, and cement producers are anticipating increase in their distribution costs that will burden the end users.
Power tariff will go up and oil marketing companies are also expected to witness further increase in the under recovery amidst rising crude prices.
Budget at ET: Budget 2012 | Union Budget | Railway Budget 2012 | Budget News
Railway Board chairman Vinay Mittal estimated additional revenues of Rs 15000-20000 crore by next fiscal. Railway Board's member (traffic) KK Srivastava said, "Our operation costs have gone up on account of price rise of oil, power and coal among other inputs.
Hence, we are compelled to introduce minor change in freight to offset our rising costs." He added that Indian Railways would not loose any customers on account of higher freight.
According to estimates, transportation cost accounts for close to 28% in cost of coal and 20% in petroleum products.
Experts fear that price hikes after the Union budget in various products is inevitable as infrastructure, agriculture & commodities are adversely affected areas since cost of transport is on rise.
"In India, railway freights are one of the highest in world. Due to inability to raise passenger fares, Indian Railways has been increasingly getting dependent upon freight to stay afloat.
As of now, about 70% of the railway revenues are coming from freight only," said Ernst & Young ED and Leader PPP Abhaya Agarwal said. According to Agarwal, the average realisation to railways in per net tonne per kilometer terms have grown at the compounded annual rate of 2.5% over the past 10 years.
An IOC official stated that under recovery for the company would go up unless the government allows it to increase petroleum prices.
Commodities like coal, iron ore, cement, food grains, fertilizers, petroleum oil and lubricants account for 80% revenues for Indian Railways that is expected to garner close to one lakh crore rupees from cargo movements this fiscal.
Coal accounts for highest traffic in Indian Railways' basket as 1,05,000 mw of country's total 1,86,654 mw of electricity generation capacity is dependent on coal. It was expected to transport 400 million tonne of coal in current fiscal.
According to top executives of power arms of Essar and Adani groups, 20% higher costs of coal transportation will be passed on to the electricity distribution companies as per the power purchase agreement.
A top official of one of the state power utilities said, "Railway tariff hike has come at a time when we are struggling with coal price hike and seeking electricity tariff hike. We will factor the same while presenting our case for tariff hike before the state electricity regulatory commission. The distribution companies will pass on the burden to the end users."
The steel makers estimate additional burden of $ 30 per tonne in exports and iron ore in domestic market will increase by Rs 1,800 per tonne on account of freight tariff hike. "It is not an industry friendly development.
Steel industry is already is witnessing slow growth in demands and margins are under pressure. Steel makers will not be able to absorb this cost and it will be uncompetitive if the cheaper imports flood the Indian market," said a top official of a large steel company.
"The 20% freight hike announced by Railways is unreasonable especially in context to the cement industry as this is a logistic driven and freight sensitive core sector industry.
This hike will lead to increased input and transportation cost and will adversely affect the already squeezed margins of the cement manufacturers who are currently under pressure of oversupply condition due to capacity additions," said Sanghi Cement wholetime director Alok Sanghi.
Commenting on the development, Rs 10,000 crore Gujarat Cooperative Milk Marketing Federation Limited (Amul) MD RS Sodhi said, "One third of our produces is transported through Railways.
Entire East and North East India is catered through Indian Railways. We agree with Railways for an appropriate tariff hike since it has remained in control for past few years. However, dramatic freight hike is not reasonable as end user will suffer the most." Sodhi claimed its cost of railway transportation would increase by over 30% effectively.
Power tariff will go up and oil marketing companies are also expected to witness further increase in the under recovery amidst rising crude prices.
Budget at ET: Budget 2012 | Union Budget | Railway Budget 2012 | Budget News
Railway Board chairman Vinay Mittal estimated additional revenues of Rs 15000-20000 crore by next fiscal. Railway Board's member (traffic) KK Srivastava said, "Our operation costs have gone up on account of price rise of oil, power and coal among other inputs.
Hence, we are compelled to introduce minor change in freight to offset our rising costs." He added that Indian Railways would not loose any customers on account of higher freight.
According to estimates, transportation cost accounts for close to 28% in cost of coal and 20% in petroleum products.
Experts fear that price hikes after the Union budget in various products is inevitable as infrastructure, agriculture & commodities are adversely affected areas since cost of transport is on rise.
"In India, railway freights are one of the highest in world. Due to inability to raise passenger fares, Indian Railways has been increasingly getting dependent upon freight to stay afloat.
As of now, about 70% of the railway revenues are coming from freight only," said Ernst & Young ED and Leader PPP Abhaya Agarwal said. According to Agarwal, the average realisation to railways in per net tonne per kilometer terms have grown at the compounded annual rate of 2.5% over the past 10 years.
An IOC official stated that under recovery for the company would go up unless the government allows it to increase petroleum prices.
Commodities like coal, iron ore, cement, food grains, fertilizers, petroleum oil and lubricants account for 80% revenues for Indian Railways that is expected to garner close to one lakh crore rupees from cargo movements this fiscal.
Coal accounts for highest traffic in Indian Railways' basket as 1,05,000 mw of country's total 1,86,654 mw of electricity generation capacity is dependent on coal. It was expected to transport 400 million tonne of coal in current fiscal.
According to top executives of power arms of Essar and Adani groups, 20% higher costs of coal transportation will be passed on to the electricity distribution companies as per the power purchase agreement.
A top official of one of the state power utilities said, "Railway tariff hike has come at a time when we are struggling with coal price hike and seeking electricity tariff hike. We will factor the same while presenting our case for tariff hike before the state electricity regulatory commission. The distribution companies will pass on the burden to the end users."
The steel makers estimate additional burden of $ 30 per tonne in exports and iron ore in domestic market will increase by Rs 1,800 per tonne on account of freight tariff hike. "It is not an industry friendly development.
Steel industry is already is witnessing slow growth in demands and margins are under pressure. Steel makers will not be able to absorb this cost and it will be uncompetitive if the cheaper imports flood the Indian market," said a top official of a large steel company.
"The 20% freight hike announced by Railways is unreasonable especially in context to the cement industry as this is a logistic driven and freight sensitive core sector industry.
This hike will lead to increased input and transportation cost and will adversely affect the already squeezed margins of the cement manufacturers who are currently under pressure of oversupply condition due to capacity additions," said Sanghi Cement wholetime director Alok Sanghi.
Commenting on the development, Rs 10,000 crore Gujarat Cooperative Milk Marketing Federation Limited (Amul) MD RS Sodhi said, "One third of our produces is transported through Railways.
Entire East and North East India is catered through Indian Railways. We agree with Railways for an appropriate tariff hike since it has remained in control for past few years. However, dramatic freight hike is not reasonable as end user will suffer the most." Sodhi claimed its cost of railway transportation would increase by over 30% effectively.
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