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Petrol, diesel haulage to cost 5% less; 14% cut in fly ash freight not to benefit industry

The Railway Budget is likely to bring in savings for the oil marketing companies, while the move to cut freight on fly ash will have no impact on the cement industry.

The steel companies will benefit from the use of stainless steel in producing wagons and coaches. There has been no change in the freight rates for either cement or steel.

Indian Oil Corporation (IOC), the country's largest marketer of petroleum products, will see a positive impact of Rs 19-20 crore annually with the proposed 5 per cent cut in freight rates for petrol and diesel, said a company official.

Both Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) will see a higher gain than IOC as these two companies, unlike IOC, transport more products through railways. HPCL will gain Rs 38 crore annually, while BPCL will save Rs 32-35 crore.

IOC's share price at the Bombay Stock Exchange (BSE) closed at Rs 550.90, up 4.17 per cent from the previous day.

The freight cut in fly ash, a raw material for manufacturing cement, will not result in any major benefit for the cement industry.

"The 14 per cent cut in the freight rate of fly ash will have no immediate impact on the cement industry since there is no significant loading of this product by railways. However, if this continues, some players may prefer to transport fly ash by rail," said HM Bangur, president of Cement Manufacturers' Association, and managing director of Shree Cement.

However, Bangur added that the cut in freight of diesel would indirectly have a positive impact on the cement industry.

"There is hardly any movement of fly ash by rail. Cement producers prefer transporting fly ash via roads as it is more convenient. The reduction in freight will not induce companies to shift to rail for transporting fly ash," said Rahul Kumar, chief operating officer (cement) at Jaiprakash Associates, a leading cement producer.

Also, the government's decision to manufacture stainless-steel coaches will benefit the producers since the demand for stainless steel will grow in the future.

The decision to stop production of 20.3-tonne axle load BCN and BOXN wagons, and to produce only stainless-steel wagons of 22.9 tonnes will also drive demand for stainless steel.

"The proposed increase in investment on new railway lines and addition of 20,000 new wagons to the railway fleet augurs well for the Indian steel industry," said J Mehra, CEO, Essar Steel Holdings.

However, he added that the steel industry had been expecting some relief from numerous additional levies like congestion surcharge, which were imposed earlier.

Most of the new dedicated iron-ore routes will be constructed or upgraded for 25-tonne axle load and some routes will be made suitable for running 30-tonne axle load trains.

"The doubling of lines on Hospet-Vasco and Banspani-Jhakhpura routes will help the mining industry," said RK Sharma, secretary general, Federation of Indian Mineral Industries.