Rail Budget: Steel majors get cost breather

The steel industry will benefit from Railway Budget 2007 with freight rates on iron ore being cut and special emphasis being laid on the sector.

The increase in wagon production by 10%, revamping of rail infrastructure and expenditure of Rs 30,000 crore for the freight corridor is expected to boost steel consumption.

S K Roongta, chairman, Steel Authority of India (SAIL) said, the steel sector would particularly benefit from the proposed freight reduction of 6% on iron ore, limestone and dolomite along with railway fare concession.

The impact of freight reduction and railway fare concession for SAIL was likely to be Rs 70 crore, he added.

The other steel PSU, Rashtriya Ispat Nigam (RINL), is likely to save around Rs 15 crore from freight reduction. Y S Sagar Rao, chairman and managing director, RINL said, the company uses around six million tonne of iron ore, which would translate to savings of around Rs 15 crore.

J Mehra, director, Essar Steel said the announcement about in cut in freight tariffs on iron ore was an initiative in the right directon. "I hope it is applicable to all steel plants."

Mehra pointed out that the minister's promise for new railway lines to new steel and power projects was a positive initiative.

Sajjan Jindal, vice chairman, JSW Steel said this was the first time that importance has been given to the steel sector and that in itself was an advantage.

Roongta added that the announcement of the railway minister for co-operation with the expansion plans of steel producers was a welcome statement.