Railways policy to hit logistics firms

The Rs 100-crore turnover floor prescribed by the Railways for private companies interesting in running container trains, has deterred several logistics players, including Sanco Trans, Satva and Associated Container Terminals Ltd, from applying to the scheme, since they have lower turnovers.

"Despite being in the logistics business for many years, several companies that own internal container depots (ICD) will not even be able to qualify for running container trains. This is because these companies do not have a turnover of Rs 100 crore," a member of National Association of Container Freight (NACF) Stations told Business Standard.

The Railways in its policy for containers has put a condition that only those companies with a minimum turnover of Rs 100 crore can apply. The last date for submitting application is February 16.

NACF sources added that there were at 10 to 15 freight station owners in India that would not be able to conform to this provision. There are about 153 internal container depots and container freight stations in India, of which nearly 50 are in private sector.

Of these, only a few companies like the Gateway Terminal of India, Sical container freight station and Maersk ICD in Mumbai, could have a turnover of more than Rs 100 crore, as they belonged to larger groups, the association members said.

"The Railways has ensured that a stand-alone player cannot enter the business, despite being in the business of handling container traffic for years," a private internal container depot owner said.

He added that this policy would also result in duplication of resources. One of the conditions put by the Railways is that companies eying container business have to own an ICD.

"Now new companies will come in and build more ICDs within the window period of three years given to them, while many existing ones will not be in the reckoning at all," the private internal container depot owner said.