Global biz biggies want slice of Rly?s pie
Rail Bhawan has become the preferred destination of frontline asset managers and investment bankers, reports Vinod Sharma. Can this help transform Indian Rlys?
The list is long: UBS, Goldman Sachs, Deutsche Bank, McKinsey & Co. and Credit Agricole’s CLSA. Of late, Rail Bhawan has become the preferred destination of frontline global asset managers, investment bankers and consultants.
Some are on the prowl for business and investment opportunities, while others are just curious about the Indian Rail’s turnaround. Just how robust is the financial recovery, they ask, and what’s in it for their clients?
Foreign investment bank CLSA wants to highlight the Railways’ transformation under Lalu Yadav in its report, curiously named after Jack Nicholson’s “A Few Good Men”. Meant for distribution to over 5,000 global investors and fund managers in the US, UK, Europe and Asia, the report, the bank feels would address investors’ concerns over lack of infrastructure, poor governance and poverty in India.
The Deutsche Equities’ vice president is equally impressed with the Railways’ phenomenon. He wants to learn more after seeing a presentation by Lalu’s OSD Sudhir Kumar at a World Bank forum. “I am currently researching the drastic turnaround of Railways and its impact on user industries.”
Clearly buoyed by such attention, Lalu’s pointspersons have their sights on bigger goals. In the first half of April, they would present to the PM-led Cabinet Committee on Infrastructure a mind-bogglingly expensive plan to ‘transform Indian Rail forever’.
Their figures are astronomical: a Rs 5 lakh crore plan size for 2007-2012 — up eight times from the meager Rs 60000 crore in the 10th plan. Of this, 1.25 lakh crore each will be raised internally and through market borrowings and Rs 2 lakh crore from public-private partnerships. The later figure perhaps explains the Rail Bhawan’s newfound global profile.
“We expect Rs 60,000 crore from the Finance Ministry but can do without it,” an official boasts. In the Railways’ 66,000 km route, 67 per cent traffic is on the 8,700 km golden quadrilateral and its diagonals. Not surprising then that the average speeds of goods and passenger trains in this crowded sector have stagnated at 22 and 50-55 km an hour for 35 years.
Only a dedicated freight corridor costing Rs 80,000 crore over five years can remove the bottleneck. Another 40,000 crore will be spent on ‘mineral routes’ and port connectivity and 20,000 crore on the 12,000-km gauge conversion.
The concomitant line capacity will, by 2012, push up freight from 670 million tonnes to 1200 million tonnes and passenger traffic from 6000 million to 9000 million.
For optimal use of the new corridor, the railways will need more wagons (Rs 50,000 crore), modern signalling and telecommunication (Rs 30,000 crore), upgraded tracks and bridges (Rs 50,000 crore).