Freight rate hike to cost SAIL Rs 300-cr annually

State-run Steel Authority of India (SAIL) today said it will have to annually bear an additional cost of Rs 300 crore due to the hike in railway freight rates.

Freight charges will go up over 5% with effect from April 1 with Railway Minister Pawan Kumar Bansal deciding to link freight rates with input fuel charges in the Budget.

"For SAIL, this is estimated to have a negative implication of Rs 200 crore per annum on inward traffic and around Rs 100 crores per annum on outbound finished goods traffic," the state-run steel maker said in a statement.

The hike in freight charges would also impact other steel makers, but it would vary from company to company depending on their plant locations and markets where they sell their final products.

SAIL, however, described Bansal's maiden Budget as "growth -oriented" and said it was aimed at financial sustainability.

"The Rail Budget has a 20 per cent higher plan outlay of Rs 63,360 crore in FY14, which augurs well in enhancing the railway infrastructure," it said.

For steel and mining industry, the last mile connectivity planned for some ports and mines will facilitate competitiveness.

"The investment planned by Indian Railways in the 12th Five Year Plan of Rs 1 lakh crore, through the PPP mode is eagerly awaited by the steel industry," SAIL said.

The increased investment by Indian Railways is likely to spur steel consumption at a time, when large capacities for steel are being installed by SAIL, which shall be beneficial to the company.