India Inc bets big on Railways order

The Indian companies are expecting the Indian Railways to give orders from its  Rs 8.56 trillion investments planned in the next few years with CEOs saying this will come as a major economic stimulus package for their companies.

The railways will spend money in redevelopment of stations, setting up wi-fi networks, solar power networks, track renewals and electrification of existing tracks.



“With the emphasis on investment on an on-going basis, this budget reinforces the government’s commitment in making railway infrastructure development its priority. An increase of 52% in budgetary allocation to Rs 1,00,011 crore, railway track electrification of 6608 kms in 2015-16, an investment of Rs 8,686 crore, increase of 84% year on year for doubling, tripling and four lines, PPP mode for last mile projects and 20% increase in track length to 138000 kms are big positives for us ,” said  R D Chandak, MD & CEO - KEC International, a RPG group company, which has a portfolio of Rs 500 crore of railway projects.

The redevelopment of railway stations is a good news for construction companies like L&T, HCC and Gammon which can bid for the projects in the public-private partnership (PPP) basis. The plans to set up CCTVs and offer wireless internet connections is a good news for listed companies like SmartLink, CMC and Smartlink which make the hardware for providing wi-fi networks.

Another big equipment supplier, Europe-based Alsthom said a vibrant PPP model will lead to rapid modernization of railways and will offer huge scope for private players like Alstom to contribute in areas like signaling, track renewal, electrification etc.

 “It will also allow Indian Railways to induct from the private sector, new technologies based on life cycle costs rather than merely the capital cost of procurement. We hope the continuous push to Network decongestion, gauge conversion, upgraded rolling stock and new lines will make Railways far more efficient and commercially viable organization,” said Bharat Salhotra, MD, Alstom Transport India Ltd. Companies like Taxmaco and Kalindee Rail Nirman will be big beneficiaries when the railways gives orders for signalling and telecommunication equipment.

“The railway budget has aimed to give a facelift to the image of Railways through digitization and modernization than any big or new reform measures. Some emphasis like increasing the speed in nine corridors will surely help in reducing the logistics lead time and therefore benefit the industries. Other announcements like Transport Development Corporation, multi modal depots etc. are all welcome measures as these are bound to improve the delivery capability,” said S V Sukumar, Partner Strategy & Operations, KPMG in India.

“However the budget has not addressed the main concern of “Logistics cost” for the India Inc. and that will continue to remain high. Unfortunately this is not going to help our “Make in India “campaign“,” he said.