CBI probes Rs 780-cr iron ore transportation scam

Fri, Nov.18, 2011

An initial investigation conducted by the Railways revealed that the company caused huge revenue loss to it by making false or misleading declaration about the end use of the iron ore lifted from mining sources.
New Delhi, Nov. 16:

CBI is investigating a scam worth at least Rs 780 crore by a mining firm which allegedly defrauded the Railways in transportation of iron ore meant for commercial activities by making false declaration about its end use.

Official sources said the alleged irregularities were carried out in connivance with certain senior officials of South Eastern Railway (SER) for wrongfully transporting the goods from its Chakradharpur division which were exported through Haldia Port in West Bengal.

An initial investigation conducted by the Railways revealed that the company caused huge revenue loss to it by making false or misleading declaration about the end use of the iron ore lifted from mining sources.

It detected that certain industrial units were transporting iron ore through the Chakradharpur Division of SER declaring the material was for domestic consumption or internal use. “Actually the iron ore was being exported through Haldia Port. The investigations initially revealed a loss of revenue of about Rs 50 crore for a period of nine months in the year 2010 by a private company,” a source said without divulging the name of the company.

Later, the scope of investigations was widened to cover three years from 2008-09 to 2010-11.

“The recoverable amount worked out by the Railways in mis-declaration of goods is Rs 749.50 crore,” he said.

Officials have got evidence of similar modus operandi being opted by other companies active in mining activities in Jharkhand and Orissa and they are now being separately investigated.

The case was referred to the CBI for an in-depth probe by the Central Vigilance Commission.

“The scam is huge and there is a possibility of involvement of certain railway officials who colluded with certain mining firm owners,” the official said.

Keywords: CBI probe, iron ore transportation scam, irregularities, South Eastern Railway,
Sourced:BusinessLine

Interview - Japan quake to delay Titagarh steel bridge JV

Monday 21 March 2011, 1:26 PM

By Aniruddha Basu

MUMBAI (Reuters) - Indian wagonmaker Titagarh Wagons Ltd's plans to set up a joint venture with a Japanese firm will take longer than expected due to the massive earthquake that rocked Japan earlier this month, a senior official said.

Titagarh has signed a memorandum of understanding with Japan's Kawada Industries Inc to manufacture steel bridges in India. The two firms plan to make two-lane modular bridges with steel composite decking, according to Titagarh Wagons' website.

"The JV would be subject to a preliminary study getting completed. That is underway. And now with the current situation in Japan things will be deferred to an extent as they will have a lot of rebuilding work in Japan," Titagarh Wagons' Vice Chairman Umesh Chowdhary told Reuters on Monday.

He did not give a timeline for the venture to become operational.

"The joint venture agreement has not yet been signed. It will take a little time".

To take advantage of India's increasing demand for metro coaches, Titagarh has teamed up with another Japanese metro coach maker to bid for such orders.

"We are in a consortium with a Japan firm and we will bid for tenders as and when they come up," Chowdhary said. He declined to name the Japanese firm.

Indian Railways has earmarked an investment of $12.68 billion in 2011/12 for modernise its creaky infrastructure and expand capacity. It has proposed to set up two wagon units with private partners.

The Railways has estimated the total public-private partnership investment in India at 15.26 billion rupees in 2011/12.

Titagarh, which gets the bulk of its revenues from the Indian Railways, expects a tender for 18,000 wagons to be published within the next one or two months, he said.

The firm has a capacity to make about 5,000 wagons annually. Its unit Cimmco is expected to make another 2,000 wagons in 2011/12.

Orders from the private sector have not yet seen an uptick he said.

"Private sector demand has not yet picked up but railway demand looks healthy," he said.

Titagarh's JV with US-based FreightCar America to make aluminium rail cars -- lighter wagons with more pay load -- for the local market is yet to start operations due to limited enthusiasm from the Railways, he said.

"The designing has been done, but the issue is that this was a new concept and until the concept picks up, it does not make sense to go into manufacturing."

Kolkata-based Titagarh, which had acquired the assets of France's IGF Industries- Arbel Fauvet Rail last July, is open to more such overseas acquisitions, but no deal has been finalised yet, he said.

At 1:16 p.m., Titagarh Wagons shares were down 1.12 percent at 308.85 rupees in a choppy Mumbai market. (sourced:Reuters)

Coal is gold for railways

Feb 25, 2011, 19:46
Press Trust of India

New Delhi : Coal used in generating power, manufacturing steel and cement, is among the main sources of income for the Railways and contributes over 38% of its freight earnings, according to the Railway Budget for 2011-12.

The Budget presented by the Railways Minister Mamata Banerjee today revealed that out of the expected Rs 62,489.33 crore total income from freights in 2010-11, coal was likely to contribute Rs 24,127.77 crore to the kitty.

The Indian Railway had earned Rs 58,501.68 crore from ferrying goods in 2009-10 in which coal transport contributed Rs 22,418.07 crore.

Hoping to ferry more coal, the railways has set a revenue target of Rs 68,620 crore for the next fiscal, which is nearly 10% more than the projected income in the current fiscal.

The Railways is projecting an earning of Rs 27,126.49 crore by transporting coal for steel plants, washeries, power houses and for other public users for the next fiscal.

Indian Railways had earned a total of Rs 23,488.17 crore by ferrying passengers in FY10, hopes to generate Rs 26,126.4 crore in the current fiscal and Rs 30,456 crore in FY12.

Transport of iron ore is the second highest source of income for the railways in the freight category. Railways had earned Rs 8,345.27 crore through iron ore transports and aims to generate Rs 8,423.83 crore in the current fiscal.

For the next fiscal, it targets to achieve Rs 9,035.31 crore revenue from transportation of iron ore.

Coal India, which accounts for over 80% of the country's production, targets 431.5 million tonne production for this fiscal. Its output target for 2011-12 is 460.5 million tonne.

Out of India's total 771.551 KWh power generation in FY10, 640.876 KWh was generated from thermal sources.

Tags: power houses, transport of iron ore, Coal India Limited,

Railways to set up 2 wagon units with pvt partners

25Feb, 2011, 12.41PM IST,REUTERS

NEW DELHI: Indian Railways Minister Mamata Banerjee announced a proposal to set up two wagon units with the assistance of private partners, in her third annual budget for state-run Indian Railways in parliament on Friday.

Railways eases wagon leasing scheme rules

Feb,22,2011 By Souvik Sanyal,ET Bureau

NEW DELHI: The Indian Railways has eased conditions for firms to procure and lease rail wagons to other businesses in an attempt to make its three-year-old Wagon Leasing Scheme more attractive for the private sector.

Launched in 2008, the scheme had failed to take off with firms blaming its stringent conditions.

The railways has now lowered the eligibility bar for companies, extended the validity of the one-time registration and given more freedom to firms in sourcing of wagons, a senior railway ministry official said.

According to the new norms, a company with a net worth of 100 crore could operate under the Wagon Leasing Scheme. The earlier norms required a company to have a net worth of at least 250 crore.

The railways has also extended the validity of the one-time registration to 35 years with a provision for further extension on payment of registration fees. Industry had raised concerns over the 20-year validity prescribed under the old norms. Although, the scheme allowed an extension of 10 years, industry said the period was short to recover investments made in the capital-intensive business.

The new norms also allow the leasing company to purchase wagons from container train operators, special freight train operators, automobile freight train operators and end users.

It also allows a company to import wagons and lease them to private container operators and the railways.

To streamline the policy of rebate, the Railways has said that the rebate approved will be the same as given under the scheme under which the wagons were procured.

It has, however, introduced provisions for imposing charges on the company if the train suffers detention due to them.

"Railways need to somehow ensure that leased services run by it and supported by industry gets preferential treatment," Vineet Agarwal, Executive Director, Transport Corporation of India , said in a recent note. "If they fail to look at this point seriously, industry may rethink on going for leased services on long-term basis as erratic delivery timelines have defeated the very purpose of leased services, USP of which was time-bound services."

Companies such as General Electric , Srei Infrastructure Finance and Adani Logistics had initially shown interest in the Wagon Leasing Scheme, which was proposed in the 2008-09 Railway Budget. It was aimed at developing a strong wagon-leasing market by encouraging third-party leasing to bring in better-quality wagons.

But the scheme was bogged down by tough conditions.

Stung by strong resistance from the industry over a majority of its schemes under the private-public partnership mode, the railways now seems to be making amends in its approach.

In November 2010, Railway Minister Mamata Banerjee met industry representatives to garner support for the projects launched under the public-private partnership mode. At that time, the industry had raised with her issues concerning the Wagon Leasing Scheme also.

Tags: General Electric, Srei Infrastructure Finance and Adani Logistics, private-public partnership schemes

Indian Railways invites private companies to connect mines with plants

Feb23, 2011, 12.38PM IST,ET Bureau

NEW DELHI: The railways ministry has invited investment proposals from private companies in the country's power and steel sectors to build tracks connecting coal and iron ore mines with their plants, after failing to attract private capital in its earlier attempts.

The move forms part of the ministry's plan to attract private investment in rail connectivity between mineral-rich areas and industrial belts to support increasing demand for these key raw materials.

"A number of new coal blocks and iron ore mines have been identified for exploitation, but many of them do not have either rail or road connectivity," a railways official said, adding that the scheme is beneficial for both the railways and private firms.

Called R2CI, the new policy will incentivise developers by offering to return their investment over a period of 10-25 years through a surcharge on freight.

This is a substantial improvement over its earlier R3i policy for private sector participation in rail projects, which left out coal and iron ore mines out of its ambit.

The decision comes just three days before the railway budget and is seen as the ministry's efforts to improve its image as a department willing to tap private capital to develop railways infrastructure.

The railways will also undertake the operations and maintenance of such lines after the ownership is transferred to it. Companies can apply for the scheme either through setting up special purpose vehicles or through a capital cost model where the cost of construction shall be borne by an individual company, partnership firm or a joint-venture between firms.

To eliminate non-serious players, the railways will stipulate a lock-in period for investors.

"Between the date of execution and the commercial operation date, transfer of shares to any other entity except as provided in the agreement will not be permitted," the policy document states.

The railways ministry had initiated a similar scheme earlier to connect automobile factories with ports. But the initiative failed with the industry objecting to several restrictive conditions put in place by the railways.

"Railways need to be more receptive to the ideas of the industry & end-users so as to encourage the industry to invest in PPP model," said Vineet Agarwal, executive director of Transport Corporation of India in a note.

Railways minister Mamata Banerjee is keen to list some achievements as part of the railway budget to be placed in the Parliament on Friday. Railways' finances took a hit in the current fiscal due to an over 92% hike in salaries, two hikes in diesel prices and irregular freight business.

Tags:railway connectivity to mines and plants, investment proposals,

Indian Railways plans to use alloys in wagons to cut costs

Feb23, 2011, 12.36PM IST,
By Anuradha Himatsingka,ET Bureau

KOLKATA: Indian Railways plans to introduce new wagons that are cheaper by a fifth and carry almost the same weight as the existing stainless steel ones.

However, the railways will seek inputs from all stakeholders before taking a final decision on the use of 'high alloy mild steel' for manufacture of covered wagons, a railways official said.

This steel is expected to lower the production cost by about Rs 6-7 lakh per wagon, which costs around Rs 35 lakh. A wagon built using mild steel willl be able to carry the same weight as that by a stainless steel one, which is approximately 70.8 tonne.

The official said, "When we decided to go for stainless steel wagons some two years ago, the pay-to-tare-ratio' (the load factor) improved. But the procurement cost per wagon nearly doubled and adversely impacted Indian Railways' (IR) margins."

The Railways had released orders for procuring 18,000 wagons for the financial year 2010-11.

A senior industry player said, "The difference in procurement cost is substantial and will have a positive impact on IR's profits."

Half the wagons produced in the country are covered. Uncovered wagons, or open wagons, are prone to corrosion and so have a lower life span. "It is, therefore, prudent to use stainless steel for uncovered wagons. For covered wagons, we have been trying to find out ways to lower manufacturing costs. We finally zeroed in on high alloy mild steel," the source said. Steel producers have more or less agreed to supply this steel to wagon manufacturers. (via ET )