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Railway Budget and opportunities

Railway Budget: Record outlays may benefit a host of cos(The Hindu Business Line 26th Feb 2008)Armed with a cash surplus of Rs 25,000 crore, the Indian Railways has announced several initiatives towards easing infrastructure bottlenecks in the Railways. These moves may open up a host of business opportunities for many companies.
Backed by the largest ever annual plan outlay of over Rs 37,500 crore, the Railways Minister’s growth initiatives appear promising.Rolling stock
The Budget has laid down plans to procure an all-time high number of 20,000 wagons, 250 diesel and 220 electric locomotives for the coming year. This opens up sizeable potential revenues for wagon manufacturing companies such as Texmaco, BEML and Titagarh Wagons (the company has recently filed for an initial public offering with SEBI), which derive a significant portion of their revenues from the manufacture of wagons for the Railways.
Besides revenue growth, these companies may also benefit by way of margin expansion over the long-term, given the proposal to migrate to high-end stainless steel wagons starting from 2011. The Government’s focus on setting up public-private partnerships to further infrastructure growth may also help keep the demand for wagons buoyant.
That apart, introduction of a wagon leasing policy and the wagon investment scheme may reduce the capital outgo for the buyers and boost demand. Nonetheless, this could also breed competition. Attempts by established foreign players such as General Electric, Alstom and Bombardier, with a superior technology backup to expand their operations in the Indian market, may raise competition for existing players.
In this context, the fact that Indian companies enjoy access to lower manufacturing cost offers some respite.Freight corridors
Kalindee Rail Nirman, a frontrunner in railway related infrastructure works such as construction of new line and gauge conversion, may benefit significantly from the setting up of dedicated freight corridors by the Railways. This may translate into topline growth for the company from the next financial year, with the work on both the Eastern and Western dedicated freight corridors slated to begin by 2008-09.
The thrust on setting up of freight corridors, rail-port connectivity and increased investments expected in container rolling stock and inland container depots by Container Corporation and other operators may also open up opportunities for logistics players such as Gateway Distriparks and Allcargo Global. More

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