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Business Street 3

Greasing the Freight Wagon Wheels

Modern Industries in Sahibabad has contributed to the smooth running of Railways wagons for more than five decades
SHIVENDRA KUMAR SINGH
GHAZIABAD

OR over 15,000 small and medium enterprises operating from the industrial city of Ghaziabad, the growth story of Modern Industries could well be the proverbial beacon of hope and inspiration. The group, which started as a lantern-making factory way back in 1941, diversified into steel, oxygen cylinders and textiles in the following decades, and finally established itself as one of the premier suppliers of freight wagons to the Indian Railways. We are one of the two companies which manufacture freight wagons in the entire north India, says Bharat Bhushan, vice president of the `150crore company that produces 4,500 wagons annually. According to Mr Bhushan, of the total 2,30,000 wagons currently in use by the railways, Modern Industries has contributed to no less than 30,000 wagons. Railways

have plans to make its dedicated freight corridor (DFC) project operational by 2017. This will increase the demand of freight wagons by almost 50 percent and will further fuel our growth, says Mr Bhushan. To meet this projected spurt in demand, Modern Industries is thinking of equipping their unit with robots and make it fully automatic. The biggest problem that we always face is labour. Even though the cost of each robot is somewhere around `3-4 crore, it will work out to be in our favour in the long run, says Mr Bhushan. There are 13 freight wagon manufacturers in the country out of which seven are government and three are private players while three more players are coming up. The demand for current year is over 15,700 wagons, which will be on tender basis. We are expecting to garner a contract of 2,000-2,500 wagons, considering the quality we give and the reputation we have made over several

decades, says Mr Bhushan. As the managing proprietor Sanjay Bindal puts it: It is with legitimate pride that Modern Industries can speak about its profile, performance and prosperity. To be able to survive and thrive in the emerging new environment where competition is stiff and appetite for excellence is a big challenge, the company has succeeded in putting its market rivals in the shade. Spread over a sprawling 26 acre, the unit is situated on the main GT road at Sahibabad and is connected to an Indian railway system by a private line. The company has a fully integrated plant with installed power generation system. Modern Industries officials take pride in its investments in R&Dthat is to the tune of `50 lakh annually and which has helped them come out with some landmark innovations. We were the first company to bring short blasting technique into the industry. The technique is used for surface preparation of

the wagons, says Mr Bhushan. We are also the first company to make corrosion-resistant wagons made from stainless steel. Earlier they were made of mild steel. The company makes 10 different types of wagons, which includes oil tankers and vehicle careers. The wagons come between the range of `25- 45 lakh depending upon the type and size of the freight wagons. WHY WE NEED MORE WAGONS Indian Railways draw more than 70 percent of the revenue from the freight sector and uses the profits to subsidize the passenger segment. This year between April and June, Indian Railways carried over 233.77 million tonnes of freight, an increase by 15.42 million tonnes against the last years 218.35 mt. The freight traffic is increasing at the rate of 8-11 percent year on year. Mr Bhushan be-

lieves that railways will play a much bigger role in the transportation of all types goods in the times to come. This will minimize delivery time, cut down risks (accidents etc) save resources like fuel and minimize cost. He explained it through simple mathematics. A freight wagon can carry 63 tonnes of goods. There are 23 wagons attached to a single locomotive that makes 1449 tonnes of freight carried in one go. While a truck carries 5-6 tonnes. Assuming that it carries 6 tonnes in best-case scenario, it will still require over 241 trucks to carry the same load. Congestion on the road and the toll it takes on it are not accounted in the economics. And Modern Industries, working quietly from a corner of Ghaziabad, is happy to be an important cog in the wheel. shivendra.kumar@timesgroup.com

Short Term Portfolios to Generate Decent Yields

MIPs work best when interest rates are on a downward trajectory and equities poised for an uptrend

As per a return sheet provided by Delhi-based MSJ Capital, even if the equity component in an MIP logs 25 percent negative returns, at current yield, the debt portion is expected to generate 3-5 percent returns. If the equities market remains locked in a narrow range, the debt portion in MIPs could generate 8-8.5 percent. If the equities market registers a minor rally, the overall portfolio returns could be in the range of 1014 percent, the MSJ return sheet said. Investors will benefit from higher accruals in the debt portion. They have the advantage of investing at lower levels of equity markets and higher yields on debt markets currently, said Sunil Jhaveri, managing director, MSJ Capital, adding, with a one-year investment horizon, investors should get 1015 percent returns on MIP portfolios. As per fund managers, MIPs do well when equities and debt are trending with a positive outlook. MIPs work best when interest rates are on a downward trajectory and equities poised for an uptrend. A section of debt fund managers is still waiting for clearer signals on interest rates. Were waiting for some more clarity on interest rates. We dont expect RBI to resort to aggressive monetary tightening from current levels, said Lakshmi Iyer, head-fixed income, Kotak Mutual Fund. Iyer says investors with a lower investment horizon (less than one year) can consider locking investments in shortterm debt funds. At current rates, short-term debt portfolios will generate decent yields for investors, she said.

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