Railway Budget 2012: Construction firms to gain, not wagon companies

The focus of this year's Railway Budget on enhancing the infrastructure of the railways is likely to benefit various small construction companies.

The budget has allocated Rs 7.35 lakh crore in the Twelfth Five-Year Plan for modernisation, safety and capacity addition of Indian Railways - an almost four-fold rise compared with the previous plan.


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Companies can expect quite a few projects related to construction of tunnels, tracks, bridges and terminals.

Companies such as Simplex Infrastructure, MBL Infrastructure and Supreme Infrastructure are likely to benefit from new railway projects. On an average, these companies earn more than 10% of their revenues from the railway segment.

Besides this, the budget has proposed to set up a Logistics Corporation to set up warehouses and multi-modal logistics parks. Although this company would be competing with operators such as Arshiya International and Allcargo Logistics, a lot depends on how soon it is set up.

The budget, however, failed to cheer wagon-manufacturing companies as there were no proposal on wagon procurement. Companies like Titagarh Wagons and Texmaco Rail & Engineering are likely to lose on large orders.

A week before, the railway ministry had raised freight rates of commodities by 20-39%. This hike in freight rates would impact the operating margins of private container operators like Container Corporation of India (Concor) and Gateway Distriparks.