Date:25/02/2006 URL: http://www.thehindubusinessline.com/2006/02/25/stories/2006022503940900.htm

Back Steel sector sees marginal benefit

Our Bureau

New Delhi , Feb. 24

The steel industry has, in general, welcomed the Railway budget, but feels that the concessions proposed in tariff rates would only help marginally in improving the bottom lines. However, the stress on improving railway infrastructure would lead to higher demand for steel.

The loyalty discount scheme as introduced by the Railway Minister would have only an impact of around 7-8 crore on the overall industry, steel company officials said.

According to this scheme, during non-peak seasons, if over 90 per cent of the production of any steel or cement factory is transported by rail, a discount of 1 per cent would be given. The discount of 0.5 per cent will be offered of more than 50 per cent of the total output is transported by railways.

This discount would be applicable only for finished products and not for raw materials or clinkers.

According to Mr Musa Raza, President of the Indian Steel Alliance (ISA), the very fact that freight rates have not been increased is a welcome step. However, he feels that there was a case for reduction in freight rates, particularly in view of the one million tonnes of additional imports, which would have an impact on steel prices.

According to Mr V.S. Jain, Chairman, Steel Authority of India Ltd (SAIL), "We welcome the proposal for investments earmarked for freight corridor, 550 km of new railway tracks, 1,100 km of gauge conversion, 435 km of doubling of lines besides 25 per cent increase in wagon manufacturing. These will help to boost demand for steel."

"So far as SAIL is concerned, the budget is a balanced one with marginal overall impact," he said.