7/30/2019 Freight Wagon

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SHIVENDRA KUMAR SINGH

GHAZIABAD

FOR over 15,000 small and medi-um enterprises operating from theindustrial city of Ghaziabad, the

growth story of Modern Industries couldwell be the proverbial beacon of hopeand inspiration. The group, which start-ed as a lantern-making factory way backin 1941, diversified into steel, oxygencylinders and textiles in the followingdecades, and finally established itself asone of the premier suppliers of freightwagons to the Indian Railways.

We are one of the two companieswhich manufacture freight wagons inthe entire north India, says BharatBhushan, vice president of the`150-crore company that produces 4,500wagons annually. According to MrBhushan, of the total 2,30,000 wagonscurrently in use by the railways,Modern Industries has contributed tono less than 30,000 wagons. Railways

have plans to make its dedicated freightcorridor (DFC) project operational by2017. This will increase the demand offreight wagons by almost 50 percentand will further fuel our growth, saysMr Bhushan.

To meet this projected spurt in de-mand, Modern Industries is thinking ofequipping their unit with robots andmake it fully automatic. The biggestproblem that we always face is labour.Even though the cost of each robot issomewhere around`3-4 crore, it willwork out to be in our favour in the longrun, says Mr Bhushan.

There are 13 freight wagon manufac-turers in the country out of which sevenare government and three are privateplayers while three more players arecoming up. The demand for current yearis over 15,700 wagons, which will be ontender basis. We are expecting to gar-ner a contract of 2,000-2,500 wagons,considering the quality we give and thereputation we have made over several

decades, says Mr Bhushan.As the managing proprietor Sanjay

Bindal puts it: It is with legitimate pridethat Modern Industries can speak aboutits profile, performance and prosperity.To be able to survive and thrive in theemerging new environment wherecompetition is stiff and appetite for ex-cellence is a big challenge, the companyhas succeeded in putting its market ri-vals in the shade.

Spread over a sprawling 26 acre, theunit is situated on the main GT road atSahibabad and is connected to an Indianrailway system by a private line. Thecompany has a fully integrated plant withinstalled power generation system.Modern Industries officials take pride inits investments in R&Dthat is to thetune of`50 lakh annually and whichhas helped them come out with somelandmark innovations. We were thefirst company to bring short blastingtechnique into the industry. The tech-nique is used for surface preparation of

the wagons, says Mr Bhushan. Weare also the first company to make cor-rosion-resistant wagons made fromstainless steel. Earlier they were made ofmild steel.The company makes 10 different typesof wagons, which includes oil tankersand vehicle careers. The wagons comebetween the range of`25- 45 lakh de-pending upon the type and size of thefreight wagons.

WHY WE NEED MORE WAGONS

Indian Railways draw more than 70percent of the revenue from the freightsector and uses the profits to subsidizethe passenger segment. This year be-tween April and June, Indian Railwayscarried over 233.77 million tonnes offreight, an increase by 15.42 milliontonnes against the last years 218.35 mt.The freight traffic is increasing at therate of 8-11 percentyear on year.

Mr Bhushan be-

lieves that railways will play a muchbigger role in the transportation of alltypes goods in the times to come. Thiswill minimize delivery time, cut downrisks (accidents etc) save resources likefuel and minimize cost. He explained itthrough simple mathematics. A freightwagon can carry 63 tonnes of goods.There are 23 wagons attached to a sin-gle locomotive that makes 1449 tonnesof freight carried in one go. While atruck carries 5-6 tonnes. Assuming thatit carries 6 tonnes in best-case scenario,it will still require over 241 trucks tocarry the same load. Congestion on theroad and the toll it takes on it are notaccounted in the economics. AndModern Industries, working quietlyfrom a corner of Ghaziabad, is happy tobe an important cog in the wheel.

shivendra.kumar@timesgroup.com

Business Street 3WWW.ECONOMICTIMES.COM

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Short Term Portfolios to

Generate Decent Yields

Greasing the Freight Wagon WheelsModern Industries in Sahibabad has contributed to the smooth running of Railways wagons for more than five decades

As per a return sheet provided by Delhi-based MSJ Capital,even if the equity component in an MIP logs 25 percent nega-tive returns, at current yield, the debt portion is expected togenerate 3-5 percent returns. If the equities market remainslocked in a narrow range, the debt portion in MIPs could gen-erate 8-8.5 percent. If the equities market registers a minorrally, the overall portfolio returns could be in the range of 10-14 percent, the MSJ return sheet said.

Investors will benefit from higher accruals in the debt por-tion. They have the advantage of investing at lower levels ofequity 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 10-15 percent returns on MIP portfolios.

As per fund managers, MIPs do well when equities and debtare trending with a positive outlook. MIPs work best when in-terest rates are on a downward trajectory and equities poisedfor an uptrend.

A section of debt fund managers is still waiting for clearersignals on interest rates. Were waiting for some more clarityon interest rates. We dont expect RBI to resort to aggressivemonetary tightening from current levels, said Lakshmi Iyer,head-fixed income, Kotak Mutual Fund.

Iyer says investors with a lower investment horizon (lessthan one year) can consider locking investments in shorttermdebt funds. At current rates, short-term debt portfolios willgenerate decent yields for investors, she said.

MIPs work best when

interest rates are on a

downward trajectory

and equities poised

for an uptrend