Dilemmas of Railways: Any solution?

Dilemmas of Railways: Any solution?

CASE-A

When the price of onion touched ` 60/kg in Azadpur wholesale mandi in Delhi during second half of 2013 Seth Dhanpatlal thought it is a proper opportunity to import onion from Pakistan and Egypt at almost one forth price and sale at Indian market at a competitive rate to capture a big portion of Indian market in the shortest time.  However, the dream to achieve this was not easy.  For importing any item for commercial purpose one need Besides 34 licenses and approval the real bottleneck was infrastructural issue of landing the commodity in any port.

Although onion was much cheaper in Egypt it was not easy to transport it by sea as ships are likely to take more than 10 days to touch the nearest port of Kandla and it was all probable that the consignment would get spoiled in the handling.  Hence Egypt was ruled out.  Now the better alternative was Pakistan.  However, fixing a port was a big issue as onion cannot be brought as coal or any other loose commodity.  Kandla was not a perfect import destination as landing cost including Berthing Cost in Kandla is much costlier than smaller port.  Further there was not much warehousing facility at Kandla.  Even the cost of keeping onion in container in open would be much higher.  In contrast, smaller port like, Navlakhi would provide much attractive feature as it is much near to Pakistan, its berthing cost is much cheaper.  Here there is not much waiting time as it happens in big port. Navlakhi is even 160 kms nearer to Delhi in comparison to Kandla.  Navlakhi Port is an all-weather non major intermediate port.  It is situated on the Southwest end of the Gulf of Kutch in Hansthal Creek.  Here draft is 12 meter.  Its outer anchorage is situated about 5 miles where water depth is 15 meter.  However, this port is primarily being used by loose commodity particularly coal.  In such situation it would not be possible to mix onion with coal.  Further there was no warehousing facility to keep imported onion at Navlakhi port as most space was open space which was being utilized for stacking coal which used to get slow burning and smoke blowing all the time.  After the experiment of Central Warehousing Corporation (CWC) at    Kandla where they have constructed one full length goods-shed along with one of 5 freight lines at the investment of ` 6 crores the response of the market was sluggish.  Initially they leased @ 40 lakh per annum and they had to pay ` 2.50 lakh to IR as land lease cost along with 8% of rented amount.  However, in subsequent year there was no taker rat the rate of previous year.  Hence subsequently it was leased @ 30 lakh per annum. In such no party has turned up to develop any warehouse in any port including Navlakhi. As such there were so many infrastructural constraints and in such situation doing business could be much riskier as one or two mistakes could totally ruin the business.  Although chance of higher profit existed any mistake on the port of party could have a disastrous affect.

Hence Dhanpatlal was still in doldrums to decide whether take all the risk and import onion from Pakistan from any port and try to make profit as much as possible or leave the issue altogether and concentrate on the trading of other commodities in Azadpur Market.  Here question is why doing business in India is so risky?  Why infrastructure of Indian ports are so lacking?  Why don’t IR takes initiatives to provide, near its goods shed warehousing facilities?  Why transporting goods from port to hinter land properly and safely is considered to be risky business affair?  How these facilities can be provided in a integrating manner.

CASE-B

Harprit Singh, a forwarding agent and established businessman of Madhya Pradesh turned bankrupt after participating in the international trade.  His traditional business of dealing with grain in his native state is in deep trouble due to heavy debt incurred in last year export commitment as he has not been to make his rake loaded with Soya bean and DOC (Deiolised Cake- a product being used in making medicines, biscuits and animal feed in developed countries) could not reach timely to the Windmill port where he was loading a medium size ship to Amsterdam.  Due to late arrival of his consignment the ship was detained for eleven hours for which he has to fork out a very heavy penalty.  To readjust his business strategy Harprit decided to shift his reliance on the Indian Railway (IR) and to make arrangement for warehousing his product well in advance near the port itself.  However, his quest for a proper warehouse turned to be another nightmare as there was complete lack of warehousing facility near the port at a reasonable rate.  Although IR has promised to coordinate for facilitating warehousing facility to develop itself in the direction of total logistic service provider, a corporate goal, not a single step was taken in that direction.  Nor ‘Central Warehousing Corporation’ (CWC) has taken any step to construct any warehouse.  There were few private warehouse keepers who have constructed a few sub-standard warehouses to reap the benefit of the situation. They were aware that how the businessman has to pay very high punitive charges for any detention of international freight liner ship.  Hence Harprit has opted to take on lease one such warehouse to overcome the problem.  However, probably his luck was against him as when Harprit got fully ready to play the role of international trader, there was a serious down-turn in American-European economy.  The sluggish market did not improve for months together.  There was no demand of soyabean and DOC in the international market whereas the warehouses hired by Harprit were fully packed.  Due to dumping practices by international players, particularly Chinese one, his company was not able to get a single order.  To make the matter worse, during rainy season heavy cyclonic rain submerged the entire area with rainy flood water.  Rainy water entered in several warehouses, destroying more than 60 per cent due to flooding.  Although Harprit has taken insurance against fire, he never imagined that such heavy rainfall would take place in Western part of country where average rainfall is around 45 cms.  But, by this time everything has gone haywire.

CASE-C

Ghanshyam Patel is a marketing executive of Patel Fieldmarshal of Rajkot which manufactures diesel engines, diesel pumps, diesel mono-pump, centrifugal water pump, diesel generator, AC alternator, submersible pump, marine diesel generator etc.  It produces nearly 60 per cent of all India production of nearly 5 lac diesel engines per annum.  Having 100 full fledge manufacturers of diesel engines with 3500 ancillary units  support  Rajkot has enhanced the production of 2,75,000 engines per annum.  Their production started around in 1963 under the name of M/S. Patel Manufacturers with initial capacity of 80 engines per annum.  They have added  to agricultural and domestic market a variety of Electrical Products like single, three phase mono block pump sets, open well and bore well  submersible pump sets, alternators and centrifugal / self-priming/mud pump.  They also manufacture light weight fuel efficient and compact diesel engines ranging from 5HP to 24HP.  Presently Fieldmarshal engines have multipurpose application in various fields such as marines construction equipment, power generation, industrial, agricultural, automotive etc.

Amit Pandya is another marketing executive of ECHJAY Industries of Rajkot which incorporates a full-fledged forge shop, machine shop equipped with CNC machine, die shop, tool room, heat treatment plant and an ultra-modern metallurgical and metrological laboratory all under one roof.  It has over 1,150 work force and total sales of US $ 75 million.  Its plant caters to the range and quality demands of core sector industries like petro chemicals, fertilizers, oil refining, automotive, railways, heavy engineering, nuclear power generation oil and natural gas.  Its client includes Mahindra & Mahindra Ltd., Tata Engineering & Locomotive Company Ltd. Tractor & Farm Equipment Ltd.  The company emphasizes strict quality at every stage and ensures appropriate production and customizes service as per the requirement of client. This has been duly acknowledged by RITES, RDSO, EIL etc.

The commonality between Ghanshyam Patel and Amit Pandya is that both of them are frequent traveler out of Rajkot to different parts of country to cater the need of different customers and rope in new clients.  For them railway is the most convenient means to cover different parts of the country.  But their journey to different cities from Rajkot is not an easy ride.  Besides non-availability of confirmed berth, the availability of train itself is very limited as except Mumbai, Jabalpur, Ahmedabad and Surat here most of the trains are weekly or bi-weekly.  Even for the capital of India there is no super-fast train daily.  Whatever trains run, these take excessive long time between Ahmedabad and Rajkot.  Hence they have to rush either Ahmedabad or Vadodara to catch the train as per their choice or requirement.