Gallantt Ispat shares climb 10% on agreement to buy railway rakes

Shares of Gallantt Ispat surged 10 per cent in Monday's trade after the company entered into an agreement with East Coast Railway, Bhubaneshwar, Odisha to buy and own railway wagons to get rid of wagon shortfall with the lndian Railways. The move is seen saving freight cost for the company.

Unavailability of rakes, a collection of wagons pulled by an engine, by lndian Railway is a major concern and pet peeve of the company.

Gallantt Ispat said rakes are provided by the lndian Railway on priority by payment of 15 per cent premium on freight charges. Even then, the availability of railway rakes is very difficult, Gallantt Ispat said. Availability of railway rakes is more difficult through placing normal indent nowadays and recent past, it added.

"Hence, the company is in the process of acquiring two railway rakes under the General-Purpose Wagon lnvestment Scheme (GPWIS) of Railway Board. Thus, lndian Railways offer l0 per cent rebate on railway freight rate for 15 years under the GPWI Scheme. As such, altogether company would be able to save 25 per cent on the freight cost (10 per cent rebate plus 15 per cent on premium indent).

The stock rose 10.30 per cent to hit a high of Rs 75.70 on BSE.

Owning two railway rakes would cost the company around Rs 55 crore but having own rakes would assure that raw materials are dispatched timely, hassle free and cost effectively.

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First rake is expected to be delivered in the last week of July and the second one in the month of November.

"If everything goes as per the expectation of the management, company would explore of owning more railway rakes in future to cater the need of raw materials of the Company with faster movement, Gallantt Ispat said.

 

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