Lalu Prasad has, perhaps understandably, chosen to go the populist way, cutting second class non-suburban passenger fares by 5 % and leaving freight tariff unchanged save for some tinkering. The benefit for passengers on the whole is too minor to make an impact; travelling 2,000 km will be get cheaper by Rs 14. A pragmatic approach would have involved cutting freight rates through further rationalisation of freight classes. That would have helped companies cut costs and hopefully benefited consumers. To Lalu’s credit, freight classes have been rationalised over the past four years, but much more should be done. The lowering of the highest class to 200 from 210 will undoubtedly benefit oil companies. However, is there any guarantee that there will be no mid-year increase of freight rates for some other commodities? Further, railways must keep up its efforts to improve passenger earnings and its share in total earnings. For the current fiscal, passenger services are estimated to be 28 % of the earnings from all services while that from freight would 66 %. Budget estimates for 2008-09 expect earnings from passengers at a lower 27%. Clearly, the skew indicates subsidisation of significant number of the 6.7 billion (including 3.8 billion suburban) passengers the railways expect to ferry this year. The practice of subsidising lower classes with earnings from freight and to some extent upper class passengers must cease. The operating ratio may improve from 79.6 to 76.3 in ’08-09 but is likely to deteriorate later because of the impact of the pay commission. More importantly, the railways must accelerate the pace of modernising its network and completion of ongoing projects. The increased loading of wagons will over time speed up the wear and tear of the rail infrastructure, and so pre-emptive measures including strengthening of weak links such as bridges are needed to avert accidents. Introduction of new trains could lead to congestion of the network and slowing of train movement, at least till signaling is upgraded and new lines are laid. Also, rather than announcing new projects and thus spread resources thin, Lalu would have done more justice if he had focused more on completing critical projects such as freight corridor and utilisation of land under the PPP route.
Archive for March 16th, 2008
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Ghayal
March 16th, 2008 
krishna Rajkumar Santoshi’s directed and Dharmendra’s produced film “Ghayal” is the story of an amateur boxer (Sunny Deol) who has suffered frustration at the hand of police while trying to trace his lost brother (Raj Babbar). The music of this 1990 hit was done by Bappi Lahiri. The movie’s plot begins with Sunny reporting his missing brother in a police station which refuses any help but tries to mess up the case amidst bureaucratic protocols. When Raj’s dead body is found, Sunny is framed with charges of having killed his father and of also having had sexual relations with his sister-in-law. Sunny’s fight for justice begins when he breaks free from the jail with a few convicts whom he befriended while in jail. Then, he starts investigating into his brother’s death himself during which he seeks comfort and recluse with Meenakshi Sheshadri, the leading lady of the movie. The movie ends with Sunny finding the real culprit behind the crime and killing him. The movie was one of the early movies where Sunny Deol played the angry civilian who has to take matters in his own hand to seek justice in an ever increasing corrupted Indian administration. The movie had all the flavors which the audience can expect from a complete commercial movie aimed at providing 100% entertainment. Sunny’s dialogues became a rage through out the nation and inspired the common men to look towards their daily life activities with more optimism in the belief that the good will eventually triumph. Sunny’s job as the protagonist was very commendable through out the movie and is responsible for the talks of a sequel of the movie being still in the air.
THE MYSTERIOUS FALL
March 16th, 2008 krishna One of the baffling episodes in the market this February has been the collapse of the JP Associates stock. It was Rs 510 at the start of the year, corrected to Rs 370 by the end of January but it is the fall since then to Rs 250 which is mysterious. The second leg of the fall has its genesis in a global investor conference organised by an influential investment bank where the company presented and a harmless slide in that presentation gave the listed JP associates only a 55 per cent economic interest of its arm JP Infratech, which houses the multibillion dollar Taj Expressway project. Wire money online to India with Xoom.com for as low as $4.99. Investors were aghast; after all they had assumed that JP Infratech was always going to be a 100 per cent subsidiary and the entire project upside would be captured by the shareholders of the listed entity. They were now being told that 45 per, cent would be held by promoters. When confronted at the conference the JP associates official confirmed the news; the next morning the stock tanked 10%. Within minutes the vice chairman of the company was on CNBC TV18 clarifying that JP associates would own the entire 100 per cent of JP Infratech, yet the stock failed to recover. Grapevine has it that calls were made by even Union Ministers to ascertain the facts with Manoj Gaur though one cannot be sure of these things. I also hear that the management’s “ostensible” reason for splitting the shareholding was that they had to share ownership with certain politicians from UP without whose blessings the deal may have been difficult to bag. But all this is hearsay. So, essentially the management had indeed considered such a move but had to back off or reverse it on investor/political pressure. This has left a bad taste in the mouth for large investors. It’s a well owned stock, FIIs own large chunks of and mutual fund houses own hundreds of crores worth of stock. This institutional holding is perhaps a hangover now, the reason why the stock refuses to bottom out despite having lost half its market cap this year. Trust has been violated, or at least that’s the perception. The Gaurs of JP need to do some damage control and assure investors they won’t attempt such side moves. [...]
