Railways seeks advance payments from premium customers to improve balance sheet at fiscal-end

Railways has asked its premium freight customers, those whose business with national transporter in a fiscal exceeds Rs 500 crore, to make vance payments for ir 2020-2021 operations, officials said on Tuesday, in a bid to ensure that beleaguered carrier ends current financial year with a healthy balance sheet.

Last year, this financial engineering h brought in an ditional revenue of Rs 18,000 crore for railways under Freight vance Scheme, which offers its premium freight customers tariff certainty for entire fiscal and priority in rake allocation.

vance payment has to be me by March 31, 2020 to avail benefits for 2020-2021 fiscal, a policy document on matter said.

"This is t just about earning ditional revenue, but also building a relationship and ensuring continued business from our major customers. This also ensures that we don't lose m, to say, roways. We are giving our major customers benefits under this scheme which y will orwise t get. It's just a business. Zonal railways have sent out letters encouraging m to avail scheme," a senior railway official said.

In 2019, NTPC, which has a business of Rs 8,557 crore with railways, me an vance payment of Rs 15,000 crore, while Container Corporation of India (CONCOR) me an vance payment of Rs 3,000 crore (its business with railways is Rs 3,729 crore).

Sources say that two private entities have shown interest in scheme for 2020-21 fiscal and will sign dotted lines soon.

Around 50 freight customers h a business of Rs 500 crore or above with railways in previous calendar year, and hence, y are eligible for scheme.

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Central and state government organisations generate most revenue for railways through freight loing.

Private entities like Ultratech Cement (Rs 2,773 crore), Jindal Steel and Power Limited (Rs 1,527 crore), Bhushan Steel (Rs 1,492 crore), Vedanta Limited (Rs 1,104 crore), ani Power Maharashtra Ltd (Rs 798 crore) and Ambuja Cement (Rs 614 crore) are also among railways' Rs 500-crore plus premium customers' list.

In one of letters sent to ani Power Limited, South East Central Railway has encourd it to avail scheme.

"As your power house requires regular supply of coal through rail movement, it is once again reiterated to consider payment of suitable sums as vance freight to avail benefits as applicable. Monday and Friday will be minated two days for according higher priority within same class to traffic under Freight vance Scheme," letter stated.

"In case, you are t able to pay a minimum Rs 500 crore and you wish to apply for lesser amount please feel free to apply so that same may be considered," it ded.

Such letters, officials said, are being sent to all premium freight customers. Through scheme, Railways, officials said, have set a target to at least cross Rs 18,000-crore mark achieved for current fiscal.

This ditional revenue generated through vance freight payments will ensure that railways ends year with a much improved operating ratio -- amount railways spends to earn Rs 100.

Railways ended 2018-19 with an operating ratio of 96.2, just a t better than 10-year low of 98.4 in 2017-18. operating ratio target in Budget Estimates for year 2019-2020 was 95 per cent. 

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