Growth streak in railway traffic continues

by Manasi Swamy

Revenue earning freight traffic on Indian Railways increased to 110.1 million tonnes in November 2020 from 108.3 million tonnes in October 2020. This was the highest traffic recorded since January 2020. Compared year-on-year, freight traffic in November 2020 was nine per cent higher. This was the fourth straight month when revenue earning freight traffic recorded a y-o-y growth. After the Covid-19 lockdown shock, the traffic first grew in August 2020, by 3.9 per cent. The growth shot up to a little over 15 per cent in September and October 2020, before moderating to nine per cent in November 2020. This moderation in growth, however, is a high base effect. The growth in freight traffic in August, September and October 2020 had come on top of a 6 to 8 per cent fall in traffic in the corresponding months a year-ago, whereas the November 2020 growth has come on top of a 0.9 per cent growth in November 2019.

The pace of y-o-y growth in freight traffic slowed down in November mainly due to a 0.7 per cent contraction in coal traffic. In fact, coal was the only commodity whose traffic was in the red in November 2020 compared to its level in November 2019. Coal accounts for more than 40 per cent of the total traffic.

Coal traffic on railways for thermal power houses dropped y-o-y by 7.6 per cent in November 2020. Farmers’ protest in the north against farm bills hampered the movement of coal. Coal supplies to thermal power plants in Punjab were the worst affected. Thermal power plants in the state held coal stocks worth 10 days consumption by November end as against stocks of 30 days consumption they normally hold. Some plants saw the stock level drop to as low as worth only 3 days usage. The state witnessed a steep 63.3 per cent contraction in electricity generation in November 2020.

Coal traffic to non-power sector users in November 2020 was up y-o-y by 4.7 per cent, implying greater demand from the industrial sector.

Railway traffic of coal for steel plants was 8.5 per cent higher in November 2020 compared to its year ago level. Traffic of iron ore to steel plants too was up by 19.6 per in November 2020. Also, traffic of pig iron and finished steel grew by a robust 20.2 per cent in November 2020, reflecting higher demand for steel. Finished steel consumption data released by the Joint Plant Committee (JPC) confirms the same. Domestic finished steel consumption grew y-o-y by 11 per cent in November 2020.

Iron ore traffic on railways for export declined y-o-y by 15.3 per cent to 1.3 million tonnes in November 2020. The fall came after 23 consecutive months of a robust growth in iron ore traffic for exports. Iron ore exports have been witnessing stupendous growth for the last two years owing to increased demand from China. Indian steel manufacturers of late had started complaining of shortage of iron ore for domestic consumption. Union Steel Minister Dharmendra Pradhan had said that the government was considering imposition of a short-term ban on iron ore exports. The Federation of Indian Mineral Industries (FIMI) had refuted the claims of steel manufacturers by describing the shortages as ‘artificial’. However, the decline in iron ore movement on railways for exports in November 2020 suggests that miners have probably responded to the steel manufacturers’ call.

Cement & clinker traffic on the Indian Railways inched up from 11 million tonnes in October to 11.1 million tonnes in November 2020. Compared y-o-y, it was 25.7 per cent higher. A robust growth in cement traffic, albeit on a low base, along with continued improvement in steel traffic post festive season, hints at a possible improvement in construction activities in India. Cement (including clinker) accounts for around 10 per cent of the total revenue earning freight traffic on Indian Railways.

Traffic of foodgrain on the railways moderated to 5.1 million tonnes in November after touching an all-time high of 6.3 million tonnes in October this year. Nonetheless, food traffic in November 2020 was a steep 66.7 per cent higher than its year-ago level. Traffic of fertilisers dropped to 5.5 million tonnes in November from its peak of 5.9 million tonnes recorded in the previous month. But, this too was 11.9 per cent higher than the year-ago level. Both, foodgrain and fertilisers traffic in November 2020 was also way higher than their respective pre-Covid levels in February 2020.

Overall the Indian Railways carried its highest level of freight in November 2020 since the pandemic induced lockdown. Traffic levels remained healthy despite festive holidays, farmers’ protest in the north and some disruptions caused by cyclone Nivar in southern states of Tamil Nadu and Andhra Pradesh. The buoyancy in railway freight traffic seen in the last three months is a reflection of economic recovery and also a shift towards rail from road transport owing to improved efficiency of the former.

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Consumer Sentiments Index
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Current Economic Conditions Index
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Quarterly CapEx Aggregates
(Rs.trillion) Mar 20 Jun 20 Sep 20 Dec 20
New projects 3.80 0.83 1.05 0.86
Completed projects 1.77 0.25 0.72 0.58
Stalled projects 0.73 0.11 0.08 0.30
Revived projects 0.42 0.68 0.36 0.08
Implementation stalled projects 10.18 0.09 0.07 0.12
Updated on: 22 Jan 2021 8:28PM
Quarterly Financials of Listed Companies
(% change) Mar 20 Jun 20 Sep 20 Dec 20
All listed Companies
 Income -5.0 -27.6 -6.2 9.0
 Expenses -1.9 -27.9 -10.1 5.8
 Net profit -48.9 -40.3 45.2 35.8
 PAT margin (%) 2.3 5.3 8.3 19.0
 Count of Cos. 4,357 4,351 4,316 218
Non-financial Companies
 Income -9.0 -37.4 -10.4 11.3
 Expenses -4.9 -37.6 -14.0 7.0
 Net profit -50.1 -55.8 29.9 50.9
 PAT margin (%) 3.2 4.5 8.0 19.1
 Net fixed assets 13.3 5.9
 Current assets 3.6 0.8
 Current liabilities 6.2 -2.8
 Borrowings 15.8 8.1
 Reserves & surplus 1.3 4.5
 Count of Cos. 3,241 3,239 3,219 153
Numbers are net of P&E
Updated on: 22 Jan 2021 8:28PM
Annual Financials of All Companies
(% change) FY18 FY19 FY20
All Companies
 Income 8.4 13.5 0.3
 Expenses 9.9 13.8 0.5
 Net profit -41.4 18.5 -11.8
 PAT margin (%) 1.9 2.2 3.8
 Assets 10.9 9.5 9.3
 Net worth 7.4 8.5 4.7
 RONW (%) 3.4 4.0 5.5
 Count of Cos. 29,431 28,732 9,883
Non-financial Companies
 Income 8.6 14.1 -2.6
 Expenses 8.8 14.3 -1.8
 Net profit -10.1 22.6 -24.0
 PAT margin (%) 2.7 3.0 3.9
 Net fixed assets 7.2 5.5 12.4
 Net worth 6.0 8.2 1.7
 RONW (%) 5.6 6.6 6.8
 Debt / Equity (times) 1.0 1.0 0.8
 Interest cover (times) 2.1 2.3 2.6
 Net working capital cycle (days) 77 70 59
 Count of Cos. 23,809 23,199 7,312
Numbers are net of P&E
Updated on: 20 Jan 2021 2:19PM