IRFC, IRCTC, RVNL Shares Fall: Why Railway Stocks In Focus Amid LPG Shortage? Meals At Train Stations To Stop?

Railway stocks fell sharply on March 11 amidst LPG shortage crisis. A new report is stating that Indian Railways' catering services provider, IRCTC has directed the caterers to choose alternative options instead of LPG and to inform authorities when LPG-based cylinders are not available. The LPG crisis in India has escalated into panic, confusion and long-queues despite the government's prioritisation of LPG allocations.

Railway Stocks Fall On March 11:

IRFC was down by 1%, while RVNL plunged by 1.5%. Other railway stocks like RailTel Corporation, RITES, Titagarh Rail Systems, and Ircon International plunged by 1% each. But it was IRCTC that took the most hit.

At the time of writing, IRCTC is down by 2.4% on BSE.

LPG Shortage For Railway Stations?

IRCTC On LPG Shortage:

According to reports, IRCTC issued a nationwide advisory; all catering units in the West Zone are asked to temporarily choose an alternative from LPG-based cooking. It told the catering units to switch to induction cooktops, microwave ovens, and other electric cooking appliances for seamless food preparations and meals delivery to passengers travelling by trains.

Under the advisory, IRCTC reiterated that all catering operations should be open and operational at all times, as they play a critical role in serving millions of meals to passengers on a daily basis.

Any disruption in the foods services could lead to passenger inconvenience and operational challenges for Indian Railways.

Apart from this, IRCTC also directed vendors to have substantial Ready-to-Eat (RTE) food products in their inventories. These can become a fallback option in case of supply disruptions during catering services.

As per reports, Indian Railways serve approximately 17 lakh meals per day and about 20% of the total is focused in western zone. Hence, this makes categering services in western zone vulnerable to gas shortage.

Why There Is LPG Shortage In India?

LPG cylinders in India have become scarce and panic has escalated over the shortage of indane gas. Many hotels in cities like Bengaluru, Mumbai, Chennai Delhi, Hyderabad have announced an impact on their operations due to disruption in LPG supplies.

Meanwhile, Prime Minister Narendra Modi held a high-level meeting with Petroleum Minister Hardeep Singh Puri and External Affairs Minister S. Jaishankar to tackle the LPG shortage panic in India, which has escalated since the shutdown of the Strait of Hormuz owing to the US-Israel and Iran war in the Middle East.

Hormuz is one of the largest chokepoints for global oil and gas supply. This maritime passage is crucial for India's oil, natural gas and energy market. Notably, India imports 62% of its total LPG through this passage in the Red Sea. Iran has warned to set vessels ablaze if they try to pass through Hormuz, which has left hundreds of ships stranded. Many Arab countries, which are key exporters of oil and gas, have announced output cuts.

To ease the situation, India has also imposed the Essential Commodities Act, 1955, which is focused on regulating the supply and distribution of petroleum and petroleum products.