A feud is simmering between public sector steel units SAIL and RINL as the former is unwilling to let go of its status as the sole supplier of forged wheels to the Indian Railways. SAIL’s objection to Vizag-based RINL becoming a co-supplier to the railways is notwithstanding the fact that the latter is already setting up a Rs 1,600-crore forged wheel unit at Rae Bareli in Uttar Pradesh, backed by an assured off-take deal signed with the national transporter in 2014.
SAIL has a forged wheel plant at Durgapur in West Bengal with an annual capacity of 72,000 units, which is expandable to 1,00,000 units with a minor investment. This, it believes, would meet the entire projected needs of the railways by 2020-21. The 1,00,000-units RINL plant is being set up on land given by the railways and it is likely to be operational by September 2018. The plant’s capacity could potentially be doubled to 2,00,000 units in the future.
The Indian Railways has a projected requirement of 72,200 wheels in 2017-18, which can go up to 1,04,500 units by 2020-21 and further to 1,56,000 wheels by 2026-27. Currently, the railways buys 48,000 wheels from SAIL, and imports the remaining. SAIL is not operating its Durgapur facility for forged wheel at full capacity. The railways’ demand for forged wheels for LHB coaches is gradually shifting to cast wheels and thus, demand for such wheels may not go up much in the future. The prevailing and projected demand-supply scenario has prompted the steel ministry to intervene in the matter. At a recent tripartite meeting between SAIL, RINL and the railways, steel secretary Aruna Sharma is learnt to have instructed SAIL and RINL to come up with a solution so that neither of them incurs losses due to the addition of such capacities.
Sources said SAIL chairman PK Singh, in the meeting, said that following expansion, SAIL will be capable of supplying the railways’ entire future requirement, including those which are being imported. RINL chairman and managing director P Madhusudan, however, said that RINL started working on the project only after signing the assured off-take and land lease agreement with the the railways in October 2013. RINL has also placed order for the main technical packages in total turnkey basis. Civil work at the site of the main package has also been started.
However, talking to FE, Sharma said, “Future capacity addition of the forged wheels may be done based on the viability and economies of the market. I have asked both of them to come out with demand projections separately.”
However, the demand for forged wheels to the tune of 10,000 units a month is expected by metro rail projects across the country by 2019-20, and may also increase further as the government is planning to take metro rail services in Tier-I and Tier-II cities in the future.
Sources said the government may ask SAIL to consider replacing the requirement of imported forged wheels and RINL to develop expertise for production of forged wheels used in metro rails.