Supply of 5 lakh tonnes per annum of rails to Indian Railways likely over next five years
Encouraged by opportunities in rail orders in the domestic space, Jindal Steel & Power (JSPL), India’s only private manufacturer of rails, is eyeing at least 5 lakh tonnes of such orders per annum over the next five years, it is learnt. Also, the company is exploring some rail export orders to newer geographies like the Middle East, Brazil as well as Uganda and Kenya in Africa.
Going forward, JSPL expects to double its total revenues from rail and allied products. At present, railway products comprise more than 10% of the company’s volumes and around 13% of the total revenues.
Regular and consistent demand from Railways is very important for the company’s revenues, as per sources. Where the domestic market is concerned, JSPL, in fact, is eyeing repeat orders from Indian Railways (IR). IR has a projected annual requirement of 17 lakh tonnes of rails for the next five years, starting financial year 2018-19. The Steel Authority of India (SAIL), as per sources, has a capacity of 15 lakh tonnes and is likely to produce and supply close to 12 lakh tonnes per annum. That leaves a tremendous opportunity for JSPL to bridge the gap of up to 5 lakh tonnes per annum. Hence, at a conservative estimate, JSPL could be looking to supply 5 lakh tonnes per annum of rails to IR over the next five years.
Also, in addition to long rails orders from IR, JSPL is expecting orders of a minimum volume of 2 lakh tonnes per annum of 13/26 metre rails from Rail Vikas Nigam Limited (RVNL) and IRCON International Limited (formerly Indian Railway Construction Company Limited).
At present, the rails are being manufactured at JSPL’s one-million-tonne-per-annum rail mill that forms part of its 3.6-million-tonnes-per-annum (mtpa) integrated steel plant at Raigarh, Chhattisgarh. But, keeping in mind the growing demand from IR, RVNL, IRCON, the Dedicated Freight Corridor Corporation of India Limited (DFCCIL) and Metro Rail, JSPL will ramp up production of its rails. The company, at present, has the capacity to produce 6 lakh tonnes of rails per annum.
At its RUBM mill at Raigarh, JSPL produces universal columns, beams and channels and sheet piles, crane rails 80/100/120/150 in addition to rails. JSPL is also exploring the possibility of adding ZU 1 60 asymmetrical rails which are key requirements of IR, RVNL, IRCON, DFCCIL and Metro Rail for making switches/ turnouts. Apart from the domestic companies, JSPL is supplying rail products to neighbouring countries like Bangladesh and Iran. It has exported 1.5 lakh tonnes to Iran through STC and 11,200 tonnes to Bangladesh. In fact, the company is in the process of supplying another 24,000 tonnes to Bangladesh. Importantly, JSPL is eyeing some orders in the Middle East, Brazil, Uganda and Kenya.
Rails require high standards of quality backed by clean steel-making, technical and manufacturing skills. These are high-precision items where hardness and durability are crucial. The focus is on reducing residual stress through lesser number of joints to eliminate fracture of rails. JSPL has been supplying 260-metre-long rail panels with only two welds, thereby improving safety. JSPL also has the capability to produce higher grade of rails – the head hardened ones.
The company says that through the supply of rail and allied products, it is contributing to the government’s Make-in-India initiative.
Meanwhile, JSPL has won an order from RVNL to supply 89,042 tonnes of UIC 60 kg IRS T-12 880 grade 13 metre rails for its upcoming projects. The order is valued at around INR665 crore. A notification of award for the same was issued to JSPL on May 8, 2019 by RVNL.
“It is a privilege to be awarded this contract which reflects the confidence Indian Railways has reposed in us based on our recent performance. We are grateful to RVNL for reposing trust in our capabilities to deliver for the nation. This contract will provide an important foundation for our future rail business,” Naushad Akhter Ansari, Joint Managing Director, JSPL, said in a statement. “This order is indicative of JSPL’s strategic commitment to growing its footprint in the domestic rail segments.
It is a great endorsement of our products and services, and securing another important rail contract from Railways in less than a year is a source of great pride,” he added.
Earlier, in July 2018, JSPL had bagged the first-ever global tender for supply of rails to IR. This tender had seen bidding by eight leading players amongst which were the world’s seven top manufacturers of rails.
As per the terms of the global tender, JSPL was to supply close to one lakh tonnes of long rails, worth INR 568 crore to IR over a period of one year. It had completed the delivery in a record time, four months ahead of schedule. Over and above, JSPL secured an additional order to supply 30,000 tonnes of rails under this global tender.
“The RVNL order reinforces our expertise and product quality combined with our commitment to meet tight delivery schedules. We are glad to have always kept our commitment to our client as our top most priority.
We look forward to the successful completion of the order and are optimistic regarding the potential to secure additional orders in the coming years,” said Ansari. Part of the USD 22-billion OP Jindal Group, JSPL has a presence in steel, power, mining and infrastructure sectors. JSPL set up India’s most modern rail mill at its Raigarh plant in 2003 to become the second player after SAIL to produce rails in India. Its rails are one of the longest which can go up to 480-metre rail panels through flash butt welding carried out within the plant premises.