The Hindu Business Line : SAIL and Railways — A change of track after the railing

SAIL is examining ways of integrating its future plans with those of the Indian Railways for upgradation of technology and smoother movement of raw materials and finished goods.

ONE CAN call it a sort of love-hate relationship. Hardly a day passes without the Steel Authority of India Ltd (SAIL) and the Indian Railways blaming each other on a variety of issues. One complains about the non-availability of wagons, and the other about the detention of wagons; if one opposes the revision of tariffs, the other is critical of the tendency to use wagons as warehouses. The list goes on. Yet, neither can do without the other.

No wonder, SAIL is now examining how to integrate its future plans with those of the Indian Railways for upgradation of technology as well as smoother movement of raw materials and finished goods. A beginning has been made. SAIL has engaged Rail India Technical and Economic Services to study the internal rail transport systems within the Bhilai Steel Plant and suggest changes to meet the future requirement for higher production. Similar studies will be conducted in respect of other plants. A joint group of SAIL and the Railways is also studying strategies and action plan to meet the growing requirement of steel production. SAIL has planned to invest in rail movement infrastructure at the plants for handling projected increased volumes of traffic in coming years.

The Railways is a major service provider, responsible for bringing in nearly 98 per cent of raw materials into SAIL plants and evacuating finished products out of them. SAIL's total inward and outward freight movement is about 54 million tonnes (inward about 43 mt and outward 11 mt) annually, which is nearly 10 per cent of the total freight carried by the Railways. The annual railway freight payment by SAIL is about Rs 2,000 crore (Rs 1,050 crore inward freight and Rs 940 crore outward freight). By 2012, SAIL's both inward and outward movement will be much larger (80 mt of raw material movement to produce 20 mt of hot metal) and with it the annual freight payment..

With a total production capacity of 12 million tonnes of crude steel now, SAIL has four integrated steel plants at Bhilai, Durgapur, Rourkela and Bokaro, three special steel plants at Durgapur, Salem and Bhadravati and two subsidiaries, MEL Chandrapur and IISCO. It has seven captive mines for iron ore, four for limestone and two for dolomites in Jharkhand, Orissa, Chattishgarh and Madhya Pradesh. The raw materials are moved from captive ore mines, ports (Haldia, Paradip and Visakhapatnam), and coal mines. SAIL has a wide range of product-mix such as structurals, rounds, wire rods, plates, HR/CR products, GP/GC, welded pipes, electrical sheets, rails wheels, axles, coal chemicals and fertilisers.

At the same time, the Railways is also an important customer of SAIL. SAIL's total supplies to the Railways is about one million tonnes per annum, roughly 10 per cent of its total sales. The Bhilai Steel Plant is the major supplier of rails to the Railways, the annual rail supply being 7.5 lakh tonnes. To meet stringent quality standards, SAIL has installed various steel refining processes and quality assuring equipment in rail manufacture. The Railways requirement of longer rails is being met by SAIL — the supply of 26-metre-long rails started in 2002-03, the 78-metre-long rails project has been completed and welding facility for up to 240 metre length is being set up.

The Durgapur Steel Plant is the main supplier of forged wheels and axles to the Railways — the annual supply being around 50,000-60,000 pieces of wheels and 5,000 axles depending on the allocations given by the Railways; design of better heat dissipation wheels with S cross-section developed for the Railways, and SAIL supplies corrosion resistant steel for coach and wagon building.

While the critical role played by the Railways for the steel sector can hardly be overemphasised, it is also true that the Railway loading of iron and steel over the years has registered a low growth. Thus, between 1991-92 and 2003-04, the combined production of pig iron and steel steadily increased from 15.92 mt to 41.37 mt, posting a growth of 8.28 per cent.

During the same period, the corresponding growth in the Railways loading of iron and steel was much lower at 1.09 per cent. The Railway loading fluctuated in a narrow band of 10.97 mt in 1998-99 to 14.34 mt in 2003-04. This is presumably because the primary and main steel producers have always remained the principal customers of the Railway while the secondary producers refrained from using the rail network. What can be a matter of concern is that the share of primary producers in the country's production of finished steel declined from 55 per cent in 1991-92 to about 42 per cent in 2003-04. In the case of pig iron, the fall is much sharper, from 93 per cent to about 19 per cent.

In fact, the Railways faces myriad challenges from the steel sector. The steel market being highly competitive, the steel producers are constantly looking for new opportunities to cut down on costs to achieve optimum solutions across the value chain, including transportation and logistics.

This is because any optimum solution will not only reduce freight costs but also provide flexibility in deliveries to meet the customer requirement in the best possible way. The steel producers may opt for multi-modal transport system such a mix of rail-road or rail-sea, or rail-river/canal to reduce transport cost.

The Railways, in turn, too has to be innovative to cope with the changing situation: It might consider tie-up with the road transport operators (as is being done by Container Corporation of India) to offer consignment delivery at the customer's doorstep and it might even allow more number of piecemeal wagons and examine various options as to how to reduce their transit time.

There are various technological challenges such as how to reduce payload to tare ratio to bring down dead weight, introduce wagons with higher axle load, dedicated freight corridors or commodity specific wagons. Unfortunately, in a situation where politics matters most, the issues like these may not get the kind of attention they deserve.

More Stories on : Railways | Steel | On the move

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Passenger service fee on IA tickets to be taxed

Air India taxiing on recovery path

Revamping Mumbai — The tough road ahead

Dubai Port Intl's acquisition of CSX World Terminals — A box of benefits for Kochi ICTT

Set up autonomous regulators for rail, road, shipping: CII

SAIL and Railways — A change of track after the railing

PM flags off underground section of Delhi Metro

Govt okays Rs 125 cr to APSRTC