Railways takes over RINL’s forged wheel plant in Raebareli

The Indian Railways has taken over operations of the forged wheel plant of debt-laden RINL (Rashtriya Ispat Nigam Ltd) at Raebareli in Uttar Pradesh., officials in the know told businessline.

The take over terms include part payment of cash to the steelmaker -- pegged at ₹800-900 crore -- and a transfer of ₹1000 crore of RINL’s debt to the forged wheel unit. 

“Necessary payments have been made,” the official said. 

• Also read: RINL in talks with Paradip port for “commodity loan”

The takeover occurred in April, marking the beginning of this fiscal year, and Railways are already investing in capacity ramp-up at the unit.

The nation’s second-largest steel CPSE, RINL, falls under the Ministry of Steel. While the Steel Ministry retains control of the steel plant, known as Vizag Steel, the Railways now own and oversee the forged wheel unit.

“Railways have started working at the Raebareli plant. Further investments in it will happen,” the official said. 

The plant was set-up, reportedly, at a cost of ₹2250 crore, with the capacity to produce 80,000 wheels a year. 

“By this year-end, the unit should be ready to be operational at full capacity. Ramp up will happen in subsequent years,” another official said. 

• Also read: Debt-laden RINL looks at more land sale to secure working capital, reduce borrowings

A forged wheel is crafted from a billet, a large solid metal square. The billet undergoes heating and high pressure to form its shape. These wheels are commonly used in wagons.

Queries have been sent to RINL.

Railways: RINL’s white knight

Incidentally, RINL had received initial orders of around 2,000 wheels, and were delivered in FY23. 

However, at various meetings of the Core Group of Secretaries on Strategic Disinvestment  (CGD), it was pointed out that “the plant was unable to operate at full capacity due to several reasons”.

The issues included RINL’s financial constraints and lack of experience in forging operations.

It was noted during these meetings, that there was  “little scope for raising further resources” (by RINL).

Accordingly, discussions in 2023 focused on the piece-meal disinvestment of RINL. 

While land auctions was seen as a way out, a proposal was floated to outsource operations at the forged wheel plant. 

This was when the Railways - which has an approximate requirement for 80,000 wheels annually - was approached for take over.

The Railways has requirement and expertise, while transfer of ownership would require a Cabinet approval, since it was an inter-ministerial transfer. 

A proposal was also mooted to see if another CPSE, SAIL, would be running operations at the forged wheel unit. 

If required, another option proposed was Railways takes over land and the unit, and then outsources operations to SAIL. 

“Technically, Railways have the expertise. And there was no point in bringing-in SAIL again. So around Jan - Feb this year it was finally decided that Railways will take over the unit and run it themselves,” another official said. 

Push for exports 

According to the official, there will soon be a push for export of forged wheel. 

Apart from ramping up capacities at Raebareli (forged wheel), the consortium of Ramkrishna Forgings and Titagarh Wagons to set up a manufacturing unit with an annual capacity of producing 228,000 wheels is on course. 

This pushes overall capacity of forged wheel making to nearly 300,000 across these two units.

“The Ministry has given an assured offtake of 80,000 wheels a year, whereas the remaining would be pushed for exports specially to markets in Europe, Africa and LatAm,” the official said. 

India currently imports various types of forged wheels from the UK, Brazil, Japan, Russia, and Ukraine. The import bill is around ₹520 crore. 

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