Rashtriya Ispat Nigam Ltd (RINL) expects to sign definitive agreements with the Railways in January for the proposed axle manufacturing plant at New Jalpaiguri in West Bengal.
P. Madhusudan, Finance Director, told Business Line that RINL was in discussions with the Railway Board to finalise the drafts terms for the agreements on offtake, land lease and pricing mechanism. “Before January-end, the definitive agreements may be signed and the land handed-over would take place,” he added.
Mecon, after preparing the project report, is now working on the detailed project engineering for the Uttarbanga Rail Karkhana (URK). Madhusudan said URK would be a unit of RINL. According to indications, the project, slated to be commissioned by the end of 2014, may cost Rs 400 crore, higher than earlier estimate of Rs 278 crore.
The RINL unit is to be located on a 47-acre Railways land for a 30-year renewable lease. RINL has decided to pay “a little higher annual lease rent” than a rate of eight per cent on the land value, applicable to only dedicated capacity.
As RINL unit will have capacity of 50,000 pieces of axles a year, larger than the likely offtake commitment of 35,000-40,000 from the Railways, it cannot make use of the opportunity.
The state-owned steel maker has already floated a tender for the forging facility of the unit. Bids for the machining facility will shortly be invited.
The Railways and RINL are in the process of determining a pricing formula for the axles purchases based on the “first principles method”, which primarily considers costs and a variable return.
The axles would be meant for the Railways’ eastern operations. Each axle will have the load-bearing capacity of between 22.9 tonnes and 25 tonnes and be of 210 mm diameter. At present, the Indian Railways depends on substantial imports of axles.
Incidentally, RINL is also considering setting up a wheel plant at Rai Bareily in UP. SAIL’s DSP supplies 45,000 sets a year of wheel and axles of five different types.
jayanta.mallick@thehindu.co.in