The Railways' plan to invest massively in modernising rail network and infrastructure will augur well for steel makers such as SAIL and Tata Steel. Such a move will trigger steel consumption, which has seen a sluggish growth in the current fiscal.
“The four-fold increase in investment over the next five years at Rs 7.35 lakh crore will open up a lot of opportunities for us,” said SAIL Chairman, Mr C.S.Verma. SAIL is the largest steel supplier to the Railways, estimated at one million tonnes annually.
The Railways Minister, Mr Dinesh Trivedi, on Wednesday rolled out plans to renew and upgrade nearly 19,000 km track to run heavier freight trains and passenger trains at high speed. The Railways plans to spend Rs 63,212 crore on track modernisation in five years. Of this, an allocation of Rs 6,467 crore has been made in 2012-13, about 11 per cent of the total plan outlay.
Besides, it will invest in new facilities to upgrade coaches and introduce new wagons with higher axle and payloads to improve productivity in the next five years.
With an emphasis on improving safety, the Railways plans to progressively shift to longer length and heavier rails of 60 kg a metre from the present 52 kg a metre. It also plans to manufacture crash-worthy coaches with proven anti-climb features of not toppling during accidents.
“New trains, new railway stations, new lines for Kolkata Metro and gauge conversion are all positive indicators for increase in steel consumption,” Mr Verma said. SAIL is setting up a new facility in Bhilai to produce heavier rails and to cater to rail-based mass rapid transit systems like metros.
The wagon manufacturing facility being set up jointly by SAIL and RITES at Kulti is likely to commence operations towards end of 2012-13. Mr Trivedi said a new wagon manufacturing facility is being proposed at Sitapalli in Orissa and a rail coach factory at Palakkad, Kerala. Two new coach factories are also being planned in Karnataka and Gujarat.
Trigger consumption
Mr Sushil Maroo, CFO of Jindal Steel and Power Ltd (JSPL), said the Rail budget will trigger consumption of both long and flat products in the years to come. “We hope that there will be more of demand with the increase in investment by the Railways,” he added. JSPL is setting up a plate manufacturing facility in Angul, Orissa.
The steel makers have seen a sluggish growth in consumption in the current year on account of decline in offtake from sectors such as automobile and consumer durables.