Railways Lender An Opportunity For Steel Mills

Indian Railways has floated a global tender to procure rails and the state-run freight and passenger carrier is seeking to buy 700,000 tons of rails for track upgrades, Railway Minister Piyush Goyal said.

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Analysts say apart from SAIL, the move will ensure steady supplies and competitive prices and benefit Jindal Steel & Power Ltd.

Prime Minister Narendra Modi is pouring about ₹8.6 trillion to upgrade the aging lines of the network that was started under British colonial rule. Giant tracklaying projects are underway to modernize passenger and freight movements to cut travel time.

The tender gains significance as Steel Authority and Jindal Steel have been trying to boost market share and profits after reporting losses for at least two straight years even as they battle high debt levels. Indian Railways expects annual demand for steel rails to rise to 1.5 million tons in the year ending March from about 800,000 tons in the prior 12-month period.

Recently, Steel Minister Birender Singh asked SAIL to ramp up production from its new rail mill in Bhilai to meet the requirements of its major customers. “The company should chalk out a time-bound action plan to cater to the Indian Railways’ increasing demand.”