SAIL, Indian Railways to ink pact for manufacturing Passenger Coaches

NEW DELHI: Aimed at expanding rolling stock product basket, steel major SAIL has initiated talks with the Indian Railways to jointly set up a passenger coach making facility with an estimated investment of Rs.1,000 crore.

“We are in talks with the Railways for passenger coaches. We have different locations in mind but are yet to finalise. The detailed project report is getting readied,” SAIL Chairman C S Verma told RailNews.

Passenger coach is the missing link in SAIL’s offerings to the Railways though it is the dominant supplier of wheels, axles and tracks. SAIL is also all set to roll out wagons by the end of next year. Steel constitutes almost half of the price of a passenger coach.

The proportion of shareholding in the proposed joint venture is yet to be worked out, Verma said, adding that SAIL would not insist on being a majority shareholder.

“As long as they guarantee us off-take, we are comfortable for any combination of shareholding. This is not an issue at all,” Verma said.

It would require around Rs 1,000 crore investment to set up a plant to have the capacity to manufacture 1,000 coaches, he added.

The MoU for the proposed venture is believed to be signed soon with the Railways expanding its reach and with this, need for passengers coaches was also on the rise. Indian Railways has the largest rail network in Asia ferrying around 130 lakh passengers on a daily basis.

Manufacturing of coaches would be a win-win for both SAIL and the Railways as it would help the steel major to hedge its risks during industrial downturn and the Indian Railways with the easy-availability of coaches.

Asked whether SAIL would venture into manufacturing metro coaches, he said as and when any opportunity would crop up, it would look into making a foray.

Verma said the work on the Waggon plant at Kulti in West Bengal is in progress and the facility would roll out about 1,500 waggons towards the end of 2014.

“Construction of the project has already started. We have already placed orders for the plant and machinery. It will start manufacturing waggons by the end of 2014,” he said.