Indian Railways News

Indian Railways opens door to private steel manufacturers

Indian Railways has floated a global tender to procure rails, a move that may end the monopoly of state-run supplier Steel Authority of IndiaBSE 0.98 % Ltd. as Asia’s oldest network seeks to plug a supply shortfall.

The state-run freight and passenger carrier is seeking to buy 700,000 metric tons of rails for track upgrades, Railway Minister Piyush Goyal said. The move will ensure steady supplies and competitive prices. Jindal Steel & Power Ltd., one of the biggest non-state steelmaker, may benefit as it’s the only other local producer of this grade, according to Goutam Chakraborty, an analyst at Emkay Global Financial Services.

“If Steel Authority cannot supply, then they will go in for other producers. So in that way, JSPL will definitely be benefiting,” Chakraborty said by phone from Mumbai. “The railways’ first preference will always be Steel Authority.”

Prime Minister Narendra Modi is pouring about 8.6 trillion rupees ($132 billion) to upgrade the aging lines of the network that was started under British colonial rule. Giant track-laying projects are underway to modernize passenger and freight movements to cut travel time.

Market Share
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.

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