Former Congress MP Naveen Jindal-backed Jindal Steel and Power (JSPL) has bagged the contract to manufacture and supply 97,400 tonnes of rail to Indian Railways in a first such move by the national transporter to buy rails from the market.
In the final reckoning of the global tender, other steelmakers such as ArcelorMittal, Nippon, Voestalpine of Germany, England-based British Steel and Denmark’s East Metal got edged out as, sources said, their “processes and testing” specifications did not match the laid down parameters of the tender in terms of quality suited for Indian conditions. Two companies from China did not qualify as the genuineness of their certain eligibility documents were not found to be satisfactory, sources said.
In effect, JSPL remained the only bidder to qualify with a financial bid. The company bagged the contract for around Rs 565 crore in what was estimated to be a Rs 2,500-crore purchase order for 4.87 lakh tonnes of long rails of 60 kg-90 ultimate tensile strength (UTS) variety of steel. The idea was to divide the tender among a few players keeping in view the huge quantity.
Now Railways is likely to float separate tenders in phases for the remaining quantity with new specifications for the steel.
“Some of the international players wanted European standards of rail testing to be part of the conditions as they did not match Indian standards, which are quite different,” said a government official.
JSPL has been given a year’s time to supply the quantity even though officials said that efforts will be to get them in about six months considering the pace of work in progress. “It is a new beginning for us. We will scale up and do everything required to meet the demand,” Vijay Kumar Chama, executive vice president of JSPL told The Indian Express.
The next phase of the tender for the remaining 80 per cent quantity will be for tougher rails of 60 kg- 110 UTS variety because Railway Board is in the process of finalising new standards that mandate that these rails will be used for axle load of 25 kg in rolling stock.
The Jindals have been vying for a toehold into the rail supply business by Indian Railways since 2005. “We supply rails to Bangladesh, Iran and Eastern Dedicated Freight Corridor,” Chama said.
State-owned SAIL, which has been exclusively supplying rails to the transporter, was not allowed to bid since this particular requirement arose only because SAIL had not been able to scale up and meet the existing need of Indian Railways in the renewed pace at which it was needed, sources said.
The national transporter’s policy has been to procure only from steel citing strict quality control and utilisation of state-owned capacity. However, the PSU steel major has been lagging in meeting the demand from the transporter. In 2016-17, for instance, it supplied around 6.2 lakh tonnes of rails against an order of 10.05 lakh tonnes.
In 2017-18, it supplied around 9 lakh tonnes falling short of the demand. This year the demand for rails was estimated to be much more because Railways has stressed on speedy renewal of overaged tracks apart from laying new lines, doubling and gauge conversion works. The estimated requirement is around 15 lakh tonnes. The figure of 4.8 lakh tonnes was arrived at after working out how the demand a supply mismatch vis-a-vis SAIL and also to get a price advantage.