RINL in talks with SBI for Rs 1,600 crore debt for UP project

Firm has product price formula of production cost plus 10% return per set of wheels

State-owned Rashtriya Ispat Nigam Ltd (RINL) is close to tying debt for its Rs 1,600-crore forged-wheel project planned for the railways in Uttar Pradesh.

“Talks with State Bank of India (SBI) are in the advanced stage for a Rs 1,200-crore debt we need for the unit to be set up over 50 acre at Rae Bareli,” Chairman and Managing Director P Madhusudan told Business Standard. 

“Funding will be entirely done by RINL and the railways will be providing land for the project,” he added.

The steel producer is also in talks with two other banks for the debt tie-up. "The forged-wheel plant is a first-of-its-kind in the country. Until now, the Indian Railways was importing these wheels," explained Madhusudan. 

The 50-acre land procured for setting up the one lakh wheel sets along with a township for RINL workers is part of the railway's factory area in Uttar Pradesh. RINL has already worked out the product price, with the railways in turn assuring fixed revenue stream along with assured margins for itself.

“We are using a price formula of cost of production plus 10 per cent return on investment. This assures us a margin as well as steady revenue flow,” said Madhusudan. The forged-wheel plant is meant for high-speed trains and is expected to be commissioned by 2018-end. RINL is among the large producers of steel in the country along with SAIL, Bhushan Steel, JSW Steel and Jindal Steel & Power, among others. For the wheel plant, the railways has given an assured initial off-take of 55,000 wheels which will be progressively increased to 80,000.

RINL’s Vishakhapatnam plant will supply 330-450 mm rounds from the caster installed in its premises to produce the high-speed wheels.