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New generation rails will be Bhilai Steel's crown jewel

The compelling reason of his being so enamoured of BSP is it contributing about 45% to the group profit

Kunal Bose 

Steel Authority of India Limited (SAIL) chairman Chandra Shekhar Verma loves to describe Plant (BSP) as the "jewel in the crown" of the country's largest steel producing group. The compelling reason of his being so enamoured of BSP is it contributing about 45 per cent to the group profit, while its share of turnover is around 25 per cent. This is so for the very high level of value addition to commodity steel in many of its products, particularly rails and plates, says BSP Chief Executive Officer S Chandrasekaran. While other steelmakers have tried their hand in rail making with different degrees of success and disappointment, (IR) has so far not looked beyond BSP for rail procurement. No wonder, as BSP is building a new universal rail mill (URM) which will allow it to make "very long rails," Verma sees in the upcoming facility a "game changer" for the biggest of the five integrated

The country has the world's third largest railway network, covering 63,974 route km and handling on a daily average 2.65 million tonnes (mt) of freight and 23 million passengers. The Sam Pitroda-chaired expert group on modernisation of IR, while drawing attention to "chronic underinvestment in railway infrastructure" has recommended laying of robust tracks to facilitate heavier freight trains at higher speeds. Such tracks should also allow plying of passenger trains at a speed of up to 200 km per hour. Poor progress in track upgrading is causing big diversion of freight and passenger traffic to road. A long succession of ministers unmindful of track renewal has to take the blame for the resulting revenue loss to IR. Traffic seepage from rail to road is responsible for a "much larger freight cost to GDP and higher environmental cost per route km of freight and passenger traffic than in other countries." Track health improvement needs to be put on a fast lane if the economy is not to be burdened with increasingly higher freight cost. But is the government awakened to the issue?

In this context, the criticality of URM for our railways is to be seen. BSP has carefully nursed a culture of seeking inputs from highly demanding customers before developing new grades of rails and plates, particularly for making ships and boilers and applications in nuclear plants. This has paid the mill handsomely, in that IR and some defence and nuclear establishments have not felt the need to buy critical steel products other than from BSP. But, why is this new URM being created at an investment of close to Rs 1,200 crore, when BSP is already producing welded rails in lengths of 130 and 260 metres? Verma provides the answer: "For the country to have a faster and safer railway system, it is absolutely essential to have very long rails with superior surface finish and close tolerances. URM is designed to roll out a 130-metre long rail in a single piece. A marvel for this country will be rail panels in a length of up to 520 metres by way of welding four pieces together. Moreover, URM with capacity of 1.2 mt will be among the largest such facilities in the world." At the rail and structural mill (RSM), around 700,000 tonnes of rails are made annually.

Capacity besides, technology will be a major differentiator between RSM and on-the-anvil URM. "Business success depends on anticipating emerging demand and getting ready in time with the products. URM, being supplied by a consortium led by SMS Meer of Germany, will include features like in-line rail head hardening and on-line non-destructive testing. One rail piece will come in a length of 130 metres and for us to join four of these in a single panel, we are buying welding machines from RailTech International of France. BSP's challenge is to stay in sync with railway track renewal programme," says Chandrasekaran. URM allowing universal rolling from four directions will give ideal structure, profile, tolerance and finish to rails. The new facility is scheduled to be up by this financial year end. But then what happens to the now-in-operation RSM? According to Chandrasekaran, URM commissioning will require of BSP to develop new heavy structurals so that capacity to be vacated by rail in RSM is gainfully used.

A nagging BSP concern relates to delays in the building steel melting shop (SMS) III, which is to supply high-quality clean steel to URM. The management is, therefore, constrained to figure out how to feed URM with steel till SMS III is ready. SMS II, equipped with secondary refining, could be the interim source of steel for URM. That option will, however, throw up some logistical challenges, which Chandrasekaran is confident of resolving. In that case, the source of steel for making structurals will be SMS I. But for the series of setbacks in SMS III building in the past, the Rs 18,000-crore modernisation-cum-expansion programme of BSP would have smooth-sailed. The share of special steel for BSP was 61.5 per cent last year. This will go up few notches on completion of the investment programme.

First Published: Mon, July 01 2013. 22:33 IST