“Challenges in meeting requirement of steel of Indian Railways in the decade ending 2025”

Ashok KumarDRS/I&S

Railway BoardKolkata

20.02.2015

Topic

At “ Steel Furnace Association of India”

Steel Requirement :Focus Areas

•India: Potential for Growth

•Rolling Stocks on Indian Railways

•Other than Rolling Stock

•Steel Consumption

•Procurement Modalities

•Steel Ordering Status of Steel plants

•Challenges Ahead

India: Potential for Growth• Growth prospects /Opportunities of IR

synonymous with Growth Trend of Indian Economy

• Strong Positive indicators set in place

• Interaction of Global Economy with Indian Economy

• Broader Road Map for future expansion & reform in India and in Indian Railways

India: Potential for Growth

• Infrastructure development.

• Indian Railways meet the requirement of Growing Economy.

• Requirement of steel for various Projects/Rolling Stocks needs to be fulfilled.

IR’s Leapfrogging to higher growth Trajectory

• IR Gross Revenue remained at a level of around 1.2% of India's GDP over the last 10 years.

• India's GDP is expected to exceed Rs. 90 lakh crore by the year 2020. With GDP at this level, IR has the potential to grow to around Rs.2,70,000 crore of revenue from around Rs. 90,000 crore at present .

• IR Vision is to take it to 3% in the next 10 years.

• To realize this potential, the IR must achieve annual growth of 10% over the next 10 years.

Rolling Stock on IRItems Numbers

(as on 31.03.2013)Annual Induction

Steam Loco 43 ---

Diesel Loco 5,345 300

Electrical Loco 4,568 270-280

EMU Coaches 8,238

4000

Conventional Coaches 48,072

DMU Coaches 946

Other Coaching Vehicles(LV, MV etc)

6614

Wagons 2,44,731 14000

Other than Rolling Stocks Annual Requirement & Source of supply

RWF SAIL Import Total

WHEEL 1,95,000 55,000 22,000* 2,72,000

AXLE 68,000 9,000 --- 77,000

RAIL --- 3.5 Lakh MT --- 3.5 Lakh MT

* This requirement is for LHB Coaches & High Horse Power Locomotives

Rolling Stocks (last 3 years in Nos)

Items 2010-11 2011-12 2012-13

Diesel Loco 5137 5197 5345

Electrical Loco 4033 4309 4568

Passenger Carriage 45048 46688 48072

EMU/DMU+ 8053 8617 9184

Other Coaching Vehicles 6500 6560 6614

Wagons 229997 239321 244731

Rolling Stocks Trend(last 12 years in Nos)

Items 2000-01 2012-13 % increase

Diesel Loco 4702 5345 13.67

Electrical Loco 2810 4568 62.56

Passenger Carriage 33236 48072 44.63

EMU/DMU+ 4668 9184 96.74

Other Coaching Vehicles 4731 6614 39.80

Wagons 222193 244731 10.14

Steel Consumption (in last 3 years)

Item Consumption of Steel (sheets/ Plates/ Structurals for Manufacturing and Repair activities of rolling stock (in Metric Ton)

2011-12 2012-13 2013-14

Mild Steel 118733 81906 77045

Corten 51793 45113 63486

Stainless 60955 53362 24600

Structural 22402 14101 10747

Special Steel 11260 23761 24168

Procurement Modalities

• Assessment of Annual Demand• Railways Consignees• Railways PSUs• Central PSUs• Pvt Manufacturers of Rolling Stocks

• Placement of Running Contracts• Integrated Steel Plants• Re-rollers with BIS License• Supply Orders

Eligibility Criteria for Purchases(For sheets/Plates)

• Bulk Purchase:--Established, reliable, indigenous main producers of steel having Integrated Steel Plants (ISPs) which include in-house iron making followed by production of liquid steel and crude steel with in-house rolling.

• Established and reliable source :-For each of the tendered item, only those firms who have supplied any quantity of that particular tendered item against Railway Board’s contracts during last five years and current year of tender opening (up to the date of tender opening)

Eligibility Criteria for Purchases(For Structurals)

Bulk Purchase:-i) Established, reliable, indigenous main producers of Steel having Integrated Steel Plants which includes in-house iron making followed by production of liquid steel and crude steel with in-house rolling or

ii) Sources holding valid BIS licence for re-rolling specific to tendered items to tendered spec.

iii) For any source to qualify as established:-supply performance of 20% in each category last three financial years and current year of tender opening.

Present Steel Ordering

• SAIL- 81-85%

• Pvt Producers- 14-17%

• Others-1-2%

Ordering

SAIL

Pvt Producers

Others

Prevalent Specifications in Use

• IS: 513 Cold Reduced Low Carbon Steel Sheet and Strip

• IS:1079 Hot Rolled Carbon Steel Sheet and Strip• IS:5986 Hot Rolled Steel Flat Products for

Structural Forming and Flanging Purposes• IS:2062 Hot Rolled Medium and High tensile

Structural Steel• IS:3502 Steel Chequered Plates• IS:2041 Steel for Pressure Vessels• IRS :M-41 Corrosion Resistant Structural Steel• IRS:M-44 Corrosion Resistant Stainless Steel

Extra Quality Requirement (in IR)

• Copper Quality

• Furnace Normalization

• Ultra Sonic Testing

• Impact Test

• Dimensional Tolerance

• Vacuum Arc Degassing etc

Challenges Ahead• Design Changes in Rolling Stocks

• Manufacturing Constraints w.r.t Sizes

• Supply Chain & its Logistics

• Lead Time in Supply

• Forecasting of Requirement

• Quality Issue

• Sourcing problem faced by IR in WTA

• Emerging Steel Manufacturing Processes

Challenges: Design Changes in Rolling Stocks

• Due to technological upgradation• For Higher hauling capacity to enhance earning

capability of Rolling stocks• This requires study by Steel Manufacturers.• Steel Plants either incorporate the changes in

their production or give suggestions for viable alternative.

Problem faced by IR (at present ):– Z-Section required for manufacture of Wagon is a

bottleneck for IR. This item is out of production range of SAIL/Burnpur(being only successful supplier of this item).

– IR is facing problem in supply of Unequal Angles as sources are very limited.

Challenges: Design Changes in Railway Bridges

IR may face difficulty in procuring

• Steel having High strength to low weight ratio : – For Rail connectivity in Hilly region in future decade-NE, J&K,

High strength steel will be required due to their low weight, higher performance in Tensile strength, Toughness, weldability, Cold Formability and Corrosion Resistance properties. Minimum self weight & less substructure cost are also an important factor.

• High Performance Steel(HPS): – HPS has outstanding potential to decrease costs and increase

productivity for building steel bridges due to its excellent toughness providing higher reserve capacity to structure, and allow the structure to tolerate fabrication flaws and withstand extreme loading events such as earthquakes .

Challenges: in meeting various Sizes of steel

• Specific sizes are required based on Design of Rolling Stocks.

• Proper Sizes are required to avoid wastage

• Problem faced in Cut to size requirement for long Products(Angle/Channel)

• Steel Plants must devise a system to supply these steel requirement either directly from their plants or through their cutting agents.

Challenges: in meeting various Sizes of steel

– IR is facing problem in getting small quantity requirement of specific sizes due to rolling tonnage constraints and Transportation constraints.

– Steel Producers must resolve these issues.

Challenges : Supply Chain & Logistics

• Transport Contracts for door delivery to consignee to be put in place

• Unloading of steel materials by the contractors arranging man power, crane etc

• Comprehensive Transport contract for handling all types of steel- WTA, RAIL, SHEETS/PLATES

• Rail head connectivity/Port Connectivity

Challenges : Supply Chain & Logistics

• Insurance issues

• Barriers in Inter-state transportation• Road Permit/Way Bills• Entry Tax• Octroi Exemption certificate• Others legal issues

• Introduction of GST

• Warehousing

Challenges: Forecasting of Steel Requirement

• In coming years, Rolling Stocks, Rail Connectivity, Rail infrastructure are going to increase.

• This in turn leads to more consumption of steel.

• Proper methodology & Consultant need to be employed to study the emerging scenario in coming decades.

Challenges: Quality & price Issue

• Plant modernization requires adaptability of International Standards in addition to Indian Standards.

• Upgradation of Quality – Globally competitive

• Indigenous Steel producers’ Price should be comparable to the contemporary International Market Prices.

• Steel Producers should also be ready to compete in future Global tenders.

Challenges: Limited Sources

Vendor base is narrow for steel requirement for following items:

• WTA• RAIL• Stainless Steel (IRSM-44) Plates in higher

thicknesses.• IRSM-41 Sheets/Plates in higher width(> 1500 mm)• Items requiring steel with International

Specification.• Boiler Quality Plates (BTPGLN wagon)• Mild Steel in thickness(>20mm) & width (>1500

mm)• Mild Steel HR Sheet in thick(< 2mm)

Conclusion

Challenges before steel industries formeeting requirement of steel of IndianRailways are to be taken as an opportunityfor further strengthening the Steel SupplyChain for nation building. This needs properintegration of issues raised by Railways, itsrelated vendors and Primary as well asSecondary Producers.

Thank You