Steelcast LLC, a 50:50 joint venture between, Gujarat-based Steelcast Ltd and US-based Michigan Steel, will make casnub bogies for US railways in the large capacity wagon segment of 110 tonnes and 125 tonnes, a top company official informed on Monday.
The company is awaiting certification from the Association of American Railroads (AAR) for its manufacturing facility in Bhavnagar in Gujarat.
"An inspection team will visit Bhavnagar facility of Steelcast Ltd in the month of February 2012. It seems, Chinese suppliers are focusing more on their domestic market, hence for players outside China, there is a huge potential in US railroad market," said Vaughn Makary, president and CEO, Michigan Steel.
According to Makary, the cars or wagons will be largely used for dry cargo transport for the commodities like coal, iron ore, plastic pallette and automobile. "US railways' freight transport is one of the largest in the world.
BSE-listed Steelcast Ltd has invested Rs 25 crore for the facility in Bhavnagar to make casnub bogies, mainly used for freight wagons. Currently, the plant has a capacity of 17,000 tonnes of steel casting products, which will be ramped up to 24,000 tonnes by December 2012.
"Once we get the certificate from the US agency, we will be able to bid contracts there. This would also give us advantage to bid for project of Indian Railways in future. We are hopeful for newer opportunities emanating from the proposed Delhi-Mumbai Freight Corridor as well," said Chetan Tamboli, chairman and managing director, Steelcast Ltd.
According to Tamboli, the US JV is likely to achieve revenues in excess to Rs 200 crore over the next five years. "In the first year itself, we expect sales of Rs 40 crore from Steelcast LLC," he said. The US JV was formed in June 2010.
By 2013, the company is looking to expand its manufacturing capacity to 36,000 tonnes per annum, for which an investment of Rs 45 crore is being planned.
Steelcast Ltd has registered sales of Rs 100 crore in the first half period (April-December) of the current financial year. For 2010-11, company's sales stood at Rs 133 crore with 40-45 per cent exports to overseas markets. This year, exports to the US market is estimated to be around Rs 50 crore, the company official informed.
