Indian Railways Takes Control of RINL's Forged Wheel Plant in Raebareli

The Indian Railways has taken control of the forged wheel plant of debt-ridden Rashtriya Ispat Nigam Ltd (RINL) in Raebareli, Uttar Pradesh, signaling a strategic shift in managing the plant's operations. Officials close to the development told businessline that the takeover terms include a partial cash payment to the steelmaker, estimated between ₹800-900 crore, and the transfer of ₹1000 crore of RINL's debt to the forged wheel unit.

The transfer of control took place in April, marking the start of the current fiscal year. Indian Railways has already initiated investments to increase the plant's capacity. The plant was originally established at a cost of ₹2250 crore, with the capacity to produce 80,000 wheels per year. An official noted that the plant should be fully operational by the end of this year, with further ramp-up expected in the following years.

RINL, the nation's second-largest steel Central Public Sector Enterprise (CPSE), operates under the Ministry of Steel. While the Ministry of Steel retains control of Vizag Steel, the Railways now own and oversee the forged wheel unit in Raebareli. The forged wheel plant crafts wheels from billets through a process of heating and high pressure. These wheels are used primarily in wagons, a key component of the Railways' infrastructure.

The official explained that the takeover was partly due to RINL's financial constraints and limited experience in forging operations. RINL had initially received orders for around 2,000 wheels, which were delivered in FY23, but the plant had been unable to operate at full capacity due to financial issues and lack of expertise. The Core Group of Secretaries on Strategic Disinvestment (CGD) identified "little scope for raising further resources" from RINL, leading to discussions on piece-meal disinvestment.

The Railways, which require approximately 80,000 wheels annually, emerged as the most suitable candidate to take over the plant. The transfer of ownership required Cabinet approval, as it involved an inter-ministerial transfer. Although there were discussions on involving another CPSE, like SAIL, to run the operations, it was ultimately decided that Railways would take over and manage the plant themselves.

The Railways' takeover of the forged wheel plant represents a strategic move to ensure the consistent production of critical components while relieving the burden on RINL. The arrangement is expected to benefit both entities, with Railways gaining operational control and RINL achieving some financial relief from the plant's operations.

HBL