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Steelcast Ltd, which has entered into a technical-cum-marketing alliance with the US-based Michigan Steel, is investing nearly Rs 70 crore on expansion of its steel casting manufacturing plant’s capacity to tap the multi-billion dollar American railways’ demand for castings.
Steelcast, the Gujarat-based steel casting manufacturer, focusing on mining and construction equipment market, is expanding capacity from the existing 17,000 tons per annum (tpa) to 36,000 tpa in two years, Mr Chetan Tamboli, Chairman and Managing Director, said here on Thursday.
The BSE-listed company’s capacity has already been expanded to 24,000 tpa with an investment of Rs 24 crore in the last one year. Another Rs 45 crore are being invested in2012-13 to increase it to 36,000 tpa, he said.
The expansion is being carried out in the wake of Steelcast’s 50:50 joint venture (JV) with Michigan Steel signed in June 2010, which was announced here on Thursday. As part of the last lap of getting certified by the US Railways, an inspection team will visit the Steelcast manufacturing facility at Bhavnagar in February. “Once the approval from the US Railways and the Association of American Railways (AAR) is expectedly received in a couple of months, Steelcast will become only the second such company from India.”
The JV, known as Steelcast LLC, has the potential to generate Rs 200 crore revenues over the next five years from the US Railways’ demand, including Rs 40 crore in 2012-13. It will market the company’s products in the USA, especially the US Railways, for freight transport. Michigan Steel is providing technology to Steelcast,besides making marketing efforts like seeking the requisite approvals in America, Mr Tamboli said.
The US Railways certification is also expected to give Steelcast an advantage over other players while bidding for contracts from the Indian Railways, especially the opportunities expected to be generated from the upcoming Delhi-Mumbai Freight Corridor.
Steelcast’s sales in 2010-11 were Rs 133 crore with a net profit of Rs 5.03 crore. In 2011-12, its sales increased to Rs 100 crore in the first six months, mainly due to exports to Germany, USA and Denmark.
The Indian foundry industry’s size is expected to increase from USD 8 billion in 2009 to USD 19.2 billion by 2016.
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