Shares of Titagarh Wagons and Ramkrishna Forgings jumped 4 percent and 9 percent, respectively, on March 15, as a consortium of the two companies has been selected as the lowest bidder for a forged wheels order.
The consortium of Ramkrishna Forgings and Titagarh Wagons has emerged as the Lowest Bidder (L1) as per the financial bid opened on March 14 to manufacture and supply forged wheels under Aatmanirbhar Bharat initiative of the rail ministry, Government of India, as per a regulatory filing.
The total quantity of forged wheels to be supplied will be around 15,40,000 wheels over a period of 20 years, the filing said.
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At 9:59am, shares of Titagarh Wagons were trading at 245.80, up 1.7 percent, on the BSE, while Ramkrishna Forgings gained 8.4 percent at Rs 287.85 on the BSE. The former has given closer to 800 percent returns in the past three years, while the latter has soared closer to 600 percent during the same period.
According to the bid document seen by Moneycontrol, the consortium quoted Rs 12,226 crore to emerge as the lowest bidder followed by Bharat Forge who quoted Rs 17,875 crore, and SAIL that quoted Rs 18,817.5 crore.
In the first three years of the order, the selected bidder would be required to manufacture 80,000 wheels, and after that, the requirement would be 80,000 wheels per year at a cost of Rs 600 crore. The wheels would be used for semi-high-speed, high-speed trains, and Vande Bharat trains.
About 50 percent of the requirement for different types of wheels would be for Linke Hofmann Busch (LHB) coaches, 40 percent for locomotives, 7 percent for electric multiple unit (EMU) and MEMU trains, and 3 percent for Vande Bharat trains.
The consortium of Titagarh Wagons and Ramkrishna Forgings will set up a production unit for forged wheels, at an estimated cost of Rs 1,000 crore. The Indian Railways had last year come out with this tender to reduce the country's reliance on imports from Europe for specialised wheels.
Railways Minister Ashwini Vaishnaw had also said that the country requires around two lakh forged wheels annually and that bidders who participate in the tender will be given an off-take assurance.
The Indian Railways faced a wheel crisis last year due to the Russia-Ukraine war and imports of wheels from Ukraine taking a hit. The national transporter was forced placed an order for 39,000 semi-forged wheels with a Chinese company, citing disrupted European supply chains on account of the Russia-Ukraine war.
"The order win by the consortium of Ramakrishna Forging Consortium and Titagarh Wagons to manufacture forged wheels for LHB coaches and locomotives will lower the dependence of the Indian Railways on imports. Following the commissioning of the plant under this order, India will no longer need to import forged wheels," Sudhanshu Mani, former general manager of Integral Coach Factory, Chennai, and the chief architect of India’s first Vande Bharat project, said.
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As part of the tender the winning bidder would be expected to provide 40,000 wheels during the first year of supply, 60,000 wheels during the second year of supply, and 80,000 wheels per year, during each of the subsequent years.
The railways will also have the right to increase the total supply period by up to five years, on the same terms and conditions.
With the government’s focus on railway capital expenditure, evident from the higher capex allocated to the sector, is likely to benefit companies like railway wagon manufacturer Titagarh Wagons and Ramkrishna Forgings which is a supplier to sectors like automotive, railways, farm equipment, bearings, oil and gas, power and construction, earth moving and mining, both in India and overseas markets.
