Michigan Steel Works with India's Steelcast for U.S. Rail Castings Market

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Steelcast Limited (Bhavnagar, Gujarat) is in the last phase of obtaining certification from that U.S. railways that are sending a team to inspect the company's castings plant in Bhavnagar, Gujarat. Steelcast and Michigan Steel (Detroit, Michigan) formed Steelcast LLC (Muskegon, Michigan), a 50:50 joint venture, in 2010 as part of a strategy to take advantage of the multi-million dollar potential for castings in the U.S., especially for rail transport, which is one of the largest markets in the world.

When approval and certification are received, probably before the end of March, Steelcast will be only the second Indian company to receive this clearance.

The company also expects the U.S. rail certification to give it the competitive edge in the domestic Indian market when bidding for Indian Railways contracts. Massive opportunities are expected to flow from the Delhi-Mumbai Freight Corridor project.

The joint venture will allow technology transfer to the Indian company from Michigan Steel, which will seek relevant approvals in the U.S. for the transfer.

"The U.S. rail demand for castings is so huge that over the next five years, we expect our U.S. joint venture to post revenues in excess of $40 million," said Chetan Tamboli, the chairman and managing director of Steelcast. In the first 2012-13 year of operation, the venture expects sales of $8 million.

"The U.S. markets for steel castings are huge, and the U.S. railways constitute one of the biggest parts," said Vaughn Makary, the president and chief executive officer of Steelcast LLC. "We have tied up with India's Steelcast Limited, as their manufacturing facilities are world-class and their product pricing is very competitive, especially against the major steel castings players from China."

Steelcast has a manufacturing capacity of 24,000 tons annually for a product range including industrial castings in carbon steel and low-alloy steel. The company supplies products to earthmoving equipment manufacturers. Revenues in 2011-12 are expected to be more than $45 million, with almost 45% coming from exports, mainly to the U.S. and Germany.

Kurimoto (Tokyo, Japan) holds a 2.5% stake in the Indian company.

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