Pre-Budget expectations – Hilton Metal Forging Ltd

Ahmedabad (Gujarat) [India], February 01: The Interim Budget is expected to maintain its focus on key sectors such as infrastructure, power, and railways, reflecting the government’s continued emphasis on these areas. In the previous fiscal year, the Indian Railways received a record allocation of Rs 2.4 lakhs crores in the last union budget which is four times of the allocation of Rs 60,000 crore in Union Budget in 2014, indicating a commitment to modernisation of Indian Railways and development of Railway infrastructure. We expect a further increase in the budget allocation for railways in the upcoming fiscal year, with the aim of supporting modernization initiatives such as faster trains, upgraded stations, improved safety features, and the expansion of freight corridors. Railways plans to introduce 3,000 new passenger trains in next few years to cut down waiting time for expected 1,000 crore passengers in next few years.

The year 2023-24 witnessed significant developments in the Indian Railways, including the inauguration of new Vande Bharat trains and the introduction of the no-frills Amrit Bharat Express. Against this backdrop, there is widespread anticipation that the Finance Minister will allocate a substantial budget to facilitate the ongoing modernization efforts in the railway sector.

Beyond the railways, sectors, including agriculture, infrastructure, healthcare, education, banking, and industry need special thrust for a growth-oriented Budget that encourages innovation and enhances societal well-being. While acknowledging the success of Production Linked Incentive (PLI) schemes, there is a suggestion to consider extending the concessional tax regime for manufacturing operations for a minimum of five years.

With global business dynamics undergoing changes and advanced economies adopting strategies like the “China plus one” approach, India has a significant opportunity to emerge as a global manufacturing hub. To capitalize on this potential, we emphasize the importance of incentivizing and attracting substantial investments from global manufacturing companies. The government could play a crucial role in fostering this growth by creating a conducive environment for large-scale investments, thereby positioning India as a key player in the evolving global manufacturing landscape.

About – Indian Forging Industry Forging is traditionally considered as the back bone of manufacturing industry. It is a major input to the sectors which support economic growth of the nation, such as, Automobile, Industrial Machinery, Power, Construction & Mining Equipment, Railways and General Engineering. The Indian forging industry is well recognised globally for its technical capabilities. With an installed capacity of around 38.5 lakh MT, Indian forging industry has a capability to forge variety of raw materials like Carbon steel, alloy steel, stainless steel, super alloy, titanium, aluminium and so forth, as per the requirements of user industry.

Big opportunity for Indian companies to contribute in Indian Railway Growth story

• The anticipation of substantial railway orders is on the horizon as India gears up to manufacture over 2,000 locomotives domestically. Additionally, the expansion of new rail tracks presents promising opportunities for casting foundries to contribute to the growing needs of the railway infrastructure.

• The demand for wheels in the railway sector is significant, with an annual requirement reaching approximately 3,80,000 wheels. This demand stems from the production needs of new coaches, wagons, and locomotives, accounting for around 2,80,000 wheels, while the replacement market necessitates an additional 1,00,000 wheels. The mandatory overhaul maintenance every 4.5 years for all wagons and freight adds to the continuous demand for wheels.

• Presently, the combined annual production of casting and forged wheels stands at around 2,75,000, resulting in a shortfall of roughly 1,05,000 wheels per year based on the current requirements of wagon/coach production and the replacement market. To address this shortfall, India currently relies on imports. In line with this, the Indian Government is actively encouraging domestic companies to engage in the production of railway wheels, aligning with the ‘Make in India’ initiative to promote self-sufficiency.

• Looking ahead, the annual demand for forged wagon wheels is expected to be around 30,000 in FY24 and approximately 45,000 in FY25. This demand is projected to grow incrementally each year, reaching over 60,000 forged wagon wheels in FY26. This growth is particularly attributed to the replacement market, with LHB wagons completing 5 years of operation. The phased increase in demand signifies a continuous opportunity for domestic manufacturers to enhance production capacities and contribute significantly to the objectives of the ‘Make in India’ initiative.

Advantage – Hilton Metal Forging Ltd

Hilton Metal Forging Ltd stands as a prominent manufacturer and distributor in the steel forging industry, specializing in products such as flanges, fittings, and oilfield and marine products. The company has successfully expanded its portfolio by entering the aerospace sector, manufacturing turbine blades, and making inroads into the railway industry with the production of forged wheels. Equipped with an in-house facility encompassing forging, machining, heat-treatment, a computerized laboratory for testing, and a dedicated quality control department, the company is well-positioned to meet industry standards.

Recognizing a significant opportunity in the railway sector, Hilton Metal Forging Ltd is strategically focusing on the production of Forged Wagon Wheels with a strong emphasis on speed, safety, modernization, and the ‘Made In India’ initiative. The company is eligible for a minimum of 20% of the Global Wagon Wheel Tender (L1) under the Make in India scheme, backed by its proven track record. The Forged Wagon Wheels manufactured by the company undergo inspection and certification by RITES, further establishing their suitability for supply to Indian Railways.

• With a targeted production capacity of 1000 Wheels/month, Hilton Metal Forging Ltd aims to scale up to around 2000 Wheels/month to meet the increasing demand in the replacement market. The Board of Directors proudly announced that the company has successfully developed and supplied railway wheels to the Indian Railways, achieving the distinction of being the first Indian MSME company to produce Indigenous Forged Railway Wheels. Having supplied 1500 Railway Wheels to date, the company is now eligible to participate in Global tenders. Furthermore, the company has initiated Research and Development in the Railway Wheel Set Assembly, with plans to release a press release post-approval from third-party agencies.

• In a significant development, Jupiter Wagons has placed an order for 250 Forged Wagon Wheelsets with Hilton Metal Forging Ltd as a trial order. Following the successful supply of the initial 250 sets, Jupiter Wagons has issued a Letter of Intent (LOI) for procuring 6000 Forged Wagon Wheelsets annually, highlighting the company’s growing recognition and potential in the market. Hilton Metal Forgings Ltd has set an ambitious target to manufacture 12000 Forged Wagon Wheelsets in FY26. Additionally, TEXMACO/Titagarh wagons are identified as potential clients for Forged Wagon Wheelsets, indicating the company’s expanding market reach and promising future in the railway industry.

Indian Railway Growth Story – Highlights

• As of March 2022, Indian Railways‘ rolling stock consisted of 3,18,196 Freight wagons, 84,863 passenger coaches and 13,215 Locomotives. Indian Govt. focus in modernization, safety and increasing speed of the Trains. Indian Railway budget in 2023-24 is 2,40,000 crore which is 4 times increase from Indian Railway budget of 65,445 crore in 2014-15. To increase speed of the Trains, Indian railways is focussed on increasing usage of Forged wheels. Casting wheels has speed limitation of upto 120 km/hour. Indian Trains can go upto speeds of 220 km/hour using Forged wheels.

• Presently 27% freight traffic in India moves on Indian Railway network which Indian Govt. plans to increase to 45% by 2030. Govt. has created 2 dedicated Freight Corridors – EDFC (Eastern Dedicated Freight Corridor), WDFC (Western Dedicated Freight Corridor) for faster and dedicated freight movement. FY22 Indian Railways placed order of 60,000 freight wagons to Private cos for delivery within next 3 years.
• Indian Railways operates around 34,000 LHB coaches out of total 84,863 passenger coaches. IR plans to phase out 50,000 odd ICH coaches and replace with LHB coaches. Passenger coaches are manufactured in 3 Indian railway coach factory.
• Indian Railways plans to add 3000 new trains to its network to eliminate waiting list for tickets and increase passenger capacity from 800 crore passengers to 1,000 crore passengers by 2027. Each train would have 22 coaches which means additional 66,000 new coaches over and above present 84,863 passenger coaches.

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