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In what could be a major boost to Bharat Heavy Electricals Ltd (BHEL)’s railway business, the state-run power equipment firm is close to winning a contract worth Rs 1,000 crore from Pakistan to manufacture railway locomotives.
This will be the company’s first deal in the neighbouring country and is happening at a time when both India and Pakistan have started opening channels of bilateral trade. “In recent government-to-government talks, the need for locomotives has been identified as one of the requirements for Pakistan and we have made an offer to supply locos,” said B Prasada Rao, chairman and managing director of Bhel.
“Of late, we have started getting more locomotive orders. We have increased our capacity to produce locomotives at our Jhansi plant to 50 per year from 30. This year, we will increase the capacity to 75 and then to 100 per year as we expect continuous business from the Indian Railways on this front,” Rao told Business Standard. Both India and Pakistan inherited their rail network from the British and have similar systems. Pakistan now has about 7,800 km of railway network. It is looking at strengthening its railway system.
Though the financing arrangement for the contract was yet to be finalised, it could come as a soft loan from the Indian to the Pakistani government and could be worth over Rs 1,000 crore, Rao said.
Besides Pakistan, Bhel is also looking at other export markets for its railway business. The company already has an export market for its equipment at around Rs 4,000-5,000 crore yearly.
It is present in about 70 countries and has been focusing on African, southeast and central Asian and Gulf countries. Recently, it has got two orders from Bhutan, which are under execution. “There were some problems in our target areas globally last year, but this year we expect everything to return to normalcy,” Rao said.