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Steelcast and Caterpillar in Long-Term Supply Agreement

April 25, 2012
New steel casting capacity due to be developed in India

According to local reports, India's Steelcast Ltd. has a long-term agreement to supply Caterpillar Inc. with ferrous castings. Caterpillar will provide a four-year, $5-million, interest-free loan to Steelcast as it installs new production capacity to supply castings to Caterillar’s specifications.

Details of the new manufacturing operation are unclear. The foundry’s current operation at Gujarat (western India, north of Mumbai), produces low-alloy, carbon, high-alloy, and specialty steel castings via sand and shell molding processes, with finished products weighing up to 2.5 tons.

The two companies have had a supply arrangement for two decades, according to Steelcast. It estimated its current sales to Caterpillar at about $7.5 million annually, but expects that total to increase to more than $28 million annually over the course of the new agreement. The company’s chairman and managing director, Chetan Tamboli, stated: “We will now look at entering into similar long-term agreements with other global majors, too.”

Caterpillar has three manufacturing plants in India, including an off-highway truck plant in Chennai, which is due for a $70-million expansion, and plans to build a $150-million diesel engine plant to produce its Perkins 4000 Series truck engines.

Producing component parts for mining and construction equipment, railroad stock, valve bodies, casings, and numerous other markets, Steelcast is a significant exporter of steel castings, in particular to the U.S. and Germany.

Recently, Steelcast set up a joint-venture distribution company with Michigan Steel to produce railroad bogies for the U.S. market.