State-owned Steel Authority of India (SAIL) today said it is setting up a Rs 1,600 crore universal rail mill with 1.2 million tonne capacity at its Bhilai facility in Chhattisgarh to produce heavy rails for the first time in India.

The mill is likely to be operational by next year.

"SAIL is investing Rs 1,600 crore in a new Universal Rail Mill... [to] produce single 130-metre rails. The mill has been designed to produce heavier rail sections up to 75 kg/m and head-hardened rails for the first time in India," it said in a statement.

It added that Railways Minister Dinesh Trivedi, who visited Bhilai Steel Plant of SAIL today, accompanied by Minister of State for Railways KH Muniyappa, appreciated Steel Authority's initiatives to meet railways' growing requirements.

SAIL Chairman CS Verma said the company contributed about 7% of the total freight business of the Indian Railways in India in both volume and monetary terms.

Verma added that SAIL is already the sole supplier of rails to the Indian Railways, including long rails of 260 metres.

Till date SAIL has supplied over 16 million tonnes of rails to the Railways with a total rail length of around 4 lakh km, enough to encircle the earth 9.5 times, the statement said.

It added that the bond has been further strengthened with collaborative efforts with Railways including a pact with RITES to set up a wagon manufacturing unit at Kulti in West Bengal to annually manufacture 1,200 wagons and undertake rehabilitation of 300 wagons.