Document of

The World Bank

FOR OFFICIAL USE ONLY

/ A 'z 7SC3 4/aReport No. 12780-IN

STAF APPRAISAL REPORT

IDDIA

CONTAINER TRASPORT LOGISTICS PROJECT

MAY 9, 1994

MICROGRAPHICS

Report No: 12780 INType: SAR

Infrastructure Operations DivisionCountry Department II - IndiaSouth Asia Regional Office

This document has a restricted distribution and may be used by ripients only in the perfonnnc oftheir offciil dutes. Its contents may not othewis be disclosed without Wodd Bank authoriaion.

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CURRENCY EOUIVALENTS

Currency Unit = Rupee (Rs)I Rupee (Rs) = 100 paisa = US$ 0.0323I Lakh 100 thousand = US$ 3,1251 Crore = 10 million Rs = US$ 312,500US$ 1.00 = Rs32

SYSTEM OF WEIGHTS AND MEASURES: METRIC

Metric British/US system

I meter (m) = 3.281 feet1 square meter (!n2) = 10.764 square feet1 cubic meter (m) = 35.315 cubic feet1 kilometer (km) = 0.621 mileI metric ton = 2,205 pounds1 tkm = ton-kilometer (0.621 ton-mile)I pkm = passenger-kilometer (0.621 passenger-mile)

ACRONYMS AND ABBREVIATIONS

BFK = bogie container flatsBPT = Bombay Port TrustCAS = country assistance strategyCONCOR Container Corporation of IndiaCFS container freight stationDEA = Department of Economic Affairs (Ministy of

Finance)DPE = Departnent of Public EnterprisesEDI = eleatronic data interchangeERR = ecanomic fate of returnFAK = frcight all kindsFYP = Five Year PlanGDP = gross domestic productGNP = giOss national product001 = Government of IndiaHDC = high density corridorsHOM = Port of MadrasICB = international competitive biddingICD = inland container depotICR Inmplmentation of Completion ReportIR = Indian RailwaysJNPT = Jawaharlal Nehru Port TrustMOC = Ministry of CommerceMOCA = Ministry of Civil AviationMOR = Ministry of RailwaysMOST = Ministy of Surface TransportMOU memorandum of understandingMTO = multi-modal trnsport operatorNVOCC = non-vessel- operating container carrierPC Planning CommissionPOL petroleum oil lubricantsPKM = passenger-kilometersPSCT port side container terminalPSU = Public Sector UnitRDSO = Research, Design and Standards OrganizationRFID = radio frequency identification deviceRITES = Rail India Techmical and Economic ServicesSAL/SAC = stuctural adjustment loan/creditTA = technical assistanceTEU = twenty foot equivalent unitsTILL = trade and investment 1beralizai loanTKD = Tughiakabad ICDTKM = ton-kilometers

I:OR OFFICIAL USE ONLY

INDIA

CONTAINER TRANSPORT LOGISTICS PROJECT

LOAN AND PROJECT SUMMARY

Borrower Container Corporation of India (CONCOR)

Benefician Container Corporation of India (CONCOR)

Guarantor India, acting by its President. The Government of India (GOI) would chargeCONCOR a guarantee fee of 1.2 percent per annum on the principal amountof the IBRD loan withdrawn and outstanding.

Loan Amount US$ 94 million equivalent

Terms The loan would have a repayment period of twenmy years, including a five-year grace period, at the Bank's standard variable interest rate.

Qbiecv The overall objective of the project would be to provide a suitable enablingervironment for container transport and increase the capacity and efficiency oflong haul transport of high value general cargo, particularly related to foreigntrade. The project would increase the use of containers hi the transport ofgeneral cargo, and encourage and facilitate the use of the railway for suchtransport wherever it is economically the best option.

ProiectDesridtio The proposed project would: (a) improve the institutional framework for

efficient and competitive container transport through the removal of the maincustoms practices and procedures restricting the inland movement ofcontainers; (b) strengthen the commercial approach and operational efficiencyof CONCOR in an increasingly compeitive environment by diluting at least a5 percent share of GOI's equity in CONCOR, broadening the composition ofthe Board of Directors of CONCOR, reforming CONCOR's claim policy tomeet customer needs, and providing technical assistance and training; and (c)support scheduled high-quality container train services in the main corridorsthrough the acquisition of selected rolling stock, cargo handling equipment,transponders and readers for electronic tracking of container trains, flat carand containers, and related civil works and engineering services.

Benefits The proposed project would help develop container transport with particularemphasis, as a first step, on the main rail corridors of Delhi-Bombay/JNPTand Delhi-Madras. It would improve transport capacity and efficiency of long-haul high-value containerizable cargo, particularly for foreign trade shipments,through increased speed and safety, reduced losses, and overall door-to-doorcosts. In addition, by diverting traffic from the satrated highways, the projectwould help reduce congestion and pollution.

This document has a resticted distnbution and may be used by recipients only in the pfomac of tbeirofficial duties Its content may not otherwise be discled without World Bank athorizaton.

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Risks The main risk is that the expected improms in CONCOR's perfom1ancemay not be fully achieved due to insufficient support from Indian Railways(IR) in providing needed block train paths and trAction power. Anotlier risk isthat agencies, such as Customs, that derive litde direct benefit from theproject may be slow to amend thir procedures. In addition if demandprojections do not materialize, CONCOR would have difficulties in servicingthe sharply higher level of debt generated by the project. Fially, the foreignexchange risk of the project will be borne by CONCOR even though all of itsrevemnes are .: Rupees.

Estimated Cost US$ 151 million equivalent

Fin cin. P-1 IBRD US$ 94.0 millionCONCOR US$ 53.0 millionCo-fimancier US$ 4.0 million

Estimated Loan and Credit Disbrseents

FY95 FY96 FY97 FY98 FY99 FY2000----(S$ million)-.

Annual 12 26 28 16 8 4Cumulative 12 38 66 82 90 94

EconomicRate of Rn 37 percent

Poverty Cate2ory Not applicable

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CONTAINER TRANSPORT LOGISTICS PROJECT

TABLE OF CONTENTS

I. TRANSPORT AND TRADE IN INDIA ................................. 1A. Economy and Trade ...... .................................. I

1. Overview ........................................ 12. Government's Program of Econoric Reform .................. 13. Bank's Involvement in Economic Reform and Trade Liberaliaion in

India ........................................... 2B. The Transport Sector .............................. . 2

1. Overview ........................................ 22. Phnning and Coordmatin ............................. 33. Investmen and Policy .............. 34. Bank's Involvement in Transport Sector and Lessons Leared.4

C. Role of Transport in Facilitting Trade ............ .. ................ S

1. Major Transport constaints to Trade Growth ................. 52. Role of Contaier Transportaion ......................... 53. Major Issues in Developing Cont riade on .................. 6

H. CONTAINER CORPORATION OF INDIA (CONCOR) ........................ 8A. The Company ............................................. 8B. Business Activities. 9C. CONCOR's Strengths and Weaknesses ......... .............. ...... 9D. Financial Performance .................................. 10E. Business and Finance Plan .............................. ... 12F. Memorandum of Understanding (MOU) .............................. 12G. Financial Projections ................................. 13

IH. THE PROJECT ................................. 14A. Project Orgin .................................. 14B. Rationale and Objectives .................................. 14C. Project Description ............ ..................... 15D. Project Cost ................................. 16E. Project Financing ................................. 16F. Project l aon. ......................... ............. 17G. Procurement ................................. 17H. Disbursement ................................. 20I. Economric Evaluation and Risks ................................. 20J. Environental impact ................................. 21K. Monitoring and Auditing .................................. 21

IV. AGREEMENTS AND RECOMMENDATION ............................. 22

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1.1 Bank Loans and Credits to Transportation Sector2.1 Summary of Draft MOU (fiscal 1994-95)2.2 Financial Evaluation of CONCOR3.1 Project Objectives and Development Indicators3.2 Outline of 'The Netherlands Technical Assistance Program to CONCOR3.3 Project Cost Summary Table3.4 Imlemeion Schedule3.5 Performance Targets3.6 Cumulative Disbursement Schedule3.7 Economic Evaluation3.8 Outline of Content of Quarterly Progress Reports3.9 Supervision Schedule3.10 Documents Available in Project File

TABLES

1. Container Corporation of India Ltd. Financial Statements2. Sunmmy of Proposed Procrement Arrangements

CHART

2.1 Organizational Chart of CONCOR3.1 Procement Schedule for Equipme of Materials

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INDIA

CONTAINER TRANSPORT LOGISTICS PROJECT

STAFF APPRAISAL REPORT

1. TRANSPORT AND TRADE IN INDIA

A. Economy and Trade

1. Overview

1.1 Witb a per capita Gross Domestic Product (GDP) of US$ 350, india remains one of theworld's poorest countries. From the time of independence in 1947 until recently, India pursued acentrally planned approach to development (combining prudent macroeconomic management; anactive role for the state in key sectors such as banking, basic industries, utvlities, and infrastructure;and extensive regulation of the economy) that went beyond the import su*bstitution industrializationpolicies of most developing countries after World War HI. The Government regulated nearly all firmsof a specified size, in such basic business decisions 3s: borrowing, investment, capacity utilization,pricing and distrbution. However, although highly regulated, the private sector has continued to beimportant and is present in most sectors of the economy, accountirg for two-thiirds of the country'sGDP.

2. Government's Program of Economic Reform

1.2 Reform Programs Throughout the 1980s, important policy changes began to liberalizetrade, industry and flun',e, while subsidies, tax concessions and depreciation of the currencyimproved exports. These reforms, altLough only partially addressing the country's most fundamentalstruural problems, did help increase GDP growth to more than 5 percent per year during the decadeand help reduce the incidence of poverty.

1.3 A break with India's past development policies occurred in June 1991 when the presentgovernment came to power and began implementing a comprehensive program of stabilization andreform. The Eighth Plan for FY92/97 articulated the new government's main objectives: reducingmacroeconomic imbalances, transforming India into an internationally competitive economy open totrade and foreign investment, encouraging the development ef the private sector, and improving thecountry's infrastructure and human resources base. The balance of payments crisis has been overcomeand the current account deficit has declined from US$ 10 billion (3.5 percent of GDP) in FY90/91 toUS$ 1.7 billion in PY93/1994 (0.7 percent of GDP); inflation has declined to around 8.5 percent atpresent, from a peak of 17 percent in August 1991; and the fiscal deficit has been reduced from 8.5percent of GDP in FY90/91 to 7.3 percent in FY93/1994. On the structural reform front there hasbeen rapid progress in liberalizing the trade and investment regimes, liberalizing capital markets, andstrenthening the banking system. A start has also been made to restructure or privatize public sectorenterprises and to reform the tax system.

1.4 Trade Liberalization The first set of trade reforms was introduced in July 1991. Theyeliminat a costly subsidy scheme for exports, lowered quantitative restrictions on imports, adjustedthe exchange rate, and increased significantly the freely tradable import entitlement granted toexporers. Sweeping additional trade and payments reforms were introduced seven months later at thetime of the PY92/93 budget, and again in April 1993. As a result, a floating exchange rate system

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has emerged. The maximum import tariff rate has been reduced significantly, from 400 percent to 65percent while the import -weighed tariff has been reduced from 77 percent in PY90/91 to 41 percentin PY93194. Quantitative restrictions have been eliminated for intermediates and capital goods. In theEighth Plan, the government indicated that further measures will be taken to reach a trade regime freeof quantity restrictions and an average tariff rate of 25 percent by FY96/97.

1.5 Export Promotion Export promotion is a key component of the government's programand is the main reason for devaluation and floating of the Rupee and tariff reductions. In addition,001 has taken several steps to improve thAe administration of export promotion schemes and toremove foreign exchange controls that restricted exporters' activities. A number of schemes havebeen strengthened to improve exporters' access to i4puti at international prices, such as the AdvanceLicense Scheme (which allows exporters to import raw materials and intermediate goods withoutpaying duty), the Duty Drawback Scheme, the export processing zones, and the 100 percent ExportOriented Units. Current projections suggest that imports and exports will grow in real terms at ratesslighdy above 10 percent per year.

3. Bank's Jnvolve%ent in Economic Reform and Trade Liberalization in India

1.6 Policy-Based Lending In December 1991, the Bank made a US$ 500 million strucuraladjustment loan and credit (SAL/SAC) to India, the first stage of Bank support for the 01rI'sadjusanent program. In December 1992, the Bank made another sector adjustment credit of US$ 500million to facilitate GOI's reform program by strengthening the social safety net during the adjustmentprocess. Recently, the Bank has approved a US$ 300 million Trade and Investment LiberalizationLoan (IUL), in support of the liberalization of India's external sector and investment regime.

B. The Transport Sector

I. Overview

1.7 The transport network in India is extensive and diversified: it comprises about 62,000route kilometers (km) of railways; 1,890,000 km of roads (of which 8.5 percent of the networkcarries 75 percent of the road traffic); 11 major and 139 intermediate and minor ports; 14 majorairports (6 handle international flights); 7,000 km of pipelines; and 14,500 km of inland waterways(5,200 km are navigable by motorized vessels). In addition to motorized transport, India las animportant non-motorized transport system in the form of bullock carts and sailing boats, as well aspush carts and other porterage (an estimated 15 million units, but with a freight market share of only2 percent).

1.8 Land transport, traffic (road and rail) has been increasing rapidly since the 1950s. Roadtransport has grown substantially faster than rail, with an average growth rate of about 6 percent forfreight and 7 percent for passenger traffic during the period 1951-81. Road traffic had an even fastergrowth rate during the period 1981-93 when freight traffic grew at about 7 percent and passengertraffic at 9 percent. During the same period rail freight traffic grew at about 5 percent and passengersalso by about 5 percent.

1.9 Historically, India relied on its extensive raLl network for .nost of its long distancetransport needs, and Indian Railways (IR) has become the world's third largest system in terms oftotal traffic units under one administration and employs approximately 1.7 million people. In 1992-93,it carried 268 billion ton kilometers (M) and 226 billion passenger kilometers (P"M). The currentrole of the railway is consistent with its comparative advantage in the Indian transport sector, exceptfor long-distance transport of high-value goods. IR's share in the modal transport split has beendeclining and is presendy down to 18 percent for PKM and 40 percent for TKM. The road accountsfor 55 percent of TKM and 82 percent of PKM and coastal and inland watways shipping handles

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the remaining 5 percent of freight TKM. Today, IR has become primarily a long-distance bulkcarrier of commodities, with coal, cemeit, fertilizer, grain, and iron ore accounting for 85 percent ofrail freight traffic. It also plays a vital role irn the transportation of conmmuters in three major cities(Bombay, Madras, and Calcutta) and of inter-city passengers.

1.10 To serve the growing traffic requirements, both the rail and road systems nieeo majorimprovements. The effective functioning of IR is hampered by capacity constraints and old and worntrack, signalling equipment, motive power and rolling stock, much of which needs to be repaired orr;placed. The road network is also suffering from low construction standards and increasingcongestion, particularly in the high density corridors. Because of the long distances involved betweenthe main inland production centers and the gateway ports, a properly functioning system formovement of containers by rail would have a comparative advantage and should yield significanteconomic benefits. It should be noted that, partly as a result of slow and unreliable inland road andrail transport, a significant part of Indian exports (approximately 35 percent by value) is currentlymoved by air freight.

2. Planninig and Coordination

1.11 The GOi is heavily involved in the transport sector in India, characterized by stateownership of infrastructure and most transport operators (except for road freight transport, someshipping and, since mid-1992, an increasing number of private airlines), a regime of administeredprices, centrally allocated supply, and a policy of technological self-reliance. The system ofadministered prices for publicly provided transport services has resulted in delays in tariff adjustmentsand has introduced some socio-political considerations in tariff setting, particularly for passengerfares. The policy of technological self-reliance has resulted in the continued use of older and less-efficient technologies, particularly in rail aud road transport.

1.12 The sector is under the jurisdiction of various ministries: roads and road transport,major ports, and shipping are under the jurisdiction of the Ministry of Surface Transport (MOST);railways are a department of the Ministry of Railways (MOR); civil aviation is under the Ministry ofCivil Aviation (MOCA); pipelines are under the Ministry of Petroleum and Natural Gas; and tradeorganization is under the Ministry of Commerce (MOC). Responsibility for some of these activities,particularly highways and ports, is shared by the central goverment and the states, which also havedirect jurisdiction over some services (especially those provided within states). Coordination amongthe different modes is handled by the Coordinating Committee of the Secretaries of SurfaceTransport, Railways, Civil Aviation.

3. Investment and Policy

1.13 The level of investments in the transport sector has been insufficient to meet theincreasing demand. Invesuments allocated in successive plans for the transport sector have beenincreasing in real terms; however, these increases have oeen significantly less than the growth intraffic. The share of budget allocations for transport in the five-year plans has declined from 22percent during the First Five-Y, jr Plan (FYP) to around 13 percent during the Sixth, Seventh andEighth FYP. This is particularly true in the road sub-sector where not only have the funds allocatedbeen insufficient but there has been a constant bias in favor of the tertiary road network (rural roads)at the expense of the national and state road networks. Within the transport sector, modal shares inpublic capital expenditure have varied considerably, but the -ailways have received the largest share(about 48 percent of the Eighth FYP) followed by road construction (24 percent), road transport (7percent), and ports and inland waterways, r-ivil aviation and shipping (the remaining 21 percent). Theother transport sub-sectors, including the ra lways, have also had inadequate funding, which has led toincreasing transport bottlenecks. In the future public sector funding constraints and increasingtransport demand will likely necessitate increased efficiency and financial self-reliance in public

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enterprises and more investments from, as well as a greater role for, the private sector. To date,private sector investments have been concentrated maivly in road and air transport and to a growingextent in shipping. The government is now developing policies for attracting more private investmentsin road infrastructure and ports, and IR is trying to attract private or public investments in rollingstock and other facilities. IR is also resorting to substantial market borrowing (Rs 10.5 billion forFY95) to augment its internal resources.

1.14 The government long -term investment objectives for the transport sector are: (a)removing bottlenecks, (b) increasing capacity, (c) conserving energy, (d) completing ongoing works,(e) maximizing asset utilization, and (f) paying special attention to rural areas. None of theseobjectives have been fully achieved in the past, and major shortcomings persist (for instance,infrastructure capacity lags behind demand for nmost modes). It is expected, however, that thestructural reform program initiated in 1991 will result in increased private sector involvement andmore liberalization in the transport sector as well as improved efficiency and performance.

4. Bank's Involvement in Transport Sector and Lessons Leamed

1.15 Bank/IDA Operations in the Transport Sector. Until recently, the Bank's involvement inthe sector was predominantly in railways, due to the Indian authorities' preference for localcompetitive bidding in road and port projects. However, following GOI's decision in the mid-1980sto allow international competitive bidding for contracts in road and port projects, the Bank has had amore balanced lending program split between the railways and roads. Annex 1.1 provides a list ofrecent transport sector projects.

1.16 Current Bank Strategv in the Transport Sector. The sector strategy will complement thegovernment's overall reform policies and focus on projects for capacity expansion and efficiencyimprovement at the agency and sub-sector level, including policy adjustments and institution building.More specifically the Bank strategy gives particular emphasis to improving the commercial andcompetitive environment in the sector and sub-sectors, improving the capacity and efficiency in thehigh-density corridors and strengthening project engineering, implementation and supervision. Itfocusses on:

(a) Rationalization of container services on fixed schedules, delegation of moreresponsibilities to the port authorities and the promotion of private participation in areassuch as terminal operations and container handling.

(b) Establishment of an effective, operational National Highway Authority, privatization ofhighway engineering design and supervision services, rigorous prequalification ofconsulting engineers and contractors together with sound competitive bindingprocedures.

(c) Significant increase in outlays for investment and maintenance on the congested roadnetwcrk, partly financed through user fees and charges, including vehicle and fueltaxation.

(d) Adoption of measures to place the operations of Indian Railways on a sound commercialfooting by giving higher priority to profitable freight operations through redluctions insubsikiies for passenger, suburban and meter gauge services and through thecorporatization/privatization of its manufacturing activities.

1.17 Lessons to be Learned from Past Projects. The Bank's lending in the transport sectorin India has faced a multitude of problems, especially in the area of implementation. Obstacles tosatisfactory project performance have included shortage of counterpart funding, delays in decision-

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making, and capacity constraints and quality control in the construction industry and procurementdelays. These problems are not unique to the transport sector but also appear in other sectors.

1.18 Many of the problems were project-specific: lack of familiarity with Bank procedures;changes in project scope or components during implementation; inadequate engineering designs;changes in project management; low salaries; an delays in procurement start-up delays. Generallyspeaking, the railway projects have encountered fewer implementation problems than those in theother sub-sectors due to a well-structured administrative system familiar with Bank procurementprocedures. The main problem has been procurement delays.

1.19 Because of the above, Bank-financed projects in the transport sector have in many casesencountered substantial delays in implemen'tation and, in some cases, cost overruns. However, itshould be noted that the qiuality of the completed projects components have, (with some exceptions,particularly regarding road construction standards), been acceptable. To further improveimplementation quality, over the last two years there has been increased use of internationalconsultants in project design and supervision, larger contract packages, and standardization of tenderdocuments as adopted in the Second National Highways Project. In June 1993, the government alsoannounced the establishment of a monitoring system and a new system of releas, of counterpart fundsto accelerate project implementation. In order to further improve procurement, the government andthe Bank jointly prepared "standard bidding documents" to be used for all future Bank projects inIndia.

1.20 Drawing on past experience, considerable attention has been given to several measuresto ensure efficient iniplementation of the proposed Container Transport Logistics Project. First,agreement has been reached on the key policy issues such as the Multi-modal Transport of Goods Act(para 1.27), some changes in custome procedures (para 1.28), and private sector participation (para1.27) that will enable container transport to develop. Second, the preparation of the physicalcomponents of the project is well advanced. Equipment specifications, procurement packaging andtender documentation have been agreed before loan negotiations. Finally, in order to improve thetechnical, operational, financial and marketing performance of CONCOR, the Government of TheNetherlands has approved a grant for a comprehensive technical assistance program, which is anintegral part of the project.

C. Ro1e of Transport in Facilitating Trade

1. Maior Transport Constraints to Trade Growth

1.21 The Eighth Plan stated that GOI would carry out further trade reforms to better integratethe Indian economy into world trade. However, faster growth in trade will be held back if currentconstraints in the transport sector are not addressed. As discussed in section B above, the transportsystem has not kept pace with the demand for transport services, largely because of insufficientinvestments, some inanpropriate policies, and less than optimal efficiency. The Indian transport sectorhas also been slow in upgrading technology and adapting to changing transport demands in bothdomestic and foreign trade. This is particularly true for containerization.

2. Role of Container Transportation

1.22 Containerization trarsport in India began only recently and has developed at a relativelyslow pace. At present containerized transport of general cargo accounts for only about one-third ofthe total containerizable cargo, as compared with 65 to 70 percent in many other developingcountries. Perhaps more importantly, fewer than 20 percent of the containers passing through Indianports move inland, while 80 percent are stuffed or destuffed in the ports, clearly indicating thepotential for substantial further growth in the inland movement of containers. The slow development

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of inland container movements can be explained by several factors, including the organization of thetrade, insufficient infrastructure and facilities for container transport and handling, and outdatedregulations (see para 1.26).

1.23 The benefits of containerization are manyfold: it allows door-to-door transport, speedyintermodal transfers, low handling costs, reduced breakage and pilferage, lower insurance costs, andearlier payments to the exporter. The Indian economy would benefit substantially through improvedcompetitiveness and higher revenues or lower costs if containerization were used as extensively as inother countries in the region.

1.24 As part of its effort to promote exports, GOI has in recent years incremed port capacityand facilitated the development of container and combined transport services. A major new port wasconstructed at New Bombay (JNPT), with specialized container facilities, and new container-handlingfacilities were added at other major ports such as Madras and Cochin. Following the estabiishment ofCONCOR as a wholly owned subsidiary of IR in March 1988, considerable progress has been madein developing an initial network of inland container depots (ICDs) and a system of block containertrains linking Delhi with the major ports of Bombay (JNPT and BPT), Madras (HOM), as well asbetween Bangalore and Madras and Cochin. New ICDs have recently been opened at Delhi andBangalore. The private sector also owns and operates an increasing number of container freightstations (CFSs).

1.25 The development of containerization and increased use of inland rail transport ofcontainers will also help reduce the severe bottlenecks on India's highways. According to a recentstudy, 46 percent of trucking hauls on India's main highway network are in excess of 500 km and 26percent are in excess of 1,000 km. Much of this traffic could be moved by rail in containers if high-quality, long-haul container transport services were made available.

3. Major Issues in DeveloDinge Containerization

1.26 Containerization has developed slowly in India mainly because (a) customs regulationsand procedures restrict movement of import/export containers by road and prolong the time containersmoving inland have to spend in the country; (b) there was a shortage of ICDs and CFSs; (c) therewas no appropriate legislative framework for container transport; (d) the shortage of railway fiats andthe low priority given by IR to such traffic; (e) the shortage of multi-axle trucks suitable for thetransport of containers; and (f) the generally poor condition of road networks that restricts roadmovement of containers.

1.27 Most of the above problems have been or are being addressed. The government hasopened the development of ICDs and CFSs to the private sector and stablished a -one-window-approval system (b). Th-v legislative framework for combined transport has been dealt with throughthe recent passage of the Multi-Modal Transport of Goods Act, (1993) and various amendments thatare presently being prepared (c). The proposed project would provide additional flat-wagons forrailway movement of containers (d). Linked with the project. IR and CONCOR have developed anew memorandum of understanding (MOU) for 1994-95 that accords higher priority to this trafficthrough increasingly fixed schedule guaranteed transit time services for container trains (d).Resolution of the road network constraints and upgrading of truck technology (e and f) are longer-term measures that cannot be dealt with within the scope of the proposed project.

1.28 The customs bottleneck is one of the most difficult issues facing trade development inIndia. The customs system is widely regarded as one of the more cumbersome and complicated in theworld. The system is based on safeguarding revenues; until recently over 50 percent of centralgovermment revenues were derived from customs duties and taxes. The rules and procedures used for

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assessing and collecting duties and taxes, however, have become excessively complex and open toabuse by bureaucratic discretionary power. The 1991 Rail India Technical and Economic Services(RITES) review of customs procedures and documentation has already resulted in some simplificationof procedures and alignment of export documents. A review of the recommendations made by RITESis currenly being carried out for the Ministry of Commerce to assess the extent of implementatioL.Apart from these actions, there reportedly has been a significant improvement in the attitude ofCustoms over the last year. Furthermore, in late-1993 the Ministry of Commerce established acommittee to review all procedures relating to imports and exports with the objective ofsimplification; their recommendations are expected shortly.

1.29 The project addresses the specific customs procedures and practices that restrict or wereperceived to restrict the inland movement of containers. These points were discussed during loannegotiations and the following Action Plan agreed between the government and the Bank:

(a) Containers, whether loaded with goods or not, will be granted temporary admission fora period of six months, which may be extended by the competent Customs authorities,without any separate statutory Customs document being required to be filed for eachcontainer separately. The party concerned shall notify the Customs of the number andidentification particulars of the containers to be moved outside the Customs area. Anybond required for such movement could be either for a specific individual consignmentof containers or as a standing general bond covering a larger number of containers. Theaimount of bond shall not exceed the Customs duty leviable on such containers in casethey are not re-exported within the stipulated time. Appropriate instructions to theCustoms authorities concemed will be issued before 31 May 1994. The questionwhether the requirement of bond can be waived will be examined in the light of recentdevelopments, including the new UN/ECE Container Pool Convention. The Bank will beinformed of the conclusion and measures to be taken by end of 1994.

(b) As regards movement of goods under bond to inland destinations, Customs may requirea bank guarantee for an amount not exceeding the Customs duty leviable on the goods.For the benefit of traders, Customs will clarify before 31 May 1994 any ambiguityregarding the amount of bank guarantee required for different categories of importers.

(c) It is confirmed, and will be clarified to the trade before 31 May, 1994, that there is norestriction that export containers, stuffed at exporters' premises and sealed by Customs,should move to a port, an airport, an ICD or a CFS for export by (i) any particularmode of transport, or (ii) only under the custodianship of a public sector entity.

(d) The relevant wording of the Import Transhipment Regulations will be reviewed with aview to be revised by 31 December 1994 in order to reflect the fact that transhipment isallowed by rail, sea, air or road. Transhipment by road, however, may be subject toconditions or may be disalowed where there are exceptional risks involved (e.g. becausuof the hazardous nature of the goods or restrictions on their import into the country).The availability or non-availability of a particular mode of transport should not be adetermining factor for the choice of mode.

(e) A twenty-four hour Customs examnmation and clearance facility is available for exportcargo at the four major ports and airports since 1 April 1994. On request, and whenwarranted by the volume and nature of traffic, such a facility would be considered forintroduction at ICDs/CFSs as well. Presently examination and clearance of cargo atICDs/CFSs beyond normal working hours is available on payment of overtime charges.

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II. CONTAINER CORPORATION OF INDIA (CONCOR)

A. The Companv

2.1 CONCOR was established under the Companies Act in March 1988, at therecommendation of RITES. It is a wholly owned subsidiary of IR. In November 1989, CONCORbegan operating the ICDs established earlier by IR and now operates 10 ICDs (New Delhi, Ludhiana,Abmedabad, Pune, Bangalore, Coimbatore, Hyderabad, Guntur, Anaparti and Guwahati), 3 CFSs, 3port side container terminals (PSCTs), and 2 domestic container terminals. It has remained the onlyentity in the country handling container traffic at ICDs, althou6 h another public sector enterpriseoperates a large number of CFSs, partly in competition with CONCOR. More recently, theGovernment has opened the establishment of ICDs as well as CFSs to the private sector (as indicatedin para 1.27). Besides CONCOR, certain other state agencies as well as The private sector hasresponded and now own and operate a large number of CFSs.

2.2 Company Assets CONCOR has an authorized capital of Rs 1,000 million, out of whichRs 650 million has been subscribed by IR, but most of the shares are held in the name of thePresident of India. Until recently CONCOR owned very few physical assets and most of the land andfacilities have been leased from IR at concessional rates. During the past three years, CONCOR hasmade substantial investments in ICDs at TUGHLAKABAD (TKD) outside New Delhi, Bangalore,Madras and elsewhere at an estimated cost of Rs 1,110 million, funded primarily through internallygenerated funds and capital subscriptions by IR. Handling equipment at all locations except TKD isowned and operated by private sector contractors. At TKD, CONCOR owns and operates most ofthe equipment; this is the only location where it intends to follow this practice. Requirements forunskilled labor at all locations have been contracted out.

2.3 Management CONCOR is managed by a managing director. It has a Board ofDirectors composed of ten members: the chairman, the managing director, two executive directors formarketing and operation and for finance, and six non-executive directors from IR and relatedministries. Non-executive directors are nominated by relevant ministries. The Board meets at leastonce every quarter to decide company affairs. In order to enhance CONCOR's competitiveness andperformance as well as responsiveness to user requirements, it is desirable to broaden the Boardcomposition by bringing in members with a commercial marketing or operational background tocomplement the current experience mix. During loan negotiations the Indian delegation informed theBank that the principle had been approved by both the Borrower Board and by the Railway Board andarrangements are presently underway under the guidance of DPE to identify suitable non-official part-time board members. Since this will take some time, it was agreed that the implementation in linewith existing Department of Public Enterprises (DPE) guidelines which provide that one-third of PSUboards be constituted by non-official part-time directors would become a condition of LoanEffectiveness.

2.4 CONCOR's organizational structure is shown in Chart 2.1.

2.5 Staffing As a public sector unit (PSU), CONCOR's staffing policy is governed byrelevant government rules, regulations and pay scales. CONCOR currently employs about 285employees, of whom 37 are on secondment from IR. In order to minimize overheads and maximizeefficiency, CONCOR utilizes another 576 employees at its ICDs and CFSs supplied by privateconractors. Most of the 16 senior management officials of the company have come from IR,seconded for three to five years with the option to return to IR or to stay at CONCOR. The topmanagement is composed of former IR officials who have severed their employment links with IR andit is expected that the number of staff on secondment will decline. External recruitment at themanagerial level has been limited so far but is expected to increase, along with the need fordiversified expertise as CONCOR becomes more commercially oriented.

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B. Business Atvte

2.6 The transportation of containers by rail generates over 95 percent of CONCOR'sturnover, making it a container transport operator. CONCOR operates a network of ICDs, CFSs andPSCTs that it either took over from IR or buflt during the past 3 years. Its business activities fail intothree categories: conainer freight movement (74 percent of revenues), terminal handling (9 percent),and ground storage (8 percent). The remanng 9 percent is generated primarily by interest income onshort-term deposits.

2.7 Clearly, container freight handling is CONCOR's main line of business, but since itcurrently does not own its rolling stock, it is like a non-vessel operating container carrier (NVOCC),accepting containerized cargo and afranging for its transport (primarily through IR). CONCOR alsoarranges transportation of contaiers by road over some selected corrdors. CONCOR pays IRhaulage charges for containers on a freight all lknd (FAK) tariff basis (incidentally, other containerfreight operators can ship by IR under the same FAK tariff basis) and is free to set rates according towhat the market can beAr. Traffic transit paths are presently provided by IR according to its ownpriority in scheduling, and there is no guarantee for "on-time" transit for CONCOR's containerfreight. This will change under the new MOU (see section F). IR has indicated that it is presently inthe process of negotiating agreements for container transport with at least one private party and that itwould be willing to negotiate similar arrangements with other intersted parties.

2.8 CONCOR's continer freight traffic falls into two categories: import/export traffic (thetransit between ports and ICDs or CFSs) and domestic traffic (the relatively small but growing flowsbetween Indian statinns). Over 60 percent of CONCOR's import/export traffic is concentated on thekey rail transit between the Delhi and Bombay/JNPT ports. Another 20 percent is on the Delhi-Madras corridor. The remaining is found between ports and other inland destinations, includingBangalore and Guwahati in Assam. CONCOR is responsible for container handling at all of its inlandlocations (including PSCTs). However, the coiner handling activi at the ports is theresponsibility of the respective port authorities/stevedores. During 1992-93, CONCOR handled over155,000 twenty-foot equivalent units (TEUs) at its various terminals, including 33,000 TEUs (21percent) of domestic traffic. For 1993-94, CONCOR is expected to handle a total of 221,000 TEUs,of which 51,000 (23 percent) are domestic-a 42 percent increase over the previous year.

C. CONCOR's Smth and Weaknesses

2.9 s CONCOR's major competitive strength is that it is the leader in a rapidlyexpanding market. It is estimated that because of the low con ion rate of cargo and therelatively low trade orientation of the Indian economy, in ion will expand by at least 20percent per year until the turn of the centy. The growth is partly as a result of increased foreigntrade, but more importantly due to a growth in the share of continerizd traffic that moves inland incontainers rather than being stffed/destuffed in the ports as is presently the case. CONCOR, inanticipation of the growth in demand, is planing to invest heavily during the next five years toincrease its handlig capacity, quality of service, and operaig efficiency.

2.10 Container tranwport by rail also enjoys subsanti cost advantages over long-haultransport of freight by road. It is estimated that on the crucial TKD to Bombay corridor, CONCORhas at least a 20 percent cost advantage over the transport of freight by road in break bulk. It can beassumed that even when the regulatory framework allows free movement of containers by road,CONCOR will still enjoy a substntial cost advantage on the TED to Bombay corridor. in the shortand medium term this advantage could also increase as traffic congestion increases on the mainhighways. In addition, when compared to road haulage, CONCOR enjoys a subtntial secuity,pilferage and damage advantage, with an accident rate of only 0.02 percent of containers carried.

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2.11 Weaknesses Even though CONCOR enjoys substantial cost and security advantages, itfalls short in meeting the demand for a faster, more frequent and reliable level of service. In addition,CONCOR lacks both the physical capacity and service facilities to capture the growing demand forcontainer transport. This explains why such a high percentage of cargo is still moving by road inbreak bulk for distances of over 1,000 km and such an important share of exports are shipped by air(para 1.10). Furthermore, CONCOR's record in responding promptly to customer inquiries andrequirements needed to be improved. At present it is handling the settlement of claims according tothe Railway Act procedures, ieading to complaints from the customers who often get the run-aroundbetween CONCOR and IR rather than prompt setdtement of their claims.

2.12 The project, in conjunction with a five-year Business and Finance Plan forFY93194-FY97/98, addresses many of the weaknesses of CONCOR (sev section E). The FY94/95MOU between CONCOR and IR (currently agreed but awaiting review by the Department of PublicEnterprise before finalization) also begins to tackle the issue of reliability, speed and frequency ofservices (see section F).

2.13 In order to deal with one of the most frequent complaints of the users, the currentsystem for settling claims should be thoroughly reformed to make CONCOR fully responsible forsettling claims with its customers, by assuming liabilities comparable to those provided by multi-modal transport operators (MTO) competitors. The necessary arrangements were reviewed duringloan negotiations, and implementation would be a condition of loan effectiveness.

D. Financial Performance

2.14 CONCOR's business activities have grown rapidly since it began operating. Thenumber of TEUs handled has increased by almost 500 percent, from 26,511 (FY91/92) to 155,585(FY93/94); over the same period, turnover has increased by more than 300 percent, from Rs 210million to around Rs 900 million. CONCOR has also been profitable since it began operations, andprofits before taxes increased from Rs 48 million (FY91/92) to Rs 250 million (FY93/94), whileprofits after tax incrased from Rs 32 million to Rs 173 million (see Table 1).

2.15 CONCOR has enjoyed a high level of profitability, with an operating ratio of 77percent, a gross profit margin (profit before tax divided by total income) of 28 percent, a net profitratio of 19.2 percent and a return on equity of 27 percent during FY93/94. CONCOR has retainedmost of its earning to finance its capital expenditure budget, and in FY92 it declared its first dividendof Rs 5 million, which increased to Rs 17.5 million in FY93.

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Table 1 CONCOR Financial StatementsProfit and Loss Account

(Rs millions as of March 31, 1993)

______________________________ FY90191 FY91/92 FY92/93Operating Income 186.6 500.0 811.0Other Income 23.5 44.7 88.5Total Income 210.1 544.7 899.5

Total Expes 131.9 367.2 644.4Profit before tax 77.9 177.0 250.0Tax A461 77.5Profit After Tax 31.8 110.8 172.8

Balance Sheet(Rs millions as of March 31, 1993) ______

_____________ ____________FY90/91 FY91/92 FY92/93

ASSETS

Curren Assets, Loans and Advances 159.80 304.80 325.30Investments 245.40 287.90 230.10Fixed Assets 7.80 10.70 257.20Less Accmulated Depreciation 0.30 0.80 5.60Net Fixed Assets 7.50 9.90 251.60Capital-Work in Progress 53.70 301.00 571.60Miscellaneous 1.10 1.10 1.00

Total Assets 467.50 904.70 1379.40

LLABILITIES

Current Liabilities 80.80 243.40 314.20Loans 0.00 7.40 79.60Reserves 56.80 183.90 335.70Shareholders Equity 329.90 470.00 649.90

Total Liabilities and Equity 467.50 904.70 1379.40

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E. Business and Finance Plan

2.16 CONCOR has prepared a five-year Business and Finance plan (FY93/94-FY97/98) thatsets out the corporaia objectives and resource mobilization strategy needed to implement the plan.The salient features of the plan are that CONCOR plans to consolidate its market position throughrapid growth and profitability, while at the same time improving the quality of its services. In thebusiness plan, CONCOR has projected its container traffic at 470,000 TEUs by FY97198.

2.17 In order to achieve the growth targets set out in the business plan and improve its levelof service, CONCOR has prepared an accompanying resource mobilization plan. The resourcemobilization plan provides for investment of Rs 4,800 million over the next five years. CONCORplans to raise Rs 600 million through leasing of containers and other equipment, Rs 1,200 millionfrom retained earnings, and the remaining Rs 3,000 million from the proposed Bank loan. If thebusiness should grow faster than expected, the sale of new equity would be considered during thelatter years (not counting the sale of currently subscribed equity from which the revenues would notaccrue to CONCOR).

2.18 The breakdown of CONCOR's resource mobilization plan shows that more than 90percent of the funds budgeted will be used for the purchase of new flatbed wagons and the purchaseand retrofit of existing flat wagons currently owned by IR, in order to ensure an adequate supply ofrolling stock for the expected container traffic. The balance will be spent on additional cargohandling equipment and related infrastructure to improve both the productivity and capacity ofCONCOR.

2.19 The primary aim of the resource mobilization plan is to provide CONCOR with thenecessary hardware to greatly improve its service level and to increase capacity by financing modernrolling stock for regular block train operations on the gateway port corridors, while at the same timestrengthening its commercial performance. The business plan together with the resource mobilizationplan will be updated annually to help CONCOR meet its long-term objectives. During loannegotiations, agreement has been reached that CONCOR will make available to the Bank annually forcomment its updated Business and Finance Plan.

2.20 In order to provide a sound basis for its future financial, commercial and operationalperformance, the Business and Finance Plan of CONCOR also provides for a gradual dilution ofCONCOR's equity (by as much as 35 percent after FY97/98) through the sale of currently subscribedequity held in the name of the President of India or issuance of additional equity. An early sale ofshares on the market would tend to establish CONCOR as a separate commercial venture in the mindof the public, further commercialize and institutionalize the relationship between IR and CONCOR,and at the same time attract new shareholders-all of which should improve the image and marketorientadon of CONCOR. During loan negotiadons, the government anreed that a minimum of 5percent of CONCOR's equity will be offered for sale to the public.

F. Memorandum of Understanding (MOU)

2.21 In the past CONCOR and IR have jointly established guidelines for commercial,operating and general arrangements. This process has been further strengthened through thenegotiation of an MOU between CONCOR and the Ministry of Railways to better define and monitorperformance targets and obligations. It should be noted that in India, MOUs are presently negotiatedamnually between each of the public enterprises and its parent or supervising ministry, withcommitments and performance targets limited to the year in question.

2.22 More specifically, in the draft MOU for FY94/95 IR has committed itself tooperatimg scheduled unit contaix -ins between TKD and JNPI/BPT and between TKD and HOM.

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A planned 25 trains will be operated each month between BPT (average transit time of 69 hours), 22trains per month between JNPT and TKD (85 hours), and 8 trains per month between HOM and TK)(126 hours). This schedule is compared to an average of 105, 131 and 160 hours (respectively)during the first nine months of FY93/94. Even more importantly from the users point of view is thereliability of transit times. For example, the average transit time in December 1993 varied between52 and 235 hours on the TKD-BPT run and between 78 and 285 hours, TKD-JNPT. Substantialreductions are also expected in the turnaround times at TKD and the gateway ports. Of the plannedscheduled trains, each corridor will operate a substantial number of guaranteed transit time trains.According to the MOU if the guaranteed transit time is met by IR, CONCOR will pay a 5 percentprenium to IR; conversely, if the guaranteed transit time is not met, IR will give CONCOR a 5percent discount on its standard tariff rate.

2.23 The MOU also sets out the operational targets that CONCOR must attain. Specificprofitability, traffic and turnover targets have been established for CONCOR. The performance ofCONCOR and its management is then evaluated at the end of the year to how well the targets havebeen met (or exceeded). Annex 2.1 provides a summary of the key provisions included in the draftMOU for FY94/95.

2.24 The MOU will become the fundamental instrument for commercializing therelatronship between IR and CONCOR, and it is envisaged that, in line with current Indianprocedures, it will be updated annually to reflect changes in basic elements related to productivity,quality of service and profitability of CONCOR, and the level of service provided by IR. The mainfeatures of the draft FY94/95 MQU were confirmed during loan negotiation. Agreement was alsoreached that satisfactory MOUs will be maintained during the implementation of the proiect. and thatfuture draft MOUs will be furnished to the Bank by end April of each year.

2.25 To secure the third link in the performance chain, CONCOR also needs tonegotiate arrangements with each of the three gateway ports (JNPT, BPT and HOM) for improvingturnaround time of flat wagons at the ports. During loan negotiations CONCOR agreed to enter intoan agreement with each gateway port by December 31. 1994.

G. Financial Projections

2.26 For a relatively young and rapidly expanding company, CONCOR has a strongbalance sheet. In FY93/94, CONCOR had an equity base of almost Rs 1,000 million and onlyapproximately Rs 80 million in long-term debt, giving it a very low debt to equity ratio of .08:1. Inaddition, for the same year, CONCOR's debt service coverage ratio was around 20:1 and its currentratio was 1.7:1. The low leverage and relatively high liquidity position of CONCOR means that itwill be able without any further capital increases to mobilize and service a substantially higher levelof debt than at present.

2.27 According to CONCOR's projections, by FY97/98 it will be handling 470,000TEU's representing a 25 percent annual growth in traffic. Taking into account the expected rapidgrowth in India's trade (over 10 percent per year in real terms) together with the still lowcontainerization rate, this figure could tum out to be on the conservative side. If the projected growthin the market materializes and CONCOR manages to improve both the quality and cost efficiency ofits services, it should be able to maintain its current high levels of profitability and a reasonablyleveraged balance she!et. More importantly, it should be able to generate enough resources to serviceits increased debt comnitments caused by the implementation of the Rs 4,800 million capitalexpenditure component of the FY93/94-FY97/98 Business and Finance Plan. During loan agreementsCONCOR agreed to specific financial covenants to the effect that CONCOR shall: (a) not incur anydebt unless CONCOR shows that the projected mternal cash generation of CONCOR for each fiscalyear during the term of the debt to be incurred shall be at least 1.7 times the estimated debt service

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requirements of CONCOR in such year on all its debt including the debt to be incurred; (b) not incurany debt, if after the incurrence of such debt the ratio of debt to equity shall be greater than 3: 1; (c)maintain a ratio of current assets to current liabilities of not less than 1:1; (d) from time to time takeall such measures within its power, as shall be required to enable CONCOR to meet as of its fiscalyear beginning April 1, 1994, a working ratio of not more than 83 percent; and (e) maintain a rate ofreturn on average current net value of fixed assets of at least 17 percent.

2.28 An element that could weaken CONCOR's continued strong financial performanceand its ability to service a higher debt load is the basis on which IR land currently leased byCONCOR is valued. Originally, it was decided to determine lease charges for land leased byCONCOR from IR based, on the book value of the land. However, subsequently, IR has claimed thatthe basis of valuation for lease charges for land should be related to market value rather than bookvalue. A final agreement on this subject has not yet been reached between CONCOR and IR, and ithas been estimated that the fixation of lease charges on the basis of current market rather than bookvalue of the IR land currently leased by CONCOR would have a substantial impact on the financialperformance of CONCOR

m. THE PROJECT

A. Proiect Origin

3.1 The initial assessment for the proposed project was a sector survey (Trade Logistics,report no. 8130-IN), carried out in 1989 by the Bank, in close cooperation with relevant ministries,transport operators, and shippers. Key recommendations were that the Government should: (a) enactlegislation regarding multi-modal transport; (b) relax the customs procedures and regulations thatprecluded the operation of private bonded warehouses and impeded container transport by road; (c)develop ICDs and improved air cargo facilities; (d) promote private sector investment in containerfacilities and equipment; (e) review regulations that restrict the ability of Indian ship operators toadapt to market requirements; (f) review rail tariffs that seem to discriminate against containerizedcargo; and (g) improve the efficiency of container handling at Indian ports.

3.2 Since the completion of the survey, and particularly since 1991, the government hastaken many important steps to deal with the weaknesses identified, for instance in adopting aMultimodal Transport of Goods Act (1993), opening ICD/CFSs to the private sector, improving portfacilities, moving to greater private sector participation in port operations, and beginning to reducesome of the procedural constraints affecting container transport. However, much more needs to bedone to improve the capacity and efficiency of container transport in India.

B. Rationale and Objectives

3.3 Rationale The proposed project forms part of the Bank's Country Assistance Strategy(report # P-6141-IN) which focuses on supporting GOI's efforts to provide an enabling environmentfor broad-based efficient private sector-led growth while accelerating poverty alleviation and thedevelopment of human resources, will be discussed on May 12, 1994. It also forms part of the Bank'sstrategy of promoting exports, increasing efficiency, promoting institutional capacity, and buildingcompetition in the transport sector in India. In particular, the development of international containertransport is higbly management-intensive and requires a commercial and institutional framework thatis not yet complete in India. The Bank and the bilateral assistance from The Netherlands would assistin transferring relevant overseas experience in the technology of container handling and tiansport,which would improve the institutional capabilities of CONCOR as well as of the industry. It wouldalso enable CONCOR to become a fully competitive and financially sound

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enterprise, pernitting it to finance its future requirements on the lomestic capital markets througheither debt or equity financing.

3.4 Project Objectives: The overall objective of the project is to establish an enablingenvironment for container transport and increase the capacity and efficiency of long-haul transport ofhigh-value general cargo. More specifically, the proposed project would:

(a) improve the institutional framework for efficient and comnpetitive container transport toserve both foreign and domestic trade;

(b) strengthen the commercial and operational performance of CONCOR in an increasinglycompetitive environment; and

(c) greatly improve the service level and capacity in the main corridors by providingmodem technology rolling stock to permit regular block train operations on gateway portcorridors.

C. Project Description

3.5 The proposed project would help develop the necessary framework for containertransport. The project would include three major complementary components:

(a) IMnrovement of the institutional framework for efficient and competitive containertransport by removing some of the restrictive customs practices and policies restrictinginland movements of containers, including by road, and expanding customs workinghours at TKD (see customns reform as described in para. 1.29).

(b) Strengthenin2 of the commercial approach and operational capacity of CONCOR in anincreasingly competitive environment by:

(i) formalizing service relations with IR through a MOU relating to service levels ofcontainer trains;

(ii) divesting at least 5 percent of the Government's equity in CONCOR, as a firststep to diversifying the shareholder base and strengthening its commercialorientation;

(iii) broadening the composition of the Board of Directors of CONCOR to introducenon-official directors to improve the skill base of the Board;

(iv) reforming CONCOR's claim policy to meet customers demand and be competitivewith road transport;

(v) providing technical assistance and training to improve CONCOR's operational,commercial, financial and general management capabilities, with particularattention to the operations at TKD; and

(vi) providing computer systems and related software to computerize accounting andinventory control and providing commercial logistic support to CONCOR.

(c) Support scheduled highL-ualitv container train services in the main corridors through:

(i) acquisition and retrofitting of 1,200 BFK flat cars to air brakdng systems;

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(ii) acquisition of 1,500 new container flat cars of new design prepared by theResearch, Design and Standards Organization (RDSO) that are equipped with airbrakes, automatic couplers and high-speed bogies (100 KPH zapability);

(iii) acquisition of 5 prototype 60-foot long platform, lightweight flat wagonblockscapable of carrying three loaded 20-foot ISO containers, which utilize automaticcouplers on end units and slackness drawbars for intermediate couplings, fortesting purposes in preparation for the next generation of higher capacity flatcar;

(iv) acquisition of approximately 750 new flat cars of the same design as under (ii) oran equivalent capacity of the new designs under (iii) above if the design has beenapproved by the time of starting procurement;

(v) acquisition of complementary cargo handling equipment for TKKD ICD, includingI rubber-tired gantry crane (having a span of 26.5 meters to bridge four tracksand one roadway); 2 reach stackers; and 5 tractor/trailer trucks :o handlecontainers from trackside and serve the CFS warehouses;

(vi) acquisition of an electronic tracking system for container trains, flat cars andcontainers on a pilot basis;

(vii) construction of civil works necessary for completing development of Tughlakabadand construction of ICDs at Ludhiana and Hyderabad to better serve emergingmarkets; and

(viii) provision of engineering services for design, inspection and testing of flat cars.

D. Proiect Cost

3.6 The total cost of the project is presently estimated to be US$ 151 million, which includesUS$ 19 million of price contingencies. The cost estimate includes taxes and custom duties of US$ 15million on imported materials and equipment as well as domestic taxes. CONCOR's Business andFinance Plan currently foresees a Bank loan of approximately US$ 94 million to meet the foreignexchange costs of flat cars and cargo handling and other equipment, as well as part of the local costthereof. The Netherlands have agreed to provide grant funding of about US$ 4 million equivalent forthe technical assistance component for operational support and tmining Annex 3.2. The cost estimatesare detailed in Annex 3.3.

3.7 Cost estimates are on the basis of late-1993 prices of comparable equipment. The civilwork costs are based on preliminary designs. Local price contingencies are applied to the estimatedbase costs in the following order: 7.0 percent for 1994, 6.5 percent for 1995, 6.0 percent for 1996and 5.5 percent for 1997. Foreign price contingencies were applied to the estimated base costs inaccordance with the Bank's guidelines: 2.5 percent for 1994 through 1997. As the Bank-fundedproject components basically involve equipment, no physical contingencies were included.

E. Proiect Financing

3.8 The total cost of the project is estimated to be about US$ 136.8 million, excluding taxesand duties. Of this total amount, US$ 34.7 million will be for foreign exchange components, and theremaining US$ 102.1 million for local currency components. The Bank would finance US$ 94million of the foreign exchange and local component for flat cars, some other equipment and aprovision for complementing technical assistance and training to the extent that this is not covered byThe Netherlands assistance. The Netherlands would finance US$ 4 million of the foreign exchange

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component of technical assistance, and the remaining US$ 53 million would be financed by CONCORthrough internally generated resources or leasinig.

F. Proiect Imolementation

3.9 CONCOR will implement the main components of the project, particularly theprocurement of flat cars and other equipment and the related institutional components. Closecoordination and cooperation with IR will be needed to cnsure the expected performanceimprovements as foreseen under the draft MOU for FY94/95. The broader institutional componentrelated to customs procedures and practices will be implemented by the Ministry of Finance inconsultation with the Ministry of Commerce and Ministry of Surface Transport. While CONCORwould be the recipient of the technical assistance, the Dutch government would contract with theconsulting firm. Project procurement is expected to be started shortly after loan negotiations and theproject should be completed by June 30, 1999. Annex 3.4 and Chart 3.1 contains the provisionalImplementation Schedule for the procurement of the different project components, taking into accountCONCOR's estimate of the time required for RDSO and IR approvals where necessary. In view ofthe rapid increase, in CONCOR's activities and the current shortage of flat cars, carefut attentionshould be given to measures to accelerate preparation of tender documents and the necessary.approvals before tendering and testing of the RDSO and the tri-axle prototypes. Close collaborationbetween CONCOR on the one hand and RDSO and IR on the other will be essential to avoid unduedelays in project implementation that would have a negative impact of CONCOR's revenues andcompetitive situation. The schedule was reviewed and confirmed during loan negotiations.

3.10 Annex 3.5 summarizes the key performance indicators for CONCOR, drawing on thetargets already established in the draft MOU for FY94/95 and in the Business and Finance Plan.These indicators were discussed and confirmed durng loan negotiations and will be reviewed andupdated as appropriate during project implementation.

3.11 In line with current Bank practice, a mid-term review of the project will be carried outjointly with CONCOR and the government. During loan negotiations CONCOR and the governmentagreed to a mid-term review by December 31. 1995. During negotiations the Indian delegationconfirmed that the bilateral agreement with The Netherlands for technical assistance for Part D of theProject is effective; and The Netherlands would be the contracting party to the consultant contract.The Netherlands Ministry of Foreign Affairs confirmed that the selection process had been completedand a firm of consultants had indeed been selected for invitation for contract negotiations and thatfield work started in June 1994.

G. Procurement

3.12 The rolling stock, equipment and goods to be financed by the Bank and expected to costthe equivalent of US$ 200,000 or more per contract package will be procured following internationalcompetitive bidding (ICB) procedures. The Bank's standard bidding document for goods will be used.For rolling stock (flat cars) a two-stage bidding process will be adopted. Domestic bidders competingunder ICB will have 15 percent preference margin or the applicable duty, whichever is lower, if theymeet the domestic value-added requirements. Consultants funded with loan proceeds would beselected in accordance with principles and procedures satisfactory to the Bank.

3.13 Procurement of items required for the retrofit-braking system of 1,200 BFK flat cars, allcivil works, engineering services, and computer software systems will be financed by CONCORunder their own procurement procedures. The technical assistance under the project will be fundedunder The Netherlands Grant using their own procurement procedures.

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3.14 All bid documents and award decisions for the supply of goods financed by the Bankwith an estimated cost of US$ 200,000 or more will be subject to prior review by the Bank. Since allcontracts are expected to exceed this level, 100 percent of the contract packaging for goods/equipmentwill be subject to prior Bank review.

3.15 CONCOR will be using the services of officers from IR who ate fully conversant withthe Bank's ICB procedures of procurement. CONCOR will use the standard Bank bidding documentsfor goods, adjusted as necessary, to take into account country and project conditions, along withtechnical specifications for rolling stock and other equipment for procurement with Bank funding.Draft bidding documents, including specifications for the first tranche of flat cars and cargo handlingequipment have been received as this was a condition of loan negotiations. Specifications for thesecond tranche of flat cars will be prepared following the testing of the new tri-axle flat cars.

3.16 Procurement information will be collected and reported by CONCOR for the following:

(a) Contract award information;

(b) Comprehensive quarterly reports to the Bank, indicating

(i) revised cost estimates for individual contracts and the total project, including bestestimates of allowances for price contingency;

(ii) revised time of procurement actions, including advertising, bidding, contractaward and completion time for individual contracts; and

(iii) a compietion report within three months of the loan closing date.

3.17 A summary of the procurement arrangements is indicated in Table 2. These wereconfirmed during loan negtiations.

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Table 2 Sunmary of Proposed Procurement Arrangements(US$ millions equivalent)

S. No. Project Element Procurement Method NBF(a) Total Cost

l______________ ICB LCB Othets

1. Works 12.1(b) 12.1(b)

2. Goods and Equipment

2.1 New rolling stock 101.1 101.1(2,250) (91.1) (91.1)

2.2 Five tri-axle flatcar for 0.6(c) 0.6testing (0.5) (0.5)

2.3 Purchase of 1,200 used 23.1(b) 23.1(b)BFK flat cars

2.4 Retrofit braking system of 4. l(b) 4. l(b)l____ 1,200 BFK flat cars

2.5 Handling equipment 2.3 1.0(b) 3.3(1.8) (1.8)

2.6 Trucks, chassis and other 0.2(b) 0.2(b)equipment

2.7 Computers and software 0.6(b) 0.6(b)

2.8 Transponders and related 0.5 0.5equipment (0.4) (0.4)

3. Technical Assistance3.1 Capacity Building and 0.2 4.0(d) 4.2(d)

______ Training ________ ________ (0.2) (0.2)

3.2 Project Preparation and 1.2(b) 1.2(b)Imnplementation Support

Grand Total 103.9 0.8 46.3 151.0(93.3) (0.7) (94.^'

Note: Figures in parentheses indicate amount financed by Bank. The order of these notes are:

a. Not Bank financed.b. Financed by CONCOR.c. Procurement of the prototype tn-axle flatcar for testing purposes may be acquired either

through ICB or from the proprietary manufacturer.d. Financed under The Netherlands Grant.

20

H. Disbursement

3.18 The proceeds of the loan would be disbursed against 100 percent of foreign expenditurescost insurance freight (CIF) or 100 percent of local expenditure ex factory and of items procuredunder ICB, costs of flat wagons, cargo handling equipment, and other equipment, and 100 percent fortechnical assistance and training. This was confirmed durine loan negotiations.

3.19 Disbursements are projected for a period of 5.5 years from July 1, 1994 to December1999. Project completion is expected by June 30, 1999. The proposed disbursement period of sixyears compares with an all-sector past profile of 8.5 years and a transportation sector profile of 9.5years. The shorter disbursement period in this case is justified by the general progress made inimproving project implementation procedures in India, including the use of agreed standard biddingdocuments. The project mainly finances equipment and consultant services and not civil works, whichtend to have a longer implementation period, and will be implemented by a company with a morecommercial approach than often found in the public sector. Also, tender documents will be preparedand part of procurement started before Board presentation. It is expected that the main projectcomponent of flat cars will be procured in two phases with a two-three years interval to allow fortraffic growth. The disbursement schedule is contained in Annex 3.6.

3.20 It is expected that all disbursements would be fully documented and there would be nodisbursements against statements of expenditures. The borrower has indicated that there would be noneed for a special account. Expenditures incurred from January 1, 1994 to the date of loan signing forproject activities would be eligible for retroactive fincing up to a maximum of US$ S million. Allcontracts and items to be fmanced retroactively will be procured in a manner consistent with theabove arrangements and acceptable to the Bank. The closing date of the loan is December 31, 1999.

I. Economic Evaluation and Risks

3.21 The economic evaluation prepared by CONCOR covered the two main projectcomponents, i.e. retrofitting of 1,200 ex-sting flat cars (to be funded by CONCOR) and theacquisition of 2,250 new flat cars to be funded with the help of the Bank loan. The economnicevaluation of the retrofitting is based primarily on the reduced operating/maintenance costs because offewer breakdowns and the increased carrying capacity because of the higher speeds. The componentyields an ERR of 33 percent as discussed further in Annex 3.7. The economic evaluation of the newflat cars takes into account the additional carrying capacity provided by these cars and the costsavings as compared with road traiisport over the three main corridors for which the weighted averagedistance is about 1,600 km. As discussed further in Annex 3.7, the rate of return for this componentis 37 percent. In the event of a combined increase in investment costs of 10 percent and a reductionin benefits of 10 percent. the ERRs would fall to respectively 27 percent, 31 percent, indicating thatthe project has a high economic rate of return. Further information on the sensitivity analysis,including switching values is given in Annex 3.7.

3.22 The above returns are conservative since they do not take into account several benefitsthat are difficult to quantify. These include the costs of avoided accidents and pollution as comparedwith road transport and the fact that real vehicle operating costs can be expected to increasesignificantly over time as a result of increasing traffic congestion. Because of their modest costs andthe problem of separating out benefits from the incremental supply of cargo handling equipmenttransponders to rack flat cars and technical assistance, no separate economic evaluation was carriedout for these items accounting for a combined 5 percent of the project cost. CONCOR has carried outa preliminary financial evaluation of the rate of return from the additional civil works to be fundedfrom its ovn resources. It is presently updating and completing this evaluation for the Bank.

21

3.23 The main ris related to the project is that the expected improvements in CONCOR'sperformance will not be achieved due to insufficient support from IR in providing needed block trainpaths and traction power. The recently negotiated draft MOU represents a major step forward inrecognizing the importance of speedy and reliable container service and the readiness of IR to acceptperformance related premiums and penalties. The covenant regarding provision of annually updatedMOUs is intended to further reduce this risk. A second risk concerns the commercial approach andefficiency of CONCOR in responding to market demands. The steps being taken to formalize thecommercial relationship with IR, the up-front offer for sale of a share of equity to the public and theintroduction of non-official Board members should jointly reinforce the commercial approach ofCONCOR. The extensive Dutch technical assistance that covers both the operations at TKD andgeneral manpower development, cost accounting and financial management as well as marketingshould also contribute substantially to improving the efficiency of CONCOR and its commercialapproach. A third risk concerns the rate of traffic growth and the financial implications of lowertraffic growth. This risk is significantly reduced by the fact that almost 80 percent of its operatingexpenses are variable (mainly payments to IR) and would therefore decline or increase in line withtraffic. Also, the acquisition of the second tranche of flat cars can be deferred or advanced in linewith traffic growth. A fourth related and longer term financial risk concerns the foreign exchange riskof debt repayment in the event of further devaluation of the Rs. A significant devaluation would,however, also affect the cost of road transport, particularly fuel, and it can therefore be assumed thatsuch an event should not significantly affect CONCOR's competitive position.

J. Enviromental InMact

3.24 The environmental impact of most of the project components will be positive, and theproposed project as been given a category "B" environmental assessment rating. This was basicallydue to the inclusion of some modest civil works that will be fully fimded by CONCOR. During loannegotiations, CONCOR indicated that the civil works in question (a) were already under contract ortendering and were being funded ftilly by the Borrower and the scope of the works had beensignificantly reduced as compared with what was earlier foreseen; (b) they did not involve acquisitionand clearing of new land; and (c) they mostly involved paving of existing unpaved areas andconstruction of some small building and would in themselves have positive environmental impacts.Construction activities will be monitored by CONCOR for any adverse enviromental impacts andhazards to worker safety and that the responsible contractor(s) will be directed to make immediate andeffective corrective actions when the need arises. As a result of the project, substantal amounts offreight currently moved by truck in break bulk on the highly congested HDC highways will move incontainers over the existing rail network, reducing road congestion, POL consumption, vehicleemissions, and accidents. In addition, the acquisition of new high-speed flat cars will permit a higherand more efficient utilizaton of the existing railway trunk network that is strained to capacity and willdelay the need to construct or convert railway lines.

3.25 At present, no new land needs to be acquired by CONCOR to meet its medium-termtraffic growth projections. With improved procedures and operations the existing facilities operated byCONCOR at TKD/ICD are sufficient for their projected traffic growth for at least the next three tofour-years, depending on demand. Additional land is available if needed.

K. Monitoring and Au&iM

3.26 CONCOR will prepare quarterly progress reparts in a fo!at acceptable to the Bank.These reports should indicate progress made in meeting performance indicators, problemsencountered, remedial steps required, and proposed future actions. The last of these reports will bethe implementation completion report (ICR), which would be issued no later than six months afterphysical completion of the works. The ICR will include, inter alia, the details of project costs anddisbursements, general characteristics of project execution and benefits, the degree to which project

22

objectives were achieved, and the performance of both the Bank and CONCOR of their respectiveobligations. To facilitate the preparation of the ICR and to assess the actual efficiency of the newrolling stocks, CONCOR will keep separate records, as part of the progress reports, on theutilization and efficiency of these rolling stocks. 'lhe reporting requirements were confirmed duringnegotiadons. The sample outline of contents of the Quarterly Report was also agreed to Annex 3.8.

3.27 CONCOR shall maintain records and accounts adequate to reflect in accordance withsound accounting practices and adequate to reflect its operations and financial condition. It shall also(a) have its records, accounts and financial statements (balance sheets, statements of income andexpenses, and related statements) audited by independent auditors acceptable to the Bank inaccordance with appropriate auditing principles consistentlv applied; (b) furnish to the Bank as soonas available, but in any case not later than seven months after the end of each fiscal year, certifiedcopies of its financial statements for such year as so audited and the report of such audit by saidauditors; (c) furnish to the Bank such other information concerning said records, accounts andfinancial statements as well as the audit thereof as the Bank shall from time to time reasonablyrequest. CONCOR agreed during negotiations to these requirements.

3.28 The plan for Bank supervision of the project is presented in Annex 3.9. An average of14 staff weeks per year will be required with a heavier input of 21 staff weeks during the first fullyear, including three staff weeks for follow-up regvarding the customs procedures and one staff weekfor coordination with the Netherlands Government regarding the technical assistance funded by them.This would be offset by a tapering off from 12 staff weeks during the second year: 10 staff weeks forthe subsequent years.

IV. AGREEMENTS AND RECOMMENDATION

4.1 At loan negotiation assurances were obtained that CONCOR will:

(a) Establish in consultation with IR new claims settlement arrangements to be implementedbefore loan effectiveness (para 2.13);

(b) Submit to the Bank for comments annually (beginning in February 28., 1995) the updatedBusiness and Finance Plan (para 2.19);

(c) Maintain during the execution of the project a satisfactory MOU and to this end furmishannually revised version of the MOU to the Bank (pam 2.24);

(d) Enter into agreements by December 31, 1994 with the three gateway ports to ensureexpeditious loading/discharging of container flat wagons (para 2.25);

(e) Take all necessary steps from FY95 onwards to achieve specific financial targets (para2.27);

(f) Conduct together with the Bank a mid-term project review by December 31, 1995 (para3.11);

(g) Implement the project in accordance with agreed procurement procedures (para 3.17);

(h) Follow agreed disbursement procedures (para 3.18);

(i) Comply with agreed reporting requirements (para 3.26);

23

) Submit on an annual basis, within seven months of the end of its fiscal year, auditedaccounts (para 3.27);

4.2 At loan negotiations understandings was reached that CONCOR will:

(a) Implement the project in accordance with the implementation schedule agreed duringnegotiations (para 3.9); and

(b) Achieve agreed performance targets (para 3.10);

4.3 At loan negotiations assurances were obtained from the government that it will:

(a) implement agreed measures concerning inland movemenits of containers in accordancewith the agreed timing (para 1.29);

(b) broaden the composition of the Board of Directors of CONCOR in accordance with DPEguidelines and that this will be implemented before loan effectiveness (para 2.3);

(c) offer for sale to the public 5 percent of its equity in CONCOR by March 31, 1995 (para2.20);

(d) maintain during the execution of the project a satisfactory MOU (para 2.24);

(e) carry out together with CONCOR and the Bank a mid-term review of the project byDecember 31, 1995 (para 3.11);

(f) provide the nomnal loan guarantees.

4.4 The following are special conditions of loan effectiveness:

(a) CONCOR's Board of Directors shall have been broadened (para 2.3); and

(b) CONCOR has implemented a new claims policy (para 2.13).

4.5 Subject to the above agreements, the proposed project would be suitable for a Bank Loanof US$ 94 million equivalent to CONCOR for 20 years including a five-year grace period, at theBank's standard variable interest rate.

24 Annex 1.1

INDIA

CONTAINER TRANSPORT LOGISTICS PROJECTBANK LOANS AND CREDITS TO TRANSPORTATION SECTOR"

Loan/Credit Approval Closing LoanSector Project Name Number Date Date Amount Status

RAIL Railway Ln 17 8/49 3/51 34.00 CompletedSecond Railway Las 167-170 7/57 12/58 90/01 CompletedThird Railway Ln 207 9/58 6/59 85.00 CompletedFourth Railway Ln 233 7/59 6/60 50.00 CompletedFifth Railway Ln 262 7/60 1/62 70.00 CompletedSixth Railway Ln 298 10161 12/62 50.00 CompletedSeventh Railway Eighth Railway Cr 36 3/63 8/64 t 1.43 CompletedNinth Railway Cr 67 10/64 1/66 74.79 CompletedTenth Railway Cr 88 6/66 6/68 82.03 CompletedEleventh Railway Cr 162 9/69 9/71 66.35 CompetedTwelfth Railway Cr 280 1/72 9n4 79.98 CompletedRailway Moder. & Maintenance Cr 448 12/73 9/75 80.00 CompletedSecond Railway Modem & Cr 582 8n5 9/78 110.00 CompletedMain. Cr 844 8n8 9/89 190.00 Completed

Cr 1299 11/82 9/89 253.63 CompletedRailway Electrification Ln 2210 11/82 9/92 200.00 CompletedThird Rail Modernization Ln 2417 5/84 9/92 280.70 Completed

Ln 2935 5/88 2/94 390.00 Ongoing

2267.92Subtotal

PORT Calcutta Port La 198 4/58 12/65 29.00 CompletedMadras Port Ln 199 4/58 6/66 14.00 CompletedSecond Calcutta Port Ln 294 7/61 7/68 21.00 CompletedBombay Port Cr 27 7/62 12/67 21.09 CompletedIndia Shipping Cr 328 372 6/75 84.69 Completed

Ln 2387 3/84 6/92 250.00 Completed

Subtotal 419.78

ROADS Road Cr 3 6/61 6/67 72.11 CompletedBihar Rural Roads Cr 1072 11/80 6/87 36.66 CompletedNational Highways I La 2534 5/85 12/92 200.00 CompletedGujarat Rural Roads Cr 1757 2/86 12/94 138.69 OngoingState Roads I Ln 2994 10/88 6/95 170.00 Ongoing

Cr 1995 10/88 6/95 80.00 OngoingNational Highways ] Ln 3470 5/92 6/2001 153.00 Ongoing

Cr 2365 5/92 6/2001 153.00 Ongoing

1003.46Subtotal

AIR Air India Ln 161 3/57 12/59 56 Completed

PIPELiNE Petroleum Transport Project Ln 3044 4/89 6/95 340.00 Ongoing

Total 4036.76

'Excluding operations for urban transport.

25

Annex 2. 1

CONTAINER TRANSPORT LOGISTICS PROIECT

SUMMARY OF DRAFT FISCAL FY94/95 MOU

between

Container Corporation of India, Ltd.and

Ministry of Railways

1. Corporate Mission: Multi-modal logistics support for international and intemal trade andcommerce.

2. Corporate Objectives: Promote containerization, develop cost-effective service forcontainers, and provide competitive prices and reasonable return on capital.

3. CONCOR's commitments for FY94-95:

(a) Throughput of 250,000 TEUs;

(b) Generate internal surplus of Rs 300 million and 15 percent return on capital employed;and

(c) Others (contained in Annex to MOU).

4. Assistance from Ministry of Railways:

(a) Support in interface with State and Central Government;

(b) Provide unit container train pathways on specified rail corridors to achieve average railtransit times of:

i. TKD-BPT 69 hours;ii. TKD-JNPT 85 hours; andiii. TKD-HOM 126 hours

(c) Provide a minimum number of special weekly paths with reduced transit lines:

i. TKD-BPT 4 at 62 hours;ii. TIKD-JNPT 2 at 78 hours; andiii. TKD- HOM 2 at 120 hours

(d) Provide at least 1,000 rail flat cars (BFKs) and/or modified unloadable BOX wagons.

5. Premium of 5 percent to be paid by CONCOR for the special paths if schedules aremaintained by IR; if not, CONCOR will receive 5 percent discount.

26

Annex 2.2Page 1 of 3

INDIACONTAINER TRANSPORT LOGISTICS PROJECT

FINANCIAL ANALYSIS OF CONCOR

A. Financial Projections For Base Case Scenario

1. The key assumption of the base case scenario financial projections prepared byCONCOR is that they will be handling 470,000 TEUs by FY97/98 and 688,127 TEUs by FY2001/02(see table 2.2.5). The average proje.Aed growth in traffic for the whole period is 19 percent and isdivided into two distinct growth phases. The "high growth" phase ends in FY97/98 with the volumeof TEUs handled growing at over 25 percent per year. The "market consolidation growth" phase isprojected for the subsequent period (FY97/98 through FY2001/02) and will see CONCOR growing ataround 10 percent per year as the market matures and competition increases.

2. The growth in traffic will lead to an even higher growth in operating revenues, asCONCOR will be able to charge higher rates as the quality of service improves. Operating expensesduring the forecast period are expected to grow at a slower rate than operating revenues, leading to aslight improvement in the working ratio. The assumption behind this is that, as a result of the project,CONCOR will start to own most of its roiling stock and thereby be able to benefit from a 16 percentreduction in freight charges under IR's "own your own wagon scheme."

3. However, total expenses are expected to increase more rapidly than total revenues,leading to a modest deterioration in CONCOR's overall profitability. According to the base casescenario, this deterioration in the overall profitability of CONCOR is attributable to the sharp increasein depreciation and interest charges caused by the implementation of its capital investment programunder the FY93194-FY97198 business plan.

4. More importantly, as result of implementing the capital investment program, CONCORwMl also experience a deterioration in its debt, liquidity and leverage ratios (see table 2.2.4) as itsdebt service requirements increase rapidly from the current very low levels. However, in the basecase scenario, CONCOR is projecting that the expected deterioration in its financial position will stillleave it with a fairly strong balance sheet and an adequate level of profitability. A closer look at theprncipal ratios shows that the debt to equity ratio is expected to peak at approximately 2:1 inFY96/97, while the debt service coverage ratio will not fall below 2.3:1 and the net profit ratioshould not drop below 10 percent. These are more than satisfactory for a rapidly expanding companylike CONCOR.

5. Finally, part of the capital expenditure program is going to be financed by a World Bankloan in foreign exchange. CONCOR in its base case projections is forecasting a annual 5 percentdepreciation in the Rs vis a vis the US dollar. This means that the foreign exchange risk of borrowingfrom the Bank is built into the debt repayment projections for the model.

B. Financial Projectic.zs For Alternative Scenarios

6. The second scenario assumes a 10 percent decrease in the projected rate of growth ofCONCOR's total revenue together with a 8 percent decrease (8 percent was used, becauseapproximately 80 percent of CONCOR's operating expenses are variable costs) in the projectedgrowth rate in operating expenses. The results of the first scenario (see table 2.2.4) show CONCOR'sfinancial position deteriorating somewhat. The key debt to equity ratio increases to approximately

27

Annex 2.2Page 2 of 3

2.2:1 in FY97 and the debt service coverage ratio falls to approximately 1.9:1 by FY95/96. Theworking ratio and net profit ratios are lower for the period, indicating that CONCOR still remainsprofitable, with a net profit ratio falling to a minimum of 7 percent. From a cash flow point of view,CONCOR's financial posidon deteriorates considerably, with negative end of,period cash balancesfrom FY96 through FY2000/01. The deterioration in the cash flow position of CONCOR isattributable to the heavy capital investment program and the resulting increased debt serviceobligations. Under the first scenario, if CONCOR maintains the current planned level of capitalexpenditure, it would face liquidity problems especially during the FY94/95-FY96/97 period whenthe capital expenditure program is at its peak. To meet the obligations during this period CONCORwould probably have to arrange short-term bridge financing to bolster its liquidity position. However,as indicated in paragraph 9, CONCOR could in this case cut pari of its capital expenditure programand thus reduce its financial obligations.

7. The third scenario foresees a 20 percent decrease in the projected rate of growth in totalrevenues for CONCOR matched by a corresponding 16 percent fall in operating expenses. Under thisscenario, CONCOR's financial position would deteriorate considerably even though the companywould still remain moderately profitable. The working ratio would fall to 85 percent while the netprofit ratio would drop to a little above 2 percent. Although under the second scenario CONCOR isstill projected to remain profitable the cash flow and liquidity position of the company would becomecntical. The workig ratio drops to zero in FY95/96 and FY96/97 as the company's cash positionbecomes negative. The sharp deterioration in the liquidity position would lead to difficulties in theability of the company to meet its day-to-day operating requirements due to a lack of working capital.Under the second scenario, the debt position of CONCOR also deteriorates, but is not yet critical.The key debt to equity ratio peaks at only 2.8 in FY96/97, and the debt service coverage ratio falls toaround 1.6. The consequences of the second scenario on CONCOR's cash flow position means thatthe company would have major difficulty meeting its financial obligations. This is because eventhough CONCOR would still be profitable and the debt position of the company would not be critical,the company would not generate sufficient cash from its operations to meet its increased debt serviceand capital investment obligations. A substantial reduction in the capital expenditure budget wouldenable CONCOR to remain financially viable.

8. The fourth scenario predicts a 10 percent increase in total revenues (together with a 8percent increase in operating revenues) above what is projected in the base case scenario. With thisscenario the financial position of CONCOR is strengthened substantially leaving it with enoughresources to increase its capital expenditure program if demand justifies it. Its debt to equity ratiounder this scenario does not exceed 1.5:1 while the average net value of fixed assets employedremains above 20 percent. The already good profitability of CONCOR would increase further with aworking ratio not increasing above 75 percent and a net profit ratio substantially above 13 percent forthe whole period (with increases to over 20 percent in the later part of the period). The cash flow andliquidity position of the company would be substantally reinforced, with the current ratio increasingfrom a low of 1.9:1 during the period. This scenario would mean that CONCOR should not have anymajor difficulties in meeting its fiacial obligations even during the peak period of the capitalexpenditure program, and the working capital position of the company would be quite strong.

C. CONCLUSIONS

9. The sensitivity analysis conducted on CONCOR's strong financial base case scenario,shows a modest sensitivity to fluctuations in revenues and expenses at the 10 percent level but a muchgreater sensitivity at higher deviations. From the results it is fairly clear that a deviation of over 10percent from the projected values in the base case scenario would have significant repercussions on

28

Annex 2.2Page 3 of 3

the company's financial position. This is especially true for the company's cash flow position thatwould deteriorate so much that CONCOR would have difficulty meeting its financial obligations.However, what needs to be kept in mind is the flexible nature of CONCOR's capital expenditureprogram. The bulk of the capital expenditure program is the acquisition and retrofit in batches ofrolling stock over a three to four year period. This means that if traffic projections are substantiallybelow projections, CONCOR would not need part of the additional rolling stock, enabling it to cancelpart of its acquisition of rolling stock in line with actual demand. The converse holds true, meaningthat CONCOR could procure more rolling stock in the batches if traffic volumes are above theprojected demand level. In addition, because around 80 percent of CONCOR's operating expenses arevariable, a fall in traffic that causes a fall in operating revenues would be matched by a fall inoperating expenses. What all this iniplies is that due to the cost structure of the company and thestaggered nature of its capital investment program, CONCOR has substantial flexibility to adjust tolower or higher levels of revenue, decreasing its sensitivity.

CONCORBase Case Balance Sheet

(In Rs MiSons. Financia Yea Endh March 31)

1993 1994 1996 1996 1997 1998 1999 2000 2001 2002ASSETS

Cash Balances: 133.80 31.9 43.2 45.6 49.3 44.9 46.9 50.6 53.7 61.6Invtments: 230.10 160.10 0 90 240.00 800.00 1440.00 202 2.700 3,680Current Assets: 191.60 179 175 181 238 297 360 437 532 649Miscellaneous: 0.9 0.7 0.5 0.3 0.1 0 0 0 0 0Fixed Assets: 257.2 896.3 1677.4 3668.5 5123.2 5628.3 6164.7 8664.9 7161.1 7668.1Less: Depreciation: 6.6 31.2 118.2 242.4 451.2 707.8 1013.6 1315.1 1642.1 1995Net Fixed Assets: 251.6 865.1 1559.2 3426 4627.1 4920.5 5151.1 5349.8 5618.9 6673.1Capital - MnP. 571.6 263.6 375.5 207.5 372.4 114.8 40.5 25.5 26.5 25.5TotefAssets: 1379.6 1490.4 2153.2 3950.5 6571.6 6176.9 7038.2 7882.8 8830.2 10088.8

NLIABILITIES

Current LiabUites: 314.2 253.9 211.4 248.8 337.8 429.3 492.2 569.5 664.7 781.3IBRD Loan: 0 0 576.6 2150.6 3449.7 3622.2 3803.3 3727.2 3634.1 3522.3IFCI Loan: 79.6 81.3 62.2 43.1 23.9 4.8 0 0 0 0Domestic Loans 0 0 10 10 10 10 10 10 7.5 6Total Loans: 79.6 81.3 648.8 2203.7 3483.6 3636.9 3813.3 3737.2 3641.5 3527.2Shareholders Equlty: 649.9 649.9 649.9 649.9 649.9 649.9 649.9 649.9 649.9 649.9Reserves: 335.9 505.2 643.1 848.1 1100.2 1460.8 2082.8 2926.2 3874.1 5130.4ToteJI.JahO 1379.6 1490.4 2153.2 3950.5 6571.6 6176.9 7038.2 7882.8 8830.2 10088.8

'-3

CONCOR8aso Case Income Statement

(in Rs Lacs. Financial Yea Ending Match 311

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

!NCOME

Freight: 6,635 9,108 13,077 17.596 24.132 30.584 37,679 46,421 57,191 70,459

Trans & Handling: 794 1,802 2,317 2,919 3,448 3,977 4,477 5,049 5.704 6,454Storage Charges: 721 765 907 1.062 1.224 1,410 1,473 1,540 1.694 1,863

Miscellaneous income: 25 30 32 33 35 36 38 40 42 44Rent: 0 70 70 70 84 84 84 101 101 101

Operatikg Income: 8,175 11,775 16.403 22,039 28,923 36,091 43,752 53.151 64,731 78.921

InterestIncome: 820 426 179 161 343 831 1,640 2,468 3,330 4,460

Total Income: 8,995 12,200 16 582 22.201 29,266 36,922 45,392 55,619 68.061 83.381

EXPENSES

Freight; 5,309 7,105 9,284 12,210 15,686 20.185 24,868 30,638 37,746 46.503Trans & Handling: 633 958 1,243 1,593 1.989 2,392 2,753 3,169 3,649 4,203 0

Salaries: 103 175 201 231 266 306 362 405 466 535Overheads: 175 450 618 595 684 787 905 1,041 1,197 1,377Other Expenses: 100 186 283 331 547 710 769 844 918 994Ucense Fee: 0 337 337 340 340 340 340 340 340 340Container Lease: 0 0 0 0 0 0 0 0 0 0

Operatin Expensos: 6,321 9,211 11,866 15,301 19,512 24,720 29,987 36,437 44,316 53.952

PBIDT: 2,675 2,990 4,716 6.900 9,753 12,202 15,405 19,182 23,745 29,429

Finance Charges: 124 209 2,047 2.953 4,166 4,728 4,828 4,861 4,786 4,696Depreciation: 48 256 870 1,242 2.087 . '66 3,058 3,015 3,270 3,529

Profit BeforeTaxes: 2,503 2,524 1,798 2.705 3.500 4,908 7,519 9.734 10,779 13.863

Taxes: 775 566 26 0 0 0 0 1.572 4,910 7,341 ID

Profit After Taxes: 1,728 1.958 1.772 2.705 3.500 4.908 7.519 9.734 10,779 13.863

CONCORBase Case staement of Change In Fiancial Position

{In Rf MMons, Financial Year Ending March 311

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

SOURCES OF FUNDS

Cash Accruals: 1.668 1,952 2,250 3,295 4,610 6,173 9,278 11,450 12,749 16,092Equityl sue: 1.800 0 0 0 0 0 0 0 0 0Sale of Assets: 578 800 1501 0 0 0 0 0 0 0Loans: 722 161 5766 15,452 11,915 0 0 0 0 0IncomeinCur.Lbab.: 708 -603 -424 373 891 914 630 773 952 1,166

Total Soswces: 5.377 2,310 9.093 19,120 17.416 7.087 9.907 12,222 13,701 17,258

USES OF FUNDS

CAPEX: 5,171 3,311 8,930 17,942 15,121 750 2,810 2,950 3,098 3,253Investments: 0 0 0 900 1,500 5,600 6,400 5,800 6,800 9,800 LiIncome in Cuffent Assets: -519 -126 -42 63 566 589 630 773 952 1,166 HLoan Repayments: 0 144 191 191 191 191 48 2,662 2,795 2,935

Total Uss: 4,652 3,328 9.080 19,096 17,379 7,131 9.888 12.185 13,670 17,179

Cash Balances:Opening Balance: 613 1,338 319 332 356 393 349 369 406 437Surplusl(Deficitf: 726 -1.019 13 24 38 -44 20 37 31 79

CLOSING BALANCE: 1,338 319 332 356 393 349 369 406 437 516

CONCORiKey Raetos Under Dnffrent Sconadool

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

BASE CASE

Cunrnt Rtio: 1.8 1.A 1 1.3 1.6 2.7 3.8 4.4 4.9 5.6DObt To Eqty Retdo: 0.08 0.07 0.5 1.5 2 1.7 1.4 1.1 0.8 0.6Avwseg Not V@htuof Fxed Assets Emplbyedd: 138% 41% 30% 22% 18% 18% 21% 26% 32% 38%Workin Rtdo: 77.90% 80.40% 77.60% 75.10% 74.70% 76.60% 75.S0% 74.20% 73.S0% 72.80%Debt Swerce Coverege Retdo: 21.6 14.3 2.3 2.3 2.3 2.6 3.2 4 5 6.3Net Profit Reto: 19.20% 16.10% 10.70% 12.20% 12.00% 13.30% 16.60% 17.50°b 15.80% 16.60%

SECOND SCENARIO (.10%1

Current Retbo : 1.8 1.5 0.9 0.8 1.1 2.1 3 3.8 4.t 5.9Debt To Equity Rdtb: 0.06 0.07 O.5 1.6 2.2 1.9 1.6 1.2 0.8 0.6Average Net Valuof RxedAssetsnpVloyed: 138% 33% 25% 17% 15% 15% 17% 22% 26% 32%Working Redto: 77.90% 82.40% 79.80% 78.50% 77% 77.90% 77.80% 76.40% 75.60% 74.90%Debt Service Coverage Ratio: 21.6 12 2 1.9 2 2.2 2.8 3.4 4.3 5.4Not ftrit Ratio: 19.20% 18.40% 7.30% 7.10% 8.10% 9.60% 13.20% 17.30% 19.50% 22.20%

THRD SCENARIO 1-20%)

Currn t Ratio: 1.8 1.3 0.3 0 0.06 0.9 1.5 2 2.7 3.7Debt To Equity Ratio: 0.08 0.07 0.6 1.9 2.8 2.7 2.3 1.7 1.2 0.8Average Net Valheof RxedAssets Eployed: 138% 26% 19% 13% 12% 12% 13% 17% 21% 26%Working Reto: 77.90% 84.90% 82.60% 81.30% 79.90% 80.80% 80.70% 79.10% 78.20% 77.40%Debt Serice Coveroge Ratio: 21.6 9.7 1.6 1.6 1.7 1.9 2.3 2.9 3.6 4.6Not Profit Ratio: 19.20% 15.80% 2.90% 2.40% 3.30% 5% 8.90% 13.50% 15.90% 19%

FOIIRTh SCENARIO (+ t10%

Current Ratio: 1.8 1.9 2 2.6 3.2 4.6 6 7.3 8.7 10.3Debt To Equity Retio: 0.08 0.06 0.4 1.2 1.5 1.2 1 0.7 0.5 0.4Averagw Net Vawk sof fixed Assets Enplo yed: 138% 49% 36% 24% 21% 22% 25% 31% 37% 45%°Working Ratio: 77.90% 78.80% 75.90% 74.50% 72.80% 73.70% 73.70% 72.50% 71.80% 71.20%Debt Seice Coverage Redo: 21.6 16.6 2.7 2.5 2.7 2.9 3.6 4.60 5.60 7.10Net profit Rato: 19.20% 22.30% 13.80% 13.80% 15.10%' 16.30% 19.30% 22.80% 24.60% 27.00%

33

Table 2.2.5

CONCOR(Actual and Forecasted Traffic Projection)

Financial 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002Year _

TEUsHandled 122607 170000 221000 276000 332000 390000 429000 471900 519090 570999International 32869 t00_0 _5000 64000 76000 80000 88000 96800 106480 117128Domestic

155476 221000 276000 340000 408000 470000 517000 568700 625570 688127Total

TEUsHandled 0 82000 98400 114000 114000 114000 114000 114000 114000 114000ICD - TIKD 155476 139000 177600 2260 294000 356000 403000 4570 511570 574127Other ICDs

155476 221000 276000 340000 408000 470000 517000 568700 625570 688127Total . _ _ _ _ _ _ _ _ __ _ _ ___ _

TEUs BookedInternational 107501 147900 192270 240120 288840 339300 373230 410553 451608 496769Domestic 16019 25500 27500 32000 38000 40000 44000 48400 53240 58564

Total 123520 173400 219770 272120 326840 379300 417230 458953 504848 555333

INDIACONTAINER TRANSPORT LOGISTICS PROJECT

Proiecl Obiectives and Development Indicators

Proiect Obiective Activiv/Refform wicators/Tareetz Comments1. Improve institutional framework for - Removal of some restritive cpstom6 - Transhipment of containers by road is - Customs will isswe by May 31. 1994efficient and competitive containcr transport practices and policies restricting inlatd albwed in most cases by customs. clariracations to de trade on what is permitted orto serve both foreign and domestic trade. movement of containers especially by road. not on the issue of inland novement of

- Containers will be granted temporary comainers. Covered by side Iluer to Guaranteeadmission for an extendable period of 6 Agreement.months or more.

- Guarantee amount on loaded containerswill not exceed customs duty levied on thegoods.

- No restrictions on factory stuffedcontainers.

- Expanding customs working hours. - A twenty four hour customs examinationand clearance facility is available at mkajorports/airports from April 1994.

2. Strengthen tde commercial and operatinal - MOU betwccn IR and CONCOR relating - Sce Section F. Ahmex 2. 1. and Ahnex 3.5. - IThe MOU establishes perfornance critcria andperformance of CONCOR in an increasingly to service levels of container trains. responsibilities between IR and CONCOR. Thecompetitive environment. performance targets in Annex 3.5. which arebased on the MOU. monitor the commercial andoperational improvements of CONCOR over thelife of the project.

I'dJo OID X

w0.H

Project Obieives Activitv/Reform Indicators/Taraets Comments

- Divesting at least 5 percent of GOls - Will be completed by March 31. 1995. Project covenant.stake in CONCOR.

- Broadening of CONCOR's Board of - Will be in effect by September 1994. - Condition of Board Presentation.Directors to improve skill base of Board.

- Reforming CONCOR's Claim Policy tobetter serve the niarket. - See Annex 3.S(8) - Conditon of Effectiveness.

- Providing technical assistance andtrainig to inprove CONCOR s - See Annex 3.5 (1,2,7) - Agreement for 2 year TA component signedoperationa, commercial and fnuncial between GOI and The Netherland'capabilities.

3. Greatly imrove the ̂ ervice level and - Establishmnet of scheduled (with - See Sectien F Aninex 2.1 and Annex 3.5capacity in te main corridors by providing guaranteed transh times) contaier trains '(3.4,S.6) for performance targets.modem tecinology rolling stock to permi from TKD to JNPT, HOM and BPr.regular block train operations on gatewayports corridors. - Acquisition and retrofitting of 1,200 BFK - All equipment wil be procured by 1997.

flat cars. (See Annex 3.4)

- Ac.uiskiotm or 1.S00 (100 kph capability) - All equipment will be procured by 1997.new container (at cars. (See Annex 3.4)

- Acquisbion of complementary cargo - All equipment will be procured by 1997.handling and tracking equipment. (See Annex 3.4)

-Complementary ICD construction to better - All equipment will he procured by 1997.serve emerging narkets. (See Annex 3.4)

INtb

0' N)

36

Annex 3.2Page I of 3

Outline of The Netherland's Technical Assistance Program to CONCOR

Project Objective

The objective of the assignment is to provide technical assistance to CONCOR, in order to establish itselfas an effective developer and operator of intermodal transfer facilities in India and to improve its capability of managing,operating and maintaining its facilities to accepted standards of performance and cost efficiency and to the satisfactionof its users. The assignment will be implemented in New Delhi at the offices of CONCOR and at the newly build ICDat TKD near New Delhi. The duration of the technical assistance program will be two years.

Project Components

The proposed Technical Assistance Program can be considered as consisting of two major components, onertiated to the medium and long-term development of CONCOR and the other reiated to short-term assistance, throughthe implementation of a "crash" training and advisory program. For reasons of administrative convenience, it is desirablefor both ccmponents to be handled within one contract, by a single contracting company. However, it is possible thatsome elements of the project will have to be subcontracted to specialist companies or individuals.

Description of key proiect personnel and duration of assigmnents

(1) Project Manager (24 man-months): a senior expert with experience in successfully managing technicalassistance projects of a simnilar nature and scale in developing countries.

(2) Operations Adviser (15 man-months): an expert with considerable experience of all aspects of intermodalterminal operations, and with demonstrable skills in developing operating procedures and systems.

(3) Mechanical/Electrical Engineering Adviser (24 man-months): a mechanical/electrical engineer withextensive experience in the operation and maintenance of terminal plant and equipment preferably in ports or theintermodal transport industry.

(4) Systems Adviser (12 man-months): a systems analyst with wide experience in computer applications in thetransport sector; with demonstrable skills in the use of computerized information systems.

(5) Human Resources Development Adviser (15 man-months): an expert with wide experience in modempersonnel management and human resources development practices preferably in the transport industry.

(6) Operations Expert (15 man-months): an expert with practical experience of all aspects of ICD and CFSoperations, preferably with operational experience in developing counties.

(7) Maintenance Expert (18 man-months): an engineer specialized in mechanical and electrical maintenanceof heavy plant and equipment, preferably with experience in ports and/or intermodal transport.

(8) Cost Accounting Expert (12 man-months): a qualified cost accountant with practical experience offornulating costing systems, preferably having familiarity with the operations related to container terminals.

(9) Financial Management Expert (9 man-months): an expert well qualified in financial management havingpractical experience of financial evaluation of projects and having financial expertise in the management of a company'sfinances.

37

Annex 3.2Page 2 of -.

(10) Market Research Expert (12 man-months): an expert having at least five years experience in marketiniand market research.

(11) Additional Staff on Short-Term Assignments (12 man-months): an indeterminable number of experts ma)be required on short-term contracts.

38 Annex 3.2Page 3 of 3

Workplau for The Netherlands Technical AssistanceProram for CONCOR

A, ONTHAppenmment ef *.: .||

the Prajea. Team

Pregardion ofindivdual We*ptens

Acceptance oflndmduaI Workplans

Organizadon and Delivery of CrashTraining for C-NCOUR Ma n I I I IOrganizadon and Derivery of CrashTrainting for TJGHtLAKAAD SI ff

ProvIdtng Advice anOcertionsAMainteLnanceProcedures b:y ExpertsPredtcal and On-Job

|irain-ing by lExperts|[ ||| Preparation and Ancrevat.of Susiness DevelopmentPlan StudyOevelopment of theBusiness Development Ptan

ImplementatIon of the

Revlew Container/Cargo iProjections and Capacfies for I

|TUJGHWCAXAZ artt Other ICO%

Acceptance by CONCOR and GOIof the Recommenddatons of tMeOperations Task Foa andTheir Implementadton

Design, PreparadtonImpimentatdon of ProceduralManuals on Terrinal Operatdons |

De sign, Preparation I

Mair;teance System * tl 1

|esgn. Preparentn. | | I I III I'Itmplementation of Supplies IManagement System | |

ProducJon of StandardP-ocurement Tender Document

Oesign. Poepmratin .ImplementatIn of EquipmentIOperating Procetdures ||||||||

Design. Preparation, tmpIemenatonof an lgrated and ComputdsdCONCOR and TerTninal ManagentInformaion Systems

Oevelopment of IRO Policy,Plan and Systems

Formulaion of a Training Suategyand its Implementadon

Supervision Civil Works

DOsign. Development and Produftio n Iof Pa 6ged Training Programmes * I I 1 I I |

Rertitnent ofShort-Term Expetsm

P'rocurement of 'reechingEquipment and Matenals

39

Amex 3.3Page 1 of 2

INDIACONTAINER TRANSPORT LOGISTICS PROJECT

PROJECT COST SUMMARY TABLE(US$ millions)

EstiinatedEstimated Local Exchange Estimated

Component Description Fgn. Exch. Loc. C. - Duty/Taxes Total

1. Retrofit braking systemof 1,200 BFK flat cars* .00 3.36 .24 3.60

2. Purchase 1200 BFKflat cars* .00 18.75 1.31 20.06

3. Construction of 1,500modem design flat cars 15.75 36.75 6.51 59.01

4. Construction of 5 tri-axle flat cars .45 .00 .11 .56

5. Construction of 750modem design flat cars 7.88 18.37 3.26 29.51

6. Purchase 1 rubber tiredgantry crane 1.60 .00 .40 2.00

7. Purchase 2 reach stackercontainer handlers* .67 .00 .23 .90

8. Purchase 5 tractor/trailer trucks* .00 .19 .01 .20

9. Purchase 6,900 RFIDtransponders, 7 RFIDreaders/RF modules, andI encoder unit .33 .00 .08 .41

10. Civil Works ICD Construction*- Tughlakabad .00 5.18 .36 5.54- Ludhiana .00 2.93 .20 3.13- Hyderabad .00 1.76 .12 1.88

11. Computer Software Systems* .00 .45 .03 .48

12. Consultancies and Training*

(a) Technical Assistance for Capacity 3.70 .00 .00 3.70

40

Annex 3.2Page 2 of 2

Building and Training**(b) Engineering Services for Project .00 1.00 .00 1.00

Preparation and Implementation Support

SUB-TOTAL 30.38 88.74 12.86 131.98

Contingency 1.62 15.26 2.14 19.02

TOTAL 32.00 104.00 15.00 151.00

* Items to be fully funded by CONCOR.** Item to be funded by The Netherlands in the amount of

US$ 3.5 million equivalent and by Bank in the amount ofUS$ 0.2 million equivalentBilateral Assistance

DISTRIBUTION OF FINANCING:The Netherlands Ministry F/A 4.00 .00 .00 4.00World Bank Finance 28.00 66.00 .00 94.00Concor Local Finance .00 38.00 15.00 53.00

41

Anmus 3.4Page 1 Of 3

INDIACONTAINER TRANSPORT LOGISTICS PROJECT

IMPLEMENTATION SCHEDULE

Actions and Project Components By Bank By Borrower Others(Date of Completed Action)

Project Processing:

Appraisal 1/24/94Negotiations 4108/94Board 5/19/94Effectiveness 07/19/94 (guarantor)Midterm Review 12/95 12/95

Procurement of Major Components

Item #12(a). Technical Assistance

Invite proposals 12/01/93Receipt of bids 02/03/94Bid evaluation 03/15/94Contract signature 05/01/94Start of assistance 06/01/94

Item #1. Retrofit Braking System

Draft tender documents 09/30194Permission of IR Board 07/31/94 (guaranor)Invite proposals 10/31194Bid evaluation 01/31/95Award 02/28/95Delivery and services 07/01/95

03/31/96

Items #4. Tri-axle Flat cars

Draft tender documents 06/21/94 36/01/94RDSO and Board Approval 09/01/94Invite proposals 09/15/94Receipt of bids 12/15/94Bid evaluation 02/21/95 02/01/95Award 03/15/95Delivery 09/15/95Test Clearance 12/15/95

42

Anex 3.4Page 2 of 3

Items #3. Flat cars (Tranche 1)

Draft tender documents 03/15/94 03/07/94Invite technical tenders 04/16/94Receipt of bids 07/16/94Bid evaluation/comments 10/15/94 09/15/94Award first stage 10131/94Invite price bids 10/31/94Receipt of bids 11/30/94Bid evaluation/comments 01/21/95 12/31/94Award second stage 02/15/95Delivery of Test car (Prototype) 08/15/95Prototype test and report 11/15/95Delivery 12/15/95

12/15/96

Item #5. Flat cars (Tranche 2)

Draft tender documents 01/15/96 12/15/95Invite tenders 01/31/96Receipt of bids 04/30/96Bid evaluation/comments 07/08/96 06/15/96Award 07/30/96Delivery 01/31/97

07/31/97

Item #6. Gantr Cranes

Draft tender documents 04/19/94 03/15/94Invite tenders 04/16/94Receipt of bids 07/02194Bid evaluation/commes 09/01/94 08/15/94Award 09/20/94Delivery

09/15/95

Item #8. Tractor/Trailer Trucks

Invite tenders 10/15/94Delivery 03/15/95

43

Annex 3.4Page 3 of 3

Item #9. Transponders

Draft tender documents 09/08/94 08/15/94Invite tenders 12/15/94Receipt of bids 03/15J5Bid evaluation/comments 06/15/95 05/15/95Award 07/01/95Delivery and Installation 12/15/95

Item #10. Civil Works Ludhiana

Draft tender documents 09/15/93Invite tenders 10/21/93Bid evaluation/comments 02/15/94Award 05/31/94Delivery 06/30/95

1tm #10. Civil Works Hvderabad

Draft tender documents 03/31/94Invite tenders 04/15/94Bid evaluation/comments 07/15194Award 07/31/94Delivery 12/31/95

Item #11. Conmuter Software

Draft tender documents 04/15/93Invite tenders 05/15/93Bid evaluation/comments 06/01/93Award 07/01/93Delivery 12/31/94

Notes: Item #12(a) is fumded by The Netherlands, which is responsible for bid evaluadon and award.

Items #1, #2, #7, #8, #10, #11 and #12 will be funded fully by CONCOR using own procedures.

44

Annex 3.5

CONTAINER TRANSPORT LOGISTICS PROIECT

CONCOR PERFORMANCE TAR___

Actual Estimated_ Targets

1992/93 1993/94 1994/95 1995/96 1996/97 1997/98

1. Traffic (000 TEUs)(a) ltenational 122 189 221 276 332 390(b) Domestic M 48 55 64 76 80(c) Total 155 237 276 340 408 470

2. Finance (Rs milion)Opeating Revenues 817 1177 1640 2204 2892 3609Operating Expenses 632 921 1187 1530 1951 2472Profit before taxes 250 252 180 270 350 490Salaries as percent ofOperating Cost 1.6 1.9 2.1 2.0 1.9 1.8

3. Train tansit times (brs)TKD-BPT D.a. 105 69 63 60 57TKD-JNPT n.a. 131 85 80 75 67TKD-HOM n.a. 160 126 115 110 100

4. Train tum round at notus rea (includina tain examation

BFr n.a. 48 To be added following negotiations betweenJNPr na. 60 CONCOR and the Ports.HOM noa. 60 _ _ _ _

5. Overall Round trip turnarod of flat cs (days)TKD-BPT 12 9 7 6 6TKD-JNPT 13 10 8 7 6TKD-HOM 18 13 11 10 9

6. Number of snecial schedled weekl" ainsNorth India - BPT/JNPT _ _ 6 10 14 18North ndia - HOM - _ 2 3 4 5

7. Perfrmance of TKD/ICDAverage cargo handling equipment availabflty - ona. 80 85 85 85Average dwell time of import comainer (.days) - n.a. 15 8 7 6Average dwell time of export contaiv days) - n.a. 4 3 S 2Average dwell time of break-bulk imports and expons (_days) - n.a. 12 10 9 8Import coniers to be available for ddivety wilhio x hours - n.a. 36 24 12 12

of discharge for block ttains

8. Customer Saonaei RaOU(percent of customers satisfied with service as per MOU) _ _ _ 80 '5 90

Note: Subject to ftre raffic leves. At least 75 cet of interaton t service is to be on spec Ia schedules with fasterguaranteed transit time by 1997198.

n.a. Data not availble- Not appLicable

45

&uMe 3,

CONTAINER TRANSPORT LOGISTICS PROJECT

CUMULATIVE DISBURSEDENT SCHEDtJILE

from Date of LD Fiscal Year Rsdtmated D ibursements DbbunementApprovaj and Quarter (US$ milons) profie

Quarter cumulative Percent

1 FY95 Sept. 30, 94 - - - _2 Dec.31, 94 2 2 2 0%3 Mar.31,95 6 18 94 Iun.30, 95 4 12 13 1%

S FY96 Sept. 30,95 4 16 176 Dec.31,95 6 22 23 10%7 Mar.31,96 8 30 328 Jun.30,96 8 38 40 18%

9 FY97 Sept. 30,96 10 46 5110 Dec.31,96 6 54 57 26%11 Mar.31, 97 6 60 6412 Jun.30,97 6 66 70 38%

13 FY98 SepL 30, 97 6 72 7714 Dec.31, 97 4 76 81 50%15 Mar.31, 98 4 80 8516 Jun.30,98 2 82 87 62%

17 FY99 SepL 30, 98 2 84 8918 Dec.31, 98 2 86 91 70%19 Mar.31,99 2 88 9420 Jun. 30, 99 2 90 96 78%

21 FY2000 Sep. 30, 99 2 92 9822 Dec. 31, 99 2 94 100 86%23 Mar. 31, 200024 Jun. 30, 2000 94%

25 FY2001 Sept. 30, 200026 Dec. 31, 2000 96%27 Mar. 31, 200128 Jun. 30, 2001 98%

29 FY2002 Sept. 30, 200130 Dec. 31, 2001 100%

- Not app1icable.

a. Estmated Disburseme assume Board dale in Fouri Quarter FY94 and closing date ofDecember 31, 1999. Cumulative Disbursement Profile is for Rank-wide subsector for railways.

46

AnnA 3.7Page 1 of 3

INDIACONTAINER TRANSPORT LOGISTICS PROJECT

ECONOMIC EVALUATION

1. Acquisition of 2.250 new flat cars. The economic benefit from this investment arises from thereduced transport cost of container rail movement (with the project) as compared with road transport(without the project) from northern India to the three gateway ports of BPT, JNPT and HOM, with aweighted average distance of about 1,600 km. The underlying assumption is that without theadditional flat cars, the corresponding traffic would move by road, as is presently the case for most ofthe traffic. The benefit from the proposed investment is therefore the saving in total transport cost byrail as compared with road transport. The road vehicle costs are based on a 1993 consultant studygiving an average cost of Rs .51 per thn for the main highways. To this is added terminal handlingcosts at the port, cargo inventory costs and the container costs. In the with-project case, the throughcosts are the rail transport costs, including flatcar maintenance costs, handling costs at the ICD andport, an estimated 100 km road transport to/from the ICD, cargo inventory costs and the containercosts. All costs are in late-1993 prices adjusted using a standard conversion factor for India of 0.8.

2. The resulting ERR for this component is 37 percent (see table below) and the net profit (NPV)at 12 percent is Rs 3,113 million. Allowing for a 10 percent increase in investment costs and a 10percent reduction in benefits would reduce the ERR to 31 percent. The results of the sensitivityanalysis is given below:

Test ERR NPV(Rs Million)

Base Case 37% 3,113Benefits decreased 10% 33% 2,609Benefits decreased 20% 29% 2,105Costs increased 10% 33% 2,920Coss increased 20% 30% 2,728Beneft decreased 10% andcosts increased 10% 31% 2,482

Switching values show that the cost of this component would have to increase by about 162 percent orthe benefits would have to drop by 61 percent before the NPV would fall to zero. This is bighlyunlikely.

3. The above analysis is conservative since it does not take into account a number of potentialbenefits, which for the purpose of this analysis have been treated as non-quaified benefis. First, noallowance has been made in the without case for increasing vehicle operating costs due to increasingcongestion on the main highways. Over time road traffic would increase as a result of normal trfficgrowth. Furtmore, if the rail capacity was not increased through the acquisition of the new fiatcars, this additional traffic would also have to be handled by the existing road network, thus adding tocurrent traffic congestion. In this connection it should be noted that approximately 80 percent of therail container transport is between northern India and Bombay (BPT and JNPT) and is mainy servedby NH 2 and 3. The annual capacity of the 2,50 flat cars is conservatively esdmated at 241,300TEUs, (about 154,500 loaded), for a total of about 2,300,000 tons. Assuming an average of 7 tonsper truck would give an average of 900 additional truck per day or some 700 per day in the North

47

Annex 3.7Page 2 of 3

India-Bombay corridor. Based on recent traffic counts by MOST, this would be an increase ofbetween 12 and 45 percent in the heavy vehicle (bus and truck) traffic currently handled by NH 2 and3; based on the average traffic counts at 14 sections, the average increase in heavy vehicles would be18 percent. As congestion increases some traffic would, as is already happening, detour to otherlonger but less congested roads. However, this would also result in higher vehicle operating costs.Second, no consideration was given to the increased road deterioration or increased road maintenancecosts that would result from the increased volume of heavy, frequently overloaded, trucks. Third, noaccount was taken of the much higher accident rates for road transport in India and therefore theavoided accident costs if the traffic moves by rail. Fourth, the costs of pollution generated by theadditional heavy road traffic was not quantified. Any attempt to quantify these additional benefitswould be very time consuming and require information that is not presently available. As the basicevaluation yields a good rate of return, it was therefore not considered necessary in the context of thisproject to enter into such a more detailed and time-consuming analysis.

4. Retrofittiag of 1.200 existing BFK flat cars. The economic benefit of this component consistsof two main items. First, the retrofitting would result in higher average speeds and less down timedue to repairs and maintenance. This would result in an increase of about one-third in the carryingcapacity of the upgraded flat cars, or about 17,000 TEUs per year. Second, maitenance costs pertlan would be reduced. CONCOR has estimated that as a result of the retrofitting, maintenance costsper tkm would be reduced by 50 percent. This appears reasonable since retrofitted items are the mostmaintenance intensive conponents. The resulting economic benefit has been estimated as thedifference between rail and road transport costs as in the previous case, but only for the incrementaltraffic that could be carried by rail as a result of the retrofitting. Again no account was taken of thenon-quantified benefits mentioned in para 3.

5. On the above basis, the ERR for this component is estimated at 33 percent (see table below).Allowing for a 10 percent increase in capital cost and a 10 percent reduction in benefits would reducethe ERR to 27 percent. The results of the sensitivity analysis is summarized below:

Test ERR NPV(Rs Mmion)

Base case 33% 108Benefits decreased 10% 30% 88Benefits decreased 20% 26% 69Costs increased 10% 30% 99Costs increased 20% 27% 90Benefits decreased 10% andcosts increased 10% 27% 80

Switching values show that the cost of this lomnponent would have to increase by about 125 percent orbenefits would have to drop by 55 percent for the NPV to fall to zero, which is highly unlikely.

6. Taking into account the above analysis and the non-quantified benefits mentioned in pam 3, theinvestment is clearly justified.

48

Annex 3.7Page 3 of 3

7. _thers. CONCOR has made a financial analysis for the equipment purchases for TKD.Estimating the economic benefits from the marginal increment in cargo handling equipment providedunder the project as well as for the rail car tracking equipment, which would basically improvecustomer service, is difficult. Because of this and the relatively modest amounts involved (3 percent),a separate economic evaluation was not carried out Similarly, no economic evaluation was carriedout of the technical assistance components (2 percent) Finally, CONCOR has prepared a preliminaryfinancial evaluation of the additional civil works to be funded fully from its own resources (8 percent)and this is currently being updated. As indicated in para 3.21, CONCOR should at loan negotiationsagree to make the resulting evaluation available to the Bank before conuencing the works.

8. Combined. Table 3 provides the combined cost and benefit streams for the two main projectcomponents for which an economic evaluation was carried out as discussed in the precedingparagraphs. The resulting combined ERR is 37 percent and the NPV at 12 percent is Rs 3221 million.Switching values show that the combined cost would bave to increase by about 160 percent or benefitswould have to drop by about 60 percent for the NPV to fai to zero, which is highly unlikely.

INl)lACONTAINER TRANSPORT LOGISTICS PROJEIC

FCONOMIC RATE OF RETUtRN (I.RRsAcquisition of 2.250 New Plat Cars

(Rs millions)

OPERATING COSTS WMIOUTINVISTMlINT PROJLCCT OPFRATING COSTS WMIT PROJECT

Year Investment Satlvagc Road Transport Adjusment forCosts Valuc Costs Total Curfent Rall Costs Own Wagons Total Net Beneftr

1994 545.2 0 0 0 0 0 -545.2199S 817.S 899.6 899.6 652.7 47.4 60M.3 -523.51996 817.8 1799.1 1799.1 1305.4 94.9 1210.5 -229.21997 2248.9 2248.9 1631.8 118.6 1513.2 735.71998 2248.9 2248.9 1631.8 118.6 1513.2 735.71999 2248.9 2248.9 1631.8 118.6 1513.2 735.72000 2248.9 2248.9 1631.8 118.6 1513.2 735.72001 2248.9 2248.9 1631.8 118.6 1513.2 735.72002 2248.9 2248.9 1631.8 118.6 1513.2 735.72003 2248.9 2248.9 1631.8 118.6 1513.2 735.72004 2248.9 2248.9 1631.8 118.6 1513.2 735.72005 2248.9 2248.) 1631.8 118.6 1513.2 735.72006 2248.9 2248.9 1631.8 118.6 1513.2 735.7 o2007 2248.9 2248.9 1631.8 118.6 1513.2 73S.72008 2248.9 2248.9 1631.8 118.6 1513.2 735.72MP) 2248.9 2248.9 1631.8 118.6 1513.2 73S.72010 2248.9 2248.9 1631.8 118.6 1513.2 735.72011 2248.9 2248.9 1631.8 118.6 1513.2 735.72012 2248.9 2248.9 1631.8 118.6 1513.2 735.72013 2248.9 2248.9 1631.8 118.6 1513.2 735.72014 -S45.4 2248.9 2248.9 1631.B 118.6 1513.2 1281.1

ERR 37%NPV at2%: 3113

Notes: 1. All costa are in late 1993 prices using a standard conversion factor of 0.8.

2. Road transport costs without project covers road vehicle operating costs at Rs 0.5 I per tkm for aim average distaice of 1.600 kIm plus dte cost of handling at port(Rs 3,230 per TEU), inventory cost (Rs 1,500 per TElU based on Rs 300 per day) anrd conlaimter costs (Rs 492 per l PU) based on information pravyWed by CONCOR andCES study.

3. Rail operatimig cosIs wkiti project includes rail transport costs inclidiing hlat car mainteniace plus hlndling costs at ICD (Rs 6.846 per TU). port terminal handlingcosts (Rs 1.530 per TEU). cuioeting road transport to and front ICI) (Rs 765 per 11'U lused on Rs 0.51 per tknmi for I10 kini), inventory capital costs(Rs 2,100 per TEU based on Rs 300 per day), and container costs (Rs 820 per l'l}U).

4. Residual value of flat cars has been cssunmed to be 25 pemcent wkich is conservative taking illto account a normlal economi liCfe of 30 years.

S. An adjustment to The current rail .osts was nade In exclude depreciatiuna costs aud ldus aVoil #dntul, 4 4"untlng.

INDIACONtAINER TRANS t)ORT MI STICS -ROJIfiC

fiCONOMIC RATE OF RETVRN (fR3}

Retrofitting of 1,200 BFK flat (ars(Rs milioats)

INVPStMtNT OPERATING OCtSTI WmIOUT PROWIVT OPERATING COSTS WrilI PROJEICTImvestnttt Salvage By Road RNt Car Reduaed 1Fa NetYear Costs Value Dy Rail Transpoti Maintenance Total Dy Rai Car Maittenance ToWt Iknht

1994 S6.02 0 0 0 0 0 0 0 -86.021995 507.057 200.068 12.6 719.725 683.4U4 6.3 689.784 29.9411996 507.057 200.068 12.6 719.725 683.4t4 6.3 689.784 29.9411997 507.057 200.068 12.6 71').725 683.484 6.3 6h9.7?4 29.9411998 507.057 200.068 9.46 716.585 683.434 4.73 6St.214 28.3711999 507.057 200.068 9.46 716.585 683.434 4.73 6S8.214 28.3712000 507.057 20o.068 9.46 716.585 6813.484 4.73 688.214 28.3712001 507.057 200.EM8 7.08 714.205 683AW4 3.54 687.024 27.1612002 507.057 2110.068 7.08 714.205 683.484 3.54 687.024 27.1812003 507.057 200.068 7.08 714.205 683.484 3.54 687.024 27.1812004 507.057 200.068 5.32 712.445 683.484 2.66 686.144 26.301 82005 507.051 200.0M 8 5.32 712.445 683.484 2.66 686.144 26.3012006 507.057 20tl.068 5.32 712.445 683.4N4 2.66 686.144 26.3012007 507.057 200.068 3.98 711.105 bX3.4,4 1 .99 6t5.474 25.6312003 507.057 2tX0.062 3.93 7121.105 683.4g4 1.99 685.474 25.631200U) .*8.6 507.057 200. __ 3.98 711.105 683.434 1.99 68S.474 34.231

ER 33%

NPV at 12%: 108Note: 1. All costs are in late 1993 prices using a stanlarni conversion factor of 0.3.

2. Rail operating costs widt4ott project isclule rail transport costs plis ICD termibal handling (Rs 6.1846 per Tltl) poit handling costs (Rs 1 530 per Tl U) a 100 lItt connecing road transpon to orfrom ICi) (Rs 7U5 per 113U based oni R.s 1.51 pel Ikmlt). ituvemltuty capital costt (Its 2. I(Y) pke ThIti, aJttd coultattner ettus (its 192 Ier 2111I1) as puvidtlcd by CUNtOUt.

3. Road transport costs witotiut project covers road vehicl operating COStS for the itCientCtial tOntiage whtic could blie laidled lby rail attly alter thc flat cars have been retrofitted (Rs 0.51 per ikm)X phisthc cost of handlinig at pon (Rs 3,230 Pcr IWEU), taivtattry custs (Rs I ,t5O per IlTU). ansI container costs (Rs 492 pea TIWU) based ont ihiloiaitation provided by CONCOR and CES study.

4. Rail opeating costs with project includes rail transport costs after retrofitting (restiltitig in 1/3 imtcrease it carry capacity) plus ltadliillj costs, ICD tenninal handling costs of conncting mad transport to and from ICD. inventory capital costs and contamier costs. a- X

5. Flat car naaintenantce costs have btac estimated by CONCOR to be reducedtlay 50' percet i follhwing tetatolattinag.

6. The residual life of the fiat cars after reltofitting Ilas been assitaned to be t5 years with a 10 percent rcsidual value of tle mtkvestaltent cost.

CONTAINER TRANSPORT LOGISTICS PROJECT

COMBINED ECONOMIC RATE OF RETURN (ERR}Acquisition of 2,250 FIat Cars and Retrofitting 1,200 BPKs

(Rs millions)

Operating Costs Operating Costsinvestment Without Projects With Project Net

Year Investment Cost Salvage Value Total Combined Costs Total Combined Costs Benefat

1994 631.2 0 0 -631.21995 817.8 1619.3 1295.1 -493.61996 817.8 2518.8 1900.3 -199.31997 2968.6 2203 765.61998 2965.5 2201.4 764.11999 2965.5 2201.4 764.12000 2965.5 2201.4 764.12001 2963.1 2200.2 762.92002 2963.1 2200.2 762.92003 2963.1 2200.2 762.92004 2961.3 2199.3 762 e2004 2961.3 2199.3 7622005 2961.3 2199.3 7622006 2961.3 2199.3 7622007 2960 2198.7 761.32008 2960 2198.7 761.32009 -8.6 2960 2198.7 769.92010 2248.9 1513.2 73S.72011 2248.9 1513.2 735.72012 2248.9 1513.2 735.72013 2248.9 1513.2 735.72014 -5.545.4 2248.9 1513.2 1281.1

ERR: 37%NPV: 3221

52

Annex3.

CONTAINER TRANSPORT LOGISTICS PROJECT

Outline of Content of Ouarterlv Progress Reports(to be furnished within 30 days of end of each quarter)

I. Introduction.

II. CONCOR's Business Activities and Developments, including quarterly data for items coveredby the performance targets in so are as the actual data are available on a quarterly basis.

Eg. Project Progress (details in annexure) - Tender document preparation, tendering and contractawards by project component, progress by contract compared to agreed procurement scheduleand contracts (table including (i) date of bid invitation; (ii) date bids received; (iii) date of bidvalidity; (iv) date of contract award; and (v) delay or elapsed time - (iv) - (iii).

TV. Status and Progress of Consultant Services (progress report of technical assistance team fundedby The Netherlands in annexure).

V. Financial Management - Broad parameters of CONCOR's financial situation; projectexpenditures by component; disbursements.

53

A=nx 3.9

CONT INE RANSPRT LOGSTC POJC

SuD1e sion Pl an

InputApproxmate Skm In Staff

Dates Ac_t RequIm ts Weeks

FY9S-July Supervision Mission Econ.-Procure-Fin. 3

FY9S-November Supervision Mission Econ.-Procure-Ole- 6Cusroms-Finan.

FY9S-February Supervision Mission Econ.-Egr-Praocure- 3Finan.

FY95 Headquarters Procure-En-Finan. 2NDO Procure-Rese_iment 7

FY96-September Supervision Mission Econ-Oper-Pue- 4Finan.

FY96-March Supervision Mission Econ-Procure-Finan. 3

FY96 Headquarters Econ-Finan. 2NDO Proure. 3

FY97-Sepzember Supervision Mission Econ-Procure-Finan.- 3Oper.

FY97-March Supervision Mission Econ-ProcureFinan. 3

FY97 Headquarters Econ-F un. 2NDO Procufe. 2

FY98-Septem r Supervision Mission Eoon-Oper-Procure-Fin. 4

FY98-March Supervision Mission Econ-Promre-Finan. 3

FY98 Headquarters Econ-Fman. 2NDO Procure. I

FY99-September Supervision Mission Econ-Finat-Procure. 3

FY99-March Supervision Mission Econ-Finan 3

FY99 Headquarters an PCR Econ-Funan. 2

FY2000-September Supervision Mission F'-Fiman. 3

FY2000-Jamzary PCR Mission PCR Mission 10

a. Assumes Board date in Fourth Quarter of FY92 and closing date of December 31, 1996.

54

INDIA Annex 3.10

CONTAINE TRANSPORT IO-GISTICS PROJECT

DOCUMENTS AVAILABLE ON ROJEC FILE

1. Annual Reports for 1988/1989 through 1992/1993 - CONCOR.

2. Business Plan (1993/94 - 1997/98) - CONCOR.

3. Finance Plan; Resource Mobilization Strategy (1993/94 - 1997/98) - CONCOR.

4. Memorandum and Articles of Incorporation - CONCOR, 1988.

5. CONCOR Technical Assistnce Project - Govermment of the Netherlands, 1993.

6. India's Growing Conflict Between Trade and Transport - Hans Peters, Blue Works India, WPS346, January 1990.

7. Memorandum of Undersading, An Approach to Improving Public EnterprisePerformance - Prajapati Tnvedi, Ifternational Management Publishers, 1990.

8. Memorandum of Understanding for 1994 - 95 between CONCOR and Indian Railways -

CONCOR, 1994.

9. Container Transport Logistics Project, Mission Report - Bill Thompson, October 1993.

10. Container Transport Logistics Project, Mission Reports - Bill Thompson, May 1993.

11. Economic Appraisal of Container Transport Logistics Project - A. Gupta, Decenber 1993.

12. India - Transport Logistics and Trade Policy - Gosta E. Roos, November 1993.

13. Study on Simplification of Customs Procedures for Promotion of Exports, - Rites, August 1991.

14. India - Review of Container Development Strategy - Final Report, (ODA) ColquhounTransportation Planning, March 1992.

15. A Perspective Plan for the Development of Containeization in India - RITES, September, 1987.

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