India : Railways Sector Report_August 2013

49

description

Indian Railways has a total route network of about 64,600 kilometers (km) spread across 7,146 stations and operates more than 19,000 trains every day. Over 30 million passengers travel by trains on a daily basis in India and around 975.2 million tonnes (MT) of freight was transported via trains in FY12. The revenues of Indian Railways are expected to expand at a compounded annual growth rate (CAGR) of 12.1 per cent during FY07-14. Freight is the major revenue earning segment for the railways, accounting for 70.6 per cent of the total revenues in FY12. Passenger traffic went up by more than 15 times over FY1951-FY12. Increasing incomes, both urban and rural, have made rail travel affordable to a large number of Indians. Urban population in India increased from 17.3 per cent of the total population in 1951 to 31.2 per cent in 2011; this has led to increase in traffic between urban and rural areas in the country. With rapid economic growth and increasing industrialisation, freight traffic is expected to grow at a CAGR of 7.6 per cent during FY12-17 to touch 1,405 million metric tonnes (MMT) by FY17. Indian Railways has set a target of having a freight market share of 50 per cent by 2030 from 30 per cent in 2010. The Government of India is investing heavily in building rail infrastructure in the country and plans to invest US$ 153 billion during the 12th Five Year Plan.

Transcript of India : Railways Sector Report_August 2013

Page 1: India : Railways Sector Report_August 2013
Page 2: India : Railways Sector Report_August 2013
Page 3: India : Railways Sector Report_August 2013

World’s fourth-largest

rail network

• As of FY12, Indian Railways had 12,335 passenger trains carrying over 30 million

passengers daily. On the commercial front, 975.2 million tonnes of freight was transported

via trains in FY12

Growing public-private

partnership

• Private sector companies are being encouraged to participate in rail projects, which were

largely in the public domain. In December 2012, the Cabinet approved “participative

models for rail-connectivity and capacity augmented projects”, which allows private

ownership of some railway lines

Growth initiatives

• Indian Railways is undertaking the construction of dedicated freight lines along the

country’s Eastern and Western corridors; this would increase productivity and reduce

transportation cost. A special purpose vehicle has been set up for the same. Moreover, in

March 2013, the Cabinet approved the “Automobile Freight Train Operator Scheme” to

encourage automobile transportation through railways

Modernisation/

technology upgradation

• Indian Railways has launched mobile ticketing services, which enable customers to

receive tickets on short message service (SMS). Additionally, it plans to upgrade its

current systems to support bookings of 7,200 tickets per minute compared with the current

capacity of 2,000 tickets

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• The engineering sector is delicensed; 100 per cent FDI is allowed in the sector

• Due to policy support, there was cumulative FDI of USD14.0 billion into the sector over April 2000 – February 2012, making up 8.6 per cent of total FDI into the country in that period

Growing demand

Source: Railway Budget 2013, Planning Commission, Aranca Research

Notes: 2017F – Forecast figure for 2017, MMT is Million Metric Tonnes

FDI is Foreign Direct Investment, FY is Indian Financial Year (April to March)

Growing demand

• Increasing urbanisation coupled with rising incomes (both urban and rural) is driving growth in the passenger segment

• Growing industrialisation across country has increased freight traffic over the last decade

Attractive opportunities

• Freight traffic is set to increase manifold, thanks to investments and private sector participation

• Metro rail projects are being envisaged across many cities over the next ten years

Policy support

• Government has increased the scope of PPP, to beyond providing maintenance and other such supporting roles

• Government is providing new lines, increasing the rolling stock to build up capacity

Higher investments

• The government has been investing heavily to upgrade railway infrastructure

• Sector has been witnessing increasing level of FDI participation over FY08–12

2012

Freight

Traffic –

975 MMT

2017F

Freight

Traffic –

1,405 MMT

Advantage

India

Page 5: India : Railways Sector Report_August 2013

Source: Ministry of Railways, Aranca Research

Indian Railways (IR) is –

A departmental undertaking of Government of India (GOI), which owns and operates most of India's rail transport

Overseen by the Ministry of Railways

It has a total route network of about 64,600 kilometres (of which 29.98 per cent is double/multi-track) spread across 7,146

stations.

Operates more than 19,000 trains every day

It has 239,321 wagons, 61,899 coaches, and 9,549 locomotives

IR’s total assets at the end of FY12 amounted to USD61.7 billion.

Railways

Passenger

Freight

• Around 975.2 million tonnes of freight was transported via

trains in FY12

• These include a huge variety of goods like mineral ores, iron

and steel, fertilizers, petrochemicals, and agricultural produce

• About 12,335 passenger trains were in operation in FY12

• Over 30 million passengers travel by trains on a daily basis in

India

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Source: Ministry of Railways, Aranca Research

India has the world's fourth largest rail network, which is also the second largest under single management

Net revenues

(INR billion)

Passenger traffic

(billion)

Freight traffic

(million metric tonnes)

Number of stations

Running track

(kilometres) 59,315

5,976

73.2

1.3

0.5

89,801

7,146

975.2

8.2

67.8

FY1951

FY12

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Gross revenues trends over the years

(USD billion)

Source: Ministry of Railways, Aranca Research

* In Indian Rupee Terms

Notes: CAGR – Compound Annual Growth Rate, E – Estimates,

B – Budgeted, FY – Indian Financial Year (April–March)

Indian Railways revenues grew the fastest in three years to

USD21.7 billion in FY12, a 10.1 per cent y/y growth. The

Railway Ministry estimates revenues to grow 20.7 per cent*

in 2013

Overall, revenues are expected to expand at a CAGR of

12.1 per cent* during FY07–14

Revenue growth has, in fact, been strong over the

years; during FY07–12, revenues expanded at a

CAGR of 9.9 per cent*

For FY14, the government has estimated revenues

to expand at a CAGR of 17.5 per cent* over FY12

14.3

18.3 17.8 18.8 20.8

21.7 23.1

26.5

FY07 FY08 FY09 FY10 FY11 FY12 FY13E FY14B

CAGR: 12.1%

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Passenger Earnings (in USD billion)

Source: Ministry of Railways, Aranca Research

* In Indian Rupee Terms

Notes: CAGR – Compound Annual Growth Rate, FY – Indian Financial Year (April–March)

In the last six years, revenues from the passenger segment has expanded at a CAGR of 10.5 per cent*. The FY14 Budget

provides for a CAGR of 22.2 per cent* in revenues over FY12

Freight segment’s revenues have been on the rise; in FY12, revenues were up 11.6 per cent* over last year, the highest

growth rate in the last four years

Earnings from Freight (in USD billion)

3.8

4.9 4.8 4.9

5.6 5.9

FY07 FY08 FY09 FY10 FY11 FY12

9.1

11.5 11.3 12.0

13.3 14.1

FY07 FY08 FY09 FY10 FY11 FY12

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Revenue breakup, by segment (FY12)

Source: Ministry of Railways, Aranca Research

Freight remains the major revenue earning segment for the

railways, accounting for 70.6 per cent of total revenues in

FY12

Profits from this segment are used to cross-subsidise the

passenger segment

70.6%

29.4%

Freight

Passenger

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Trends in passenger volumes (in millions)

Source: Ministry of Railways, Planning Commission, Aranca Research

Notes: CAGR – Compound Annual Growth Rate, F – Forecast

FY – Indian Financial Year (April–March)

Train travel remains the preferred means of communication

for a large majority of Indians, a fact easily reflected by

volume and growth of passengers over the years

Passenger volumes are expected to expand at a CAGR of

6.6 per cent to 11.7 million by FY17 from 6.2 million in FY07

The number of passengers travelling by train

reached 8.2 billion in FY12, up 7.2 per cent over the

previous fiscal year

Annual passenger volumes expanded at a CAGR of

5.8 per cent during FY07–12. According to the 12th

Five-Year Plan, passenger volumes are expected to

increase at a CAGR of 7.4 per cent during FY12–17

6.2 6.5 6.9 7.2

7.7 8.2 8.9

9.5 10.2 10.9

11.7

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13F

FY

14F

FY

15F

FY

16F

FY

17F

CAGR: 6.6%

Page 11: India : Railways Sector Report_August 2013

Number of Suburban passengers originating

(in millions)

Source: Ministry of Railways, Planning Commission, Aranca Research

Notes: CAGR – Compound Annual Growth Rate, F – Forecast

FY – Indian Financial Year (April–March)

Suburban passenger volumes have witnessed a constant increase in growth rates. The segment posted a growth of 7.8

per cent in FY12 compared with 4.8 per cent in FY11 and 1.9 per cent in FY10

Meanwhile, non-suburban passenger volumes have grown consistently, averaging 7.3 per cent over the last three years

The 12th Five-Year Plan forecasts suburban and non-suburban passenger volumes to increase to 5.9 billion and 5.8 billion,

respectively, by FY17

Number of non-suburban passengers originating

(in millions)

3,802 3,876 4,061 4,377 4,545

4,855 5,186

5,540 5,917

FY09 FY10 FY11 FY12 FY13F FY14F FY15F FY16F FY17F

3,118 3,370

3,590 3,847

4,323 4,651 5,005 5,385

5,793

FY09 FY10 FY11 FY12 FY13F FY14F FY15F FY16F FY17F

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745 804

837 892 926 975 1,038

1,119 1,206 1,300

1,405

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13F

FY

14F

FY

15F

FY

16F

FY

17F

Freight traffic (million tonnes)

Source: Ministry of Railways, Planning Commission,

Aranca Research

Notes: CAGR – Compound Annual Growth Rate, F – Forecast

FY – Indian Financial Year (April–March)

As of FY12, railways accounted for 31 per cent of India’s

freight traffic

Freight traffic is expected to expand at a CAGR of 6.6 per

cent to 1.4 billion tonnes by FY17 from 745 million tonnes in

FY07

Freight traffic reached 975 million tonnes in FY12, a

5.3 per cent rise over the previous fiscal year

The figure has grown at a CAGR of 5.5 per cent over

FY07–12 and is expected to grow at a CAGR of 7.6

per cent during FY12–17

CAGR: 6.6%

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Source: Relevant company annual reports and websites, Aranca Research

Notes: PSU – Public Sector Undertaking, DFC – Dedicated Freight Corridor, SPV – Special Purpose Vehicle

Company Business description

• Navratna PSU under the Indian Ministry of Railways

• It is a carrier, terminal operator and warehouse operator

• SPV set up under the Ministry of Railways

• Undertakes planning and development, mobilisation of financial resources and construction,

maintenance and operation of the Dedicated Freight Corridor (DFC)

• SPV created by the Government of India

• It builds engineering works required by Indian Railways

• Mini Ratna PSU with one of the largest neutral telecom infrastructure providers in the country

• It strives to modernise train control operation and safety system of Indian Railways

Page 14: India : Railways Sector Report_August 2013

Source: Relevant company annual reports and websites, Aranca Research

Notes: NTPC – National Thermal Power Corporation, km – Kilometres; * - Exchange rate as of 2008

Rail projects in India have typically been in the public sector domain

Private players were involved in allied activities such as track laying and maintenance, maintenance of coaches and

wagons, construction of bridges, stations, signalling, and telecommunications works

Company Project details

• Construction of 8 metro stations in Bengaluru

• Construction of two elevated Metro stations at MG Road and Trinity Circle in Reach-1

(inaugurated in September, 2011)

• Gauge conversion of VilluPuram-Mayiladuthurai section

• Installation and commissioning of signaling and telecommunications facilities at NTPC

• Bagged an order of US$ 535.8* million in 2008 in consortium with Scomi Engineering to execute

the country’s first monorail system in Mumbai

• Executing an order for development of railway siding; this involves engineering, procurement, and

construction work for a dedicated railway line of 38 km

Page 15: India : Railways Sector Report_August 2013

Source: Ministry of Railways, Aranca Research

Notes: PPP – Public Private Partnership

In December 2012, the Cabinet approved the new policy of “participative models for rail-connectivity and capacity augmented

projects”. The policy addressed private investors’ concerns, which included ownership of the railway line and repayment of

investment

This has led to renewed investor interest in the rail sector. Since then, railway authorities have received various proposals from

private investors and have already given approval (can now acquire land and begin construction) for four port connectivity

projects, which would ease congestion

This is in line with the government’s 12th Five-Year Plan. It intends to raise investments worth USD18.4 billion through PPP

route

Areas proposed for private investment during this period are likely to include elevated rail corridor in Mumbai, some parts of

dedicated freight corridor, freight terminals, redevelopment of stations, and power generation/energy saving projects

Other measures taken/proposed include:

Setting up of a modern signalling equipment facility at Chandigarh through the PPP route

Construction of new lines – Bhupdeopur-Raigarh (Mand Colliery), Gevra Road-Pendara Road – and doubling of

Palanpur-Samakhiali section through the PPP route

The Railways Ministry has already proposed for the development of 50 world-class stations in the PPP mode to improve and

enhance rail infrastructure in the country

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Demand for urban

transport

• There is a rapid increase in demand for urban mass transportation systems in the country

• Several metro rail projects are in progress to improve connectivity within cities; the Delhi

Metro has emerged as an internationally acclaimed venture

M-ticketing and

E-ticketing

• Indian Railways (IR) launched mobile ticketing services in August 2011. Users can now

use mobiles to directly buy tickets, which would be delivered to them through a non-

transferable SMS

• The government plans to upgrade the e-ticketing system by year-end to support 7,200

tickets per minute from 2,000 currently

International investment

• IR has attracted increasing investments from overseas through strategic alliances with

various countries over the last few years

• Subsidiaries of foreign companies are being set up to cater to the huge demand offered by

IR

Source: Ministry of Railways; Aranca Research

High speed rails • IR is planning to build seven high-speed rail corridors to provide faster rail connectivity

across the country

• The trains will be capable of running at speeds up to 300 kilometre per hour

Page 17: India : Railways Sector Report_August 2013

Government

focus on

infrastructure

building

Growth of freight

traffic due to

industrialisation

Rising demand

for urban mass

transportation

Increasing

private sector

participation

Improved safety

and

modernisation

Page 18: India : Railways Sector Report_August 2013

Source: Ministry of Railways; Aranca Research

Passenger traffic went up by more than 15 times over FY1951–2012

Increasing incomes, both urban and rural, has made rail travel affordable to a large number of Indians

Urban population in India increased from 17.3 per cent of the total population in 1951 to 31.2 per cent in 2011; this has led to

increase in traffic between urban and rural areas in the country

Improvement of urban-rural connectivity by rail has been another major contributor to passenger growth

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Passenger traffic growth index

(1950–51 taken as the base year)

India’s per capita income at current prices (USD)

Source: Ministry of Railways, IMF, Aranca Research

FY – Indian Financial Year (April–March)

Notes: F – Forecast

100

279

394

614

728

1,084

1,189

1,288

1,403

1,505

1950-51

1980-81

1990-91

2000-01

2003-04

2007-08

2008-09

2009-10

2010-11

2011-12

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

0

500

1,000

1,500

2,000

2,500

200

0

200

2

200

4

200

6

200

8

201

0

201

2

201

4F

201

6F

201

8F

Per Capita Income, USD, LHS Annual Growth Rate

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Train Description

Duronto Express • Non-stop point-to-point rail services

• Connects metros and major state capitals of India

Rajdhani Express • Air-conditioned trains linking major cities to New Delhi

• One of the fastest trains in India with very few station stops

Shatabdi, Jan

Shatabdi Express • Intercity seater-type trains for travel during day

Garib Rath • Fully air-conditioned trains, designed for those who cannot afford to travel in

expensive trains such as Rajdhani and Shatabdi

Superfast Mail/ Express • Trains that have an average speed greater than 55 kilometers per hour

• Have an additional super-fast surcharge

Mail/ Express • More stops than their super-fast counterparts

• Stops only at relatively important intermediate stations

Passenger, Fast

Passenger

• Slow trains that stop at most stations along the route

• Low-cost alternative

Suburban trains • Operate in urban areas

• Usually stops at all stations and have unreserved seating accommodation

Page 21: India : Railways Sector Report_August 2013

Freight traffic went up by more than 15 times over FY1951–2012

This traffic is due to the increasing levels of industrialisation across the country as is evident from the growth in the Index of

Industrial Production (IIP) over the last decade

Increasing freight traffic is generated from these industries year-on-year which are spread out across the country

Source: Ministry of Railways; Aranca Research

Page 22: India : Railways Sector Report_August 2013

Passenger traffic growth index

(1950–51 taken as the base year)

Growth (YoY) in the Index of Industrial Production

(IIP)

Source: Ministry of Railways, Ministry of Statistics and

Programme Implementation, Aranca Research

100

359

550

715

871

1,185

1,251

1,363

1,420

1,516

1950-51

1980-81

1990-91

2000-01

2003-04

2007-08

2008-09

2009-10

2010-11

2011-12

-8%

-4%

0%

4%

8%

12%

16%

20%

Ap

r-06

Jul-0

6O

ct-

06

Jan

-07

Ap

r-07

Jul-0

7O

ct-

07

Jan

-08

Ap

r-08

Jul-0

8O

ct-

08

Jan

-09

Ap

r-09

Jul-0

9O

ct-

09

Jan

-10

Ap

r-10

Jul-1

0O

ct-

10

Jan

-11

Ap

r-11

Jul-1

1O

ct-

11

Jan

-12

Ap

r-12

Jul-1

2O

ct-

12

Jan

-13

Page 23: India : Railways Sector Report_August 2013

Source: Ministry of Railways, Aranca Research

Notes: DFC – Dedicated Freight Corridor, DFCCIL – Dedicated Freight

Corridor Corporation of India Limited, JV – Joint Venture

• DFCCIL, a special purpose vehicle, was set up for implementing the DFC project under the administrative

control of the Ministry of Railways

• The plan is to construct dedicated freight lines along the Eastern and Western parts of India

• Total length: 3,300 kilometres; total estimated cost: USD16.7 billion; project scheduled for completion in

FY17

Punjab - > Haryana - > Uttar

Pradesh - > Bihar - > West

Bengal

Uttar Pradesh - > Delhi - >

Haryana - > Rajasthan - >

Gujarat - > Maharashtra

Western Corridor Eastern Corridor

Page 24: India : Railways Sector Report_August 2013

Source: Ministry of Railways, Aranca Research

Objectives

Increase rail freight share

through customised

logistic services Segregate

freight and passenger

lines for focused

approach

Create additional

freight capacity to

meet demand Introduce

time-tabled freight

services to ensure better

services

Adopt high-end

technology for real-time data analysis

Reduce unit cost of

transportation and increase productivity

Page 25: India : Railways Sector Report_August 2013

76 91

64

91

2016-17 2017-22EDFC WDFC

Freight traffic projections on DFC (in MMT)

Source: KPMG

Notes: CAGR – Compound Annual Growth Rate,DFC – Dedicated

Freight Corridor, EDFC – Eastern Dedicated Freight Corridor,

WDFC – Western Dedicated Freight Corridor,

MMT – Million Metric Tonnes

Freight traffic via DFC would increase at a CAGR of 5.4 per

cent to 182 MMT in 2021–22 from 140 MMT in 2016–17

Container traffic is likely to be an important constituent of

the WDFC and is expected to grow to 5.3 million TEUs in

2021–22 from 3.8 million TEUs in 2016–17

CAGR: 5.4%

Page 26: India : Railways Sector Report_August 2013

DFC Model Mix (2016-17)

Source: KPMG

In the DFC scenario, added capacity and efficiency of the new infrastructure would result in an increased share of railway

network to 87 per cent in 2021–22 from 84 per cent projected in 2016–17

DFC Model Mix (2017-22)

16%

84%

Road Share

Rail Share

13%

87%

Road Share

Rail Share

Page 27: India : Railways Sector Report_August 2013

12th Five-Year Plan

• An outlay of USD95.6 billion has been approved by the Planning Commission for railways.

The railway ministry had proposed an outlay of USD100.9 billion

• Details of the outlay are as under:

(i) Gross Budgetary Support USD35.8 billion

(ii) Internal Generation USD19.3 billion

(iii) Extra Budgetary Resources USD40.5 billion

Participative models

for rail connectivity and

capacity augmented

projects

• This policy supersedes the R3i and R2CI policies notified earlier

• The policy provides for supplementing government’s investment in rail infrastructure

projects by private capital flows

• The policy contains the following models: non-government railway; joint venture with

equity participation by railways; capacity augmentation through funding by customers;

capacity augmentation – annuity model applicability; and BOT

Source: Ministry of Railways, Aranca Research

Notes: R3i – Railways' Infrastructure for Industry Initiative, R2CI is Railways Policy for

Connectivity to Coal and Iron Ore Mines, BOT – Build Operate and Transfer

Page 28: India : Railways Sector Report_August 2013

Automobile Freight

Train Operator Scheme

2013

• To increase its share in automobiles transportation, Indian Railways notified a new

scheme in March 2013 – Automobile Freight Train Operator (AFTO). The scheme

provides logistic service providers and road transporters an opportunity to introduce their

own special wagons to run on the railways' network and avail of freight rebates in return.

The requirements for the scheme are laid down as under:

• Companies with minimum net worth of USD3.7 million or annual turnover of USD5.5

million are eligible to participate in this scheme

• A registration fee of USD0.9 million is required to be paid to the railway ministry on

approval as AFTOs

• Companies are required to introduce at least three rakes and make them operational

within six months from the commissioning of the first rake

• The freight rates would be notified from time to time for specific stock to be moved by

AFTOs

• The freight rebate would be incorporated in the freight rates specified for transportations of

automobiles

• Special wagons to be designed and developed by Research, Design and Standards

Organisation (RDSO) for induction by third-party logistics providers and road transporters

• Each rake is to have a capacity to carry 318 small cars. The rake should be tested by

RDSO

Source: Ministry of Railways, Aranca Research

Page 29: India : Railways Sector Report_August 2013

R3i policy

• Aimed at attracting private sector participation in rail connectivity projects in order to create

additional rail transport capacity

• The policy allows for four models – (a) Cost Sharing-Freight Rebate, (b) Full Contribution-

Apportioned Earnings, (c) Special Purpose Vehicle (SPV), and (d) Private Line

R2CI

• New policy initiated to improve rail connectivity to coal and iron ore mines

• It offers the developer involved in the construction of the line to levy a surcharge on the

freight over a period of 10–25 years

• The policy has two models – Capital Cost Model, and the SPV Model. While the Capital

Cost Model is relevant when there are two players, the SPV Model is intended for a

situation where there are a large number of players

Source: Ministry of Railways, Aranca Research

Notes: R3i – Railways' Infrastructure for Industry Initiative, SPV – Special Purpose

Vehicle, R2CI is Railways Policy for Connectivity to Coal and Iron Ore Mines

Page 30: India : Railways Sector Report_August 2013

Railway Budget FY14

• For FY14, the budget earmarks an outlay of USD11.7 billion, of which 40.9 per cent would

be funded through gross budgetary support and internal resources, while 23.8 per cent

would be funded through borrowings. Moreover, USD1.1 billion would be mobilised

through the PPP route

• The ministry expects a 9 per cent increase in freight earnings to USD17.2 billion in FY14

Passenger earnings are expected to increase to USD7.8 billion during the same period.

• Operating ratio is also expected to improve to 87.8 per cent in FY14

Wagon Investment

Scheme

• Indian Railways launched the Wagon Investment Scheme in 2005 to offer freight rebates

and supply a guaranteed number of rakes for a period of 7 – 15 years for different types of

wagons

• The Ministry of Railways has proposed to set up five wagon factories in Secunderabad,

Bardhaman, Bhubaneswar/ Kalahandi, Guwahati and Haldia under the JV/ PPP model

• It plans to procure 18,000 wagons during FY12

Source: Ministry of Railways, Aranca Research

Notes: VSAT - Very Small Aperture Terminal

Page 31: India : Railways Sector Report_August 2013

Key modernisation

initiatives

• Rolling out a more user-friendly system, with internet ticketing timings increased to 23

hours a day from 0030 hrs to 2330 hrs

• A new e-ticketing system, which would support 120,000 users simultaneously at any point

in time compared with the existing 40,000 capacity, will be put in place by year end. The

system would be able to support the booking of 7,200 tickets per minute as against the

current capacity of 2,000

• Launched mobile ticketing services in August 2011 and SMS in case if e-ticket not

accepted as valid proof of reservation

• With the successful completion of initial testing, the Train Collision Avoidance System

(TCAS) will be put to rigorous trials to validate its safety under complex operational

conditions

• Introduction of Self-Propelled Accident Relief Trains (SPART) on trial basis with a view to

establish a fast and reliable disaster management system

• A modern signalling system, a train-protection warning system, and a special railway

safety fund have been initiated to ensure passengers’ security

• Railway Budget FY14 focuses on improving passenger amenities such as free Wi-Fi

access, pilot projects to help passengers contact onboard staff regarding coach

cleanliness, etc.

Source: Ministry of Railways, Aranca Research

Page 32: India : Railways Sector Report_August 2013

Investments during the 11th Plan (USD billion)

Approved

Outlay 2007–08 2008-09 2009-10 2010-11 2011-12*

Total 11th

Plan

Excess/

Shortfall 2012-13**

Gross

Budgetary

Support

15.8 2.2 2.2 3.7 4.3 4.4 17.0 3.0 4.4

Internal

Generation 22.4 3.7 4.1 2.6 2.5 1.9 14.7 (5.1) 3.5

Extra

Budgetary

Resources

19.8 1.3 1.6 2.1 2.1 3.4 10.7 (6.9) 3.0

Total 58.0 7.2 7.9 8.4 8.9 9.7 42.3 9.1 11.1

Source: Planning Commission, Aranca Research

* - Revised Expenditure, ** - Budgetary Expenditure

Page 33: India : Railways Sector Report_August 2013

Cumulative FDI inflows from April 2000

(USD million)

Source: Department of Industrial Policy & Promotion, Aranca Research

Notes: FDI – Foreign Direct Investment; Cumulative from April 2000 to

March 2008 and so on

Since FY08, cumulative FDI inflows into the sector has

increased fivefold

In FY13, the figure stood at USD270.3 million

57.3 75.3

109.6

132.8

240.3

270.3

FY08 FY09 FY10 FY11 FY12 FY13

Page 34: India : Railways Sector Report_August 2013

Source: Ministry of Railways, Aranca Research

Notes: ICT – Information and Communication Technology,

PPP – Public Private Partnership

To modernise Indian Railways, the focus is on two

fundamental drivers – Safety and Growth and along

a five-pronged strategy

• Modernise core assets – They are key revenue

generating assets

• Explore new revenue models – To meet the

funding needs for modernisation and growth

• Review projects – To ensure financial viability,

social benefits, and timely implementation

• Focus on enablers – For a holistic and long term

approach to modernisation and execution

• Mobilize resources – To capitalise on an

opportunity

Key focus areas

Core

Assets Track and

bridges Signalling

Rolling

stock

Stations and

terminals

Revenue

Models PPPs Land

Dedicated

freight

corridors

High

speed trains

Projects Review of existing and proposed projects

Enablers ICT Indigenous

development Safety

Resources Funding Human

resource Organisation

Page 35: India : Railways Sector Report_August 2013

Source: Ministry of Railways, Aranca Research

Notes: Km – Kilometres, IR – Indian Railways, UTS – Ultimate Tensile Strength,

CST9 – Central Standard Trial-9, PSC – Pre Stressed Concrete

• Sleepers have been upgraded from

wooden, steel, and CST-9 to PSC sleepers

• Heavier section and high tensile strength

rails are being used (52kg/60kg 90 UTS

rails are being used in place of 90R/52kg

72UTS rails)

• As of FY12, total length of welded track on

main lines of IR was 79,113 km, of which

65,500 km was with long-welded rails and

the rest with short-welded rails

• There is a progressive shift to flash butt

welding which is superior in quality to

Alumino Thermic (AT) welding

• Adequate capacity for production of

concrete sleepers to meet the present

requirement of IR has been developed

• During FY12, 6.9 million broad-gauge

mono-block concrete sleepers and 10,359

sets of PSC turnout sleepers were

produced

• In FY12, 924 bridges, including 12

distressed bridges, were rehabilitated

• Modern bridge inspection and management

system has been adopted, which include

non-destructive testing techniques, under

water inspections, fibre composite

wrapping, integrity testing etc.

Track upgradation and welded rails Sleepers and bridges

Page 36: India : Railways Sector Report_August 2013

Source: Ministry of Railways, Aranca Research

Notes: WDG5 (W – Wide/broad gauge, D – Diesel-powered,

G – Made for hauling goods, 5 – above 5000hp)

• Design and development of

5500 HP WDG5 diesel

locomotive for faster, longer

and heavier trains

• Development of high-

sensitivity thermal imaging

camera with online scanning

facility to improve the

reliability of electric traction

system

• Development of 25 KV HV

connector for multiple

operation of WAP5

locomotives with one

pantograph in raised

condition

Unreserved ticketing services

(UTS)

• UTS has been made

functional at 5,690 locations

with 10,508 terminals as of

April 2013

• More than 90 per cent of

unreserved tickets are now

generated through UTS

• A total of 6.65 billion

passengers were served

(total earnings of USD2.26

billion) in FY11 as compared

to 5.88 billion passengers

(total earnings of USD199.86

million) in FY10

Terminal Management

System (TMS)

• TMS generates online

railway receipts and has

been deployed at 631 field

locations during FY11

• During FY11, USD6.95 billion

of freight payment was

realised through e-payment

mode, which accounts for 58

per cent of total freight

collected

Increasing Operational

efficiency

Page 37: India : Railways Sector Report_August 2013

Source: Press information Bureau, GOI and News websites

Notes: SPV – Special Purpose Vehicle

PSU – Public Sector Undertaking

Salient features

• It has been created with the view of making the Indian

Railway stations world class as a public–private

partnership venture (PPP)

• A memorandum of understanding (MoU) for the SPV

was signed between two railway PSUs – the Ircon

international Limited (IRCON) and the Rail Land

Development Authority (RLDA)

• The SPV will have an initial corpus of USD20.8 billion

with 51:49 equity between Ircon and RLDA

Need and importance

• To meet with the aspirations of rail users and to

facilitate them with better facilities

• To augment and improve passenger related amenities

at stations to high standards

• To have modern stations which would be functional,

customer-oriented and well equipped with proper

circulation area and railway operation facilities

• It will be designed to provide well designed

concourses, high quality waiting spaces, easy access

to the platforms, congestion-free platforms, modern

catering facilities, hotels and other facilities

Page 38: India : Railways Sector Report_August 2013

Country Network

length (km)

Number of

employees

(000s)

Passengers

carried

(million)

Passenger

distances

(billion km)

Freight

carried

(million

tonnes)

Freight

distance

(billion km)

Number of

locomotives

Number of

coaches

Number of

wagons

(000s)

USA 226,706 187 26 9 1,775 2,820 23,990 1,186 475

Russia 84,158 1,128 1,280 173 1,344 2,090 12,063 33,955 567

China 63,637 2,067 1,287 690 2,624 2,211 17,222 42,471 571

India 63,327 1,406 6,219 695 728 4,810 8,110 43,124 208

Canada 57,042 34 4 1 313 353 2,947 595 98

Germany 33,897 231 1,835 75 273 91 4,128 17,537 96

France 29,488 166 1,097 84 106 42 4,289 15,973 33

South Africa 24,487 36 533 15 181 109 3,301 1,723 112

Japan 20,050 132 8,907 253 36 23 1,170 25,244 9

Australia 9,639 13 54 1 177 46 509 663 11

Source: Ministry of Railways, Aranca Research

Note: Figures are as of Dec ‘09

Page 39: India : Railways Sector Report_August 2013

Average rate per passenger km. (in rupees)

Source: Ministry of Railways, Aranca Research

Freight revenue accounts for major share of total railway revenues in India (71 per cent share in in FY12)

Major freight railways such as the US, China and Russia have one-fourth the freight rate compared to India

Indian Railways charges higher freight tariff in order to cross-subsidise the passenger fares and make them affordable to

the public. This is why the passenger fares were not increased in tandem with the rising costs over the years; in fact, fares

have gone down in a few cases

Average rate per tonne km. (in rupees)

0.25

0.26

0.26 0.26

0.26

0.27

FY 07 FY 08 FY 09 FY 10 FY 11 FY 12

0.85

0.89

0.94 0.95

0.97

1.01

FY 07 FY 08 FY 09 FY 10 FY 11 FY 12

Page 40: India : Railways Sector Report_August 2013

Average freight revenue per tonne kilometre

(2009) Ratio of average passenger fare to average freight

rates (2009)

Source: World Bank, Aranca Research

100

112

122

185

207

218

273

281

327

395

751

USA

Canada

Russia

China

Japan

France

Italy

South Africa

Spain

India

Germany

0.3

0.3

0.3

0.4

0.7

0.9

0.9

1.1

1.2

1.3

1.4

India

Pakistan

Vietnam

Greece

Thailand

Indonesia

Malaysia

Austria

China

France

Korea

Page 41: India : Railways Sector Report_August 2013

Revenues from traffic operations (USD million)

Source: Delhi Metro website, Annual Reports,

Aranca Research

Revenues from traffic operations increased at a CAGR of

37.5 per cent during FY08–12 to USD236.0 million

Average ridership increased to 1.9 million in June 2012 from

0.9 million in FY10, marking an increase of more than 100

per cent

Phase III of the project was approved in August, 2011 and

covers a route length of 103.1kms and 67 stations

Finalized Phase IV of the project which would cover area of

more than 115kms

Total operational network across Phase I and Phase

II spans 190 kilometres and covers 143 stations

66.0

91.8

109.8

195.6

236.0

FY 08 FY 09 FY 10 FY 11 FY 12

CAGR: 37.5%

Page 42: India : Railways Sector Report_August 2013

Source: Press Information Bureau, GOI and News Websites

Notes: SPV – Special Purpose Vehicle

PSU – Public Sector Undertaking

Key success factors

• Coordinated and well collaborated effort from various

government agencies for timely completion of the

project

• Availed overseas financing to cover 60 per cent of the

costs to ensure expedition of the project’s execution

• Involvement of consultants from across the world with

extensive experience – both technological and

managerial – in the field

Salient features

• The capital cost of completion of Phase I has been

estimated at USD2.2 billion, saving about USD125.0

million from the budgeted expenditure

• The phase was completed three years ahead of

schedule

• Average duration of major tenders was nineteen days,

compared with the three to nine months that is the

norm

Page 43: India : Railways Sector Report_August 2013

Freight traffic (million tonnes)

• The government is investing heavily in building rail

infrastructure in the country. The government

plans to invest USD153 billion during the 12th Five-

Year Plan

• With increasing participation expected from private

players – both domestic and foreign – due to

favourable policy measures, freight traffic is

expected to grow rapidly over the medium to long

term

• Railways has set a target of having a freight

market share of 50 per cent by 2030 from 30 per

cent in 2010

745 804 837 892

926 975 1,038 1,119

1,206 1,300

1,405

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13E

FY

14E

FY

15E

FY

16E

FY

17E

• With rapid economic growth and increasing

industrialisation, freight traffic is expected to touch

1,405 million metric tonnes by FY17

• This indicates a CAGR of 7.6 per cent over FY12–17

CAGR: 6.6%

Page 44: India : Railways Sector Report_August 2013

Source: Ministry of Urban Development, Concor, Aranca Research

• Investments expected in metro rail networks in India: USD42 billion by 2020

• Amount invested so far: USD16.7 billion

Name of project Estimated cost (USD

billion) Length of project

(kilometres) (Estimated) Date of

completion

Delhi Mass Rapid Transit System

Phase I 2.2 65.1 November 2006

Delhi Mass Rapid Transit System

Phase II 1.1 124.6 August 2011

Kolkata Metro Rail Project 1.1 14.7 2014–15

Bengaluru Metro Rail Project 2.4 42.3 September 2012

Hyderabad Metro Project 2.5 71.2 2013

Mumbai Metro Project Phase-II 1.7 31.9 2016

Chennai Metro Rail Project 2.3 45.1 2014–15

Page 45: India : Railways Sector Report_August 2013

Manufacturers Association for Information Technology (MAIT)

4th Floor, PHD House, Opp. Asian Games Village,

New Delhi 110 016, India

Tel: 91 11 26855487

Fax: 91 11 26851321

E-mail: [email protected]

Website: www.mait.com

Consumer Electronics and Appliances Manufacturers

Association (CEAMA)

5th Floor, PHD House

4/2, Siri Institutional Area, August Kranti Marg

New Delhi –110 016

Telefax: 91-11-46070335, 46070336

E-mail: [email protected]

Website: www.ceama.in

Page 46: India : Railways Sector Report_August 2013

CAGR: Compound Annual Growth Rate

FDI: Foreign Direct Investment

FY: Indian financial year (April to March)

So FY12 implies April 2011 to March 2012

DFC: Dedicated Freight Corridor

DFCCIL: Dedicated Freight Corridor Corporation of India Limited

PPP: Public-private partnership

IIP: Index of industrial production

R2CI: Railways Policy for Connectivity to Coal and Iron Ore Mines

R3i: Railways' Infrastructure for Industry Initiative

CST – 9: Central Standard Trial-9,

SPV: Special Purpose Vehicle

Page 47: India : Railways Sector Report_August 2013

USD: US Dollar

Wherever applicable, numbers have been rounded off to the nearest whole number

Page 48: India : Railways Sector Report_August 2013

Year INR equivalent of one USD

2004-05 44.95

2005-06 44.28

2006-07 45.28

2007-08 40.24

2008-09 45.91

2009-10 47.41

2010-11 45.57

2011-12 47.94

2012-13 54.31

Exchange Rates (Fiscal Year)

Year INR equivalent of one USD

2005 45.55

2006 44.34

2007 39.45

2008 49.21

2009 46.76

2010 45.32

2011 45.64

2012 54.69

2013 54.45

Exchange Rates (Calendar Year)

Average for the year

Page 49: India : Railways Sector Report_August 2013

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