railways - august 2013

7/29/2019 Railways - August 2013

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Worlds fourth-largestrail network

As of FY12, Indian Railways had 12,335 passenger trains carrying over 30 millionpassengers daily. On the commercial front, 975.2 million tonnes of freight was transportedvia trains in FY12

Growing public-privatepartnership

Private sector companies are being encouraged to participate in rail projects, which werelargely in the public domain. In December 2012, the Cabinet approved participativemodels for rail-connectivity and capacity augmented projects, which allows privateownership of some railway lines

Growth initiatives

Indian Railways is undertaking the construction of dedicated freight lines along thecountrys Eastern and Western corridors; this would increase productivity and reducetransportation cost. A special purpose vehicle has been set up for the same. Moreover, inMarch 2013, the Cabinet approved the Automobile Freight Train Operator Scheme toencourage automobile transportation through railways

Modernisation/technology upgradation

Indian Railways has launched mobile ticketing services, which enable customers toreceive tickets on short message service (SMS). Additionally, it plans to upgrade itscurrent systems to support bookings of 7,200 tickets per minute compared with the currentcapacity of 2,000 tickets


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

Due to policy support, there wascumulative FDI of USD14.0 billion intothe sector over April 2000 February2012, making up 8.6 per cent of totalFDI into the country in that period

Growing demand

Source: Railway Budget 2013, Planning Commission, Aranca ResearchNotes: 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 coupledwith rising incomes (both urbanand rural) is driving growth in thepassenger segment

Growing industrialisation acrosscountry has increased freight

traffic over the last decade

Attractive opportunities

Freight traffic is set to increasemanifold, thanks to investmentsand private sector participation

Metro rail projects are beingenvisaged across many cities overthe next ten years

Policy support

Government has increased thescope of PPP, to beyond providing

maintenance and other suchsupporting roles

Government is providing new lines,increasing the rolling stock to buildup capacity

Higher investments

The government has beeninvesting heavily to upgrade

railway infrastructure Sector has been witnessing

increasing level of FDIparticipation over FY0812

2012

FreightTraffic

975 MMT

2017F

FreightTraffic

1,405 MMT

AdvantageIndia


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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 7,146stations.

Operates more than 19,000 trains every day

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

IRs 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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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 (AprilMarch)

Indian Railways revenues grew the fastest in three years toUSD21.7 billion in FY12, a 10.1 per cent y/y growth. TheRailway Ministry estimates revenues to grow 20.7 per cent*in 2013

Overall, revenues are expected to expand at a CAGR of12.1 per cent* during FY0714

Revenue growth has, in fact, been strong over theyears; during FY0712, revenues expanded at aCAGR of 9.9 per cent*

For FY14, the government has estimated revenuesto expand at a CAGR of 17.5 per cent* over FY12

14.3

18.3 17.8 18.820.8

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 (AprilMarch)

In the last six years, revenues from the passenger segment has expanded at a CAGR of 10.5 per cent*. The FY14 Budgetprovides for a CAGR of 22.2 per cent* in revenues over FY12

Freight segments revenues have been on the rise; in FY12, revenues were up 11.6 per cent* over last year, the highestgrowth 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 11.312.0

13.3 14.1



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Revenue breakup, by segment (FY12)


Freight remains the major revenue earning segment for therailways, accounting for 70.6 per cent of total revenues inFY12

Profits from this segment are used to cross-subsidise thepassenger segment

70.6%

29.4%

Freight

Passenger


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Trends in passenger volumes (in millions)

Source: Ministry of Railways, Planning Commission, Aranca ResearchNotes: CAGR Compound Annual Growth Rate, F ForecastFY Indian Financial Year (AprilMarch)

Train travel remains the preferred means of communicationfor a large majority of Indians, a fact easily reflected byvolume and growth of passengers over the years

Passenger volumes are expected to expand at a CAGR of6.6 per cent to 11.7 million by FY17 from 6.2 million in FY07

The number of passengers travelling by trainreached 8.2 billion in FY12, up 7.2 per cent over theprevious fiscal year

Annual passenger volumes expanded at a CAGR of5.8 per cent during FY0712. According to the 12thFive-Year Plan, passenger volumes are expected toincrease at a CAGR of 7.4 per cent during FY1217

6.2 6.5 6.97.2

7.78.2 8.9

9.510.2 10.9

11.7

FY07

FY08

FY09

FY10

FY11

FY12

FY13F

FY14F

FY15F

FY16F

FY17F

CAGR: 6.6%


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Number of Suburban passengers originating(in millions)

Source: Ministry of Railways, Planning Commission, Aranca ResearchNotes: CAGR Compound Annual Growth Rate, F Forecast

FY Indian Financial Year (AprilMarch)

Suburban passenger volumes have witnessed a constant increase in growth rates. The segment posted a growth of 7.8per 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 3,8764,061 4,377

4,5454,855

5,186

5,540 5,917

FY09 FY10 FY11 FY12 FY13F FY14F FY15F FY16F FY17F

3,118 3,3703,590 3,847

4,323 4,651 5,0055,385

5,793

FY09 FY10 FY11 FY12 FY13F FY14F FY15F FY16F FY17F


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745804

837 892926 975 1,038

1,1191,206 1,300

1,405

FY07

FY08

FY09

FY10

FY11

FY12

FY13F

FY14F

FY15F

FY16F

FY17F

Freight traffic (million tonnes)

Source: Ministry of Railways, Planning Commission,Aranca Research

Notes: CAGR Compound Annual Growth Rate, F ForecastFY Indian Financial Year (AprilMarch)

As of FY12, railways accounted for 31 per cent of Indiasfreight traffic

Freight traffic is expected to expand at a CAGR of 6.6 percent to 1.4 billion tonnes by FY17 from 745 million tonnes inFY07

Freight traffic reached 975 million tonnes in FY12, a5.3 per cent rise over the previous fiscal year

The figure has grown at a CAGR of 5.5 per cent overFY0712 and is expected to grow at a CAGR of 7.6per cent during FY1217

CAGR: 6.6%


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Source: Relevant company annual reports and websites, Aranca ResearchNotes: 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


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Source: Relevant company annual reports and websites, Aranca ResearchNotes: 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 andwagons, 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 executethe countrys first monorail system in Mumbai

Executing an order for development of railway siding; this involves engineering, procurement, andconstruction work for a dedicated railway line of 38 km


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Source: Ministry of Railways, Aranca ResearchNotes: PPP Public Private Partnership

In December 2012, the Cabinet approved the new policy of participative models for rail-connectivity and capacity augmentedprojects. The policy addressed private investors concerns, which included ownership of the railway line and repayment ofinvestment

This has led to renewed investor interest in the rail sector. Since then, railway authorities have received various proposals fromprivate investors and have already given approval (can now acquire land and begin construction) for four port connectivityprojects, which would ease congestion

This is in line with the governments 12th Five-Year Plan. It intends to raise investments worth USD18.4 billion through PPProute

Areas proposed for private investment during this period are likely to include elevated rail corridor in Mumbai, some parts ofdedicated 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 ofPalanpur-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 andenhance rail infrastructure in the country


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Demand for urbantransport

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 nowuse 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 7,200tickets per minute from 2,000 currently

International investment

IR has attracted increasing investments from overseas through strategic alliances withvarious countries over the last few years

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

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


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Governmentfocus on

infrastructurebuilding

Growth of freighttraffic due to

industrialisation

Rising demandfor urban masstransportation

Increasingprivate sectorparticipation

Improved safetyand

modernisation


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Passenger traffic went up by more than 15 times over FY19512012

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 toincrease 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(195051 taken as the base year)

Indias per capita income at current prices (USD)

Source: Ministry of Railways, IMF, Aranca ResearchFY Indian Financial Year (AprilMarch)

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

2000

2002

2004

2006

2008

2010

2012

2014F

2016F

2018F

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, FastPassenger

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


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Freight traffic went up by more than 15 times over FY19512012

This traffic is due to the increasing levels of industrialisation across the country as is evident from the growth in the Index ofIndustrial Production (IIP) over the last decade

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



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Passenger traffic growth index(195051 taken as the base year)

Growth (YoY) in the Index of Industrial Production(IIP)

Source: Ministry of Railways, Ministry of Statistics andProgramme 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%

Apr-06

Jul-06

Oct-06

Jan-07

Apr-07

Jul-07

Oct-07

Jan-08

Apr-08

Jul-08

Oct-08

Jan-09

Apr-09

Jul-09

Oct-09

Jan-10

Apr-10

Jul-10

Oct-10

Jan-11

Apr-11

Jul-11

Oct-11

Jan-12

Apr-12

Jul-12

Oct-12

Jan-13


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Source: Ministry of Railways, Aranca ResearchNotes: 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 administrativecontrol 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 inFY17

Punjab - > Haryana - > UttarPradesh - > Bihar - > WestBengal

Uttar Pradesh - > Delhi - >Haryana - > Rajasthan - >Gujarat - > Maharashtra

Western Corridor Eastern Corridor


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Objectives

Increase railfreight share

throughcustomised

logisticservices Segregate

freight andpassenger

lines for

focusedapproach

Createadditional

freightcapacity to

meet demandIntroduce

time-tabledfreight

services toensure better

services

Adopt high-end

technologyfor real-timedata analysis

Reduce unitcost of

transportationand increaseproductivity


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7691

64

91

2016-17 2017-22EDFC WDFC

Freight traffic projections on DFC (in MMT)

Source: KPMGNotes: 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 percent to 182 MMT in 202122 from 140 MMT in 201617

Container traffic is likely to be an important constituent ofthe WDFC and is expected to grow to 5.3 million TEUs in202122 from 3.8 million TEUs in 201617

CAGR: 5.4%


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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 railwaynetwork to 87 per cent in 202122 from 84 per cent projected in 201617

DFC Model Mix (2017-22)

16%

84%

Road Share

Rail Share

13%

87%

Road Share

Rail Share


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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 modelsfor rail connectivity and

capacity augmentedprojects

This policy supersedes the R3i and R2CI policies notified earlier The policy provides for supplementing governments 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 ResearchNotes: R3i Railways' Infrastructure for Industry Initiative, R2CI is Railways Policy for

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


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Automobile FreightTrain Operator Scheme

2013

To increase its share in automobiles transportation, Indian Railways notified a newscheme in March 2013 Automobile Freight Train Operator (AFTO). The schemeprovides logistic service providers and road transporters an opportunity to introduce theirown 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 USD5.5million 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 byRDSO



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R3i policy

Aimed at attracting private sector participation in rail connectivity projects in order to createadditional 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 1025 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 asituation where there are a large number of players

Source: Ministry of Railways, Aranca ResearchNotes: R3i Railways' Infrastructure for Industry Initiative, SPV Special Purpose

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


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Railway Budget FY14

For FY14, the budget earmarks an outlay of USD11.7 billion, of which 40.9 per cent wouldbe funded through gross budgetary support and internal resources, while 23.8 per centwould be funded through borrowings. Moreover, USD1.1 billion would be mobilisedthrough the PPP route

The ministry expects a 9 per cent increase in freight earnings to USD17.2 billion in FY14Passenger 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 InvestmentScheme

Indian Railways launched the Wagon Investment Scheme in 2005 to offer freight rebatesand supply a guaranteed number of rakes for a period of 7 15 years for different types ofwagons

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 ResearchNotes: VSAT - Very Small Aperture Terminal


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Key modernisationinitiatives

Rolling out a more user-friendly system, with internet ticketing timings increased to 23hours a day from 0030 hrs to 2330 hrs

A new e-ticketing system, which would support 120,000 users simultaneously at any pointin time compared with the existing 40,000 capacity, will be put in place by year end. Thesystem would be able to support the booking of 7,200 tickets per minute as against thecurrent capacity of 2,000

Launched mobile ticketing services in August 2011 and SMS in case if e-ticket notaccepted 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 operationalconditions

Introduction of Self-Propelled Accident Relief Trains (SPART) on trial basis with a view toestablish a fast and reliable disaster management system

A modern signalling system, a train-protection warning system, and a special railwaysafety fund have been initiated to ensure passengers security

Railway Budget FY14 focuses on improving passenger amenities such as free Wi-Fiaccess, pilot projects to help passengers contact onboard staff regarding coach

cleanliness, etc.



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Investments during the 11th Plan (USD billion)

ApprovedOutlay

200708 2008-09 2009-10 2010-11 2011-12*Total 11th

PlanExcess/Shortfall

2012-13**

Gross

BudgetarySupport15.8 2.2 2.2 3.7 4.3 4.4 17.0 3.0 4.4

InternalGeneration

22.4 3.7 4.1 2.6 2.5 1.9 14.7 (5.1) 3.5

ExtraBudgetaryResources

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


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Cumulative FDI inflows from April 2000(USD million)

Source: Department of Industrial Policy & Promotion, Aranca ResearchNotes: FDI Foreign Direct Investment; Cumulative from April 2000 to

March 2008 and so on

Since FY08, cumulative FDI inflows into the sector hasincreased fivefold

In FY13, the figure stood at USD270.3 million

57.375.3

109.6

132.8

240.3

270.3



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Source: Ministry of Railways, Aranca ResearchNotes: 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

CoreAssets

Track andbridges

SignallingRollingstock

Stations andterminals

Revenue

ModelsPPPs Land

Dedicatedfreight

corridors

High

speed trains

Projects Review of existing and proposed projects

Enablers ICTIndigenous

developmentSafety

Resources Funding Humanresource Organisation


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Source: Ministry of Railways, Aranca ResearchNotes: 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 UTSrails 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-gaugemono-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


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Source: Ministry of Railways, Aranca ResearchNotes: 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 multipleoperation 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 ManagementSystem (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 Operationalefficiency


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Source: Press information Bureau, GOI and News websitesNotes: SPV Special Purpose Vehicle

PSU Public Sector Undertaking

Salient features

It has been created with the view of making the IndianRailway stations world class as a publicprivatepartnership venture (PPP)

A memorandum of understanding (MoU) for the SPV

was signed between two railway PSUs the Irconinternational Limited (IRCON) and the Rail LandDevelopment Authority (RLDA)

The SPV will have an initial corpus of USD20.8 billionwith 51:49 equity between Ircon and RLDA

Need and importance

To meet with the aspirations of rail users and tofacilitate them with better facilities

To augment and improve passenger related amenitiesat stations to high standards

To have modern stations which would be functional,

customer-oriented and well equipped with propercirculation area and railway operation facilities

It will be designed to provide well designedconcourses, high quality waiting spaces, easy accessto the platforms, congestion-free platforms, moderncatering facilities, hotels and other facilities


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CountryNetwork

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 ResearchNote: Figures are as of Dec 09


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Average rate per passenger km. (in rupees)


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 tothe public. This is why the passenger fares were not increased in tandem with the rising costs over the years; in fact, fareshave gone down in a few cases

Average rate per tonne km. (in rupees)

0.25

0.26

0.260.26

0.26

0.27

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

0.85

0.89

0.940.95

0.97

1.01

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


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Average freight revenue per tonne kilometre(2009)

Ratio of average passenger fare to average freightrates (2009)

Source: World Bank, Aranca Research

100

112

122

185

207

218273

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

IndonesiaMalaysia

Austria

China

France

Korea


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Revenues from traffic operations (USD million)

Source: Delhi Metro website, Annual Reports,

Aranca Research

Revenues from traffic operations increased at a CAGR of37.5 per cent during FY0812 to USD236.0 million

Average ridership increased to 1.9 million in June 2012 from0.9 million in FY10, marking an increase of more than 100per 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 ofmore than 115kms

Total operational network across Phase I and PhaseII 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%


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Source: Press Information Bureau, GOI and News WebsitesNotes: SPV Special Purpose Vehicle

PSU Public Sector Undertaking

Key success factors

Coordinated and well collaborated effort from variousgovernment agencies for timely completion of theproject

Availed overseas financing to cover 60 per cent of thecosts to ensure expedition of the projects execution

Involvement of consultants from across the world withextensive experience both technological andmanagerial in the field

Salient features

The capital cost of completion of Phase I has beenestimated at USD2.2 billion, saving about USD125.0million from the budgeted expenditure

The phase was completed three years ahead ofschedule

Average duration of major tenders was nineteen days,compared with the three to nine months that is thenorm


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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 12 th Five-

Year Plan

With increasing participation expected from private

players both domestic and foreign due to

favourable policy measures, freight traffic isexpected 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 892926 975

1,038 1,119

1,2061,300

1,405

FY07

FY08

FY09

FY10

FY11

FY12

FY13E

FY14E

FY15E

FY16E

FY17E

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 FY1217

CAGR: 6.6%


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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 projectEstimated cost (USD

billion)Length of project

(kilometres)(Estimated) Date of

completion

Delhi Mass Rapid Transit SystemPhase I

2.2 65.1 November 2006

Delhi Mass Rapid Transit SystemPhase II

1.1 124.6 August 2011

Kolkata Metro Rail Project 1.1 14.7 201415

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 201415


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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 Delhi110 016

Telefax: 91-11-46070335, 46070336

E-mail: [email protected]

Website: www.ceama.in


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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


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USD: US Dollar

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


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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


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Aranca in consultation with IBEF.

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This presentation is for information purposes only. While due care has been taken during the compilation of this

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railways - august 2013

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