RESTRUCTURING OF INDIAN RAILWAYS

SUBMITTED BY: Sharath chandra dasbba(be) 4531/09

INDIAN RAILWAYS
It is the most state owned railway co. of India . It is overseen by the the Ministery of Railways of Govt. of India .It has one of the largest and busiest rail networks in the world. It transport 18 million passengers and more then 2 million tonnes of freight daily. It is world largest utility employers with more then 1.4 million employees . FOUNDED :26 th April,1853 HEADQUARTERS :New Delhi, India KEY PEOPLE : E. Ahmed & K.H. Muniyappa, Chaiman & Railway Board. S.S.Khurana INDUSTRY : Railways & Locomotives SERVICES : Rail Transport REVENUE : Rs. 931.59 billion ( US $ 19.13 billion) EMPLOYEES : 14,06,403 (2007) PARENT : Ministry of Railways, Government of India. DIVISIONS : 16 Railway Zones (excluding Konkan Railway)

THE RAILWAY ZONES

British Railways
PRIVATISED IN 1990S

HOW ABOUT PRIVATISING THE WHOLE INDIAN RAILWAYS NOW??

SHRI LALU PRASAD YADAV MINISTER INDIAN RAILWAYS

MR. ANIL AMBANI CEO INDIAN RAILWAY

PERFORMANCE OF THE RAILWAYS

2000 2001
2000-01 2001-02

Total revenue earning

Net Tonnes Km (billion)
Net Tonne Km per wagon per day (Broad) Passenger Traffic originating (million)

456.4

473.5

347.8

357.3

3.7

2.7

305
2027

312
2042

229
1975

239
2076

2.4
0.7

4.4
5.1

4585

4833

3557

3866

5.4

8.7

Passenger Km (billion)

431

457

342

38.4

6.1

12.1

GROWTH OF
100 90 80 70 60 50 40 30 20 10 0 1st Qtr 2nd Qtr
PASSENGER FREIGHT (1990-91 (2004-05 &2003-04) &2005-07)

RAILWAYS

ANNUAL % GROWTH

FARE COMPARISON
AIRLINES
INDIAN AIRLINES

SECTOR
DELHI-BANGALOR DELHI-MUMBAI DELHI-CHENNAI DELHI-HYDERABAD DELHI-KOCHI

LOWEST FARE
RS.3965 RS.3965 RS.5065 RS.3965 RS.8035 RS.1999 RS.1599 RS.1499

SPICE JET

DELHI-BANGALOR DELHI-MUMBAI DELHI-HYDERABAD DELHI-CHENNAI

RS.1699

FARE COMPARISON
AIRLINES
AIR DECCAN

SECTOR
DELHI-BANGALOR DELHI-MUMBAI DELHI-CHENNAI DELHI-HYDERABAD

LOWEST FARE
RS.2529 RS.1829 RS.2829 RS.2279

JET AIRWAYS

DELHI-BANGALOR
DELHI-MUMBAI

RS.3720 RS.3220 RS.3620

RS.3220

DELHI-CHENNAI
DELHI-HYDERABAD

PASSENGER DISTRIBUTION
NUMERS IN MILLION

YEAR
RAILWAYS AIRLINES

2001-02 2002-03 2003-04 2004-05

5,093 12.81 4,971 13.32 5,112 14.54 5,475 18.17

HOUSEHOLD % OF NUMBER OF INCOME RANGE HOUSEHOLDS HOUSEHOLDS [CURRENT $US] $1000 65 9,593,204 $1000- $2000 45 86,338,840 $2000- $3000 23 44,128,740 $3000- $4000 6.5 12,471,166 $4000- $5000 5 9,593,204 $5000- $6000 4.5 8,633,884 $6000 11 21,105,050 TOTAL 100 191,864,088

INCOME DISTRIBUTION [IN CURRENT[US DOLLAR]

HOUSEHOLD DISTRIBUTION BY INCOME LEVEL,INDIS[$US]

90000

Number Of Households

80000 70000 60000 50000 40000 30000 20000 10000 0 $1,000 $2000$3000 $4000$5000 $6,000 No of Households

Household Income Range

PERCENT
100 70 75 80 85 90 95

OPERATING RATIO

19 87 -8 8 19 89 -9 0 19 91 -9 2 19 93 -9 4 19 95 -9 6 19 97 -9 8 19 99 -0 0 20 01 -0 2 20 03 -0 4 20 05 -0 6

OPERATING RATIO

Series1

THE TURNAROUND STORY EARNINGS & EXPENSES

CHARACTERISTICS OF RAILWAYS & RAIL INVESTMENT :

High capacity Efficient land use Very fuel efficient Environment friendly Bulk movement Suited for long life Capital intensive Long gestation Relatively low return Internal cross subsidy Large shelf of project socio economic considerations

THROW FORWARD
1.SHELF OF 296 PROJECTS RS.61,487CRORES TO COMPLETE. 2.9000 KMs OF NEW LINES . 3.7600 KMs OF GAUGE CONVERSATION. 4.3825 KMs OF ELECTRIFICATION. 5.245KMs OF SUB-URBAN PROJECTS .

WHAT HAS BEEN DONE

Taken initiatives to attract private participation . Joint ventures with some State Governments . Increase in number of Super fast trains . Reduction in fares. Parcel services & leasing of brake vans of passenger trains. Differential pricing based on time of bookng THE TATKAL SCHEME Automatic upgrades to passengers . Improvement in service quality.

THE WAY AHEAD:

LOWER CLASS MIDDLE CLASS

Unreserved components to be incrased. Increase unreserved second class coaches. Wooden seats to be replaced by cushioned ones. 8 new Garib Rats 732 pairs new trains introduced. 200 trins to be made superfast. Differential discounts in peak & off peak seasons. Cyber cafs & ATMs to be opened at major stations.

TRAVEL IN COOL UPPERCLASS COMFORTAT NO EXTRA COST

UPGRADATION SCHEME HAS NOW

BRAND LALOO

BEEN EXTENDED TO RAC& WAITING LIST PASSANGERS AS WELL

JUMPING OF CLASS WILL BE

PERMITTED IN CASE ELIGIBLE PASSANGER ARE NOT AVAILABLE IN THE IMMEDIATELY LOWER CLASS
THE REQUEST FORM HAS BEEN

SIMPLIFIED FOR THE PURPOSE OF UPGRADATION

ALL PASSANGERSBOOKED ON A

SINGEL TICKET ARE UPGRADED TOGETHER

SERVICES INDIAN RAILWAYS CAN OFFER

SEGMENT

SERVICE

LOWER CLASS ( < RS3LAKH p.a )

MIDDLE CLASS ( RS 3-10 LAKH p.a )

UPPER CLASS ( > RS 10LAKH p.a)

TARVEL

TOURISM (LUXURY CLASS)

The Twin bedded Saloon The Bar Lounge

PALACE ON WHEELS

The Bar Lounge The Exterior

FINANCING OF X-RS.84,708 CRORES

45%

20% 35%

BUDGETRY SUPPORT INTEGRATION GENERATION EBR(MARKET BORROWING)

COMMERCIALISING ACTIVITIES
Annual Catering Contracts
Howrah Kalka Mail Rs 83.6 lakhs from Rs 5 lakhs License fee (Bandra) Rs 16 lakhs from Rs 78,000 Licence fee (Nagpur) Rs 34 lakhs from Rs 32,000

Talks on with the Oberoi Group

Hotels

Food Plazas Vending machines ..

Data Source -IIMA analysis of the Railways Turnaround (G. Raghuram)

IS COMPLETE RESTRUCTURING REALLY

REQUIRED IN INDIA ???

-Critical role of railways in economy. -Too complex system. -Need of partial restructuring . -Non core activities out sourced.

ADVANTAGES OF COMMERCIALISATION:
-Competitive rates.
-Less political interference. -Financial freedom to an extent.

SHORTCOMINGS:
-Automization of BR. -Role of government still required. -Employee dissatisfaction.

MEASURES TO STRENGTHEN SAFETY AND UPGRADE RAILWAY INFRASTRUCTURE

Special Railway safety fund with Rs. 17,000 crores to wipe out the arrears in the renewal of safety equipments . Provision of 25 watt VHF sets at road side stations for communications between drivers guards & Station staff . Funds located from Diesel cells used for safety related work pertaining to level crossings . Tracks circulating of run- through lines on all stations with permitted speed of 75 kmph completed . Bogies mounted break system being introduced on wagons . development & indigenous manufacture of centre Buffer Couplers. The High level committee on in enhanced Security on Railways.