Worlds 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 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 Indian Railways is undertaking the construction of dedicated freight lines along the countrys 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 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

Growing public-private partnership

Growth initiatives

Modernisation/ technology upgradation

2012

Growingdemand demand Growing

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

2017F
Freight Traffic 1,405 MMT

Freight Traffic 975 MMT

Advantage India
Higher investments

The government has been investing heavily to upgrade railway infrastructure Sector has been witnessing increasing level of FDI participation over FY0812

The engineering sector is delicensed; Government has 100 per cent FDI is increased allowed in the the scope sector of PPP, to beyond providing maintenance and other such supporting roles Due to policy support, there was cumulative FDI USD14.0 billion into Government isof providing new lines, the sector over April 2000 February increasing the rolling stock to build 2012, making up 8.6 per cent of total up capacity FDI into the country in that period

Policy support

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)

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 IRs total assets at the end of FY12 amounted to USD61.7 billion.

About 12,335 passenger trains were in operation in FY12

Passenger

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

India

Railways
Around 975.2 million tonnes of freight was transported via

Freight

trains in FY12
These include a huge variety of goods like mineral ores, iron

and steel, fertilizers, petrochemicals, and agricultural produce

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)

0.5 FY12

67.8

Passenger traffic (billion)

1.3

8.2

Freight traffic (million metric tonnes)

73.2

975.2

Number of stations

5,976

7,146

Running track (kilometres)

59,315

FY1951

89,801
Source: Ministry of Railways, Aranca Research

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 FY0714 Revenue growth has, in fact, been strong over the years; during FY0712, 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
FY07 14.3

Gross revenues trends over the years (USD billion)

26.5

CAGR: 12.1%
20.8 18.3 17.8 18.8 21.7 23.1

FY08

FY09

FY10

FY11

FY12

FY13E FY14B

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)

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 segments 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

Passenger Earnings (in USD billion)

Earnings from Freight (in USD billion)

13.3 11.5 9.1 11.3 12.0 14.1

5.6 4.9 3.8 4.8

5.9

4.9

FY07

FY08

FY09

FY10

FY11

FY12

FY07

FY08

FY09

FY10

FY11

FY12

Source: Ministry of Railways, Aranca Research * In Indian Rupee Terms Notes: CAGR Compound Annual Growth Rate, FY Indian Financial Year (AprilMarch)

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

Revenue breakup, by segment (FY12)

29.4% Freight

Passenger 70.6%

Source: Ministry of Railways, Aranca Research

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 FY0712. According to the 12th Five-Year Plan, passenger volumes are expected to increase at a CAGR of 7.4 per cent during FY1217
6.2

Trends in passenger volumes (in millions)

11.7

CAGR: 6.6%
9.5 6.5 6.9 7.2 7.7 8.2 8.9

10.2 10.9

FY07

FY08

FY09

FY10

FY11

FY12

FY13F

FY14F

FY15F

FY16F

Source: Ministry of Railways, Planning Commission, Aranca Research Notes: CAGR Compound Annual Growth Rate, F Forecast FY Indian Financial Year (AprilMarch)

FY17F

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 Suburban passengers originating (in millions)

5,540 5,917 4,855 4,061 4,377 3,802 3,876 4,545 5,186

Number of non-suburban passengers originating (in millions)

5,793

4,323 4,651
3,590 3,847 3,118 3,370

5,005

5,385

FY09

FY10

FY11

FY12 FY13F FY14F FY15F FY16F FY17F

FY09 FY10 FY11 FY12 FY13F FY14F FY15F FY16F FY17F Source: Ministry of Railways, Planning Commission, Aranca Research Notes: CAGR Compound Annual Growth Rate, F Forecast FY Indian Financial Year (AprilMarch)

As of FY12, railways accounted for 31 per cent of Indias 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 FY0712 and is expected to grow at a CAGR of 7.6 per cent during FY1217
745

Freight traffic (million tonnes)

1,405

CAGR: 6.6%
837 804 892 926 975 1,038

1,119

1,206 1,300

FY07

FY08

FY09

FY10

FY11

FY12

FY13F

FY14F

FY15F

FY16F

Source: Ministry of Railways, Planning Commission, Aranca Research Notes: CAGR Compound Annual Growth Rate, F Forecast FY Indian Financial Year (AprilMarch)

FY17F

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

Source: Relevant company annual reports and websites, Aranca Research Notes: PSU Public Sector Undertaking, DFC Dedicated Freight Corridor, SPV Special Purpose Vehicle

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 countrys 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

Source: Relevant company annual reports and websites, Aranca Research Notes: NTPC National Thermal Power Corporation, km Kilometres; * - Exchange rate as of 2008

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 governments 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
Source: Ministry of Railways, Aranca Research Notes: PPP Public Private Partnership

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 nontransferable 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

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

Source: Ministry of Railways; Aranca Research

Government focus on infrastructure building

Increasing private sector participation

Growth of freight traffic due to industrialisation

Improved safety and modernisation

Rising demand for urban mass transportation

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 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

Source: Ministry of Railways; Aranca Research

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

2011-12
2010-11 2009-10 2008-09 2007-08 2003-04 2000-01 1990-91 1980-81 1950-51 100 394 279 728 1,505

Indias per capita income at current prices (USD)

2,500 2,000 1,500 1,000 500

25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2014F 2016F 2018F 2000 2002 2004 2006 2008 2010 2012

1,403
1,288 1,189 1,084

614 0

Per Capita Income, USD, LHS

Annual Growth Rate

Source: Ministry of Railways, IMF, Aranca Research FY Indian Financial Year (AprilMarch) Notes: F Forecast

Train
Duronto Express

Description
Non-stop point-to-point rail services Connects metros and major state capitals of India Air-conditioned trains linking major cities to New Delhi One of the fastest trains in India with very few station stops Intercity seater-type trains for travel during day Fully air-conditioned trains, designed for those who cannot afford to travel in expensive trains such as Rajdhani and Shatabdi Trains that have an average speed greater than 55 kilometers per hour Have an additional super-fast surcharge More stops than their super-fast counterparts Stops only at relatively important intermediate stations Slow trains that stop at most stations along the route Low-cost alternative Operate in urban areas Usually stops at all stations and have unreserved seating accommodation

Rajdhani Express Shatabdi, Jan Shatabdi Express Garib Rath Superfast Mail/ Express Mail/ Express Passenger, Fast Passenger Suburban trains

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 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

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

2011-12 2010-11 2009-10 2008-09 2007-08 2003-04 2000-01 1990-91 1980-81 1950-51 100 359 550 715 871 1,516 1,420 1,363 1,251 1,185

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

20% 16% 12% 8% 4% 0% -4% -8%
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

Source: Ministry of Railways, Ministry of Statistics and Programme Implementation, Aranca Research

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

Western Corridor

Eastern Corridor

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

Punjab - > Haryana - > Uttar Pradesh - > Bihar - > West Bengal
Source: Ministry of Railways, Aranca Research Notes: DFC Dedicated Freight Corridor, DFCCIL Dedicated Freight Corridor Corporation of India Limited, JV Joint Venture

Reduce unit cost of transportation and increase productivity

Increase rail freight share through customised logistic services

Segregate freight and passenger lines for focused approach

Objectives
Adopt highend technology for real-time data analysis Create additional freight capacity to meet demand

Introduce time-tabled freight services to ensure better services

Source: Ministry of Railways, Aranca Research

Freight traffic via DFC would increase at a CAGR of 5.4 per cent to 182 MMT in 202122 from 140 MMT in 201617 Container traffic is likely to be an important constituent of the WDFC and is expected to grow to 5.3 million TEUs in 202122 from 3.8 million TEUs in 201617

Freight traffic projections on DFC (in MMT)

CAGR: 5.4%
91 64

76

91

2016-17

EDFC

WDFC

2017-22

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

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 202122 from 84 per cent projected in 201617

DFC Model Mix (2016-17)

DFC Model Mix (2017-22)

16% Road Share

13% Road Share

Rail Share

Rail Share

84%

87%

Source: KPMG

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 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 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

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

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 ContributionApportioned 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 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

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

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

Investments during the 11th Plan (USD billion)

Approved Outlay 200708 Total 11th Plan Excess/ Shortfall

2008-09

2009-10

2010-11

2011-12*

2012-13**

Gross Budgetary Support Internal Generation Extra Budgetary Resources Total

15.8

2.2

2.2

3.7

4.3

4.4

17.0

3.0

4.4

22.4

3.7

4.1

2.6

2.5

1.9

14.7

(5.1)

3.5

19.8

1.3

1.6

2.1

2.1

3.4

10.7

(6.9)

3.0

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

Since FY08, cumulative FDI inflows into the sector has increased fivefold In FY13, the figure stood at USD270.3 million

Cumulative FDI inflows from April 2000 (USD million)

270.3 240.3

132.8 109.6 57.3 75.3

FY08

FY09

FY10

FY11

FY12

FY13

Source: Department of Industrial Policy & Promotion, Aranca Research Notes: FDI Foreign Direct Investment; Cumulative from April 2000 to March 2008 and so on

Key focus areas

To modernise Indian Railways, the focus is on two fundamental drivers Safety and Growth and along a five-pronged strategy

Core Assets Revenue Models

Track and bridges

Signalling

Rolling stock Dedicated freight corridors

Stations and terminals High speed trains

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 opportunity To capitalise on an

PPPs

Land

Projects

Review of existing and proposed projects Indigenous development Human resource

Enablers

ICT

Safety

Resources

Funding

Organisation

Source: Ministry of Railways, Aranca Research Notes: ICT Information and Communication Technology, PPP Public Private Partnership

Track upgradation and welded rails

Sleepers

Sleepers and bridges

Adequate

have been upgraded from wooden, steel, and CST-9 to PSC sleepers rails are being used (52kg/60kg 90 UTS rails are being used in place of 90R/52kg 72UTS rails)

Heavier section and high tensile strength

capacity for production of concrete sleepers to meet the present requirement of IR has been developed FY12, 6.9 million broad-gauge mono-block concrete sleepers and 10,359 sets of PSC turnout sleepers were produced FY12, 924 bridges, including distressed bridges, were rehabilitated 12

During

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

In

Modern bridge inspection and management

welding which is superior in quality to Alumino Thermic (AT) welding

system has been adopted, which include non-destructive testing techniques, under water inspections, fibre composite wrapping, integrity testing etc.
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

Increasing Operational efficiency

Design and development of

Unreserved ticketing services (UTS)

UTS

Terminal Management System (TMS)

TMS

5500 HP WDG5 diesel locomotive for faster, longer and heavier trains
Development

has been made functional at 5,690 locations with 10,508 terminals as of April 2013
unreserved tickets are now generated through UTS

generates online railway receipts and has been deployed at 631 field locations during FY11 of freight payment was realised through e-payment mode, which accounts for 58 per cent of total freight collected

of highsensitivity thermal imaging camera with online scanning facility to improve the reliability of electric traction system connector operation locomotives pantograph condition for multiple of WAP5 with one in raised

More than 90 per cent of

During FY11, USD6.95 billion

Development of 25 KV HV

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

Source: Ministry of Railways, Aranca Research Notes: WDG5 (W Wide/broad gauge, D Diesel-powered, G Made for hauling goods, 5 above 5000hp)

Salient features
It has been created with the view of making the Indian Railway stations world class as a publicprivate 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
Source: Press information Bureau, GOI and News websites Notes: SPV Special Purpose Vehicle PSU Public Sector Undertaking

Country

Network length (km)

226,706 84,158 63,637 63,327 57,042 33,897 29,488 24,487 20,050 9,639

Number of employees (000s)

187 1,128 2,067 1,406 34 231 166 36 132 13

Passengers carried (million)

26 1,280 1,287 6,219 4 1,835 1,097 533 8,907 54

Passenger distances (billion km)

9 173 690 695 1 75 84 15 253 1

Freight carried (million tonnes)

1,775 1,344 2,624 728 313 273 106 181 36 177

Freight Number of distance locomotives (billion km)

2,820 2,090 2,211 4,810 353 91 42 109 23 46 23,990 12,063 17,222 8,110 2,947 4,128 4,289 3,301 1,170 509

Number of coaches
1,186 33,955 42,471 43,124 595 17,537 15,973 1,723 25,244 663

Number of wagons (000s)

475 567 571 208 98 96 33 112 9 11

USA Russia China India Canada

Germany
France South Africa Japan Australia

Source: Ministry of Railways, Aranca Research Note: Figures are as of Dec 09

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 passenger km. (in rupees)

0.27 0.26 0.26 0.26 0.85 0.25 0.26

Average rate per tonne km. (in rupees)

1.01 0.97 0.94 0.89 0.95

FY 07

FY 08

FY 09

FY 10

FY 11

FY 12

FY 07

FY 08

FY 09

FY 10

FY 11

FY 12

Source: Ministry of Railways, Aranca Research

Average freight revenue per tonne kilometre (2009)

Germany India Spain South Africa Italy France Japan China Russia Canada USA 122 112 100 327 281 273 395

Ratio of average passenger fare to average freight rates (2009)

751
1.4 1.3 1.2 1.1 0.9 0.9 Korea France China Austria Malaysia Indonesia Thailand 0.4 0.3 0.3 0.3 Greece Vietnam Pakistan India

218
207

0.7

185

Source: World Bank, Aranca Research

Revenues from traffic operations increased at a CAGR of 37.5 per cent during FY0812 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

Revenues from traffic operations (USD million)

236.0 195.6

CAGR: 37.5%
109.8 91.8 66.0

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
FY 08 FY 09 FY 10 FY 11 FY 12

Source: Delhi Metro website, Annual Reports, Aranca Research

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 projects 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
Source: Press Information Bureau, GOI and News Websites Notes: SPV Special Purpose Vehicle PSU Public Sector Undertaking

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 FiveYear 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

1,405

CAGR: 6.6%
926 837 892

1,206 1,119 1,038 975

1,300

FY07

FY08

FY09

FY10

FY11

FY12

FY13E

FY14E

FY15E

FY16E

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

FY17E

Investments expected in metro rail networks in India: USD42 billion by 2020 Amount invested so far: USD16.7 billion

Name of project
Delhi Mass Rapid Transit System Phase I Delhi Mass Rapid Transit System Phase II Kolkata Metro Rail Project Bengaluru Metro Rail Project Hyderabad Metro Project Mumbai Metro Project Phase-II Chennai Metro Rail Project

Estimated cost (USD billion)

2.2 1.1 1.1 2.4 2.5 1.7 2.3

Length of project (kilometres)

65.1 124.6 14.7 42.3 71.2 31.9 45.1

(Estimated) Date of completion

November 2006 August 2011 201415 September 2012 2013 2016 201415

Source: Ministry of Urban Development, Concor, Aranca Research

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: contact@mait.com 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: ceama@airtelmail.in Website: www.ceama.in

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

USD: US Dollar Wherever applicable, numbers have been rounded off to the nearest whole number

Exchange Rates (Fiscal Year) Year

2004-05 2005-06 2006-07

Exchange Rates (Calendar Year) Year

2005 2006 2007 2008

INR equivalent of one USD

44.95 44.28 45.28

INR equivalent of one USD

45.55 44.34 39.45 49.21

2007-08
2008-09 2009-10 2010-11 2011-12 2012-13

40.24
45.91 47.41 45.57 47.94 54.31

2009
2010 2011 2012 2013

46.76
45.32 45.64 54.69 54.45
Average for the year

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