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Rail Transport Market India

November 2014

Executive Summary
Market

Freight Services
Initiatives

Freight Marketing
Schemes

Indian Railways (IR) generated INR f bn in freight earning in 2013-14 and is expected to earn INR k bn by
2018-19, growing at a CAGR of x1%
Freight loading for IR stood at p mn tonnes in 2013-14, and it is expected to grow and reach q mn tonnes
by 2018-19

Segregation of freight and passenger corridors

Construction of dedicated freight corridors
Improving transit speed
Cost-efficiencies in bulk transport
Meeting customers needs in service delivery, logistics services, transit time and tariff
Special Freight Train Operator Scheme (SFTO)
Wagon Investment Scheme
Terminal Development Scheme (TDS)
Wagon Leasing Scheme (WLS)

Private Freight Terminals (PFT)

Liberalized Wagon Investment Scheme (LWIS)
Automobile Freight Train Operator Scheme (AFTO)

Drivers
Drivers &
Challenges

Challenges

Shift Towards Rail by Private Players

Increasing Exports and Imports
Dynamic Tariff Policy
Opportunity in Emerging Sector

Poor Quality of Service

Increase in Rail Freight Rates
Problems with Connectivity

Major Players

Competitive
Landscape

Company 1

Company 2

Company 3

Company 4

Company 5

Company 6

RAIL TRANSPORT MARKET IN INDIA 2014.PPT

Macroeconomic Indicators
Introduction
Market Overview
Revenue Generation
Zone-Wise Income
Commodity-Wise Income

Freight Rates
Freight Services Initiatives
Freight Marketing Schemes
Vision 2020
Operational Strategy

Drivers and Challenges

Competitive Landscape
Future Requirements and Investments
Strategic Recommendations
Appendix
RAIL TRANSPORT MARKET IN INDIA 2014.PPT

Macroeconomic Indicators (1/3)

GDP at Factor Cost: Quarterly
INR tn
16
15

a4

14

a3
a2
a1

13

d3
d2
d1

c3
c2
c1

b3
b2
b1

12

Q1

Q2
2011-12

2012-13

2013-14

Q3
2014-15

Q4

Inflation Rate: Monthly

%
2
1

0
-1

-t

-2

Jul 2013 - Aug 2013

Aug 2013 - Sep 2013

Sep 2013 - Oct 2013

Oct 2013 - Nov 2013

RAIL TRANSPORT MARKET IN INDIA 2014.PPT

Nov 2013 - Dec 2013

4

Freight earnings for Indian Railways is expected to increase

in the coming years
Rail Transport Market Overview (1/2)
Indian Railways earnings from freight traffic increased from INR a bn in 2009-10 to INR f bn in 2013-14, at a CAGR of
y%
Nine major commodity groups, namely, coal, iron and steel, iron ore (both for export and domestic steel plants), other
raw materials for steel plants, cement, food grain, fertilizer, petroleum products and container traffic dominate the
freight basket of IR
Bulk freight such as coal, pig iron and finished steel, iron ore, cement, foodgrains, fertilizers and POL products accounted for p% of IRs
total earnings in 2013-14, while other commodities accounted for the remaining q%

Market Size & Growth Freight Earnings

INR bn
2,000

+x1%
1,500
1,000

2009-10

2010-11

2011-12

2012-13

2013-14

500
0

2014-15e

2015-16e

RAIL TRANSPORT MARKET IN INDIA 2014.PPT

2016-17e

2017-18e

2018-19e
5

Zone-Wise Income (1/16)

Central Railway Overview
Central Railway covers a large part of the State 1 and parts of State 2 and State 3
It covers l km of route network with m km of track linking n stations
It is divided into five divisions: Division 1, Division 2, Division 3, Division 4, and Division 5
Major commodities carried include Commodity 1, Commodity 2, Commodity 3, Commodity 4, Commodity 5, and
Commodity 6

Freight Loading Profile (By Volume)

Freight Revenue Earning Profile (By Value)

INR bn

mn Tonnes
c1

50
40
30
20
10
0

d1

a1

b1

60

a2

b2

c2

d2

p6%

p7%

p8%

p9%

50

p3%

p4%

p1%
r1%q1%
s1% 6%
t1%
u1%
v1%

p2%
q2%
r2%
s2%w2%
t2%
u2%
v2%

r3%
s3%w3%
t3%
u3%
v3%

q4%
r4%
s4%
w4%
t4%
u4%
v4%

2010-11

2011-12

2012-13

2013-14

f1
p5%
r5%q5%
w5%s5%
t5%
u5%
v5%

40
30
20
10
0

2014-15
Till Sep 2014

r6%
t6%
u6%
v6%
2010-11

r7%

r9%

2011-12

2013-14

2012-13

Commodity 1

Commodity 3

Commodity 5

Commodity 7

Commodity 9

Commodity 2

Commodity 4

Commodity 6

Commodity 8

Others

RAIL TRANSPORT MARKET IN INDIA 2014.PPT

q9%
s9%

r8%
s7% w7% s8%w8%
t7%
t8%
u7%
u8%
v7%
v8%

t9%
u9%
v9%

f2
p10%
q10%r10% 6%
s10%t10%
5%
u10%
2014-15
Till Sep 2014

Commodity-Wise Income (1/14)

Coal Overview

Coal Usage Segments (2013-14)

In 2013-14, IR carried z mn tonnes of coal, earning INR

y bn in revenues
m% of the coal transported by IR was for use in thermal
power stations, while n% was for steel plants
Zone J and Zone B are the major transporters of coal due
concentration of coal around Region 1 and Region 2

Segment 1
s%

Segment 2
Segment 3

r%
q%

Segment 4
p%
Based on Volume

Freight Revenue Earnings (2013-14)

Total Freight Revenue Earnings: INR y mn
INR mn
j

120000
100000
80000
60000
40000
20000

b
c
d
a

0
Zone A

Zone B

Zone C

Zone D

i
f

Zone F

Zone G

Zone H

Zone I

k
Zone J

RAIL TRANSPORT MARKET IN INDIA 2014.PPT

Zone K

l
Zone L

m
Zone M

n
Zone N

Zone P

Freight Rates (1/6)

Freight Rate Per Tonne (INR)
Distance (kms)

Class LR3

Class LR2

Class LR1

Class 100

Class 110

Class 120

Class 130

1 125
126 150

151 175
176 200
201 225
226 250

251 275
276 300
301 325
326 350

351 375
376 400
401 425
426 450

451 475
RAIL TRANSPORT MARKET IN INDIA 2014.PPT

Schemes for Freight Marketing (1/3)

Scheme A

xx

Scheme B

xx

Scheme C

xx

RAIL TRANSPORT MARKET IN INDIA 2014.PPT

Drivers & Challenges Summary

Challenges
Drivers

Poor Quality of Service

Shift Towards Rail by Private Players

Increase in Rail Freight Rates

Increasing Exports and Imports

Problems with Connectivity

Dynamic Tariff Policy

Opportunity in Emerging Sector

RAIL TRANSPORT MARKET IN INDIA 2014.PPT

10

Market Competition Porters Five Forces Analysis

Threat of New Entrants

Impact

Impact

Impact
Impact

Bargaining Power of Suppliers

Competitive Rivalry

Bargaining Power of Buyers

Impact

Threat of Substitutes

RAIL TRANSPORT MARKET IN INDIA 2014.PPT

11

Competitive Benchmarking (1/4)

Key Ratios of Top 3 Companies Operational Basis (FY 2014) (1/3)
Operating Margin

Net Margin

100

c1
a1

50
0

b1
-a2

-b2

-c2

-50
Adani Agri Logistics Ltd.

Innovative B2B Logistics Solutions Pvt. Ltd.

KRIBHCO Infrastructure Ltd.

Company 3 recorded operating margin of c1%, higher than that of Company 1 and Company 2 which recorded
operating margin of a1% and -c2% respectively
Net margin was highest for Company 1 which recorded a net margin of b1%, followed by Company 2 and Company 3
which recorded net margin of -b2% and -c2% respectively

RAIL TRANSPORT MARKET IN INDIA 2014.PPT

12

Public: Domestic Company Company 1

(1/4)
Company Information

Offices and Centres India

Corporate Address
Tel No.
Fax No.
Website
Year of Incorporation
Ticker Symbol
Stock Exchange

Head Office

Products and Services

Category

Railroads

Products/Services

Key People
Name

Designation

Person 1

Chairman and Managing Director

Person 2

Director

Person 3

Director

Person 4

Director

RAIL TRANSPORT MARKET IN INDIA 2014.PPT

13

Public: Domestic Company Company 1

(2/4)
Financial Snapshot
Total Income

INR bn
60

a2

b2

Key Ratios
Net Profit/Loss
c2

INR bn
d2

10

40
20

a1

b1

c1

d1

0
2011

2012

2013

2014

Financial Summary

It reported total Income of INR XX mn in FY 20XX, registering an

increase of X per cent over FY 20YY
It earned an operating margin of X.X per cent in FY 20XX an increase
of X.X percentage points over FY 20YY
The company reported debt to equity ratio of X.XX in FY 20XX, an
increase of X.X per cent over FY 20YY

Key Financial Performance Indicators

Market Capitalization (INR mn)
Total Enterprise Value (INR mn)
EPS (INR)
PE Ratio (Absolute)

y-o-y change
(2014-13)

2014

2013

2012

2011

Profitability Ratios
Operating Margin
Net Margin
Profit Before Tax Margin
Return on Equity
Return on Capital Employed
Return on Working Capital
Return on Assets
Return on Fixed Assets

Cost Ratios

Company incurred a net loss of INR XX mn in FY 20XX, as compared

to net profit of INR Y mn in FY 20YY

Indicators

Particulars

Value (dd/mm/yyyy)

Operating costs (% of Sales)

Administration costs (% of
Sales)
Interest costs (% of Sales)

Liquidity Ratios
Current Ratio
Cash Ratio

Leverage Ratios
Debt to Equity Ratio
Debt to Capital Ratio
Interest Coverage Ratio

Efficiency Ratios
Fixed Asset Turnover
Asset Turnover
Current Asset Turnover
Working Capital Turnover
Capital Employed Turnover
Improved

RAIL TRANSPORT MARKET IN INDIA 2014.PPT

Decline

14

Public: Domestic Company Company 1

(3/4)
Key Business Segments
Segment 1

Key Geographic Segments

Segment 2

Country A

100%
50%
0%

100%
p1%

p2%

p3%

p4%

q1%

q2%

q3%

q4%

2011

2012

2013

2014

50%

100%

India is the only geographic

segment in which the company
has been operating for the last
five years

0%
2014

Business Highlights
Description

News

Overview
Container Operations
Partnerships

RAIL TRANSPORT MARKET IN INDIA 2014.PPT

15

Public: Domestic Company Company 1 SWOT Analysis

(4/4)

RAIL TRANSPORT MARKET IN INDIA 2014.PPT

16

Private: Domestic Company Company 2

(1/5)
Company Information

Offices and Centres India

Corporate Address

Tel No.
Fax No.
Website
Year of Incorporation
Head Office

Products and Services

Category

Products/Services

Key People
Integrated logistics
solutions

Name

Designation

Person 1

Director

Person 2

Managing Director

Person 3

Director

RAIL TRANSPORT MARKET IN INDIA 2014.PPT

17

Private: Domestic Company Company 2

(2/5)
Shareholders of the Company
Name

Ownership Structure
No. of Shares held

Category 1

Shareholder 1
Shareholder 2
Shareholder 3
Shareholder 4
100.0%

Shareholder 5

Shareholder 6
Shareholder 7
Total

RAIL TRANSPORT MARKET IN INDIA 2014.PPT

18

Private: Domestic Company Company 2

(3/5)
Financial Snapshot
Total Income

Key Ratios
Net Profit/Loss

Particulars

INR mn
1,500

INR mn
q1

p1

p2

p3

100
0

-q3

1,000
500

q4

-q2

-100
p4

-200
-300
-400

2011

2012

2013

2014

Financial Summary

2013

2012

2011

Operating Margin
Net Margin
Profit Before Tax Margin
Return on Equity
Return on Capital Employed
Return on Working Capital
Return on Assets
Return on Fixed Assets

Cost Ratios
Operating costs (% of Sales)
Administration costs (% of
Sales)
Interest costs (% of Sales)

Liquidity Ratios

It reported total Income of INR XX mn in FY 20XX, registering

an increase of X per cent over FY 20YY

Leverage Ratios

The company reported debt to equity ratio of X.XX in FY 20XX,

an increase of X.X per cent over FY 20YY

2014

Profitability Ratios

Company earned a net profit of INR XX mn in FY 20XX, as

compared to net profit of INR Y mn in FY 20YY

It earned an operating margin of X.X per cent in FY 20XX an

increase of X.X percentage points over FY 20YY

y-o-y change
(2014-13)

Current Ratio
Cash Ratio
Debt to Equity Ratio
Debt to Capital Ratio
Interest Coverage Ratio

Efficiency Ratios
Fixed Asset Turnover
Asset Turnover
Current Asset Turnover
Working Capital Turnover
Capital Employed Turnover
Improved

RAIL TRANSPORT MARKET IN INDIA 2014.PPT

Decline

19

Private: Domestic Company Company 2

(4/5)
Business Highlights
Description

News

Overview

Container Operations

RAIL TRANSPORT MARKET IN INDIA 2014.PPT

20

Private: Domestic Company Company 2 SWOT Analysis

(5/5)

RAIL TRANSPORT MARKET IN INDIA 2014.PPT

21

Modernization Initiatives and Investment Requirements

15 focus areas have been identified in order to drive modernization in IR
Core Assets
Revenue Models

Projects
Enablers
Resources

Total Investment Requirements for Modernization

INR bn

5,603

6,000
5,000

2,000

Segment 1
Segment 2

q%

4,000

3,000

y%

p%

r%
d
f

Segment 6
w%

Segment 4
Segment 5

1,000

Segment 3

v%
u%
t%

RAIL TRANSPORT MARKET IN INDIA 2014.PPT

s%

Segment 7
Segment 8
Segment 9

22

Thank you for the attention

Rail Transport Market India report is part of Netscribes Automotive and Logistics Series.
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