Indian railways commercialisation

Submitted By:Avinash Roshan(2010MB70)

Jitendra Singh(2010MB33)Kunal Bhasney(2010MB29)Sachin Kumar(2010MB44)

Indian Railways The world’s second largest railway, carries 18 million

passengers each day and it has

Introduction to IR

FREIGHT (GOODS) 62%

PASSENGER28%

OTHERS 10%

SOURCES OF REVENUE

0

10

20

30

40

50

60

70

80

90

100

2002 2003 2004 2005 2006 2007 2008 2009

98.396

92.3 92.1 91

83.278.7 75.9

Operating Ratio

back

Commercialization of Indian Railways

Commercialization is important aspect of Indian railways.

Aims at providing not only service but also to generate revenue.

Why Commercialization???

How it revolved?

Conceptual Framework

Retrenchment Strategy Effect

1 ) Reviewing value adding business (Catering, parcel service )

Cost saving > Rs 1,000 crores /annum

2) Reduction of wagon turnaround time

14 % time saved

3) Outsourcing Improved efficiency

Repositioning Strategy Effect

1 ) Developing new products (Double stack containers)

Saving: 7% on capital cost , 25% operational expenses

2) Product differentiation E-ticketing, new passenger coaches

3) Focus on revenue growth(like enhancement in loading capacity, cash incentive to free up wagons)

Freight revenue jumped from 233 m(2001) to 417 m(2007).

Re- Organization

Strategy Effect

1) Changes in planning system Improved efficiency

2) Extent of decentralization ( like Zones raised from (2003) to 16 (2005))

Improved vendor satisfaction

Areas of Commercialization

Transportation.

Introduction of I.T.

Outsourcing.

Transportation

Daily expenditure is about Rs 100 cr (42% staff, 18% fuels).

Daily earnings Rs120 cr .Daily loss on uneconomic branch line Rs 8 cr.Greater competition from Roadways, with

major investments in Highway network upgradation.

Upgradation of the Railway Production units for improved efficiency and productivity.

Transportation Goods TrainsRailway earns mainly from goods traffic.More than a million ton of goods transported

daily.Carries 16 lakh tonnes of goods every day.Railways has 7500 engines,38000 coaches &

about 2.5 lakh of wagons.Goods train maxm. 100 kmph.

TransportationPassenger TrainsCarries 1.4 crore passengers daily.Greater attention to passenger services and

safety.Heavily subsidised passenger fares, distorted

passenger pricing.Indian railways have a share of nearly 22% in

the passenger transport market.

Transportation

VARIETY OF SERVICESAC FIRST CLASS.AC SLEEPER.FIRST CLASS.AC 3 TIER.AC CHAIR CAR.SLEEPER CLASS.ORDINARY CHAIR CAR.

Usage of IT in RailwaysA large complex Infrastructure System with

Large Geographical Dispersion such as the Indian Railways can benefit greatly from the intelligent use of IT

E-GOVERNANCE OBJECTIVE• Freight revenue enhancement• Passenger revenue enhancement• Improvements in Customer and public service• Investment optimization

Usage of IT in Railways

Transforming Transport through Technology.

Jewels in the Crown.• Freight Operations Information system (

FOIS).• Passenger Reservations System (PRS).• Unreserved Ticketing System (UTS).• Instant voice response system (IVRS).• Rail Net.• E- Ticketing.

OUTSORCING

IT giants like TCS and WIPRO eyeing Railways' outsourcing deal.

L&T Infotech wins system integration projects from Indian Railways.

Indian Railways formed a PPP cell at the Board level to guide in the initiatives of Indian Railways .

Organisations like RITES, RVNL, CONCOR, IRCTC, etc. have been formed as an FBO.

Parcel Service, Catering,Vinyl Wrapping of trains,Palace on Wheels are part of outsourcing of IR.

Parcel Management System Following Functions are covered • Parcel Booking, Cancellation and Loading • Monitoring and tracking of Parcels • Printing of Parcel labels • Networking of all parcel offices• RFID tags for tracing parcels

Vinyl wrapped train by Airtel

80 crores contract with airtel and kurkure for ad

Catering

PALACE ON WHEELS

WHEELS OF CHANGES

MoU with CHINESE counterpart

Rail fleet with eco-friendly technology

Train traffic control will be computerised soon

WI-FI will be introduced soon in business class

Railway will utilize solar energy

What`s next now???

References www.indianraiways.gov.in www.indianrail.gov.in Milind.Sathye@canberra.edu.au www.rbi.org.in www.reservebank.com www.irfca.org en.wikipedia.org Rakesh Mohan Committee. 2001. Highlights of the Executive

Summary Raghuram, G. 2007. ‘Turnaround’ of Indian Railways: A critical

appraisal of strategies and processes’, Indian Institute of Management Working Paper no. 2007–02–03, Indian Institute of Management, Ahmedabad.

A Case Study Desh Gupta and Milind Sathye* Faculty of Business & Government University of Canberra, Canberra, Australia.

References www.indianraiways.gov.in www.indianrail.gov.in Milind.Sathye@canberra.edu.au www.rbi.org.in www.reservebank.com www.irfca.org en.wikipedia.org Rakesh Mohan Committee. 2001. Highlights of the Executive

Summary Raghuram, G. 2007. ‘Turnaround’ of Indian Railways: A critical

appraisal of strategies and processes’, Indian Institute of Management Working Paper no. 2007–02–03, Indian Institute of Management, Ahmedabad.

A Case Study Desh Gupta and Milind Sathye* Faculty of Business & Government University of Canberra, Canberra, Australia.