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PROFILE
Hassan Mangalore Rail Development Company Limited was incorporated in July 2003 under the Companies Act of 1956 as a joint venture of the Government of Karnataka & the Ministry of Railways.
Objective: HMRDC to take over the gauge conversion of the Hassan Mangalore railway line and ensure its early completion through appropriate and timely funding. The company was to raise the required resources through debt and equity.
The Beginning
2
Project ImplementationProject ImplementationThe gauge conversion of the line has been completed under a set of agreements signed by the Company with the Ministry of Railways and the South Western Railway.
• Concession Agreement• Construction Agreement• Operations and Maintenance Agreement
The line was commissioned for goods traffic on 5th May 2006
and for passenger services on 8th December 2007.
Company is enjoying Tax Holiday for 10 years from COD & Company is paying MAT at 18.5% as against 33% IT.
3
Framework of operation of SPV
Key features of the framework are:
• Cost of construction financed by HMRDC • Line capacity to be used primarily for goods services• Assured passenger services to the extent operated on the meter gauge.• Running & operating costs of passenger services to be borne by Railways• Cost of freight operations and maintenance of the line to be met by HMRDC.• Revenues to Company to accrue from freight only• Revenues from passenger trains to accrue to IR
4
Concession Agreement
Under the Concession Agreement, the Ministry of Railways has
granted HMRDC a concession for 32 years during which the company would convert the MG line between Hassan and Mangalore into a BG line and thereafter undertake its operation and maintenance during the concession period.
To enable construction of the new line, the existing assets including land, station buildings, formation, bridges etc. (assets forming part of the rail network and necessary for gauge conversion) have been leased to the company.
5
O & M Agreement
Under the Operations and Maintenance Agreement HMRDC has contracted with SWR for operation of goods train services on the line and its maintenance till the termination of the concession period.
Construction Agreement
Under the Construction Agreement signed between HMRDC and South Western Railway (SWR) the later has been appointed as the Engineering, Procurement and Construction (EPC) Agency for the line and entrusted with the construction work.
6
Project FinancingInitial Project Cost `. 293 cr
Construction Cost `. 275 cr
RMV Equipment `. 4 cr
Pre-operative exp & IDC `. 14 cr
Revised Project Cost `. 366 cr
Construction Cost `. 348 cr
RMV Equipment `. 4 cr
Pre-operative exp & IDC `. 14 cr
Funding through
Subordinate debt from IR `. 141 cr
Equity `. 112 cr
Term loans from banks `. 90 cr
Revised construction cost is under examination for mutual acceptance.
7
Construction of the line
Detailed estimate sanctioned by Rly Board in Dec 2002 forms the basis of the construction agreement.
The 183 Km long MG line from Hassan to Kankanadi has been converted to BG.
Four new crossing stations were planned of which three have been commissioned so far. Arebetta station is yet to be opened.
The cost of construction as per the Construction Agreement is ` 274.71 Cr. In addition, HMRDC has also paid for rail mounted vehicles to be used for inspection & maintenance of the line.
The completion cost of the project is presently being worked out. It is expected to be around `. 340 cr.
8
Operations & Maintenance of the lineThe Operations and Maintenance of the line from Commercial Operations Date (COD) i.e. 5thMay 2006 is being done by SWR under the terms of the O & M agreement.
100% inflation of distance is allowed for the Ghat section between SKLR-SBHR, the chargeable distance being 110Km i.e 238.45Km for the entire line. (Rate circular No. 32 of 2006)
Freight due to HMRDC from traffic carried on the line is calculated as per the inter zonal railway rules of apportionment.
O & M ( Fixed & Variable) costs payable by HMRDC are calculated on the basis of the formula prescribed in the O & M agreement.
Fixed costs covering cost of manpower, cost of consumables etc. are payable irrespective of the traffic moved.
Variable costs including fuel, cost of crew, loco and wagon usage etc. vary according to the tonnage carried on the line.
Apportioned freight minus the O&M costs constitutes HMRDC’s share of revenue.
9
Traffic Forecast
The Hassan Mangalore line is expected to carry up to six million tonnes of freight per annum that includes
Towards Mangalore Area:Export iron ore to Port from Chitradurga – Tumkur and Hospet –Bellary sectors
Iron ore for KIOCL pellet plant at Mangalore
Cement, Food grains and other general goods to Mangalore goods shed
From Mangalore Area:Coal
Fertilizer imports
Limestone, Iron Ore Pellet
Fertilizer from MCF, Mangalore.
POL and LPG from Mangalore Refinery, Thokkur.
10
Capital Structure Authorized share capital `. 125 Cr. (Equity share of Rs.10/- each)
Paid up capital `. 112 Cr.
The shareholding pattern is as follows
Government of Karnataka `.28 Cr
Mysore Sales International Ltd. `. 7 Cr 40%
Vishveshwarya Ind Trade Center `. 10 Cr
Ministry of Railways `. 45 Cr 40%
New Mangalore Port Trust `. 10 Cr 9%
Mineral Enterprises Limited `. 10 Cr 9%
K-RIDE `. 2 Cr 2%11
Salient Physical Features of Hassan - Mangalore Section
Sl.No. Section Elevation (MSL) Distance Gradient
1 Hassan – 900m
42 kms. 1 in 100 plateau
2Sakleshpur – 967m
3 Sakleshpur – 967m
55 kms. 1 in 50 Ghat
4 Subramanya Rd. – 113m
5 Subramanya Rd. – 113m
86 kms. 1 in 100 plain
6 Mangalore – 9.5m
12
A. Rails
Hassan to Mangalore – 183 Kms
Main line track class I - 52 Kg rails
Loop line class II - 52 Kg rails
B. Sleepers
Hassan to Sakleshpur 60 Kg PSC sleepers - M+ 4 density
Sakleshpur to Mangalore 60 Kg PSC sleepers - M+ 7 density
Loop lines 52 Kg PSC sleepers - M+ 4 density
C. Fittings
Class - I fittings - ERC Clips, GR pads, metal liners in mid section and GFN liners in yards
D. Ballast - 250 mm cushion.
13
3. Bridges - Total - 670
Major Bridges – 91 Minor Bridges – 549 Road over bridges – 16 Road under bridges – 12 FOB –2
4. Tunnels - Total Nos. 57 Total length - 10.98 kms. Longest tunnel - 578 mts No.11
5. Level Crossings - Total - 65 Manned – 31 Unmanned - 34
6. Curves - Total – 110 80 - 85 Nos.- 30 to 50 - 25 Nos
7. Catch Sidings Donigal station – Shrivagilu Yedakumeri - Proposed
8. Slip Sidings Donigal, Shrivagulu
14
Details of Block Stations and Halts in Hassan-Mangalore
S.No Name of Station Jurisdiction Location at (kms) Inter Dist
1 Hassan (HAS) S W R 00.00 0.00
2 Alur (ALUR)
H
M
R
D
C
13.38 13.38
3 Balupete (BLLT) 27.53 14.15
4 Sakleshpur (SKLR) 42.06 14.53
5 Donigal (DOGL) 49.64 7.58
6 Kadagaravalli (KVGL) 59.30 9.66
7 Yedakumeri (YDK) 67.23 7.93
8 Arrebetta (TO BE COMMISSIONED) 75.00 7.77
9 Shrivagulu (SVGL) 85.35 10.35
10 Subramanya Road (SBHR) 97.32 11.97
11 Bajakare (BAJE) – Halt 103.36 6.04
12 Kodimbala (KDBA) – Halt 106.61 3.25
13 Yedamangala (YDM) 111.85 5.24
14 Kaniuri (KNYR) – Halt 120.44 8.59
15 Narimogaru (NRJ) 129.74 9.30
16 Kabakaputtur (KBPR) 139.61 9.87
17 Neralekatte (NEHL) 150.10 10.49
18 Kalladaka (KLKD) – Halt 158.93 8.83
19 Bantwal (BNTL) 164.19 5.26
20 Faringapeta (FRG) – Halt 173.65 9.46
21 Padil (PDL) S R 180.20 6.55
22 Mangalore Jn. 183.19 2.99
Line Capacity The Maximum number of Trains that can be operated in a Day in a section is known as Line
Capacity, which is decided by the running time of the Critical Block Section by a slowest moving train.
The Critical Block Section of HMRDC Line is DOGL-SVGL in the ghat section of SKLR-SBHR section, 120 minutes is the running time of the critical block section and line capacity is 12 trains per day including Passenger Trains.
Some amount of time to be provided for the track and signal maintenance works, which again reduces the Line Capacity to that extent which is equivalent to 3 Hrs/ 2 trains.
To increase the line capacity the running time of critical block section has to be reduced for which the provision of CATCH Sidings (safety device) to be undertaken at all the stations on the ghat section. As a first step, it is proposed to construct a CATCH Siding @ YDK at a cost of `12.5 Cr. Sanction from CRS, South Zone awaited.
To improve the line capacity maximum permissible speed to be increased to 45 KMPH in the UP direction without compromising the safety since the track strength has been upgraded over the period.
16
Operational & Financial Performance
04/19/23 17
Particulars 2006-07
(05/06-03/07)
2007-08 2008-09 2009-10
2010-11 2011-12
Carried Tonnage (MT)
1.60 4.60 4.51 5.01 3.87 3.27
Earnings 36.71 133.54 188.19 163.63 116.63 71.35
O&M costs 17.68 66.72 74.49 91.01 76.14 67.05
Income from Operations
19.03 66.82 113.70 72.62 40.49 4.30
Deferred OH
4.14 11.37 11.39 12.36 10.15 8.98
`. - Crores
Commodity wise Earnings
04/19/23 18
Commod
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Carr Tonn (MT)
Reve % to tot Rev
Carr Tonn (MT)
Reve % to tot Rev
Carr Tonn (MT)
Reve % to tot Rev
Carr Tonn (MT)
Reve % to tot Rev
Carr Tonn (MT)
Reve % to tot Rev
Carr Tonn (MT)
Reve % to tot Rev
Iron Ore ExportDomesticPellets
Total
0.810.020.00
0.83
21.680.550.00
22.23
59%
2%---
61%
2.810.210.00
3.02
95.016.640.00
101.65
70%
5%---
76%
2.450.050.00
2.50
146.76
0.120.00
146.88
78%
0%---
78%
1.780.160.06
2.00
94.814.13
1.47
100.41
58%
3%1%
61%
0.441.240.00
1.68
39.8630.97
0.00
70.83
34% 27%
---
61%
0.000.430.00
0.43
0.0010.89
0.00
10.89
0%15%
0%
15%
Limeston
0.14 3.26 9% 0.61 14.25 10%
0.34 8.08 4% 0.74 16.82 10%
0.20 4.52 4% 0.00 0.00 0%
Cement 0.01 0.24 1% 0.14 2.82 2% 0.35 7.48 4% 0.31 6.48 4% 0.56 11.18 10% 0.70 15.56 22%
Coal 0.15 2.55 7% 0.09 1.60 1% 0.35 6.85 4% 0.87 17.59 11%
0.29 5.47 5% 0.69 15.49 22%
F Grains/ Fertilizer
0.35 5.35 14%
0.49 8.28 7% 0.76 12.78 7% 0.81 13.81 8% 0.76 11.81 10% 0.99 16.17 23%
LPG/POL 0.12 2.94 8% 0.26 7.05 5% 0.21 6.08 3% 0.29 8.48 5% 0.36 12.23 11% 0.36 10.93 15%
Gypsum/ Others
0.00 0.00 --- 0.00 0.00 --- 0.00 0.00 --- 0.00 0.00 --- 0.02 0.58 1% 0.10 2.31 3%
`. - Crores
Wagon wise Earnings/Train Load 2011-12
04/19/23 19
Type of Wagon/
Commodity
Total No of Trains
Total Load (Million T)
Total Revenue
(Cr)
Load per Train
(Tonnes)
Revenue per Train
(In Lakhs)
BOXN –
Iron Ore
Gypsum
Coal
Clinker
114
23
180
1
0.43
0.09
0.69
0.00
10.89
1.98
15.49
0.08
3776
3859
3831
3841
9.55
8.61
8.61
8.00
BCN –
Cement
* Fert/ Food Gr
289
386
0.70
0.99
15.56
16.17
2412
2574
5.38
4.19
BTPG - LPG 177 0.21 6.51 1171 3.68
BTPN - POL 62 0.15 4.41 2415 7.11
BRN/ BRH –
Iron Sheet
Cont
1
10
0.00
0.01
0.06
0.18
2615
601
6.00
1.80
Components of Fixed & Variable Costs
Fixed Costs Variable Costs
Man Power Cost of Fuel
Other than Man power Cost of Crew
Direct Supervision Charges Cost of Loco & Wagon Usage
Indirect Over Heads Cost of Running Repairs of Wagons
Misc. Documentation
Compensation Claim
Indirect Over Heads
20
Review of O&M Costs
04/19/23 21
Particulars 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Carried Tonnage (MT)
1.60 4.60 4.50 5.01 3.87 3.27
Fixed Costs (FC – `.- Cr)
9.96 13.50 15.83 25.05 25.13 23.99
FC/Tonne (`.) 62.30 29.35 35.18 50.00 64.94 73.36
FC/Tonne/Km (`.)
0.34 0.16 0.19 0.27 0.35 0.40
Variable Cost (VC – `. - Cr)
7.72 53.22 58.65 66.06 51.00 43.05
VC/Tonne (`.) 48.30 115.70 130.33 131.86 131.78 131.65
VC/Tonne/Km (`.)
0.26 0.63 0.71 0.72 0.72 0.72
Income and Expenditure
04/19/23 22
Income:
Particulars 06-07 07-08 08-09 09-10 10-11 11-12
From Freight Operations
36.68 133.76 190.32 156.20 116.70 71.12
Others 0.11 2.61 9.80 11.46 17.20 18.87
Total 36.79 136.37 200.12 167.66 133.90 89.99
Expenses:
O&M Railway
Fixed Costs
Variable Costs
Indirect OH – FC
Indirect OH – VC
Maintenance Exp
9.13
7.69
2.18
1.96
10.89
44.46
2.61
8.76
10.97
49.89
2.63
8.76
2.23
17.53
56.33
2.63
9.73
4.89
16.61
43.49
2.63
7.52
5.64
16.50
36.62
2.63
6.33
4.85
Expenses: Administration 0.32 0.61 1.02 1.27 2.32 1.78
Office Financial Expenses 4.14 6.14 7.10 1.74 0.01 0.05
Depreciation 25.65 28.78 29.74 30.23 31.83 34.01
Total 51.07 102.24 112.34 124.35 110.06 102.77
P B I T (14.28) 34.13 87.79 43.31 23.84 (12.78)
Tax Paid --- 3.89 9.74 7.30 4.81 0.00
P A T (14.28) 30.24 77.64 35.89 19.02 (12.78)
`. - Crores
EarningsParticulars 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Tonnage (Million Tonne) 1.60 4.60 4.51 5.01 3.87 3.27
Gross Earnings (`. Crores) 36.71 133.54 188.19 163.63 116.63 71.35
Gross Earnings/Ton/ KM (`.)
1.25 1.58 2.27 1.78 1.64 1.90
O&M Cost (`. Crores) 17.68 66.72 74.49 91.01 76.14 67.05
O&M Cost/Ton/ Km- (`.) 0.60 0.79 0.90 0.99 1.07 1.12
Net Earnings (`. Crores) 19.03 66.82 113.70 72.62 40.49 4.30
Net Earnings/Ton/ Km (`.) 0.65 0.79 1.37 0.79 0.57 0.01
Profit/ Loss (`. Crores) (Inc. of all Expenses)
(14.28) 30.24 77.64 35.89 18.79 (12.78)
Profit/Loss/ Ton/ Km (`.) (0.49) 0.36 0.94 0.39 0.26 (0.02)
23
Performance of the Company
04/19/23 24
Particulars 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Total Income 36.79 136.37 200.13 167.66 133.90 89.99
Total Expenses
51.07 102.24 112.34 124.35 110.06 102.77
P B I T (14.28) 34.13 87.79 43.31 23.84 (12.78)
P A T (14.28) 30.24 77.64 35.89 19.02 (12.78)
E P S (Rs.) (1.28) 2.70 6.93 3.20 2.14 (1.13)
` - Crores
25
Fixed Assets
04/19/23 26
Particulars
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
GAV NAV GAV NAV GAV NAV GAV NAV GAV NAV GAV NAV
Railways
Bridges 26.91 26.53 31.03 30.19 32.94 31.58 33.45 31.54 33.86 31.41 58.56 55.26
Formation 69.99 63.41 69.47 55.70 74.22 52.78 74.79 45.58 87.29 49.07 91.14 43.60
P Way 188.70
171.09
189.51
152.51
192.23
135.54
193.04
116.44
193.50
96.92 205.42
87.75
Station & Building
9.66 8.80 10.10 9.07 10.38 9.19 10.57 9.21 10.67 9.13 12.61 10.86
Plant & Machinery
15.96 15.73 14.98 13.22 17.24 13.82 18.62 13.37 21.10 13.76 24.40 14.58
Total 311.20
285.56
315.08
260.69
327.02
242.91
330.47
216.14
346.42
200.29
392.13
212.04
Office 0.23 0.21 0.23 0.19 0.25 0.19 0.26 0.19 0.36 0.26 0.41 0.26
G Total 311.42
285.77
315.32
260.88
327.27
243.10
330.74
216.34
346.78
200.55
392.54
212.30
`- Crores
GAV – Gross Asset Value NAV – Net Asset Value
Capital Structure
04/19/23 27
Particulars 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Share Capital
Paid Up 112.00 112.00 112.00 112.00 112.00 112.00
Reserve & Surplus (Cumulative)
--- 15.95 93.60 129.49 148.51 134.86
Secured Loans
Canara Bank 45.00 45.00 48.90 1.08 0.00 0.00
SBH 25.00 25.00 31.12 1.10 0.00 0.00
Unsecured Loans
Sub debt from S W R 140.79 140.79 140.79 140.79 126.79 99.79
Deferred Indirect Over Heads of SWR
4.14 15.51 26.90 39.25 49.41 58.37
` - Crores
Section Staff Position in HMRDCS.No Department No of Staff
as per AgmtNo. of
Staff on Roll
New Staff Recruited in
Engg (June’12)
No of staff on Roll as per SWR
1 Mechanical (SKLR-SBHR) 68 58 58
2 Electrical (TLD) 23 7 7
3 Traffic (SKLR-BNTL) 91
21
112 99 99
4 S&T (SKLR-BNTL) 59 51 51
5 SE/P-Way (HAS-SKLR) at HAS 47 31 78
6 SE/P-Way (SKLR-SBHR) at SKLR 95 32 127
7 ADEN (SKLR) 390 3 3
8 BRI (SKLR) 7 7
9 SE/Works (SKLR) at SKLR 18 18
10 SE/P-Way (KBPR) 93 46 139
11 Accounts 3 3 3
Total 655 481 109 590
28
SWR has recruited New Staff for Engg in the month of May 2012 and effective from June 2012
INSURANCE
PROJECT LENGTH COVERED : 97 Kms out of 183 Kms from (SKLR to KBPR)ASSETS INSURED : Permanent way, Station
Buildings, Signaling, and Telecom, Mechanical & Electrical Equipments RISKS COVERED : Force Majeure occurrence such as fire, root, flood, breaches, lightning,
earthquake and other natural disaster – mainly on account of landslides/ rockslides during monsoon.
LOSSES COVERED : i) Restoration cost of tracks and assets damaged ii) Loss of Profit/ Revenue on account of stoppage of operation on
account of Force majeure events.
POLICY PERIOD : 4th January 2011 to 3rd January 2012PREMIUM PAID : 2008 ` 33.60 Lakhs
2009 ` 40.08 Lakhs
2010 ` 69.53 Lakhs
2011 ` 93.75 Lakhs
2012 ` 58.62 LakhsCLAIMS SETTLED : 2008 :
Restoration Cost : ` 61 Lakhs Loss of Profit : ` 163 Lakhs (Received on 28.07.10)
2009 :
Restoration Cost : ` 30.16 Lakhs
Loss of profit : ` 245.76 Lakhs (Received on 31.03.11)
No Claims were made during last 2 years since 2010 as there were no landslides during these years.
29
Income Tax Holiday and Payment of MAT INCOME TAX HOLIDAY :
Nature of exemption : Eligibility U/s 80IA being Infrastructure facility
Quantum of Exemption : 100% of Profit/ Income of the Company
Period of Exemption : For 10 Consecutive years from the Initial year
Exemption Availed : From FY 2007-08
Exemption Available : upto FY 2016 – 17
PAYMENT OF MAT :
The Company is required to Pay minimum Alternative Tax (MAT) on Book Profits u/s 115JB of Income Tax Act.
The Book Profit and MAT paid are :
FIN YEAR Book Profit Rate% including Surcharge ` In Crores Amt and Education Cess of MAT Paid
2007-08 34.12 11.33 (10%+10%+3%) 3.88
2008-09 87.79 11.33 (10%+10%+3%) 9.95
2009-10 43.31 16.995 (15%+10%+3%) 7.36
2010-11 23.83 19.93(18%+7.5%+3%) 4.81
2011-12 (12.78) 20.01(18.5%+5%+3%) 0.00 30
Looking to Future
04/19/23 31
SWOT Analysis :
Strengths :
The Only Railway Line passing through Western Ghats connecting the major port of Karnataka with Hinterland. Has got Line Capacity to transport 6 Million Tonnes of Traffic per annum. Stabilized Rail Link.Entire Loan of `. 90 Cr. availed from Nationalized Banks Completely Amortized within 3 years of CoD
Looking to Future
04/19/23 32
Weaknesses :
Dependence on a single Commodity (Iron-Ore/Export) which is the Cash Cow. Oligopolistic customers. Capacity and Operational constraints due to steep gradient ( 1 in 50) and more number of 8 degree Curves. •Multiple locos with AEBs used for hauling up Trains• Empty running of Locos and Rakes• Speed restrictions – 30 KMPH in Ghat Section.•Detention due to a variety of reasons. Outstanding sub-debt (`108 Cr) and deferred OH (` 58 Cr) along with interest, if any. The Cash Reserves of ` 186 Cr represent only DRF.
Looking to Future
04/19/23 33
Opportunities :
Steady Traffic with KIOCL expansion plans (Iron Ore Domestic)Iron-Ore for Export market may commence upon lifting the ban.Import of high grade non-coking Coal for proposed Steel Plants and Coal for Power Plants, which will be moved from NMPT through Hassan Mangalore Rail Line. Diversification into development of Property Time Shares (with the Land available) for heritage Tours and Trek to boost non-traditional income.Going for “Doubling” of the Line, avoiding Ghat Section (118 Kms as against 55Kms of Ghat Section) with minimum impact on Environment.
Looking to Future
04/19/23 34
Threats :
Higher Expenditure on Maintenance costs for retaining walls etc to
prevent landslides.Huge Capital Expenditure for strengthening of bridges to permit running of 25T Axle Load Trains.Dwindling traffic movements.Premature replacement of Assets due to denudation.