Indian Railways:

5 Year Strategic Plan

Harshavardhana Nandakumar - 13
Sachin Kenganal - 20
Anindita Sarkar - 43
Abdulbasith Shaikh - 46
Harshad Menon 60

Introduction of Indian Railways
Largest and Busiest rail networks in the world

Introduced in India in 1853 from Bombay to Thane

First railway train journeyed distance of 22 miles between
Bombay and Thane

Originally, operated by private companies Englishmen. 1925-
1950

GOI took over all the private railway companies.

SITUATION ANALYSIS
PEST
Political
Railways owned and
managed by Government
of India

Passenger awareness
programmes are done

The GOI decides the fares
Social
Environment friendly mode
of transport

Trains run on electricity
hence it saves fuel

Social obligation and care
for weaker section enjoy
concession benefit from
railways
ECONOMICAL
Conserves foreign exchange

Indirectly affecting the
economy

TECHNOLOGICAL
Reservation systems have
been computerized

Launched mobile ticketing
services

Super fast and express
trains have been introduced
SWOT
STRENGTHS
Second largest railway
network in the world
(7,172 railway stations, 1,31,205 railway
bridges, 9,013 locomotives, 62,924
passenger coaches, 2,39,281 freight cars
and 65,436 route kilometers.
IR operates 20,038 trains each day,
comprising 12,617 passenger trains and
7421 freight trains.
Transports 1050.18 million tonnes of
freight traffic and 23 million passengers
every day and 7.2 billion passengers per
year.
Currently has 1.307 million employees
and had revenues of Rs. 1441.67 billion
(20132014))

Goodwill

WEAKNESSES
Poor maintenance
Poor sanitation
No proper financial planning
(New projects announced
without funding)
Lack of safety for women
Lack of proper announcement
system
Lack of proper fire safety
mechanisms
The problem of Superfast
trains

SWOT
OPPORTUNITIES
Opening Agricultural
Centres at Stations
Other Non-rail revenue
Registered baggage
handling facility
Revenue from
advertising
THREATS
Competition from
Roadways & Airways
Political interference
Government policy

Porters Five Forces Model

Threat of new entrants - LOW
High entry costs

RailCorp owns railways,
therefore there is only a
threat of new indirect
competitors


Rivalry amongst competitors
LOW
No direct competitor
monopoly

Only indirect competitors
like bus etc
Substitute products HIGH

Many substitutes available

Buyers view the substitutes
as satisfactory in terms of
quality, comfort and
convenience

Bargaining power of
consumers LOW
CityRail has monopoly

For longer distances trains
are the most convenient
and cheapest mode of
travelling

Bargaining power of suppliers HIGH
Few suppliers in most categories like ticketing,
other equipment
Relatively high switching costs for most
supplies
COMPETITION ANALYSIS
Competition Analysis
Roadways:
- Luxury buses
- Personal vehicles
- Improved Public
Transport
Airways:
- Low Cost Carriers
(LCCs) such as Indigo,
SpiceJet and GoAir.

Roadways
86%
Railways
12%
Airways
1%
Modal Share in Passenger Traffic (2012)*
0
10
20
30
40
50
60
70
80
90
Trend in Mix of Modal Share in Passenger
Movement
Roadways
Railways
Airways
Competition to Long Distance Trains by
LLCs
Routes
Railways Low Cost Airlines - Economy Class*
Train
Cost (Rs.)
Time
(hrs)
Cost (Rs.)
Time
(hrs) 1 AC 2 AC 3 AC
2 months prior
booking
3 months prior
booking
One
Way
Round
Trip**
One
Way
Round
Trip**
Mumbai
- Delhi
Rajdhani 4680 2810 2030 16 2989 6685 3264 6304 2
Mumbai-
Kolkata
Duronto 6040 3615 2600 26.25 3789 7578 3799 8097 2.5
Mumbai
- Kerala
Duronto 5105 3030 2180 23.25 2999 5964 3408 6473 2
Advantages of Airways (LLCs) over
Railways
Comparative rates for long distance routes
Shorter travel time
High Frequency of flights
Higher Choice of routes
Relatively shorter advance reservation/booking
period
More comfortable
Locations/areas not accessible by rail can also be
accessed

Competition to Short Distance Trains by
Roadways
Routes
Railways Roadways
Train
Cost (Rs.)
Time
(hrs)
(AC + Sleeper
Buses)
1 AC 2 AC
AC
Chair/
3 AC
Cost
(Rs.)
Time
(hrs)
Lucknow-Delhi
Gomti-Superfast
Express
2030 1210 695 9 1100 10.30
Mumbai-
Ahmedabad
Barmer AC
Express
1840 1085 755 8.20 1000 11
Chennai-
Bengaluru
Bangalore Mail 1540 920 655 6 600 6
IDENTIFICATION OF REASONS FOR
DECLINING PASSENGER REVENUES
Passenger Revenue
Problem Identification
Ticket bookings in the five-month period [April-Aug
14], acc. to railway ministry data, showed a decrease
of 6.29 per cent as compared to 2013

Coaches are running with full capacity, ticket bookings
are not matching to it

Reasons: Long queues for tickets, increase in ticket
rates, economic slowdown, cost of living has become
expensive.



PROPOSED STRATEGIES FOR A
TURNAROUND
Operations Strategy
Increase capacity to get 25% market share in passenger traffic
Re-engineer Business Processes to streamline the decision-making
process to bring about accountability, result-orientation and
responsiveness at all levels and develop IT tools with this objective in
mind
Modernize procurement processes and benchmark products and
suppliers
Computerize all Railway business/ operations including financial
management, inventory, HR and other assets
Increase the length of trains by increasing the number of coaches to
24/26. Hence platform lengths and maintenance pit lines also need to be
increased
Use PRS (Public Reservation System) Analysis to reduce coaches from less
patronized trains and attaching extra coaches to long waiting trains


Operations Strategy
Segregate the Passenger and Freight divisions
into independent business units
Reduce the number of halts on long
distance/fast trains
Leverage multimodal means to upgrade
connectivity
HR Strategies
Revamp reward systems

Reduce excess staff

Improve quality of applicants to the Railway
posts

Organization Restructuring
Re-organize Railway Board along business discipline to reflect
Chairman as Chief Executive Officer and Members for, Safety,
Business development/ Commercial, Freight, Passenger Services,
Infrastructure, Finance, HR, PPP, Technology/ ICT & Signaling
Create Key Account Directors of suburban, long distance
passenger etc. under Member Passenger.
Ensure autonomy, flexibility and accountability at all levels with
clear P&L Responsibilities.
Establish a separate Authority for implementation of Major
Projects such as redevelopment of railway stations etc.


Organization Restructuring
Empower Zonal Railways along with accountability:
Build capacity for the officers at the Zonal railways to manage PPP
projects. A PPP cell should be constituted in each zone to identify,
develop, implement and monitor projects at the zonal level.
Appoint a PPP Ombudsman to resolve any disputes that may arise
between the private sector and the government in interpretation
and enforcement of provisions of the agreements. The Ombudsman
should be a quasi judicial authority and should have the authority
to give directions which are binding on all parties.
Constitute a Railways Tariff Regulatory Authority in order to provide
a level playing field to all stakeholders.




Pricing Strategies
Suburban Trains
- Contribution to number of passengers of IR: 53.16 %
- Contribution to earnings: 6.42 % (stats:2012-13)
- Strategy: Increase in suburban passenger fare by 2%,
every year
Long Distance Trains
- Strategy: Differential Pricing to be adapted for tickets
being booked
- Eg. 3 months advance booking: Rs. 1000
2 months advance booking: Rs. 1300
And so on


Increasing Revenues from Non-
transportation Business and Other Services
Non-Transportation Businesses
Source: IR Land
- Agriculture
Source: IR Station space, office buildings
- Supermarkets
- Leasing out to tenants
Source: Advertisement
- Space on stations and platforms: utilize more space for ads
- Space on trains: Inside and Outside
- Printing ads on tickets
Other Services: Registered baggage handling facility (hassle free
handling of luggage at a cost, extra cost for extra luggage)






Leverage Luxury Tourist Trains
Apart from the The Palace on Wheels, the rest
of the luxury trains have not been leveraged to
obtain revenues out of them.
Efforts should be taken to promote tourism for
the other luxury trains which are as follows:
- The Fairy Queen
- The Deccan Odyssey
- Heritage on Wheels
- Golden Chariot
- Mahaparinirvan Special Train (Spiritual Tour)
Improving Ticketing Service
Intensify ticket checking exercise at major
stations

Make tickets easily available with opening up of
more counters and deployment of more
personnel

Mobile Ticket Booking App

Increase the no. of ATVM machines
FINANCIALS & PROJECTIONS
THANK YOU!