Indian Railway

Sustainable Growth
Through Optimised Procurement Process, Operation Improvement in
Premium Passenger Segment and New Revenue Channels

Presented by: Group I4

PGID Name
61921072 Rakesh Mondal
61920680 Deepu Krishnan
61920137 Prasin Roy Chowdhury
 TABLE OF CONTENTS

EXECUTIVE SUMMARY ............................................................................................................ 3

MOTIVATION/PURPOSE............................................................................................................ 4

ABOUT THIS SECTOR/REGION ............................................................................................... 5

CHALLENGES/OPPORTUNITIES............................................................................................. 6

OVERALL VALUE CHAIN AND PROCESSES IN SCOPE.................................................... 7

STAKEHOLDERS ......................................................................................................................... 8

MEASURABLE OBJECTIVES .................................................................................................... 8

ANALYSIS AND POSSIBLE CHANGES ................................................................................... 9

RECOMMENDATIONS.............................................................................................................. 23

CONCLUSION ............................................................................................................................. 27

2
EXECUTIVE SUMMARY

The Indian Railways is among the world's largest rail networks. The Indian Railways route length

network is spread over 115,000 km, with 12,617 passenger trains and 7,421 freight trains each day

from 7,349 stations plying 23 million travelers and 3 million tones (MT) of freight daily. India's

railway network is recognized as one of the largest railway systems in the world under single

management.

Despite being the single

railway service provider,

in the passenger

segment, Indian Railway claims to recover only 57% of the ticket value on an average taking into

consideration all the classes of travel.i Ministry of Railway allocates the budget for Indian Railway,

which in turn comes from the tax money of the ordinary citizen of India.

In this project, we intend to analyze the value chain of the passenger services segment, find out the

inefficiencies, recommend possible resolutions, and create a strategy and business model to make

the passenger segment more profitable.

However, while preparing the recommendation we will also take into consideration of the fact that

railway is considered as a public service in India and is a lifeline for connecting people. Hence,

areas which are governed by policies or which can affect employment are not explored in our

analysis. Since social obligation is part of Indian Railways mission, we are addressing a few areas

where railway can implement the improvement projects on their own without affecting its overall

service or affordability.

3
MOTIVATION/PURPOSE

The public services and public utility companies were initiated in India with the vision as not a

profit engine but a service provider to the Indian citizen. However, we are in the opinion that loss-

making public services do not ease the life of the common citizen. They increase the tax burden on

citizens and corporate entities and provide poor services under the pretext of loss (Live example –

BSNL and Air India). If these services can be made self-reliant and/ or profitable, (1) they will be

able to serve consumers better, (2) will be able to invest in themselves to improve, to grow and (3)

contribute to the Indian economy further.

Indian Railway is one of the giant public entities. Despite being the only railway entity in India (i.e.,

no private competitor), they make a loss on passenger business, provide poor customer service, and

even many lives are lost every year through major accidents. We believe that if railways reduce its

operating expenses and increases its profitability in the passenger segment, it will be able to garner

a good surplus that can be invested back to improve customer service and safety. As we make this

report, Indian Railway posts its worst

financial performance in many years

as corroborated from news reports.ii

Our team comprise of people who have worked with the Indian PSUs (Railway, BHEL, and GAIL)

and have seen such operational inefficiencies from a first person's view. As we believe that the

economic growth of India is impacted by the large public sector undertakings, it is important to

work on such projects. Hence, we have picked up this topic.

4
ABOUT THIS SECTOR/REGION

The Ministry of Railways regulates the railway sector in India. Government-owned Indian Railways

is the dominant player in the sector. The railway network is also ideal for long-distance travel and

movement of bulk commodities, apart from being an energy-efficient and economical mode of

conveyance and transport.

Indian Railways transports around 36% of the total cargo in India. But recently it has been losing

market share to road transport. Also, railways have been losing passenger market share to airlines

from the 1st AC and 2nd AC classes. It cross subsidises passenger traffic through higher freight

earnings.iii

Recently, in October, the first private train called Tejas Express has been run on the network. This

train has posted a profit of Rs. 70 lakhs in its first month of operation.iv The tickets are priced

dynamically and vary according to demand. Tejas Express also provides better facilities for

passengers like onboard infotainment services, high-quality food, and travel insurance. NITI Aayog

is planning to privatize 150 trains and 50 railway stations to provide better passenger service and

increase the profitability of railways. Our objective in this report is to understand why Tejas Express

has posted profits and prepare a roadmap for further implementation.

Apart from this, we also need to analyse the operational efficiencies and the costs involved in the

manufacturing & maintenance of rolling stock, including coaches, wagons, and locomotives. As of

now, these functions are carried out by railways inhouse. Railways have manufacturing factories

and maintenance sheds manned by railway staff. The raw materials for the manufacturing and

maintenance facilities are procured through the public procurement system.

5
CHALLENGES/OPPORTUNITIES

Challenges

1. Line Capacity is utilized in the existing network

at many locations, and hence there is not much

scope to increase the number of trains.v

Line capacity is measured by Scott’s Formula or

by Charting method.
Image 1: Scott’s Formula

2. The parliament and government decide the fares, and therefore railways have little say in it.

3. Railways is facing fierce competition from the airlines and the road transport sectors. The

premium segment of AC passengers prefers low-cost airline carriers. On the other hand, the

cargo and parcel segments are facing stiff competition from the road cargo carriers.

Opportunities

1. Willingness to Pay of the premium customer can be increased by providing better services

like entertainment and catering. Also, the pricing can be made more dynamic catering to

different customer segments.

2. By improving the internal processes and procedures for example in procurement, we will be

able to reduce costs and increase profits.

3. The opening of the western and eastern dedicated freight corridors to freight traffic would

ease capacity from the existing network. New services can then be rolled out in the existing

network.

6
 OVERALL VALUE CHAIN AND PROCESSES IN SCOPE

The overall value chain of railway operations has many parallel components like –

1. Railway Assets like tracks, stations, signalling.

2. Off-board services like counter ticket booking, parking, chart preparation.

3. Onboard services like catering.

4. Rolling stock and its maintenance.

In this consulting project, we are considering only the onboard services and the rolling stock

components. We are planning to study these components and come out with solutions to improve

profitability. This is done by either increasing the willingness to pay or by reducing the costs.

The value chain of the onboard services is shown below-

Ticket Chart Passenger Onboard

booking Preparation boards the Catering entertainment

train services

The value chain of the rolling stock is shown below-

Testing, inspection and
Procurement of Coaches/
Railway certification done before
Raw Materials Wagons/Locomotives
Factory introducing in the
are manufactured.
network.
Procurement of Raw

Materials.
Railway workshop Rolling stock released to the
Rolling Stock stabled carries out maintenance. network after certification.
The
for in-scope activities are-
maintenance.

7
1. Studying the present procurement process in railway and suggesting improvements to the

procurement processes (in the railway coach factories and workshops).

2. Find out the improvement areas for asset utilisation in premium train segments.

3. Explore new revenue stream areas and its implementation. Create a business model for the

same.

4. Creating a road map for scaling up the private trains to 150 as planned by NITI Aayog. This

includes understanding the present model for Tejas and why it is profitable.

STAKEHOLDERS

There are many stakeholders in this project. The audience is the Railway Board, which is the apex

decision making body of Indian Railways. We are external consultants advising the Railway

Board. The different stakeholders are-

1. Railway Board

2. Managers

3. Unions

4. Employees and staff

5. Customers of freight and passenger business

6. Tax paying citizens of India

MEASURABLE OBJECTIVES

For the procurement improvement part, we will be measuring % of revenue spent on store purchase.

In 2017-18 it was 27% of the gross revenue. However, the preceding three years the average store

cost was 25% of gross revenue. Our target is to reduce the store purchase cost back to 25% in first

year as per present calculation model, include new cost calculation process using Activity Based

8
Costing, finding out possible areas to reduce activity cost and reduce the ABC cost further by 5%

every year.

For the asset utilisation part, we will be measuring revenue earned per passenger km and revenue

earned per vehicle km. Average rate per passenger km is Paise 41.3 in 2017-18, highest in preceding

five years and the revenue earned per vehicle km is Rs. 18.57. Our target will be to increase the

revenue earned per vehicle by 10% in a year without increasing the revenue earned per passenger

km, i.e. without increasing ticket price earning more revenue by improving asset utilisation.

For the new revenue generation, we will be measuring increase in number of new trains in the

suggested segment and the probability of approaching the target of private train as suggested by

NITI Aayog.

Railway financial data is attached at the end of the report. The metrics mentioned above are

calculated from the data.

ANALYSIS AND POSSIBLE CHANGES

PROCUREMENT IN INDIAN RAILWAYS

INTRODUCTION

IR has a very high degree of vertical integration. It manufactures about 250 electric locomotives,

250 diesel-electric locomotives and 3000 passenger coaches annually at six manufacturing units for

its own use and for export. Railway workshops manufacture items such as traction motors, switch

gears and control gears, cast & fabricated bogies, cast steel railroad wheels and forged axles.

About 40 percent of the procurement expenditure was for purchase of items required for

manufacturing, 30 percent for purchase of items required for repairs, operation and maintenance,

27 percent for purchase of fuel and remaining for purchase of items required for construction. Items

9
as diverse as rails, motors, paint, diesel, office supplies and medicines are regularly procured by IR

in substantial quantities. (Source: Ministry of Railway website.)

During the year 2017-18 the total expenses of IR was Rs.829 billion, of which expenses for

procurement alone was Rs.279 billion. This means IR can derive tremendous cost savings by re-

engineering procurement process and adopting modern procurement policies. (Source: Ministry of

Railway website.)vivii

PRESENT PROCESS

The present procurement process in IR is done at 3 levels-

1. Apex level at railway board level for bulk items purchased like steel, rails and diesel.

2. Zonal level and Production Units (Manufacturing factories) - For regularly used stock items

and non-stock items.

3. Divisional level for daily used consumable items and office supplies.

IR hence relies on a mix of centralized and decentralized procurement method. The items are clearly

segregated to be procured in a centralized or decentralized manner with clear SOP (Schedule of

Powers). In case of emergency or contingency, separate SOP provisions are used.

Procurement in IR is guided by multiple codes, guidelines and instructions making it very complex

and cumbersome. IR has a manual for purchase with detailed guidelines and procedures. Moreover,

IR needs to adhere to public procurement procedures and Ministry of Finance guidelines. The

regulatory supervision is also at multiple levels which includes internal audit, external audit by CAG

and Central Vigilance Commission (CVC). Transparency is also ensured by Right to Information

(RTI). Due to excessive regulations and restrictions the procurement process is often time

consuming and the procurement department must place order on the lowest eligible L1 irrespective

of the quality difference between suppliers.

10
 The MMIS (Material Management Information System) is an MIS system used in IR to track level

of inventory in different depots spread throughout the country. Also, another IT module called

IREPS (Indian Railway e-Procurement System) is used for procurement and tendering. The

inventory is managed by material managers in warehouses.

In our study we are not focusing on the regulation or the procurement guidelines since they are

difficult to change. Hence, we have kept them as “out of scope” issues. Also, we are completely

focusing on ideas, processes and methods which can make the procurement process more efficient

and cost effective.

Value Chain

The average time taken for the procurement process up to the release of purchase order is

approximately 3-6 months, although this varies depending upon the nature of material purchased.

Material demand Material Demand Forwarded to purchase Tendering

Forecasting Generation department

Material Testing Material Delivery Purchase Order Tender evaluation

and Certification

Bill Passing Inventory holding

in depots

11
IMPROVEMENTS IN PROCUREMENT

Business Process Restructuring

The entire business process can be restructured. Instead of tendering for each item separately, we

can incorporate a reverse auction model. Reverse auction model is a very efficient procurement

method to obtain low prices especially for materials of general consumption.

E-Tendering needs to be adopted in all cases. That is, the tendering needs to be online and not

manual. Manual tendering which includes dropping of bids into a physical tender box has many

disadvantages. This includes reduced competition due to physical distance between buyer and seller.

There are also issues with transparency and accountability in the manual tendering process.

E-Tendering will also reduce the time taken for procurement, thereby reducing procurement costs.

Digitalize the process

Many steps in the procurement process are now manually done. This also includes the use of paper

and physical files. The entire process can be digitized end to end. This saves us valuable time. This

also improves transparency and accountability. IR can develop the already existing MIS software

to support this.

New model of Procurement Platform model

A new platform model can be developed for procurement. It can be very similar to Amazon. For

example, the vendors can register themselves onto the platform and showcase their product

including specifications and price. IR and other government buyers can register on the other side as

purchasers. Whenever a requisition demand is raised to the procurement department for buying a

new item, the procurement department can browse through the items & sellers registered along with

their price and directly place the order.

12
The identity of the seller and buyer is masked till the tender is finalized. This will be a very

transparent method and the procurement process will be very quick. This procurement model is

more suitable for routine purchase and purchase of general items.

There is also increased competition thereby reducing prices. IR can make substantial savings by

implementing this model.

Reverse Auction can be carried out on this platform. IR can register its requirement and the sellers

can anonymously bid for the rate.

Predictive forecasting and inventory management

Periodic maintenance and repair work are presently done in Indian Railways. Sometimes the parts

are replaced before exhausting their useful life. In some cases, the parts are not checked or replaced

although there is an imminent risk of failure. This leads to increased costs in some cases and failures

in other cases. This problem can be resolved by implementing an IoT solution.

The failure of parts can be predicted beforehand, and the replacement done at an appropriate time.

The IoT solution needs to be implemented only for the moving parts and parts that affect safety.

Inventory can also be ordered based on better forecasting. This reduces inventory costs

substantially. Although the implementation is costly, it would payback in some years.

Optimization of inventory between multiple warehouses

There are more than 100 material handling depots in Indian Railways. IR follows a hub and spook

model for depot management. Every zone has some major large depots and the smaller depots in

divisions obtain inventory from the main depot.

13
Optimization of inventory is a major issue. Depot A might have extra stock of some items which is

needed in Depot B. In many cases, there are intra-depot transfer of materials by road or rail. This

increases the inventory costs.

The allocation of inventory to individual depots is done manually based on judgement and demand

projection. But this is not a scientific method.

We need to develop a program for optimization of inventory distribution (DMOP type). This should

also consider factors like distance between depots, cost for transportation, ease of access and

probability of stockout.

This will help us to reduce inventory and save costs.

Vendor managed inventory for High Speed Diesel

IR purchases around Rs.18,000 crores of High-Speed Diesel every year. IR is one of the largest

consumers of diesel. IR also transported diesel through its network. Moreover, IR has vacant land

near railway stations. Also, IR stores around 15 days of diesel inventory.

IR can partner with Oil Marketing Companies and lease vacant land at suitable locations to build

Diesel Storage facilities. This can also be used by IR for refuelling. This avoids extra transportation

costs for IR. Also, IR can now maintain lesser inventory.

This is a win-win situation for both IR and OMC’s.

Outsourcing of repair and maintenance activities

IR carries out the repair and maintenance activities of its rolling stock in-house. The average wage

for a railway employee is 2-3 times the prevailing market wage rate for a semi-skilled or unskilled

worker. Also, bulk of the material purchase is done to carry out this activity.

14
Instead of carrying out this activity inhouse, IR can outsource it. This will reduce its costs. The

private party can be empowered to purchase the materials. But we need to identity proper incentive

and control mechanism to prevent misuse by the private party. The procurement of material by a

private party is less cumbersome and more efficient.

Nevertheless, IR needs to maintain oversight and supervision. There should be strict quality

standards to ensure the safety of the rolling stock.

A similar outsourcing model has been successfully implemented in station cleaning contracts. This

experience can be drawn into while designing the new outsourcing contract for repair and

maintenance.

Life cycle-based costing

While deciding the material specification, railways should calculate lifecycle costs instead of initial

costs.

For example, in the case of brake blocks as of now only the initial quoted price is considered for

determined the L1 (Lowest 1) tenderer. Instead, a new method to evaluate the life cycle costs of

materials should be incorporated while identifying L1 tenderer. This reduces future maintenance

and repair costs. This also reduces the total inventory that needs to be managed.

Implementation Kjalic matrix for procurement

IR purchases thousands of items every year. In some zonal railways, the number of stock items is

around 10,000. This excludes the non-stock item purchase done. Hence, management of suppliers

and resources are very critical for any successful procurement process.

As of now, IR uses the ABC and VED method of inventory classification. VED (Vital, Essential

and Desirable) classification helps us to decide items that are very critical to operations and safety.

15
The ABC classification helps us to identify items that needs more control and supervision. ABC

classification is obtained by doing the spend analysis.

But this misses out the issue of supplier complexity from procurement management. Kjalic matrix

helps us to incorporate supplier complexity.

In the Kjalic matrix the top right quadrant is the segment where we need to give maximum

importance especially with respect to relationship building. In this quadrant, we have items like

diesel, electricity, bearings, rails, electric locomotives which are imported etc.

Figure 1 : Standard Kajlic Matrix Figure 2: Kajlic Matrix for IR including a few representative items

Vendor development, onboarding

Many of the materials supplied to railways are custom made (for example train seats or train doors).

This means that there is less competition and more bargaining power to the suppliers. Railways also

have less choices regarding quality and introduction of new designs.

The best method to solve this issue is to develop a much broader vendor base. This could involve

vendor identification, vendor education, onboarding and partnerships with Small and Medium

scaled enterprises (SME’s).

16
Railways needs to develop “railway based” manufacturing zones or clusters with the partnership of

state governments. Also, it can enter into long term contracts with the suppliers. This would

motivate them to invest in the manufacturing ecosystem.

Development of broad-based material specifications

For many items the specifications developed are too narrow excluding many genuine suppliers.

These specifications need to be made more broad-based wherever possible. This increases

competition and reduces procurement costs.

Design changes and obsolescence

Off late Indian Railways has been making modifications in the rolling stock and introducing new

models. While introducing new models, it needs to plan for inventory obsolescence and wastage.

Long term contracts and rate contracts with price variation and quantity variation contracts

Rate contracts for commonly brought items like PC’s, printers, furniture etc. needs to be entered

into. This reduces the procurement time and procurement costs.

ASSET UTILISATION

Railway possess three kinds of assets – (1) Movable Assets, such as locos, coaches, tracks,

machineries, inventory etc., (2) Fixed Assets – Land, Factories, Platforms, Buildings etc. and (3)

Human Assets.

As Railway is a public entity, it is not possible to make any changes in the asset type in short term.

However, through better utilisation of the movable and fixed assets the ROA can be improved.

In this report, we are focussing on the asset utilisation of the rolling stock, i.e. loco and coaches

only.

17
It is important to improve utilisation of the rolling stock as any time they are not moving they are

not earning any revenue. Also, these assets are depreciating continually and hence, they need to be

used more efficiently within their limited lifetime.

In the rolling stock segment, the trains can be again segmented into four categories; (1) Premium

Full AC Trains such as Rajdhani, Shatabdi, Duranto etc. (2) Mail/Express Trains with a mix of AC

and Non AC Coaches, (3) Local Trains, and (4) Goods Carriers. We have segmented the trains

depending on their ticket pricing / premium-non premium type instead of speed, coach number,

gauge of track, type of fuel etc. as used by Indian Railway. We have done that to focus on specific

areas and analyse asset utilisation.

The premium trains are fully air

conditioned; catering service

are included and are given

priority over other segments for

track clearance. Due to the

nature of service, the ticket

pricing is high in many cases

and the 2AC Rajdhani fare

Image 2 Inside of Mumbai Delhi Rajdhani Express.
exceeds the flight fare between Point A to B. The

dynamic fare system also sometimes leads to exorbitant ticket price hike. As a result, in many cases

with travel times more than 10-12 hours (i.e. overnight) passengers prefer to travel by flight instead

of the premium trains like Rajdhani.

Also, due to zonal quota system, all the passenger seats are not open for booking at the origin station.

However, railway needs to run the entire rake with all the coaches in anticipation of passengers

from onward stations even though they are unoccupied.

18
As a result, the operating cost of utility (electricity for AC, lighting, linen), fuel (the loco need to

provide enough torque to drag all coaches whether there are passengers or not) and manpower cost

(attendants, mechanics). However, when the trains do not run in full capacity, the revenue

generation reduces proportionately. Hence, the premium trains gradually became less profitable and

the service level drops to reduce costs, leading to a cascading effect of customer dissatisfaction and

customer attrition.

Distribute coaches en-route and attach them to save operating cost

The premium trains run with all coaches from end to end. However, the passenger load varies at

different stations. As these trains stop only at major stations, instead of running with all coaches,

additional coaches can be added in the major intermediate stations. The time required to do this

needs to be considered and clubbed with other activities such as cleaning, preventive maintenance,

water filling etc.

Dynamic Seat Allocation System

In the present process, the seat numbers are confirmed during reservation. Once a coach and seat

are confirmed to a passenger, railway is liable to attach that coach to avoid last minute confusion

and customer dissatisfaction. Instead, the seat confirmation system can be revamped by confirm

seat numbers a few hours before departure. That way, railway will be able to aggregate the dispersed

passengers over all coaches to a few coaches. The utility cost on the vacant coaches can be saved

in this way. Also, as the seat numbers will be confirmed at the very end, more consideration

regarding seat allocation for aged, women, physically disabled or families can be considered.

Especially aged passengers and passengers with infants prefer lower berth and this change in

procedure will help railways to cater to the need of these segments

19
Aggregate Passenger Demand

Currently under the VIKALP scheme, railway offers to provide alternate arrangement to passengers

having waiting list tickets in other trains. However, the uncertainty of timing or station often deters

passengers from opting the scheme. Instead, the VIKALP scheme can be extended to the AC

passengers with confirmed tickets in other trains. The scheme will need to be on confirmation basis

and not mandatory. In this scheme a passenger having a confirmed seat in 1A/2A/3A in other trains

and having confirmed for VIKALP scheme will get notification about availability of seat in the

premium trains running +/- two to four hours withing the departure time of their train. If they opt

for the VIKALP, their reservation will be shifted in the premium train and their currently vacant

seat will be filled by the waitlisted passengers in their original train. An additional fraction may or

may not be charged depending upon the catering service coming with the upgrade. As a result, the

occupancy in the premium trains will increase and instead of earning zero revenue for the vacant

seats, railway will earn a partial revenue. The basic idea here is to divert demand from overbooked

trains to under booked trains to increase asset utilisation.

Pricing Factor

“During the Financial Year 2016-17 (Sept to Mar), 2017-18 and 2018-19 (April to June), Railway
earned approximately ₹371 Cr., ₹860 Cr. and ₹262 cr. respectively as additional earnings from
viii
trains having flexi fare.” - PIB Delhi

Dynamic pricing was introduced in specific premium trains by Indian Railways. But the results

have been mixed. Dynamic pricing help railways to capture better revenue per ticket. But this has

also led to unoccupied seats, passengers shifting to airlines and lower asset utilisation. One way to

solve this issue is to include the airline fares as an input in the algorithm that calculates ticket prices.

This ticket fares should be always below airline fares to prevent passengers from shifting.

20
New Revenue Stream Generation

Maharajas' Express, Palace on Wheels, Royal Rajasthan on Wheels, The Golden Chariot, The

Deccan Odyssey are some of the luxurious tourist trains of Indian Railway which are mostly

preferred by foreign tourists and people looking for a different luxurious experience.

Image 3: The Suite of Maharaja Express Image 4: Food served at Maharaja Express

However, the general tourist of India cannot afford such high price for the tourist trains. But they

are willing to pay for a premium service. The current operation of Tejas Express by IRCTC (Tejas

is India’s first privately run train) has seen profit in its first month of operation. More such trains

will add on to the revenue streams of railway.

Route identification will be a major factor for such services. The travel time vs. price utility need

to be higher than the cumulative travel time and cost vide flight (Cab fare, wait time, check in

restrictions etc.). Moreover, the price point needs to be redesigned considering external factors and

customer’s WTP.

Another key question that needs to be addressed is the capital investment. Railway needs investment

to revamp its tracks, existing services, platforms, station upgradation etc, and in this situation how

does it invest in new trains for tourists. Further, currently while the tracks are overburdened, how

railway can accommodate new trains in the new routes.

21
Issues like pricing, gauging customer Willingness to Pay (WTP) will also need fair bit of market

research.

Tourist Train on PPP Model

As long as IR owns the assets, they will need to make the investment and bear the maintenance and

depreciation cost. As the nature of tourist train offering is to provide a travel experience and not just

connecting two points the asset ownership model can be changed.

Tejas Express (first private train) is owned by Indian Railway but operated by IRCTC. However,

IRCTC is a subsidiary of IR. Tejas Express posted profits of Rs. 70 lakhs in first month of

operations. We need to also understand the business model of Tejas Express.

BUSINESS MODEL OF TEJAS EXPRESS

Executive lounge facility Premium onboard services,

at NDLS – use of existing vending machine etc.
facility

Onboard crew services

First private train –
avoid process hierarchy
and decision paralysis of Baggage pick up-drop facility
public sector from home to destination
(Payable)

Exclusive Ticket booking Premium

VAS – Cab booking, hotel
through IRCTC only – Reduce Cost experience and Increased WTP
booking
less process cost on reliable services
booking function

Refund policy (if train is

delayed)
Reduced advanced
reservation period and
no tatkal quota - Travel insurance & Household
suitable for tourists and theft insurance for the travel
business travellers period

Reduced cancellation charges

Use of existing track,
platforms of railway
however get priority in
Snack-styled high quality
getting green signal
meals

Through premium value-added services and reliable operation, IRCTC was able to increase the

WTP of passengers travelling by Tejas Express. Also being a private entity, it was able to operate

more efficiently.

22
Partnership Model

Partnership with the premium hotel chains and travel / tourism companies can create a business

model where the coaches are not owned by IR anymore. They will be owned by the Hotel Chains

and build as a Hotel on Wheels extending the vacation experience. The price point for such trains

need to be in mid-range i.e. affordable for the general Indian tourist who can afford to pay for a

vacation and stay in a 3-star hotel but not as high as the price point charged by Palace on Wheel.

Railway will provide its track, loco, infrastructure services and can receive payment on a rental/

utilisation basis or on a revenue sharing basis.

Fast and Premium Service Trains for Short Distance

For short distances the speed, reliability, service quality and route will be deciding factors for

introducing more premium trains. Such trains can run on the routes connecting tourist spots which

are not more than 6-8 hours journey away. Further to enhance the travel experience, these trains be

designed as per the theme of the tourist spots, on-board food, music etc can provide a flavour of the

local area. Thus, instead of just a train journey to see a place, the entire journey will become a part

of the travel experience.

RECOMMENDATIONS

Cost Reduction (in Procurement)

A major area in cost reduction is Procurement Process (27% in 2017-18).

Restructuring the business process - using E-Tendering, Reverse Auction, the cost of process can

be reduced.

Digitisation - Through Digitalizing the process, the time associated with procurement can be

changed, thus saving opportunity cost, lead time and ensuring faster response time in procurement.

23
New Procurement Platform model - Innovative ideas such as new Procurement Platform model,

in the style of popular e-commerce players can provide real time information on prices of regular

items and transform the lengthy procurement process into one click process.

Predictive forecasting and inventory management- Implementing an IoT solution to identify

parts that needs replacement. This Inventory can also be ordered based on better forecasting. This

reduces inventory costs substantially.

Optimization of inventory between multiple warehouses- The allocation of inventory to

individual depots is done manually based on judgement and demand projection. A program for

optimization of inventory distribution (DMOP type) should be developed. This should also consider

factors like distance between depots, cost for transportation, ease of access and probability of

stockout.

Vendor managed inventory for High Speed Diesel- IR can partner with Oil Marketing Companies

and lease vacant land at suitable locations to build Diesel Storage facilities. This can also be used

by IR for re-fuelling. This avoids extra transportation costs for IR. Also, IR can now maintain lesser

inventory. This is a win-win situation for both IR and OMC’s.

Outsourcing of repair and maintenance activities- IR can outsource these activities to private

parties. This will reduce maintenance costs. But, proper incentive and control mechanism to be

implemented to prevent misuse by the private party. The procurement of material by a private party

is less cumbersome and more efficient.

Life cycle-based costing- Railways should calculate lifecycle costs instead of initial costs.

Evaluate the life cycle costs of materials should be incorporated while identifying L1 tenderer. This

reduces future maintenance and repair costs. This also reduces the total inventory that needs to be

managed.

24
Implementation Kjalic matrix for procurement- IR uses the ABC and VED method of inventory

classification. VED (Vital, Essential and Desirable) classification helps us to decide items that are

very critical to operations and safety. But this misses out the issue of supplier complexity from

procurement management. Kjalic matrix helps us to incorporate supplier complexity.

Vendor development, onboarding- Many of the custom-made materials are purchased by IR (for

example train seats or train doors). This means that there is less competition and more bargaining

power to the suppliers. To solve this issue a much broader vendor base needs to be developed.

Development of broad-based material specifications- The specifications need to be made more

broad-based wherever possible. This increases competition and reduces procurement costs.

Design changes and obsolescence- Introducing new rolling stock models, needs to be planned to

reduce inventory obsolescence and wastage.

Long term contracts and rate contracts with price variation and quantity variation contracts-

Rate contracts for commonly brought items like PC’s, printers, furniture etc. needs to be entered

into. This reduces the procurement time and procurement costs.

Increase Operational Efficiency

Better utilisation of premium assets – Looking into the data of how premium trains run and its

profitability per km of running will inform the amount of inefficiency. Through Root Cause

Analysis these areas can be addressed one by one.

Changing seat allocation system – Seat allocation method as discussed will provide railway more

flexibility to use the assets in a more efficient manner. As customers are not very keen on seat

numbers once their reservation is confirmed, it will not increase dissatisfaction or reduce WTP.

25
Demand aggregation – Through demand aggregation more cost can be recovered from the

premium segment and more passengers can be accommodated in the non-premium segment. As a

result, at one end railway can be more cost efficient, on the other end can provide service to more

passengers.

Modifying dynamic pricing algorithm – While dynamic pricing in premium segment allows

railway to earn as much as possible, it often exceeds the WTP of passengers. The algorithm needs

to consider the pricing of alternate and faster travel modes e.g. air fare. We need to keep the dynamic

pricing in a range so not to exceed air fare in real time and should be compensating for the travel

time differences. Keeping the price accordingly will not exceed the WTP of passengers who can

afford premium trains.

Increasing WTP

Reliable services – Increase in ticket prices can be justified only by providing reliable and premium

services. Dynamic pricing model inclusive of on-board services with money back guarantee in case

of delay not covered under force-majeure will be acceptable to customers. Premium trains running

in long and short distances can follow this pricing model.

Creating Alternate Revenue Generation Mode

Trains on PPP Model – New travel/ tourist train in collaboration with travel agencies/ hotel chains

will allow railway to utilise spare capacity in wide-spread tourist destinations of India and build

new revenue models. However, as these trains will not be owned by railway, the burden of asset

maintenance will not be imposed on railway. In implementing this at the initial stage IR will need

to find out new / underutilised routes where the tourist trains can be operated on a regular basis. The

heavily used rail corridors may not be able to prioritise these premier trains initially and thus the

purpose of introducing premier trains may not be achieved.

26
CONCLUSION

IR is a very vast and complex organisation. It is a government controlled legacy organisation with

14 lakh employees and strong unions. Bringing in any drastic change will be extremely difficult and

met with resistance. Hence, changes and reforms need to be done in a step-by-step continuous

method. The managers, staff and unions neds to be onboarded to the reform process. The necessity

and logic of reforms needs to be explained. Apart from this a large change management program

should be launched along with any major reform.

The reforms suggested are strategic changes and operational reengineering involving low

implementation costs. The time taken to implement the reforms will be anywhere between 6 months

to 1 year since many policy decisions needs to be taken and it involves change management and

staff training.

The prioritisation needs to be done based on ease of implementation and value added. The

procurement reforms are the low hanging fruits and needs to be targeted first. Secondly, we need to

increase asset utilisation. Thirdly, launching new channels of revenue by introducing new private

trains needs to be implemented.

The results of this reform after implementation can be measured by doing a spend analysis for

procurement and calculating the revenue earned from premium services that are privatised.

We believe the recommendations provided by us will act as a starting point to look into a few

actionable areas and through continuous improvement and a strong will to change, Indian Railway

can definitely turn into any other world class railway.

27
References
i
https://www.indiatoday.in/india/delhi/story/how-much-did-govt-pay-for-your-train-ride-see-info-printed-on-your-
tickets-15717-2016-06-22
ii
https://economictimes.indiatimes.com/industry/transportation/railways/railways-operating-ratio-of-98-44-pc-in-
2017-18-worst-in-last-10-years-cag/articleshow/72333478.cms?from=mdr
iii
https://qz.com/india/1336094/indian-railways-survives-by-ferrying-coal-not-passengers/
iv
https://economictimes.indiatimes.com/industry/transportation/railways/railways-1st-private-train-tejas-posts-rs-70-
lakh-profit-in-first-month-of-ops-sources/articleshow/71995096.cms
v
https://www.firstpost.com/india/40-of-indian-railways-tracks-used-beyond-capacity-overworked-tracks-make-train-
travel-unsafe-3365066.html
vi
https://mpra.ub.uni-muenchen.de/38579/1/WP_Procurement_on_Indian_Railways.pdf
vii
http://www.indianrailways.gov.in/railwayboard/uploads/codesmanual/StoreDept-I/StoreICh3.htm
viii
https://pib.gov.in/PressReleasePage.aspx?PRID=1540623

Image Credits
Cover page : https://www.railway-technology.com/news/kerala-cabinet-approves-9-3bn-semi-high-speed-railway-
project/
Image 1 : https://ner.indianrailways.gov.in/uploads/files/1427437752886-Ch-27.pdf
Image 2 : https://www.financialexpress.com/photos/business-gallery/1067266/mumbai-delhi-rajdhani-makeover-
operation-swarn-new-train-images-features-indian-railways/
Image 3 : https://www.the-maharajas.com/maharajas/maharajas-express-photo-gallery.html
Image 4: https://www.the-maharajas.com/maharajas/maharajas-express-photo-gallery.html
Figure 1 & 2 : https://twitter.com/technicontact

28
 Statistical Summary—Indian Railways
As on March 31 1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 As on March 31
Assets Assets
@Capital-at-charge (` in crore) 827.0 1,520.9 3,330.3 6,096.3 16,125.8 43,051.88 1,04,301.25 1,23,000.69 1,43,220.57 1,61,447.97 1,83,488.08 2,08,844.28 2,42,116.97 2,75,135.23 3,02,457.78 3,24,725.64 @Capital-at-charge (` in crore)
Total Investment (` in crore) 855.2 1,868.6 4,099.4 7,448.4 22,200.5 63,341.01 1,76,726.41 2,03,315.37 2,31,615.25 2,57,958.35 2,89,374.87 3,24,662.40 3,68,758.21 4,19,123.61 4,71,776.39 5,17,324.19 Total Investment (` in crore)
Route kilometres– Route kilometres–
Electrified 388 748 3,706 5,345 9,968 14,856 18,559 18,927 19,607 20,275 20,884 21,614 22,224 23,555 25,367 29,376 Electrified
Total 53,596 56,247 59,790 61,240 62,367 63,028 64,015 63,974 64,460 64,600 65,436 65,808 66,030 66,687 67,368 68,442 Total
Running Track kms– Running Track kms–
Electrified 937 1,752 7,447 10,474 18,954 27,937 35,471 35,811 36,007 38,669 38,524 39,661 41,038 43,357 48,239 52,926 Electrified
Total 59,315 63,602 71,669 75,860 78,607 81,865 86,937 87,087 87,114 89,801 89,236 89,919 90,803 92,081 93,902 94,735 Total
Number of stations 5,976 6,523 7,066 7,035 7,100 6,843 7,030 7,083 7,133 7,146 7,172 7,112 7,137 7,216 7,309* 7,318 Number of stations
Rolling Stock (in units)– Rolling Stock (in units)–
Locomotives: Locomotives:
Steam 8,120 10,312 9,387 7,469 2,915 54 43 42 43 43 43 43 43 39 39 39 Steam
Diesel 17 181 1,169 2,403 3,759 4,702 4,963 5,022 5,137 5,197 5,345 5,633 5,714 5,869 6,023 6,086 Diesel
Electric 72 131 602 1,036 1,743 2,810 3,586 3,825 4,033 4,309 4,568 4,823 5,016 5,214 5,399 5,639 Electric
Coaching stock– Coaching stock–
Passenger carriages 13,022 20,062 24,591 27,410 28,677 33,236 42,079 43,526 45,048 46,688 48,037 50,194 51,798 53,140 53,638* 54,059 Passenger carriages
EMU/DMU/DHMU 460 846 1,750 2,625 3,142 4,668 6,984 7,487 8,053 8,617 9,184 9,371 9,725 10,210 10,617* 11,246 EMU/DMU/DHMU
Rail Cars 87 116 85 68 24 22 38 37 34 34 35 35 35 31 30 21 Rail Cars
Other coaching vehicles 6,059 7,415 8,719 8,230 6,668 4,731 5,985 6,477 6,500 6,560 6,622 6,792 7,000 6,704 6,699* 6,499 Other coaching vehicles
Wagons 205,596 307,907 383,990 400,946 346,102 222,193 212,835 220,549 229,997 239,321 244,818 2,52,833 2,54,018 2,51,295 2,77,992* 2,79,308 Wagons
Personnel Personnel
No. of employees (in thousands) 914 1,157 1,374 1,572 1,652 1,545 1,386 1,362 1,332 1,306 1,307 1,334 1,326 1,330 1,309* 1,271 No. of employees (in thousands)
Wage Bill (` in crore) 113.8 205.2 459.9 1,316.7 5,166.3 18,841.4 39,993.35 51,719.42 51,776.57 58,638.28 67,004.42 75,893.05 84,759.69 93,001.24 1,18,501.74* 1,29,336.48 Wage Bill (` in crore)
Average wage per employee (in `) 1,263 1,799 3,398 8,435 31,864 121,281 2,90,784 3,82,472 3,94,112 4,56,357 5,27,295 5,85,620 6,51,376 7,15,726 9,08,263* 10,30,961 Average wage per employee (in `)
For the year For the year
Transportation output Transportation output
Train kms. (excl.deptt.) (in millions)– Train kms. (excl.deptt.) (in millions)–
Passenger and proportion of mixed 163.4 205.1 248.7 294.6 364.5 453.2 591.2 624.5 655.4 681.5 703.8 733.4 760.8 770.30 788.45* 769.27 Passenger and proportion of mixed
Goods and proportion of mixed 111.5 161.2 202.4 199.5 244.9 261.1 340.6 356.0 368.9 391.4 400.8 418.8 401.9 393.44 391.09* 396.48 Goods and proportion of mixed
Vehicle and wagon kms. (excl. deptt. and Vehicle and wagon kms. (excl. deptt. and
brake vans) (in millions)– brake vans) (in millions)–
Vehicle kms. 2,802 3,799 5,011 6,189 8,585 12,067 17,588 18,678 19,646 *20,816 22,309 23,542 24,812 25,327 26,332* 26,191 Vehicle kms.
Wagon kms. 4,370 7,507 10,999 12,165 19,230 27,654 16,134 17,063 17,749 19,140 18,912 19,546 18,930 18,708 18,403 18,461 Wagon kms.
NTKms./Wagon day (BG) (8-wheelers) 710 998 908 986 1,407 2,042 8,687 9,022 9,247 9,261 9,267 8,547 8,113 7,510 7,359 7,405 NTKms./Wagon day (BG) (8-wheelers)
Volume of traffic Volume of traffic
Passenger traffic– Passenger traffic–
No. of passengers originating (in millions) 1,284 1,594 2,431 3,613 3,858 4,833 6,920 7,246 7,651 8,224 8,421 8,397 8,224 8,107 8,116 8,286 No. of passengers originating (in millions)
Passenger kms. (in millions) 66,517 77,665 118,120 208,558 295,644 457,022 838,032 903,465 978,508 1,046,522 1,098,103 1,140,412 1,147,190 1,143,039 1,149,835 1,177,699 Passenger kms. (in millions)
Passenger earnings (` in crore) 98.2 131.6 295.5 827.5 3,144.7 10,483.2 21,866.48 23,414.44 25,705.64 28,246.43 31,322.84 36,532.25 42,189.61 44,283.26 46,280.46 48,643.14 Passenger earnings (` in crore)
Average lead (in kms.) 51.8 48.7 48.6 57.7 76.6 94.6 121.1 124.7 127.9 127.2 130.4 135.8 139.5 141.0 141.7 142.1 Average lead (in kms.)
Average rate per passenger-km. (in paise) 1.48 1.71 2.50 3.97 10.64 22.94 26.09 25.9 26.3 27.0 28.5 32.0 36.8 38.7 40.3 41.3 Average rate per passenger-km. (in paise)
Freight Traffic– Freight Traffic–
Tonnes originating (in millions): Tonnes originating (in millions):
Revenue earning traffic 73.2 119.8 167.9 195.9 318.4 473.5 833.39 887.79 921.73 969.05 1,008.09 1,051.64 1,095.26 1,101.51 1,106.15 1,159.55 Revenue earning traffic
Total traffic 93.0 156.2 196.5 220.0 341.4 504.2 836.61 892.22 926.43 975.16 1,014.15 1,058.81 1,101.09 1,108.62 1,110.95 1,162.64 Total traffic
Net tonne kms. (in millons): Net tonne kms. (in millons):
Revenue earning traffic 37,565 72,333 110,696 147,652 235,785 312,371 551,448 600,548 625,723 667,607 649,645 665,810 681,696 654,481 620,175 692,916 Revenue earning traffic
Total traffic 44,117 87,680 127,358 158,474 242,699 315,516 552,002 601,290 626,473 668,618 650,625 666,728 682,612 655,605 620,858 693,281 Total traffic
Earnings from freight carried excl. Earnings from freight carried excl.
wharfage & demurrage charges (` in cr) 139.3 280.5 600.7 1,550.9 8,247.0 23,045.41 51,749.34 56,911.51 60,687.05 67,743.62 83,478.83 91,570.85 1,03,100.15 1,06,940.55 1,02,027.82 1,13,523.53 wharfage & demurrage charges (` in cr)
Average lead-Total traffic (in kms.) 470 561 648 720 711 626 660 674 676 686 642 630 620 591 559 596 Average lead-Total traffic (in kms.)
Average rate per tonne km. (in paise) 3.16 3.87 5.43 10.50 35.00 73.78 93.84 94.77 96.99 101.47 128.50 137.53 151.24 163.40 164.51 163.83 Average rate per tonne km. (in paise)
Quantity of fuel consumed by locomotives Quantity of fuel consumed by locomotives
Coal (in thousand tonnes) 9,504 14,800 14,338 11,079 4,483 4 2 2 1 1 1 1 1 1 1 1 Coal (in thousand tonnes)
Diesel oil (in kilo-litres) N.A 62,771 569,025 1,067,477 1,712,816 1,999,262 2,260,754 2,400,467 25,16,044 27,05,084 26,99,616 2,789.259 2,856,185 2,874,950 27,92,963* 27,78,431 Diesel oil (in kilo-litres)
Electricity (Million KWH) N.A N.A. N.A. N.A. 4,249.26 7,932.65 12,242.00 13,087.31 13,571.53 13,449.98, 13,853.44 15,169.16 15,742.89 15,701.25 15,666.46 16,632.17 Electricity (Million KWH)
Stores purchases (` in crore) Stores purchases (` in crore)
Indigenous 63.2 158.1 331.1 1,233.3 4,749.2 10,381.8 26,682 26,726 28,017 28,458 33,780 40,258 41,351 41,802 41,854 48,495 Indigenous
Total 81.6 177.9 363.7 1,337.1 5,189.3 10,835.2 27,495 27,876 29,099 31,359 36,027 42,447 42,764 43,131 43,347 49,485 Total
Operating Revenue and Expenditure (` in cr) Operating Revenue and Expenditure (` in cr)
Gross revenue receipts 263.30 460.42 1,006.95 2,703.48 12,451.55 36,010.95 81,658.98 89,229.29 96,681.02 106,245.28 1,26,180.43 1,43,213.87 1,61,017.25 1,68,379.60 1,65,382.48 1,78,929.64 Gross revenue receipts
Working expenses incl. depreciation etc. Working expenses incl. depreciation, etc.
and miscellaneous expenses 215.74 372.55 862.22 2,575.99 11,337.77 34,939.72 72,484.53 83,685.20 90,334.88 99,463.68 1,12,565.24 1,31,464.80 1,44,178.76 1,49,151.13 1,60,469.48 1,77,264.03 and miscellaneous expenses
Net revenue receipts 47.56 87.87 144.73 127.49 1,113.78 1,071.23 9,174.45 5,544.09 6,346.14 6,781.60 13,615.19 11,749.07 16,838.49 19,228.48 4,913.00 1,665.61 Net revenue receipts
Percentage of net revenue receipts to the Percentage of net revenue receipts to the
Capital-at-charge 5.75 5.77 4.35 2.09 6.91 2.49 8.80 4.51 4.43 4.20 7.42 5.63 6.95 7.00 1.62 0.51 Capital-at-charge
Operating ratio (per cent 81.00 78.75 84.13 96.07 91.97 98.34 90.46 95.28 94.59 94.85 90.19 93.6 91.3 90.5 96.5 98.4 Operating ratio (per cent)
Dividend to General Revenues and payment to Dividend to General Revenues and payment to
States in lieu of tax on passenger fares 32.51 55.86 164.57 325.36 938.11 307.64 4,717.67 5,543.34 4,941.25 5,656.03 5,348.94 8,008.67 9,173.55 8,722.51 – – States in lieu of tax on passenger fares
Excess(+)/Shortfall(-) (+) 15.05 (+) 32.01 (-) 19.84 (-) 197.87 (+) 175.67 (+) 763.59 (+) 4,456.78 (+)0.75 (+) 1,404.89 (+)1,125.57 (+)8,266.25 (+)3,740.4 (+)7,664.94 (+)10,505.97 (+)4,913.00 (+)1,665.61 Excess(+)/Shortfall(-)
Output Cost (BG) Output Cost (BG)
Cost/Vehicle km (`) N.A N.A. 0.84 2.09 6.05 13.83 24.11 24.67 26.15 29.39 30.72 35.06 36.88 38.46 40.27* 44.55 Cost/Vehicle km (`)
Cost/Wagon km (`) N.A 0.33 0.57 1.24 3.20 6.52 17.38 22.49 23.35 23.96 25.79 30.85 35.30 35.46 34.95* 38.53 Cost/Wagon km (`)
@ Includes investment from Capital Fund. Investment during 2017-18 was `53,449.91 crore. N.A. Not Available * revised
As on March 31 1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
Assets
@Capital-at-charge (` in crore) 827 1,520.90 3,330.30 6,096.30 16,125.80 43,051.88 1,04,301.25 1,23,000.69 1,43,220.57 1,61,447.97 1,83,488.08 2,08,844.28 2,42,116.97 2,75,135.23 3,02,457.78 3,24,725.64
% increase 83.91% 118.97% 83.06% 164.52% 166.98% 142.27% 17.93% 16.44% 12.73% 13.65% 13.82% 15.93% 13.64% 9.93% 7.36%
Total Investment (` in crore) 855.2 1,868.60 4,099.40 7,448.40 22,200.50 63,341.01 1,76,726.41 2,03,315.37 2,31,615.25 2,57,958.35 2,89,374.87 3,24,662.40 3,68,758.21 4,19,123.61 4,71,776.39 5,17,324.19
Route kilometres–
Electrified 388 748 3,706 5,345 9,968 14,856 18,559 18,927 19,607 20,275 20,884 21,614 22,224 23,555 25,367 29,376
Total 53,596 56,247 59,790 61,240 62,367 63,028 64,015 63,974 64,460 64,600 65,436 65,808 66,030 66,687 67,368 68,442
Running Track kms–
Electrified 937 1,752 7,447 10,474 18,954 27,937 35,471 35,811 36,007 38,669 38,524 39,661 41,038 43,357 48,239 52,926
Total 59,315 63,602 71,669 75,860 78,607 81,865 86,937 87,087 87,114 89,801 89,236 89,919 90,803 92,081 93,902 94,735
Number of stations 5,976 6,523 7,066 7,035 7,100 6,843 7,030 7,083 7,133 7,146 7,172 7,112 7,137 7,216 7,309* 7,318
Rolling Stock (in units)–
Locomotives:
Steam 8,120 10,312 9,387 7,469 2,915 54 43 42 43 43 43 43 43 39 39 39
Diesel 17 181 1,169 2,403 3,759 4,702 4,963 5,022 5,137 5,197 5,345 5,633 5,714 5,869 6,023 6,086
Electric 72 131 602 1,036 1,743 2,810 3,586 3,825 4,033 4,309 4,568 4,823 5,016 5,214 5,399 5,639
Coaching stock–
Passenger carriages 13,022 20,062 24,591 27,410 28,677 33,236 42,079 43,526 45,048 46,688 48,037 50,194 51,798 53,140 53,638* 54,059
EMU/DMU/DHMU 460 846 1,750 2,625 3,142 4,668 6,984 7,487 8,053 8,617 9,184 9,371 9,725 10,210 10,617* 11,246
Rail Cars 87 116 85 68 24 22 38 37 34 34 35 35 35 31 30 21
Other coaching vehicles 6,059 7,415 8,719 8,230 6,668 4,731 5,985 6,477 6,500 6,560 6,622 6,792 7,000 6,704 6,699* 6,499
Wagons 2,05,596 3,07,907 3,83,990 4,00,946 3,46,102 2,22,193 2,12,835 2,20,549 2,29,997 2,39,321 2,44,818 2,52,833 2,54,018 2,51,295 2,77,992* 2,79,308
Personnel
No.ofemployees(inthousands) 914 1,157 1,374 1,572 1,652 1,545 1,386 1,362 1,332 1,306 1,307 1,334 1,326 1,330 1,309* 1,271
Wage Bill (` in crore) 113.8 205.2 459.9 1,316.70 5,166.30 18,841.40 39,993.35 51,719.42 51,776.57 58,638.28 67,004.42 75,893.05 84,759.69 93,001.24 1,18,501.74 1,29,336.48
Average wage per employee (in `) 1,263 1,799 3,398 8,435 31,864 1,21,281 2,90,784 3,82,472 3,94,112 4,56,357 5,27,295 5,85,620 6,51,376 7,15,726 9,08,263* 10,30,961
For the year
Transportation output
Trainkms.(excl.deptt.)(inmillions)–
Passenger and proportion of mixed 163.4 205.1 248.7 294.6 364.5 453.2 591.2 624.5 655.4 681.5 703.8 733.4 760.8 770.3 788.45* 769.27
Goods and proportion of mixed 111.5 161.2 202.4 199.5 244.9 261.1 340.6 356 368.9 391.4 400.8 418.8 401.9 393.44 391.09* 396.48
Vehicleandwagonkms.(excl.deptt.and brake
vans) (in millions)–
Vehicle kms. 2,802 3,799 5,011 6,189 8,585 12,067 17,588 18,678 19,646 20,816 22,309 23,542 24,812 25,327 26,332 26,191
Wagon kms. 4,370 7,507 10,999 12,165 19,230 27,654 16,134 17,063 17,749 19,140 18,912 19,546 18,930 18,708 18,403 18,461
NTKms./Wagonday(BG)(8-wheelers) 710 998 908 986 1,407 2,042 8,687 9,022 9,247 9,261 9,267 8,547 8,113 7,510 7,359 7,405
Volume of traffic
Passengertraffic–
No. of passengers originating (in millions) 1,284 1,594 2,431 3,613 3,858 4,833 6,920 7,246 7,651 8,224 8,421 8,397 8,224 8,107 8,116 8,286
Passenger kms. (in millions) 66,517 77,665 1,18,120 2,08,558 2,95,644 4,57,022 8,38,032 9,03,465 9,78,508 10,46,522 10,98,103 11,40,412 11,47,190 11,43,039 11,49,835 11,77,699
Passenger earnings (` in crore) 98.2 131.6 295.5 827.5 3,144.70 10,483.20 21,866.48 23,414.44 25,705.64 28,246.43 31,322.84 36,532.25 42,189.61 44,283.26 46,280.46 48,643.14
Averagelead(inkms.) 51.8 48.7 48.6 57.7 76.6 94.6 121.1 124.7 127.9 127.2 130.4 135.8 139.5 141 141.7 142.1
Average rate per passenger-km. (in paise) 1.48 1.71 2.5 3.97 10.64 22.94 26.09 25.9 26.3 27 28.5 32 36.8 38.7 40.3 41.3
% increase 15.54% 46.20% 58.80% 168.01% 115.60% 13.73% -0.73% 1.54% 2.66% 5.56% 12.28% 15.00% 5.16% 4.13% 2.48%
FreightTraffic–
Tonnes originating (in millions):
Revenue earning traffic 73.2 119.8 167.9 195.9 318.4 473.5 833.39 887.79 921.73 969.05 1,008.09 1,051.64 1,095.26 1,101.51 1,106.15 1,159.55
Totaltraffic 93 156.2 196.5 220 341.4 504.2 836.61 892.22 926.43 975.16 1,014.15 1,058.81 1,101.09 1,108.62 1,110.95 1,162.64
Net tonne kms. (in millons):
Revenueearningtraffic 37,565 72,333 1,10,696 1,47,652 2,35,785 3,12,371 5,51,448 6,00,548 6,25,723 6,67,607 6,49,645 6,65,810 6,81,696 6,54,481 6,20,175 6,92,916
Totaltraffic 44,117 87,680 1,27,358 1,58,474 2,42,699 3,15,516 5,52,002 6,01,290 6,26,473 6,68,618 6,50,625 6,66,728 6,82,612 6,55,605 6,20,858 6,93,281
139.3 280.5 600.7 1,550.90 8,247.00 23,045.41 51,749.34 56,911.51 60,687.05 67,743.62 83,478.83 91,570.85 1,03,100.15 1,06,940.55 1,02,027.82 1,13,523.53
Earningsfromfreightcarriedexcl.wharfage&demurr
agecharges(` in cr)
Averagelead-Totaltraffic(inkms.) 470 561 648 720 711 626 660 674 676 686 642 630 620 591 559 596
Average rate per tonne km. (in paise) 3.16 3.87 5.43 10.5 35 73.78 93.84 94.77 96.99 101.47 128.5 137.53 151.24 163.4 164.51 163.83
Quantity of fuel consumed by locomotives
Coal(inthousandtonnes) 9,504 14,800 14,338 11,079 4,483 4 2 2 1 1 1 1 1 1 1 1
Diesel oil (in kilo-litres) N.A 62,771 5,69,025 10,67,477 17,12,816 19,99,262 22,60,754 24,00,467 25,16,044 27,05,084 26,99,616 2,789.26 28,56,185 28,74,950 27,92,963* 27,78,431
Electricity (Million KWH) N.A N.A. N.A. N.A. 4,249.26 7,932.65 12,242.00 13,087.31 13,571.53 13,449.98, 13,853.44 15,169.16 15,742.89 15,701.25 15,666.46 16,632.17
As on March 31 1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
Stores purchases (` in crore)
Indigenous 63.2 158.1 331.1 1,233.30 4,749.20 10,381.80 26,682 26,726 28,017 28,458 33,780 40,258 41,351 41,802 41,854 48,495
Total 81.6 177.9 363.7 1,337.10 5,189.30 10,835.20 27,495 27,876 29,099 31,359 36,027 42,447 42,764 43,131 43,347 49,485
Operating Revenue and Expenditure (` in cr)

Gross revenue receipts 263.3 460.42 1,006.95 2,703.48 12,451.55 36,010.95 81,658.98 89,229.29 96,681.02 1,06,245.28 1,26,180.43 1,43,213.87 1,61,017.25 1,68,379.60 1,65,382.48 1,78,929.64
215.74 372.55 862.22 2,575.99 11,337.77 34,939.72 72,484.53 83,685.20 90,334.88 99,463.68 1,12,565.24 1,31,464.80 1,44,178.76 1,49,151.13 1,60,469.48 1,77,264.03
Workingexpensesincl.depreciationetc.andmiscell
aneousexpenses
Net revenue receipts 47.56 87.87 144.73 127.49 1,113.78 1,071.23 9,174.45 5,544.09 6,346.14 6,781.60 13,615.19 11,749.07 16,838.49 19,228.48 4,913.00 1,665.61
Percentage of net revenue receipts to theCapital- 5.75 5.77 4.35 2.09 6.91 2.49 8.8 4.51 4.43 4.2 7.42 5.63 6.95 7 1.62 0.51
at-charge
Operating ratio (per cent 81 78.75 84.13 96.07 91.97 98.34 90.46 95.28 94.59 94.85 90.19 93.6 91.3 90.5 96.5 98.4
DividendtoGeneralRevenuesandpaymenttoState 32.51 55.86 164.57 325.36 938.11 307.64 4,717.67 5,543.34 4,941.25 5,656.03 5,348.94 8,008.67 9,173.55 8,722.51 – –
s in lieu of tax on passenger fares
Excess(+)/Shortfall(-) 15.05 32.01 -19.84 -197.87 175.67 763.59 4,456.78 0.75 1,404.89 1,125.57 8,266.25 3,740.40 7,664.94 10,505.97 4,913.00 1,665.61
Output Cost (BG)
Cost/Vehicle km (`) N.A N.A. 0.84 2.09 6.05 13.83 24.11 24.67 26.15 29.39 30.72 35.06 36.88 38.46 40.27 44.55
Cost/Wagon km (`) N.A 0.33 0.57 1.24 3.2 6.52 17.38 22.49 23.35 23.96 25.79 30.85 35.3 35.46 34.95 38.53

Revenue/ Vehicle Km 0.35 0.35 0.59 1.34 3.66 8.69 12.43 12.54 13.08 13.57 14.04 15.52 17.00 17.48 17.58 18.57
% increase -1.16% 70.23% 126.73% 173.96% 137.17% 43.11% 0.83% 4.38% 3.71% 3.47% 10.52% 9.57% 2.83% 0.52% 5.67%
Profitability 5.72% 6.95% -1.97% -7.32% 1.41% 2.12% 5.46% 0.00% 1.45% 1.06% 6.55% 2.61% 4.76% 6.24% 2.97% 0.93%
Wage/ Revenue 48.70% 41.49% 52.32% 48.98% 57.96% 53.55% 55.19% 53.10% 52.99% 52.64% 55.23% 71.65% 72.28%

Store Purchase/ Revenue 24.00% 34.34% 32.88% 45.62% 38.14% 28.83% 32.67% 29.95% 28.98% 26.79% 26.77% 28.11% 25.68% 24.83% 25.31% 27.10%