Final Ppt Of Ir

“From a black sheep to a blue eyed boy”

“The Indian Railways, which was declared to be heading towards bankruptcy, is today’s second largest profit making Public Sector Undertaking.”

TURNAROUND



“Process that takes a company from a situation of poor performance to a situation of good sustained performance.” (Brandes and Brege.)

JOURNEY OF THE PRESENTATION 1. 2. 3. 4. 5. 6.

10. 11. 12. 13.

WHY WE SELECTED INDIAN RAILWAYS INDIAN RAILWAYS AN OVERVIEW WHERE WAS INDIAN RAILWAYS IN 2000-01 FINANCIAL TURNAROUND OF INDIAN RAILWAYS MAGIC FORMULA STRATEGIES:A) FREIGHT B) PASSENGERS C) OTHERS ENVIRONMENTAL FACTORS INDIAN RAILWAYS - WHEELS ON CHANGES INDIAN RAILWAYS – SHORTCOMINGS LIMITATIONS

WHY TO STUDY INDIAN RAILWAY? 1. Indian Railway is the world’s largest employer and it had turned around, without any layoff in its workforce. 3. Strong forward and backward linkages with core sectors. 5. Public sector symbolizes inefficiency (!!!). BACK

INDIAN RAILWAY AN OVERVIEW OWNERSHIP :- MINISTRY OF RAILWAY, GOVT. OF INDIA Founded :- 26 April 1853 First railway track: Bombay to Thane, distance 34 kms.  Now Indian railways has 66000 kms network coverage

INDIAN RAILWAYS AN OVERVIEW Industry :- Railways and Locomotives SERVICES :- Rail transport, freight transport, services Revenue :- Rs. 107.66 billion Employees :- 1,406,430 (2007) Divisions :- 16 Railway Zones Website :www.indianrailways.gov.in

Key people Union Railway Minister Laloo Prasad Yadav Minister of State for Railways (V) R. Velu Minister of State for Railways (R): Naranbhai J. Rathwa Chairman, Railway Board K C Jena Officer on special duty Sudhir Kumar BACK

Where the Indian Railway was in 2000-2001? “Today Indian Railway is on the verge of a financial crisis... To put it bluntly, the ‘business as usual low growth’ will rapidly drive IR to fatal bankruptcy, and in sixteen years Government of India will be saddled with an additional financial liability of over Rs 61,000 crores… On a pure operating level, IR is in a terminal debt trap.” “It is very likely that Indian Railways would be a heavily-loss-making entity—in fact on the path toward bankruptcy, if it were not state owned.” The Expert-Group committee govt. of India July 2001

REASONS OF DECLINE 

OPERATION INEFFICIENCY



RIGID PRICING



INVESTMENT IN UN-REMUNERATION PROJECTS



POLITICAL PROFLIGACY



LACK OF ACCOUNTABILITY BACK

FROM LOSS TO PROFIT 14000

(Rs in crores)

12000

11449 10206

10000

Operating profit 8000

6193

6000 4000 2000 0 -2000

-198

175

1981

1991

1000 2002

1115

1091

2003

2004

2074

2005

2006

2007

2008

Return on Investment 20 18 16 14 12 10 8 6 4 2 0

19.0

18.0

15.4

7.5

8.0

8.7

4.9

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Surplus 12000

11449

(Rs. In crores)

10206

10000 8000

6193

6000 4000 2000 1000 0

1115

1091

2074

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Net Revenue 18000 16000

16022 (Rs. In cr.)

14453

14000 12000 10000

10143

8000 6000 4000

3130

4478

5273

2337

2000 0

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Operating Ratio 100 98.3

96

92.3

92.1

90

91 83.2

80

78.7

75.9

70 60 50 40 30 20 10 0

2001

2002

2003

2004

2005

2006

2007

2008

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MAGIC FORMULA - PROFFESIONALISM ENTITLEMENT

CONCEPTUAL LEVEL EMOTIONAL LEVEL

INNOVATION COMPASSION PARTNERSHIP

ER

W

PO

EM T

EN M

OPERATIONAL LEVEL

EN R

LEVERAGING SYNERGY OPTIMIZATION

IC HM EN T

FASTER HEAVIER LONGER

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SOURCES OF REVENUE OTHERS 4%

PASSENGER 27% FREIGHT (GOODS) 69%

FREIGHT BUSINESS OF INDIAN RAILWAYS 

CORE INFRASTRUCTURE INDUSTRY IN INDIA COMPRISES : CRUDE, REFINED PETROLEUM PRODUCTS, COAL, STEEL, CEMENT, FERTILIZERS.



IN INDIAN RAILWAY ABOUT 75% OF FREIGHT COMPRISES COAL, STEEL, CEMENT AND PETROLEUM PRODUCTS



GROWTH

05-06 5.8%

06-07 8.4%

50000

800

45000

700

40000

LOAD IN TONNES

Rs IN CRORES

FREIGHT REVENUE AND LOAD PERFORMANCE

35000 30000 25000 20000 15000 10000

600 500 400 300 200

5000

100

0

0

2001

2002

2003

2004

YEAR

2005

2006

2007

2000 2001 2002 2003 2004 2005 2006 2007

YEAR

TRACK UTILISATION Increase in Traffic Density 19.5

18.83

19

18.34

18.5 18

17.46

17.5

16.85

17

16.34

16.5 16 15.5

15.35

15.55

15 1999-00

200-01

2001-02

2002-03

2003-04

2004-05

2005-06

FREIGHT RATIONALIZATION THE STRATEGIES 

INCREASE VOLUMES- PILOT PROJECTS ON HIGHER AXLE LOADS



PRODUCT INNOVATION-IMPROVED DESIGN OF WAGONS



CUSTOM DESIGN - THE WAGONS BY END USERS



PRIORATIZATION - TIMELY DELIVERY OF THE GOODS



FREIGHT CHARGES STRATEGIES



MODERNIZATION - TRACK AND STRUCTURES.



REDUCED WAGON TURNAROUND



MARKET ORIENTED TARIFF AND SCHEME

INCREASE VOLUMES 

ALLOW TO INCREASE IN CARRYING CAPACITY (20.32T TO 22.82T)

OUTPUT  INCREASE IN REVENUE BY Rs. 6000 Cr.

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PRODUCT INNOVATION 1.

3.

5.

7.

INTRODUCE DOUBLE STACK CONTAINER ON DIESEL ROUTE INTRODUCE NEW DESIGNED WAGONS WITH HIGHER CARRYING CAPACITY LOWER TARE WEIGHT NEW REFRIGERATED PARCEL VANS WERE INTRODUCED back

PRIROTIZATION

3.

SEPARATE TRACKS FOR THE FREIGHT TRAINS

5.

LINE CLEARANCE ON THE STATIONS

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FREIGHT CHARGES STRATEGIES MAJOR STRATEGY 

DUAL PRICING POLICY

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MODERNIZATION 

RAILS



FITTINGS



BALLAST



JOINTS



SWITCHES



MAINTENANCE

CONVENTIONAL

MODERN

90R/52KG 72UTS

52/60KG 90UTS HH

RIGID 150/200mm FISH PLATED

ELASTIC 250/300mm WELDED WITH SEJs

STRAIGHT

CURVED/TWS

MANUAL

MECHANISED

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REDUCED WAGON TURNAROUND 

CASH INCENTIVES TO FREIGHT CUSTOMERS



FREIGHT OPERATION INFORMATION SYSTEM



ROUND THE CLOCK LOADING AND UNLOADING AT TERMINALS



CONNECTIVITY TO PORTS WAS INCREASED

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PASSENGER REVENUE AND VOLUME PERFORMANCE REVENUE

VOLUME PASSENGERS IN MILLIONS

Rs IN CRORE

25000 20000 15000 10000 5000 0

2001

2002

2003

2004

YEAR

2005

2006

2007

7000 6000 5000 4000 3000 2000 1000 0

2001 2002 2003 2004 2005 2006 2007

YEAR

PASSENGER STRATEGIES 

PRODUCT DIFFERENTIATION



COMPETITIVE PRICING



OUTSOURCING



DOWNSIZING



SAFETY MEASURES



HUMAN RESOURCES INITIATIVES



IMPROVE IN EFFICIENCY

PRODUCT DIFFERENTIATION 

INTRODUCE NEW TRAINS



INTRODUCE NEW PASSENGER COACHES



INTRODUCE E-TICKTING



NEW SIGNALLING TECHNOLOGY



SUBSTANTIAL INCREASE IN PASSENGER COMFORT AND AMMENITIES



UPGRADATION back

COMPETITIVE PRICING 

AVERAGE RATE PER PASSENGER PER KM REMAIN UNCHANGED ( Rs. 0.24 / Km)



REDUCE FARE FOR AC COACHES TO COMPETE WITH AVIATION

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OUTSOURCING



LEASE OUT PARCEL AND CATERING SERVICES



ADVERTISING SERVICES

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DOWNSIZING 

NUMBER OF EMPLOYEES WERE BROUGHT DOWN

[1.652 mn(1991) TO 1.41mn(2006)]

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SAFETY MEASURES 

SPECIAL RAILWAY SAFETY FUND OF Rs 170 bn.



REPLACE OVERAGED ASSETS



USE OF HIGH TECHNOLOGY IN SAFETY



STRENGTHEN RAILWAY PROTECTION FORCE



DECENTRALIZATION

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HUMAN RESOURCES INITIATIVES 

CHANGES IN ORGANIZATIONAL CULTURE



CREW FRIENDLY DRIVER’S CABINS AND BRAKE VANS WERE DESIGNED.



ESTABLISHMENT OF INTERNATIONAL RAILWAY STRATEGIC MANAGEMENT INSTITUTE.



PARTICIPATION OF RAILWAY EMPLOYEES IN MANAGEMENT (PREM)



SPORTS FACILITIES back

IMPROVE IN EFFICIENCY 

INTRODUCE IMPROVED ACCOUNTING TECHNIQUE



IMPROVED MANAGEMENT INFORMATION SYSTEM(MIS)



LONG-RANGE DECISION SUPPORT SYSTEM (LRDSS)



ENTERPRISE RESOURCE PLANNING(ERP) back

OTHER STRATEGIES 

ADVERTISEMENT INITIATIVE (with vinyl wrapping)



PALACE ON WHEELS



TAMPLE TRAIN

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ENVIRONMENTAL FACTORS 

CHANGE IN THE MACRO-ECONOMIC CONDITIONS



RISE IN DEMAND



CHANGE IN THE LEGAL POSITION



CHANGES IN THE ACCOUNTING PRACTICE



DECLINE IN THE FINANCIAL COST

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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 BACK

SHORTCOMINGS 

OVER UTILIZATION MAY BECOME A PROBLEM



COMMERCIALIZATION MAY BECOME A PROBLEM



TRAVELLING TIME IS STILL NOT IMPROVED



IMPROVEMENT IS STILL NEEDED BACK

LIMITATIONS 

SPHERE NEED TO BE INVESTIGATE FURTHER



COMPARISON WITH WORLD CLASS RAILWAY



FINANCIAL PROFIT ANALYSIS AND ACCOUNTING SHOULD BE SEE IN DETAIL FURTHER.

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MILES TO GO

INDIAN RAILWAY

PALACE ON WHEELS

Who will be the beneficiaries?

You & Me Thank You… …….

BIBLIOGRAPHY         



www.indianraiways.gov.in www.indianrail.gov.in [email protected] 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.

Vinyl wrapped train by Airtel 80 crores contract with airtel and kurkure for ad back

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