The Hindu Business Line : PwC to advise Rlys on factories

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The Railways has announced plans to set up four new factories to meet its rolling stock requirements.
Eyeing these plans, players in the segment like Alstom, Bombardier, GE and Siemens have approached the Ministry.

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New Delhi Feb. 16 Indian Railways has selected PricewaterhouseCoopers (PwC) to advise it on the process it should prefer for setting up its proposed locomotive, coach and wheel manufacturing factories.

While the Railways has stated on several occasions that it would like to set up these rolling stock units on public private partnership basis, the advisors are free to suggest whether it makes more sense for Railways to set up a particular factory as a departmental production unit.

"PwC is required to submit an inception report within a fortnight. And the final advisory report has to be submitted within another two-and-a-half months," senior officials told Business Line.

NEW FACTORIES

The Railways has announced plans to set up four new factories to meet its rolling stock requirements.

They include two factories to manufacture locomotives (one for manufacturing 150 diesel locomotives per year and another to manufacture 120 electric locomotives per year) apart from one factory to churn out 1,100 passenger coaches per year and another to manufacture 1,00,000 wheel discs per year.

SPV proposal

It is also considering a proposal to have a special purpose vehicle, which would be holding the Railways' share of equity in all these units.

Eyeing these plans, major players in the segment like Alstom, Bombardier, GE and Siemens have approached the Ministry and are showcasing similar joint ventures that they have undertaken in other countries. Russian firm Transmashholding is also trying to enter the Indian market.

"Alstom has won a 375 million order to supply 180 freight locomotives to China, primarily to move coal. We have had partnerships and technology transfers with locomotive works and China Railway Electrification Bureau," Mr Marc Chatelard, Senior Vice-President, Alstom Transport, told Business Line in Singapore recently.

"Bombardier's supply and technology transfer to Chittaranjan Locomotive Works for WAP5 and WAG9 locomotives have resulted in a 70 per cent reduction in price between 1993 and 2003," said Mr Rajeev Jyoti, Managing Director, Bombardier.

EXPECTED DEMAND

The need to have these additional units is driven by the gap between demand for rolling stock and lower production capacity in the country.

According to demand projections of the Railways, during the XIPlan period (2007-08 to 2011-12), it would require 62,000 wagons, 1,800 diesel locomotives, and 1,800 electric locomotives.

Additional capacity

Given the current production capacity, it would need additional capacity of 200 electric locos and 200 diesel locos each year.

On behalf of the Railway Ministry, RITES had invited competitive bids from consulting firms to provide advisory services on "development strategy and bid process management for selection of developers for new factories".

Apart from the above new factories, the Indian Railways plans to increase the production capacities of its coach manufacturing units at Kapurthala and Chennai.

It is also planning to increase production capacities of Diesel Locomotive Works and Chittaranjan Locomotive Works.