Rail Neer demand goes up 50% this summer

Indian Railway Catering and Tourism Corporation’s (IRCTC) bottled water – Rail Neer – which accounts for almost a fifth of the total bottled water sold on trains, has seen a 50 per cent rise in sales as temperatures soar. The company is seeing sales of 36,000 cartons daily, against 20,000-22,000 cartons during winters. Each carton has 12 one-litre bottles.

IRCTC has four Rail Neer plants at Nangloi (Delhi), Danapur (near Patna), Palur (near Chennai) and Ambarnath (near Mumbai). “Another plant at Amethi, with a capacity to produce two lakh litres a day, is ready for commissioning,” AK Manocha, CMD, IRCTC, told BusinessLine .

Interestingly, despite high demand, all Rail Neer bottles, which are produced by Indian Railways’ own subsidiary, are not being entirely picked up, as some zones are resorting to sourcing water from other vendors.

For instance, the Ambarnath unit near Mumbai, which can supply water to Western and Central Railways, operates at 30 per cent capacity due to lack of demand.

This may be attributed to private firms supplying water to some railway zones at ₹1.20 discount against rates charged by IRCTC, which supplies at ₹10 a litre, which the Railways sell for ₹15 a litre.

However, Manocha attributes the marginally higher price at certain places to IRCTC being a government company, which has to be fully tax compliant. It pays an excise duty of ₹2.30 a bottle, and this brings in a huge price gap.

However, there are many zones, such as North Eastern Railway, North Central Railway, North Western Railway, which absorb a lot of capacity. Also, there is demand from Eastern and South Eastern Railway, which IRCTC partly supplies from Danapur. Similarly, Southern and South Western Railway also source Rail Neer.

Also, the pricing of Rail Neer is a function of the location of factories, which is mostly decided on political rather than commercial considerations and adds to transportation costs to the destination.

The company has a capacity to produce 14 crore one litre bottles a year, of which 10 crore were produced. IRCTC earned almost ₹100 crore from Rail Neer sales, registering 10 per cent growth.

More Rail Neer plants at Bilaspur, Nagpur and Parassala are likely to be commissioned by December 2015. Projects where land is yet to be made available include Ambala, Lalitpur, Ahmedabad, Nashik and Vijayawada.

COMMENT NOW