Southern Railway on off-track revenue-generating mode

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"The Railway Minister Mr Lalu Yadav, has asked us to think of innovative ways to improve our income... We've also been asked to look out actively for commercial advertising... "


Rasheeda Bhagat

With the Indian Railways' revenues on fast track, the Southern Railway, which is a "passenger-intensive" zone, has been asked to make a push for increasing income with such innovative ideas as leasing of land, commercial advertising, and budget hotels,

Mr Thomas Varghese, General Manager, Southern Railway,

told Business Line


Excerpts from the interview:

Is Southern Railway profitable? The Indian Railways made a profit of Rs 11,000 crore last year...

Southern Railway (SR) is a more a passenger-oriented railway, unlike the other zones that carry more freight. SR is unique because we carry 1-1.1 million passengers every day, which is 10 per cent of the traffic on Indian Railways. Normally, the passenger traffic growth rate is 8 per cent, but this year it has been far higher at 12 per cent. This despite the threat from the so-called low-cost airlines! We've not had passengers running away to these airlines.

But profit comes from freight and we are more a passenger-intensive facility. Last year the Indian Railways moved over 700 million tonnes of freight, but SR doesn't have any colliery, steel plant, etc. Of the 700 million tonnes, 400 million tonnes is coal, iron, manganese ore, etc.

If you take the operating ratio, for every Rs 100 earned last year, we spent Rs 117. So we are on a negative there, though we've improved; earlier it was Rs 120. Our basic staff cost is 56 per cent; in 1970 it was Rs 100 for a Class IV employee almost 85 per cent of our employees are the bottom layer today it is Rs 6,000, up 60 times.

Compare passenger fares: In that period, for instance, the Chennai-Kochi sleeper class ticket went up from Rs 60 to Rs 300, a five-fold increase. But the staff cost went up 60 times.

Similarly diesel that cost 30 paise per litre in 1970 has gone up to Rs 35, an over 100-fold increase. But we're thinking of a number of ways to increase our revenue.

Such as...

Wherever we have surplus land, we're going in for budget hotels.

In which places?

We've identified Chennai, Madurai, Thiruvananthapuram, Coimbatore, Rameswaram and are thinking of Mangalore and Kozhikode. At these hotels passengers will get good AC rooms for Rs 700-800 per night, with such facilities as an Internet kiosk and a convention centre. At Chennai Central we're looking at the area next to the parcel office, by creating an elevation above the circulating area of passengers. At Chennai's Egmore terminal we're planning a mid-segment hotel with 200-300 rooms. The IRCTC will take up this venture, give franchise to hotel companies, with a certain percentage coming to SR.

At what stage is this?

At a nascent stage and the first hotel will come in two years, perhaps at Madurai, near the main station.

How much will each hotel cost?

We haven't worked it out yet, but it won't be less than Rs 30-40 crore. The Ministry has also told us to increase food plazas and go in for shopping malls. SR has a lot of surplus land, particularly in Perambur and Villivakkam in Chennai and we've been told to improve our finances by leasing out land.

We've also been asked to look out actively for commercial advertising. The Railway Minister Mr Lalu Yadav, has asked us to think of innovative ways to improve our income. I've asked our officers to directly contact corporates and get quotations for the sole rights of a railway station, or a complete division. Chennai's Central and Egmore stations have a huge potential, as there is vacant land available. Also, the MRTS offers scope for advertising.

What kind of income do you expect to get from this?

I'd think that SR can earn Rs 100 crore from commercial advertising, though it's not a very big amount compared to our earnings. Last year, SR earned Rs 1,332 crore from passengers and Rs 1,318 crore from freight. Normally the reverse happens; freight fetches more, up to 65 per cent of the revenues, and passengers the rest. While our gross earnings have gone up by 10 per cent, we are conscious that passengers require better amenities...

Look at the state of the Central station, which is the premier station of SR...

Last year we allocated Rs 17 crore to develop passenger amenities, and that includes improvement of stations, platform covering, better catering stalls...

But why is Central station so dowdy? Even the Vizag station is so much better...

You have to realise that Central station handles roughly 1 lakh passengers every day; we are now bursting at the seams...

So what are you doing about it?

We're now proposing a new coaching terminal, which means more passenger area to handle passenger trains. We're trying to acquire more land on the Moore Market complex side, and perhaps extend to the Salt Cotaurs area. With that we hope to get several more platforms. That will be a major improvement. Simultaneously we want to develop Tambaram as another possible new coaching hub so some of the trains could start there and distribute the crowd. This year, for passenger amenities, the allotment bas gone up from Rs 17 crore to Rs 27 crore, a big jump. And the Railway Minister has asked us to go ahead and spend money... even up to Rs 40 crore.

Which stations will benefit?

We've identified five stations in each division Chennai, Tiruchi, Madurai, Palghat and Thiruvanathapuram for upgradation through general landscaping and other beautification measures. We also want to improve the catering and passenger waiting area, retiring rooms, etc. We're also going to put up a display system particularly in AC coaches. At nights passengers have no idea which station the train is approaching, so a lot of crowding takes place at the doorway. Now you'll have visual display inside the coach, telling passenger of the station the train is approaching. This has been introduced in a number of trains already, particularly in Kerala, where there are frequent stops.

But the fact remains that we're still in an era of shortages. Do you think in our lifetime we'll be able to go to the station and board a train without prior reservation?

A major problem of Indian Railways is line capacity, and a shortage of coaches. The ICF manufactures about 1,100 coaches, and the Coach Factory Kapurthala another 1,100. But the demand for new trains and the replacement of the old coaches eats up the spare supply. So we have a line capacity problem; we don't have a separate track for goods, long-distance and suburban trains. There is an urgent need to improve our line capacity, and SR is making a push for this. This was a predominantly meter-gauge railway south of Chennai, but now we're going in for broad-gauge conversion in a big way, which automatically increases coach capacity.

How is the online reservation system doing?

It is picking up; the Ministry has told us to increase it to phase-out the crowds at the booking counters. But the problem is that since reservations are done on credit cards, refunds take time and people don't like that.

Why can we not have faster trains?

It is a problem of inputs and socio-economic factors. What people need today are more, and not super-fast, trains, which need a separate track and exclusive logistic support. The super-fast trains of Japan run on elevated tracks without level crossings or stops. In India people want stops; I joke that in Kerala they want the train to stop at every coconut tree. High-speed trains run at 200 km without stops, only then can you get speed acceleration.

Next is the cost factor. The Indian Railways is the cheapest in the world; a 500-km journey in II Tier AC costs Rs 800, about $14-15; in Europe it would cost $120-130. Our corporate plan of 1985-2000 spoke of running trains at 180 km but this requires a separate speed corridor. We're now planning a golden quadrilateral for freight trains That would relieve our main tracks and we may be able to speed up passenger trains.

(This article was published in the Business Line print edition dated September 11, 2006)
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