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Rail Transport Market – India November 2014
Executive Summary Market
Freight Services Initiatives
Freight Marketing Schemes
Indian Railways (IR) generated INR ‘f’ bn in freight earning in 2013-14 and is expected to earn INR ‘k’ bn by 2018-19, growing at a CAGR of x1% Freight loading for IR stood at ‘p’ mn tonnes in 2013-14, and it is expected to grow and reach ‘q’ mn tonnes by 2018-19
Segregation of freight and passenger corridors Construction of dedicated freight corridors Improving transit speed Cost-efficiencies in bulk transport Meeting customers needs in service delivery, logistics services, transit time and tariff Special Freight Train Operator Scheme (SFTO) Wagon Investment Scheme Terminal Development Scheme (TDS) Wagon Leasing Scheme (WLS)
Private Freight Terminals (PFT) Liberalized Wagon Investment Scheme (LWIS) Automobile Freight Train Operator Scheme (AFTO)
Drivers Drivers & Challenges
Challenges
Shift Towards Rail by Private Players Increasing Exports and Imports Dynamic Tariff Policy Opportunity in Emerging Sector
Poor Quality of Service Increase in Rail Freight Rates Problems with Connectivity
Major Players
Competitive Landscape
Company 1
Company 2
Company 3
Company 4
Company 5
Company 6
RAIL TRANSPORT MARKET IN INDIA 2014.PPT
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•Macroeconomic Indicators •Introduction •Market Overview •Revenue Generation Zone-Wise Income Commodity-Wise Income
•Freight Rates •Freight Services Initiatives •Freight Marketing Schemes •Vision 2020 Operational Strategy
•Drivers and Challenges •Competitive Landscape •Future Requirements and Investments •Strategic Recommendations •Appendix RAIL TRANSPORT MARKET IN INDIA 2014.PPT
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Macroeconomic Indicators (1/3) GDP at Factor Cost: Quarterly INR tn 16 15
a4
14
a3 a2 a1
13
d3 d2 d1
c3 c2 c1
b3 b2 b1
12
Q1
Q2 2011-12
2012-13
2013-14
Q3 2014-15
Q4
Inflation Rate: Monthly % 2 1
p
r
s
q
0 -1
-t
-2
Jul 2013 - Aug 2013
Aug 2013 - Sep 2013
Sep 2013 - Oct 2013
Oct 2013 - Nov 2013
RAIL TRANSPORT MARKET IN INDIA 2014.PPT
Nov 2013 - Dec 2013 4
Freight earnings for Indian Railways is expected to increase in the coming years Rail Transport Market – Overview (1/2) • Indian Railways’ earnings from freight traffic increased from INR ‘a’ bn in 2009-10 to INR ‘f’ bn in 2013-14, at a CAGR of ‘y’% • Nine major commodity groups, namely, coal, iron and steel, iron ore (both for export and domestic steel plants), other raw materials for steel plants, cement, food grain, fertilizer, petroleum products and container traffic dominate the freight basket of IR Bulk freight such as coal, pig iron and finished steel, iron ore, cement, foodgrains, fertilizers and POL products accounted for ‘p’% of IR’s total earnings in 2013-14, while other commodities accounted for the remaining ‘q’%
Market Size & Growth – Freight Earnings INR bn 2,000
+x1% 1,500 1,000
a
b
c
2009-10
2010-11
2011-12
d
f
2012-13
2013-14
h
g
i
j
k
500 0
2014-15e
2015-16e
RAIL TRANSPORT MARKET IN INDIA 2014.PPT
2016-17e
2017-18e
2018-19e 5
Zone-Wise Income (1/16) Central Railway – Overview • Central Railway covers a large part of the State 1 and parts of State 2 and State 3 • It covers ‘l’ km of route network with ‘m’ km of track linking ‘n’ stations • It is divided into five divisions: Division 1, Division 2, Division 3, Division 4, and Division 5 • Major commodities carried include Commodity 1, Commodity 2, Commodity 3, Commodity 4, Commodity 5, and Commodity 6
Freight Loading Profile (By Volume)
Freight Revenue Earning Profile (By Value) INR bn
mn Tonnes c1
50 40 30 20 10 0
d1
a1
b1
60
a2
b2
c2
d2
p6%
p7%
p8%
p9%
50
p3%
p4%
p1% r1%q1% s1% 6% t1% u1% v1%
p2% q2% r2% s2%w2% t2% u2% v2%
r3% s3%w3% t3% u3% v3%
q4% r4% s4% w4% t4% u4% v4%
2010-11
2011-12
2012-13
2013-14
f1 p5% r5%q5% w5%s5% t5% u5% v5%
40 30 20 10 0
2014-15 Till Sep 2014
r6% t6% u6% v6% 2010-11
r7%
r9%
2011-12
2013-14
2012-13
Commodity 1
Commodity 3
Commodity 5
Commodity 7
Commodity 9
Commodity 2
Commodity 4
Commodity 6
Commodity 8
Others
RAIL TRANSPORT MARKET IN INDIA 2014.PPT
q9% s9%
r8% s7% w7% s8%w8% t7% t8% u7% u8% v7% v8%
t9% u9% v9%
f2 p10% q10%r10% 6% s10%t10% 5% u10% 2014-15 Till Sep 2014
6
Commodity-Wise Income (1/14) Coal – Overview
Coal Usage – Segments (2013-14)
• In 2013-14, IR carried ‘z’ mn tonnes of coal, earning INR ‘y’ bn in revenues • ‘m’% of the coal transported by IR was for use in thermal power stations, while ‘n’% was for steel plants • Zone J and Zone B are the major transporters of coal due concentration of coal around Region 1 and Region 2
Segment 1 s%
Segment 2 Segment 3
r% q%
Segment 4 p% Based on Volume
Freight Revenue Earnings (2013-14) Total Freight Revenue Earnings: INR ‘y’ mn INR mn j
120000 100000 80000 60000 40000 20000
b c d a
0 Zone A
Zone B
Zone C
Zone D
p
i f
g
h
Zone F
Zone G
Zone H
Zone I
k Zone J
RAIL TRANSPORT MARKET IN INDIA 2014.PPT
Zone K
l Zone L
m Zone M
n Zone N
Zone P
7
Freight Rates (1/6) Freight Rate Per Tonne (INR) Distance (kms)
Class LR3
Class LR2
Class LR1
Class 100
Class 110
Class 120
Class 130
1 – 125 126 – 150
151 – 175 176 – 200 201 – 225 226 – 250
251 – 275 276 – 300 301 – 325 326 – 350
351 – 375 376 – 400 401 – 425 426 – 450
451 – 475 RAIL TRANSPORT MARKET IN INDIA 2014.PPT
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Schemes for Freight Marketing (1/3) Scheme A
• xx
Scheme B
• xx
Scheme C
• xx
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Drivers & Challenges – Summary
Challenges Drivers
Poor Quality of Service
Shift Towards Rail by Private Players
Increase in Rail Freight Rates
Increasing Exports and Imports
Problems with Connectivity
Dynamic Tariff Policy Opportunity in Emerging Sector
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Market Competition – Porter’s Five Forces Analysis Threat of New Entrants
Impact
Impact
Impact Impact
Bargaining Power of Suppliers
Competitive Rivalry
Bargaining Power of Buyers
Impact
Threat of Substitutes
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Competitive Benchmarking (1/4) Key Ratios of Top 3 Companies – Operational Basis (FY 2014) (1/3) Operating Margin
Net Margin
%
100
c1 a1
50 0
b1 -a2
-b2
-c2
-50 Adani Agri Logistics Ltd.
Innovative B2B Logistics Solutions Pvt. Ltd.
KRIBHCO Infrastructure Ltd.
• Company 3 recorded operating margin of c1%, higher than that of Company 1 and Company 2 which recorded operating margin of a1% and -c2% respectively • Net margin was highest for Company 1 which recorded a net margin of b1%, followed by Company 2 and Company 3 which recorded net margin of -b2% and -c2% respectively
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Public: Domestic Company – Company 1 (1/4) Company Information
Offices and Centres – India
Corporate Address Tel No. Fax No. Website Year of Incorporation Ticker Symbol Stock Exchange
Head Office
Products and Services Category
Railroads
Products/Services
Key People Name
Designation
Person 1
Chairman and Managing Director
Person 2
Director
Person 3
Director
Person 4
Director
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Public: Domestic Company – Company 1 (2/4) Financial Snapshot Total Income
INR bn 60
a2
b2
Key Ratios Net Profit/Loss c2
INR bn d2
10
40 20
a1
b1
c1
d1
0
5
0 2011
2012
2013
2014
Financial Summary
• It reported total Income of INR XX mn in FY 20XX, registering an increase of X per cent over FY 20YY • It earned an operating margin of X.X per cent in FY 20XX an increase of X.X percentage points over FY 20YY • The company reported debt to equity ratio of X.XX in FY 20XX, an increase of X.X per cent over FY 20YY
Key Financial Performance Indicators Market Capitalization (INR mn) Total Enterprise Value (INR mn) EPS (INR) PE Ratio (Absolute)
y-o-y change (2014-13)
2014
2013
2012
2011
Profitability Ratios Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
Cost Ratios
• Company incurred a net loss of INR XX mn in FY 20XX, as compared to net profit of INR Y mn in FY 20YY
Indicators
Particulars
Value (dd/mm/yyyy)
Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
Liquidity Ratios Current Ratio Cash Ratio
Leverage Ratios Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover Improved
RAIL TRANSPORT MARKET IN INDIA 2014.PPT
Decline
14
Public: Domestic Company – Company 1 (3/4) Key Business Segments Segment 1
Key Geographic Segments Segment 2
Country A
100% 50% 0%
100% p1%
p2%
p3%
p4%
q1%
q2%
q3%
q4%
2011
2012
2013
2014
50%
100%
India is the only geographic segment in which the company has been operating for the last five years
0% 2014
Business Highlights Description
News
Overview Container Operations Partnerships
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Public: Domestic Company – Company 1 – SWOT Analysis (4/4)
S
W
O
T
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Private: Domestic Company – Company 2 (1/5) Company Information
Offices and Centres – India
Corporate Address
Tel No. Fax No. Website Year of Incorporation Head Office
Products and Services Category
Products/Services
Key People Integrated logistics solutions
Name
Designation
Person 1
Director
Person 2
Managing Director
Person 3
Director
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Private: Domestic Company – Company 2 (2/5) Shareholders of the Company Name
Ownership Structure No. of Shares held
Category 1
Shareholder 1 Shareholder 2 Shareholder 3 Shareholder 4 100.0%
Shareholder 5
Shareholder 6 Shareholder 7 Total
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Private: Domestic Company – Company 2 (3/5) Financial Snapshot Total Income
Key Ratios Net Profit/Loss
Particulars
INR mn 1,500
INR mn q1
p1
p2
p3
100 0
-q3
1,000 500
q4
-q2
-100 p4
0
-200 -300 -400
2011
2012
2013
2014
Financial Summary
2013
2012
2011
Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
Cost Ratios Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
Liquidity Ratios
• It reported total Income of INR XX mn in FY 20XX, registering an increase of X per cent over FY 20YY
Leverage Ratios
• The company reported debt to equity ratio of X.XX in FY 20XX, an increase of X.X per cent over FY 20YY
2014
Profitability Ratios
• Company earned a net profit of INR XX mn in FY 20XX, as compared to net profit of INR Y mn in FY 20YY
• It earned an operating margin of X.X per cent in FY 20XX an increase of X.X percentage points over FY 20YY
y-o-y change (2014-13)
Current Ratio Cash Ratio Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover Improved
RAIL TRANSPORT MARKET IN INDIA 2014.PPT
Decline
19
Private: Domestic Company – Company 2 (4/5) Business Highlights Description
News
Overview
Container Operations
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Private: Domestic Company – Company 2 – SWOT Analysis (5/5)
S
W
O
T
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Modernization Initiatives and Investment Requirements 15 focus areas have been identified in order to drive modernization in IR Core Assets Revenue Models
Projects Enablers Resources
Total Investment Requirements for Modernization INR bn
5,603
6,000 5,000
a
2,000
Segment 1 Segment 2
q%
c
4,000
3,000
y%
b
p%
r% d f
h
Segment 6 w%
j
Segment 4 Segment 5
g
i
1,000
Segment 3
v% u% t%
0
RAIL TRANSPORT MARKET IN INDIA 2014.PPT
s%
Segment 7 Segment 8 Segment 9
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