Market Research Report : Rail transport market in india 2014 - Sample

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Rail Transport Market – India

November 2014

2 RAIL TRANSPORT MARKET IN INDIA 2014.PPT

Executive Summary

Market

Drivers & Challenges

Competitive Landscape

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

Drivers Shift Towards Rail by Private Players

Increasing Exports and Imports

Dynamic Tariff Policy

Opportunity in Emerging Sector

Challenges Poor Quality of Service

Increase in Rail Freight Rates

Problems with Connectivity

Major Players

Company 1 Company 2 Company 3

Company 4 Company 5 Company 6

Freight Services Initiatives

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

Freight Marketing Schemes

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)

3

•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

4

Macroeconomic Indicators (1/3)

12

13

14

15

16

INR tn

Q4

d3

d2

d1

Q3

c3 c2 c1

Q2

b3

b2 b1

Q1

a4

a3 a2 a1

2014-15 2013-14 2012-13 2011-12

GDP at Factor Cost: Quarterly

Inflation Rate: Monthly

-2

-1

0

1

2

%

Nov 2013 - Dec 2013

-t

r

Oct 2013 - Nov 2013

s q

Sep 2013 - Oct 2013 Aug 2013 - Sep 2013 Jul 2013 - Aug 2013

p


5 RAIL TRANSPORT MARKET IN INDIA 2014.PPT

• 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’%

Rail Transport Market – Overview (1/2)

Market Size & Growth – Freight Earnings

Freight earnings for Indian Railways is expected to increase in the coming years

0

500

1,000

1,500

2,000

INR bn

+x1%

2018-19e

k

2017-18e

j

2016-17e

i

2015-16e

h

2014-15e

g

2013-14

f

2012-13

d

2011-12

c

2010-11

b

2009-10

a

6

20

0

10

30

50

40

q4%

2014-15 Till Sep 2014

f1

v5% u5% t5% w5% s5% r5%

w3% s3% r3%

p3%

2011-12

b1

v2%

u2% t2%

w2% s2% r2%

q2%

p2%

2010-11

a1

v1%

u1% t1% 6% s1% r1% q1%

p1%

q5% p5%

p4%

d1

v4%

u4%

t4% w4%

s4%

2013-14 2012-13

c1

t3%

INR bn

v3%

u3%

r4%

Commodity 7

Commodity 6

Commodity 5

Commodity 4

Commodity 3

Commodity 2

Commodity 1

Others

Commodity 9

Commodity 8

0

10

20

30

40

50

60

2014-15 Till Sep 2014

q9% f2

5% u10% t10%

6% s10% r10% q10% p10%

2013-14

d2

v9% u9%

t9% s9%

r9%

t8% w8%

2012-13

v8% u8%

s8% r8%

p8%

2011-12

v7%

u7% t7%

r7% s7%

p9%

mn Tonnes

p7%

2010-11

a2 c2

w7%

b2

u6% t6%

r6%

p6%

v6%

Zone-Wise Income (1/16)


• 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

Central Railway – Overview

Freight Revenue Earning Profile (By Value) Freight Loading Profile (By Volume)

7

Commodity-Wise Income (1/14)


Freight Revenue Earnings (2013-14)

0

20000

40000

60000

80000

100000

120000

INR mn

Zone P

p

Zone N

n

Zone M

m

Zone L

l

Zone K

k

Zone J

j

Zone I

i

Zone H

h

Zone G

g

Zone F

f

Zone D

d

Zone C

c

Zone B

b

Zone A

a

Total Freight Revenue Earnings: INR ‘y’ mn

s%

r%

q% p%

Segment 4

Segment 3

Segment 2

Segment 1

Coal – Overview

• 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

Coal Usage – Segments (2013-14)

Based on Volume

8

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

9

Scheme B

• xx

Schemes for Freight Marketing (1/3)

Scheme A

• xx


Scheme C

• xx

10

Drivers & Challenges – Summary

Drivers

Shift Towards Rail by Private Players

Increasing Exports and Imports

Dynamic Tariff Policy

Opportunity in Emerging Sector

Challenges

Poor Quality of Service

Increase in Rail Freight Rates

Problems with Connectivity


11

Competitive Rivalry

Bargaining Power of Suppliers

Bargaining Power of Buyers

Threat of Substitutes

Threat of New Entrants

Impact

Impact

Impact

Impact

Impact

Market Competition – Porter’s Five Forces Analysis


12

Key Ratios of Top 3 Companies – Operational Basis (FY 2014) (1/3)

-50

0

50

100

%

KRIBHCO Infrastructure Ltd.

-c2

c1

Innovative B2B Logistics Solutions Pvt. Ltd.

-b2 -a2

Adani Agri Logistics Ltd.

b1

a1

Net Margin Operating Margin

• 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

Competitive Benchmarking (1/4)


13

Public: Domestic Company – Company 1 (1/4)

Products and Services

Company Information Offices and Centres – India

Corporate Address

Tel No.

Fax No.

Website

Year of Incorporation

Ticker Symbol

Stock Exchange

Category Products/Services

Railroads

Head Office


Key People

Name Designation

Person 1 Chairman and Managing Director

Person 2 Director

Person 3 Director

Person 4 Director

14

Financial Snapshot Key Ratios

Financial Summary

• Company incurred a net loss of INR XX mn in FY 20XX, as compared to net profit of INR Y mn in FY 20YY

• 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

Indicators Value (dd/mm/yyyy)

Market Capitalization (INR mn)

Total Enterprise Value (INR mn)

EPS (INR)

PE Ratio (Absolute)

Particulars 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 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 Decline

Net Profit/Loss Total Income

5

10

40

0

60

20

0

INR bn INR bn

2014

d2

d1

2013

c2

c1

2012

b2

b1

2011

a2

a1



15

Key Business Segments Key Geographic Segments

Business Highlights

Description News

Overview

Container Operations

Partnerships

0%

50%

100%

q4%

p4%

2013 2014 2011

q2% q3%

p3%

q1%

p1%

2012

p2%

100%

50%

0%

100%

2014

Country A

India is the only geographic segment in which the company has been operating for the last

five years

Segment 2 Segment 1



16

T O

W S


Public: Domestic Company – Company 1 – SWOT Analysis (4/4)

17

Key People

Products and Services

Company Information Offices and Centres – India

Category Products/Services

Integrated logistics solutions

Name Designation

Person 1 Director

Person 2 Managing Director

Person 3 Director

Corporate Address

Tel No.

Fax No.

Website

Year of Incorporation

Head Office


Private: Domestic Company – Company 2 (1/5)

18

100.0%

Category 1

Shareholders of the Company Ownership Structure

Name No. of Shares held

Shareholder 1

Shareholder 2

Shareholder 3

Shareholder 4

Shareholder 5

Shareholder 6

Shareholder 7

Total



19

Financial Snapshot Key Ratios

Particulars 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 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 Decline

Financial Summary

• 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 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

Net Profit/Loss Total Income

-300

0

100

-100

-200

-400

1,500

1,000

500

0

INR mn INR mn

2014

q4

p4

2013

-q3

p3

2012

-q2

p2

2011

q1

p1



20

Business Highlights

Description News

Overview

Container Operations



21

T O

W S


Private: Domestic Company – Company 2 – SWOT Analysis (5/5)

22

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

u%

r%

t%

s%

q% p%

w%

y%

v%

Segment 5

Segment 2

Segment 3

Segment 4

Segment 6

Segment 1

Segment 8

Segment 7

Segment 9

5,000

3,000

0

2,000

4,000

1,000

6,000

h

j

g

5,603

i

f

INR bn

b c

d

a


Total Investment Requirements for Modernization

23

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