AN ASSIGNMENT REPORT ON

Analysis of Delhi metro in term of strategic implementation

Submitted To: Prof- Mahesh Soni

Submitted By:Sitesh Pratap Singh(47)

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WHY METRO TRAIN IN DELHI?

Delhi, the capital city of India, is one of the fastest growing cities in the world with a population of 13 million as reported in the Census of India Report for the year 2000. Until recently, it was perhaps the only city of its size in the world depending almost entirely on roads as the sole mode of mass transport. The total length of the road network in Delhi has increased from a mere 652 km in 1981 to 1122 km in 2001 and it is expected to grow to 1340 km in the year 2021. This increase in road length is not at par with the phenomenal growth in the number of vehicles on these roads in Delhi. The cumulative figure of registered private and government buses, the main means of public transport, is 41,872 in 1990 and it is expected to increase to 81,603 by the year 2011. The number of personal motor vehicles has increased from 5.4 lakhs in 1981 to 30 lakhs in 1998 and is projected to go up to 35 lakhs by 2011. With gradual horizontal expansion of the city, the average trip length of buses has gone up to 13 km and the increased congestion on roads has made the corresponding journey time of about one hour. Delhi has now become the fourth most polluted city in the world, with automobiles contributing more than two thirds of the total atmospheric pollution. In this context, the decision of the Government of India to develop a mass transport system for Delhi providing alternative modes of transport to the passengers was most appropriate.

DELHI METRO - Background

The concept of a mass rapid transit for Delhi first emerged from a traffic and travel characteristics study which was carried out in the city in 1969. Over the next several years, many official committees by a variety of government departments were commissioned to examine issues related to technology, route alignment and governmental jurisdiction. In 1984, the Delhi Development Authority and the Urban Arts Commission came up with a proposal for developing a multi-modal transport system, which would consist of constructing three underground mass rapid transit corridors as well augmenting the city's existing suburban railway and road transport networks. While extensive technical studies and the raising of finance for the project were in progress, the city expanded significantly resulting in a twofold rise in population and a fivefold rise in the number of vehicles between 1981 and 1998. Consequently, traffic congestion and pollution soared, as an increasing number of commuters took to private vehicles with the existing bus system unable to bear the load. An attempt at privatizing the bus transport system
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in 1992 merely compounded the problem, with inexperienced operators plying poorly maintained, noisy and polluting buses on lengthy routes, resulting in long waiting times, unreliable service, extreme overcrowding, unqualified drivers, speeding and reckless driving. To rectify the situation, the Government of India and the Government of Delhi jointly set up a company called the Delhi Metro Rail Corporation (DMRC) on March 5, 1995 with E. Sreedharan as the managing director. The Delhi Metro is a rapid transit system serving Delhi, Gurgaon and Noida in the National Capital Region of India. The network consists of six lines with a total length of 156 kilometers (97 mi) with 132 stations of which 31 are underground. It has a combination of elevated, at-grade and underground lines and uses both broad gauge and standard gauge rolling stock. Delhi Metro is being built and operated by the Delhi Metro Rail Corporation Limited (DMRC). As of April 2010, DMRC operates around 130 trains daily between 6:00 and 23:00 running with an interval of 3 to 4.5 minutes between trains. The trains have four coaches but there are plans to shift to six coach trains to increase capacity. Structure

Chairman - Shri Navin Kumar Managing Director - Dr. E. Sreedharan Total No. of Directors - 16 Nominee of Govt. of India 5

Mission

To cover the whole of Delhi with a Metro Network by the year 2021. Delhi Metro to be of world class standards in regard to safety, reliability, punctuality, comfort and customer satisfaction.

Metro to operate on sound commercial lines obviating the need for Government support.

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MASTER PLAN OF DELHI METROPhase I (1995 - 2005) Distance 65.10 km 1) Shahdara Barwala 2) Vishwa Vidhyalaya- Central Secretariat 3) Barakhamba Road - Dwarka Corridors 4) Barakhamba Road - Indraprastha 5) Extension into Dwarka Sub city Investment 53.02 km 1)Vishwa Vidhyalaya- Jahangirpuri 2) Central Secretariat- Qutab Minar 3) Shahdra- Dilshad Garden 4) Indraprastha- New Ashok Nagar 5) Yamuna Bank- Anand Vihar ISBT 6) Kirti Nagar- Mundka Rs 6406 crores (2004 prices) Phase III Distance 62.2 km 1) Rangpuri to Shahabad Mohammadpur Corridors 2) Barwala to Bawana 3) Jahangirpuri to Okhla Industrial Area Phase I 4) Shahbad Mohammadpur to Najafgarh Source- RITES (2005a) Rs 8026 crores (2004 prices) Phase IV 1) Jahangirpuri to Sagarpur West 2) Narela to Najafgarh 3) Andheria Mod to Gurgaon Phase II (2005 -2011)

The Delhi Metro (DM) planned in four phases is part of the MRTS. The work of Phase I and part of Phase II is now complete while that of phase III is in progress. The first phase of DM consists of 3 corridors divided in to eight sections with a total route of 65.1 kms, of which 13.17 kms has been planned as an underground corridor, 47.43 kms as elevated corridors and 4.5 kms as a grade rail corridor. The second phase covers 53.02 kilometers of which the underground portion, grade and elevated section are expected to be 8.93 kilometers, 1.85 kilometers and 42.24 kilometers respectively. The construction of the first phase of DM was spread over 10 years during 1995-96 to 2004-05 while that of the second phase, which started in 2005-2006 is expected to be complete by 2010-11.

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BUSINESS MODEL:DMRC is confident to cover operating and maintenance costs from day one. The DMRC expects an internal rate of return of over 2.3 per cent from the first day of operation. DMRC has been able to raise cheap loans. 56 per cent of the project cost (another 30 per cent has come in exchange for equity from the Delhi and Central governments) has come from a JBIC concessional loan at an interest of only 1.8 per cent payable in 30 years with a 10-year moratorium. In February 1997 JBIC agreed to extend 14,760 million-yen for Phase I of the Project, 6,732 million yen for Phase II in March 2001 and 28,659 million-yen for Phase III. This means there are no outgoings for the first 10 years. And the government is giving an interest free subordinate loan to cover the cost of land acquisition, which constitutes 8 per cent of the project cost.

The DMRC has calculated that 90 per cent of revenue (Rs.12 lakhs per day) will come from tickets and the remaining amount is expected to come from selling advertising space in the stations as well as property development. The DMRC had hired the National Council for Advanced Economic Research to work out a tariff plan. Insiders say the NCAER concluded that only 1.6 million to 1.7 million passengers would use the metro and fixed a tariff slab that started with Rs 5 for the first 2-km. It decided that the costliest ticket would be Rs 10 at 2001 prices. At these rates, the NCAER reckoned that the project would be able to meet its operations and maintenance costs as well as meets its depreciation costs. Delhi Metro Rail Corporation is developing commercial property within and around the stations. All stations will have ATMs, food outlets, coffee shops, newspaper vendors etc. In addition, it is proposed to lease the areas around the stations for development of supermarkets, commercial establishments and office buildings that would act as a supplemental revenue source. A contract has already been signed with McDonald's and negotiations are on with Nirulas to open fast food counters.

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MARKET READYNESS:As cities grow in size, the number of vehicular trips on road system goes up. This necessitates a pragmatic policy shift to discourage private modes and encourage public transport once the level of traffic along any travel corridor in one direction exceeds 20,000 persons per hour. National Capital Territory of Delhi (NCTD), with an area of 1486 km2 has a population of about 15 million. Buses are the sole mode of public transport in the NCTD, which are inadequate and overcrowded. For want of an efficient mass transport system, the number of motor vehicles is around 4 million. The result is extreme congestion on Delhi roads, ever slowing speeds, increase in road accidents (5 persons killed and 13 injured everyday), fuel wastage and environmental pollution with motorized vehicles alone contributing to about two thirds of the atmospheric pollution.

The mixed traffic in the city has resulted in road accidents, killing 5 persons and injuring 13 persons a day on an average. The situation is expected to deteriorate further in the years to come. It was in 1970 when the Central Road Research Institute (CRRI) after an exhaustive study on traffic and travel characteristics of Delhi recommended a Mass Rapid Transit Network for the city. Since then a number of studies on the subject have been carried out like the Metropolitan Transport Team (MTT) of the Indian Railways, Delhi Development Authority (DDA) and the Study Group of the Ministry of Railways. Feasibility Report on Integrated Multi Modal Mass Rapid Transport System of Delhi (IMMRTS) prepared by RITES (Rail India Technical & Economic Services) recommended the 3-component system comprising Rail Corridors, Metro Corridors and Dedicated Bus Way totaling 198.50 km to meet the projected traffic demand up to the year 2021.Implementation started when the Delhi Metro Rail Corporation Ltd. under the Companies Act, 1956 was set up in May 1995. Physical work on the project started on October 1, 1998.

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STRATEGIES USED IN DELHI METRO Funding Strategies:The capital cost of Phases I and II has been estimated to be 14,430 crore (US$3.22 billion) at 2004 prices. However, more recent estimates have placed the cost of construction at 200 crore (US$44.6 million) per kilometer. Thirty percent of the total investment for Phases I and II has been raised through equity capital with the Government of India (GoI) and Government of Delhi contributing equal shares, and approximately another 60 percent has been raised as either long-term or subordinate debt, through soft loans from the Japan Bank for International Cooperation. The rest of the investment is proposed to be recovered from internal revenues through operations and property development. The Metro also received 1,914.3 crore (US$426.9 million) as grant-in-aid from various agencies for the financial year ending March 2009. As of August 7, 2010, Delhi Metro has paid back an amount of 567.63 crore (US$126.58 million), which includes loan amount for Phase I and interest amounts for Phases I and II, to the Japan International Cooperation Agency (JICA).

Revenue and profits Strategies:In 2007, the Delhi Metro claimed to be one of only five metro systems in the world that operated at a profit without government subsidies. This was enabled by keeping maintenance costs to a minimum and harnessing additional revenue from advertisements and property development, apart from ticket sales. The Metro also generates revenue by leasing out its trains and stations for film shoots. Due to its increasing association with Delhi as an image of the city's everyday life, it has been a popular filming location for production houses, and several films and advertisements have been shot on board. Producers have to pay as much as 1 lakh (US$2,230) for every hour of filming, besides a security deposit and insurance. For the financial year ended March 2008, the Metro reported operating revenues of 305.27 crore (US$68.1 million) and a profit before tax of 19.98 crore (US$4.46 million), which rose to 723.77 crore (US$161.4million) and 90.4 (US$20.2 for the financial year ended March 2009. million) respectively

Partnership Strategy- Went for extensive experience

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Consulted with Pacific Consultants International from Japan for engineering matters, Korea's Rotem and Japan's Mitsubishi supplied the initial shipment of coaches; France's Alstom designed of the automatic train control system.

Pricing Strategy
DMRC has kept its fare reasonable with a minimum of Rs 6 and a maximum of Rs 24 and has compensated by increasing the revenue from other sources like advertisements, commercial exploitation of available space and consultancy services.

Relationship Strategy- Assembled the metro carriages in

Bangalore and rolled them on Indian Railways track straight to the New Delhi Metro to avoid the conflict with Indian Railways about the kind of track to be used.

Advertising Strategy
Use of Lenticular vision technology - the picture and the projections are modified to suit the audience speed helping them to view the advertisements clearly. Customer Oriented Approach 1) Implementation of Smart cards 2) Feeder Bus Service 3) Rent a cycle service in the University campus 4) Ductile pathways and ramps to guide visually challenged people 5) Pre Station alert Emergency Services

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ADVANTAGES OF DELHI METRO: Reduction in the number of vehicles on road

The growth rates of registered cars, two-wheelers, three wheelers, taxis and buses in Delhi are calculated as 9.8, 11, 8, 5 and 7 percent, respectively using data for these vehicles for the period 1971-2002. To calculate the number of vehicles going off the road due to the introduction of MRTS the following exercise is conducted. The registered number of vehicles for each category of these vehicles in Delhi for the period 2002-42 is estimated using the above mentioned growth rates.RITES (1995a) has reported that out of the total registered vehicles, only 28 percent of cars, 40 percent of two-wheelers and 65 percent of taxis and three wheelers are on the roads. It is also reported, depending upon the area and the density of population through which the Metro line passes, that only 30 percent of vehicles on road are influenced by Phase I of the Metro. It is further mentioned that 45 percent of cars, 70 percent of two-wheelers, and 25 percent of buses out of the influenced traffic are diverted to Metro. It is assumed that modes of transport like taxis and three wheelers are on the road by choice and hence they will not be diverted due to the Metro.

Savings in fuel consumption

There are savings in fuel consumption (inclusive of both CNG and petrol) due to the diversion of a part of the Delhi road traffic to Metro and reduced congestion to vehicles still operating on the roads. There is an inter-fuel substitution of petrol and CNG to electricity that could result in savings of foreign exchange and a reduction of air pollution. Fuel saved due to traffic diverted to the Metro is estimated given the estimates of diverted traffic described above and the annual run and fuel consumption norms of different vehicles. Table 12 provides information about the annual run and fuel consumption norms of different vehicles in Delhi. RITES (2005a) has estimated the total reduction in CNG due to the traffic of buses diverted to the Metro (Phases I & II) during the year 2011-12 as 39.65 million kg.

Reduction in air pollution

Fewer vehicles and the decongestion for the residual traffic on Delhi roads due to Metro
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could lead to reduced air pollution. The distance saved due to decongestion is estimated by multiplying the time saved with the speed of a vehicle in a decongested situation. An estimate of the pollution reduction by a vehicle in this context could be obtained by multiplying the distance saved by the relevant emission coefficient for different pollutants for each category of vehicle. The emission coefficients for different vehicles as per the

Euro II norms are given in Table 13. Estimates of reduction in distance traveled every day due to the decongestion effect are obtained for cars, two wheelers and buses as 9.18 kms, 7.65 kms and 69.72 kms, respectively.

Savings due to fewer accidents

The Road User Cost Study (CRRI, 1982) later updated by Loss Prevention Association of India provides estimates of the cost of various accidents on road. Components like gross loss of future output due to death/major injury, medical treatment expenses, legal expenses, administrative expenses on police, insurance companies and the intangible

psychosomatic cost of pain were included in the estimation. In the case of buses and other public vehicles, the loss due to lay off period and unproductive wages paid to the crew are also included.

Savings in vehicular operating costs due to the decongestion effect

Annual vehicle operating cost is substantially reduced due to the higher speed of vehicles and consequently lesser hours on road. It is estimated as the product of the residual traffic, time saved on average lead per vehicle annually and the vehicle operating cost per hour. According to RITES (2005b), the value of this component for the year 2011-12 is Rs. 15040 million.

Savings in Capital and Operating Cost of Diverted vehicles

Reduction in the capital and operating cost of vehicles due to the introduction of the MRTS is given by the product of the diverted traffic stream, the annual run and the VOC/V-km. The estimated value of this component for the year 2011-12 is Rs. 17677 million.

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WHY DMRC IS SUCCESS:The Delhi Metro Rail Corporation (DMRC) is one of the four metros in the world to have operating profits among 135 metros globally. DMRC has been making operating profits ever since it became operational. However, in 2005-06, it earned Rs 448.93 crore, where as its expenditure was Rs 102.41 crore, thus making an operational profit of Rs 346.52 crore," the case study adds. Investment in the Delhi Metro's phase I - ended November 2006 - was Rs 10,571 crore. The second phase, much larger in terms of size, will need much higher investments. The network currently is 65.1 km long and another 121 km will be added with Phase II. By some estimates, the project, when sanctioned eight years ago, was premised on expected passenger traffic of 21, 80,000 per day in the third year of operation from December 2002. Today only 5, 00,000 commuters use the metro per day.

The DMRC website states that estimated number of originating passengers per day in the year 2011 for Phase I and Phase II corridors will be 26,17,000. About 1,100 train trips operate every day with a punctuality of nearly 100 per cent, states the IIM case study. According to DMRC spokesperson Anuj Dayal the metro earns Rs 1 crore daily, of which Rs 65 lakh comes from passenger fare and the rest comes through associated activities like property development, advertisements and displays, consultancy and others. Following DMRC's success, it has been asked to prepare detailed project reports for metro rail transport systems, both in India as well as abroad.

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