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PROFILE. Board of Directors  Dr. Rajkumar Khatri IAS Secretary to GoK – IDD Chairman  Mr.K.Jothiramalingam IAS Principal Secretary to GoK – Director.

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Presentation on theme: "PROFILE. Board of Directors  Dr. Rajkumar Khatri IAS Secretary to GoK – IDD Chairman  Mr.K.Jothiramalingam IAS Principal Secretary to GoK – Director."— Presentation transcript:

1 PROFILE

2 Board of Directors  Dr. Rajkumar Khatri IAS Secretary to GoK – IDD Chairman  Mr.K.Jothiramalingam IAS Principal Secretary to GoK – Director Commerce & Industries  IAS Special Secretary to GoK – IDD Director  Mr. N. K. Shukla IRTS Executive Director Director Perspective Planning Railway Board  Mr. N C Sinha IRTS Chief Operations Manager, S W Rly Director  Mr. B. B. Verma IRAS Divisional Rly Manager, Mysore Director  Mr. Tamilvanan IAS Chairman New Mangalore Port Trust Director  Mr. A. B. Shenoy CFO & Company Secretary, Director Infrastructure Dev Co. Karnataka Ltd  Mr. Ashwin Paul Head Commercial, MEL Director  From Railways CEO 1

3 Hassan Mangalore Rail Development Company Limited was incorporated in July 2003 under the Companies Act of 1956 as a joint venture of the Government of Karnataka & the Ministry of Railways. Objective: HMRDC to take over the gauge conversion of the Hassan Mangalore railway line and ensure its early completion through appropriate and timely funding. The company was to raise the required resources through debt and equity. The Beginning 2

4 Project Implementation The gauge conversion of the line has been completed under a set of agreements signed by the Company with the Ministry of Railways and the South Western Railway. Concession Agreement Construction Agreement Operations and Maintenance Agreement The line was commissioned for goods traffic on 5 th May 2006 and for passenger services on 8 th December Company is enjoying Tax Holiday for 10 years from COD & Company is paying MAT at 18.5% as against 33% IT. Company’s Credit rating is LA (Adequate credit quality) given by ICRA 3

5 Framework of operation of SPV Key features of the framework are: Cost of construction financed by HMRDC Cost of construction financed by HMRDC Line capacity to be used primarily for goods services Line capacity to be used primarily for goods services Assured passenger services to the extent operated on the meter gauge. Assured passenger services to the extent operated on the meter gauge. Running & operating costs of passenger services to be borne by Railways Running & operating costs of passenger services to be borne by Railways Cost of freight operations and maintenance of the line to be met by HMRDC. Cost of freight operations and maintenance of the line to be met by HMRDC. Revenues to Company to accrue from freight only Revenues to Company to accrue from freight only Revenues from passenger trains to accrue to IR Revenues from passenger trains to accrue to IR 4

6 Concession Agreement Under the Concession Agreement, the Ministry of Railways has granted HMRDC a concession for 32 years during which the company would convert the MG line between Hassan and Mangalore into a BG line and thereafter undertake its operation and maintenance during the concession period. Under the Concession Agreement, the Ministry of Railways has granted HMRDC a concession for 32 years during which the company would convert the MG line between Hassan and Mangalore into a BG line and thereafter undertake its operation and maintenance during the concession period. To enable construction of the new line, the existing assets including land, station buildings, formation, bridges etc. (assets forming part of the rail network and necessary for gauge conversion) have been leased to the company. 5

7 O & M Agreement Under the Operations and Maintenance Agreement HMRDC has contracted with SWR for operation of goods train services on the line and its maintenance till the termination of the concession period. Under the Operations and Maintenance Agreement HMRDC has contracted with SWR for operation of goods train services on the line and its maintenance till the termination of the concession period. Construction Agreement Under the Construction Agreement signed between HMRDC and South Western Railway (SWR) the later has been appointed as the Engineering, Procurement and Construction (EPC) Agency for the line and entrusted with the construction work. Under the Construction Agreement signed between HMRDC and South Western Railway (SWR) the later has been appointed as the Engineering, Procurement and Construction (EPC) Agency for the line and entrusted with the construction work. 6

8 Project Financing Initial Project CostRs. 293 cr Construction Cost Rs. 275 cr RMV Equipment Rs. 4 cr Pre-operative exp & IDC Rs. 14 cr Revised Project CostRs. 366 cr Construction Cost Rs. 348 cr RMV Equipment Rs. 4 cr Pre-operative exp & IDC Rs. 14 cr Funding through Subordinate debt from IR Rs. 141 cr EquityRs. 112 cr Term loans from banksRs. 90 cr Revised construction cost is under examination for mutual acceptance. Revised construction cost is under examination for mutual acceptance. 7

9 Construction of the line Detailed estimate sanctioned by Rly Board in Dec 2002 forms the basis of the construction agreement. The 183 Km long MG line from Hassan to Kankanadi has been converted to BG. Four new crossing stations were planned of which three have been commissioned so far. Arebetta station is yet to be opened. The cost of construction as per the Construction Agreement is Rs Cr. In addition, HMRDC has also paid for rail mounted vehicles to be used for inspection & maintenance of the line. The completion cost of the project is presently being worked out. It is expected to be around Rs. 340 cr. 8

10 Operations & Maintenance of the line The Operations and Maintenance of the line from Commercial Operations Date (COD) i.e. 5 th May 2006 is being done by SWR under the terms of the O & M agreement. Freight due to HMRDC from traffic carried on the line is calculated as per the inter zonal railway rules of apportionment. O & M ( Fixed & Variable) costs payable by HMRDC are calculated on the basis of the formula prescribed in the O & M agreement. Fixed costs covering cost of manpower, cost of consumables etc. are payable irrespective of the traffic moved. Variable costs including fuel, cost of crew, loco and wagon usage etc. vary according to the tonnage carried on the line. Apportioned freight minus the O&M costs constitutes HMRDC’s share of revenue. 9

11 Traffic Forecast The Hassan Mangalore line is expected to carry up to six million tonnes of freight per annum that includes Towards Mangalore Area: Export iron ore to Port from Chitradurga – Tumkur and Hospet –Bellary sectors Iron ore for KIOCL pellet plant at Mangalore Cement, foodgrain and other general goods to Mangalore goods shed From Mangalore Area: Coal Fertilizer imports Limestone, Iron Ore Pellet Fertilizer from MCF, Mangalore. POL and LPG from Mangalore Refinery, Thokkur. 10

12 Capital Structure Authorized share capital Rs. 125 Cr. (Equity share of Rs.10/- each) Paid up capital Rs. 112 Cr. The shareholding pattern is as follows  Government of Karnataka Rs.28 Cr  Mysore Sales International Ltd.Rs. 7 Cr40%  Vishveshwarya Ind Trade CenterRs. 10 Cr  Ministry of Railways Rs. 45 Cr40%  New Mangalore Port Trust Rs. 10 Cr 9%  Mineral Enterprises Limited Rs. 10 Cr 9%  K-RIDE Rs. 2 Cr 2% 11

13 Salient Physical Features of Hassan - Mangalore Section Sl.No. Section Elevation (MSL)DistanceGradient 1Hassan – 900m 42 kms. 1 in 100 plateau 2 Sakleshpur – 967m 3 55 kms. 1 in 50 Ghat 4Subramanya Rd. – 113m 5 86 kms.1 in 100 plain 6Mangalore – 9.5m 12

14 A. Rails Hassan to Mangalore – 183 Kms Main line track class I - 52 Kg rails Loop line class II - 52 Kg rails B. Sleepers Hassan to Sakleshpur60 Kg PSC sleepers - M+ 4 density Sakleshpur to Mangalore 60 Kg PSC sleepers - M+ 7 density Loop lines52 Kg PSC sleepers - M+ 4 density C. Fittings Class - I fittings - ERC Clips, GR pads, metal liners in mid section and GFN liners in yards D. Ballast mm cushion. 13

15 3. Bridges - Total Major Bridges – 91 Minor Bridges – 549 Road over bridges – 16 Road under bridges – 12 FOB – 2 4. Tunnels - Total Nos. 57 Total length kms. Longest tunnel mts No Level Crossings - Total - 65 Manned – 31 Unmanned Curves - Total – Nos to Nos 7. Catch Sidings Donigal station – Shrivagilu 8. Slip Sidings Donigal, Yedakumeri, Shrivagulu 14

16 Details of Block Stations and Halts in Hassan-Mangalore S.NoName of StationJurisdictionLocation at (kms)Inter Dist 1Hassan (HAS)S W R Alur (ALUR) HMRDCHMRDC Balupete (BLLT) Sakleshpur (SKLR) Donigal (DOGL) Kadagaravalli (KVGL) Yedakumeri (YDK) Arrebetta (TO BE COMMISSIONED) Shrivagulu (SVGL) Subramanya Road (SBHR) Bajakare (BAJE) – Halt Kodimbala (KDBA) – Halt Yedamangala (YDM) Kaniuri (KNYR) – Halt Narimogaru (NRJ) Kabakaputtur (KBPR) Neralekatte (NEHL) Kalladaka (KLKD) – Halt Bantwal (BNTL) Faringapeta (FRG) – Halt Padil (PDL) S R Mangalore Jn

17 Line Capacity  The Maximum number of Trains that can be operated in a Day in a section is known as Line Capacity, which is decided by the running time of the Critical Block Section by a slowest moving train.  The Critical Block Section of HMRDC Line is DOGL-SVGL in the ghat section of SKLR-SBHR section, 120 minutes is the running time of the critical block section and line capacity is 12 trains per day including Passenger Trains.  Some amount of time to be provided for the track and signal maintenance works, which again reduces the Line Capacity to that extent which is equivalent to 3 Hrs/ 2 trains.  To increase the line capacity the running time of critical block section has to be reduced for which the provision of CATCH Sidings (safety device) to be under taken at all the stations on the ghat section. As a first step, it is proposed to construct a CATCH YDK at a cost of 12.5 Cr. Sanction from CRS, South Zone awaited.  To improve the line capacity maximum permissible speed to be increased to 45 KMPH in the UP direction without compromising the safety since the track strength has been upgraded over the period. 16

18 Operational & Financial Performance 4/27/ Particulars Carried Tonnage (MT) Earnings O&M costs Income from Operations Deferred OH Rs. - Crores

19 Commodity wise Earnings 4/27/ Commodity Carr Tonn (MT) Reve% to tot Rev Carr Tonn (MT) Reve% to tot Rev Carr Tonn (MT) Reve% to tot Rev Carr Tonn (MT) Reve% to tot Rev Iron Ore – Export Domestic Pellets Limestone Cement Coal Food Grains/ Fertilizers LPG/POL Gypsum/ Others Rs. - Crores

20 Wagon wise Earnings/Train Load /27/ Type of Wagon/ Commodity Total No of Trains Total Load (Million T) Total Revenue (Cr) Load per Train (Tonnes) Revenue per Train (In Lakhs) BOXN – Iron Ore Gypsum Limestone Coal BCN – Cement * Fert/ Food Gr BTPG - LPG BTPN - POL BKI/ BRH – Auto/ Cont

21 Components of Fixed & Variable Costs Fixed CostsVariable Costs Man PowerCost of Fuel Other than Man powerCost of Crew Direct Supervision ChargesCost of Loco & Wagon Usage Indirect Over HeadsCost of Running Repairs of Wagons Misc.Documentation Compensation Claim Indirect Over Heads 20

22 Review of O&M Costs 4/27/ Particulars Carried Tonnage (MT) Fixed Costs (FC –Rs.- Cr) FC/Tonne (Rs.) FC/Tonne/Km (Rs.) Variable Cost (VC –Rs. - Cr) VC/Tonne (Rs.) VC/Tonne/Km (Rs.)

23 Income and Expenditure 4/27/ Income: Particulars From Freight Operations Others Total Expenses: O&M Railway Fixed Costs Variable Costs Indirect OH – FC Indirect OH – VC Maintenance Exp Expenses:Administration OfficeFinancial Expenses Depreciation Total P B I T Tax Paid P A T Rs. - Crores

24 Earnings Particulars Tonnage (Million Tonne) Gross Earnings (`. Crores) Gross Earnings/Ton/ KM (`.) O&M Cost (`. Crores) O&M Cost/Ton/ Km- (`.) Net Earnings (`. Crores) Net Earnings/Ton/ Km (`.) Profit/ Loss (`. Crores) (Inc. of all Expenses) Profit/Loss/ Ton/ Km (`.)

25 Performance of the Company 4/27/ Particulars Total Income Total Expenses P B I T P A T E P S (Rs.) ` - Crores

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27 Fixed Assets 4/27/ Particulars GAVNAVGAVNAVGAVNAVGAVNAV Railways Bridges Formation P Way Station & Building Plant & Machinery Total Office G Total Rs - Crores GAV – Gross Asset ValueNAV – Net Asset Value

28 Capital Structure 4/27/ Particulars Share Capital Paid Up Reserve & Surplus (Cumulative) Secured Loans Canara Bank SBH Unsecured Loans Sub debt from S W R Deferred Indirect Over Heads of SWR ` - Crores

29 Section Staff Position in HMRDC S. No DepartmentNo of Staff as per Agmt No. of Staff on Roll 1Mechanical (SKLR-SBHR)6859 2Electrical (TLD)239 3Traffic (SKLR-BNTL)9184 4S&T (SKLR-BNTL)5933 5SE/P-Way (HAS-SKLR) at HAS66 6SE/P-Way (SKLR-SBHR) at SKLR117 7ADEN (SKLR)3905 8BRI (SKLR)9 9SE/Works (SKLR) at SKLR22 10SE/P-Way (KBPR)117 11Accounts33 Total

30 INSURANCE PROJECT LENGTH COVERED : 97 Kms out of 183 Kms from (SKLR to KBPR) ASSETS INSURED : Permanent way, Station Buildings, Signaling, and Telecom, Mechanical & Electrical Equipments RISKS COVERED: Force Majeure occurrence such as fire, root, flood, breaches, lightning, earthquake and other natural disaster – mainly on account of landslides/ rockslides during monsoon. LOSSES COVERED: i) Restoration cost of tracks and assets damaged ii) Loss of Profit/ Revenue on account of stoppage of operation on account of Force majeure events. POLICY PERIOD : 4 th January 2011 to 3 rd January 2012 PREMIUM PAID : 2008 ` Lakhs 2009 ` Lakhs 2010 ` Lakhs 2011 ` Lakhs CLAIMS SETTLED : 2008 : Restoration Cost : ` 61 Lakhs Loss of Profit : ` 163 Lakhs (Received on ) 2009 : Restoration Cost : ` Lakhs Loss of profit : ` Lakhs (Received on ) No Claims were made during 2010 since there were no landslides during the period. 29

31 Income Tax Holiday and Payment of MAT  INCOME TAX HOLIDAY : Nature of exemption : Eligibility U/s 80IA being Infrastructure facility Quantum of Exemption : 100% of Profit/ Income of the Company Period of Exemption : For 10 Consecutive years from the Initial year Exemption Availed : From FY Exemption Available : upto FY 2016 – 17  PAYMENT OF MAT : The Company is required to Pay minimum Alternative Tax (MAT) on Book Profits u/s 115JB of Income Tax Act. The Book Profit and MAT paid are : FIN YEARBook Profit Rate% including Surcharge ` In Crores Amt and Education Cess of MAT Paid (10%+10%+3%) (10%+10%+3%) (15%+10%+3%) (18%+7.5%+3%)

32 Looking to Future 4/27/ SWOT Analysis : Strengths :  The Only Railway Line passing through Western Ghats connecting the major port of Karnataka with Hinterland.  Has got Line Capacity to transport 6 Million Tonnes of Traffic per annum.  Stabilized Rail Link.  Entire Loan of Rs. 90 Cr. availed from Nationalized Banks Completely Amortized within 3 years of CoD

33 Looking to Future 4/27/ Weaknesses :  Dependence on a single Commodity (Iron-Ore/Export) which is the Cash Cow.  Oligopolistic customers.  Capacity and Operational constraints due to steep gradient ( 1 in 50) and more number of 8 degree Curves. Multiple locos with AEBs used for hauling up Trains Empty running of Locos and Rakes Speed restrictions – 30 KMPH in Ghat Section. Detention due to a variety of reasons.  Outstanding sub-debt ( ` 126 Cr) and deferred OH ( ` 50 Cr) along with interest, if any.  The Cash Reserves of ` 200 Cr represent only DRF.

34 Looking to Future 4/27/ Opportunities :  Steady Traffic with KIOCL expansion plans (Iron Ore Domestic)  Iron-Ore for Export market is still booming.  Import of high grade non-coking Coal for proposed Steel Plants and Coal for Power Plants, which will be moved from NMPT through Hassan Mangalore Rail Line.  Diversification into development of Property Time Shares (with the Land available) for heritage Tours and Trek to boost non-traditional income.  Going for “Doubling” of the Line, avoiding Ghat Section (118 Kms as against 55Kms of Ghat Section) with minimum impact on Environment.

35 Looking to Future 4/27/ Threats :  Higher Expenditure on Maintenance costs for retaining walls etc to prevent landslides.  Huge Capital Expenditure for strengthening of bridges to permit running of 25T Axle Load Trains.  Dwindling traffic movements.  Premature replacement of Assets due to denudation.

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