Monopoly - Introduction

Primary characteristics of a monopoly

Single Sellers
No Close substitutes
Price Maker
Blocked Entry

Profit Maximization for Monopoly

Costs and
Revenue

Monopoly
price

2. ...and then the

demand curve shows
the price consistent
with this quantity.
B

1. The intersection
of the marginalrevenue curve and
the marginal-cost
curve determines
the profitmaximizing
quantity...
Average
total cost

A
Demand

Marginal
cost
0

QMAX

Marginal revenue
Quantity

Background Information - Evolution

Railways Zone

Background Information - Evolution

Railways Zones
Sr.
No.

Name

Abbr.

1 Central

CR

2 East Central
3 East Coast
4 Eastern
5 North Central
6 North Eastern

ECR
ECoR
ER
NCR
NER

7 North Western
8 Northeast Frontier
9 Northern

NWR
NFR
NR

10 South
11 South
12 South
13 South

Central
East Central
Eastern
Western

SCR
SECR
SER
SWR

14 Southern
15 West Central

SR
WCR

16 Western

WR

Date
Headquarters Established Divisions
November 5,
1951
Mumbai
Mumbai, Bhusawal, Pune, Solapur, Nagpur
October 1,
Danapur, Dhanbad, Mughalsarai, Samastipur,
2002
Hajipur
Sonpur
April 1, 2003
Bhubaneswar Khurda Road, Sambalpur, Visakhapatnam
April, 1952
Kolkata
Howrah, Sealdah, Asansol, Malda
April 1, 2003
Allahabad
Allahabad, Agra, Jhansi
1952
Gorakhpur
Izzatnagar, Lucknow, Varanasi
October 1,
2002
Jaipur
Jaipur, Ajmer, Bikaner, Jodhpur
1958
Guwahati
Alipurduar, Katihar, Lumding, Rangia, Tinsukia
April 14, 1952 Delhi
Delhi, Ambala, Firozpur, Lucknow, Moradabad
October 2,
Secunderaba Secunderabad, Hyderabad, Guntakal, Guntur,
1966
d
Nanded, Vijayawada
April 1, 2003
Bilaspur, CG Bilaspur, Raipur, Nagpur
1955
Kolkata
Adra, Chakradharpur, Kharagpur, Ranchi
April 1, 2003
Hubli
Hubli, Bangalore, Mysore
Chennai, Madurai, Palakkad, Salem,
April 14, 1951 Chennai
Tiruchchirapalli, Thiruvanathapuram
April 1, 2003
Jabalpur
Jabalpur, Bhopal, Kota
November 5,
Mumbai Central, Vadodara, Ratlam, Ahmedabad,
1951
Mumbai
Rajkot, Bhavnagar

Background Information - Services

Passenger Services
Operates over 9000 trains and
transports over 5 billion annually across
India.
Preferred mode of transport in most of
the country.
Overcrowding is a widely faced problem
Ticket-less travel is also an additional
problem faced.

Background Information - Services

Production Services
Name
Diesel Locomotive Works
Chittaranjan Locomotive
Works
Diesel-Loco Modernisation
Works

Headquar
ters
Purpose
Manufacture mainline diesel-electric for passenger and freight
Varanasi
traffic
Chittaranja Manufacture electric locomotives using DC traction as well as ACn
AC transmission
Patiala

Manufactures key sub-assemblies for Diesel Locomotives

Integral Coach Factory

Chennai

Make coaches for the Indian Railways

Rail Coach Factory

Kapurthala Modern plant and has a much more flexible automation

Wheel & Axle Plant

Bengaluru Makes cast wheels for wagons

In addition, Central Organisation for Railway Electrification

(CORE) headquartered at Allahabad is also headed by a GM.
Its job is to undertake electrification projects of IR & monitor
their progress across the country.

Background Information - Services

Freight
Carries variety of goods
Contributes to 70% of revenues
Last 2 decades, shifted to large
container movement.
Majority of earnings comes from
carrying bulk goods like iron ore, coal.
Introduced CONRAJ for high priority
freight

Background Information - Services

Suburban Rail
Many cities have dedicated suburban
networks.
Cities include Mumbai, Chennai, Delhi,
Hyderabad, Kolkata, Lucknow & Pune.
Only Mumbai, Pune & Hyderabad share tracks
with long distance trains.
Trains are mostly electric multiple units.
Only in Mumbai trains run on Direct Current,
rest run on Alternating Current.

Background Information Organizational

Services

Background Information Organizational

Structure

Other PSUs under the control of Ministry of Railways

Indian Railways Catering and Tourism Corporation
Konkan Railway Corporation
Indian Railway Finance Corporation
Mumbai Rail Vikas Corporation
Railtel Corporation of India Telecommunication Networks
RITES Ltd. Consulting Division of Indian Railways
IRCON International Ltd. Construction Division
Rail Vikas Nigam Limited

Centre for Railway Information Systems is an

autonomous society under Railway Board, which is
responsible for developing the major software
required by Indian Railways for its operations.

Indian Railways - Present

Worlds third largest railway network
Prime movers to the nation
Approximately 65,000 km of rail tracks and over
7,151 railway stations.
IR owns a fleet of
2,22,379 wagons
42,441 coaches
7,910 locomotives
Operates 1,60,251 trains including 9,550
passenger trains, carrying about 1.6 million tonnes
of freight and about 18 million passengers daily

Indian Railways - Present

Prime infrastructural sector
World's largest commercial or utility employer,
with more than 1.5million employees on its
payrolls
Commercial Organization
Perform the dual role
Vehicle for fulfillment of social obligations
Part and parcel of the total receipts and
expenditure of the Government of India.
Contributes to 1% of GDP of INDIA.

Indian Railways The Mayhem

In 2002-03, 'social service obligation' of
Indian Railways worked out Rs 37.87 billion.
A 2001-02 review of all "branch lines"
disclosed that 115 trains had become
uneconomical, accounting for an annual loss
of Rs 434 crore.
In 2001, the ratio of net revenue to capital
declined to 2.5
In 1999-2000, fund balances had touched a
low of Rs. 1.49 billion.
Operating ratio reached 98.8 percent in the
year ending March 2001.

Indian Railways Problems faced

Surplus manpower1.6 million in FY

2001.
Poor staff productivity.
Loss of market share in the profitable
freight business.
Lack of flexibility in pricing.
Lack of accountability.
Politicization of the decision-making
processes

Indian Railways Cost Structure

Indian Railways Corrective Measures

modernization
safety and security of passengers
replacement and renewal of assets
track renewal & improvement in passenger
amenities
increase in productivity and reduction in operating
ratio.
computerization of railway systems.
induction of new technologies for signalling and
telecom.
prevention of leakages of revenue.

Indian Railways Strategic

Performance Enhancement Initiatives

Capacity Enhancement
increasing wagon loading capacity
reducing wagon turnaround time
increasing length of wagon
sidings(platforms)
reducing loading/unloading time
avoiding frequent train examination

Indian Railways Strategic

Performance Enhancement Initiatives

Capacity Utilization
Dynamic pricing policy
Tariff Rationalization
Non-peak Season Incremental Freight
Discount
Loyalty Discount Scheme
Long-term Freight Discount Scheme
Multiple Unloading

Indian Railways Strategic

Performance Enhancement Initiatives

Revenue Enhancement
Focusing on low-cost high-volume
operations
Revision in freight rates
Increasing number of coaches in popular
trains
Reducing AC class fares
Introducing Garib Raths to attract volumes

Indian Railways Favourable Factors

Change in the macro-economic

conditions
Rise in demand
Change in the legal position
Changes in organisational culture
Human resources initiatives
Downsizing
Decentralising

Indian Railways The Recovery

In FY 2006-2007, IR registered profits of Rs. 200 billion.

As of 2007, IR was India's second largest profit making PSU
after ONGC.
Revenue per staff witnessed a rise by 68 percent (2001
2006).
Operating Ratio was brought down to 78.7 percent by 2007.
Enhanced axle load and reduction in turnaround time of
wagons increased by 14%
IR increased wagon capacity available per day by 36 %
The number of employees reduced to 1.412 million by 2006
.
The number of accidents have been more than halved from
473 (2001) to 200 (2007)
Increase in the volume of passengers by approx 29 percent
over the period 2001 to 2007

Way Forward for Indian Railways..

Increase in market share in freight traffic, both bulk and non-bulk,
was the important focus area.
Plan priorities for IR - building capacity for handling traffic growth
Up-gradation for heavy axle load movement
Modernization of freight and passenger terminals
Developing world class stations
Information Technology initiatives and technological up-gradations.

Way Forward for Indian Railways..

Amenities
Provision of on-line coach indication display board; on-line train arrival departure
information board; on-line reservation availability information board.
Provision of discharge-free green toilets in all 36,000 coaches in XI Plan period
at a cost of about Rs.4,000 cr.
LHB design coaches for all Rajdhani and Shatabdi trains over next few years.
Provision of LHB coaches with stainless steel bogies in Mail/Express trains.

Way Forward for Indian Railways..

Concessions

Senior citizen concession for women enhanced to 50% from existing 30%.

Free Monthly Seasonal Ticket to girl students up to graduation level in

place of 12th standard and for boys up to 12 th standard in place of 10th
standard.

Improvements in ticketing

Termination of queues at ticket counters targeted in two years.

Ticket booking on mobile phones; E-ticket for waitlisted passengers.

Increase in Unreserved Ticketing Systems counters to 15,000 and ATVMs

to 6000.

Way Forward for Indian Railways..

Reduction in passenger fares

One rupee discount per passenger for fares up to Rs.50 in non suburban
Second Class (ordinary and mail/express)
5% discount across the board for passenger fares beyond Rs.50 for all non
suburban Second Class (ordinary and mail/express).
Increase in discount for travel in new design high capacity reserved
coaches.
Reduction in fare AC-I : 7%; and AC-II : 4% (the reduction will be half for
popular trains and during peak period).

Way Forward for Indian Railways..

Freight Business
Reductions & Concessions
5% reduction in freight rates for Petrol and
Diesel.
14% reduction in freight rate of Fly-ash.
Liberalisation of Traditional Empty Flow
direction incentive scheme

Way Forward for Indian Railways..

Freight Business
Reductions & Concessions
30% discount on entire traffic in place of
incremental traffic booked from goods shed.
Increase in discount on incremental traffic
booked from private sidings from 30% to 40%.
6% freight concession for traffic booked from
other States for stations in North Eastern
States.

Way Forward for Indian Railways..

Initiatives
Target for loading fixed at 850 MT in 2008-09.
Blue - Print prepared for High Density Network.
Top priority being given to port rail connectivity
projects.
New and dedicated iron ore routes to be
upgraded/constructed.
Work on Eastern freight corridor from Ludhiana to
Dankuni (Kolkata) and Western freight corridor
from Delhi to JNPT to start in 2008-09.

Way Forward for Indian Railways..

Initiatives
Procurement of Rolling Stock: All time high
of 20,000 wagons, 250 diesel and 220
electric locomotives to be manufactured.
New Wagon Leasing Policy and Wagon
Investment Scheme formulated to increase
availability of wagons in the system.
Discounts for development of bulk and nonbulk goods terminals.

Way Forward for Indian Railways..

Safety & Security

Multi-pronged scheme to strengthen railway safety through various

automatic devices like anti-collision device etc.

Rail accidents have reduced remarkably despite substantial increase

in gross traffic volumes.

Fire resistant material to be used in coaches.

Unmanned level crossings at busy sections to be manned on a fast

track basis.

Integrated security plan drawn up through installation of CCTVs, metal

detectors etc.

Way Forward for Indian Railways..

Welfare Measures
Social Welfare
99% backlog vacancies for SCs/STs filled up in special campaign launched
since 2004.
Appointment of candidates from SCs/STs/OBCs exceeded their respective
quotas inGroup D appointments.
Minorities welfare cells to be opened at Railway Board and Zonal Railways.

Way Forward for Indian Railways..

Welfare Measures
Social Welfare
One time exercise of appointing Railway Porters as gangmen and

to other Group D posts.

Mother-Child Health Express to be run on a pilot basis at

concessional fares in collaboration with Rajiv Gandhi Foundation

for providing medical facilities to mother and child.

Way Forward for Indian Railways..

Staff Welfare
Per-capita contribution to Staff Benefit Fund to be increased by ten
times from Rs.35 to Rs.350 for 2008-09.
Northern Railway Central Hospital at Delhi to be made centrally airconditioned.
Two divisional hospitals at Jaipur and Hubli to be upgraded to central
hospitals.

Way Forward for Indian Railways..

Staff Welfare
A new divisional hospital at Ranchi and an OPD block at
Integral Coach Factory to be constructed.
Employees who joined Railways from other
agencies/PSUs etc and are eligible for pensionary
benefits, would now be eligible for post retirement
complimentary passes as per the norms being set.

Way Forward for Indian Railways..

Vision 2025
Public-Private Partnership schemes to be launched for
attracting an investment of Rs.1,00,000 cr over the next
five years for developing world class stations, rolling stock
ad other logistics.
Commercial use of Railway land by Rail Land Development
Authority to give a boost to Railway Revenues.