Railway

CHAPTER 11
THE ESTIMATION OF THE PROJECT COST

The Feasibility Study on
The Development of Dedicated Freight Corridor
for Delhi-Mumbai and Ludhiana-Sonnagar in India Final Report (Task 2)
CHAPTER 11 THE ESTIMATION OF THE PROJECT COST
11.1 SCOPE OF THE PROJECT COST ESTIMATION AND IT’S CONDITIONS
The following costs are estimated as components of the Project Cost.
1) Construction Costs
- Civil & Building works
- Track works
- Electrical & Electrification works
- Mechanical works
- Signal & Telecommunication works
- Procurement of Construction, Maintenance & Inspection Vehicles and Equipments
- ICD (Inland Container Depot) Construction
- Locomotive Maintenance Depot Construction
2) Electric Locomotives Procurement Cost (including spare parts)
3) General Consultancy Services Cost
4) Physical Contingency
5) Price Escalation
6) Land acquisition and compensation Costs for Railway and Replacement of ROBs
7) General Administration Costs (including Preliminary expense)
8) Taxes (only related to Foreign Consultant)
9 Accrued Interests during Construction
In addition, following Costs are excluded from Project cost and noted for reference purpose.
a) Procurement Cost of Containers & Wagons

b) Construction of New Wagon Maintenance Depot
b) New ROBs Construction Cost (including cost of Land) – excluded from PETS-II
report)
The conditions of cost estimation by JICA Study Team (JST) are stipulated in the following
Table 11-1.
Table 11-1 Comparison of major estimate conditions between JST and PETS-II)
Description JICA Study Team PETS-II
Train Traction System JST assumes Electric locomotive Traction systems assumed are
traction system for the both Corridors. Electric locomotive for the Eastern
and Deisel locomotive for the
Western corridor.
Double stack container (DSC) Well-type wagon, double stack container Double stack container system on
System system for Western corridor and single Flat-type wagon, for Western
stack for Eastern corridor for the time corridor and Well-type, double
being. stack container system for Eastern
corridor.
Procurement of Locomotives According to the demand forecast based Outside the scope of the DFC
on the revised implementation schedule, project cost estimate.
Chapter 11
11-1
which has been used to calculate the

number of locomotives upto at 10-years
after opening of Phase I-a of project.
(Year-2023) This cost is included in the
Project cost of Phase I-a.
Construction of New JST have assumed a new locomotive Outside the scope of the DFC
Locomotive Depot depot for western DFC and its costs is project cost esti mate.
included in the Project costs of Phase
I-a.
Construction of New JST have assumed a new ICD at Out of scope of the DFC project
Container Terminal Depot Gurgaon area. The costs of the same is costs.
(ICD) included in the Project costsof Phase I-a.
Construction of branch-line JST recommends betterment works for Cost Estimate scope is not clear,
(TKD to Pirthala Junction the existing line of due to the limited but assumed no cost included in
station) on the Western capacity of expansition of TKD depot. RITES PETS II report.
corridor Hence its costs are not included in this
Project cost.
Construction of New ROBs JST verified the validity and necessity of DFCCIL and Railway Safety Fund
its construction costs to be included in will take charge of the costs for
the Project cost. JST introduced and new ROBs construction at 505
recommended an alternative solution of locations for Western corridor, 368
adopting automatic level crossing locations for Eastern corridor
system instead of ROBs. Thus the ROBs totaling -873 locations.
cost is removed from the project cost.
Construction of ROBs to be JST Project cost has taken into account For Western – 24 locations and
replaced the construction cost of replacing ROBs Eastern – 9 locations is the number
as per the JST route plan. of ROBs needing replacement,
costs of which are included in the
report.
Electrical/Electrification Electrification system cost for the both Electrification system for the
Works corridors are included in the Project Eastern corridor and no cost is
costs. assumed for electrification system
for the Western corridor.
Signal & Telecommunication The estimation has been made based on The estimation was made based on
Works the latest AF track circuit systems. the Track circuit type but it is not
clear which system is adopted from
the report.
General Consultancy Services JST Assumed to employ an International General charges (General
Consulting firm for this STEP loan Administration costs) have been
project. The costs of which have been included and it is assumed that a
calculated and divided into stagewise direct management style of
Project costs. construction supervision is
adopted.
Physical Contingency Capitalized 5% on the eligible portion of Capitalized in the individual items.
Yen loan.
Price Escalation Price escalation has been added to the Not specifically mentioned in the
Project costs for the eligible portion of report.
Yen loan included physical contingency.
Accrued Interest during Financial interest during construction Not specifically mentioned in the
Construction has been included in the Project costs. report.
11.2 BASIC CONDITIONS OF THE COST ESTIMATION
The JST has estimated the Project cost based on the following conditions:
1) The Exchange rate of US $ / Indian Rs. and Japanese Yen / Indian Rs. is estimated based
on the average of the reference exchange rate of Reserve Bank of India during the period
Chapter 11
11-2
of 1st of December 2006 to end of May 2007.
Description Average Rate

¥／Rs 2.770
Rs／US$ 42.98
2) Estimated cost or price is a contract or purchase price as received from contractors or

suppliers. Thus the estimated cost or price includes direct cost, indirect cost, overhead,
profit and all necessary taxes excluding import duties.
3) All domestic taxes (i.e. Commodity tax, service tax) have been included in the
construction costs except import duties and taxes and domestic taxes for overseas
procurements due to imprecise understanding of these in relation to this project.
4) The rates and prices of the Year 2006-2007 are used for the cost estimation.
5) Scope of base-case estimation is taken as for the same routes as that of PETS-II, Dadri to
JNPT for Western Corridor, Dadri to Sonnagar and Khurja to Dhandarikalan for Eastern
Corridor. However the cost estimation is done as per the stagewise development of these
sections as specified in the Construction cost para of this report.
6) The unit costs are divided into three (3) portions, machinery, material and labor cost and
ratio among them for each portion was assumed based on the past studies in India.
Subsequently, ratio between foreign and local currency for above three portions was
assumed. Finally, by comparing ratios between these three portions, foreign and local
currency in unit cost was estimated.
7) Implementation schedule is assumed as presented in Table 11-2 for the purpose of cost
estimation.
Table 11-2 Assumed Implementation Schedule for the Phase
Phase 2008 2009 2010 2011 2012 2013 2014 2015
West-1a
West-1b
West-2
East-1a
East-1b
East-2
11.3 REVIEW OF PETS-II COST AND COST FRAME ALTERATION
The review of project cost mentioned in PETS-II has been carried out. The JST concentrated
to determine DFC route and review PETS-II quantities and to investigate the uncertainity of
items in the PETS-II report.
Land costs, detail design cost, track works cost, plants and equipments cost and General
administration costs are included in Civil Engineering costs in PETS-II. Hence the cost
estimate frame has been further clarified and altered as mentioned below to suit the concept of
the Study team.
- Preliminary Expenses: The cost of General Consultancy services cost has originally been
altered. However these costs are a difficult to be included in the GC services cost and
treated as independent item.
Chapter 11
11-3
- Land acquisition and compensation costs: This cost has been further clarified and
separated as land cost for Railway, land cost for replacing ROBs and land costs for new
ROBs, respectively.
- Construction cost of Hospital: This cost has been further clarified and could not justified
to including in the eligible yen loan costs.
In the Volume2 Task 0&1, Chapter 12 it has beeen mentioned that the review and verification
of the major rates and prices in the PETS-II was required. Thereafter, JST made further
revision to following rates and prices.
- Blanketing – Formation works: The rate has been revised to 500 Rs/m3 instead of 400
Rs/m3 in the PETS-II according to the investigation of material rates.
- Replacing ROB – Bridge works: Based on the outline design made by study team, prices
are 10% less for ROBs in urban areas and 30% increase for ROBs in sub-urban areas as
compare with PETS-II prices. The cost are adapted to the JST’s cost estimates.
- Ballast – Track works: The material rate has been increased by 15% as compare with
PETS-II material rate, based on the investigation of purchase rate of Northern Railway
and market prices.
- Points & Crossings – Track works: The rates have been revised by a 20% increase as
compared with PETS-II rate, due to the modification and change of crossings and use of
Head Hardened rail (HH rail).
In addition, following costs are either revised or recently added to the project costs based on
the further review and study.
1) Electrical/Electrification works
The estimated costs are based on electrification of both corridors i.e. Western and
Eastern. Study team proposes Auto Transformer (AT) system instead of Booster tracton
(BT) system as was proposed in the PETS-II report, while for Western corridor it was
adopted due to its advantage in long-term cost performance.
Table 11-3 Detail costs of Electrical/Electrification work

Western Eastern
TOTAL
Description Corridor Corridor
(Million Rs) (Million Rs)
(Million Rs)
Electrical/Electrification works
OHE System 7,602 6,194 13,796
SCADA 69 68 137
TPSI works 8,201 6,442 14,643
General power supply 231 191 422
Civil works 831 636 1,467
Total (Electrical/Electrification): 16,934 13,531 30,465
2) Signal & Telecommunication Cost

Cost estimate of Signaling & Telecommunication works are as shown below in Table
11-4. Signalling works cost has been revised due to change to a proven system which is
based on AF track circuit instead of Micro-Balise train detection system in the previous
report. Also, the cost of Automatic level crossing system has been shifted from previous
ROB construction cost to this category.
Chapter 11
11-4
Table 11-4 Detail cost of Signalling & Telecom. Works

Western Eastern Corridor TOTAL
Corridor Double-line Single-line
Description
section section
(Million Rs) (Million Rs) (Million Rs) (Million Rs)
Train Management System 148 50 102 300
Signalling System at Station 6,197 4,700 4,365 15,262
Signalling System between Station 13,498 4,606 2,225 20,328
Dispatching Telephone System 48 36 39 123
Fixed Communication System 1,233 750 419 2,402
Mobile Communication System 691 474 228 1,392
Digital Electronic Exchange System 108 94 81 283
Total (Signal & Telecom. Works): 21,922 10,709 7,458 40,090
Automatic Level Crossing System 2,214 1,153 460 3,827
Grand Total: 24,136 11,862 7,918 43,917
3) ICD（Inland Container Depot）Construction Cost

The out-line cost has been calculated for a newly established inland container depot
which is expected to be built in Gurgaon area. This does not include land acquisition and
compensation costs.
4) Vehicle Depots Construction Cost

The cost estimate for Electric locomotives depot to be established one for each Western
and Eastern corridor is also included. This cost also does not include land acquisition and
compensation costs.
5) Electric Locomotives procurement Cost

The procurement cost has been revised based on the implementation schedule as
mentioned in Chapter 14 in this report. The required number of electric locomotives are
based on demand forecasting at 10-years from the commissioning of Phase I-a (Year
2023).
Table 11-5 Detail Cost of Elecric Locomotives

Quantity Rate Amount
Description
Western Eastern (Million Rs) (Million Rs)
E. Locomotive (8-axleｓ) 59 165 212 47,488
E. Locomotive (6-axleｓ) 202 5 130 26,910
Spare parts 1,153
Total: 261 170 75,551
11.4 CHARACTERISTICS OF THE PROJECT COSTS
The estimated costs are classified and then divided among the Investment body (DFCCIL),
Ministry of Railways (MOR), Indian Railway (IR) and Private parties.
Electric Locomotives cost and the Locomotive Depot’s construction cost are included in the
Indian Railway’s portion and some other in the project costs apportioned to DFCCIL’s cost.
The cost of Inland Container Depot will only be its basic construction cost, other costs for
establishment will be taken up by private partners.
Chapter 11
11-5
11.5 TRANS-SHIPMENT COST FOR FOREIGN AND LOCAL CURRENCY
Each cost and/or price shall be divided into foreign and local currency. (The cost or price is
categorized into labor, materials and plant costs and further each cost is divided into foreign
and local currency portion based on an assumption.)
Table 11-6 shows the Trans-shipment table for Foreign and Local Currency.
Table 11-6 Trans-shipment Cost - Table for Foreign and Local Currency
Currency Ratio
Cost Allocation Ratio Weight Currency Allocation
Labor Mate. Plant Estimated
Description Labor Amount
Mate. Plant F L F L F L F L Foreign Local
S U
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (Million Rs) (Million Rs) (Million Rs)
CIVIL & BUILDING
Earth work-Cutting 5 5 50 40 0 100 0 100 15 85 6.0 94.0 186 11 174
Embankment works 5 5 50 40 0 100 0 100 15 85 6.0 94.0 23,874 1,432 22,441
Blanketing 5 5 55 35 0 100 0 100 20 80 7.0 93.0 9,969 698 9,271
Tunnel 10 5 45 40 0 100 10 90 40 60 20.5 79.5 3,495 716 2,778
Others 10 5 50 35 0 100 0 100 15 85 5.3 94.8 1,460 77 1,384
SubTotal-1: 38,983 2,934 36,049
Bridges-Steel 5 10 60 25 0 100 15 85 15 85 12.8 87.3 10,339 1,318 9,021
Bridges-Masonry 5 10 55 30 0 100 5 95 15 85 7.3 92.8 16,077 1,166 14,911
Bridges-Flyover 5 10 55 30 0 100 5 95 15 85 7.3 92.8 11,094 804 10,290
Bridges-Minor 5 10 55 30 0 100 5 95 15 85 7.3 92.8 8,079 586 7,493
Others 5 10 55 30 0 100 5 95 15 85 7.3 92.8 631 46 585
SubTotal-2: 46,221 3,920 42,301
Office Building 10 5 55 30 0 100 5 95 10 90 5.8 94.3 2,488 143 2,345
Station & Shed 10 5 55 30 0 100 5 95 10 90 5.8 94.3 729 42 687
Residential Building 10 5 55 30 0 100 10 90 10 90 8.5 91.5 5,318 452 4,866
Others 10 5 55 30 0 100 5 95 10 90 5.8 94.3 321 18 302
SubTotal-3: 8,856 655 8,200
Miscellaneous works 10 5 60 25 0 100 5 95 20 80 8.0 92.0 12,241 979 11,261
SubTotal-4: 12,241 979 11,261
PERMANENT WAY
Rail & Fastening 5 5 80 10 0 100 80 20 15 85 65.5 34.5 47,532 31,134 16,399
Sleeper & Fastening 5 10 55 30 0 100 10 90 15 85 10.0 90.0 15,345 1,535 13,811
Point & Crossing 5 5 65 25 0 100 55 45 15 85 39.5 60.5 3,027 1,196 1,831
Ballast 5 5 60 30 0 100 0 100 20 80 6.0 94.0 14,844 891 13,953
Foot-over Bridge 5 10 55 30 0 100 0 100 15 85 4.5 95.5 997 45 952
Others 5 10 55 30 0 100 0 100 15 85 4.5 95.5 50 2 48
SubTotal-5: 81,795 34,802 46,994
O&M VEHICLES
Plant & Equipment 0 0 0 100 0 0 0 0 80 20 80.0 20.0 3,819 3,055 764
ELECTRICAL
25.0 75.0 30,465 7,616 22,849
MECHANICAL
25.0 75.0 467 117 351
SIGNAL & TELECOM
Signal & Telecom 61.0 39.0 37,749 23,027 14,722
ICD
5 5 50 40 0 100 5 95 15 85 8.5 91.5 3,000 255 2,745
VEHICLE DEPOT
5 5 50 40 0 100 5 95 15 85 8.5 91.5 717 61 656
Total (Construction): 264,313 77,422 186,892
ROLLING-STOCK
Electric Locomotive 0 0 0 100 0 0 0 0 90 10 90.0 10.0 75,551 67,996 7,555
ENGINEERING SERVICE
Detail Design Stage 85 5 5 5 75 25 0 100 5 95 67.8 32.3 1,814 1,229 585
Tender Assistance Stage 85 5 5 5 77 23 0 100 5 95 69.6 30.5 443 308 135
Construction Stage 80 5 5 10 74 26 0 100 15 85 64.4 35.6 6,594 4,247 2,347
TOTAL: 348,716 151,201 197,514

43.36% 56.64%
Legend: W－Worker Cost、M－Material Cost、P－Plant Cost F－Foreign Currency、L－ Local Currency
Chapter 11
11-6
11.6 RESULT OF PROJECT COST ESTIMATION
11.6.1 Sectional Project Cost Estimation
As mentioned in the Chapter-3 earlier, the Study team estimated the project cost in every
section to examine the scenario of stage development. Route division map is as shown Figure
11-1.
E-
C2
DHANDARIKALAN
E-
C1
1 KALANAUR
-A
W
E-
A2
DADRI
2a
REWARI
-A
KHURJA
W
E-
A1
E-
A3
2b
E-
AJMER B
-A
W
KANPUR
SONNAGAR
MUGHAL SARAI
PALANPUR
W-A3
Mundra Port AHMEDABAD

Kandla Port
W -B1
VADODARA
W -B2
Pipavav Port
LEGEND
VASAI ROAD WESTERN DFC

W -B3
EASTERN DFC
JNPT
JN Port PORT
ICD
Figure 11-1 DFC Route Division Map for Stage Development
Chapter 11
11-7
A1
W-
DADRI
REWARI
2a
-A
W
AJMER
2b
-A
W
PALANPUR
W-A3
Mundra Port
AHMEDABAD
Kandla Port
W-B1
VADODARA
W-B2
Pipavav Port
VASAI ROAD
W-B3
JNPT
JN Port LEGEND
PHASE I-
I-a
PHASE I-
I-b
PHASE II
Figure 11-2 DFC Route Division Map for Stage Development (Western Corridor)
DHANDARIKALAN E-
C2
KALANAUR
E-C1
DADRI
KHURJA
E-
A3
E-
A2
KANPUR
E-
A1
E-
B
SONNAGAR
MUGHAL SARAI
LEGEND
PHASE I-
I-a
PHASE I-
I-b
PHASE II
Figure 11-3 DFC Route Division Map for Stage Development (Eastern Corridor)
The project cost estimation for various scenarios is shown in Table 11-7 for the each section
as described in Figure 11-1.
Chapter 11
11-8
Table 11-7 Sectional Project Cost Matrix
Corridor Western Corridor Eastern Corridor
Phase NO. PHASE II PHASE I-a PHASE I-b PHASE I-b PHASE I-a PHASE II PHASE I-b
Whole Line TOTAL for TOTAL for Whole Line
Section No. W-A-1 W-A-2a W-A-2b W-A-3 W-B-1 W-B-2 W-B-3 E-A-3 E-A-2 E-A-1 E-B E-C-1 E-C-2 TOTAL
TOTAL E-A & B E-C
Start Dadri Rewari Ajmer Palanpur Ahmadabad Vadodara Vasai Road Dadri Dadri Khurja Kanpur Mughalsarai Khurja Kalanaur Dhandarikalan
(Double line) (Single line)
End Rewari Ajmer Palanpur Ahmadabad Vadodara Vasai Road JNPT JNPT Khurja Kanpur Mughalsarai Son Nagar Kalanaur Dhandarikalan Son Nagar
Unit (Million Rs) (Million Rs) (Million Rs) (Million Rs) (Million Rs) (Million Rs) (Million Rs) (Million Rs) (Million Rs) (Million Rs) (Million Rs) (Million Rs) (Million Rs) (Million Rs) (Million Rs) (Million Rs) (Million Rs) (Million Rs) (Million Rs) (%)
Civil & Building work 67,197 12,346 6,965 11,835 4,789 10,825 16,725 3,711 67,197 26,468 12,634 1,065 11,142 9,269 4,993 5,588 7,047 39,103 106,300 21.3
Formation works (other than Tunnel) 21,925 2,524 3,435 4,457 2,591 4,543 3,699 676 21,925 9,128 4,435 297 5,145 2,750 936 2,138 2,297 13,563 35,488 7.1
Formation works (Tunnel) 3,495 3,495 0 0 0 0 0 0 3,495 0 0 0 0 0 0 0 0 0 3,495 0.7
Bridge works （exclud. ROB & items bellow） 22,812 3,551 820 2,944 1,035 4,326 8,098 2,038 22,812 5,310 2,636 94 828 2,856 1,532 613 2,023 7,946 30,758 6.2
Bridge works （Flyovers） 6,279 1,402 786 1,958 63 376 1,567 126 6,279 3,606 1,210 323 924 804 1,554 532 677 4,815 11,094 2.2
Bridge works （RUBs） 2,203 555 234 182 273 626 307 25 2,203 926 609 0 753 170 2 259 351 1,535 3,738 0.7
Bridge works （Protection works） 505 0 0 0 0 0 379 126 505 126 0 0 0 126 0 0 0 126 631 0.1
Station & Building works 4,262 368 874 980 397 417 1,000 227 4,262 3,109 1,484 162 1,366 1,134 447 843 641 4,594 8,856 1.8
Miscellaneous works (missing in the PETS-2) 5,717 451 816 1,314 430 538 1,676 492 5,717 4,264 2,259 189 2,125 1,430 521 1,202 1,057 6,523 12,241 2.4
Track work 45,785 3,649 9,045 11,477 3,867 4,242 10,729 2,776 45,785 27,203 8,807 1,417 11,944 9,930 3,912 5,020 3,787 36,010 81,795 16.4
Electrical work 16,934 1,350 3,345 4,245 1,430 1,569 3,968 1,027 16,934 10,538 2,994 549 4,631 3,843 1,516 1,701 1,293 13,532 30,465 6.1
Mechanical work 208 17 41 52 18 19 49 13 208 196 64 10 86 71 28 36 27 259 467 0.1
Signaling & Telecommunication works 20,939 1,657 4,255 5,212 1,756 1,926 4,872 1,260 20,939 10,252 6,558 533 4,535 3,721 1,464 3,771 2,787 16,810 37,749 7.6
Signaling work 16,498 1,315 3,259 4,136 1,394 1,528 3,866 1,000 16,498 7,696 5,229 401 3,382 2,806 1,107 2,971 2,259 12,925 29,423 5.9
Traffic Control System 148 0 148 0 0 0 0 0 148 50 102 0 50 0 0 102 0 152 300 0.1
Telecommunication work 2,080 166 411 521 176 193 487 126 2,080 1,354 766 71 595 494 195 435 331 2,120 4,200 0.8
Automatic Level Crossing System 2,214 176 437 555 187 205 519 134 2,214 1,153 460 61 508 421 162 263 197 1,613 3,827 0.8
Plant & Equipment Procurement 2,041 0 2,041 0 0 2,041 1,495 283 0 1,495 0 283 1,778 3,819 0.8
ICD Construction work 3,000 0 3,000 0 0 0 0 0 3,000 0 0 0 0 0 0 0 0 0 3,000 0.6
Sub Total-1 (DFCCIL): 156,104 19,019 27,162 33,332 12,371 19,091 36,343 8,786 156,104 76,153 31,340 3,574 33,085 27,581 11,913 16,257 15,082 107,493 263,596 52.7
Locomotive Maintenance Depot 717 0 717 0 0 0 0 0 717 0 0 0 0 0 0 0 0 0 717 0.1
Electric Locomotives Procurement 38,768 0 38,768 0 0 38,768 35,630 0 0 35,630 0 0 0 35,630 74,398 14.9
Project Spare Parts for Electric Locomotives 566 0 566 0 0 566 587 0 0 587 0 0 0 587 1,153 0.2
Cost Sub Total-2 (IR): 40,051 0 10,551 9,834 9,834 9,834 0 0 40,051 36,217 0 0 18,108 18,108 0 0 0 36,217 76,268 15.3
Sub Total-A: 196,155 19,019 37,712 43,166 22,205 28,925 36,343 8,786 196,155 112,370 31,340 3,574 51,193 45,690 11,913 16,257 15,082 143,709 339,865 68.0
General Consultancy Service
Detail Design & Tender Preparation Stage 1,113 209 695 209 1,113 584 117 117 234 234 117 701 1,814 0.4
Tender Assistance Stage 272 51 170 51 272 142 28 28 57 57 28 171 443 0.1
ES Service Cost during Construction 4,047 58 2,528 1,461 4,047 1,816 731 731 1,086 0 731 2,547 6,594 1.3
Total for GC Service: 5,432 318 848 848 848 848 861 861 5,432 2,543 876 876 1,376 291 876 3,419 8,851 1.8
Sub Total-B: 201,588 19,337 38,561 44,014 23,053 29,773 37,204 9,647 201,588 114,913 32,216 4,450 51,881 46,378 12,204 16,695 15,520 147,128 348,716 69.8
Physical Contingency 10,079 967 1,928 2,201 1,153 1,489 1,860 482 10,079 5,746 1,611 222 2,594 2,319 610 835 776 7,356 17,436 3.5
Price Escalation 18,838 1,807 3,603 4,113 2,154 2,782 3,477 901 18,838 10,739 3,011 416 4,848 4,334 1,140 1,560 1,450 13,749 32,587 6.5
Sub Total-C: 230,505 22,111 44,092 50,328 26,360 34,044 42,540 11,030 230,505 131,397 36,838 5,088 59,324 53,031 13,954 19,090 17,747 168,234 398,739 79.8
Land Acquisition cost for Railway 26,439 5,729 3,128 3,143 5,064 4,996 3,931 449 26,439 17,857 7,535 711 7,754 7,342 2,051 4,744 2,791 25,393 51,831 10.4
Land Acquisition cost for Replacing ROB 201 0 0 9 0 0 88 105 201 91 11 0 0 48 43 11 0 102 303 0.1
Preliminary Expenses (Survey & Design) 742 59 146 186 63 69 174 45 742 347 144 18 152 126 50 82 62 491 1,232 0.2
Construction cost for Replacing ROB 6,465 0 0 87 0 0 3,427 2,951 6,465 897 1,171 0 0 174 723 1,171 0 2,068 8,533 1.7
Construction cost for Hospital 25 2 5 6 2 2 6 1 25 133 64 7 58 48 19 36 28 197 222 0.0
Utilities Relocation works 1,344 247 139 237 96 217 335 74 1,344 529 253 21 223 185 100 112 141 782 2,126 0.4
General Administration Cost during Construction 9,857 786 1,947 2,471 833 913 2,310 598 9,857 4,879 1,864 254 2,144 1,779 702 1,059 805 6,744 16,601 3.3
Taxes and Duties for Foreign Consultant 2,234 226 1,332 676 2,234 990 336 336 540 114 336 1,326 3,560 0.7
Sub Total-D: 277,811 29,159 50,790 56,465 32,417 40,240 53,485 15,254 277,811 157,119 48,217 6,436 69,925 63,004 17,755 26,474 21,742 205,335 483,147 96.7
Accrued Interest during Construction 9,608 1,009 1,757 1,953 1,121 1,392 1,850 528 9,608 5,434 1,668 223 2,418 2,179 614 916 752 7,102 16,710 3.3
Sub Total (India portion): 56,915 8,057 8,455 8,090 7,179 7,588 12,795 4,751 56,915 31,157 13,047 1,570 13,020 12,152 4,415 8,299 4,747 44,203 101,118 20.2
Grand Total: 287,420 30,168 52,547 58,418 33,538 41,632 55,335 15,781 287,420 162,553 49,884 6,658 72,343 65,183 18,369 27,390 27,242 212,437 499,857 100.0
Reference ITEMS (excluded from the Project cost)
Wagons Procurement 20,473 20,473 14,025 14,025 34,498 6.9
Reference Wagons Depot 526 0 526 0 0 0 0 0 526 1,979 0 0 1,979 0 0 0 0 1,979 2,505 0.5
only Cost for new ROBs in the PETS-2 23,780 23,780 8,972 3,427 12,399 36,178 7.2
Land Acquisition Cost for new ROBs (PETS-2) 6,825 141 2,000 1,865 694 213 1,663 249 6,825 192 2,641 3,178 1,010 1,454 1,089 9,563 16,388 3.3
Chapter 11
11-9
Following conditions and assumptions may be applicable for calculations.
1) Construction Costs
- In the Civil & Building works, items of tunneling work, earthworks (cutting,
embankment and blanketing) are allocated in each and every section of formation
works. Items of bridge works, Railway bridges-Steel, Railway bridges-Concrete,
Railway bridges-Flyover, Road over Bridges (ROB) and bridge protection works are
also allocated and calculated section wise. Building works costs are divided according
to the route length.
- The costs of Track works, Electrical engineering works, Mechanical engineering works,
Signal & Telecom Engineering works are divided according to the route length for each
Western corridor and Eastern corridor which are also allocated according to double
track or single track section.
- Plant and equipment costs (construction, maintenance and service vehicles) are
included in the Phase I-a section of each corridor.
- New ICD construction costs and Locomotive depot construction costs are allocated to
each designated section.
2) General consultancy services cost are not divided by sections. The costs allocation for
stage development is mentioned in the Clause 11.6.2.
3) Rolling stock cost is also not divided by sections and the cost allocation for stage
development is mentioned in the Clause 11.6.2.
4) The cost of Price escalation is divided for each corridor and then further divided into
each section by in the ratio of its cost.
5) Physical contingency cost is divided for each corridor and sections by in the ratio of its
cost.
6) Land acquisition and compensation costs are divided for the each section in the ratio of
its cost.
7) Taxes for Foreign consultant are divided for each section in the same manner as GC
services cost.
8) General administration costs are allocated for the each section according to the route
length.
9) Accrued interest during construction is divided for each corridor and then further divided
into each section in the ratio of its cost.
Overall costs allocation for the eligible portion of Yen-loan and the Indian Rupee portion are
shown in the Table 11-8, and further divided for each corridor as shown in the Table 11-9.
Chapter 11
11-10
Table 11-8 Overall Project Costs (Whole sections)

(Unit: Million Rs)
Eligible
Indian
Description portion of TOTAL Ratio
portion
Yen-Loan
1) Construction Costs (DFCCIL portion)
263,596 0 263,596 52.7%
(except those mentioned below in 2)
0 10,881 10,881 2.2%
(ROB, and Utilities relocation works)
3) Construction Costs (IR portion) 717 0 717 0.1%
4) Electric Locomotive procurement costs 75,551 0 75,551 15.1%
5) General Consultancy Services Cost 8,851 0 8,851 1.8%
6) Physical Contingency 17,436 0 17,436 3.5%
7) Price Escalation 32,587 0 32,587 6.5%
8) Land acquisition and compensation Costs 0 52,134 52,134 10.4%
9) Preliminary expenses (Survey & Design) 0 1,232 1,232 0.2%
10) *General Administration Costs 0 16,601 16,601 3.3%
11) Taxes (For foreign consultants) 0 3,560 3,560 0.7%
12) Accrued Interest during construction 0 16,710 16,710 3.3%
Total Project Costs: 398,739 101,118 499,857 100.0%
Proportion (Donor – India): 79.8% 20.2%
**Wagon procurement & Wagon Depot Costs 37,003
**New ROB Construction & Land Cost 52,567
Note) *Including Local Construction Supervisors Cost
**The Cost for reference purpose
Table 11-9 Overall Project Costs (by the Each Corridor)

(Unit: Million Rs)
Western Corridor Eastern Corridor
Description Eligible Eligible TOTAL
Indian Indian
portion of portion of
portion portion
Yen-Loan Yen-Loan
156,104 0 107,493 0 263,596
0 7,834 0 3,047 10,881
(ROB and Utilities relocation works)
3) Construction Costs (IR portion) 717 0 0 0 717
4) Electric Locomotive procurement costs 39,334 0 36,217 0 75,551
5) General Consultancy Services Cost 5,432 0 3,419 0 8,851
6) Physical Contingency 10,079 0 7,356 0 17,436
7) Price Escalation 18,838 0 13,749 0 32,587
8) Land acquisition and compensation Costs 0 26,640 0 25,495 52,134
9) Preliminary expenses (Survey & Design) 0 742 0 491 1,232
10) *General Administration Costs 0 9,857 0 6,744 16,601
11) Taxes (For foreign consultants) 0 2,234 0 1,326 3,560
12) Accrued Interest during construction 0 9,608 0 7,102 16,710
Total Project Costs: 230,505 56,915 168,234 44,203 499,857
Proportion (Western – Eastern): 57.5% 42.5% 100%
Total project costs are Rs. 499.9 billion (approximately Yen 1,384.7 billion), and proportion
of eligible for Yen loan and India is 79.8% and 20.2% respectively. The proportion of project
cost for Western corridor and Eastern corridor is 57.5% and 42.5% respectively.
Chapter 11
11-11
11.6.2 Estimation of stagewise Project Costs
The stagewise project costs have been estimated based on the Table 11-10 sectional project
cost matrix. Each staged developments have been specified as per the following sections
based on the evaluations described in the Chapter 3.
Table 11-10 Section of Stagewise Developments

Corridor Western Corridor Eastern Corridor
Stage Phase I-a Phase I-b Phase II Phase I-a Phase I-b Phase 2
Rewari Vadodara - Dadri Mughal Sarai Khurja – Dadri and Sonnagar
Section - Vasai Rd. - - - Khurja – Dhandari –
Vadodara JNPT Rewari Khurja Kalan Mughal Sarai
Route 918 km 433 km 117 km 710 km 46 km Double-line 127 km
Length Double-line Double-line Double-line Double-line 426 km Single-line Double-line
The cost estimation has taken into account the following points for stagewise project costs.
1) Estimated Electric Locomotive costs are based on 10 years demand forecast from the I-a
stage opening (Year 2013) and all costs are allocated to Phase I-a development.
2) Cost of Consulting services and General administration for each stage is calculated by
fixed cost (corresponding to the Core team) portion and floating cost (corresponding to
the Zonal/Site team) portion.
3) Traffic control system cost in the signaling costs are allocated to the specified Phase I-a
section. However its amount has negligible influence (smaller than 1% of signaling cost)
so cost has been allocated to each section by route length.
4) Newly established Inland Container Depot (ICD) will be located at Gurgaon area in the
Western corridor which belongs to the Rewari – Dadri section (W-A-1). However, its
cost has been allocated to Phase I-a section (W-A-2a) due to the establishment of logistic
infrastructures between Rewari and Delhi.
Estimated Staged Development Costs are shown in the Table 11-11.
Table 11-11 Stagewise Project Costs

(Unit: Million Rs)
Description Phase I-a Phase I-b Phase II TOTAL
152,622 80,043 30,932 263,596
1,480 8,310 1,091 10,881
3) Construction Costs (IR portion) 717 0 0 717
4) Electric Locomotive procurement costs 75,551 0 0 75,551
5) General Consultancy Services Cost 4,769 3,473 609 8,851
6) Physical Contingency 11,683 4,176 1,577 17,436
7) Price Escalation 21,835 7,805 2,947 32,587
8) Land acquisition and compensation Costs 31,482 12,830 7,822 52,134
9) Preliminary expenses (Survey & Design) 742 381 109 1,232
10) General Administration Costs 10,087 5,026 1,487 16,601
11 Taxes (For foreign consultants) 1,872 1,348 340 3,560
12) Accrued Interest during construction 10,820 4,268 1,623 16,710
Total Project Costs: 323,662 127,658 48,537 499,857
Proportion of Stagewise Project Costs: 64.8% 25.5% 9.7% 100.0%
Chapter 11
11-12
The proportion of project costs for Phase I-a, Phase I-b and Phase II are approximately 64.8%,
25.5% and 9.7% respectively.
11.6.3 Project Costs Analysis by comparison (Phase I-a)
The following two Options have been examined and analyzed for consideration of Phase I-a
development Plan and each Project Costs which is also mentioned in Chapter 14.
1) Option 1: The project is implemented by funding of all the eligible items of Yen Loan.
(Fully Financed Yen Loan Plan)
2) Option 2: Critical items of civil works are carried out in advance by the India-side. (Plan
for Advance Works financed by Indian side)
Option-1 Project costs are consistent with Phase I-a Project costs which have been mentioned
in the Clause 11.6.2 The Option-2 Project costs are calculated with the following conditions.
a) All of Civil & Building works costs are borne with funds from Indian side.
b) 30% of procurement costs for Ballast materials and PC Sleepers are also borne by
funding form Indian-side.
The estimated project costs for the each Option which are based on the above conditions are
shown in the Table 11-12 and Table 11-13.
Table 11-12 Phase I-a Project Costs (Fully Financed Yen Loan Plan）
(Unit: Million Rs)
Eligible Yen
Description India Portion TOTAL Ratio
Loan Portion
152,622 0 152,622 47.2%
0 1,480 1,480 0.5%
9) Preliminary expenses (Survey & Design) 0 742 `742 0.2%
10) General Administration Costs 0 10,087 10,087 3.1%
11 Taxes (For foreign consultants) 0 1,872 1,872 0.6%
Total Project Cost: 267,178 56,484 323,662 100.0%
Proportion (Donor – India): 82.5% 17.5% 100.0%
Proportion of
64.8%
(PhaseI-a/Whole section):
Chapter 11
11-13
Table 11-13 Phase I-a Project Costs (Advance Works financed by Indian side)
(Unit: Million Rs)
Eligible Yen
Description India Portion TOTAL Ratio
Loan Portion
98,833 53,789 152,622 47.2%
0 1,480 1,480 0.5%
9) Preliminary expenses (Survey & Design) 0 742 742 0.2%
10) General Administration Costs 0 10,087 10,087 3.1%
11 Taxes (For foreign consultants) 0 1,872 1,872 0.6%
Total Project Cost: 213,389 110,273 323,662 100.0%
Proportion (Donor – India): 65.9% 34.1% 100.0%
Proportion of
64.8%
(Phase I-a/Whole section):
The percentage of project cost to be funded by India in Phase I-a for Option 1 is 17.5%
whereas for Option 2 is 34.1%.
Chapter 11
11-14
CHAPTER 12
ECONOMIC AND FINANCIAL EVALUATION
CHAPTER 12 ECONOMIC AND FINANCIAL EVALUATION
12.1 OBJECTIVE OF THIS CHAPTER
This chapter aims to justify the feasibility of the project plan. All plan alternatives discussed
in the previous chapters are compared while appraising and justifying investment feasibility
of the DFC project through economic and financial quantitative analysis. While all the
chapters are interrelated in carrying out the analyses, the following four chapters are directly
relevant: Chapter 4 on “DEMAND FORCAST”, Chapter 6 on “TRANSPORT PLANNING”
for the number of rolling stock required and their prices, Chapter 9 on “OPERATION AND
MAINTENANCE PLANNING” for operating costs and revenues, and Chapter 11 on
“OUT-LINE OF THE ESTIMATION OF THE PROJECT COST” for construction costs.
12.2 ECONOMIC EVALUATION
Economic and Financial Evaluation: Justification of the DFC construction plan should be
examined in terms of both economic analysis and financial analysis. Comparison of economic
analysis is based on the viewpoint of whether India aims at optimal utilization of the national
resources, while financial analysis is based on the viewpoint of whether private enterprises
can aim at securing profitability. In case of funding for construction from foreign financing
organizations, calculation of national EIRR index will be indispensable.
National
Standpoint Economic
Economic Cost Internal Economic
Evaluation Rate of Return（EIRR)
Optimum Benefit
Resources
Utilization Discount to
Present Value
Enterprise
Standpoint Market
Financial Cost Internal Financial
Evaluation Rate of Return(FIRR)
Revenue
Balance
Balance of
of
Earnings
Earnings &
&
EExpenses
penseｓ
Figure 12-1 Evaluation Procedure for Economic and Financial Analysis
Evaluation Comparison Index: Economic evaluation compares economic costs with

benefits, and the economic justification index uses the Economic Internal Rate of Return
(EIRR). Financial evaluation compares market costs with revenues, and the financial
justification index uses the Financial Internal Rate of Return (FIRR). Importance of EIRR
takes priority over FIRR. The period of comparison extends up to 35 years of project life (See
Figure 12-1).
12.3 CONCLUSION OF ECONOMIC EVALUATION
Table 12-1 and Table 12-2 show the results of investment feasibility analysis for the two
DFCs, by dividing them into two sections: one for Western, and the second for Eastern DFC.
Chapter 12
12-1
Total cost and benefits over 35 years of the project life discounted at the present value of 2007
were compared for the two sections. EIRR is as follows.
Economic Rate of Return of Western DFC: 14.09％ B/C Ratio: 1.22

Economic Rate of Return of Eastern DFC: 15.26％ B/C Ratio: 1.37
Investment Judgment: Both the Western DFC of 1468 km at a cost of Rs. 287,420 Million
and the Eastern DFC of 1309 km at a cost of Rs. 212,437 Million are economically justified
from the viewpoint of national economy, since the EIRR value is higher than the 12%
opportunity cost of capital. Initial investment costs and yearly operational expenses will be
fully covered by the time savings benefit to passengers and freight transport, operating
expenses savings benefit of trains, vehicle operating savings benefit of trucks and buses, and
savings benefit of exhaust gas and environmental pollution.
Table 12-1 Statement of the Internal Economic Rate of Return, Western DFC
Western DFC Million Rs.
Year Invest. Rolling Total Time Saving Working Expense CO2 Total Balance
Cost Stock Cost C.Train P.Train C.Train P.Train Truck Benefit EIRR
2008-09 16,152 16,152 &Truck &Bus &Truck &Bus &Bus -16,152
2009-10 31,607 31,607 -31,607
2010-11 32,462 32,462 -32,462
2011-12 41,487 1,354 42,841 -42,841
2012-13 34,563 34,563 -34,563
2013-14 19,978 16,721 36,699 1,045 6,455 12,383 6,151 117 26,152 -10,547
2014-15 8,452 3,597 12,049 1,112 6,759 13,160 6,324 156 27,511 15,462
2015-16 2,874 3,899 6,773 1,182 7,106 14,030 6,502 205 29,026 22,253
2016-17 4,132 4,132 1,257 7,509 15,013 6,686 266 30,731 26,599
2017-18 4,935 4,935 1,336 7,979 16,139 6,877 342 32,674 27,739
2018-19 5,636 5,636 952 8,211 17,808 6,976 455 34,402 28,766
2019-20 2,762 2,762 930 8,676 18,466 7,188 513 35,773 33,010
2020-21 2,860 2,860 907 9,185 19,202 7,414 580 37,286 34,426
2021-22 2,973 2,973 881 9,742 20,029 7,648 654 38,953 35,981
2022-23 2,930 2,930 853 11,960 20,961 7,931 746 42,450 39,520
2023-24 3,136 3,136 833 11,534 21,993 7,923 824 43,107 39,971
2024-25 2,653 2,653 845 11,600 23,097 7,949 879 44,371 41,718
2025-26 2,575 2,575 857 12,417 24,291 7,993 943 46,501 43,926
2026-27 2,619 2,619 869 13,394 25,584 8,040 1,010 48,898 46,279
2027-28 1,583 1,583 881 14,563 26,987 8,091 1,083 51,606 50,022
2028-29 1,151 1,151 893 15,961 28,513 8,272 1,181 54,819 53,668
2029-30 463 463 883 17,369 29,895 8,080 1,229 57,456 56,993
2030-31 467 467 872 19,054 31,394 8,015 1,302 60,637 60,171
2031-32 471 471 828 21,068 32,608 7,957 1,380 63,840 63,370
2031-33 474 474 838 21,519 33,214 7,977 1,380 64,929 64,454
2033-34 282 282 848 21,984 33,840 7,998 1,381 66,051 65,768
2034-35 -7 -7 848 21,984 33,840 7,998 1,381 66,051 66,058
2035-36 -7 -7 848 21,984 33,840 7,998 1,381 66,051 66,058
2036-37 -7 -7 848 21,984 33,840 7,998 1,381 66,051 66,058
2037-38 -7 -7 848 21,984 33,840 7,998 1,381 66,051 66,058
2038-39 -7 -7 848 21,984 33,840 7,998 1,381 66,051 66,058
2039-40 -7 -7 848 21,984 33,840 7,998 1,381 66,051 66,058
2040-41 -7 -7 848 21,984 33,840 7,998 1,381 66,051 66,058
2041-42 -7 -7 848 21,984 33,840 7,998 1,381 66,051 66,058
2042-43 -7 -7 848 21,984 33,840 7,998 1,381 66,051 66,058
Total 187,576 67,605 255,180 27,532 461,903 783,163 229,976 29,054 1,531,629 14.09%
Judgment Reliability: There are many uncertain factors in this railway project, as the scale
of investment is very high. There are many cost items, as well as many assumptions made in
estimating savings benefits. The EIRR of the Western DFC is lower than that of the Eastern
DFC; however, enough EIRR is secured even if benefits vary, and the permissible range of
investment justification is high. Thus even if the input index is partially changed, this
conclusion will generally not be affected.
Implementation Judgment: As construction delays result in the delay in generation of

benefits and damage to the utilization of resources, construction of the DFC for both Western
Chapter 12
12-2
and Eastern DFC should be implemented as soon as possible, even if technical problems arise
in each phase.
Table 12-2 Statement of the Internal Economic Rate of Return, Eastern DFC
Eastern DFC Million Rs.
Year Invest. Rolling Total Time Saving Working Expenses CO2 Total Balance
Cost Stock Cost C.Train P.Train C.Train P.Train Truck Benefit EIRR
2008-09 12,377 12,377 &Truck &Bus &Truck &Bus &Bus -12,377
2009-10 24,068 24,068 -24,068
2010-11 24,701 24,701 -24,701
2011-12 29,563 1,809 31,372 -31,372
2012-13 23,899 23,899 -23,899
2013-14 12,560 19,477 32,037 13.9 6,365 8,672 5,982 120 21,154 -10,883
2014-15 4,889 4,067 8,956 15.2 6,729 9,179 6,145 192 22,261 13,305
2015-16 1,392 4,021 5,412 16.5 7,163 9,580 6,312 237 23,309 17,896
2016-17 4,501 4,501 17.9 7,686 9,867 6,483 293 24,346 19,845
2017-18 4,859 4,859 19.4 8,321 10,031 6,658 361 25,390 20,532
2018-19 5,495 5,495 21.0 8,778 10,066 6,738 444 26,047 20,552
2019-20 647 647 23.7 9,345 11,495 6,876 535 28,275 27,628
2020-21 534 534 26.6 9,997 12,999 7,017 586 30,625 30,091
2021-22 672 672 29.6 10,748 14,583 7,160 643 33,163 32,491
2022-23 552 552 32.9 11,617 16,255 7,305 704 35,913 35,361
2023-24 428 428 36.3 12,520 18,020 7,211 770 38,558 38,130
2024-25 548 548 38.2 13,463 18,475 7,194 853 40,024 39,476
2025-26 551 551 40.3 14,562 18,979 7,173 938 41,692 41,141
2026-27 357 357 42.5 15,839 19,535 7,147 1,034 43,598 43,240
2027-28 481 481 44.9 17,319 20,151 7,116 1,141 45,773 45,292
2028-29 437 437 47.6 19,031 20,833 7,080 1,262 48,254 47,817
2029-30 413 413 50.3 20,826 21,582 6,899 1,398 50,756 50,342
2030-31 295 295 53.1 22,937 22,395 6,710 1,532 53,627 53,332
2031-32 297 297 56.2 25,415 23,279 6,511 1,681 56,943 56,646
2031-33 300 300 57.5 26,009 23,728 6,511 1,848 58,154 57,855
2033-34 302 302 58.8 26,620 24,192 6,511 1,848 59,231 58,929
2034-35 -8 -8 58.8 26,620 27,307 6,511 1,849 62,346 62,354
2035-36 -8 -8 58.8 26,620 27,307 6,511 1,855 62,352 62,360
2036-37 -8 -8 58.8 26,620 27,307 6,511 1,855 62,352 62,360
2037-38 -8 -8 58.8 26,620 27,307 6,511 1,855 62,352 62,360
2038-39 -8 -8 58.8 26,620 27,307 6,511 1,855 62,353 62,361
2039-40 -8 -8 58.8 26,620 27,307 6,511 1,856 62,353 62,361
2040-41 -8 -8 58.8 26,620 27,307 6,511 1,856 62,353 62,361
2041-42 -8 -8 58.8 26,620 27,307 6,511 1,856 62,353 62,361
2042-43 -8 -8 58.8 26,620 27,307 6,511 1,856 62,354 62,362
Total 133,450 50,971 184,421 1,272 540,874 589,656 201,345 35,113 1,368,261 15.26%
12.4 CONSTRUCTION COSTS FOR ECONOMIC ANALYSIS
Item Adjustment Value Adjustment
Cost estimated by Financial Economic

market price Cost Cost
12.4.1 Construction Costs
Financial Cost: The following items were extracted from the construction cost as estimated
by market price in Chapter 11.
1) Electric locomotives procurement

2) Spare parts for electric locomotives
3) Price escalation
4) Financial interest during construction
Chapter 12
12-3
Rolling stock is a cost of DFC management, but cost fluctuates according to the transport
demand, so it was calculated separately from the construction cost. Price escalation and
interest during construction were eliminated because of the transfer items in economic
activities.
Economic Costs: Financial costs are divided into domestic currency and foreign currency.
Domestic currency is divided further into tradable goods and non-tradable goods, skilled labor
and unskilled labor, and tax to correct price distortion, in order to estimate economic cost
while evaluating the genuine value of resources. Shadow exchange coefficient is 0.91which is
applied to non-tradable goods, and shadow wage rate of 0.77 is applied to unskilled workers.
As for the land costs of non-tradable goods, 7.5% of public land is used, which is obtained
without spending money. These costs are regarded as zero for financial analysis, while it is
not zero for economic cost since land resources are used. Public land cost estimate is included
in the economic cost, based on average market prices.
Financial and Economic Costs: Table 12-3 shows the composition of economic costs of
Western and Eastern DFC. These costs are used as the base case for economic analysis. (Volume4
Technical Working Paper Task2, 12 Table12-1 ‘Conversion to Economic Cost from Financial Cost,
Western and Eastern DFC’,Table12-20 ‘Shadow Exchange Coefficient’).
Cost estimate by market price: Western Rs. 287,420 Million., Eastern Rs. 212,437 Million.
Cost eliminated for 4 items: Western Rs. 220,162 Million, Eastern Rs. 155,908 Million.
Cost adjusted by value (economic cost): Western Rs. 187,576 Million, Eastern Rs. 133,450
Million.
Table 12-3 Construction Costs for DFC Economic Evaluation

Million Rs.
Western DFC Eastern DFC
Items
Financial Economic Financial Economic
Civil &Building, Track 109,545 92,219 70,038 58,960
Electrical & Mechanical Work 17,142 14,310 13,791 11,512
Signaling & Telecommunication Work 24,124 20,641 20,420 17,472
Cosultancy Service 5,432 4,711 3,419 2,965
Physical Contingency 10,084 8,199 7,369 5,992
Land Acquisition 26,439 24,597 25,393 23,624
General Administration 10,598 8,785 7,235 5,997
Others 16,799 14,114 8,244 6,927
Total for Evaluation 220,162 187,576 155,908 133,450
Grand Total 287,420 212,437
12.4.2 Economic Costs of Rolling Stock
Conversion to Economic Cost: Rolling stock consists of electric locomotives and freight
cars. Locomotives are divided into 8 axles for bulk cargo and 6 axles for containers. The
number of vehicles required in operation is calculated based on traffic demand, train-km, train
operation planning. Locomotives for the DFC are assumed to be all new. Locomotives are
also to be operated on the DFC feeder lines, but they are assumed to be operating within the
DFC for investment cost calculation. Economic conversion to economic price from market
price is as follows. (Volume4 Technical Working Paper Task2,12 Table 12-2 ‘Conversion to
Economic Cost from Financial Cost, Locomotive & Wagon’).
Chapter 12
12-4
Table 12-4 Rolling Stock Cost, Market Price and Economic Price
Million Rs.
Items Financial Cost Conversion Ratio Economic Cost
Electric Locomotive for Bulk (8-Axle) 212.00 92.5% 196.1
Electric Locomotive for Container (6-Axle) 130.00 92.5% 120.2
Container & Bulk 2.162 80.6% 1.74
Economic Cost of Rolling Stock: Rolling stock will be used right from the DFC’s opening
year, but initially only 10 locomotives for both corridors’ test operation are included from 2
year before opening. It is assumed that at the time of initial operation, 70% of the vehicles on
the existing railroad will be used, and that their costs are 50% of the new products. The life of
vehicles is estimated at 36 years for new rolling stock and 20 years for old wagons. （Volume4
Technical Working Paper Task2, 12 Table12-3 shows ‘Eastern DFC, Financial Cost, Number
of Locomotives, Wagons and the Cost by Operation Years; Table12-4 shows Eastern DFC,
Economic Cost, Number of Locomotives, Wagons and the Cost by Operation Years; Table12-5
shows Western DFC, Financial Cost, Number of Locomotives, Wagons and the Cost by
Operation Years; Table12-6 shows Western DFC, Economic Cost, Number of Locomotives,
Wagons and the Cost by Operation Years’）
Table 12-5 Classification of Rolling Stock, Number and Price

Million Rs.
West Classification No. Financial Economic
Electric Locomotive for Container (6 Axle） 246 31,980 29,580
for Bulk （8Axle） 68 14,416 13,334
Container New 10,327 22,326 17,998
Old 1,544 1,535 1,237
Bulk New 2,441 5,277 4,254
Old 1,503 1,494 1,201
Total 77,027 67,605
East Classification No. Financial Economic
Electric Locomotive for Container (6 Axle） 6 780 721
for Bulk （8Axle） 178 37,736 34,904
Container New 207 448 361
Old 63 63 50
Bulk New 7,076 15,298 12,332
Old 3,248 3,228 2,602
Total 57,552 50,971
12.5 TRAFFIC VOLUME FOR COST-BENEFIT CALCULATION
Traffic volume: The traffic volume estimated in Chapter 4 is divided as described below for
benefits analysis. The basis for traffic flow is from origin to destination. For the case that
assumes the DFC is not built (“without DFC”), traffic estimation was divided into traffic
diverted to the parallel highway, and remaining traffic on the existing railway. Passenger
traffic is also included in this traffic estimation analysis. Though the DFC is a project for
cargo transport only, the DFC project benefits passenger trains as well.
Classifications of Traffic: For the case that assumes the DFC is built (“with DFC”), traffic
was classified into four categories; 1) traffic using the DFC, 2) traffic remaining on the
existing railways, 3) traffic connected to the DFC directly (feeder), and 4) traffic remaining
on the parallel highway. Traffic on the parallel highway is classified into truck transport for
freight, and bus transport for passengers. Thus in the economic analysis, all railway and
highway traffic are to be analyzed, including the existing railway. The method of traffic
distribution is explained in more detail in Chapter 4. The growth rate of traffic volume is not
Chapter 12
12-5
fixed, because the opening period is divided in the first and second stages (see Chapter 4,
“DEMAND FORECAST”).
Table 12-6 Traffic Volume with DFC and Without DFC for Economic Analysis
Freight(Billion Ton-km) 2013 2017 2018 2022 2023 2028 2031
Without DFC
Existing Rail 426.2 467.7 510.3 557.6 588.1
Road 28.2 73.9 122.7 175.0 209.4
With DFC
Eastern Corridor
DFC 35.2 72.8 76.2 79.4 81.0
Feeder 49.7 91.3 97.7 103.9 106.9
Without Western Corridor
Existing Rail 348.4 352.8 368.7 413.0 441.9
Road 15.8 39.3 77.8 119.0 147.1
Western Corridor
DFC 29.2 32.6 67.5 86.0 90.6 113.5 128.2
Feeder 28.0 30.5 29.4 35.6 37.3 45.5 51.8
Without Eastern Corridor
Existing Rail 374.1 397.9 406.8 432.0 439.7 475.3 500.7
Road 16.4 25.9 27.2 34.7 38.1 56.5 69.4
Passenger(Billion Pass.km) 2013 2017 2018 2022 2023 2028 2031
Without DFC Case
Existing Rail 120.9 138.6 143.0 160.3 164.0 179.2 186.0
Road 2.0 4.8 5.5 9.7 11.4 23.4 34.1
With Eastern DFC
Existing Rail (East) 46.0 - 55.3 - 64.9 74.4 80.1
Existing Rail (Wes 57.3 - 68.3 - 78.9 85.9 89.6
Road 0.9 - 1.8 - 3.6 9.8 15.0
With Western DFC
Existing Rail (East) 45.4 - 53.4 - 60.5 65.7 68.0
Existing Rail (Wes 57.3 - 69.5 - 81.0 91.6 98.1
Road 1.2 - 3.7 - 8.7 17.5 24.8
12.6 COUNTABLE BENEFITS
Classifications of benefits: Countable benefits can be classified as follows. These are direct
benefits from the DFC project. Economic and social impact is based on the macro analysis by
Intermodal Research Units, which forecasts a ripple effect on households (income and
employment), on productivity (GDP), on the government (tax revenue), and on economic and
social effects not included in these benefits.
Benefits related to railways
1. Transportation time savings benefit

2. Working expense savings benefit for cargo trains and passenger trains
3. Investment cost (locomotives, freight cars) savings benefit
Direct benefits related to roads

4. Time savings benefit to passengers and freight
5. Capital cost savings benefit of vehicles
6. Road maintenance cost savings benefit
7. Traffic accident decrease benefit
8. Time and vehicle operating cost savings benefit gained from crossing of rail tracks
using ROBs
9. Environmental improvement benefit (decrease of automobile exhaust gas)
Chapter 12
12-6
Counted Benefit: From the list of countable benefits, the following 10 items were calculated.
Other uncountable benefits are covered by about 10% plus benefits at sensitivity analysis.
Improvement benefits of ports at both ends of the DFC main lines, and of ICD (Inland
Container Depot) maintenance are handled as independent facilities not included in the DFC
benefits.
1) Time savings benefit for cargo transported by cargo trains (cargo)

2) Time savings benefit for passengers transported by passenger trains (passenger)
3) Time savings benefit for cargo transported by trucks (cargo)
4) Time savings benefit for passenger buses (passenger)
5) Working expense savings benefit from efficient operation of cargo trains (train)
6) Working expense savings benefit from efficient operation of passenger trains (train)
7) Vehicle operating cost savings benefit for trucks (vehicle)
8) Vehicle operating cost savings benefit for buses (vehicle)
9) Benefit from decrease in exhaust gas of route trucks.
10) Benefit from decrease in exhaust gas of route buses.
12.7 “WITH” AND “WITHOUT”
Generation of Benefits: Benefits are generated both with and without the DFC project. In the
case of “without DFC”, only existing railroads and highways are analyzed. In the case of
“with DFC”, the DFC is added to the analysis. As a result of this, service conditions and
allocated transport volume will change, thus generating benefits.
Figure 12-2 is a simplified chart showing the relationship between traffic volume and
traveling speed used in calculating benefits.
R 65
26km/h
a
i Benefit related to railway
l
w ４２ 65：16、90(ton or person)
a R 1.Time saving of cargo
y o 35km/h 2.Time saving of passenger
a
d
3.Cost saving of cargo train
Without 4.Cost saving of passenger train
With 45km/h
16
t
70km/h Benefit related to highway
D 50km 42：1 ton or person
F 5.Time saving of truck cargo
C
1
6.Time saving of bus passenger
7.Cost saving of truck
90
8.Cost saving of bus
9.CO2 Saving of Bus
10.CO2 Saving of Truck
Figure 12-2 Change in Service Levels and Benefits Generated for With and Without DFC
Chapter 12
12-7
Without DFC, the total traffic volume of 107 (tons or persons) is transported by railways
carrying 65 and highways carrying 42. With DFC, the distribution changes to 90 carried by
the DFC, 16 by the existing railways, and 1 by highways.
The difference in transport volume between “with DFC” and “without DFC” results in a
difference in the service level of the DFC, existing railways, and highways, thus generating
benefits. For example, there are differences in operating speed, transportation distance,
transportation cost, transported items (cargo, passenger), and working expenses.
In the case above, existing railways gain time and working expenses benefits from the
difference in service level between 65 “without DFC” and 16 and 90 “with DFC”. Trucks and
buses on the highways get time, cost, and exhaust gas savings benefit from the different
service level between 42 “without DFC” and 1 “with DFC”. This is the same for passengers.
These combinations of traffic volume and different service level sometime generate negative
benefits. In some cases, it generates much higher operating costs for buses and trucks. The
benefit brought about by the construction of the DFC is reflected by the aggregate of all
benefits, including positive benefits, negative benefits and decrease of benefits.
12.8 TIME SAVINGS BENEFIT
12.8.1 Measurement of Time Savings Benefit
The time savings benefit for freight trains, passenger trains, and trucks and buses generated
by the construction of the DFC are calculated based on changes in freight and passenger
transport volume, driving speed, transport distance, and cargo time and passenger time value
(see chart below).
Running speed Time value

Train, Bus, Truck Freight, Passenger
Traffic Time Time saving
Demand Saving benefit
Traveling
distance
12.8.2 Operating Speed
Operating Speed of Railways: The operating speed of railway in the case of “Without” vary
according to freight cars, passenger cars, super-express, express, local, regional, number of
operating trains, etc.. From the Annual Statistical Statement, the average speed was estimated
at 26 km/h, considering the speed of container trains and bulk trains. The operating speed of
the DFC is based on the operating schedule prepared by the Study Team. The degree of
influence caused by the construction of the DFC on related lines varies depending on whether
the line is a feeder lines directly connected to DFC or if it is an unconnected existing line.
For passenger carriages, speed will not increase even ‘with DFC’. Instead, the number of
operating trains will increase. The benefits in this case are generated by a decrease in waiting
time resulting from increased frequency of trains. The average operating speed of freight and
passenger trains is shown in Table 12-7 (see also Chapter 6 “Transport Planning”).
Chapter 12
12-8
Table 12-7 Travelling Speed, With and Without DFC

Traveling Speed
Cargo Train
Without Project Existing, Feeder 26 km/h
With Project DFC 70 km/h
Feeder West (Container) 50 km/h
East (Bulk) 40 km/h
Existing 26 km/h
Passenger Train
Without Project Existing, Feeder 55 km/h
With Project Feeder 55 km/h
Existing 55 km/h
Truck & Bus
Without Project 35 km/h
After 20years 20 km/h
With Project 50 km/h
After 20years 30 km/h
Travelling speed of trucks and buses: Running surveys of parallel national highways and
improved national highways, as well as congestion surveys were conducted. While it is
possible to run at 80~90 km/h on the completed expressway sections of the Western DFC
such as the 140-km Ahmedabad-Vadodara segment, the following assumptions are made in
consideration of factors such as vehicles running on opposite direction, vehicles violating
rules on the passing lanes, and a mixture of 4-lane and 2-lane roads.
・Traveling speed “without DFC”: decrease from 35 km/h to 20 km/h in 20 years
・ Traveling speed “with DFC”: decrease from 50 km/h to 30 km/h in 20 years
12.8.3 Unit time value of cargo
Price per ton: Time savings benefit for cargo was measured by converting cargo time saved
for “with” and “without” into monetary value. The time value of cargo differs according to
the content of the cargo. For the Western DFC, the main cargo transported are containers
having a large variety of contents. However, most containers consist of import-export cargo,
and the unit price per ton was thus estimated based on 20 import items and 21 export items,
selected using import-export statistics. In the Eastern DFC, the main commodity is coal.
Statistical data on coal is available annually in India, and the nationwide average price per ton
was used (see Volume4 Technical Working Paper Task2, 12 Table12-19 Unit Price and Time
Value of Cargo, Western DFC).
Western DFC commodities: 4,052 Rs./ton (average of imports and exports)
Eastern DFC commodities: 749 Rs./ton (mainly coal)
Time value per ton: Cargo lying in stock due to transport delays incurs costs by the hour.
The cost per hour is equal to the short term interest rate (11% per annum) on the commodity
price computed per hour. The cost of delayed cargo was computed per ton/hour by applying
the economic price conversion coefficient of 85% to the cost per hour. The converted value of
time saved is as below.
Western DFC commodities: 0.432 Rs./ton/hour
Eastern DFC commodities: 0.0080 Rs./ton/hour
Chapter 12
12-9
12.8.4 Unit Time Value of Passengers
Characteristics of time value: The time value of passengers is higher than that of cargo. A
great variety of passengers use trains: workers and non-workers, high income and low income
earners, businessmen and tourists, students, children and the elderly. Detailed statistics on
income groups in India are easily available, and there are many analyses in the field of time
value in India. It is thus possible to calculate the time value of passengers, but generally
accepted figures in other projects was adopted in this analysis.
Unit time value of passengers: The time savings value of existing railroad passengers and
time savings value of bus passengers amounted to 2.10~9.3 Rs./passenger hour in 1999, and
5.3~21.4 Rs./passenger hour in 2004. After trial calculations, the average time value of 17.74
Rs./passenger hour was adopted for this analysis.
12.9 OPERATING EXPENSES SAVINGS BENEFIT
12.9.1 Savings Benefit for Railway Operating Expenses
For operating expenses “with DFC”, data from the attached “General Estimate of Operating
and Maintenance Costs” was used. Personnel expenses based on scaled-down personnel
management and physical expenses based on efficient operating and maintenance
management form the basis for estimating operating expenses. In particular, the unit
personnel costs for railway stations, facilities, and electricity will decrease annually as the
operation length and number of trains increase.
In the case of “without DFC”, average operating expenses of the existing railway is derived
from the Indian Railways Annual Statistics Report. It is calculated as 0.31 Rs./ton-km x 85％
= 0.264 Rs./ton-km. Average operating expenses of existing railway ‘with DFC’ is assumed to
drop by 5% (see Chapter 9, ”Operation and Maintenance Planning”).
12.9.2 Vehicle Operating Costs and Running Benefits for Trucks and Buses
Pre-suppositions: The benefit is generated from the changes in traveling speed between
“with DFC” and “without DFC”. The average traveling distance of truck and buses are based
on a survey of the origin and destination of each commodity. The traveling distance varies
yearly: that of Western DFC is between 780km and 980km, while the Eastern DFC is between
500km and 520km. Average transport volume is estimated at 10 tons by truck and 35
passengers by bus from Enterprise Study of India.
Traveling speed and Running Costs: Vehicle operating costs increase as traveling speed
decreases. The formula of the integral curve is from the formula tested by the Federal
Highway Authority of United Stated, modified for India as follows. Purchase price for trucks
is set at 1,135,264 Rs. and for buses at 1,335,605 Rs., converted to economic value:
・large size bus： Y = 0.003464x２ - 0.452039x + 24.768072 + 3.35
・large size truck： Y = 0.002082x２ – 0.2603x + 17.274845 + 3.64
Where X is traveling speed and Y is vehicle operating cost (fuel, lubricant oil, tires, etc.). The
largest change occurs in fuel costs (80%). Some costs that are not affected by speed are
overhead cost, crew costs, and capital cost. (See Volume4 Technical Working Paper Task2, 12
Table 12-21, “Input Data for Unit Vehicle Operating Cost at Base Speeds”)
Chapter 12
12-10
12.10 CALCULATION OF BENEFIT FROM DECREASE OF VEHICLE EXHAUST

GAS
Exhaust of CO2: Environmental pollution caused by exhaust gases has led to problems of
global warming. Increase in traffic and exhaust gases “without DFC” was compared to the
benefits of decreasing road traffic and lower CO2 emissions. The relationship between a
decrease in speed and the resulting increase in fuel expenses can be calculated by the same
formula as the one used for running costs benefit. Converting fuel consumption per 1 litre to
calories, 1 litre of gasoline = 0.0371GJ calorie = weight of CO2 per calorie 1= 74.01kg.
Running Conversion Conversion Emissions

Ｄｉｓｔａｎｃ Ratio0.037GJ Ratio74.01kg Trading Market
Number of Gasoline Gasoline CO2 CO2

Truck/Bus Ｃｏｎｓｕｍｐｔｉｏｎ Joule Mass: Kg Price/ton
Running CO2 of Power

Speed Plant -36.7%
CO2 Saving
Benefit
Figure 12-3 Calculation of Benefit from Decrease of Vehicle Exhaust Gas
Price of CO2 per 1000 kg: Since there has been until now no demand for CO2, it is ordinarily
not priced. However, the CO2 Emissions Trading Scheme has created a “demand” for CO2.
The trading price of CO2 per 1000kg is determined in the same way as the stock market, but it
is very unstable at present, ranging from 1 dollar to 23 dollars. 5 dollars/ton is assumed in the
calculation of this benefit.
Power Plant CO2: While electric locomotives do not directly emit CO2, CO2 is produced by
the power plant that supply electricity to the trains. A survey of railway CO2 by the Railway
Research Institute in Japan reveals that the ratio of CO2 per ton-kg is 100 (trucks): 36.7
(railways). Thus, the benefit due to CO2 was calculated by subtracting power plant CO2 from
the “without DFC” emissions of trucks and buses.
(Volume4 Technical Working Paper Task2, Table12-15 Western DFC, Truck, Benefit from
Decrease of Automobile Exhaust Gas; Table12-16 Western DFC, Bus, Benefit from Decrease
of Automobile Exhaust Gas; 12-17 Eastern DFC, Truck, Benefit from Decrease of Automobile
Exhaust Gas; 12-18 Eastern DFC, Bus, Benefit from Decrease of Automobile Exhaust Gas)
12.11 RESULTS OF BENEFIT AND COSTS CALCULATION
Table 12-8 and Table 12-9 show the results of benefit and costs calculation. Benefits are
generated not only for cargo, but also for passengers. Furthermore, positive benefits extend
beyond railways to trucks & buses as well. On the other hand, trucks & buses generate CO2,
hence causing negative benefits.
In order to obtain an accurate grasp of benefits, the period of analysis was set at 20 years, from
2013/14 to 2033/34. However, in the cost-benefit analysis, the period between 2033/34 and
2042/43 has been covered as well. The main characteristics are as follows.
Chapter 12
12-11
Table 12-8 Summary for the Total Benefit Stream, Western DFC
Western DFC Billion Rs.
Time Saving Working Expenses Saving Co2 Saving Grand
Year Cargo Passenger Cargo Passenger Truck Bus Total
Train Truck Train Bus Train Truck Train Bus
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14 1.0 0.0 5.9 0.6 11.5 0.9 6.1 0.0 0.1 0.0 26.2
2014-15 1.1 0.0 6.0 0.8 12.0 1.1 6.3 0.0 0.2 0.0 27.5
2015-16 1.1 0.0 6.1 1.0 12.5 1.5 6.5 0.0 0.2 0.0 29.0
2016-17 1.2 0.0 6.3 1.2 13.1 1.9 6.6 0.0 0.3 0.0 30.7
2017-18 1.3 0.1 6.4 1.5 13.6 2.5 6.8 0.0 0.3 0.0 32.7
2018-19 0.9 0.1 6.5 1.7 14.5 3.3 6.9 0.1 0.4 0.0 34.4
2019-20 0.8 0.1 6.7 2.0 14.6 3.9 7.1 0.1 0.5 0.0 35.8
2020-21 0.8 0.1 6.9 2.3 14.7 4.5 7.3 0.1 0.6 0.0 37.3
2021-22 0.8 0.1 7.1 2.6 14.8 5.2 7.6 0.1 0.6 0.0 39.0
2022-23 0.7 0.1 7.3 4.6 14.9 6.1 7.8 0.1 0.7 0.0 42.4
2023-24 0.7 0.2 7.2 4.3 15.0 7.0 7.8 0.1 0.8 0.0 43.1
2024-25 0.7 0.2 7.2 4.4 15.3 7.8 7.8 0.2 0.9 0.0 44.4
2025-26 0.7 0.2 7.2 5.2 15.6 8.7 7.8 0.2 0.9 0.0 46.5
2026-27 0.7 0.2 7.1 6.3 15.9 9.7 7.8 0.2 1.0 0.0 48.9
2027-28 0.6 0.2 7.1 7.5 16.2 10.8 7.8 0.3 1.1 0.0 51.6
2028-29 0.6 0.3 7.0 8.9 16.5 12.0 7.8 0.4 1.1 0.0 54.8
2029-30 0.6 0.3 6.8 10.5 16.6 13.3 7.7 0.4 1.2 0.0 57.5
2030-31 0.6 0.3 6.6 12.4 16.8 14.6 7.6 0.5 1.3 0.0 60.6
2031-32 0.5 0.3 6.4 14.7 16.6 16.0 7.4 0.5 1.4 0.0 63.8
2031-33 0.5 0.3 6.4 15.1 16.6 16.6 7.4 0.6 1.4 0.0 64.9
2033-34 0.5 0.4 6.4 15.6 16.6 17.3 7.4 0.6 1.4 0.0 66.1
2034-35 0.5 0.4 6.4 15.6 16.6 17.3 7.4 0.6 1.4 0.0 66.1
2035-36 0.5 0.4 6.4 15.6 16.6 17.3 7.4 0.6 1.4 0.0 66.1
2036-37 0.5 0.4 6.4 15.6 16.6 17.3 7.4 0.6 1.4 0.0 66.1
2037-38 0.5 0.4 6.4 15.6 16.6 17.3 7.4 0.6 1.4 0.0 66.1
2038-39 0.5 0.4 6.4 15.6 16.6 17.3 7.4 0.6 1.4 0.0 66.1
2039-40 0.5 0.4 6.4 15.6 16.6 17.3 7.4 0.6 1.4 0.0 66.1
2040-41 0.5 0.4 6.4 15.6 16.6 17.3 7.4 0.6 1.4 0.0 66.1
2041-42 0.5 0.4 6.4 15.6 16.6 17.3 7.4 0.6 1.4 0.0 66.1
2042-43 0.5 0.4 6.4 15.6 16.6 17.3 7.4 0.6 1.4 0.0 66.1
Total 20.8 6.7 198.4 263.5 462.9 320.3 220.3 9.7 28.5 0.5 1,532
% 1.4% 0.4% 13.0% 17.2% 30.2% 20.9% 14.4% 0.6% 1.9% 0.0% 100.0%
Table 12-9 Summary for the Total Benefit Stream, Eastern DFC
Eastern DFC
Time Saving Working Expenses Saving Co2 Saving Grand
Year Cargo Passenger Cargo Passenger Truck Bus Total
Train Truck Train Bus Train Truck Train Bus
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14 0.01 0.00 5.7 0.7 7.8 0.9 6.0 0.0 0.1 0.00 21
2014-15 0.01 0.00 5.8 0.9 8.1 1.1 6.1 0.0 0.1 0.07 22
2015-16 0.01 0.01 5.9 1.2 8.2 1.4 6.3 0.0 0.1 0.09 23
2016-17 0.01 0.01 6.1 1.6 8.1 1.8 6.5 0.0 0.2 0.11 24
2017-18 0.01 0.01 6.2 2.1 7.7 2.3 6.7 0.0 0.2 0.14 25
2018-19 0.01 0.01 6.3 2.5 7.1 2.9 6.7 0.0 0.3 0.17 26
2019-20 0.01 0.01 6.4 3.0 8.2 3.3 6.9 0.0 0.3 0.20 28
2020-21 0.01 0.02 6.5 3.5 9.2 3.8 7.0 0.0 0.4 0.23 31
2021-22 0.01 0.02 6.6 4.2 10.3 4.2 7.2 0.0 0.4 0.26 33
2022-23 0.01 0.02 6.7 4.9 11.5 4.8 7.3 0.0 0.4 0.30 36
2023-24 0.02 0.02 6.5 6.0 12.6 5.4 7.2 0.0 0.4 0.35 39
2024-25 0.02 0.02 6.4 7.0 12.5 6.0 7.2 0.0 0.4 0.41 40
2025-26 0.02 0.03 6.4 8.2 12.3 6.6 7.2 0.0 0.5 0.47 42
2026-27 0.01 0.03 6.3 9.6 12.2 7.4 7.1 0.0 0.5 0.55 44
2027-28 0.01 0.03 6.2 11.1 12.0 8.1 7.1 0.0 0.5 0.63 46
2028-29 0.01 0.03 6.1 13.0 11.8 9.0 7.1 0.0 0.5 0.73 48
2029-30 0.01 0.04 5.8 15.0 11.7 9.9 6.9 0.0 0.6 0.84 51
2030-31 0.01 0.04 5.5 17.4 11.6 10.8 6.7 0.0 0.6 0.95 54
2031-32 0.01 0.04 5.2 20.2 11.5 11.8 6.5 0.0 0.6 1.08 57
2031-33 0.01 0.04 5.2 20.8 11.5 12.2 6.5 0.0 0.6 1.23 58
2033-34 0.01 0.04 5.2 21.4 11.5 12.7 6.5 0.0 0.6 1.23 59
2034-35 0.01 0.04 5.2 21.4 11.5 15.8 6.5 0.0 0.6 1.23 62
2035-36 0.01 0.04 5.2 21.4 11.5 15.8 6.5 0.0 0.6 1.23 62
2036-37 0.01 0.04 5.2 21.4 11.5 15.8 6.5 0.0 0.6 1.23 62
2037-38 0.01 0.04 5.2 21.4 11.5 15.8 6.5 0.0 0.6 1.23 62
2038-39 0.01 0.04 5.2 21.4 11.5 15.8 6.5 0.0 0.6 1.23 62
2039-40 0.01 0.04 5.2 21.4 11.5 15.8 6.5 0.0 0.6 1.23 62
2040-41 0.01 0.04 5.2 21.4 11.5 15.8 6.5 0.0 0.6 1.23 62
2041-42 0.01 0.04 5.2 21.4 11.5 15.8 6.5 0.0 0.6 1.23 62
2042-43 0.01 0.04 5.2 21.4 11.5 15.8 6.5 0.0 0.6 1.23 62
Total 0.4 0.9 174.0 366.9 320.8 268.9 201.3 0.0 14.0 21.1 1,368
% 0.0% 0.1% 12.7% 26.8% 23.4% 19.6% 14.7% 0.0% 1.0% 1.5% 100%
Chapter 12
12-12
Characteristics of Total Benefits: The total component of benefits and order of benefits is as
follows. The main benefits consist of the top five items, which amount to 95.8% in the
Western DFC and 97.6% in the Eastern DFC.
Table 12-10 Components by Items of Result of Benefits Estimation

Benefit Items West East
1 Working expenses saving of the cargo train by efficient 32.5% 26.9%
2 Vehicle operating saving benefit of the truck (vehicle) 17.7% 15.7%
3 Working expenses saving benefit of the passenger train by 16.5% 17.7%
4 Time saving benefit of the passengers by passenger train 15.2% 15.7%
5 Time saving benefit of the passenger bus (passenger) 14.5% 21.6%
6 Benefit of exhaust gas decrease of route trucks. 1.7% 1.0%
7 Time saving benefit of the cargo transported by cargo train 1.6% 0.1%
8 Vehicle operating cost saving benefit of the bus (vehicle) 0.5% 0.1%
9 Time saving benefit of the cargo transported by truck (cargo) 0.4% 0.1%
10 Benefit of exhaust gas decrease of route buses. 0.1% 1.2%
35%
30 %
30%
25 %
25%
20% 20 %
15%
15 %
10%
10 %
5%
0% 5%
Truck
Truck
Truck
C.Train
C.Train
P.Train
P.Train
Bus
Bus
Bus
0%
C.Train
C.Train
Truc k
Bu s
Truc k
Bu s
Truc k
Bu s
P.Train
P.Train
Time Saving Working Co2

Expenses Saving Saving Time Saving Working Expenses Co2
Saving Saving
Western DFC Eastern DFC
Figure 12-4 Benefits Components Graph
Time Savings Benefits: Cargo vs. Passengers: The purpose of constructing the DFC is to
transport long-distance cargo quickly and inexpensively. However, the benefit analysis reveals
that time savings benefit is actually larger for passengers than for cargo. Time savings benefit
generated by the earlier arrival of cargo is very low. On the other hand, time savings benefit
for passengers are very high, resulting from the shift of cargo previously transported in mixed
passenger-cargo trains to all-cargo trains in the DFC. As the average running speed of
passenger trains is 55 km/h for both “with DFC” and “without DFC” scenarios, the time
savings benefit is not gained from an increase in the speed of passenger trains but from the
higher number of extra trains that can be operated, resulting in the drastic reduction of
passenger waiting time.
The ratio of time savings benefit for cargo trains and passenger trains is 5:95 for the Western
DFC and 1:99 for the Eastern DFC.
The reason why passenger transport has higher benefit is that the value of persons is higher
than the value of cargo. Time value of cargo per ton per hour is 0.043 Rs. in the Western DFC
where containers are main cargo, and 0.008 Rs. in the Eastern DFC where coal is the main
Chapter 12
12-13
cargo. On the other hand, value of person is 17.74 Rs. per person per hour, which is much
higher. Passenger trains in India are very congested at present, and the construction of the
DFC will contribute to the reduction of this problem. This ratio is about the same in the
Eastern and Western Bypass Corridors.
Effects of Influence on Road Traffic: Savings of Traveling Cost of Trucks: Construction

of the DFC has a big influence on road traffic. In the case of ”without DFC”, cargo and
passengers which cannot be transported on the usual lines have to use parallel national
highways. The difference in number of trucks per day between”with” and “without” (in other
words, “forced out traffic”) is shown in the table below. The average distance of this traffic is
estimated at 980km for the Western DFC and 525km for the Eastern DFC.
Table 12-11 Number of Trucks/day on Parallel Highway ”Without DFC”

Year Western DFC Eastern DFC
2013/14 4,138 6,735
2018/19 13,124 17,774
2023/24 23,694 23,464
2028/29 33,564 29,683
For “Without DFC”, traveling speed is set at 35 km/h; and “With DFC” at 50km/h. Along
with increase of traffic volume, traveling speed decreases. Thus traveling cost saving accounts
for 17.5% of the total benefit of the Western DFC, and 15.7% of the Eastern DFC. Benefits
for trucks on regular routes generated from a decrease of traffic congestion and by increase of
speed of long–distance cargo to be transferred to DFC.
Effects of Influence on Road Traffic: Benefit of Exhaust Gas Reduction: This accounts
for 1% of the total benefit. The price of CO2 is traded in the same way as stocks in the stock
market, and the price of gas emission rights fluctuate between 1 to 23 dollars. For the present
calculation, the price is assumed to be 5 dollars per ton. If 1 ton is priced at 10 dollars, this
benefit will account for 3% each of the Eastern and Western DFC.
In some cases, CO2 savings benefit is included in railroad benefit, and in other cases it is not.
It accounts only for 1% of the total benefits. However, total savings benefit of exhaust gas
reduction of both the Western and Eastern DFC over a period of 30 years amounts to
58,700,000 Rs. If the DFC is not constructed, roads will overflow with vehicles, resulting in a
big national loss (See Chapter 10, “ENVIRONMENT AND SOCIAL IMPACT MEASURES
MITIGATION STUDY (ESIMMS)”).
Meaning of Time Savings Benefits of DFC: Importance of ICD: Time savings benefit and
operating savings benefit from DFC construction is about the same at 50:50; however, there
are specific characteristics depending on transport mode. In cargo transport time, the weight
of time savings benefit is not large. Rather than time savings, other savings have more
important meaning, such as port areas to connect transport, consolidation of ICD areas, access
roads in the surrounding areas, delivery form, savings in delivery time, etc. Transport of
freight in lesser time includes benefits of other than just time savings benefit, such as an
increase of added value of cargo. In this report only direct benefits are calculated, and indirect
added value is not estimated. Furthermore, implementation of the industrial estate and export
corridor will raise added value. Accordingly, effects analysis by macro analysis should be
considered.
1) Time savings benefit ・・Passenger transport by passenger trains & buses 〉time savings
of cargo trains & trucks
2) Operating cost savings・・Cargo transport by freight trains & trucks 〉operating costs of
passenger trains & buses
Chapter 12
12-14
Operating Cost Savings Benefit of Cargo Trains: Operating cost savings benefit of cargo
trains accounts for the largest benefit. For the Western DFC, it accounts for 33.2 % of the total
benefit; for the Eastern DFC, it is 26.9%. Operating cost savings benefit of the cargo trains
consist of DFC personnel cost savings, effective operational & maintenance system, and
advantage of long distance transport. This is the benefit from comparison of engineering
alternatives to operate in the optimum facilities.
(Refer to Volume4 Technical Working Paper Task2, 12 Table 12-7 “Time Savings Benefit of
Cargo on Cargo Trains & Trucks, Western DFC”; Table 12-8 “Time Savings Benefit of
Passengers Transported by Train & Buses, Western DFC”; Table 12.9 “Time Savings
Benefit of Cargo on Cargo Trains & Trucks, Eastern DFC”; Table 12.10 “Time Savings
Benefit of Passengers Transported by Trains & Buses, Eastern DFC”; Table 12-11
“Working Expense Savings Benefit for Cargo Trains and Vehicle Operating of Trucks, Western
DFC”; Table 12-12 “Working Expenses Saving Benefit for Passenger Trains and Vehicle
Operating of Buses, Western DFC”; Table 12-13 “Working Expense Saving Benefit for Cargo
Trains and Vehicle Operating of Trucks, Eastern DFC”; Table 12-14 “Working Expense
Savings Benefit for Passenger Trains and Vehicle Operating of Buses, Eastern DFC”)
12.12 SENSITIVITY ANALYSIS ON EIRR
Overall Examination: The EIRR of the DFC proves its feasibility as shown by the results of
the evaluation. There are uncertain matters for evaluation, since the scale of the project is so
large - the length of the Western DFC is 1468 km, and the Eastern DFC is 1309 km.
- Economic Internal Rate of Return of Western DFC i.e. EIRR is 14.09% (Base Case)
B/C Ratio 1.22, Net Present Value (NPV) 35,510Million Rs.
- Economic Internal Rate of Return of Eastern DFC i.e. EIRR is 15.26% (Base Case)
B/C Ratio 1.37, Net Present Value(NPV) 54,274 Million Rs.
Influence of increase of costs: If the costs increase by 30%, the EIRR of the Western DFCs
discounted at the capital opportunity cost of 12% makes it unfeasible. Increase of 30% at
market price means Rs. 82,960 Million for the Western DFC and Rs. 61,400 Million for the
Eastern DFC. Since this much cost increase is not possible, this project will be feasible if
estimated benefits are secured.
Table 12-12 Sensitivity Analysis – Western DFC

EIRR West
Cost / Base 10% 20% 30%
Benefit / Base 14.09% 13.19% 12.40% 11.70%
-10% 12.95% 12.10% 11.36% x
-20% 11.74% x x x
-30% x x x x
Table 12-13 Sensitivity Analysis – Eastern DFC

EIRR East
Cost / Base 10% 20% 30%
Benefit / Base 15.26% 14.38% 13.61% 12.78%
-10% 14.11% 13.28% 12.56% 11.90%
-20% 12.89% 12.12% 11.44% x
-30% 11.60% x x x
Chapter 12
12-15
Influence of Changes of Benefits: Decrease of benefits affects the feasibility of the Western
DFC at 20%, but for the Eastern DFC it remains feasible. Benefits have more effect than costs.
Benefits were calculated for 10 items, out of which only 5 are important: time value savings
benefit of passengers on trains and of passengers on buses, operational cost savings benefit of
cargo trains and of trucks, and operational cost savings benefit of passenger trains. These
benefits are calculated based on appropriate estimation of presumed unit value and on traffic
demand, and will not change drastically.
12.13 FINANCIAL EVALUATION
Short-term index and long-term index: This section analyzes the feasibility of the
construction plan from the financial side. The financial analysis in this chapter is to
investigate uncertainty of long-term DFC railroad investment, and not a short-term
management analysis. It is to prove profitability by comparing revenues and costs estimate for
35 years with revenues and costs discounted at present value. In order to prove the long term
revenues and costs for 35 years, an index called the Financial Rate of Return (FIRR) is used
in the analysis.
Discounted to
Enterprise Present Value
Standpoint
Market
Financial Cost
InternalFinancial
Evaluation Rate of Return(FIRR)
Revenue
Balance of Earnings
& Expenseｓ
Figure 12-5 Evaluation Procedure for Financial Analysis
Enterprise and project durability: The DFC is to be undertaken by two enterprises: Indian
Railways (IR) composed mainly of railroad management, and the Public Corporation in
charge of construction and maintenance of infrastructure (DFCCIL). Financial analysis is
undertaken to examine if the investment will be profitable for the two enterprises in totality.
Accordingly, the total traffic using the DFC section is considered as the object of revenue.
Division of revenue between the two enterprises will be analyzed in Chapter 13 “Management
Plan Needed for DFCCIL,” including interests on construction costs, escalation, and tax, as it
is concerned with its business management.
12.14 CONCLUSION OF THE FINANCIAL EVALUATION
Internal Financial Rate of Return: Table 12-14 shows the results of the financial evaluation
of the two DFC from the point of profitability of the project. Total costs and total revenues are
compared for 35 years. The calculation is aimed at the ratio to be equal between the total
discounted cost and total discounted revenue (FIRR). FIRR is as shown in the table.
Financial Rate of Return of Western DFC 9.08%
Financial Rate of Return of Eastern DFC 15.59%
Chapter 12
12-16
Table 12-14 Internal Financial Rate of Return of Western DFC

Western DFC Million Rs.
Before Discounting FIRR
year Revenue Capital Rolling Working Total Discount Present
Cost Stock Expenses Cost Rate Value
2008-09 18,958 18,958 100.0% -18,958
2009-10 37,098 37,098 91.7% -34,009
2010-11 38,101 38,101 84.0% -32,021
2011-12 48,695 1,464 50,159 77.0% -38,645
2012-13 40,568 40,568 70.6% -28,654
2013-14 16,686 23,449 18,863 5,449 47,761 64.8% -20,121
2014-15 19,599 9,921 4,012 6,404 20,336 59.4% -438
2015-16 23,020 3,374 4,386 7,526 15,286 54.4% 4,209
2016-17 27,038 4,706 8,845 13,552 49.9% 6,728
2017-18 31,758 5,672 10,395 16,067 45.7% 7,176
2018-19 37,301 6,571 12,217 18,788 41.9% 7,762
2019-20 39,694 3,134 12,925 16,059 38.4% 9,085
2020-21 42,241 3,255 13,674 16,930 35.2% 8,919
2021-22 44,952 3,394 14,467 17,861 32.3% 8,751
2022-23 47,836 3,366 15,306 18,672 29.6% 8,637
2023-24 50,905 3,610 16,193 19,803 27.1% 8,444
2024-25 53,101 2,992 16,906 19,898 24.9% 8,264
2025-26 55,392 2,914 17,650 20,565 22.8% 7,946
2026-27 57,782 2,969 18,428 21,396 20.9% 7,611
2027-28 60,275 1,856 19,239 21,094 19.2% 7,513
2028-29 62,875 1,395 20,086 21,481 17.6% 7,277
2029-30 65,401 543 20,862 21,405 16.1% 7,090
2030-31 68,029 548 21,669 22,216 14.8% 6,768
2031-32 70,762 553 22,506 23,059 13.5% 6,461
2031-33 70,762 557 22,506 23,063 12.4% 5,923
2033-34 70,762 350 22,506 22,856 11.4% 5,453
2034-35 70,762 -9 22,506 22,497 10.4% 5,037
2035-36 70,762 -9 22,506 22,497 9.6% 4,617
2036-37 70,762 -9 22,506 22,497 8.8% 4,233
2037-38 70,762 -9 22,506 22,497 8.0% 3,880
2038-39 70,762 -9 22,506 22,497 7.4% 3,557
2039-40 70,762 -9 22,506 22,497 6.8% 3,261
2040-41 70,762 -9 22,506 22,497 6.2% 2,990
2041-42 70,762 -9 22,506 22,497 5.7% 2,741
2042-43 70,762 -9 22,506 22,497 5.2% 2,513
1,653,028 220,162 77,027 528,314 825,503 9.08% -0
Investment Feasibility: Therefore, low-interest rate and long term fund resources must be
obtained. Profit and loss balance is excluded from the financial analysis. Management
analysis, which is influenced by fund sources and financing conditions, is also excluded from
the financial analysis. These flows are not discounted, but analyzed by actual figures,
namely cash flows. This analysis of fund balance is in the area of management analysis, and
is not included in FIRR.
Conclusion of investment feasibility of the analysis results: If the index is lower than the
opportunity cost of capital, i.e. 12%, it means that implementation timing is too early, or that
the scale is too big. In this evaluation, as the result of using every possible data for calculation,
EIRR of the project was found higher than 12%: 14.09% for the Western DFC, and 15.26%
for the Eastern DFC. The conclusion is that the project should be implemented. Investment
scale and planning scale are not too large. If it is not implemented, national resources may be
wasted. For the financial analysis, FIRR, which is the index of long-term investment
evaluation, was found to be 9.08% for the Western DFC and 15.59% for the Eastern DFC.
As for the Western DFC, it should be implemented from national viewpoint, since EIRR takes
precedence over FIRR. The DFC needs low interest rate and long term repayment loan such
as ODA for the implementation.
Chapter 12
12-17
Table 12-15 Internal Financial Rate of Return of Eastern DFC

Eastern DFC Million Rs.
Before Discounting FIRR
year Revenue Capital Rolling Working Total Discount Present
Cost Stock Expenses Cost Rate Value
2008-09 14,460 14,460 100.0% -14,460
2009-10 28,119 28,119 86.5% -24,326
2010-11 28,858 28,858 74.8% -21,599
2011-12 34,538 1,956 36,494 64.8% -23,631
2012-13 27,921 27,921 56.0% -15,641
2013-14 26,271 14,674 21,911 4,155 40,740 48.5% -7,012
2014-15 30,097 5,712 4,526 4,782 15,020 41.9% 6,321
2015-16 34,480 1,626 4,519 5,504 11,649 36.3% 8,282
2016-17 39,502 5,095 6,334 11,429 31.4% 8,809
2017-18 45,255 5,558 7,290 12,848 27.1% 8,798
2018-19 51,846 6,348 8,390 14,738 23.5% 8,716
2019-20 52,263 728 8,455 9,183 20.3% 8,754
2020-21 52,684 607 8,520 9,128 17.6% 7,657
2021-22 53,108 757 8,586 9,343 15.2% 6,656
2022-23 53,535 628 8,653 9,281 13.2% 5,823
2023-24 53,966 494 8,720 9,214 11.4% 5,094
2024-25 54,361 618 8,783 9,401 9.8% 4,427
2025-26 54,758 621 8,847 9,467 8.5% 3,859
2026-27 55,159 412 8,911 9,322 7.4% 3,378
2027-28 55,563 546 8,975 9,521 6.4% 2,936
2028-29 55,969 499 9,040 9,539 5.5% 2,561
2029-30 56,335 463 9,097 9,559 4.8% 2,232
2030-31 56,703 335 9,154 9,489 4.1% 1,949
2031-32 57,073 338 9,211 9,549 3.6% 1,698
2031-33 57,073 340 9,211 9,551 3.1% 1,469
2033-34 57,073 343 9,211 9,554 2.7% 1,270
2034-35 57,073 -10 9,211 9,201 2.3% 1,107
2035-36 57,073 -10 9,211 9,201 2.0% 958
2036-37 57,073 -10 9,211 9,201 1.7% 829
2037-38 57,073 -10 9,211 9,201 1.5% 717
2038-39 57,073 -10 9,211 9,201 1.3% 620
2039-40 57,073 -10 9,211 9,201 1.1% 537
2040-41 57,073 -10 9,211 9,201 1.0% 464
2041-42 57,073 -10 9,211 9,201 0.8% 402
2042-43 57,073 -10 9,211 9,201 0.7% 347
1,566,731 155,908 57,552 252,727 466,187 15.59% 0
12.15 DFC FINANCIAL COSTS
12.15.1 Construction Costs
Financial Cost: The subjects of financial costs are: 1) construction costs, 2) operating costs,
and 3) rolling stock costs such as locomotives and freight trains. For the construction cost
calculation in financial analysis, price adjustments (economic price) as in the economic
analysis are not conducted. For adjustment of items, the following four items were excluded,
as in the case for economic analysis.
1) Electric locomotives procurement
2) Spare parts for electric locomotives
3) Price escalation
4) Financial interests during construction
Cost component for financial analysis and amount of cost is as follows.
Chapter 12
12-18
Table 12-16 Financial Costs of Construction

Financial Cost Million Rs.
Western Eastern
Items
DFC DFC
Civil &Building, Track 109,545 70,038
Electrical & Mechanical Work 17,142 13,791
Signaling & Telecommunication Work 24,124 20,420
Cosultancy Service 5,432 3,419
Physical Contingency 10,084 7,369
Land Acquisition 26,439 25,393
General Administration 10,598 7,235
Others 16,799 8,244
Total for Financial Evaluation 220,162 155,908
Grand Total 287,420 212,437
Annual Distribution of Construction Costs: The period of construction is 6 years for Phase
I-a, 8 years for Phase I-b, and 6 years for Phase II. Phase II starts two years after the start of
Phase I-b. The construction cost is distributed yearly and combined for these 3 periods.
Table 12-17 Annual Distribution of Financial Costs of Construction

Finansial Cost Million Rs.
Year Western DFC Eastern DFC
2008-09 18,958 9% 14,460 9%
2009-10 37,098 17% 28,119 18%
2010-11 38,101 17% 28,858 19%
2011-12 48,695 22% 34,538 22%
2012-13 40,568 18% 27,921 18%
2013-14 23,449 11% 14,674 9%
2014-15 9,921 5% 5,712 4%
2015-16 3,374 2% 1,626 1%
220,162 100% 155,908 100%
12.15.2 Operating and maintenance costs of DFC
Personnel and facility costs: The cost items are divided into personnel costs and facility
costs. Personnel costs of locomotive engineers and other train personnel change depending on
train/km. Personnel costs of electricity, facilities, and stations change depending on the
number of stations and operating km.
Operating unit costs decrease as transport volume increases. First, the unit cost of each item
was increased, multiplying with train km and with operating km in order to find personnel
costs. The standard estimation for unit personnel cost of the DFC is based on a smaller
number of staff, different from the existing lines. The standard of property cost estimation is
efficient operating and maintenance system (see Chapter 9, “Operating and Maintenance
Costs”section; Primary Standard of DFC).
Facility costs consist of stations, power costs, electricity costs, building costs, general
management cost, railroad police cost, etc. and they fluctuate according to operating km. Unit
cost of property by facilities is listed in Chapter 9 “Operating and Maintenance cost”.
Locomotive: The required number and cost of locomotives for the first year of operation,
2013-14, are as follows. The unit cost of 8-wheel locomotive for bulk is estimated at 212
Million Rs. Unit cost of 6-wheel locomotive for containers is estimated at 130 Million Rs.
(For details, see Volume4 Technical Working Paper Task2,12 Table 12-3,Table 12-5, Number
of Locomotives, Wagons and the Cost by Operation Years)
Chapter 12
12-19
8-Wheel Locomotives for Bulk 6-Wheel Locomotives for Containers
Western DFC 68cars 14,416Million Rs. 246cars 31,980 Million Rs
Eastern DFC 178cars 37,736 Million Rs. 6cars 780Million Rs.
Locomotives for the DFC are assumed to be all new. The locomotives actually run from the
DFC directly onto the feeder lines, but the cost is estimated assuming they run within the
DFC. The number of carriages is calculated based on transport demand, train km, and train
operation plan. However, 20 carriages are to be purchased for trials in year 2011-12.
Cargo trains: For cargo trains, the number is assumed to be the same as the required number
of locomotives. However, in the opening year it is assumed that 70% will come from
existing trains, and the price is assumed to be 50% of the new product. The service life of
trains is assumed as 36 years for the new trains, and 20 years for the existing carriages. (For
more details, refer to Chapter 6, “TRANSPORT PLANNING”)
12.16 SENSITIVITY ANALYSIS OF FIRR
Renge of Feasibility: Freight revenue forms the basis of FIRR. It is estimated based on the
present freight rate of Indian Railways, which is multiplied with estimated transport ton/km of
the DFC. On the other hand, construction cost is estimated by items.
Cost of cars is based on the required number of cars linked with volume of demand.
Operation cost is estimated on lower number of personnel as compared to existing lines and
property costs of the DFC.
Under such conditions, FIRR of the basic case is as follows. Therefore, low-interest rate and
long term fund resources must be secured.
Table 12-18 Sensitivity Analysis – Western DFC

FIRR West
Cost / Base 10% 20% 30%
Benefit / Base 9.08% 8.43% x x
-10% 7.80% 7.19% x x
-20% x x x x
-30% x x x x
Table 12-19 Sensitivity Analysis – Eastern DFC

FIRR East
Cost / Base 10% 20% 30%
Benefit / Base 15.59% 14.61% 13.75% 12.98%
-10% 14.06% 13.15% 12.34% 11.63
-20% 12.42% 11.58% 10.83% 10.17
-30% 10.64% 10.22 x x
Freight and the benefits: Freight charges affect the calculation of FIRR to a great extent.
According to the results of FIRR analysis, the freight charges of the Eastern DFC are too high,
while that of the Western DFC is appropriate, if estimations of construction costs, carriage
costs, and operational costs are correct. Figure 12-6 and Figure 12-7 compares freight charge
Chapter 12
12-20
revenue and benefits. Usually in the case of expressways, toll revenue accounts for 70% of
the benefits. Accordingly, highway users receive about 30% of user surplus.
80,000 70,000
70,000 Benefit 60,000

60,000 Revenue 50,000
50,000 40,000
40,000
30,000
30,000
20,000 20,000 Benefit
10,000 10,000
0 Revenue
0
1 3 5 7 9 11 13 15 17 19 21 23 25 1 3 5 7 9 11 13 15 17 19 21 23
Figure 12-6 Revenue and Benefit, Western DFC Figure 12-7 Revenue and Benefit, Eastern DFC
Difference of Revenue Curve: For the Western DFC, benefits and freight charge revenue are
comparatively similar, but the freight revenue still exceeds the benefits. The freight revenue
of the Eastern DFC is not similar to the benefits. Furthermore, freight revenue far exceeds the
benefits.
When charges that are higher than the benefits are levied, users usually decrease. However,
the main transport item of the Eastern DFC is coal. Coal is connected directly with electric
power generation and depends heavily on railroads. Therefore, the DFC is advantageous. In
addition, coal transport has high transport efficiency compared with container transport. Eight
years later, when the DFC is 100% completed, demand on the DFC will increase rapidly.
Because of these reasons, it is possible to set a high freight charge, and higher revenue leads
to higher FIRR. However, giving consideration to the future use of coal as electric power
generation, future demand growth rate is estimated to be low.
12.17 CONCLUSION OF ECONOMIC ANALYSIS AND FINANCIAL ANALYSIS
Method of determining investment timing and scale: The improvement of the existing
cargo lines as an alternative is not enough to supply the present demand. Even if the
passenger line is separated and improved, it will not be able to transport the present freight
demand. Faced with this situation, planning has started on a large scale project, but the
project’s feasibility cannot be judged simply by overcapacity. As a method to prove the
balance of supply and demand with facility investment, the Economic Internal Rate of Return
(EIRR) index was developed. This method compares the huge costs with national benefits
discounted at the present value, giving consideration to uncertainty in future.
Conclusion of investment feasibility of the analysis results: If the index is lower than the
opportunity cost of capital, i.e. 12%, it means that implementation timing is too early, or that
the scale is too big. In this evaluation, as the result of using every possible data for calculation,
EIRR of the project was found higher than 12%: 14.09% for the Western DFC, and 15.26%
for the Eastern DFC. The conclusion is that the project should be implemented. Investment
scale and planning scale are not too large. If it is not implemented, national resources may be
wasted.
For the financial analysis, FIRR, which is the index of long-term investment evaluation, was
found to be 9.08% for the Western DFC and 15.59% for the Eastern DFC. Eastern DFC shows
to be financially viable, but Western DFC shows relatively low FIRR. As for the Western
DFC, it should be implemented from national viewpoint, since EIRR takes precedence over
Chapter 12
12-21
FIRR. Western DFC needs low interest rate and long term repayment loan for the
implementation.
Suitability of construction timing: The construction period was planned initially as 5 years.
In the economic and financial calculation, construction period was assumed to be 15 years
from the viewpoint of engineering. At the same time, the case of shorter construction period
of 8 years was evaluated. In the case that the period is shortened to 8 years from 15 years,
EIRR and FIRR usually decreases. As the result of the calculation, even if the construction
period is shortened, the EIRR is high enough. The high figure of DFC proves that the project
a very important national project.
Reliability of the analysis and securing source of fund: In the process of calculation, all
kinds of data are inputted, including freight demand forecast till 35 years later, change of
origin and destination, traveling speed, transport cost, and time value of people and goods. If
wrong data is entered, the calculation loses its consistency.
Benefits of economic analysis are itemized into: 1) time savings, 2) savings of traveling cost
and 3) reduction of exhaust gas. Time savings are itemized into persons and goods (freight
carriages, passenger carriages, trucks, and buses). Savings in traveling costs is itemized into
freight carriages, passenger carriages, trucks, and buses. Reduction of exhaust gas is itemized
into trucks and buses. A total of 10 benefit items were analyzed. Therefore EIRR is a correct
result. The high EIRR provides proof that satisfies the conditions for obtaining source of
funds for construction from international organizations.
Economic and financial analysis and freight charge policy: Financial analysis regards
freight revenue as the only item of benefit. Thus, while economic analysis is conducted upon
accumulation of accurate data, in financial analysis, freight revenue is compared with 3 kinds
of costs. Increase and decrease of construction costs does not affect FIRR very much, but
increase and decrease of freight revenue have considerable effects. The validity of freight
level is whether freight of DFC is within the benefits estimated in the economic analysis. As
the result of comparison, freight revenue reaches more than the amount of benefit. This shows
that the freight is invalid. The freight charges for this analysis are based on the list of charges
in India. From the view point of economic analysis, railroad charges need to be within the
benefits, from a standpoint of competition as well.
Rapid transport effects of DFC and Container Depots, ICD: As for the benefits of the
DFC project, savings in operation and maintenance costs of trains is high, while weight of the
time savings benefit of freight is low. Accordingly, we should pay more attention to on-time
arrival, and inter-modal transport including improvement of container depots and ICDs at
both ends of the DFC, rather than shorter time movement of goods. Movement of long
distance freight is important for the increase of added value of freight, acquisition of foreign
currency, and for macro effects. Beneficiaries of time savings are passengers rather than
freight. From the mixed transport of freight and passengers, freight will be transferred to the
DFC. Operating speed of passenger trains is not expected to increase, but the waiting time of
passengers will be reduced with the increase of trains.
12.18 ECONOMIC IMPACT (MULTIPLIER) ANALYSIS
12.18.1 Introduction
The DFC Project will have a big impact on the socio-economy of India and the countryside in
its surrounding. When the project starts, various activities such as the hiring of workers,
procuring goods, buying external services, making contracts with construction companies
commence. These investments are considered as initial final demand or direct impact. In real
Chapter 12
12-22
economies, however, the direct demand will induce further demand or first direct impact. And
output or production requirements occurring from the first indirect impact will induce further
demand. It is like endless and inter-relational economic transactions. To make it simple, the
linkage is illustrated as follows:
From (Investment) – (Direct Impact) – (Production) – (Income) – (Consumption) –

(Production) to further economic linkage
In the process, employment, tax income and external trade will be also generated and
intensified.
Moreover, the above-mentioned project effect can contribute to poverty reduction in a broad
sense as indicated in the following points:
- The contribution to national economic growth increases employment and the income
earning opportunity of the poor.
- The employment creation and the income earning opportunity of the poor living in areas
previously without efficient transport links are facilitated by improving the traveling
time described in the economic evaluation.
- Job opportunities for the poor are provided during construction period.
Intermodal Research Unit has measured the economic impact or multiplier effect by use of the
Endogenous Household Consumption and import Input Output Model, or so-called the IO
model. In this study, the economic impact was calculated and analyzed by using the model of
Intermodal Research Unit’s measurement. The conceptual flowchart of economic impact
measurement based on IO model is as follows.
Chapter 12
12-23
Construction、Material Procurement by the DFC
Demand on Consumption and Investment

(Final Demand: FD): Input Information
Output Information
Measurement of Direct Impact: Impact (I)

Production、GVA (Income、OS、Tax)、Employment、Import & Export Direct
Impact
GVA Ratio
Import Coefficient
IO model
Impact (II)
Measurement of 1st Indirect Impact (Leontief effect):
Production、GVA (Income、OS、Tax)、Employment、Import & Export 1st Induced
Impact
Incremental Consumption Induced

and Investment Demand Income
Overall Impact
Propensity for
Consumption GVA Ratio
Import Coefficient
IO model
Impact (III)
Measurement of 2nd Indirect Impact (Inter-relational Income
effect) : Production 、 GVA (Income 、 OS 、 Tax) 、 Employment 、 2nd Induced
Import & Export Impact
Figure 12-8 Concept of Overall Multiplier Effect
12.18.2 Methodology
The project cost was inputted into the IO model and the economic impact was measured. The
model is calculated are as follows:
Induced Impact on Production : ΔX = ΔX 1 + ΔX 2 = Bˆ K

ˆ I−M[
ˆ ΔF ]
Induced Impact on GVA
(Income, Tax, OS [Profit]) : ˆK
ΔV = ΔV1 + ΔV2 = vB ˆ I−M
ˆ ΔF[ ]
Induced Impact on Employment : ΔL = ΔL 1 + ΔL 2 ˆ [I − M
= lBˆ K ˆ ]ΔF
Chapter 12
12-24
Induced Impact on Imports : ˆ Bˆ K

ΔM = ΔM 1 + ΔM 2 = M ˆ I−M[
ˆ ΔF ]
Induced Impact on Exports : ˆ Bˆ K
ΔE = ΔE 1 + ΔE 2 = E [
ˆ I −M
ˆ ΔF]
where
ˆ = [I − (I − M )A ]−1 : Leontief Inverse Matrix (Macro Multiplier Matrix),

B
ˆ = [I − (I − M )CVB ]−1 : Keynesian Inverse Matrix or Inter-relational Income
K
Multiplier Matrix,
ΔF : Vector of Final Demand,
ΔX1 , ΔV1 , ΔL 1 , ΔM 1 , ΔE1 : Vectors of Induced Impact [Direct and 1st indirect
spill over effect];
ΔX 2 , ΔV2 , ΔL 2 , ΔM 2 , ΔE 2 : Vectors of Induced Impact (2nd indirect
induced impact),
M̂ , Ê : Coefficient Matrix of Import and Export;

C : Consumption Expenditure Ratio Matrix;
v : GVA Ratio Matrix; and
l : Labor Input Coefficient Matrix.
Measurement assumptions are made as shown below:
- Project cost: Rs. 348.7 Billion (local portion),
- Allocation Ratio of Investment by Industry: : Construction (Rs. 301.8 Billion) and

Manufacturing (Rs. 46.9 Billion), respectively,
- DFC Construction Time: 8 Years,
- Average Consumption Propensity: 0.75,
- Share of import of the total investment: 30%
The economic impact was classified in consideration of the spread to the economic impact by
the project as follows.
- Nationwide: Induced Impact on Production , GVA,
- Government: Induced Impact on Tax Revenue,
- Industry: Induced Impact on Profit (Operation Surplus),
- Household: Induced Impact on Income, Employment,
- International Trade: Import, Export
12.18.3 Economic Impact
Table 12-20 shows the calculation results.
Chapter 12
12-25
Induced impact on production
The total output requirements induced by the DFC Project amount to Rs. 1,386 billion. The
impact amount is bigger than the project investment by at least 4.0 times.
Induced impact on gross value added (GVA)
The total GVA requirements induced by the DFC Project amount to Rs. 700 billion. The
impact amount is bigger than the project investment by 2.0 times.
Induced impact on tax revenue
This exercise estimates tax revenue from the domestic business sector starting from the DFC
Project investment. The result indicates Rs. 22 billion or 6.3% of the DFC investment.
Induced impact on operating surplus
The DFC Project will create numerous business transactions and bring about reasonable
operating surplus among contracted firms directly and indirectly. The total sum of the induced
impact on operating surplus is estimated at Rs. 249 billion which accounts for 71.4% of the
total DFC investment.
Induced impact on income and employment
It is part of the Project’s spill over effect to the stakeholders. As a result, the induced impact
on household income is estimated at Rs. 372 billion. Meanwhile, the employment
opportunities created by the DFC Project amount to Rs. 1.1 million.
Induced impact on international trade
The effect on international trade & exports is Rs. 50 billion. This corresponds to 1.3% of Rs.
3,752 billion of 2004-05 export. On the other hand, the import is about Rs. 67 billion. This
corresponds to 1.3 percent of Rs. 5,011 billion of 2004-05 import.
Impact on the poor
The induced impact on income and employment to the above-mentioned is going to reach the
poor. The poor in this study area is estimated to be about 190 million people for 2004-05
years, according to the investigation of Planning Commission. These people are below the
poverty level, who can expect further job opportunity and the increase of the income because
of the increase of the convenience by shortening the travel time described in the economic
valuation.
Chapter 12
12-26
Table 12-20 Economic Impact of the DFC

(Unit: Billion Rps)
Direct 1st Induced 2nd Induced
Total
Inpact Impact Impact
Production 340.5 629.4 416.1 1,386.0

Nation wide
GVA 152.6 298.5 248.6 699.7
Impact on Government Tax 2.7 12.4 6.8 21.9

Domestic
Economy Economic Firms Operating Surplus[OS] 37.7 108.4 102.7 248.8
Unit
Income 104.9 150.1 116.6 371.6
Household
Employment 0.25* 0.53* 0.32* 1.10*
Impat on Import 6.8 38.2 22.2 67.2

International Trade
Abroad
Export 4.5 26.6 19.0 50.1
Note: * Millon persons
12.19 REGIONAL DEVELOPMENT EFFECTS
The effects gained by the DFC Project may be classified into two major categories: “direct
effects” and “indirect effects”. Direct effects are described in the economic evaluation.
Indirect effects are induced by the direct effects. Most indirect effects can be represented as
regional and national development effects.
The DFC Project has various far-reaching effects on a variety of individuals and economic
sectors not only in areas where they are constructed, but also other parts of the wider region.
It is important to promote regional development from the viewpoint of sustainable
development where the balance of the country can be taken. The following effects can be
indirectly expected by executing the DFC Project.
- Acceleration of Nationwide Development
- Promotion of Industry
- Promotion of Agriculture, Forestry and Fisheries
- Improvement in Living Conditions
Since many of these effects cannot be estimated in monetary terms, they are evaluated by
means of comparing the transportation conditions in the existing railway network with those
of the future railway network.
(1) Acceleration of Nationwide Development
The DFC Project will shorten distances between different areas in the study area in terms of
traveling time. When the DFC Project is completed, the traveling time will be shortened by
about 1/3 as shown in Figure 12-9. Through the improvement of transportation conditions
such as less traveling time, the DFC Project will bring large opportunities for encouraging
development of industry, agriculture and other socio-economic activities in the core cities as
well as in their surrounding areas. These new conditions will provide jobs through industrial
Chapter 12
12-27
development, reduce disparities in income, and produce a more balanced distribution of

production.
DHANDARIKALAN
KALANAUR
DADRI
KHURJA
REWARI
DELHI-
DELHI-MUNBAI INDUSTRIAL CORRIDOR
AJMER
KANPUR
SON NAGAR
MUGHAL SARAI
PALANPUR
ＭＵＮＤＬＡ
AHMEDABAD
ＫＡＮＤＬＡ
VADODRA
KOLKATA
KOLKATA
ＰＩＰＡＶＡＶ
MUNBAI
JNPT
LEGEND
EXISTING WESTERN DFC

EASTERN DFC
WESTERN FEEDER
EASTERN FEEDER
PORT
DHANDARIKALAN
DHANDARIKALAN
KALANAUR
DADRI
DADRI
KHURJA
KHURJA
REWARI
REWARI
DELHI-
AJMER
AJMER
KANPUR
SON
SON NAGAR
NAG AR
MUG HAL SARAI
MUGHAL
PALANPUR
ＭＵＮＤＬＡ
ＭＵＮＤＬＡ
AHMEDABAD
AHMEDABAD
ＫＡＮＤＬＡ
VADODRA
VADODRA
KO LKATA
KOLKATA
MUNBAI
JNPT
WITH DFC
Figure 12-9 Betterment of Nationwide Development
Chapter 12
12-28
Promotion of Industry
One of the most important impacts on regional development by the DFC Project is the
location and relocation of manufacturing plants. Since the DFC Project will offer speedy and
scheduled transport of raw materials and products, most factories and facilities of relevant
businesses will be constructed along the DFC, especially in the vicinity of freight station.
The Government of India has further proposed consideration of establishing, promoting and
facilitating the “Delhi-Mumbai Industrial Corridor (DMIC) along the alignment of Western
DFC between Delhi and Mumbai. The joint initiative of the Governments of India and Japan,
“Special Partnership Initiative (SEPI)”, envisages cooperation in early realization of the DFC
and assistance in promoting the DMIC with development of industrial estate and special
economic regions with high physical and social infrastructure and facilitate investment from
abroad.
Figure 12-10 shows the outline of the DMIC. The project influence area is extended up to 150
km on both sides of the alignment of the DFC. The project goals for the DMIC are double
employment potential, triple industrial output and quadruple exports from seven investment
regions and thirteen industrial areas.
On the other hand, the DFC Project has an important effect on promoting industries such as
grain, fertilizer, limestone, cement, etc. on the northwest; and enhancing coal mines, steel
plants, etc. on the southeast side in the Eastern DFC.
DHANDARIKALAN
KALANAUR
DADRI
KHURJA
REWARI
DELHI-
AJMER
KANPUR
SON NAGAR
MUGHAL SARAI
PALANPUR
ＭＵＮＤＬＡ
AHMEDABAD
ＫＡＮＤＬＡ
VADODRA
KOLKATA
KOLKATA
ＰＩＰＡＶＡＶ LEGEND
WESTERN DFC
EASTERN DFC
MUNBAI WESTERN FEEDER
EASTERN FEEDER
JNPT PORT
INVESTMENT REGION
INDUSTRIAL AREA
Figure 12-10 Promotion of Industry
Chapter 12
12-29
Promotion of Agriculture, Forestry and Fisheries
The development of the DFC will cut down the time required for delivering products to the
markets as well as to food processing plants. This will make it possible to grow and cultivate
such products in other places. This will no doubt contribute substantially to promote a new
agro-industry. Moreover, because the traveling time from the coastal area to the inland is
shortened, more marine products can be expected to circulate. Therefore, it plays an important
role in the promotion of the primary industry that is one of the important sectors in the
country.
Improvement in Living Conditions
The improvement of transportation conditions with the DFC will greatly help people in local
areas to utilize and gain access to social service facilities such as hospitals, schools,
government offices, among others. Therefore, it plays a major role in improving people's
living conditions and providing a stable life.
Chapter 12
12-30
CHAPTER 13
STRATEGIC BUILDING BLOCKS
IN BUSINESS PLAN FOR DFC
for Delhi-Mumbai and Ludhiana-Sonnagar in India Final Report (Task2)
CHAPTER 13 STRATEGIC BUILDING BLOCKS IN BUSINESS

PLAN FOR DFC
13.1 MEASURES FOR SOUND MANAGEMENT
13.1.1 Subjects for Business Plan
The management of the DFC proposed by the Government of India is a vertical separated
model, because the owner of the railway infrastructure is DFCCIL and IR is the exclusive
operator for DFC. But we should consider it as an integrated model by Indian Railway (IR),
because more than 51% (actually 100%) of DFCCIL equity is held by IR, resulting that IR
holds the corporate governance of DFCCIL.
The Task Force under the Central Government Committee on Infrastructure recommended an
integrated model by the SPV with open access to the DFC lines by other operators besides the
SPV. MOR has been improving its business performance in terms of productivity and
profitability, resulting in posting of a net profit of Rs. 149.2billion in 2006-07, 6.3 times
higher than that in 2001-02. This can be attributed to its business efforts in cooperation with
World Bank and ADB. MOR has begun to create organization and management of DFC based
on the integrated model concept by DFCCIL which was originally the rail track owner only.
Furthermore, free competition would be expected on the DFC rail based on the given right of
non-discriminatory access by 15 authorized “Container (Bulk) train operators on IR
networks”.
The scheme wherein MOR collects fare charge from customers and distributes Track Access
Charge (TAC) to DFCCIL remains. MOR has also showed confidence in the past 30-year
track-record of accounting separation between Zonal Railways.
We should give it first priority that inefficiency in DFC operation, which would be the weak
point of an integrated model, must be drastically improved by promoting current “IR’s
railway reform”. (The objective)
It should be prioritized that making Track Access Charge formula, ample enough to cover not
only initial capital expenditure and working capital expenditure but sound additional
investments for future freight demand growth.
For this purpose, cash flow analysis of DFC Project and DFCCIL business operations, risk
analysis of cash flow assumptions and planning on risk hedge are essential.
Main issues requiring considerations are as follows:
1) Increase Feasibility of Project

2) Separation of Accounting from Indian Railway Accounting
3) Organizational separation from existing Zonal Railways
4) Formulation of Track Access Charge (TAC)
5) Measures to make DFCCIL accounting sound
6) Timely completion of construction of DFC
7) Management action plans and target for DFCCIL
Chapter 13
13-1
13.1.2 Increasing Feasibility of Project by Increasing Business Income of DFC and

Setting up New Expenditure Norm for DFC Operations and Maintenance
(1) Increase of freight tonne-km by economic growth and restoring of market share
of railway sector.
1) Increase of freight tonne-km by economic growth
Figure 13-1 Economic Growth and the Railway Market Share
The Above figure shows the relationship between increase of total freight traffic demand by
economic growth and IR’s market share on the assumption that railway share recovers slowly
from 2007. Area above the level line of tonne-km as of 2007 and below the railway share
curve shows IR’s incremental traffic demand. There will be also falling-off portion from IR’s
freight traffic shown as “Share down”. Area sandwiched by yellow lines represents tonne-km
IR can enjoy.
IR and DFCCIL should not be satisfied with the natural demand increase by national
economic growth but set up the strategic target of stopping the trend of declining market share
and promoting recovery of past IR’s market share.
Chapter 13
13-2
2) Restoring IR’s market share
Trends in Rail Freight Traffic Shares, 1950-2004 and

forecast after 2007
100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
51
60
70
80
90
91
96
01
04
07
12
17
22
19
19
19
19
19
19
19
20
20
20
20
20
20
Source: Ministry of Railway, Planning Commission, RITES PETS2 final report
Data from 1951 to 2001sourced by Ministry of Railway and Planning Commission as IR total
market share and data after 2004 represent the forecast for DFC market share by RITES
Figure 13-2 Past Trend and Forecast of IR’s Freight Traffic Share
IR’s share of freight traffic, amounting to 88% (44 billion ton-km) as of 1951, declined
steadily to the level of 32% (312 billion ton-km) as of 2001, in proportion to the increase of
total transport demand. RITES survey predicts that IR’s market share will hit the bottom in
2004 at 23.7% and will grow gradually to the level of 37.7% in 2022 by 14%.
But this forecast could not be achieved without IR’s management effort. Especially market
share recovery from road transport in short-mid distance-bands, where IR’s share has dropped
rapidly, needs special management strategy and best sales effort because the recovery
scenario is against the current trend of highway development and advance in motorization.
Chapter 13
13-3
(2) Market share-up by distance-bands
Source: JICA study team

Figure 13-3 Rail Freight Demand Curve by Distance-Bands
As is shown in above figure, railway freight demand curve varies by distance-bands and by
commodity classes. In other word, demand depends not only on freight tariff but on other
factors like punctuality of arrival date of goods in longer distance-band or with/without
pick-up and delivery services.
Accordingly IR has to develop innovative tactics to follow the user’s preference other than
freight tariff in the non tariff-sensitive distance-bands.
(3) Overview of DFC demand forecast
1) Major commodity of Eastern DFC is would be Coal both in 2013 and 2031 while Container
transportation would be the overwhelming majority in Western DFC by 2031.
2) Coal transportation of both 700-1,000Km and 300-700Km distance bands will grow
drastically from 2013 to 2031, resulting to increase from almost 0 to 5 billion tkm, and 2
billion tkm respectively. Container transportation of both 1,000-1,500 Km and 300-700 Km
distance-bands will also sharply grow from 2013 to 2031, resulting in from 0 to 70 billion
tkm, to 20 billion tkm respectively. Demand for distance-band of 700-1,000 Km will double
to the level of 20 billion tkm.
3) Demand for both corridors is not well balanced.
Chapter 13
13-4
(4) Optimum freight tariff by distance- bands
Unit tariff by commodity class and distance-bands (Rs/Ton-Km)
1.4
1.2
1 Class-LR5
0.8 Class-100
Rs
Class-150
0.6
Class-200
0.4 Class-220
0.2
0
105 215 400 620 900 1450 2000 2550 3100 3650 4200 4750
Km
Source: Ministry of Railway

COMMODITY......CLASS: SALT, FERTILIZERS...100, FOOD GRAINS...110, COAL ､ CEMENT, ORES…140,
LPG…180, POL..220
Figure 13-4 Current Unit Tariff by Commodity Class and Distance
But nobody denies the importance of freight rates by distance bands to recover railway
market share. IR takes commodity-oriented stiff unit freight rate in shorter than 1,500km
distance-band as is shown in above figure. DFC management should take demand-creative
tariff strategy than current freight rate/ton-km. Different tariff system can not work effectively
in one organization. (Separate division just like Zonal Railways is needed for DFC operation
in Indian Railway in order to make DFC operation and most efficient.)
Rail freight rate in tariff-sensitive mid distance-band because of strong competitors like truck
transport should be determined subject to the effective competitor’s freight charge including
all other charges like Export/Import tariff between States, transit time cost and cost of service
frequency on an assumption of the demand curve in Figure 13-3.
Average truck rate is Rs. 1.46/t-km but detailed data by directions and by distance-bands are
unknown according to JICA Study Team. Former, Director LRDSS MoR, Dr. Nalin Singhal
made generalized cost analysis between road and railway in “Rail-Road Competition in
Freight Transportation” and analyzed that generalized cost consists of monetary cost, transit
time cost, reliability cost and cost of service frequency. Shippers make mode choice
decision not only by monetary cost but also by other factors. He established that while rail
services have an advantage over road on a pure transport cost basis over medium to long
distances, on a generalized cost basis however, road transport can have an advantage even
over long distances.
Railways can maintain the monetary cost advantage over road transport if the railway system
can improve transit time, reliability and service frequency or if target market is in the
distance-band where shippers do not prefer non-monetary factors to monetary cost.
Railway also can take an additional extreme bargaining tariff tactic as is shown in the
following figure in order to get over other disadvantages in the field of transit time cost and
cost of service frequency. Risk analysis on the assumption is set out in 13.2.1-(7) “Financial
Projection for DFC”
Chapter 13
13-5
Bargain Tariff/Tonne-Km by Class and by Distance shorter than

700Km
1.4
1.2
Class-LR5
1
Class-100
0.8
Rs
Class-150
0.6
Class-200
0.4
Class-220
0.2
0
105
185
280
440
600
760
1100
1500
1900
2300
2700
3100
3500
3900
4300
4700
Km
Figure 13-5 Bargain Tariff/Tonne-Km by Distance-bands shorter than 700Km
(5) Improvement of productivity indices and setting up new norms for expenditure
in IR
Over the years IR increased TU (Transport Units (tkm + pkm)) by 40%, cut staff by 10%,
improved operating ratio from 99% to 84% (2005-06), increased productivity of traffic by
45% and improved employee productivity and productivity of wagon as showed in following
figure.
IR indices current trend
Rail route Km
170
160 P-km million
150
Freight ton-km million
140
130 Staff
120 Operating ratio

110
Employee productivity (000 of
100 TU per employee)
90 Employee per km of line
80
Traffic density (000 of TU per
1999 2003-04 2004-05 Km)
Source: Ministry of Railway､World Bank

Figure 13-6 Trend in productivity indices of IR
But IR has to improve employee productivity continuously because it is still far less than that
of the standard of advanced countries as shown in Figure 13-7. Current passenger train
operations in Eastern and Western Corridors have priority over freight train operation.
Drastic improvement in employee productivity in DFC is likely, because freight train has no
more operational limitation in DFC and has most advanced ground facilities.
Chapter 13
13-6
Actually DFC should target the productivity level of Canada and USA, because DFC has not
expensive passengers and will be better equipped by state of the art technology and services
compared with USA and Canada. Assumptions regarding to expenses and demand forecast as
shown in Table 13-5 and Figure 13-12 respectively prove the same level of productivity as
Canada at Year-1 and that of USA at Year-20, exhibited in Figure 13-23
Productivity improvement in DFC hopefully expands firstly to the parallel route of Zonal
Railways and then gradually to the railways in the same region.
Employee Productivity (000 of TU per employee)
12,000
10,000
8,000
6,000
4,000
2,000
0
USA: All
Africa
(RFFSA)
India
China
Germany
Russia
Class1*
South
Canadian
Pacific
Brazil
Source: World Bank Railway data, IR Year Book (1998-99) and Transnet Annual Report 1999
Figure 13-7 Employee productivity
(6) Recommendable tactics
DFCCIL should elaborate on the tactics based on analysis of customer’s needs. The
following are some suggestions of tactics:
1) Railway freight rates by distance-bands and by commodities.

2) Introducing “Arrival date guarantee system” for long distance-bands customer.
3) Alliance with truck transport industry for providing pick-up and delivery services to
mid/short-bands freight customers.
4) Development of Rail-side Warehouse and Logistic Parks.
5) Preferential treatment by core customers/new customers.
13.1.3 How to Separate DFC Accounting from Total IR Accounting
Next figure shows structure of revenue and operational expenditure of both Indian Railway
(IR) and DFCCIL.
The figure clearly tells us that accounting separation is absolutely important for
DFC/DFCCIL management, because without accounting separation system, we can not
recognize DFC income and DFCCIL income.
Accordingly, accounting separation of DFC revenue and expenditure from total IR is

indispensable. Accounting separation of DFC makes it possible for the first time that DFC
Chapter 13
13-7
employees do their best to ensure reduction of their operating costs to the level marked by the
circle (○). It is neither the level of the IR Norms (X), nor the average level of the DFC Norms
and the IR Norms (XX). Operating ratio in recent IR posted around 80% but following Cash
Flow Projections estimated about 31% of operating ratio in all DFC and about 30% in
Western Corridor at the highest. as is shown in Figure 13-24.
Then, we can divide DFC gross profit into DFCCIL and IR by using Track Access Charge
formula.
Source: JICA study team

Figure 13-8 Overview of the accounting separation
(1) How to separate DFC income
Total income generated by DFC operation at first flows into IR Zonal Railway account
because the shipper is the customer of the Zonal Railways. This raises the issue how to get the
DFC income out of the Zonal Railway income. One billing system from start to destination is
important for customer’s convenience. The accounting system is needed to split the bill into
DFC and other IR in terms of tonne-km. Splitting common expenditure into DFC and other
IR is also essential.
The accounting computer system must be designed not only for daily booking but for
strategic management purposes. All data from business, operation and accounting are
assembled into one management information system for analyzing the feature of customers
and operating routes. The system could strongly help the restoration of IR’s market share to
planned levels. Followings are simplified models of apportionment mechanism currently
employed among Zonal Railways which could make the DFC apportionment possible with
registration of DFC Railway into the system.
Chapter 13
13-8
1) Relations of customers and branch with different railways:

Customer A A B
Branch a b -
IR (Zonal Railways) X Z DFC
2) Payment and receivers of freight fare (Rs)
Aa Ab B
X railway 130
DFC Railway 40
Z railway 70
IR total 130 70 40
3) Transportation records
50Km 20Km 30Km
DFC
X railway Z railway
Railway
Transaction-1
50Km 20Km 30Km
Transaction-2
20Km 30Km
Transaction-3
20Km 10Km
4) Apportionment between Zonal Railways (Rs)

X DFC Z
Original receipt
130 40 70
from customer
Terminal &transhipment
charges
(30) (10) (20)
X railway ▲ 50 △ 20 △ 30
DFC Railway ▲ 10 △ 10
Z railway △ 20 ▲ 20
OFFSET result ▲ 50 △ 30 △ 20
After OFFSET △ 80 △ 70 △ 90
5) Customer Management
More than half of DFC Railway revenue comes from customer-A, which is the customer of X
Railway as is shown in the table below. It is worthwhile for DFCCIL to solicit customer-Aa
and Ab with the help of X Railway.
B Aa Ab A total
X railway △ 80 80
DFC Railway △ 30 △ 20 △ 20 40
Z railway △ 10 △ 30 △ 50 80
IR total 40 130 70 200
Chapter 13
13-9
(2) How to separate DFCCIL income
Aforementioned accounting separation requires the accurate management information system

of DFC, which would then enable to make DFCCIL income appropriate to recover the huge
investment with continuing investments for further growth of demand.
Track Access Charge (TAC) is the major income source for DFCCIL from DFC operation.
Formulation of TAC is set out in 13.1.5 in detail but following two points are important for
formulating the TAC:
1) The TAC must be increased as DFC income increase. This mechanism is very important for
the management of DFCCIL to be always ready for additional investments for the future
demand growth.
2) The TAC must at least cover following expenditure:
- Maintenance personnel cost
- Facility maintenance cost
- Depreciation cost
- Debt repayment and Interest payment
- Additional Capital Expenditure
- Dividend payment to equity holders
13.1.4 Organizational separation from existing Zonal Railways for innovative business
development of DFC
Originally it was stipulated that DFCCIL takes role of construction and maintenance and IR’s
role is business, operation and accounting in DFC project. This function sharing made the
DFC system complicated. Simplifying its interface with customers is very important for
customer’s convenience. This is the first reason why the organization handling DFC in all IR
should be one. From business point of view customer services in DFC by distance-bands and
commodity types are essential as is already mentioned above. This style of business requires
integrated and exclusive organizational services to customers over Zonal Railways. From
operational and rolling stock point of view one organization (DFC Railway) should handle
total DFC line because of the dedicated corridor. Lastly it is clear that organization separation
is essential for revenue apportionment.
New organization for DFC in IR should be at least the same level organization as current
Zonal Railways considering the expected business volume, profit scale and investment
magnitude. IR should give the new organization (DFC Railway) authority to set up other
standard of tariff strategy, business rule of conduct, expenditure norm and the like.
MOR is veering towards the direction of making DFCCIL take on roles other than
maintaining rolling stocks and drivers. This is proven by the recent public offering of Director
positions for Project Planning and Operations & Business Development. DFCCIL has
GMs not only for Design, Development and maintenance of DFC ground facilities but also
for operation and business development.
DFC is an important but a portion of total IR rail network expanded nationwide. IR can select
DFC or existing South line of Western DFC between JNPT and Delhi. Accordingly DFCCIL
has to work along with other IR network very closely in order to accomplish good result in
project planning, business development and sales with the advanced Customer Management
Information System.
Chapter 13
13-10
Nevertheless, setting up DFC Railway in IR is absolutely needed not only for operation and
rolling stock purposes but also as the control tower of DFC business as follows: DFC Railway
should be responsible for both integrated logistic management including feeder lines and
authority to propose aforementioned strategic freight fare in the special distance-band of
300-700 km to Railway Board.
Current discussion on roles of IR and DFCCIL leads to the functional diagram shown in
Figure 13-9.
Chapter 13
13-11
DFC Management Diagram
DFCCIL
In charge of every roles other than IR･DFC
Rail
Concession Track Access Charge

Agreement
IR/ DFC Railway

Haulage Business, maintaining
Locomotives, Wagons and
Drivers
Concession Haulage Charge

Agreeme
nt
Freight Container/Bulk Operator

Charge （15 Concessionaire）
ICD, Container chassis,
Wagon
Freight Sales Freight Sales

Charge Charge
Container Container Bulk goods Bulk goods

customers holding customers customers customers
Container chassis holding wagons
Figure 13-9 DFC Functional Diagram
Chapter 13
13-12
13.1.5 How to formulate Track Access Charge (TAC)
(1) Categorizing the world TACs for the formulation
Reviewing the formulation of TAC of each country in the world (Europe, North America and
Japan) we found the formulas depend upon the way of separation of railway of each country.
Accordingly concepts and rules are different from country to country concluding that there is
no one best way both theoretically and practically.
But following are trial attempt to extract underlying structure and key factors for formulations
in TAC of many countries:
Structure: Railway Operators pay not only operating expenses of DFC Railway
but its capital costs and investment return?
There is a business model at one end where no relationship between fare and compensation
cost for railway development. On the other hand, there is another business model at the other
end where rail operators pay not only operating expenses of DFC Railway but its capital costs
and investment return. There is a business model between the two where rail operators pay
only operating expenses (or part of operating expenses) as TAC in order to promote new
entries of competitive operators or to release/mitigate too much burdens of capital
expenditure and construction risks.
Table 13-1 Track Access Charge in other Countries

Countries Charge Concept Structure
Social marginal cost concept (Air No relationship between fare and
Sweden
pollution cost, Traffic accident cost, compensation cost for railway
Rail maintenance cost) development
TAC should recover the depreciation Deferent TAC table is applied by
cost of the Rail Track Corporation kinds of rail (high speed or normal)
Germany
(DB-Netz) and kinds of train (passenger or
freight)
Rail Track Corporation recovers not Deferent TAC table is applied by
only operating expenses but capital kinds of train (passenger or freight)
England
expenditure and capital returns. (Costs
and returns model)
Modification by kinds of train and TAC consists of base charge,
France competitiveness should be added to Diagram charge and Distance charge
basic cost calculation
Rail Track Corporation recovers short term avoidable costs(Operating expense)
USA
plus beneficiary’s portion of improvement investment plus On-time incentives
Rail Track Corporation recovers short term avoidable costs(Operating expense)
Canada
plus Capital costs plus On-time incentives
JR recovers short term avoidable TAC consists of Track charge and
costs(Operating expenses) plus Electric facilities charge
Japan（JR）
beneficiary’s portion of improvement
investments
Rail Track Corporations (JR East and Keisei Railway) recover not only
Japan（Narita Airport
operating expenses but capital expenditure and capital returns. (Costs and
Express rail） returns model)
Source: Mr. Masamichi Hori, “Separation of Infrastructure and Operation in the Railway System and Rail
Access Charge”
Chapter 13
13-13
(2) What are key factors for the formulation
Following 3 items are key factors to position a TAC formula between the two ends.
1) Project durability to pay TAC

Projects whose cash flow is not sufficient can only afford to support operating expenses
of DFC Railway but not afford to support its capital costs and investment return.
In case of worse situation, operators cannot afford to pay full amount of operating
expenses of DFC Railway.
2) Relationship between fare and compensation cost for railway development

TAC of England is few times higher than that of Sweden. This is because England
operators have to pay full amounts for operation, capital cost and investment return as
private company, while in Sweden railway development cost is owed by public sector
resulting that TAC has not direct relation with railway capital cost.
3) Degree of Open Access

The higher the TAC is the less entry into the railway operation business. If DFC Railway
lowers the TAC level in order to increase new entry, then it can not even pay operational
cost.
(3) Trial application of the formulation to DFCCIL
Objective of separation in DFC project is to reduce capital expenditure for ground facilities
and operational cost of DFCCIL which could not have realized in case of integration model
by IR. Business model of DFC is quite different from Swedish, French and Germany business
model.
Approval of new 15 entries into Container/bulk operator business could accelerate the
competition. While competition does not depend on level of TAC but on haulage charge
because IR is sole TAC-payer to DFCCIL.
From cash flow projection point of view, DFC project is durable to pay not only operating
expenses of DFCCIL but its capital costs and investment return thanks to high freight rate
level and low operating ratio of 30%.
Accordingly, application of UK business model, “Costs and returns model” is recommended..
Following conditions should be important in developing TAC system:
1) Achievement degree of Operating Ratio should be important part of TAC Equation.

2) Price escalation must be in the formula.
3) TAC should be revised yearly.
4) Rail Regulator’s approval is needed for its instalment and revision.
(4) Simulations for attaining optimum split ratio of profit after tax
TAC is major income source for DFCCIL. It has to cover all expenditures including
repayment of huge amount of debt and operating costs as well as cash surplus for future
Chapter 13
13-14
investments. A simulation process for the financial analysis was then carried out in 13.2 based
on this requirement.
Further analysis regarding Split Rate of profit after tax between MOR and DFCCIL is in
13.2.2.
13.1.6 How to make DFCCIL accounting sound
Following figure illustrate cost structure of DFCCIL both construction period and operation
period.
Source: JICA Study Team

Figure 13-10 Cost structure of DFCCIL
Cash flow analysis of DFCCIL, risk analysis of risk assumptions and risk hedge planning will
be scrutinized in detail in 13.2.1 but following items must be included:
1) Reduction of initial investment by introducing phasing method of investment, following

after demand growth.
2) Balancing of Debt Equity Ratio (Considering dividend rate and interest rate)
3) Maximizing Soft Loan portion (Considering interest rates of Soft Loan and Commercial
Loan)
4) Setting up the DFCCIL Norm of maintenance personnel cost.
5) Formulating income-slide TAC system for additional investments.
13.1.7 How to complete construction of DFCCIL as scheduled (No Completion Delay,

No Cost Overrun)
As is already stated in 12.5.3.-(1)-4) in the Volume 2 Task0&1 report there are many risks
which trigger the completion delay and cost overrun. The DFC project is really a gigantic
Chapter 13
13-15
project and gigantic scale of construction India never experienced in terms of track length
(2,800 km), advanced technology utilized, number of states concerned, number of
construction institutions concerned, number of facilities and equipment purchased, number of
labours required, number of inhabitants suffered, amounts of construction cost needed (Rs.
267.2 billion), difficulty of funding estimated. Instead of these difficulties this is a challenging
project because shorter construction period is required than Konkan Railway (track length:
741 km, construction cost: Rs. 35.5 billion) which caused 2 years of completion delay (40%,
original construction period: 5 years) and huge amount of cost overrun (3 times of original
cost estimate).
Uncontrollable completion delay and cost overrun would happen in the project if detail risk
analysis is not executed and if risk-hedge measures such as phasing of construction process,
taking into consideration of long environmental approval process and strong expected
resistance against land acquisition and adoption of construction management are not taken.
First of all it is urgently requested that DFCCIL set up specialist team for the construction
management.
13.1.8 Management Action Plans and essential Target Figures for successful DFC
Table 13-2 summarizes aforementioned strategies, tactics and recommendations and adds
action plans. Picking up practical tactics, target figures are selected for monitoring
achievement of tactics.
IR has improved its productivities by gaining big amount of freight volume and by constant
reduction of employees for several years and posted huge amount of unparalleled profit as a
government owned business in the world. But it is essential for IR to restore the past high
market share in the trunk industrial corridors in order to support expected high GDP growth
and industrialization. DFC is most expected development project.
DFC has to go through following two reforms to satisfy the expectations and following two
target figures are needed for monitoring the degree of the achievement.
(1) Railway Container market share: Western Corridor 35%
This is an index which monitors the development, enhancement and prevalence of “Customer
Oriented Business Development” in DFCCIL and IR.
(2) Operating Ratio: DFC (35%), Western Corridor (30%)
This is an index which monitors achievement of high target of productivity of Canada and
USA by DFC,
Chapter 13
13-16
Chapter 13
for Delhi-Mumbai and Ludhiana-Sonnagar in India

Table 13-2 PP & BD & F/A : Project planning & Business development & Finance & Accounting
Strate gie s Tactics Rec ommen datio n Action Plan Target figures
Consensus on "No strategy, no restoration of market share" MOR,DFCCIL agree
Director, Operation & Business development (Mr.
Rcommendation to set up business development & sales in DFCCIL
Shkura), GM, Business development（Neeraj Kumar)
Re sto re o f Data collection on shipper's shipping record by commodities and by OD Railway Co ntain er market
Gro wth of
1 railway market share : We ste rn Corridor
Ton ne -Km Data collection on shipper's shipping plan by commodities and by OD
sh are Data collection on shipper's strategic truck-transportation plan by Se tting u p Developme nt projec t o f 3 5%
commodities and by OD Cu stomer Man agemen t Syste m
Developing DB with shipper's track record, forecast and planning data and
establishing tactics for restoring market share
Data collection on inter-modal shipping record by commodities Se tting u p Researc h Pro je ct of All Reduc tio n of freight fare
Distance-band
2 Fre igh t fare and by OD by field survey Tran sportation Maste r plan alon gside f or ３0 0- ７00 Km distan t-
Freight fare
Analysis on effective freight fare of all transportation modes DMIC ban d: Figure1 3.5
Transit time Door to door service Multi-User/Multi-Commodity Logistic Park Lon ge st days fo r
N o- Freigh t cost/reliability cost Arrival date guarantee system System design tran sportatio n betwe en
3
f are Cost of service major citie s: FS8.3
Pick-up & Delivery service Allian ce with tru ck c o.
frequency Table 8- 11
In tro du ction o f Ele ctric Lo co motive in
Energy cost Promoting electrification in Western Corridor
We stern Co rridor
13-17
I mpro ve Ce iling of to tal n umbe r of DFCCIL Year- 1( 8,7 00 ), Ye ar-

Personnel cost Setting up DFC Norm.
4 railway employee 2 0( 14 ,60 0)
pro du ctivity O pe ratin g Ratio :
Operating Ratio Setting up DFC Norm. DFC(3 5% ), Western
Corridor(3 0% )
One window system for DFC customers and Co-working
between DFC railways (IR) and DFCCIL in the field of PP & BD Make the ne w DFC Railways in MO R
& F/A
Role sharing Design and Data collection of Integrated MIS system (PP & BD De ve lo pmen t o f MI S ( Shippe r's f ore cast,
between MOR and & F/A) Sale s, Operation , Acc ou nting, )
DFCCIL Year- 1( 2,4 00 ), Ye ar-
5 O rgan izatio n Operation (One-man operation) Establish on e- man operation system
2 0( 9,0 00 )
Ph asing o f the projec t and Plan ning of
Construction (No Completion Delay, No Cost Overrun)
co st of pric e e sc alation o n the ph ased
Profit sharing Split Rate of prof it after
Adoptio n of Who le co st syste m like
Final Report (Task2)

between MOR and Track Access Charge (TAC) tax be twee n MO R(70 %)
En gland
DFCCIL and DFCCI L( 30 %)
Total Lo gistic DFC solution
6 Which Organization in MOR group is responsible Se tting u p Con trol to we r in MO R
Man ageme nt business
13.2 CASH FLOW PROJECTION FOR DFC/ DFCCIL
13.2.1 Financial Projection for DFC
The following projections were arrived at using the Cash Flow Projection Model developed
for simulations and risk analysis.
(1) Base Case
1) Assumption1: Capital Expenditure

Table 13-3 3 Phased Capital Expenditure
Project Start Year 2008 2008 2010 2008
Construction Completion Year 2013 2015 2015 2015
Stage Phase Ⅰ-a Phase Ⅰ-b Phase Ⅱ Total
Route Km 1,628 Km 905 Km 244 Km 2,777 Km
Civil & Track work Cost 114,066 66,455 25,991 206,512
Electrical Engineering Cost 19,063 8,538 2,866 30,467
Mechanical Engineering Cost 287 135 45 467
Signal & Telecom Engineering Cost 21,405 13,223 3,121 37,749
Sub Total-1 (Construction works): 154,821 88,351 32,023 275,195
Electric Locomotives 75,551 0 0 75,551
Sub Total-A (Construction costs): 230,372 88,351 32,023 350,746
Engineering Service Cost 4,769 3,473 609 8,851
Price Escalation 11,683 4,176 1,577 17,436
Contingency 21,835 7,805 2,947 32,587
Sub Total-B: 38,287 15,454 5,133 58,874
Land acquisition & compensation Cost 31,482 12,830 7,822 52,134
General Administration Cost 10,829 5,407 1,596 17,832
Taxes for Foreign Consultant 1,872 1,348 340 3,560
Accrued Interest during construction 10,820 4,268 1,623 16,711
Sub Total-C: 55,003 23,853 11,381 90,237
Grand Total: 323,662 127,658 48,537 499,857
1stPhase CAPEX Sub Total-1 (Construction Works):
Sub Total-2 (Procurements):
Engineering Service Cost
0% 5% Price Escalation
10% 4%
4% 44% Contingency
7% Land Acquisition & Compensation

1% Cost
25% General Administration Cost
Taxes for Foreign Consultant
Accrued Interest during

Construction
Figure 13-11 1st Phase Capital Expenditure
Chapter 13
13-18
2) Assumption2: Traffic Demand forecast (Unit: million tonne-Km)
Eastern Corridor demand in 2013 East Corridor demand in 2031
40,000 40,000
35,000 35,000
30,000 30,000
25,000 25,000
20,000 -３00
20,000
300-700
15,000 15,000
700-1,000
10,000 10,000
1,000-1,500
5,000 5,000
1,000-1,500 1,500Km-
0 0 1,000-1,500
n er
al
Ore
-３00
r
Co
ne
l
al
i
ee
-３00
in s
nt a
re
L
Co
l
ai
ee
O
PO
St
s
rs
nt
L
a
nt
ain
St
Co
PO
dg r
s
i ze
Co
rs
t
me
her
en
gr
rs
ze
od
rt il
o
e
Ce
tili
Ot
th
Fo
Ce
Fo
r
Fe
O
Fe
Demand by commodities & distance in Western Corridor in Western Corridor demand in 2031
2013
70,000
70,000
60,000
60,000
50,000
50,000
40,000
40,000 -３00Km
30,000 300-700Km
30,000
20,000 700-1,000Km
20,000
10,000 1,000-1,500Km
10,000 1,000-1,500Km 1,500Km-
0
0 1,000-1,500
-３00Km
r
ine
s
Or
er
al
ain
a
-３00
rs
e
ain
Co
nt
Or
ee
s
e
in
gr
L
nt
ers
Co
er
St
liz
PO
gra
Co
nt
od
th
rs
li z
rti
od
me
he
r ti
Fo
O
Fo
Fe
Ce
Fe
Ot
Figure 13-12 Traffic Demand Structure of both Corridors (2013, 2031)
3) Assumption 3: Freight Fare

Table 13-4 Freight Fare by Commodities and by distant-bands
by Commodities By Distant-bands
Commodities Unit -300Km 300-700Km 700-1,000Km 1,000-1,500Km 1,500Km-
Container Rs/TEU・Km 10.070 8.264 7.946 7.8 7.478
Coal Rs/Tonne・Km 1.035 0.850 0.817 0.802 0.769
Ore Rs/Tonne・Km 1.035 0.850 0.817 0.802 0.769
Steel Rs/Tonne・Km 1.035 0.850 0.817 0.802 0.769
Food grains Rs/Tonne・Km 0.813 0.668 0.642 0.63 0.604
POL Rs/Tonne・Km 1.627 1.335 1.284 1.26 1.208
Fertilizers Rs/Tonne・Km 0.739 0.607 0.583 0.573 0.549
Cement Rs/Tonne・Km 1.035 0.850 0.817 0.802 0.769
Others Rs/Tonne・Km 1.035 0.850 0.817 0.802 0.769
Average Rs/Tonen・Km 1.044 0.857 0.824 0.809 0.776
Chapter 13
13-19
4) Assumption 4: Operating Expense

Table 13-5 Unit Costs of Operating Expense
Unit cost Variables Comments
Overhead 0.52 Route-Km 4fold of JR track record
Station (Small) 10.5 Number of stations Station master:1, Signal:1, Others:1
Station (Big) 35.0 Number of stations 3.5 shift, each 10 staff
Driver 0.01 Train-Km/day Apply JR track record
Personnel cost Apply twofold of track record of
Facilities 2.60 Route-Km
Konkan Railway (double track)
Electric 1.70 Route-Km Apply JR track record
Rolling stock 0.0098 Train-Km/day Apply JR track record
Unit wage 158,419 Number of employee Apply IR track record
Apply Konkan Railway track
Overhead cost 258,633.6 Route-Km
record
Station 4,644,000 Number of stations Apply 80% of IR track record
Material cost Driver 2.1 Train-Km Apply 80% of IR track record
Fuel (EL) 94.85 Train-Km Apply IR track record
Facilities 11.52 Train-Km Apply 80% of IR track record
electric 14.16 Train-Km Apply 80% of IR track record
Rolling stock 38.32 Train-Km Apply 80% of IR track record
5) Assumption 5: Train operation and station

Table 13-6 Business-Km Train-Km, Number of stations
2013 2018 2023 2 028 20 31

East 697 697 1190 1190 1190
Route-Km
West 928 1487 1487 1487 1487
Train-Km East 19.184 24.057 40.741 42.790 43.852
(million) West 25.248 61.132 85.245 108.404 122.796
Numbe r of East 14 14 52 52 52
small station West 22 32 32 32 32
Numbe r of East 8 8 14 14 14
big station West 6 12 12 12 12
DFCCIL's Staff Number
16000
14000
4720.9 4720.9 4720.9 4720.9
12000
Electric
10000
Facilities
8000 2767.6 Station (Big)
7 2 2 0 .2 7 2 2 0 .2 7 2 2 0 .2 7 2 2 0 .2
6000 Station (Small)
4 2 3 2 .8 Overhead
4000
945 945 945 945
2000 5378
25 882 882 882 882
8 4 6 .5 6 1 4 4 4 .0 4 1 4 4 4 .0 4 1 4 4 4 .0 4 1 4 4 4 .0 4
0
2014 2018 2023 2028 2031
Figure 13-13 Number of DFCCIL’s Staff
Chapter 13
13-20
DFC Railway's Staff Number
9000
8000
7000 4 3 9 6 .5 4 8 4 9 3
3 9 9 0 .7 4 7 9 4 5
6000
3 3 3 0 .8 9 9 1 7 8
5000 Rolling stock
4000 2 5 1 4 .4 1 1 5 0 7 Driver
3000
4 1 1 2 .9 1 3 6 9495 3 1 .1 3 6 7 1 2
2000 1 1 8 3 .8 4 3 4 3 2 .8 6 5 4 7 9
2 5 9 1 .3 8 3 2 8 8
1000 1 2 2 0 .0 8
0
2014 2018 2023 2028 2031
Figure 13-14 Number of DFC Railway’s Staff
6) Assumption 6: Financing
a) Financing percentage
- Equity 1/3 of Total finance
- Yen Loan Yen 500billion
- Other Soft Loan 50% of remnant after Equity and Yen Loan
- Commercial Loan 50% of remnant after Equity and Yen Loan
b) Terms and Conditions

- Equity Dividend: 7.0% p.a.
- Commercial Loan 15 years (2 years grace) Interest rate 12%p.a. Soft Loan
JBIC
ADB World Bank
STEP
Finance amount Yen 200billion 50% of remnant after Equity and Yen Loan
Term year (Grace year) 40(10) 30(5) 30(5)
Interest rate 0.40% 6months-LIBOR+0.75% 6months-LIBOR+0.75%
7) Other Assumptions:
a) TAC (Track Access Charge) revenue of DFCCIL from MOR
- DFCCIL receives Expenditure reimbursement (Operation cost, Depreciation,
Interest payment, Tax) plus 30% of Profit after tax as TAC.
b) Tax
- Based on domestic corporate tax rate (35%) and added tax (5%) of Income Tax
Act 1964. Assume 50% tax exemption for DFCCIL portion upon the suggestion
of MOR, taking account other similar projects. MOR portion is not taxable.
c) Depreciation
- Apply SLM (Straight Line Method) rate of depreciation, The Companies Act,
1988 Schedule XIV
d) Capitalize interest payment during Phase I-a construction period (2008-2012).

- Assume interest payment from revenue after operation (2014).
Chapter 13
13-21
e) Order of disbursement is as follows according to commitment amount:

1. Pro rata disbursement of Equity from MOR and Yen Loan
2. Other Donor Loans
3. Commercial Loan
8) Summary list of the Base-case projection

Table 13-7 Summary of the Projections
DSCR ROE FIRR

Whole DFC project 4.5 47.1% 10.8%
DFCCIL（TAC revenue） 1.8 14.1% 2.8%
Projection results showing ROE of 47.1% and Debt Service Coverage Ratio (DSCR) of
4.5 prove that the whole DFC is an excellent project. The computed FIRR of 10.8% is
also high taking into account of the amount of price escalation for 8 years.
9) Projection result-1: Profit & Loss (Unit: Rs. Million)

Profit after tax is posted from Year One. Depreciation and Interest payment begins to
decrease about Year-17 resulting to an accumulation of retained earning after that.
Average Operating Ratio of less than 30% makes this possible. The reasons for low
Operating Ratio are:
a) Three-folds of freight rate compared with other countries

b) Low operating costs assumed as shown in Table 13-6.
TAC Payment in total DFC PL
180,000
160,000
140,000
120,000 MOR share on DFC profit

100,000 For DFCCIL's Future investment
Debt repayment
80,000 Tax
Interest payment & Dividend
60,000 Depreciation
40,000 Expense total
20,000
0
14
16
18
20
22
24
26
28
30
32
34
36
20
20
20
20
20
20
20
20
20
20
20
20
Figure 13-15 DFC Profit & Loss Structure
10) Projection result-2: Debt Service Coverage (Unit: Rs. Million)

Average Debt Service Coverage Ratio (DSCR) of DFCCIL results in 1.8 which shows
sufficient repayment ability of debt and interest. In terms of yearly DSCR of DFCCIL,
the worst is 1.5 and the best is 2.5 between 2014 and 2036.
Chapter 13
13-22
DFCCIL Debt Service Coverage
45,000
40,000
35,000
30,000
25,000
DFCCIL Cash Flow Surplus
20,000 Debt repayment
15,000
10,000
5,000
0
14
16
18
20
22
24
26
28
30
32
34
36
20
20
20
20
20
20
20
20
20
20
20
20
Figure 13-16 DSC Structure of DFCCIL
11) Projection result-3: Equity & Loan Balance of DFCCIL

Equity from MOR begins to be disbursed from 2008. MOR equity and Yen Loan are
disbursed on pro rata from 2009. Other Donor loans will be disbursed 2013 and 2014.
Commercial loans will be disbursed after 2015. Grace period of each loans are 10years,
5years and 2 years respectively.
Equity & Loan Balance of DFCCIL
500,000
450,000
400,000
350,000
300,000
Commercial Banks
250,000 Donors
200,000 JBIC
150,000 Equity
100,000
50,000
0
08
11
14
17
20
23
26
29
32
35
20
20
20
20
20
20
20
20
20
20
Figure 13-17 Equity & Loan Balance of DFCCIL
12) Projection result-4: Dividend & Interest Payment

Interest-payment-burden of JBIC is extremely light even compared with mandated
dividend payment to MOF as to government contribution to IR, by comparison between
loan balance in Figure 13-17 and interest payment amount in Figure 13-1.
Chapter 13
13-23
Dividend & Interest payment
16,000
14,000
12,000
10,000
Commercial Banks
8,000 Donors
6,000 JBIC
Equity
4,000
2,000
0
08
11
14
17
20
23
26
29
32
35
20
20
20
20
20
20
20
20
20
20
Figure 13-18 Dividend &Interest Payment
13)Projection result-5：TAC simulation (Unit: Rs. Million)

If DFCCIL receives Expenditure Reimbursement (Operation cost, Depreciation, Interest
payment, Tax) plus 30% of Profit after tax as TAC, DFCCIL can repay debt and
accumulate retained earning for future investment as shown as red in Figure 13-19 The
retained earning of DFCCIL seems to be essential and appropriate for additional
investments in the future in order to maintain competitiveness and customer satisfaction.
TAC Payment in total DFC PL
180,000
160,000
140,000
120,000 MOR share on DFC profit

100,000 For DFCCIL's Future investment
Debt repayment
80,000 Tax
60,000 Depreciation
40,000 Expense total
20,000
0
14
16
18
20
22
24
26
28
30
32
34
36
20
20
20
20
20
20
20
20
20
20
20
20
Figure 13-19 TAC Simulation
Chapter 13
13-24
14) Projection result-6：Retained earnings
Retained Earning (Rs. million)
1,400,000
1,200,000
1,000,000
800,000
MOR
600,000 DFCCIL
400,000
200,000
0
14
16
18
20
22
24
26
28
30
32
34
36
20
20
20
20
20
20
20
20
20
20
20
20
Figure 13-20 Retained earnings
15) Projection result-7：Balance Sheet (B/S) of DFCCIL (Asset)
DFCCIL Assets
600,000
500,000
400,000
300,000 Current Assets

Total Net Fixed Asset
200,000
100,000
0
14
16
18
20
22
24
26
28
30
32
20
20
20
20
20
20
20
20
20
20
Figure 13-21 Balance Sheet (B/S) of DFCCIL (Asset)
Chapter 13
13-25
16) Projection result-8：B/S of DFCCIL (Capital & Liability)
DFCCIL Capital & Liability
600,000
500,000
400,000
300,000 Loan Balance

Equity
Retained Earning
200,000
100,000
0
14
16
18
20
22
24
26
28
30
32
20
20
20
20
20
20
20
20
20
20
Figure 13-22 B/S of DFCCIL (Capital & Liability)
17) Projection result-9：Employee productivity

As is already stated, Employee productivity in 2014 is as same as Canada and that of
2032 is around the same level of U.S.A. as of 1999.
DFC Employee Productivity (MM ・tkm/Employee
9
8
7
6
5
4
3
2
1
0
2,014 2,019 2,024 2,029 2,032
Figure 13-23 Employee productivity
18) Projection result-10：Operating Ratio of DCF project

Main cause of fluctuation as is shown below is fluctuation from depreciation amount.
Chapter 13
13-26
Operating Ratio
33%
31%
29%
27%
25%
23%
21%
19%
17%
15%
32
14
16
18
20
22
24
26
28
30
34
36
38
20
20
20
20
20
20
20
20
20
20
20
20
20
Total DFC Western corridor
Figure 13-24 Operating Ratio
(2) Business Risk：What if Railway market share is not recovered and GDP growth
rate remains 5%.
1) Assumption Change
Base case assumes that IR’s market share will hit the bottom in 2004 at 23.7% and will
grow gradually to the level of 37.7% in 2022 by 14%. Business Risk-case assumes
Railway market share will remain at 23.7% throughout the project period and Western
DFC’s traffic demand will depend only on natural growth by GDP growth rate of 5%.
2) Summary list of the Business Risk-case projection

Table 13-8 Summary of the Business Risk case Projection
DSCR ROE FIRR
3) Conclusion
Projection result of Whole DFC project (Average DSCR: 3.49 and Average ROE: 34.7%)
shows that the Project stands well against the business risk assumption. It is noteworthy
that the average ROE of 34.7 is ample enough for the return of capital investment by
MOR. DFCCIL’s DSCR (1.5) also seems to clear the minimum requirement of 1.2.
(3) Organizational Risk
This scenario assumes that DFC accounting separation will not work well, resulting in
20% of DFC revenue remaining in the zonal railways.
2) Summary list of the Organizational risk-case projection

Table 13-9 Summary of the Organizational risk projection
DSCR ROE FIRR
DFCCIL（TAC revenue） 1.5 10.0% -
Chapter 13
13-27
3) Conclusion
The probability of the organizational risk is not high because of current apportionment
system in IR for many years. Even under the very rigid assumption of 20% of revenue
reduction, DSCR of DFC and DFCCIL are 3.4 and 1.5 respectively and yearly DSCRs
are over 1.2.
(4) Operating-Expenses Risk
This scenario assumes that New Standard of Operating expenses are not set up nor
achieved by a strong labor resistance and personnel cost jump up 3 times bigger and
material cost is 25% higher than the planed.
2) Summary list of the Operating Expense Risk-case projection

Table 13-10 Summary of the risk projection
DSCR ROE FIRR
3) Conclusion
The result is that Operating Ratio jumps up 40s and DSCR drops to 3, presenting bad
effects. This proves that streamlining all expenditure is fundamental for the project.
Effect to average DSCR of DFCCIL is worst among all, resulting in 1.3. Yearly DSCR of
DFCCIL drops to the level of 1.1, under the safe level of 1.2, in Year-5 and 5 years from
Year-9 to Year-13, alarming the needs of cash injection from MOR’s portion of DFC
retained earning.
(5) Interest Risk
It is assumed that World Bank loan and ADB loan are not applicable to the project and
commercial loans take the place and Yen Loan commitment remains Yen400billion.
2) Summary list of the Interest Risk-case projection

Table 13-11 Summary of the Interest risk projection
DSCR ROE FIRR
3) Conclusion
Effects of the interest risk assumption to the total DFC-financials seems to be absorbed.
Average DSCR of DFCCIL (1.5) seems to clear the minimum requirement of 1.2 and
ROE and FIRR are even improved because the shorter repayment period required by
commercial loan lessens the burden of interest payments as long as DFC cash flow is
sufficient. But DSCRs of DFCCIL for 2 years from Year-4 to Year-5 after start of
operation are under 1.2. This proves that World Bank/ADB Loan should not be ruled out
because of big amount of fund requirement.
Chapter 13
13-28
(6) Project Implementation Risk (Completion Delay, Cost Overrun)
2 year-completion delay occurs in the first phase and 50% Cost Overrun of Civil
Engineering Cost is assumed, resulting in total Capital expenditure of Rs.650billion,
including swollen accrued interest.
2) Summary list of the Completion-delay & Cost-Overrun Risk-case1 projection

Table 13-12 Summary of the Completion-delay & Cost-Overrun Risk Projection
DSCR ROE FIRR
3) Conclusion
Revised construction schedule is very tight resulting in high possibility of completion
delay and cost overrun, because original 15 years, / 3-phased schedule of construction
has shortened to 8 years/ actually one-phased schedule. In other words, many unsettled
problems such as environmental approval issues, resistance against land acquisition,
difficulties on many ROB rebuilding, squatter problem and insufficient traffic demand
issues remain to be the sources of Completion delay/ Cost overrun Risk. Accordingly
this risk analysis assumes 2 year completion delay and 50% cost overrun in civil
engineering cost over the base case and the result of the simulation seems to be serious.
Average DSCR of DFCCIL is worsened to 1.4 resulting in yearly DSCR for 6 years from
Year-5 to Year-10 under 1.2 of safety standard. Guarantee support from MOR’s portion
of after tax profit of DFC is needed.
(7) Strategic Freight rate Risk
Discounted freight fares are applied as is shown in Figure 13-5 for reinstatement of
railway transportation under 700 km distance-band.
2) Summary list of the strategic freight fare risk-case projection

DSCR ROE FIRR
3) Conclusion
The report recommends that railway can take an extreme bargaining tariff tactic in order
to get over other disadvantages in the field of transit time cost and cost of service
frequency. This risk analysis is to measure the magnitude of the assumption.
The negative effect by the assumption change is slight, resulting that ROE of DFC
remains 40s and average DSCR of DFCCIL keeps 1.7. If demand growth by lowering
fare is taken into consideration negative impact would be lessen further.
Chapter 13
13-29
(8) Compound Risk of the business risk and project implementation risk
It assumes that the business risk (no market share recovery and 5% GDP growth rate)
and project implementation risk (2 year completion delay and 30% cost overrun) occur
simultaneously.
2) Summary list of the compound risk-case projection

DSCR ROE FIRR
3) Conclusion
Impact not only to DFCCIL but to DFC is serious, resulting in about 40% shrinking of
all ROE, FIRR and DSCR. Above all DSCR of DFCCIL has serious damage, showing
yearly DSCR for 7 years from Year-6 to Year-12 1.1. Guarantee support from MOR’s
portion of after tax profit of DFC is needed.
13.2.2 Simulations for optimum split rate of DFC’s profit after tax
A simulation for the optimum TAC-split-rate was carried out, resulting in Figure 13-19 and
Figure 13-20 based on the requirement as follows:
1) Expenditure (Operation cost, Depreciation, Interest & dividend payment, Tax) is deducted
from DFC revenue according to operating expenses assumptions for DFCCIL.
2) Then the projection iron out optimal split percentages of profit after tax between MOR and
DFCCIL. The DFCCIL portion should cover both Debt repayment and surplus for further
investment. MOR portion should cover current and future income of existing freight
corridor and investment return.
Risk analysis proves that DFCCIL accumulates Rs. 100 billion retained earnings at Year-20
even under very hash risk assumptions with 30:70 (DFCCIL: MOR) split rate. Please refer to
Volume 4 Technical Working Paper Task2, 13 about the detail result of risk simulation.
30:70 split seems to be appropriate if current assumptions are correct.
13.3 FUNDING PLANS
Capital Expenditure (CAPEX) of the 3 phased project amounts to Rs. 498.8 billion (1st
Phase: Rs. 329.2 billion, 2nd Phase: Rs. 119.7 billion, 3rd Phase: Rs. 49.8 billion) according
to the results of the JST study shown below.
Chapter 13
13-30
DFC Capital Expeniture (Rs million)

Accrued Interest
during Construction
500,000
Taxes for Foreign
450,000 Consultant
400,000 General Administration
350,000 Cost
300,000 Land Acquisition &
Compensation Cost
250,000 Contingency
200,000
150,000 Price Escalation
100,000
Engineering Service
50,000 Cost
0 Sub Total-2
1st 2nd 3rd Total
(Procurements):
Phase Phase Phase
Sub Total-1
(Construction Works):
Source: JICA Study Team
Figure 13-25 Capital Expenditure of DFC project
Rs. 498.8 billion is assumed to be the total amount expected to fund the project. Preliminary
research and funding feasibility is shown below based on past track record and the analysis on
potential market size because the project is still under F/S and potential financiers have not
started their analysis.
13.3.1 Fund sources
Possible fund sources are as follows:
1) Equity finance from MOR

2) Yen Loan
3) Donor finance from international finance institutions like World Bank and ADB
4) Indian domestic commercial finance already financed to Konkan Railway and railway
developments by RVNL
13.3.2 Equity finance
Indian Cabinet decided that Ministry of Railway (MOR) invests 100% of equity to the newly
built project company (DFCCIL).
Let’s assume MOR invests 1/3 of total required fund amounting to Rs. 166.7 billion.
MOR wants to make the money for the investment from IR’s cash flow for first 6 years (Rs.
18.3 billion per year). IR posted Rs. 213 billion of cash flow as of FY 2006 and Rs. 133
billion of total increase in fixed assets. Required fund (Rs. 23 billion per year) is 13% of IR’s
annual cash flow and 7% of annual total increase in fixed assets. The magnitude is acceptable
for the IR’s sound financing taking Government Contribution of 25% into consideration.
Chapter 13
13-31
Detail analysis on PL, cash flow and B/S of IR are as follows. These are the reasons why the
above conclusion has come out:
IR's net profit has improved after FY 2002 exceeding ADB forecast. Income increased by
both rapid growth of freight traffic while freight rates kept stable. Net Income posted Rs.
149.2billion as of FY2007, 6.3 times larger than as of FY 2002.
Net Income of IR
160,000
140,000
120,000
Rs Million
100,000
80,000 Achievements
60,000 ADB forecast
40,000
20,000
0
2002- 2003- 2004- 2005- 2006-
03 04 05 06 07

Figure 13-26 IR’s Net Income Trend
Increase of net profit leads to increase of cash flow (net profit before depreciation) which
posted Rs. 117.1 billion as of FY2006, 2.6 times larger than as of FY 2002. Government
contribution has increased in line with the growth of cash flow, posted Rs. 83.1 billion as of
FY 2005, 1.6 times larger than as of FY2002. Total source of fund as of FY 2005 is Rs. 213
billion.
Chapter 13
13-32
Sources of Funds
Other Sources
250,000
200,000 Net Increase in

Pension Fund
83,133
150,000 Interest on Fund
Rs. Million
85,546 balances
69,987
100,000 55,685 Government
50,981
Contribution
50,000
Add Depreciation
0
Add Dividend
-50,000
2001- 2002- 2003- 2004- 2005-
02 03 04 05 06 Net Income(Loss) for
Appropriation

Figure 13-27 IR’s Sources of Funds
Looking into the Use of Funds as of FY 2006, 47% (Rs. 100 billion) of source of fund is
consumed by purchase of Fixed Assets and 15% (Rs. 32.5 billion) is used for replacement of
Fixed Assets. After all, about 62% (Rs. 132.8 billion) of available fund is allotted for Fixed
Assets investment. Out of 38% of source of fund, 17% is used for Dividend to the balance of
Government Contribution amounted to Rs. 559.5billion. Funds Deposited to Government is
mainly for pension fund purpose.
Uses of Funds
250,000
200,000 43,516 Funds Deposited to

25,566 Government
Rs.Million
150,000 18,363 31,993 36,679 Dividend to

18,642 33,871
22,346 32,556 Government
100,000 14,232 27,148 19,050
13,372 14,648
15,696
Replacement of Fixed
Assets
50,000 83,005 98,296 100,246
61,509 71,143 Purchase of Fixed
0 Assets
2001- 2002- 2003- 2004- 2005-
02 03 04 05 06

Figure 13-28 IR’s Uses of Funds
Chapter 13
13-33
Assets
1,400,000
1,200,000
342,103
1,000,000 272,093 Other Non-Current
800,000 228,580 Assets
196,341
164,566
600,000 Fixed Assets
816,605
400,000 633,984 721,266
510,277 568,041
Total Current Assets
200,000
0
2001- 2002- 2003- 2004- 2005-
02 03 04 05 06

Figure 13-29 IR’s BS
Total Assets as of FY2006 is Rs. 1,200 billion. 68% is Fixed Assets and 28% is Funds
Deposits with Government which is mainly for Pension Fund and balance of Depreciation
Fund.
As to Liabilities & Equity, 47% is the balance of Government contribution and 49% is
Retained Earnings and Deposit-Provident Fund which are the results of corporate activities.
Liabilities & Capitals
1,400,000 Retained Earnings

1,200,000
1,000,000 423,598
322,117 Government
800,000 260,198 Contribution
221,541
188,424 Reserved Pension
600,000 559,502
400,000 456,720 508,450 Fund
367,575 407,093
Deposits-Provident
200,000
Fund etc.
0 Accounts Payable
2001- 2002- 2003- 2004- 2005-
02 03 04 05 06
Figure 13-30 IR’s BS
13.3.3 Yen Loan
Rs. 27.8 billion per year for 6 years is challenging amount considering current yearly
acceptance amount of Yen Loan to India is Rs. 56.5 billion as of FY 2005.
According to “the rule of country of origin”, one of the financing rule of Special Terms for
Economic Partnership (STEP), it stipulated that more than 30% of agreed STEP loan amount
must be procured by facilities & equipment of “Japan Origin” which includes facilities &
equipment procured from Japanese companies not only in Japan but from Japanese
subsidiaries in the borrower’s country* and in other developing countries**.
Chapter 13
13-34
* Japanese subsidiaries is defined that (1) more than not less than 10% of the equity of the
manufacturer are held by Japanese companies and (2) The proportion of the shares held
by the Japanese firm mentioned in (1) above is the same as or greater than that of the
shares held by any firm of a country or region other than Japan and the country or the
territory where the manufacturer is located.
** is defined (1) not less than one-third of the shares of the manufacturer are held by a
Japanese firm and (2) the same above.
Assumed Rs.166.7 billion as Yen Loan amount, Yen 150billion, 30% of the loan, could be
procured from afore-defined “Japan Origin”.
Repayment period (grace period) of STEP is 40 years (10 years) or 30 years (10 years) and
interest rate is 0.4% p.a. and 0.3% p.a. respectively.
13.3.4 Other Donors
Assuming that other donors are requested to finance half of the remnant after equity finance
and Yen Loan, it is about US$2.2billion. It is possible amount for their subscription because
World Bank suggested US$1.5-2billion and ADB are willing to participate the financing with
unofficial commitment. But the project is record magnitude in terms of construction scale,
tight construction schedule against the construction magnitude and finance amount.
Completion delay could destroy the project. Accordingly it is absolutely needed that MOR
and other donors get rid of the barriers, which caused troubles in the previous finance. It may
be recommendable that Donors clarify their precondition beforehand and find out solutions
for it, for example qualified construction bidder because of the importance of other donor
portion for total finance scheme.
Followings are terms & conditions of the last financing for MOR’s PSU by ADB and World
Bank just for information:
Table 13-15 Terms and conditions
ADB World Bank
epayment years (Grace period) 30years (5years) 30years (5years)

LIBOR-based US$ Lending LIBOR-based US$ Lending
facility, Int. Margin, front-end facility, Int. Margin: 0.75%,
Interest rate and others
fee: 1% pa, Commitment fee: front-end fee: 1% pa,
0.75% pa Commitment fee: 0.75% pa
13.3.5 Domestic Commercial Banks
Let’s assume that domestic/foreign Commercial Finance Market takes on the remnant
financing amounting to Rs. 83.3 billion.
Domestic Commercial Finance Market has provided following financing both to Konkan
Railway and RVNL railway projects. IRFC maintains AAA rating in domestic capital market.
IRFC, the financial arm of MOR, can raise funds from foreign financial/capital markets with
a BB+ rating from S&P, Baa3 from Moodys’ and BBB from JCR. It has also issued Samurai
Bond amounting to Yen 15billion in Tokyo Bond Market in February 2007.
Chapter 13
13-35
Financing Rs. 83.3 billion for 8 years from the domestic/foreign commercial markets seems to
be viable from both funding size and credibility of DFCCIL (100% owned by Central
Government) because Konkan Railway raised Rs. 27.6 billion and RVNL (50% owned by
Central Government) railway projects is under financing of Rs. 150 billion for 5 years and Rs.
400 billion for 10 years from the domestic Commercial Finance Market.
Current terms and conditions of the domestic Commercial Finance Market are as follows:
1) Commercial Bank Loan

Terms: 10-15 years（incl. 2 year grace period）, Most favourable interest rate: 11.5%
2) Bond
Terms: 3-5 years, Interest rate: around 7.5%
3) Capital Gain Tax Exemption Bond

Terms: 5 years, Interest rate: around 5.5-5.6%
The lending balance of designated commercial banks in Indian financial market is Rs. 7.3
trillion, that of other banks like Indian Industrial development Bank is scaled about Rs. 2.4
trillion and Company Bonds market size is about Rs. 600 billion. Total size of Commercial
Finance Market is Rs. 10 trillion as of the end of FY2003.
1) Konkan Railway
Other than 22.5% of equity financing are commercial sources (Debts, Company Bonds,
Leases etc.) amounted to Rs. 27.6 billion. Interest rates of Company Bonds are around
10% and term is 5-10 years.
Amount Percentage
(Billion Rs.)
Equity 8 22.5%
Long term Loan (Bond) 22.5 63.3%
ECB 4.09 11.5%
Lease 0.86 2.4%
Suppliers’ Loan 0.1 0.3%
Total 35.55 100%
Borrowing feature: Bond issuing and debt are on project financing basis with support of
Letter of Comfort from MOF. Taxable Bond and Tax-free Bond were issued. Bonds are
subscribed by Commercial Banks, institutional investor and residents of the railway site.
2) Railway projects under RVNL

RVNL railway projects is under finance amounting to Rs. 150 billion for 5 years.
Interestingly enough, most of the projects are schemed to have equity partners from
provincial governments, port authorities/trust and major industrial groups and to have
financing from ADB, SPV borrowing from commercial banks and bond financing
subscribed by banks and institutional investors with oversubscription
Viability-test is on combination of IRR and other financial indices. Threshold of IRR-test

is funding cost + 2%. Commercial financiers are satisfied with the borrower’s credibility
because projects are 50% owned by RVNL (100% owned by Central Government)
Chapter 13
13-36
13.4 REVIEWING POSSIBILITY OF PRIVATE/PUBLIC SECTOR PARTICIPATION

(PSP) IN DFC
Current PSP activities in MOR as a part of “Railway Sector Reform” are already stated in
“MOR’s PPP Strategy (Task 0&1)”. Possibility of PSP for the DFC project is reviewed
hereunder.
13.4.1 PSP to DFCCIL as Equity holders/Major customers
(1) As fund providers:
PSP as equity holders in KRC (Konkan Railway Corporation) and MRVC (Mumbai Rail
Vikas Corporation Ltd.) projects is limited to local governments. However equity holders in
RVNL (Rail Vikas Nigam) projects extend to port authorities and port trusts. Furthermore if
loan and bond funding is considered as PSP much more private sector funds would be
involved in KRC and RVNL projects.
Public Sector Undertakings (PSU) such as power generators, steel manufacturers and coal
miners have been suggested in the “Report of DFC Task Force” to participate in DFCCIL as
equity holders. Equity participation by major shippers might be recommendable and possible,
taking into account over Rs.600 billion funding-needs.
(2) As the board members of DFCCIL:
MOR has not placed the main priority in obtaining shipper’s needs and taking actions which
might lead to a decline in long-term market share. Although MOR has conducted hearing
request with major shippers it would be very important for DFCCIL to take in directors from
these major shipper and have their opinions on marketing, operation, investment, operating
cost reduction and transportation securities during director’s meetings.
13.4.2 New entry to container train-operator business with ICD facilities
(1) Promoting PSP in container train-operator business
CONCOR, 100% owned PSU by MOR, used to be the only operator of container (bulk) train
with the exception of IR along the IR networks. MOR introduced other 15 operators due to
the rapid increase of container demand
The new competitive system of train-operator business with ICD facilities is important for
Western DFC where container train will dominate in future. Door to Door strategy of
container transportation will be essential in order to realize current demand forecast of
Western DFC.
The expected Development Plans of ICD facilities by the 15 operators of container (bulk)
train on IR networks will be the key step for successful PSP in railway sector.
13.4.3 Cooperation of Logistic Park/Rail Side Warehousing with ICD/SEZ
(1) Development of a railway-centred integrated transportation business
Road-centred integrated transportation business is prevailing in developed countries where

highway network is well developed, motorization is matured and logistic park for truck
transportation is well developed nationwide and where railway network is only a part of the
total transportation system.
Chapter 13
13-37
The share of medium ad long-distance railway transportation to the total Indian transportation
system is still high while short-distance market share has been dropping. Thus, development
of a railway-centred integrated transportation base like a Logistic Park/ Rail side Warehousing
is highly recommended in order to block the entry of inefficient truck mode in the medium &
long-distance Railway transportation business. PSP in the field is a very important building
block for a total PPP. This Logistic Park/ Rail side Warehousing must cooperate with nation
wide SEZ/ICD.
Chapter 13
13-38
CHAPTER 14
EXECUTING AGENCY AND STAKEHOLDERS
CHAPTER 14 PROJECT IMPLEMENTATION PLAN
14.1 EXECUTING AGENCY AND STAKEHOLDERS
DFCCIL is the executing agency of the DFC Project and is positioned in the centre and would
manage the communication and interaction of the stakeholders of the Project such as the
Ministry of Railways (MOR), relevant Ministries, Zonal Railways, contractors, suppliers, and
consultant which will be managing the design and construction supervision.
The following Figure14-1 indicate the assumed organization structure for the DFC Project.
GOJ
Ministries MOEF
GOI
MORD
JBIC MOF
MOST
IR Zonal Railways
MOR State
RDSO Governments
DFCCIL
Environmental General
Consultant Consultants
Track Material Civil & Track work Core system & ICD Locomotive
Supplier Contractors Electrification Contractor & Depot
Contractors Contractor
Figure 14-1 Relevant Stakeholders for Implementation of DFC Project
Organisations and role of each of them in the implementation of the DFC Project :is indicated
in the following Table 14-1.
Chapter 14
14-1
Table 14-1 Role of Stakeholders in DFC Project

Abbreviation Organisation Role Pertaining to DFC Project
GOJ Government of Japan
GOI Government of India
JBIC Japan Bank of International Prime Lending Agency
Cooperation
MOR Ministry of Railways Ministry responsible for DFC Project.
MoF Ministry of Finance Ministry responsible for budget allocation.
MoST Ministry of Shipping and Ministry responsible for development of ports
Transport and highways.
MoEF Ministry of Environment and Ministry responsible for environment issues,
Forests wild life and forests.
MORD Ministry of Rural Ministry responsible for social environmental
Development issues.
SG State Governments Responsible for management of development
and maintenance of roads within State, land
acquisition, resettlement, and rehabilitation.
IR (Zonal Indian Railway Responsible for management of railway
Railways) development, maintenance, and operation of
feeder lines within respective Zones.
RDSO Research Design and Responsible for preparing standards and R&D
Standards Organization for railway, approval of new technologies
railway technologies applied to DFC.
DFCCIL Dedicated Freight Corridor SPV for DFC Project responsible for
Corporation of India Ltd. construction maintenance of DFC.
14.2 DFC PROJECT IMPLEMENTATION SCHEDULE
14.2.1 Schedule for the Implementation of DFC Project
(1) Critical Factors of the Implementation

The Project aims to construct a new freight railway line, mainly on embankment structures
and the sequence of the works involved can be generalised as: 1) Civil works (earthworks and
bridge structures); 2) Track works; 3) Electrification, telecommunication, and signalling
works. The implementation of the works is desired to be completed in a short period of time,
and JST envisages that the track works and civil works will be carried out simultaneously
with a reasonable time between the commencement of each work. Since the civil works
being the forerunner of the works, followed by the track works, the critical path of the whole
construction schedule lies in these two activities.
The volume of earthworks in Phase I-a Project alone amounts to 107.27 million m3, and
assuming the duration of the works of the whole project is five (5) years, the earthworks is
required to be completed effectively in two (2) years. Thus the JST assumes that one team
for the construction of earthwork is required to be deployed at every 20km along the DFC.
With regard to track works, the procurement of track material such as ballast, sleepers, and
rail is largest critical factor which affect the schedule. In Phase I-a alone, 430,000 tons of
60kg rail, 8,400,000m3 of ballast and 6,000,000 pieces of PC sleepers are required to be
procured.
Chapter 14
14-2
With regard to ballast, the DFC lines being planned on three zonal railways i.e. Northern
Railway, North Western Railway, and Western Railway, and it is assumed that the total
volume of ballast procured by the three Zonal Railways to the extent of 2,000,000m3 per
annum will be required for maintenance. JST calculates that it will take four (4) years to
procure ballast required for DFC Project even if the suppliers of the ballast doubles their
production capacity. The procurement of ballast is envisaged to be a difficult task since the
acquisition of approval for the expansion of concession, and expansion of the facility will take
time. The situation for the procurement of the sleeper is no different. The expansion of the
production facility in a short time frame is perceived to be difficult.
Thus, as a countermeasure, it will be desirable to make a long term material procurement plan,
in which the process for the procurement of material is recommended to start in advance of
the commencement of the construction.
As an essential consideration, the completion of the land acquisition is absolute prerequisite,

in advance of the commencement pf the civil works. If the land acquisition is delayed, the
overall schedule will be delayed (time overrun) as well as trigger the increase of Project cost
(cost overrun). In recent years there were cases in which a road construction project was
delayed, and an industrial park project was terminated due to protest from nearby residents.
The social impact arising from the implementation of mega-scale infrastructure development
project such as this DFC Project is substantial, and there is a high possibility that land
acquisition issue itself becomes the largest risk factor as well as the critical factor. It is
advised that MOR/DFCCIL endeavour with maximum effort for the early acquisition of land
required for the Project.
(2) Critical Factors for Financing the Project

The DFC Project is a massive scale project requiring a vast amount of finance. The
Government of India is requesting the Government of Japan for Yen Loan since self-financing
and borrowing from domestic market alone is not sufficient.
The process for financing from international lending agency such as JBIC, ADB, and World
Bank requires some time. In case of financing from these organisations, it is mandatory to
comply with the guidelines of the respective organisations stipulating the procurement of
consultants and contractors. After the consultants and contractors are procured under
competitive bidding procedures of Yen Loan, it requires 2.5 years from the day of the signing
of the Loan Agreement (L/A) until the signing of contract for the construction and the
commencement of works.
For the case of this Project, in which the application of the Special Terms for Economical
Partnership (STEP) will be applied, the procurement of the consultant takes 10 months, and
after that the total duration to complete activities such as the detailed design by the consultant,
preparation of tender documents, tender assistance, tender evaluation and concurrence by
JBIC, negotiation with contractors, signing of contract and concurrence by JBIC of the
contractor, and commencement of works, is at least 20 months.
The following Figure 14-2 indicate the duration for the standard procedures for the
procurement of consultants and contractors under Yen Loan.
Chapter 14
14-3
Time: Month 1 2 3 4 5 6 7 8 9 10
Signing Contract
Approval
Concurrence Contract Approval
PQ Tender PQ LC
Consultant Tender Of Of Negotiation Of
Short List Evaluation Short List Opening
DFCCIL JBIC Incl. Cont. Doc. JBIC
Time: Month 1 2 3 4 5 6 7 8 9 10 11 12
Approval of DFCCIL Signing Contract
Concurrence Contract Approval

Tender Tender PQ LC
Contractor Of Negotiation Of
(Design & Build) Evaluation Short List Opening
JBIC Incl. Cont. Doc. JBIC
Approval of
Tender
Documents
by JBIC
-3
Figure 14-2 Process for Procurement of Consultants and Contractors Under Yen Loan
14.2.2 Implementation Plan for Phased Development
In this section, the implementation plan for the prioritised section covered by Phase I-a,
proposed in Chapter 3, has deliberated with the assumption that the STEP loan is financed.
The implementation plan is based on the evaluation carried out for each section, taking into
consideration the level of seriousness of the traffic situation, the soundness of the design, and
level of impact envisaged on the natural and social environment.
The following is the resultant classification of the Project:
For the development scenario, following three phases are considered.
Phase I-a Project： A particular section composed of smaller sections having commonality
of stringent traffic situation in the short to mid-term future, and no
existence of engineering and environmental issues (category A section)
in the near future that would undermine the implementation of the
works on the combined sections, and constitutes as an independently
viable project that generate viable project effect. The Project is
earmarked as a priority project since it was judged to be capable of
bearing scrutiny by JBIC and other international lending agencies in the
project appraisal process for the financial assistance.
Phase I-b Project： A particular section composed of smaller sections having commonality
of stringent traffic situation in the short to mid-term future. However
if it is contemplated to get the project financed by international lending
agencies, the subject section has serious engineering and
environmentally related obstacles, thus the implementation of the
Chapter 14
14-4
section is judged as not eligible for being taken up by the international

lending agencies in the immediate future (category B section).
However, even if a category C section can be implemented earlier if it is
likely to uplift the overall effect of the implementation, the
implementation of such section can be done by self-financing and
responsibility of the Government of India. And however if the
particular sections are assumed to be financed by international lending
agencies, then maximum effort by the Indian Government will be
required to eliminate the obstacles and address the issues. The Project
1-B is assumed to be a project that will be implemented by the Indian
Government taking immediate action to remove the obstacles,
commence with the preparation works on site by self –finance, and seek
financial assistance from international lending agencies with
approximately a two year lead time.
Phase II Project： A particular section composed of smaller sections having commonality

of no serious traffic situation in the short to mid-term future, and is
judged that its implementation can be deferred until the traffic demand
exceeds its capacity. And sections which require reconsideration of
the alignment over the whole stretch, and its immediate
implementation is impossible.
Taking into consideration the above condition, the sections to be implemented in each phase
have been determined as follows:
Table 14-2 Sections Implemented by Each Phase

Phase Western Corridor Eastern Corridor
Rewari – Ahmedabad – Vadodara Mughal Sarai – Kanpur – Khurja
Phase I-a
( 918 Km ) ( 710Km )
Khurja – Dadri (46Km)
Vadodara – Vasai Rd.(339Km)
Khurja – Kalanaur (242km)
Phase I-b Vasai Rd. – JNPT
Kalanaur – Dhandarikalan (184Km)
( Total 433 Km )
(Total 472 Km )
Sonnagar – Mughal Sarai
Phase II Rewari – Dadri (117 Km)
(127Km)
14.2.3 Implementation Schedule For Phase I-a Project
For the deliberation of the implementation schedule for Phase I-a Project, it is important that
the vast 1,600km extensive section is completed as early as possible. For the realisation of
this, it is an absolute prerequisite that the Government of India (GOI) promptly resolve
problems such as land acquisition, settlement and compensation to habitants, and
environmental impact etc. Further more, detailed design works should be accelerated, and
after freezing the final alignment, the overall DFC project area be divided into ten (10) to
twenty (20) construction segments, and start works on segments having no constraints.
1) For the cases for which Yen Loan is available to implement the works for all sections
eligible. (Refer to Table 14-3)
The procedures for procurement of consultants can commence once the Yen Loan is
pledged. Assuming that the L/A for Phase I-a Project is concluded in February 2008,
Chapter 14
14-5
the selection of the General Consultant will take about 10 months. After that, it is
assumed that the General Consultant will take approximately one (1) year and eight (8)
months for activities such as: to arrange the procurement of major track materials (such
as rail, ballast, and PC sleepers), prepare the detailed design for construction works such
as civil, track, electrical, depot for locomotive), prepare tender documents, tendering,
tender evaluation, and contract signing with the selected contractor.
In case of ROB construction, coordination activities such as the selection of its route,
discussion with road authority, and construction of detour, etc is envisaged to take time.
Therefore, JST estimates it will take approximately four (4) years from the conclusion of
the L/A to the commencement of the ROB works. Once the civil works completes, the
track works and electrical works will follow. Running test of prototype locomotives,
and functional tests of the electrical facilities will be carried out, after their arrival.
After completion of all works, a comprehensive operational and integrated test would be
carried out. After clearance of the operational conditions from the safety point view,
the facilities will be handed over to the Indian Railways (IR) who will carry out practical
operational and track maintenance trainings for approximately six (6) months.
Accordingly, the full commissioning of the DFC of Phase I-a Project becomes a reality,
approximately 8 (eight) years after concluding the L/A.
2) For the case that the Government of India commences with all civil works by
self-financing. (Refer to Table 14-4)
As a measure to advance the commencement of the works, it is conceived that specific
project component be implemented in advance by self-financing from the Government
of India (MOR/DFCCIL), later followed by financing by the Government of Japan.
Such components are: land acquisition (which is not eligible for Yen Loan), basic design
and construction of all civil works (earthworks, bridges, reconstruction of ROBs,
construction of RUBs, etc.), determination of site for ICDs and depots.
For this case, JST estimates a duration of fifteen (15) months for the detailed design and
preparation of tender document for the civil works. In the whole stretch of Phase I-a
(divided into 10 to 20 working sections), construction can commence from in the
sections having no constraints, followed by selection of Indian contractors. JST
estimates that forty five (45) months is required for the implementation of the civil
works. Similarly, JST estimates fifty-four (54) months for the reconstruction of ROBs,
and construction of long-span bridges, including the duration from basic design until the
completion of its construction.
JST estimate the quantum of main materials necessary for track works of Phase I-a
Project as, 8,400,000 m3 of ballast, 5,900,000 pieces of PC sleeper, and about 430,000
tons of head hardened (HH) rail. Ballast and PC sleeper can be procured domestically
in India, but due to the limit of manufacturing capacity of existing suppliers, it is
recommended that procurement of those materials be planned on a long term basis.
Accordingly, JST recommends that GOI procure about 30% of the whole amount of
ballast & PC sleeper in the Phase I-a in advance of the commencement of the works
funded by Yen Loan, currently estimated to be in the middle of 2009. Regarding
procurement of HH rail, it will take Japanese manufacturer three and half (3.5) years
from the material order to the delivery of the rails to supply approximately 400,000 tons
required for Phase I-a Project. However, rail are also contemplated to be procured by
Yen Loan, its delivery can still be made before the commencement of the track works.
Procurement of locomotive is contemplated to be made by Yen Loan. The technical

specification for the locomotives are required to be determined by the Indian Railways
and approved by Research Design & Standards Organisation (RDSO) before the
Chapter 14
14-6
commencement of its procurement, which is scheduled in 2009. Based on the approved

specification the General Consultant will provide the design documents and tender
documents, and will select the contractor through tender. It is envisaged that the
awarded contractor (manufacturer) will produce say 10 prototype locomotives. Then
the delivered prototype locomotives will be tested on the completed sections of the DFC
line for approximately six (6) months in order to confirm its performance. After the
test run, the results will be feed backed to the manufacturer who will make necessary
improvements, and will start preparation for mass production. After completion of
installation of all track facilities including signal, telecommunication, CTC, and
electrification system, a comprehensive running test will be executed. The duration for
the delivery of the locomotives is expected to take six (6) years from the conclusion of
the L/A of the Phase I-a Project to the completion of its delivery.
The provision of at least one inland container depot (ICD) in Phase I-a Project, is
required. The determination of its location, basic design, and environmental study
(rapid EIA study) of ICD need to be initiated by the GOI, and the tender design,
preparation of tender document, procurement of contractor, and the construction of the
ICD will be made using Yen Loan. It is estimated that it would take approximately one
and a half (1.5) years for the construction of the 50 hectare ICD, for the earthwork,
drainage, and pavement works etc. After the completion of the land development
works, track works, signalling and telecommunication facility works will follow.
Finally, the container company will be selected through tender to install the necessary
facilities such as gantry cranes, portal cranes, etc. that are used for loading and unloading
containers.
The construction of a locomotive depot, having an area of approximately 50 hectare, is

proposed to be covered by Yen Loan. It is estimated to take approximately two (2)
years for the completion of the detailed design, selection of contractor, and conclusion of
the contract for the construction, and another two (2) years for the construction of the
depot. Inside the locomotive depot, a separate repair-maintenance will be built, and
machines utilised for repair and rehabilitation is installed in it. Since those machines
will be custom-made, JST assumes them to be procured from abroad, which will take 2
and half years for delivery and installation.
Simultaneous to the running test of the locomotives, and integration tests of the electrical
facilities, it is envisaged that the Indian Railways will recruit crew, train them for train
operation and maintenance, as well as impart training for handling, inspection and
maintenance of other facilities. This procedure is estimated to take about six (6)
months.
Assuming that the L/A is concluded in March 2008, the procurement of the General
Consultant to the commissioning of the DFC operation for Phase I-a, will take
approximately 6 years, and commissioning in around January 2014.
The JST concludes that this collaborative implementation of Phase I-a Project, in which
procurement of major track material, and advanced commencement of all civil works
initiated by the GOI financing, and followed by Yen Loan for the implementation of the
remaining works can reduce the project duration by two and half (2.5) years than the
schedule implemented by the full Yen Loan, which was presented in 1) above.
Chapter 14
14-7
Table 14-3 DFC Project Implementation Schedule for Phase I-a

Case Study ---- Option 1: All Eligible Works Fully Covered by Yen Loan
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Description
A. Works Implemented by the Indian Government Budget and Responsibility
A01 Final Alignment Survey
Basic Design of Facilities and Defining the Technical Specification of the
A02
Electric Locomotives
A03 General Plan for new ICD
A04 EIA (Environmental Impact Assessment) for new ICD
A05 Land Acquisition & Resettlement for Track Line, Station & Depot
A06 Procurement Process of EIA and RRP Consultant/NGO
A07 Selection of EIA and RRP Consultant/NGO
A08 Implementation of RRP
A09 1) Relatively less difficult sections
A10 2) Relatively difficult sections
A11 3) Implementation of Comprehensive EIA (1 full year survey/monitoring)
A12 Environmental Baseline Survey

【ROB Replac ement】
A13 General Arrangement Drawing for ROB replacement
A14 Detailed Design / Bid Documents for ROB

Agreement with Road Owner for ROB construction (Design, Permit, Cost
A15
Sharing, etc.)
A16 Selection of Contractor for ROB (Replacement)
A17 Construction of ROB (Replacement)

【Ot her Work s】
A18 Determination of Technical Specification for Locomotive
A19 Approval to the Specification for Locomotive by RDSO
A20 Preparation of Train Operation Manual & Track Maintenance Manual by RDSO
A21 Training for Operation, Training for Maintenance

A22 Open to Public ★ DFC Operation
B. Works Implemented Using Yen Loan

B01 JICA Feasibility Study
B02 EIA based on the guideline-design
B03 Resettlement Action Plan Frame Work based on the Guideline Design
B04 Approval for EIA by the Indian Government 120 days
B05 Appraisal to the Project funded by Japanese ODA Loan

B06 Review of EIA & RAP (Resettlement Action Plan) Frame Work by JBIC
B07 Pledge ★
B08 Loan Agreement (Japanese ODA Loan ) ★
Minimum 10 Months
Selection of General Consultant (Track Line, Signal, CTC,
B09
Telecommunication, Electrification, ICD, Locomotive Depot, EIA, RAP, etc.)
B10 General Consultant Engineering Service
B11 Environmental Management Monitoring Programme
【Civ il and Trac k Work s 】

Detailed Design / Bid Documents for Route Alignment, Station &
B12
Locomotive Depot by DFCCI
Detailed Design / Bid Documents for Civil Works & Track Works ( Earth Design & Document
B13
Works, Bridge, Culvert, Track etc) by DFCCIL
Review of Detailed Design / Bid Documents for Civil and Track Works by
B14
GC
Selection of Contractor for Civil Works (Earth Work, Station, Bridge, Culvert,
B15 Tender
etc.)
B16 Construction of Civil Works (Earth Work, Station, Culvert, etc) Construction (Civil Work)
B17 Construction of Long-span Bridge (L=3Km)

B18 Procurement of Ballast Procurement (Ballst)
B19 Procurement of PC Sleepers & Fasteners Procurement (Sleeper)
Procurement (Rail)
B20 Procurement of Rail & Turnout
Construction (Track)
B21 Construction of Track Works
【Signal and Telec ommunic ation Work s 】
Tender Design & Bid Document (Signal, Telecommunication, Train Control,
B22
Electrification)
Selection of Contractor (Tender) for Electrical Works(Signal, Tender
B23
Telecommunication, Train Control, Electrification)
Construction for Electrical Works (Signal, Telecommunication, Train Control, Signal, Electrification
B24
Electrification)
【Loc omotiv e and Loc o. Depot Work s 】
B25 Tender Design & Documentation for Locomotove and Locomotive Depot
Selection of Contractor for Locomotive Procurement and Maintenance Tender

B26
Depot Construction
B26 Procurement of Locomotive (Prototype 10 Rolling Stocks) Manufacturing
Procurement of Locomotive (Feedback of Test Run, Preparation of Series Manufacturing

B27
Production & Series Production)
Tender Construction & Machinery Setting
B28 Depot of Locomotive -- Tender, Construction
【ＩＣＤ Work s 】
B29 Tender Design & Document for ICD (Inland Container Depot)
B30 Reviewing Basic Design & EIA for ICD & Locomotive Depot Approval
B31 Approval by the Provincial Government
Tender Equipment Installation by the Container Company
B32 Inland Container Depot (ICD) --- Tender, Construction)
Tender Construction & Machinery Setting

B33 Depot of Locomotive -- Tender, Construction
【Running T es t】
Running & Integration Test (Locomotive, Signal, Telecommunication,
B34
Electrification & Train Operation)
Chapter 14
14-8
Table 14-4 DFC Project Implementation Schedule for Phase I-a

Case Study ---- Option 2: All Civil Works Advanced by GOI's prior to other Works Covered by Yen Loan
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Description
A. Works Implemented by the Indian Government Budget and Responsibility
A01 Final Alignment Survey
A02 Basic Design of Facilities
A03 General Plan for new ICD

A04 EIA (Environmental Impact As sess ment) for new ICD
A05 Land Acquisition & Res ettlement for Track Line, Station & Depot
A06 Procurement Process of EIA and RRP Consultant/NGO
A07 Selection of EIA and RRP Consultant/NGO

A08 Implementation of RRP
A09 1) Relatively less difficult sections
A10 2) Relatively difficult sections
A11 3) Implementation of Comprehensive EIA (1 full year survey/monitoring)
A12 Environmental Baseline Survey

【ROB Replacement】
A13 General Arrangem ent Drawing for ROB replacement
A14 Detailed Design / Bid Documents for ROB
Agreement with Road Owner for ROB cons truction (Des ign, Permit, Cos t
A15
Sharing, etc.)
A16 Selection of Contractor for ROB (Replacem ent)
A17 Construction of ROB (Replacement)

【Civil Works】
A18 Detailed Design / Bid Documents for Route Alignment, Station &
Locomotive Depot
Detailed Design / Bid Documents for Overall Civil Works ( Earth Works , Design & Document
A19
Bridge, Culvert, etc)
Selection of Contractor for Overall Civil Works (Earth Work, Station, Bridge,
A19 Tender
Culvert, etc.)
A20 Construction of Civil Works (Earth Work, Station, Culvert, etc) Construction (Civil Work)
A21 Construction of Long-s pan Bridge (L=3Km)

【Procurement of Track Materials】
A22 Procurement of Ballast by DFCCIL
A23 Procurement of PC Sleepers & Fas teners by DFCCIL
【Other Works】
A24 Determ ination of Technical Specification for Locomotive
A25 Approval to the Specification for Locom otive by RDSO
Preparation of Train Operation Manual & Track Maintenance Manual by
A26
RDSO
A27 Training for Operation, Training for Maintenance
A28 Open to Public ★ DFC Operation
B. Works Implemented Using Yen Loan

B01 JICA Feas ibility Study
B02 EIA bas ed on the guideline-design
B03 Res ettlement Action Plan Fram e Work based on the Guideline Design
B04 Approval for EIA by the Indian Government 120 days
B05 Apprais al to the Project funded by Japanes e ODA Loan

B06 Review of EIA & RAP (Res ettlement Action Plan) Fram e Work by JBIC
B07 Pledge ★
B08 Loan Agreement (Japanese ODA Loan ) ★
Minimum 10 Months
Selection of General Consultant (Track Line, Signal, CTC,
B09
Telecomm unication, Electrification, ICD, Locomotive Depot, EIA, RAP, etc.)
B10 General Consultant Engineering Service

B11 Environmental Managem ent Monitoring Programm e
B12 Preparation of Tender Design & Bid Document for Track Works
【Track Works】
Tender
B13 Selection of Contractor for Track Works
B14 Procurement of Rail & Turnout

Rail = 388,000 ton
Track
B15 Construction of Track Works
【Signal and Telecommunication Works】
Tender Des ign & Bid Document (Signal, Telecom munication, Train
B16
Control, Electrification)
Selection of Contractor (Tender) for Electrical Works(Signal, Tender
B17
Telecomm unication, Train Control, Electrification)
Construction for Electrical Works (Signal, Telecomm unication, Train Signal, Electrification
B18
Control, Electrification)
【Locomotive and Loco. Depot Works】
B19 Tender Des ign & Documentation for Locom otive and Locomotive Depot
Selection of Contractor for Locomotive Procurement and Maintenance
B20 Tender
Depot Construction
B21 Procurement of Locomotive (Prototype 10 Rolling Stocks ) Manufacturing
Procurement of Locomotive (Feedback of Tes t Run, Preparation of Series Manufacturing

B22
Production & Series Production)
Construction & Machinery Setting
B23 Depot of Locom otive -- Cons truction
【ＩＣＤ Works】
B24 Tender Des ign & Document for ICD (Inland Container Depot)
B25 Reviewing Bas ic Design & EIA for ICD Approval
B26 Approval by the Provincial Government
Tender ConstructionICDTrack Equipment Installation by the Container Company
B27 Inland Container Depot (ICD) --- Tender, Construction)
【Running Test】
Running & Integration Tes t (Locomotive, Signal, Telecom munication,
B28
Electrification & Train Operation)
Chapter 14
14-9
14.2.4 Implementation Schedule For Phase I-b Project
The length of the section covered in Phase I-b is 905 km which is approximately a little more
than that of Phase I-a. However, since the route of Project Phase I-b passes through more
built-up areas than that of Project Phase I-a where the land acquisition, resettlement, and
compensation is considered to be extremely difficult, JST envisages that the resolution of
these issues and the determination of the basic alignment will take time. The largest obstacle
that hinders the implementation of the works in this section is the reconstruction of the
existing ROBs, particularly a large number of ROBs which are concentrated on sections
between Surat to Vasai Rd. and Vasai Rd. to JNP of the Western Corridor. Under the current
plan, in which the DFC is planned parallel and adjacent to the existing lines, the existing
ROBs need to be demolished and reconstructed. The ROBs located in urbanised are a
integral part of the trunk road having a significant traffic volume, thus if its reconstruction is
contemplated, discussions and coordination with the road authorities regarding the
reconstruction plan is required for engineering and consideration of social environmental
aspects. JST concludes that for those sections having concentration of existing ROBs,
deliberation for carrying out a comparative study for a detour route in addition to the parallel
route plan is necessary.
The implementation of the Phase I-b Project has engineering challenges, and JST considers
that financial assistance from international lending agency is essential. For the foreseeable
future, JST assumes that the construction works that can be implemented within the right of
way can be implemented by self-finance of the Indian Government. For the implementation
of other works of which financing from international lending agency is contemplated, the
Government of India need to address the conditions for the realisation of the phased
development scenario, which is presented in Chapter 3. In consideration of the aspiration of
MOR for the early commencement of the DFC works and its completion, JST estimates that it
will take eight (8) years for the overall duration of the Project considering a two year lead
time required to refine the Project plan to a level which bear scrutiny of international lending
agency. (refer to Figure 14-3). It is crucial that the Government of India fully understand
that maximum effort is required for the resolution of the aforementioned issues within the
short time frame. The following summarises the prerequisites for the realisation of the
Project.
[Prerequisites for the realisation of Phase I-b Project]
1) The Phase I-b Project extends to more than 900km, having engineering challenges as well
as environmental issues that complicate the implementation. The cost for land
acquisition and construction is estimated to be large. It is advised that the Government of
India urgently deliberate the necessity of requesting financing from international lending
agencies such as ADB and World Bank.
2) Immediate securing of self-financing required for land acquisition and the cost of the
works determined to be implemented by the Indian Government.
3) Urgent commencement of detailed site survey and careful study of engineering feasibility
of the existing ROBs which are subject to reconstruction.
4) It is envisaged that the land acquisition of the subject section will be difficult since it is
situated in a heavily built-up area. The review of plan and the preliminary design of the
station need to be prepared to minimise the scale of land acquisition and resettlement.
5) In view of the above, a comparative study is urgently required between the DFC planned
in parallel to the existing line and that of an alternative route established that avoids those
Chapter 14
14-10
sections, having many ROBs, and area where it is extremely built-up or populated. For
this purpose the topographical survey is required to be carried out immediately.
6) This section mainly passes through the suburbs and fertile agricultural land, and the
residents have voiced dissent in the stakeholder meetings. Since it is envisaged that it
would not be easy to build consensus among the residents, thus continuous effort initiated
by MOR/DFCCIL is required for the materialisation of the consensus building.
7) In order to acquire fund for international lending agencies, MOR/DFCCIL need to take
initiative to carry out a ESIMMS of JICA Study (a rapid EIA level study) in a timely
manner that would withstand the appraisal.
14.2.5 Implementation Schedule For Phase II Project
The extent of the section covered in Phase II is approximately 200km which is approximately
10% of the combined section of Phase I-a and Phase I-b. The traffic situation of the freight
transport in this section is not serious compared to that of Phase I-a and 1-B, and the line
capacity has some margin. The requirement for the reinforcement of containerised freight is
low. Since there is possibility of alteration of the whole route of those sections designated as
implemented in Phase II on both corridors, the commencement of the works on these sections
is not possible in the near future. It is assumed that two (2) years is necessary to determine
the route.
The route between Mughal Sarai and Son Nagar cannot be fixed until the track layout of the
massive Mughal Sarai Junction Station is determined. There are no prominent constraints on
this section other than the issue of this junction station.
A four (4) km tunnel is perceived to be necessary due to the existing gap of the terrain
between the Rewari and Dadri section on the Western Corridor. JST has conducted a
preliminary study on possible detour routes avoiding this gap, but could not determine a
feasible detour route due to difficulty to locate land within the heavily built-up condition of
the area. The tunnel option bears environmental impact issues of dewatering of ground
water currently utilised for agricultural purposes. Thus, JST judges that a thorough
engineering study and planning of the route and structures is required.
JST estimates that two (2) years are necessary to carry out the additional engineering studies
(refer to Figure 14-3) which include topographical survey, geological survey, and
environmental survey, which require immediate execution. Besides this, discussions with
local residents are necessary. The following summarises the prerequisites for the realisation
of the Project.
[Prerequisites for the realisation of Phase II Project]
1) The urgent reconsideration of the detour route for the tunnel section between Rewari and
Dadri is advised. Also, the urgent execution of engineering survey and preliminary
design for the tunnel section is advised.
2) There is a high possibility that the construction of the tunnel section between Rewari and
Dadri will cause lowering of the water level, and thus site survey and thorough evaluation
is required to assess its impact. The urgent execution of the natural environment survey
is advised.
Chapter 14
14-11
3) The Mughal Sarai Junction Station is the origin of the Mughal Sarai-Son Nagar section
and has been proposed to have vast facilities which would require time to determine the
design and discussion with the residents. Thus, the urgent commencement of the design
work and coordination with the residents is advised.
4) The timely execution and completion of the ESIMMS (rapid EIA level study) that
withstand the appraisal need to be initiated by MOR/DFCCIL if financing from
international lending agencies is being contemplated for the implementation of the Project.
YEAR
07 08 09 10 11 12 13 14 15 16
Land Acq. Test &

GOI Financing Commissioning
Construction (Earthwork,
Part T/D Tender
ROB, Bridge)
Phase 1-a
Selection Selection Commercial
IFA Financing LA Of ES Of Construction Operation
Part Consultant Contractor
Land Acq.
GOI Financing
Part T/D Tender Construction in existing ROW Test &
Commissioning
Phase 1-b B/D & EIA for Critical Section
Selection Selection Commercial

IFA Financing
Part
LA Of ES Of Construction Operation
Consultant Contractor
Land Acq. Test &

GOI Financing Construction (Earthwork, Commissioning
B/D & EIA T/D Tender
Part ROB, Bridge)
Phase 2 Selection Selection Commercial
IFA Financing LA Of ES Of Construction Operation
Part Contractor
Consultant
Figure 14-3 Overall Implementation Schedule of DFC Project
14.3 PROJECT IMPLEMENTATION STRUCTURE
14.3.1 Project Approval Process
It is mandatory that Detailed Project Report (DPR) of all Railway development projects
costing more than Rs. 100 Cr is approved by the Planning Commission, the Expanded Board
which is chaired by the Chairman of the Railway Board of MOR, and the Cabinet Committee
on Economic Affairs (CCEA).
The discussions with MOR confirmed that the Project is already approved by the Cabinet, and
the financing plan for its implementation is the only pending issue that require approval from
the Government. The Government of India has requested the Government of Japan for
financial assistance (Yen Loan), and is scheduled to clear internal procedures after
establishing the overall Project financing plan based on the results of the discussions with the
Japanese Government.
Chapter 14
14-12
Figure 14-4 presents the flow for project appraisal process of DFC Project.
Present
Review of Consensus by Review by GOI for Decision Making Stake-

Feasibility Study Steering Sub-Loan Scheme By High Level holder’s
Report of RITES Committee to DFCCIL Authorities Approval
Japanese Funding GOJ’s

ＧＯＩ Agency’s FF Mission Government
Discussion by & Appraisal Mission Approval
SC
- MOR/RB
- DEA
- PLG. COMM. Process for
- DFCCIL GOI’s EN & LA by
JICA Study Finalization and Government GOI &GOJ
MOR/RB Final Report - Advisory approval of the Approval
Committee of Project Financial （ＭＯＦ）
Scheme
JICA
- JST
Proposal for Project Financial Scheme Validation of

DFCCIL according to result of discussion with the L/A by both
stakeholders concerned Governments
Figure 14-4 Project Appraisal Process for DFC Project
14.3.2 Project Executing Organisation
The executing organisation for the DFC Project is as follows:
1) DFCCIL: An infrastructure management company (SPV) responsible for the construction

of the railway infrastructure, train operation control, and the maintenance. JST
proposes that DFCCIL be responsible for the construction of the ICD required in
Phase I-a Project.
2) MOR: Responsible for the procurement of the rolling stock (locomotives and wagons),
train operation, and the maintenance of the rolling stock.
DFCCIL was incorporated on November 03, 2006 and provisional senior Executives
consisted of three Boards of Directors and four Officers for the Project Commencement
Group. However, DFCCIL is to be managed by a Board of Directors consisting of one
Managing Director and four Directors who have been/ are being selected through open
applications. The current position is that the Managing Director and Director Finance have
already assumed charge of their posts. Besides the Director (Operation & Business
Development) is also expected to join soon. However the incumbents for the post of Director
(Infrastructure) and Director (Projects & Planning) are under process of finalization.
The Board of Directors of DFCCIL will be supported by the Senior Officers and other
supporting staff. As per the information available with JST, the following Senior Officers
have already joined their Duty in DFCCIL:
Chapter 14
14-13
Officer on Special Duty 1 officer

General Manager (S&T) 1 officer
General Manager (Electrical) 1 officer
General Manager (Operation) 1 officer
General Manager (Business Development) 1 officer
General Manager (Finance) 1 officer
General Manager (Mechanical) 1 officer
General Managers (Civil) 3 officers
General Managers of following Regional Offices have also assumed charge:
[Western DFC]
General Manager, DFCCIL Mumbai
General Manager, DFCCIL Vadodara
General Manager, DFCCIL Ahmedabad
General Manager, DFCCIL Jaipur
[Eastern DFC]
General Manager, DFCCIL Allahabad
General Manager, DFCCIL Kanpur
General Manager, DFCCIL Ludhiana
5) Schedule in the Future
DFCCIL will continue to proceed with the expansion of the organisation in accordance to the
developments in the Project..
The JST has proposed the establishment of a dedicated Section within the DFCCIL
organisation that will handle environmental and social consideration issues, which was
accepted in principle by MOR/DFCCIL. The Section Chief is scheduled to be assigned.
14.3.3 Project Management Structure
The MOR nor DFCCIL have experience implementing railway development projects using
Yen Loan. In order for DFCCIL, as an executing organisation, to implement and complete
the Project as per schedule complying to JBIC Guidelines, it is imperative to hire a Consultant
who is well versed with the tasks of design, tender assistance, construction supervision.
Figure 14-5 and 14-6 presents the project management structure during design and tender
assistance stage, and project management structure during construction supervision stage,
respectively.
Chapter 14
14-14
GC Core Group DFCCIL/ MOR

PD/Co PD
Environmental
Contract
Consultants
Specifications
Infrastructure & Core system & Locomotive

Building Group Electrification Group
Design Manager Group Design Manager
Earth work Design Manager Loco Elect.
Track work Signal Loco Mech.
Bridges Telecommunication
Culverts Train Control
Station Buildings Electrification
Depot
ICD
Track Material Civil & Track work ICD Core system & Locomotive
Procurement Contracts Contract Electrification & Depot
Contract Contracts Contract
LEGEND
Expatriate & National Experts
Figure 14-5 Project Management Structure during Design and Tender Assistance Stage
Core Team Expatriate & National Experts

PD/Co PD
DFCCIL Contract National Experts
Specifications
ZMT ZMT ZMT ZMT ZMT

Zonal
Western Zone NW Zone -1 NW Zone-2 ICD NC Zone-1 NC Zone-2 Rolling
Management
Civil Team Civil Group Civil Group Team Civil Group Civil Group Stock
Team Track Team Track Group
Track Group Track Group Track Group Team
(ZMT) E/M Team E/M Group E/M Group E/M Group E/M Group
Depot Group
(Ahmedabad)
(Allahabad-1)
(Allahabad-4)
(Allahabd-2)
(Allahabd-3)
Divisional
(Vadodara)
ICD DST
(Jaipur-1)
(Jaipur-2)
(Ajmer-2)
(Ajmer-1)
Supervision
DST
DST
DST
DST
DST
DST
DST
DST
DST
DST
Team
(DST)
contractor
contractor
contractor
contractor
contractor
contractor
contractor
contractor
contractor
contractor
contractor
contractor
contractor
contractor
contractor
contractor
contractor
contractor
contractor
contractor
contractor
contractor
contractor
Supplier
Western Corridor Eastern Corridor
Figure 14-6 Project Management Structure during Construction Supervision Stage
Chapter 14
14-15
The construction supervision is proposed to be executed by the tri-layered organization. The

first layer is the Core Group of General Consultant which has its head office stationed in the
DFCCIL Headquarters, and takes on responsibilities for the overall management of schedule
and control of Project cost by close communication with DFCCIL.
The Zonal Management Team (ZMT) is placed at the second layer which is expected to make
day to day communication with the Zonal Railways, and be responsible for the overall project
management of the works of the respective sections within each Zonal Railways, and report
the progress to the Core Team. The ZMT is considered to be part of the General Consultant,
and international experts will be deployed.
The third layer, the Divisional Supervision Team (DST), will coordinate with the Divisional
Office, which is responsible of maintenance of the existing railway facility of the Zonal
Railways, and manage the day to day construction activities of the DFC. The DST is
proposed to have a site office and under the directions of the ZMT and carry out the day to
day construction supervision activities, and report the management record to ZMT.
The DST is required to be established before the hiring of the General Consultants and in
place from the beginning of the construction the DFC. Thus it is proposed that the DST is
established by the DFCCIL.
The CPM & Experts Groups and Resident Engineer (Site Management) teams that manage
and supervise the earthworks, the construction of station facilities, will be deployed according
to requirements at site offices.
14.4 DISCUSSIONS REGARDING CONTRACT PACKAGES OF PHASE I-A

PROJECT AND CONSTRUCTION SEGMENTS
The following are the preconditions considered for the division of the contract packages and
the construction segments.
i) The General Consultant is deployed to manage the overall implementation of the Project.
ii) Implementation of the works and procurement of the rolling stock be made through
self-financing from Government of India, and Yen Loan as well as from other international
lending agencies.
iii) The Special Terms on Economic Partnership (STEP) conditions is applied for the portion
of Yen Loan, and the prime contractor is limited to Japanese firms.
iv) The executing organisation responsible for the construction of the infrastructure and its
maintenance is DFCCIL, and the executing organisation responsible for the procurement
of rolling stock and its maintenance is MOR.
The division of the contract packages were made considering the following factors:
Factors considered for contract packaging Clarification
1. Packaging of the same Project component - Components of construction of

not allowed under different executing infrastructure is to be included in contract
organisation. of DFCCIL Project, and procurement of
rolling stock and construction of the
depot to be included in the contract with
MOR.
Chapter 14
14-16
2. For project component(s) which are - Isolation of the civil/track, works which
implemented on different period, are implemented in the early stage of the
packages that is (are) have critical activity overall schedule, and the
are isolated and its implementation be electric/signal/telecommunication works,
advanced. which are implemented in later.
3. Consolidation of Project components that - Consolidation of electric/ signal

have commonality and mutually relevant /telecommunication works into a single
package.
4. Consolidation of Project components into - Material required for track works need to
a single package that are considered to be procured in advance of the track
realise efficient construction. works. The procurement of track
material done in advance together with
the procurement of the material required
by civil works.
5. The size of one package is required to be - Separate the infrastructure works into two
small as possible and be able to manage packages, one for each corridor.
the project efficiently.
- The signal/telecommunication system is
required to be a unified system by each
corridor. Each corridor to have a single
package.
6. Since prime contractor are limited to - The integration of electrification works

Japanese contractor(s), Project with signalling/telecommunication works.
components that are difficult to divide are
proposed to be integrated into other - The integration of the package for the
Project components. construction of the depot with the
package of procurement of rolling stock.
7. In principle, one main contract package is - [Western Corridor] Phase I-a Project:
concluded for each Zonal Railways and 2 sub contract packages for North
site activities managed by ZMT and Western Railway between Rewari and
works carried out by main contractor. Palanpur section;
However, for Zonal Railways where long 1 contract package for Western Railway
sections of DFC is planned, the main between Palanpur and Vadodara section
contract will be separated into secondary
contract packages which will be managed - [Eastern Corridor] Phase I-a Project: 2
by DST, and its works carried out by a contract packages for North Central
subcontractor. Railway between Mughal Sarai and
Khurja.
Chapter 14
14-17
Table 14-5 Contract Packages Assumed for Phase I-a Project

Estimated Contract
No. Item Package Amount *)
（million Rs.）
Western DFC
A. Civil and track works
Rewari-Madar (Ajmer) / 290km Package W-A2a 16,402
Madar (Ajmer) – Palanpur / 368km Package W-A2b 23,566
Package W-A3 &
Palanpur- Vododara / 260km 20,188
W-B1
Electric, signal, telecommunication,
B. Package W-B 25,805
machinery
C. Operation and Maintenance Equipment Package W-C 2,041
D. Construction of ICD Package W-D 3,000
Eastern DFC
A. Civil and track works
Khurja-Kanpur / 388 km Package E-A2 21,937
Kanpur-Mugar Sarai / 322km Package E-A1 17,628
Electric, signal, telecommunication,
B. Package E-B 20,197
machinery
C. Operation and Maintenance Equipment Package E-C 1,495
Common items on both DFC
Procurement of Locomotives and
Package F 78,335
construction of depot
Note: *) Amount excludes price escalation and physical contingency.
In order to complete the earthworks within two (2) years, the deployment of one construction
team at every 20km interval, which is the minimum unit for the construction section. Hence,
there will be 12 to 18 construction sections working on civil and track works for each contract
package. Each construction section is perceived to be managed by one prime contractor and
several subcontractor positioned under the prime contractor. For the tender of the prime
contractor, the prime contractor will be asked to provide information of the subcontractor that
will be deployed in each section, and technical evaluation be made on the experience and
capability of those subcontractor.
Chapter 14
14-18
CHAPTER 15
COMPREHENSIVE EVALUATION OF THE PROJECT
for Delhi-Mumbai and Ludhianai-Sonnagar in India Final Report (Task 2)
CHAPTER 15 COMPREHENSIVE EVALUATION OF THE PROJECT

This chapter summarises the Study results, and presents the overall evaluation based on the
aspects of technical, environmental, project implementation structure, economical and
financial and project implementation plan.
(1) Evaluation of Technical Feasibility
The phased development scenario was established in Task 2 considering the technical
adequacy of each section. The scope of the proposed Phase I-a Project and the technologies
applicable were evaluated to be adequate.
However, the following technical elements proposed in the PETS-II were judged by JICA
Study Team (JST) to be lacking in technical feasibility.
1) Double Stack Container (DSC) transport with flat-type wagons on the Western Corridor
The PETS-II proposed the application of the DSC transport with flat-type wagons on the
Western Corridor. However, this transport system is not proven on any commercial lines
and the JST views that the operational safety, particularly with regard to the stability
against wind load, need to be verified. The JST has carried out a comparative evaluation
of the transport system and concludes that the proven system of DSC transport utilising
well-type wagons is feasible for application on the Western Corridor.
2) The existing ROBs in urban areas

The reconstruction of the existing ROBs in urban areas, included in Phase I-b project
and Phase II project, are considered to inflict negative social impact to the residents
residing of the area. The reconstruction work is envisaged to be an extreme engineering
challenge. Therefore, technical feasibility of the reconstruction of the ROBs requires
further examination.
(2) Evaluation of Feasibility on Social and Environmental Considerations
With regard to the Phase I-a project, the JST concludes that serious negative impacts to
natural and social environment can be avoided and/or minimized, if careful design works for
the track alignment, stations and bridges are conducted by the Indian side, as per the
Guideline Design proposed by the JST. However, it is imperative that simultaneous efforts are
made by the MOR/DFCCIL to build sufficient consensus among the residents regarding land
acquisition, resettlement, and compensation through public disclosure of information and
public consultation.
A large scale relocation program, reconstruction of urban ROBs and construction of a new
tunnel are envisaged in Phase I-b project and Phase II project. The occurrence of serious
negative impact to social environment in the planned areas is likely if the DFC project is
implemented without due consideration. The JST concludes that careful and further
examination of the plan should be carried out.
On the other hand, it was expected that the implementation of DFC Project will have a
gradual effect in inducing road transport users to shift to railways, as well as the tremendous
improvement on social and natural environment, such as reducing energy consumption, and
green house gas.
Chapter 15
15-1
(3) Evaluation of Feasibility on Organizational Aspect
The DFCCIL was established in November 2006, as a Public Sector Undertaking under
Ministry of Railways. It will be responsible for the construction of the two corridors as also
for maintenance of their infrastructure. Since the organisation has been set up recently, it is
expected that the staffing at various levels will be strengthen and take full shape in due course
of time. The DFCCIL will have a branch for Marketing function and Business Development.
JST has confirmed through interviews with concerned personnel that DFCCIL is expected to
adopt a completely different approach from that of IR in terms of tangible and intangible
aspects and from the success of the DFC project which will be achieved by this approach,
they expect that it will result in rationalisation and innovation of the existing Freight
Transport System of IR. This innovative willingness of the Indian side will certainly
contribute to the realisation of the DFC, although feasibility of the innovation in
organizational/institutional aspects cannot be evaluated at the moment.
(4) Evaluation of Feasibility on Economic/Financial Aspect
Economic analysis confirmed the feasibility of the DFC project for both the Western and
Eastern Corridor. The financial viability of the Eastern Corridor was proved as well.
However, the financial internal rate of return (FIRR) of the Western Corridor resulting at
approximately 9%, concluded that low interest loans are essential to secure the financial
viability.
The economic and financial analysis of the priority section of the Phase I-a Project concluded
a figure slightly lower, but a close internal rate of return, than that of the overall Project.
This confirms that the implementation of the Phase I-a Project alone is capable of generating
sufficient impact, and the economic impact analyses carried out by the JST in this Study
proved huge impacts such as inducing increase in production, increase of gross added value,
increase of tax revenue, increase of household income, and increase of employment. Even if
there is delay or suspension for the implementation of projects other than Phase I-a, the
implementation of Phase I-a Project is independently viable.
Thus, the Study confirmed that the DFC project would have a significant investment value to
the national economy of India with direct and indirect economic impact.
(5) Evaluation of Feasibility of Project Implementation Plan
The JST proposes the commencement of works of Phase I-a Project in 2008/09 and complete
its construction within 6 years period.
Yen Loan is assumed to be available for the implementation of the Project. However JST
proposes that the implementation plan should include the provision for procurement of
material required for civil and track works in advance using self-financing from the
Government of India. JST also proposes that MOR and DFCCIL take necessary action for
timely land acquisition.
The construction period of the Phase I-b project is estimated to be 8 years considering the
lead time to resolve the technical issues mentioned in para (1) of this chapter. Phase II project
is also assumed to take a 2-year lead time to examine and solve the technical issues of the
tunnel section
The JST estimated that eight years is required to complete the overall Project, which is longer
than the policy made by the Government of India. It is not a easy task to maintain the project
implementation schedule. For the timely progress of the overall project depends on the
Chapter 15
15-2
extraneous effort by the Government of India for land acquisition and resolving technical
issues.
(6) Evaluation of Feasibility on Definition of Project Scope
The project scope of the Study defined the scope of the DFC Project as construction of
railway infrastructure for DFC, reconstruction of the existing ROBs accompanied by the
activity mentioned in the preceding paras, and the construction of a new ICD required for the
Project which will be taken up by DFCCIL as also the procurement of electric locomotives
and construction of locomotive depot which will be taken up by the IR. This definition of the
project scope is considered to be appropriate when JBIC loan is being contemplated since it
suffices the conditions that the Project is sustainable, the Project is characterized as highly
public service oriented, and that Project provides exclusive use by DFC.
The PETS-II proposes the construction of ROBs at all level crossings along the DFC.
However, the implementation of such project component cannot be justified in terms of
technical feasibility, economic and social/environmental sustainability and economic viability
as well as the condition for exclusive utilisation for DFC not being met. Therefore, JST
proposes that the construction of the ROBs be excluded from the scope of the Project and its
implementation taken up separately by MOR as a independent project.
It should be noted that land acquisition, compensation for relocation and consultancy services
are included in the Project scope.
As for the branch line section between Asaoti and Tuglakabad ICD of the Western Corridor,
JST concludes that this section be excluded from the project scope, since the reconstruction of
existing ROB is prohibitive considering the site condition and the limited capacity expansion
of TKD ICD yard and the difficulty of land acquisition. The transport of containers on this
section can be managed by strengthening the transport capacity by improvement of existing
lines.
Chapter 15
15-3
CHAPTER 16
CONCLUSION AND RECOMMENDATIONS
CHAPTER 16 CONCLUSION AND RECOMMENDATION
16.1 CONCLUSION OF THE STUDY
The DFC Project is concluded as a comprehensively high investment value project including
the aspects of economic and financial evaluations.
(1) Phased Development Scenario
The implementation of Phase I-a Project is judged to be reasonable in engineering terms, and
in terms of environmental aspects as well - when appropriate measures proposed in the report
are executed, the impact on the environment and society can be minimised. Also, the
necessity of the Project is justified by the projected demand, hence urgent implementation of
the Project is strongly recommended.
With regard to Phase I-b Project, its implementation is inevitable due to the serious traffic
situation. However there are sections in which technical and environmental issues need to be
solved which require maximum effort by the Government of India for its resolution prior to
the start of construction.
With regard to the implementation of Phase II Project, the traffic situation of the relevant
sections are not serious at current, but the plan of the tunnel section would require careful
investigation and examination in the technical and environmental aspect which require
continuous and maximum effort by the Government India.
(2) Optimal Technical Option
After careful and detailed study of various options, the following technical options were
judged as optimum for the DFC development:
- The traction system shall be electrified on both western and eastern corridor.
- Container transport system for the Western Corridor shall be the Double Stack
Container (DSC) with the “Well Type”;
- Container transport system for the Eastern Corridor shall be the Single Stack Container
(SSC);
- Access to the TKD shall be through an improved existing railway line, not through the
DFC;
- Clear standing room (CSR) at stations shall be 750m (Land acquisition shall be 1,500m
preparing for future traffic demand); and,
- Construction of Road Over Bridges (ROBs) along the existing railway lines was not
included in the Project. This shall be developed by the Indian side.
(3) Environmental and Social Considerations
Out of all the Project sections, some sections were deemed to have significant impact on
social environment. In addition, some dissenting opinions against the Project were raised by
the local residents at the Stakeholder meetings. Thus the JICA Study Team (JST) emphasises
in the conclusion and recommendation of the Study that it is crucial for DFCCIL and MOR to
make maximum effort to build consensus with the local residents for the implementation of
the Project. It was also judged indispensable for the smooth implementation of the Project that
appropriate land price is fixed for necessary land acquisition, earlier completion of the
relocation plans and prompt procedures for the land acquisition and the relocation.
Chapter16
16-1
(4) Railway Management Plan
It was confirmed that an institutional set up of a totally independent management is necessary

for a rapid and an independent decision making. In addition to this, introduction of
modernized railway technologies and system is a must for the sound railway operation. The
Dedicated Freight Corridor Project is merely a part of the whole freight transport system.
Throughout the course of the Study, it was confirmed that the relevant intermodal facilities
and service of the system need to be developed in order for the Project investment to be
effectively utilised and for the expected various effects of the Project. It was concluded that
MOR/DFCCIL need to take initiative in approaching the relevant authorities for the
realisation of the total transport system development.
16.2 ACTIONS NEED TO BE TAKEN BY THE GOVERNMENT OF INDIA
The following actions need to be taken by the Government of India for the smooth
implementation of the Project:
1) Immediate decision should be made by the MOR on the technical options proposed in
the JICA Study Report.
2) The approval of the EIA-level report by the Government is a prerequisite to obtain funds
from international lending agencies, including Yen Loan, for the implementation of the
Project. Particularly, approval of the Government of India, is positively required by
November 2007 on the EIA-level report for the sections to be implemented in Phase I-a
by Yen Loan.
3) It is imperative that the fund raising for the Project is be arranged at favourable terms for
the success of the whole Project. It is advised that the Government of India deliberate on
the necessity of funds from international lending agencies such as ADB and World Bank
in addition to the funds from Japan, for the implementation of the Project including the
implementation of Phase I-a Project and start consultation with them.
4) Necessary funds to cover the cost for land acquisition and advanced implementation of
work are arranged immediately by the Government of India.
5) The completion of the preliminary engineering design and Final Location Survey of the
facilities covered in Phase I-a should be made by December 2007.
6) With regard to the existing ROBs, which are major obstacles of the Project, immediate
execution of engineering survey and preliminary engineering design of the existing ROB
subject to reconstruction should be made. Prior to the work, discussions with the road
authorities should be commenced as soon as possible.
7) In view of dissenting opinion against the Project received in the Stakeholder Meetings,
continuous effort for consensus building of the residents residing along alignment is
required through public consultation meetings initiated by MOR/DFCCIL.
8) With regard to the construction of the new ICD between Rewari - Delhi, which is
necessary for the Western Corridor Phase I-a Project, immediate decision making should
be done considering the proposal made in the JICA Study.
9) Actions for improvement towards the intermodal transport is necessary regardless of the
DFC Project. It is imperative that MOR/DFCCIL take initiative in making immediate
actions in establishing the Intermodal Transport Improvement Taskforce as was proposed
in the Report.
Chapter16
16-2

Railway

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Railway

Uploaded by

Copyright:

Available Formats

CHAPTER 11

THE ESTIMATION OF THE PROJECT COST

CHAPTER 11 THE ESTIMATION OF THE PROJECT COST

11.1 SCOPE OF THE PROJECT COST ESTIMATION AND IT’S CONDITIONS

The following costs are estimated as components of the Project Cost.

a) Procurement Cost of Containers & Wagons

which has been used to calculate the

11.2 BASIC CONDITIONS OF THE COST ESTIMATION

of 1st of December 2006 to end of May 2007.

Description Average Rate

2) Estimated cost or price is a contract or purchase price as received from contractors or

11.3 REVIEW OF PETS-II COST AND COST FRAME ALTERATION

Table 11-3 Detail costs of Electrical/Electrification work

2) Signal & Telecommunication Cost

Table 11-4 Detail cost of Signalling & Telecom. Works

3) ICD（Inland Container Depot）Construction Cost

4) Vehicle Depots Construction Cost

5) Electric Locomotives procurement Cost

Table 11-5 Detail Cost of Elecric Locomotives

11.4 CHARACTERISTICS OF THE PROJECT COSTS

11.5 TRANS-SHIPMENT COST FOR FOREIGN AND LOCAL CURRENCY

TOTAL: 348,716 151,201 197,514

11.6 RESULT OF PROJECT COST ESTIMATION

11.6.1 Sectional Project Cost Estimation

Mundra Port AHMEDABAD

VASAI ROAD WESTERN DFC

Figure 11-1 DFC Route Division Map for Stage Development

Following conditions and assumptions may be applicable for calculations.

Table 11-8 Overall Project Costs (Whole sections)

Table 11-9 Overall Project Costs (by the Each Corridor)

11.6.2 Estimation of stagewise Project Costs

Table 11-10 Section of Stagewise Developments

Table 11-11 Stagewise Project Costs

11.6.3 Project Costs Analysis by comparison (Phase I-a)

CHAPTER 12 ECONOMIC AND FINANCIAL EVALUATION

12.1 OBJECTIVE OF THIS CHAPTER

12.2 ECONOMIC EVALUATION

Figure 12-1 Evaluation Procedure for Economic and Financial Analysis

Evaluation Comparison Index: Economic evaluation compares economic costs with

12.3 CONCLUSION OF ECONOMIC EVALUATION

Economic Rate of Return of Western DFC: 14.09％ B/C Ratio: 1.22

Implementation Judgment: As construction delays result in the delay in generation of

12.4 CONSTRUCTION COSTS FOR ECONOMIC ANALYSIS

Item Adjustment Value Adjustment

Cost estimated by Financial Economic

12.4.1 Construction Costs

1) Electric locomotives procurement

Table 12-3 Construction Costs for DFC Economic Evaluation

12.4.2 Economic Costs of Rolling Stock

Table 12-5 Classification of Rolling Stock, Number and Price

12.5 TRAFFIC VOLUME FOR COST-BENEFIT CALCULATION

12.6 COUNTABLE BENEFITS

Benefits related to railways

1. Transportation time savings benefit

Direct benefits related to roads

1) Time savings benefit for cargo transported by cargo trains (cargo)

12.7 “WITH” AND “WITHOUT”

12.8 TIME SAVINGS BENEFIT

12.8.1 Measurement of Time Savings Benefit

Running speed Time value

12.8.2 Operating Speed

Table 12-7 Travelling Speed, With and Without DFC

・Traveling speed “without DFC”: decrease from 35 km/h to 20 km/h in 20 years