Railways can earn more by selling branding rights: CAG

The Indian Railways can make much more money by selling branding rights on stations, trains and Railway tickets, the Comptroller and Auditor General of India (CAG) has said.

But CAG has pulled up the Railway Board, the top policy making body of the Railways, for setting up high revenue projections without inputs from the ground.

The Indian Railways network is spread across 65,000 km, on which 19,710 trains ply, carrying 2.3 crore passengers everyday. That’s a lot of eyeballs for firms wanting to attract customer attention.

For instance, by selling branding rights on the stations, trains, wagon depots, tickets, reservation forms, Indian Railways garnered Rs 864 crore from 2008 to 2012. This was less than the earnings target of Rs 1,000 crore set in just one year of 2010-11.

On a yearly basis, Railways’ revenues from such branding activities were Rs 195.14 crore in fiscal 2011-12; Rs 187.7 crore (2010-11); Rs 170 crore (2009-10); Rs 157.48 crore (2008-09); and Rs 153.24 crore (2007-08).

The audit report throws up some interesting trends of Railways’ earnings from branding.

Of the total revenues from branding rights, 85 per cent came from rights sold on stations, 11 per cent from rights on trains, and four per cent from tickets, charts, and level crossings.

Also, publicity through vinyl wrapping on premier and suburban trains was more successful compared to passenger trains, as these categories deal with different segments.

For instance, in the three-year period — 2009-10 to 2011-12 — rights for 74 premium trains such as Rajdhani Express, Shatabdi, Mail and Express were sold for Rs 24.49 crore, while rights for 37 passenger trains were sold for Rs 1.04 crore. Meanwhile, 112 suburban trains were contracted out at Rs 11.62 crore. Revenue projections set by the Railway Board on account of commercial publicity were not backed by assessment of market potential; earnings targets were set without associating the Zonal Railways, the Comptroller and Auditor General (CAG) has said.

The CAG said this was based on an audit study conducted during May-August 2012. But, the audit has also said that the Zonal Railways also did not undertake any external agency to assess the revenue potential through advertising and media.

http://www.thehindubusinessline.com/industry-and-economy/logistics/railways-can-earn-more-by-selling-branding-rights-cag/article5019431.ece?ref=wl_industry-and-economy

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