Widening scope, aim to be a key player in urban infra space: DMRC MD

Vikas Kumar— the third managing director (MD) of Delhi Metro Rail Corporation (DMRC) — has taken over the reins at a time it is making efforts to recover its operations as well as finances. To improve revenue while keeping ticket fares in check, DMRC is venturing into newer regions and business avenues. Kumar shares details of DMRC’s growth plans in an interview with Dhruvaksh Saha and Shreya Jai. Edited excerpts:

In the past 20 years, how has Delhi Metro maintained its cost and operations?

We made the Delhi public transport at par with international metro rail systems. The first MD, E Sreedharan, had set up a reverse clock system, which is still on display in every section of the company. The idea was to deliver ahead of deadlines, so that revenue is maximised and expense is reduced.

The cost of rolling stock during these years has hardly escalated. The cost quoted in the recent tender won by Alstom, is comparable to the cost in phase 1, though these coaches have much better technology and other passenger facilities.

Another reason is domestic manufacturing by these suppliers. We have factories in Savli, Sri City, BEML Bengaluru and an upcoming one in West Bengal. It is to the credit of DMRC that we made them understand that they will get a lot of business when they set up manufacturing in India. They could manufacture here at low cost and then even export to Australia, Canada, etc.
 

Electricity and manpower are one third of the total operational cost. We have saved on electricity and earned carbon credits since the beginning. We are purchasing solar power from Rewa and are setting up a solar rooftop. Close to 35 per cent of our energy requirement comes from renewable sources and our plan is to reach 50 per cent in the next 10 years.

How is the recovery from Covid shaping up?

In terms of ridership and revenue, we are close to 90 per cent of the pre-pandemic levels. There has been a shift in the ridership demography, but we are attracting more passengers as growth in the NCR region is there. In the coming year, we will cross this level. Our growth rate in the past decade has been about 13 per cent annually. As compared to international metro systems (apart from China), this is a healthy growth. Future growth will depend on the growth of the city and development of newer areas where there will be offices and IT parks.
 

While operationally profit-making, DMRC has been in a net loss historically, mostly due to debt repayment. Is there any estimate on when there would be a break even?

This is a highly capital-intensive project, and a debt worth Rs 35,000 crore has been taken up to date. So far, we have repaid Rs 5,000 crore, and the rest will be paid over the next 20 years.

World over, metros are not profit-making. We have been able to pay our loans and run the system till now and it will be our endeavour to do the same. We are exploring how revenue can be generated from sources other than ticketing — advertising, leasing of properties, standalone property building, consultancy, and undertaking civil infrastructure projects.

What are some of the newer business areas that you are focusing on?

Consultancy for both domestic and international metro rail transport. We are trying to bid for Tel Aviv Metro in Israel, and Bahrain. A lot of avenues will open if we win this. We will partner with other organisations like we did in Dhaka, where it is a joint venture of a local company, us, and a Japanese company.

In civil infrastructure, we are working in Patna and Mumbai. We will make use of our experience of operations and maintenance of metro rail to do O&M for other metro companies. Mumbai Metro recently floated a tender for O&M where we will participate. We are looking at South-Asian markets for consultancy and O&M.

Is PPP still on your radar for metro projects?

PPP in metro has not been successful so far, since the private partner also must bring in capital, which it will be financing at a much higher rate than we do. Here, our JICA loan with the sovereign guarantee is much more feasible. If a plan is made where a lot of earning through real estate development is there, perhaps it could work. But even that has not been successful. If we look at Hyderabad Metro’s PPP with L&T, it is suffering losses and L&T is trying to get out of it. If the private sector can manage low-cost funds, maybe PPP could be successful.

In the coming years, will you be looking at other lenders besides JICA?

JICA has provided us with the best rates. We have spoken with organisations like the World Bank and Asian Development Bank, but they have not been able to compete with JICA as far as rates are concerned.

What is your vision for the coming decade?

To make the organisation sustainable, we will venture into other construction activities as well, besides consultancy and O&M. The Delhi government has asked us to construct ISBTs. In Phase-4 stations, we have optimised the cost, design, and the area of the station. We are looking to be a key player in the urban infrastructure space. I would say, even compete with major players like L&T.

Any plans for fare revision, or any projected timeline for the need of revision based on current financials?

That is a call the government will make on its own through the institution of a fare fixation committee. We do not make that decision.

What are your plans on real estate monetisation?

We have been issuing tenders but there are issues with government land-owning agencies such as MCD and DDA. The Centre has issued a policy on transit-oriented development (TOD) for this, but it needs to be implemented through a notification from these agencies. In TOD, you get more FAR (floor area ratio). If you look at Hyderabad Metro, there is no restriction on FAR. In Delhi, agencies cite lack of water capacity and sewage issues for restrictions.