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INDIAN RAILWAYS TECHNICAL SUPERVISORS ASSOCIATION (Estd. 1965, Regd. No.1329, Website http://www.irtsa.net )

M. Shanmugam, Harchandan Singh, Central President, IRTSA General Secretary, IRTSA, # 4, Sixth Street, TVS Nagar, Padi, C.Hq. 32, Phase 6, Mohali, - 600050. -160055. Email- [email protected] [email protected] Mob: 09443140817 (Ph:0172-2228306, 9316131598)

Purchase of ACEMU, DEMU & MEMU Coaches from non‐Railway companies by sparing Intellectual properties of ICF/RCF free of Cost

Preliminary report by

K.V.RAMESH, JGS/IRTSA & Staff Council Member/Supervisory – Shell/ICF

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Part‐A

Anticipated requirement of during XII th Five Year Plan & Production units of .

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Measurers to upgrade the requirement & quality of passenger services during the 12th Plan (2012‐13 to 2016‐17)

Enhancing accommodation in trains: Augmenting the load of existing services with popular timings and on popular routes to 24/26 coaches would help generating additional capacity and availability of additional berths/seats for the travelling public. Enhancing speed of trains: At present, speed of trains of /Express trains is below 55 kmph. These are low as per international standards. Segregation of freight and passenger traffic, enhancing the sectional speeds, and rationalization of stoppages are important measures for speed enhancement. The speed of especially the passenger trains is quite low at present primarily because of the coaching stock in use and due to multiplicity of stoppages enroute. There is scope for speeding up of these services by replacing trains with conventional stock by fast moving EMUs//DEMUs. Enhancing the sectional speeds is another enabling factor in speeding them. Introduction of tailored services: The travelling requirement of various sectors and various classes of passengers differ. Between major cities and metros, fast services with very limited stoppages are preferred. Introduction of non-stop services and services with higher accommodation between popular destinations would serve passenger requirement well. Measures to improve Commuter service: Due to increase in passenger and freight traffic, the local trains running with conventional stock need to be replaced with DEMU, MEMU and EMU stock as per the requirement to cater to enhanced quantum of traffic and also for faster and smooth operations. Major strategies to enhance average speed of trains would be:  Enhancing the sectional speeds.  Segregation of freight and passenger services.  Enhancement of production capacity of production units so the replacement of the conventional trains by EMUs/MEMUs/DMUs which have better acceleration/deceleration is undertaken at a faster pace.  Rationalization of stoppages. Strategies for decongesting major passenger terminals: Terminal congestion has emerged as the single biggest constraint for running of greater number of train services. Major inputs are required for the projected introduction of over 300 trains every year in terms of expansion in the infrastructural facilities like pit-lines, platforms, stabling facilities etc.

COACHES/ EMUs  Complete switch over to new manufacture of only LHB design coaches by the end of XIIth Plan.  Raise the crash worthy quotient of coaching stock on IR through larger deployment of LHB coaches, and incremental enhancement in ICF coaches.  Introduction of AC/non-AC trains at speeds more than 130 kmph by induction of LHB design coaches.

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 Introduction of automatic under gear and wheel profile measuring/ examination system to improve efficiency of train examination at terminals and pit lines.  Development and implementation of on-board coach diagnostic systems.  Induction of more no. of double-decker LHB FIAT AC coaches with high speed and higher carrying capacity for inter-city travel.  Induction of automatic fire alarm system in coaching trains for early detection of fire. Introduction of automatic fire detection and suppression system for power cars, pantry cars which are more vulnerable to fire accidents.  Introduction of standard block rake concept for coaching trains.  Design and development of under slung DG set power car for improved utilization for commercial purposes.  Introduction of high speed high carrying capacity VPUs on LHB FIAT platform.  Setting up of mechanized laundries on BOOT model for managing the daily volume of bed rolls with superior wash quality.  Introduction of new super AC class for improved comfort and features and more exclusivity.  Introduction of Green toilet technology in coaches.  With new sections in BG coming on the IR network either due to gauge conversion or due to new lines ,need for branch line operations of passenger trains is increasing. This is best addressed by DEMUs since they are low cost, do not require massive infrastructural investments and they release locos for freight and passenger operations on main line. With a new factory coming up at which is slated to manufacture upto 400 DEMU coaches per annum priority to be given to large scale proliferation of DEMU services in the North East, North , Eastern and North Eastern UP, , J&K and many other far flung areas of the country.  Introduction of High speed bogies for Self-propelled coaches (SPART/DEMUs).  New design of Stainless Steel DEMUs with 3 phase technology.  Design and development of differently abled friendly coaches and enabling facilities for their travel in AC and non-AC coaches. ROLLING STOCK REQUIREMENT DURING XIIth PLAN

* Requirement of coaches is projected based on 10% annual growth. Requirement of wagons is based on growth in freight traffic at 100 MT per annum and assuming a 2% increase in utilization during XII th Plan

** Requirements on replacement account for all rolling stocks are based on actual over age arising and the trend of average condemnation. 4

ANTICIPATED REQUIREMENT OF ROLLING STOCKS DURING XII PLAN YEAR WISE

PRODUCTION PROGRAMME OF COACHES PU WISE

Annual outturn of ICF & RCF have crossed 1600 coaches in the year 2012-13 itself against the planned year of 2014-15. BEML (annual capacity of 850 coaches) is regularly supplying coaches to Indian Railways with “price cap” equal to that of ICF manufacturing cost.

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Production units of Indian Railways

Sl. Name Abbr. Year Location Main products No Established 1. CLW 1947 Chittaranjan, Electric

Works

2. ICF 1952 Chennai Passenger coaches

3. Works DLW 1961 Diesel Locomotives

4 Diesel-Loco Modernisation DMW 1981 Diesel-electric

Works Locomotives

5. RWF 1984 Wheels and axles

6. Rail Coach Factory RCF 1986 Kapurthala Passenger coaches

7. * RSK 1988 Passenger coach springs

8. Rail Wheel Factory RWF 2012 Chhapra Railway wheels

9. Rail Coach Factory, RCF 2012 Passenger coaches

Raebareli *Doesn’t have the status of fully fledged production unit

The main Production Units of the Indian Railways in Locomotives sections are:

 Chittaranjan Locomotive Works, Chittaranjan: This locomotive factory is the oldest in with its inauguration held on January 26th, 1950. CLW, as it is often referred to, deals with the production of steam locomotives, diesel locomotives, electric locomotives and AC electric locomotives.  Diesel-Loco Modernisation Works, Patiala: This factory was primarily referred to as the Diesel Component Works ands was set in the year 1981. This factory was set to manufacture electric and diesel locomotives spare parts. Traction motors, rebuilding engine blocks, traction generators and motors and locomotive power packs form the basic production of this factory.  Diesel Locomotive Works, Varanasi: This factory was set in the year 1961 and produced its first locomotives in the year 1964. This factory produces locomotives in-house like engines, fabricated bogies, superstructures and underframes. DLW specializes in producing diesel locomotives and mostly diesel electrics. Of late, this factory has also started producing equipments for industries other than railways.

Rolling Stock for the Indian Railways are produced at:

 Integral Coach Factory, Chennai: This factory was set in the year 1955 to build coaches. The production rate of this factory has been par excellence and today it manufactures around 170 types of coaches. EMU, DMU, monitoring vehicles and diesel railcars are also produced by this factory.  Rail Coach Factory, Kapurthala: This factory was set in the year 1987 and first production of this factory came out in the year 1988. Since 1991, this factory has been producing air- conditioned coaches with AC units mounted on the roof and air braked coaches. The factory specializes in the design and development of light weight high speed coaches.  Rail Coach Factory, Raebareli: New production unit for coaching stock started its production in the year 2012. Coaches manufactured in this new Coach factory will primarily be of LHB- design, double-decker coaches, air suspension bogie, coupler and Self Propelled Accident Relief Train (SPART).

For Axles and wheels, the Indian Railway production units are situated at,

 Rail Wheel Factory, Bangalore: Formerly referred to as the Wheel and Axle Plant, was set in the year 1984. This factory was set up to compliment the production of wheels and axles which was being done by Steel Plant. The annual production of this factory is around 80,000 wheels and 50,000 axles.  Rail Wheel Factory, Chhapra: Started its production in the year 2012

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New Production units announced by Railway Ministry

Railway Ministry has announced various new production facilities for Coach, Diesel loco and Electric loco manufacturing during the Railway Budget presentations over the years, but, by and large they remains non-starter.

Date of S.N Name of new production unit announcement

1. New Electric Loco works to be set up at . Rly Budget 2. New Diesel Loco works to be set up at Marhora 2007-08 Rly Budget 3. A new rail coach factory to be set up in . 2008-09 Setting up of a new coach factory to manufacture about 500 4. EMU/MEMU coaches per annum in the Kanchrapara-Halisahar Railway complex. Rly Budget 2009-10 Setting up of a new coach factory to manufacture about 400 DEMU 5. coaches per annum at Haldia 6. A Diesel (DMU) factory to be set up at Sankrail. 7. A new Rail Axle Factory to be set up in New Jalpaiguri Rly Budget Five state-of-the-art wagon factories to set up at , 8. 2010-11 Barddhaman, Bhubaneshwar/Kalahandi, Guwahati and Haldia

9. Setting up of a refrigerated container factory at Budge Budge To be 10. Diesel Component Factory at commissioned Two additional new manufacturing units for coaches to be 11. established in the Kutch area in Gujarat and at Kolar in with active participation of the State Governments A plant for manufacture of traction alternators for high horse power Rly Budget 12. diesel locomotives to be set up at Vidisha in 2012-13 Setting up of a factory at Shyamnagar in to 13. manufacture next generation technology propulsion system for use in high power electric locomotives

14. New Forged Wheel Factory at Rae Bareli Rly Budget Coach manufacturing unit in Sonepat district – in collaboration with 15. 2013-14 state Government

Besides the announcement of these Production Units augmentation proposals for many POH & Repair workshops are also pending.

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Product Range of ICF

Important Statistics

1. Total area of the complex

a. Shell division - 25.89 Hectares; b. Furnishing division - 50.82 Hectares; c. Colonies - 15.02 Hectares; d. Service and Welfare Buildings - 5.45 Hectares; e. Afforestation - 40.00 Hectares(approx.).

Total ICF area - 192.254 Hectares

2. Residential Accommodation: (a) No. of quarters - 3013 (b) % of staff housed - 25.2%

3. Financials (as on 01.04.2012) (a) Total assets - 584.28 Crores (b) Turnover (2011-12) - 1344.4 Crores

4. Employee Strength (As on 31.03.12) (a) Group ‘A’ & ‘B’ - 163 (b) Group ‘C’ & ‘D’ - 11771 Total - 11934

ICF & RCF have been meeting the needs of the Indian Railways for varied types of coaches, however sophisticated the type may be. Some of the important types are; 1. SELF PROPELLED COACHES Electric Multiple Units for suburban services in Metropolitan cities; Diesel Rail Cars; Metro Coaches for Metro Railways; Diesel Electric Multiple Units & Diesel Hydraulic Multiple Units for non-electrified routes; Mainline Electric Multiple Units for long distance inter-city commutership; Accident Relief Trains / Medical Vans; OHE Inspection Cars; 2. AIR-CONDITIONED & NON-AIRCONDITIONED PASSENGER COACHES LHB coaches; Air-conditioned Sleeper Coaches of first & second class; Air-conditioned Chair Cars of first and second class; 3. SPECIAL COACHES Air-conditioned & Non-air-conditioned Pantry Cars High Capacity Power Cars for Shatabdi & Trains Air-conditioned Military Ward and Saloon Cars for Indian Army. 8

Air-conditioned Saloon Cars, Dining Cars, Bar & Restaurant Cars, luxury suites for luxury tourist trains like (WR), (CR), The (SWR), Royal on Wheels (NWR) and Maharajas Express of IRCTC for operation of hospital on wheels Jet Deflector Crane Cars, Inter Communication Coaches for DRDO 4. EXPORT Against stiff international competition from more advanced countries, ICF has secured several export orders, most of which are repeat orders. So far, 359 bogies, 11 stainless steel coach shells and 571 coaches including air-conditioned coaches have been exported to 13 Afro-Asian countries. ICF has bagged a number of awards for Export Excellence also. 5. DESIGN & DEVLOPMENT EFFORTS Complementing the existing design capacities and facilities, a fully computerised Design & Development Cell has been set up with sophisticated state-of-the-art computer designing facilities and testing equipment both for coach components and raw materials. D&D Centre uses 3-D modelling on Solid Works platform for generating 3-D drawings and IDEAS software for Finite Element Analysis. Strain gauge testing and squeeze test are done on prototypes before commencement of series production.

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Product Range of RCF / Kapurthala

Important Statistics

1. Total area of the complex (a) Township - 838 Acres (b) Workshop Area - 340 Acres Total Area - 1178 Acres

2. Workshop Area: (a) Covered Area - 2,42,186 Sq.mts. (b) Uncovered Area - 11,37,814 Sq.mts.

3. Roads (a) Concrete Roads - 7.6 Kms (b) Bituminous Roads - 64.0 Kms

4. Residential Accommodation: (a) No. of quarters - 3,995 (b) % of staff housed - 50.36%

6. Plantation - 2 Lakhs trees

7. Financials (as on 01.04.2012) (a) Total assets - 1262 Crores (b) Turnover (2011-12) - 1896 Crores

8. Employee Strength (As on 31.03.12) (a) Group ‘A’ & ‘B’ - 158 (b) Group ‘C’ & ‘D’ - 7774 Total - 7932

1. Broad Gauge Air Conditioned AC Sleeper (AC First, AC-2 Tier, AC-3 Tier) AC Chair Car (Executive Class, Second AC) Double Decker Coaches with seating capacity for 148 passengers as against the conventional 90 passengers.

2. Broad Gauge Non Air Conditioned General Second Class Seating General Second Sleeper General Second Class Day Coach General Second Class With Luggage Rack and Guard’s Compartment General Second Class With Disabled Compartment and Guard’s Compartment Power Cars

3. Stainless Steel BG Coaches AC Sleeper (AC First, AC-2 Tier, AC-3 Tier) AC Chair Car (Executive Class, Second AC) AC Pantry Car General Second Class Seating 10

General Second Sleeper General Second Class With Luggage Rack and Guard’s Compartment

4. Meter Gauge Air Conditioned Coaches AC Sleeper (AC First, AC-2 Tier, AC-3 Tier) AC Chair Car (Executive Class, Second AC) General Second Class Seating General Second Class With Luggage Rack and Guard’s Compartment

5. Self Propelled Coaches Accident Relief Train Mailline Mainline Meter Gauge Diesel Multiple Unit

6. Special Purpose Coaches RA Coaches Parcel Vans Refrigerated Parcel Vans Postal Vans

7. Coaches For Export Air-conditioned diesel motive units (DMU) to Senegal Assigned to manufacture 50 stainless steel coaches for Bangladesh Railways.

8. Total Coaches produced till 31st Mar 2012 is 25641

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Product Range of BEML / Bangalore (PSU)

BEML Limited as a full-fledged corporation was established in 1964 with Bangalore Complex as the mother unit. The Bangalore Complex (the then Rail Coach Factory) was in existence from 1947 as a part of Aircraft Factory (currently Hindustan Aeronautics Limited). Initially, the division was manufacturing Rolling Stock producing various models of Broad Gauge Coaches. Subsequently, over the years, the metro coaches and some of the defence products manufacture also has been added in this complex. The products manufactured at Bangalore Complex are: Rail & Metro

 Stainless Steel Metro Cars for DMRC

 Passenger Coaches

 DC Electric Multiple Units

 AC Electric Multiple Units

 Overhead Equipment Inspection Cars

 Rail Bus

 Treasury Vans

 Spoil Disposal Units

Laying Equipment

 Sky Bus

 MIL Rail Coaches

 Utility Track Vehicle (UTV)

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Part‐B

Railways’ decision on Purchase of ACEMU, DEMU & MEMU Coaches from non‐Railway companies by sparing Intellectual properties of ICF/RCF free of Cost

1. Railway Board’s letter No: 2012/RS(PF&EC)-142/Coaches/10, dated 13.02.2013. 2. Railway Board letter No. 2012/RS(PF&EC)-142/coaches/16, dated 06.09.2012. 3. Railway Board letter No. 2012/RS(PF&EC)-142/coaches/17, dated 06.09.2012. 4. Railway Board letter No. 2012/RS(PF&EC)-142/coaches/18, dated 06.09.2012. 5. Railway Board letter No. 2012/RS(PF&EC)-142/coaches/BEML/1,dated 03.01.2012. 6. Railway Board letter No. 2012/RS(PF&EC)-142/coaches/BESCO Ltd, dated 28.03.2012.

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INDIAN RAILWAYS SHOULD RECONSIDER THE DECISION ON AWARDING CONTRACTS TO PRIVATE COMPANIES WHICH WILL WORK AGAINST THE INTEREST OF RAILWAYS 1. Indian Railways has decided to go for outright purchase of 60 ACEMU rakes, 20 DEMU rakes and 13 MEMU rakes from non-railway companies namely Jessop, BEML, Titagarh, Texmaco, Besco and BHEL. 1.a. Indian Railways has also signed a MoU with BHEL, Bhilwara Rajasthan that will give Assured Off- Take orders to manufacture nearly 9000 coaches of MEMU during the next ten year period. 2. Free Supply of items by Railways to the firms  Design, Drawings and technical details (drawings for Jig & Fixture, Specifications for bought-out items, Tools, Test schedules, quality control, etc)  Steels  Wheel set assembly  Electric traction equipment – for AC EMU. – These items have to be supplied in the firms’ yard or at the nearest Railway Station.

ICF & RCF, two coach production units of Indian Railways have to provide complete set of drawings and technical details (drawings for Jig & Fixture, Specifications for bought-out items, Tools, Test schedules, quality control, etc) of high valued full formation of EMU, DEMU & MEMU coaches on free of cost to non-Railway companies and to entrust entire load of manufacturing these high valued coaches only to the Railway Production units.

3. Railways has to pay more than the manufacturing cost of their Production Units

Cost of the coaches which are proposed to be purchased from outside is very high even after the free supply of Steels, wheel sets and electric traction equipments. For the purchase of 390 coaches for 25 rakes of ACEMU & 20 rakes of DEMU, Railways is required to pay 121.89 crores more than ICF manufacturing cost.

Following are some of the Contracts awarded to non-railway companies

Type Company Number of Information available with us for these five Coaches contracts only. ICF has been directed to issue the 1 AC EMU BEML 72 2 AC EMU Titagarh 99 drawing & other details for ACEMU & DEMU 3 AC EMU Jessop & Co 59 contracts. RCF has been directed to issue the 4 DEMU BEML 160 drawing & other details for MEMU contracts 5 MEMU Besco 8 Total 398 free of cost. Approximate manufacturing Cost of ICF for the coaches which are proposed to be purchased

Coach Type Approximate Cost of manufacturing of these coaches at ICF cost in crores 1 AC EMU B 3.34 remains almost stagnant for the past two/three 2 AC EMU C 0.92 years. 3 AC EMU D 0.91 4 DEMU DPC HHP 3.84 Outsourcing of assemblies & sub‐assemblies are 5 DEMU TC GEN 0.91 effectively utilized by ICF to bring down the cost. 6 DEMU TC VEN 0.92 7 MEMU M Not known 8 MEMU T This cost includes the cost of Design & 14

i. ACEMU (BEML)- 8 number of 9 car rake (Rs. In lakhs) – Comparison between BEML price & ICF manufacturing cost

ICF COST Basic Cost of Free supply items Final cost Qty ICF Cost contract Steel Electric Wheel Total Difference cost cost Traction set cost Final between Equipment Contract contract Cost and ICF cost AC EMU B 24 8022.46 3844.30 359.74 4800 268.8 5428.54 9272.84 1250.38 AC EMU C 32 2941.84 2915.36 385.52 202.24 587.76 3503.12 561.27 AC EMU D 16 1453.09 1388.71 203.55 101.12 304.67 1693.38 240.29 Total 72 12417.40 8148.37 948.81 4800 572.16 6320.97 14469.34 2051.94

To purchase 8 numbers of 9 car rake of ACEMU from BEML, Railways has to bear the loss of Rs.20.52 crores. In addition to Rs.20.52 crores, the loss will further escalate due to Price Variation Clause.

ii. AC EMU (Titagarh) - 11 number of 9 car rake (Rs. In lakhs) – Comparison between Titagarh price & ICF manufacturing cost

ICF COST Basic Cost of Free supply items Final cost Qty ICF Cost contract Steel Electric Wheel Total Difference cost cost Traction set cost Final between Equipment Contract contract Cost and ICF cost AC EMU B 33 11030.88 5285.91 494.64 6600 369.6 7464.24 12750.15 1719.27 AC EMU C 44 4045.03 4008.62 530.08 278.08 808.16 4816.78 771.75 AC EMU D 22 1998.00 1909.48 279.89 139.04 418.93 2328.40 330.40 Total 99 17073.92 11204.0 1304.61 6600 786.72 8691.33 19895.34 2821.42

To purchase 11 numbers of 9 car rake of ACEMU from Titagarh, Railways has to bear the loss of Rs.28.21 crores. In addition to Rs.28.21 crores, the loss will further escalate due to Price Variation Clause.

iii. AC EMU (Jessop & Co) - 6 numbers of 9 car rake & 5 loose motor coaches. (Rs. In lakhs) – Comparison between Jessop & Co price & ICF manufacturing cost

ICF COST Basic Cost of Free supply items Final cost Qty ICF Cost contract Steel Electric Wheel Total Difference cost cost Traction set cost Final between Equipment Contract contract Cost and ICF cost AC EMU B 23 7688.19 3684.12 344.75 4600 257.6 5202.35 8886.47 1198.28 AC EMU C 24 2206.38 2186.52 289.14 151.68 440.82 2627.34 420.95 AC EMU D 12 1089.82 1041.53 152.67 75.84 228.51 1270.04 180.22 Total 59 10984.39 6912.17 786.55 4600 485.12 5871.67 12783.84 1799.45

To purchase 6 numbers of 9 car rake of ACEMU from Jessop & Co, Railways has to bear the loss of Rs.18 crores. In addition to Rs.18 crores, the loss will further escalate due to Price Variation Clause.

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iv. DEMU (BEML) – 20 numbers of 8 car rake (Rs. In lakhs) Comparison between BEML price & ICF manufacturing cost

ICF COST Basic Cost of Free supply items Final cost Qty ICF Cost contract Steel Wheel Total Difference cost cost set cost Final between Contract contract Cost and ICF cost DPC 40 15362.10 16778.14 670 331.2 1000.95 17779.09 2416.99 Trailer 40 3666.02 3987.65 487 212.8 699.49 4687.14 1021.12 (Vendor) Trailer 80 7307.36 8079.57 881 425.6 1306.86 9386.43 2079.07 (GEN) Total 160 26335.48 28845.35 2038 969.6 3007.30 31852.66 5517.18

To purchase 20 numbers of 8 car rake of DEMU from BEML, Railways has to bear the loss of Rs.55.18 crores. In addition to Rs.55.18 crores, the loss will further escalate due to Price Variation Clause.

v. Estimated higher cost (Rs. In lakhs)

Type Company No. of Estimated Coaches higher cost AC EMU BEML 72 2051.94 AC EMU TITAGARH 99 2821.42 AC EMU JESSSOP & CO 59 1799.45 DEMU BEML 160 5517.18 Total 390 12189.99

To purchase 390 coaches Indian Railways has to pay Rs.121.9 crores more than ICF manufacturing cost.

4. Price variation clause

In addition Railways has to bear the higher cost due to the Price Variation Clause (PVC). More disadvantageous to the Railways, benefit of PVC on steel, Electrical Machinery, Equipment & Batteries cost escalation also given to the firms, ie. Railways has to bear the cost escalation during the purchase of steel Electrical Machinery, Equipment & Batteries and again has to pay the higher cost on the account of PVC to the companies.

Price variation clause benefit extended to the companies

1. Iron & Semis

2. Steel Flats

3. All India Consumer Index Industrial Worker

4. Ferro Alloy

5. Non-Ferros Metal

6. Electrical Machinery, Equipment & Batteries.

PVC extended to all materials will further escalate the cost by 20% to 30% every year. 16

Further Cost escalation

 Design Cost incurred by ICF have not used in favour of Railways to reduce the purchase price from the companies.  Companies will have no binding on the performance of the coaches supplied by them since steel and important Electric Traction Equipments are purchased and supplied free of cost by Railways.  The cost of quality control done by Railways has not reduced the purchase price proportionally.  Railways has to do the quality control activities more than once on the same item, while purchasing the steel & Equipments and again on the coach after the completion of production.

5. Outsourcing the entire coaches to non-railway companies is against the basic interest of the Railways and the Nation, since outsourcing is being done on higher cost than the cost of Railway PUs, that will increase the financial burden on Indian Railways, which is already incurring huge loss of Rs.24,600 crores per year in passenger business. 6. If Railway Production unit has decided to outsource any of the item (for example Head Stock) which is being manufactured at their permises, the concerned HOD has to get the financial approval duly proving that the item will be purchased at lesser cost than the cost of manufacturing at PU, this basic principal is not followed in the contracts awarded to the firms.

7. Free supply of Design, Drawing, specifications and other Technical details by ICF & RCF should have reduced the cost of coaches supplied by the firms, since they need not to invest anything in activities related to Design and Development. Huge cost invested by ICF & RCF in Design and Development and Intellectual property gained over the years is going to be utilized for the benefit of private firms.

Railways has spent around Rs.160 crores while getting the LHB coach design from Germany on TOT basis. In the present outsourcing the cost of Design & Development has not been reduced in the contract price.

8. Railways should not have deviated from the practice of purchasing coaches from BEML for nearly three decades which has the important element of “price cap” equivalent to the cost of ICF production cost. That means Railways is purchasing coaches from BEML equal to the manufacturing cost of ICF, not more than that.

9. Improvements on technical, operational and passenger amenities during running of trains and design improvements interrelated with maintenance of rakes are being done continuously by ICF/RCF, through continuous interaction with the user Railways. This valuable link between user Railways, maintenance workshops and Production Units will be dis-engaged due to the introduction of non-railway companies, which will create a major threat to the safe operation of trains. Moreover operational expenses and maintenance related expenses of these rakes will also go up. Continuous improvement being done in Design, safety and comfort by the collective effort of Production unit, Work shop and depots will not happen in future.

10. The principle of self sufficiency in manufacturing, maintenance and POH of coaching stock created by Railways is being breached, which may go against the basic principle of Railways serving the nation. In the coaching sector Railways is going in the reversion direction by purchasing them at higher cost, this will only add to the huge loss occurring on passenger operation to the tune of Rs.24,600 crores as stated in the Budget speech.

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11. Initially, outsourcing will lead to reduction in the work load to the existing Production units of Indian Railways, and finally that will lead closure of PUs of Railways. Providing complete set of drawings and technical details to our competitors will not only reduce the work load for the Indian Railways production units but it will jeopardise the basic existence of them 12. All these firms except BEML have to create their infrastructure to manufacture coaches. Instead of depending on these firms, Railways should invest in its own Production units to expand their capacity. Proper planning and execution can ensure the supply of all coaching requirements of Railways by its own production units itself.

13. Instead of outsourcing the entire coaches at higher cost, investments can be done in Railway production units to expand their production capacity to fully utilize the experience and expertise. Total cost of expansion and production of these coaches in Railway Production Units will be much lesser than the cost of coaches that are going to be outsourced. It is pertinent to mention that cost of RCF &ICF coaches remain stagnant for the past three years, dispite of the fact of high inflation in material and labour cost. Railway Board is going to spend Rs.121.9 crores more in purchasing 390 coaches. In addition, due to the contract awarded to the non-railway companies on PVC clause railway has to pay nearly Rs.200 crores more than that of 2011 prices. 14. Whereas, if the sanctioned requirement of Rs.250 crores to enhance the production capacity of ICF/Chennai by 200 coaches per year is allotted in single stroke and similar sanction has been made to RCF/Kapurthalla, together both the Production Units can meet the requirement of these 93 rakes within a period of three years. Investments made to enhance the production capacity of ICF & RCF will be neutralised within four years due to the less cost of RCF/ICF made coaches. 15. Both the leading coach production units of Indian Railways (ICF and RCF) have always met their annual production target which is being increased every year without the addition of proportionate infrastructure and acute shortage of staff. They also developed new designs successfully to meet the present day requirements. To meet the growing demands of coaches Railways has announced commencement of many production units, all them remains non starter mainly because of non allotment of sufficient funds. 16. In this circumstances, existing production units of Indian Railways are granted very meager amount of money for their machinery and plant programme during the current year as shown in the table

Machinery & Plant Program 2013‐14 Figures in crores Capital DRF WMS ICF 3.3 15.3 0.8 RCF 4.9 26.5 0.0 DLW 11.5 16.5 2.2 DLMW 8.7 20.8 0.0 RWF 19.4 8.7 7.3 47.8 87.7 10.3 Total fund allocation for M&P to five Production units 145.8

Allocation of Rs.145.8 crores to the existing production units of Railways is very much against the interest of the nation, while Railway is having the plan outlay Rs.5.2 lakh crores for the XII plan.

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17. The capital investment made on ICF is very meager to meet the requirement of Indian Railways growing passenger business. Capital outlay proposed for ICF during the financial year 2013-14 is

I. 79.9 crores for assets-acquisition, construction and replacement account (including modernization & expansion to manufacture technologically upgraded coaches with increased production capacity from 1500-1700 coaches per year) II. 3.3 crores for machinery and plant program. 18. ICF coach production has increased from 944 coaches during the year 2002-03 to 1600 during the 2012-13 with the complex product mix of 46 types. But allocation of only 83.2 crores for augmentation and modernization is very meager considering the high demand of coaches for Indian Railways.

19. This kind of approach will only results in outflow of Nation’s wealth for the benefit of private players, which will lead not only to the closure of Railway Production units, but will challenge the basic existence of Indian Railways in the present form which is serving the Nation at all level and one of the important symbol of National integration. 20. This is also against the principle being followed by Indian Railways in electric power procurement. Indian Railway purchases electricity from the respective state Governments at highest cost per unit among the electricity consumers in India. In order to reduce the electricity bill Railways is installing its own power plants. Railways is also investing in non-conventional energy sources like solar and to bring down its electricity bills. But in coach manufacturing, Railways has decided in opposite way to procure the coaches at a very higher cost from non-railway companies. 21. Spare Capacity going to be created in Indian Railways workshops are not considered. Due to the introduction of LHB stainless steel high breed coaches POH schedule of coaches will be increased from 18 months to 36 months, this will result in availability of surplus capacity in all the POH workshops. Also work load in maintenance yards will come down due to reduction in primary maintenance, secondary maintenance and IOH. Full capacity of Rail Spring Karkhana, Gwalior which manufactures the coil springs, will become surplus after switching over to LHB coaches by phasing out existing ICF designed coaches.

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Conclusion

i. Indian Railways should produce all the coaching stock requirements of Railways in the Production Units by augmenting their capacity with controlled outsourcing of major assemblies and sub-assemblies. ii. Indian Railways should immediately stop the outright purchase of the entire coaches of EMU, DEMU & MEMU by sparing the intellectual properties of Railway Production units free of cost to non-railway companies. iii. Production capacity of ICF & RCF/Kapurthala should be augmented to 2000 coaches per year immediately by suitable additional sanctions and further production capacity shall be increased to 2500 coaches per year. iv. Expatiate arrangements should be made to fully utilize the Production capacity of RCF/ Raebareli 1000 coaches/annum. v. Proposed production units of Indian Railways should be completed within a period of two years by the allotment of sufficient funds. vi. Additional Coaching needs of Indian Railways after utilizing & augmenting Indian Railways own production units, facility at BEML can be utilized as being done over the years with the existing “Price Cap” method.

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