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Railways targets annual revenue of Rs 11,770 crore with new ad policy

Livemint:  August 09, 2016

New Delhi: Indian Railways is working on a new advertising policy, targeting annual revenue of around Rs.11,770 crore in five years through exclusive rights for advertising in railway properties.

The national transporter aims to install 100,000 big digital screens at 2,175 railway stations across the country as part of the plan.

Under the policy, the advertising content would be classified under three categories: same content at the same time to be displayed all over the country; the same content in different languages but at the same time all over the country; and different content on each screen.

The content would be distributed throughout the country using a centralized distribution centre which will also link all the railway stations. The network would run on the high-speed optical fiber network of Indian Railways’ RailTel Corporation of India.

Indian Railways would be required to invest around Rs.1,289 crore to set up the centralized distribution centre.

According to Indian Railways’ non-fare revenue directorate responsible for preparing the new advertising policy, half the space available on a digital screen would be used to display information on trains and passenger services such as arrival and departure of trains, platform number and information on seat availability.

The remaining half will be used for displaying advertisements.

“The display of seat availability is an exclusive feature that we would be adding to help passengers. It’s often seen that a lot of time is wasted at ticket windows by a section of passengers to enquire about seat availability,” a senior railway ministry official, who is a part of the team framing the new policy, said on condition of anonymity.

Indian Railways has already shortlisted five companies that have displayed interest in installing the digital screens at a cost of Rs.2,000 crore, the official said. To start with, the big digital screens will be installed in four railway stations—Gorakhpur, Old Delhi, Jaipur and Gwalior.

The non-fare revenue directorate of Indian Railways was formed in May to explore the advertising potential of railway properties. According to estimates, the transporter earns around Rs.300-500 crore by selling its space for advertising every year, leaving vast scope for growth.

The Railways is seeking to tap companies such as makers of packaged consumer products, and banks and insurance firms to advertise on its properties and digital platforms.

“In easy language you can say that the new advertisement policy is eyeing the revenue the way you have on TV channels where space is sold in seconds or slots. We would also have exclusive contracts for this digital space,” a second railway official said.

The new advertising policy, which will come into force from fiscal 2017-18, is estimated to generate revenue of around Rs.4,582 crore in the very first year and take the figure to Rs.11,770 crore over a period of five years.

The estimates have been prepared by consulting agency KPMG for Indian Railways, the official said.

“Railway minister Suresh Prabhu has been already given idea about the broad framework of the new advertisement policy and it will be soon presented before the Railway Board for its clearance after which the policy would be made public,” the second railway official cited above said.

According to KPMG estimates, the maintenance cost or investment cost after the first year of the project will be as low as Rs.200 crore per year.

Jaijit Bhattacharya, partner, infrastructure and government services, KPMG, confirmed that the consulting firm had prepared a report for Indian Railways.

“Advertisement has huge revenue potential and has been ignored. Indian Railways carries around 16-17 million passenger everyday criss-crossing the nation. With this you can see how much captive audience it has. The way it’s going ahead now with its new advertisement policy is a positive step,” Bhattacharya said.

Indian Railways should capitalize on the advertising potential and the vast real estate it possesses to bridge the increasing gap between revenue and expenditure, he said.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

x IBEF : India Brand Equity Foundation