General Management and Strategy

Indian Railways: Powering Through to Excellence (A) & (B)

Philip Zerrillo, Shubh Yashaswini

The case series titled "Indian Railways - Powering Through to Excellence (A) & (B)" are highly intricate and complex primary data pricing cases involving a public-private partnership (PPP) undertaking by the Indian government, specifically the Indian Railways (IR). The seed of the idea lived through multiple governments and IR administrations before becoming a reality. The pricing and plant development decision took seven years to execute. While the case can be viewed broadly as a study of a PPP project in India, the significant aspect of the project is that it was initiated primarily with price considerations in mind. The IR had been facing rising engine costs for its locomotives, poor asset utilization rates, exorbitant costs for replacement parts and underperformance in asset service and repair. The technology platform of its current fleet of 6,000 HP locomotives and spare components was nearly 20 years old.

Objective: This case series is appropriate for teaching infrastructure management, pricing models, and the rationale behind and intricacies of PPPs and/ or foreign direct investment (FDI) as a means to drive economic growth. It deals with identifying inefficiencies in existing infrastructure and procurement processes and designing an effective pricing model to increase operating expenditure (OPEX) utilization in heavy industries.