RITES in Forefront ofInfrastructure Development

P. KapurAdviser, RITES.

Prologue

RITES Journal 20.1 January 2009

Backdrop

RITES spells excellence and innovation in the Transport and Infrastructure Sector.A name to reckon with in India and featuring high in the global rankings of Consultants, itis a Company on the move that has witnessed phenomenal growth. RITES registered an alltime high turnover of Rs. 661 crore (USD 132 million) and a gross profit of Rs.180 crore (USD36 million) for 2008 – up by 16.8% and 5.3%, respectively, over the previous year. Constantlyanticipating and responding to the emerging business environment, it has remained in theforefront, offering state-of-the-art technology and critical backup support to its clients.Huge investments in infrastructure development are yielding strong demand for theCompany’s services. With recent successes in securing long-term concession contracts ofrailway systems abroad, RITES is clearly on a growth path and poised to become a Rs.1000crore (USD 200 million) group company within the next few years.

RITES now stands as one of the largest technical consulting firms in India havingpresence in a wide range of sectors and offering a variety of services. It was founded in 1974by the Ministry of Railways initially, for providing consultancy services in the Rail Sectorand Railway Management outside of India. Over the years, it has diversified and presentlyoffers services spanning the entire Transport and Infrastructure sector – be it Railways orHighways, Ports or Airports, Waterways or Ropeways, Urban Transport or Urban Planning,Container Depots or Institutional Buildings, Power Transmission or Rural Electrification.

The Author, who has extensive experiencein consultancy, has given an overview ofRITES’ impressive past performance. Theroad map in which RITES plans to build upon its strengths and contribute, in ameasured way, to the growth of the Indianeconomy, has also been shown. IncreasedState investment in Infrastructure is gaining

relevance as a means for spurring slaggingeconomies. “The Infrastructure People”,RITES’s new slogan, is most appropriate.

The Paper would be of considerable interestto those looking for high-calibre national/international partners in India’sinfrastructural progress.

- Editor

20.2 RITES in Forefront of Infrastructure Development

RITES enjoys a Mini Ratna Category - I status and is one of the first Public SectorEnterprises (PSEs) to have achieved ISO 9001-2000 Certification for its entire range ofservices. It has received several national & international awards including EEPC/ PEPCAwards for Top Exporters - FY 2002 through to FY 2006, SCOPE Awards for Excellence – for2003 & 2005, The Economic Times Award 2007 for being India’s most customer responsivePSE. In FY ’08, it was upgraded by the Govt. of India to a Schedule ‘A’ Company – thehighest classification for PSEs in India.

With work experience in more than sixty countries, RITES is today established asa leading Consultancy Organization in the international arena and recognized by multi-lateral funding agencies. It is known to deliver outstanding client services. Its clienteleincludes government agencies in India and abroad as well as top industrial groups in thecountry.

International Forays

While growing manifold since 1974, the Company has helped several developingcountries in Asia, Africa, Middle East and Latin America build-up their railways, roads &airports and other infrastructure/systems through technical assistance, consultancy, andtraining . In over 30 years of its existence, RITES has trained over 2,000 personnel fromdeveloping countries and has fielded nearly 3,000 experts to assist railways and othersegments of transport in these regions. In addition, RITES has carried out Feasibility Studiesand prepared Project Reports for establishing new rail links for various clients in Africa andelsewhere. In Highway sector, RITES has provided engineering and support services inmore than 50 projects in over 12 countries. RITES has also provided consultancy servicesfor airports in Africa, besides successfully undertaking a host of other assignments. Therange of activities undertaken by RITES in these developing countries has been wide asillustrated in paras below.

In Nigeria, it took over the management of the total railway system for three yearsto achieve operational and productivity targets and turn the Railway into a profit-maker.Similarly, RITES provided technical & management support for the operation & maintenanceof the Railway in Zimbabwe for several years. In Iraq, it has shouldered the responsibilityfor operation, maintenance and training improvements for the BAAR line while in Sudan itprepared the action plan for re-vitalization of the Railway. RITES has also provided technicalassistance for rehabilitation of wagons and railway bridges in Cambodia. It renderedmanagement support to Tanzania Railway Corporation in safety, corporate planning,maintenance of track equipment, locomotives, signaling & communication, etc. It has similarlyprovided Management support in civil engineering, finance, operations, commercialmanagement, restructuring, productivity, and marketing to railways in Botswana, Ghana ,Mozambique and Zambia, to mention a few.

RITES has made significant contributions towards productivity improvement &rehabilitation/modernization of Railway workshops in several countries, includingBangladesh, Sri Lanka and Jordan, and also in setting up a Diesel locomotive workshop atKaaradj in Iran. Maintenance management services were provided for rolling stock of the

P. Kapur 20.3

Atlantic Railway Concession inColombia. It has also designedand set up the QualityAssurance, Inventory Controland Management InformationSystems for railways in Mexico,Ghana and other countries.RITES provided expert servicesfor engineering, design,construction and projectmanagement for railway trackand electrification to MalaysianRailways.

RITES prepared the Detailed Project Report (DPR) for a new rail link from AddisAbaba to Asaab in Ethiopia. It has also done the Study for new rail links in Senegal, Iraq

& Iran besides rendering Technicalassistance for setting up newrailway lines in Algeria. It carriedout the Study for restructuring andpublic-private partnership in SriLanka Railways.

RITES provided Technicalassistance in rehabilitation andmaintenance of trunk roads inGhana & Zambia and hasundertaken the detailedengineering, design review,advisory services and constructionsupervision for road projects inEthiopia. In Myanmar, it has carried

out the techno-economic feasibility study of highway along River Kaladan from Indo-Myanmar border to Sittwe Port and navigational studies on river Sapta Kosi in Nepal.RITES is currently providing Procurement facilitation services to Afghanistan ReconstructionDevelopment Services (ARDS) under World Bank funded Public Administration and CapacityBuilding project.

RITES continues to explore newer geographical areas and re-visit others to expandits reach and services. At present it is conducting a Feasibility Study for a railway linebetween Musaffa and Al Ghweitat (length – 380 km) in UAE, Consultancy services forrailway line in Saudi Arabia for cement movement and Feasibility Study for railway line &port infrastructure in Indonesia for coal transportation. Nearer home, it is assisting Bhutanand Nepal in construction of more than 700 km of roads and undertaking final locationsurvey for a 19 km long railway line connecting India and Bhutan.

20.4 RITES in Forefront of Infrastructure Development

Rail Projects / Systems

RITES has capitalized in the domestic market on its rail experience and ability tomarshal additional railway manpower/technical resources at relatively short notice, ifrequired, to execute the projects. Most of RITES’ expert personnel for rail-related consultancyprojects typically come on deputation from the Indian Railways with rich hands on experienceand international exposure. If required, RITES does not hesitate to deploy experiencedagencies/experts of repute from within or outside the country to bring to bear the bestavailable expertise on the project to deliver innovative solutions of ‘high quality’ and‘value’ to its customers.

RITES expertise and services in the rail sector cover all areas/facets of railwayworking, from concept to commissioning, including traffic surveys , alignment and locationsurvey, economic & financial appraisal for new rail links, upgradation of existing lines,design of track, bridges and tunnels, railway electrification, signaling system design, sizingof motive power & rolling stock, workshops and all other maintenance infrastructure, businessplan, manpower & training plans. RITES services have been requisitioned regularly fornumerous small and big railway projects. RITES has recently carried out the preliminaryengineering traffic & final location surveys for the 2800 km long Dedicated eastern &western freight corridors for Indian Railways – a prestigious mega project.

Towards the late70’s & early 80’s, theGovernment of Indiadecided to set up SuperThermal Power Stations atCoal Pitheads to minimizethe transportation effort.The Thermal PowerStations turned to RITESto design the RailwayInfrastructure required formovement of coal fromnearby mines to the powerplant. RITES came up withan innovative approach and provided the very first Merry-Go-Round captive railway systemin the country with in-motion loading/unloading of coal in train for the Singrauli SuperThermal Power Station of the National Thermal Power Corporation(NTPC). This novel concepthas caught on and now the Merry-Go-Round captive railway system is adopted as thepreferred method for movement of coal in case of pithead power plants in the country.

In addition to Thermal Power Plants, RITES has also been assisting steel plantsand companies using/mining coal, iron ore, etc., in setting up/augmenting the RailInfrastructure of their new /existing units providing comprehensive services complete in allrespects. RITES is currently engaged in upgradation of railway infrastructure of SAIL Steel

P. Kapur 20.5

Plants at Rourkela, Bhilai, Burnpur & Durgapur, NTPC Thermal Power Stations at Simhadri,Nabinagar, Jhajhar, Dadri, Farrakka, Ennore, Kahalgaon & Barh & the Thermal Power Stationsof Damodar Valley Corporation at Koderma, Durgapur, Majhia, Raghunathpur and Barjora.Recently, it has undertaken the Study of Rail Infrastructure required for quantum increase iniron ore loading at 4 mines – Bolani, Gua, Kiriburu & Meghataburu.

RITES provides services not just in fulfillment of a contract but with a view tosecure success for clients in their endeavours, and towards this end continues to furnishclarifications or inputs/ assistance asked for even beyond the currency of contracts. It is inthis spirit that RITES responded to the call of one of the Thermal Power Stations in NorthernIndia to assist it in running the captive railway system it had created with RITES services.What started as a one-off job has grown phenomenally over the years and developed intoa significant revenue stream for the Company.

Today, in demand from industry, RITES is assisting the Super Thermal PowerStations, Steel plants & other industrial units in Operation & Maintenance of their RailwayInfrastructure, encompassing Track, Locomotives, Wagons, and Signaling, etc. In a relateddevelopment, RITES has taken up the work of rehabilitation of BOXN wagons with cortensteel for Indian Railways involving complete renewal of side walls, end walls and flooring.Further, RITES also plans to take up the work of rehabilitation and upgradation of BOXNwagons with stainless steel in future.

Railway Production Units and Workshops

RITES has made a mark in introducing innovative motivational schemes in IndianRailway production units and maintenance workshops. These motivational schemes arebased on physical verifiable output of the workshop and represent a complete break fromthe past, wherein incentive payment was based on the concept of ‘allowed time’ & ‘timesaved’ in each operation(s). The incentive schemes designed by RITES have high acceptanceamongst the workshop personnel. Study and formulation of motivational packages forvarious workshops of Indian Railways is currently in progress. RITES has also designedand implemented a suitable motivational package covering all categories of staff andmanagement of the Tanzania Railway Corporation.

In view of its capabilities, RITES has also been commissioned for preparing theDetailed Project Reports for setting up new Production Units, Maintenance & Overhaul ofWorkshops, including the layouts and machinery & plant specifications and detailedestimates. RITES has recently framed the Project Reports for the Cast Wheel Plant atChapra, Coach Overhaul Workshop at Harnaut and the new Rail Coach Factory in Kerala.

Broadening its horizons, RITES has further ventured into the field of workshopmodernization and upgradation undertaking projects on turnkey basis, taking on theresponsibility for procurement of all Materials & equipments, Civil Works & ElectricalWorks, installation and commissioning of all machinery & plant, Quality Assurance andproject completion within the stipulated time schedule. RITES’s ability to provide the multi-

20.6 RITES in Forefront of Infrastructure Development

disciplinary services needed for such projects has resulted in several enquiries from clientsin the railway and non-railway sectors wanting to complete their workshop modernizationand upgradation in a competent and time bound manner. RITES is currently carrying outthe turnkey project for switchover to LHB Stainless steel coach production and enhancementof capacity from 1400 to 1500 coaches per annum for the Rail Coach Factory, Kapurthala.

Highways/Airports/ICDs/Ports

While railway related business has been its foundation, RITES has also beengaining rapidly in the domestic market in services/areas such as Quality Assurance, ElectricalEngineering, Construction Projects and Procurement. However, in sectors like Highways,Ports and Airports the growth has been slower due to rapidly changing businessenvironment.

RITES has completedassignments of more than 200highway sector projects in thedomestic market, includingindependent consultancyservices and severalprestigious assignments fordesign and constructionsupervision of sections ofNational Highways in variousStates.

RITES’s capacity in the Airport Sector is fully utilizedfor development of airports in non-metro locations. Someof the recent projects for which it has been engaged areDesign and development of 8 airport strips in UttarPradesh, Feasibility Report for revival of 32 non-operational airports of Airport Authority of India and DPRfor Navi Mumbai International Airport.

RITES has played an importantrole in the development of Inland ContainerTraffic in the country. The Inland ContainerDepots (ICDs) at Tughlakabad and Dadri,some of the biggest in Asia, were designedand constructed with RITES expertise andsupervision. Several new Inland ContainerDepots have been constructed andcommissioned during the last few yearswith RITES consultancy services.

P. Kapur 20.7

In Ports and WaterResources Sector, RITEShas carried out technicalfeasibility studies fordevelopment of InlandWater Transport over majorrivers and waterways acrossthe country. RITES has beenundertaking assignments fordevelopment of new berthsfor handling iron ore, cokingcoal, etc., and upgradationof facilities of existing berthsat various Ports on the WestCoast and East Coast ofIndia.

Urban Transport/Metros

RITES is engaged indeveloping Urban TransportationSystems and has played a pivotal rolein making the Delhi Metro a reality.Detailed Project Reports forAhmedabad, Bangalore, Chennai.Hyderabad, Kolkata and MumbaiMetros have been completed.RITES is currently providingconsultancy services for the MetroProject in Bangalore and DMRCPhase –II & Airport Link ExpressProject in Delhi.

Electrification

Survey and Detailed Designs for overhead electrification of railway lines are RITESforté. It is undertaking such assignments for Indian Railways and private railway sidings ofSteel plants, Oil Companies, etc. It is working to establish itself as a significant player in thedesign and project management of sub-stations and rural electrification.

Project Management Consultancy

RITES is providing Project Management Consultancy Services including Design,Quality Assurance to Central & State Governments and Private Sector for important buildingprojects like Institutional Buildings, Convention Centres & Auditoriums, Residentialaccommodation and Housing colonies spread all over India.

20.8 RITES in Forefront of Infrastructure Development

Engineering Surveys & Investigations

RITES provides comprehensive services for engineering surveys required inRailway, Highway, Ropeway and Pipeline Projects for route selection, alignment, designand final location. It also conducts various types of Geo-technical Investigations & Surveysaided and supported by its fully equipped geo-technical laboratories as well as drilling andgeo-physical equipments. These services are widely requisitioned for bridge & tunnelprojects in construction/ expansion of railways/roads, oil & gas pipelines, hydroelectricand canal projects.

Consultancy for Privatization Schemes

Globally, there is an increasing emphasis on private sector participation ininfrastructure projects on Build Operate Transfer (BOT)/ Concession basis. With thepractical experience and deep insight gained into the intricacies of concession businessthrough participation in such activities abroad, RITES is successfully providing ConsultancyServices for Privatization Projects, Preparation of Concession Agreements, PrivatizationSchemes, BOT Documentation & Bid Process Management, etc.

Ropeways

RITES isthe only publicsector company inIndia providingconsultancy servicesin the field ofpassenger andindustrial ropeways.It stands to benefitfrom the risingdemand for ropewayscaused by theeconomic growth inthe country. Theprestigious GondolaRopeway Project atGulmarg (J&K),Chairlift and skiliftproject at Auli (Uttaranchal) and Passenger ropeway at Gangtok (Sikkim) were executedwith RITES consultancy and project management services. A number of Ropeway Projectsare currently in hand including setting up of passenger ropeway at Deoghar (Jharkhand),Namchi (Sikkim) & Mata Vaishno Devi Shrine (J & K).

P. Kapur 20.9

Third Party Inspection

RITES is one of the top players in the countryconducting Third Party Inspection of materials for therailway and non-railway sector. It has well equipped in-house material testing laboratories besides tie-ups withleading technical and research institutions in the countryto deliver Quality. It has graduated into inspection of high-tech products, vendor capacity and capability assessmentand consultancy in Quality Management Systems, viz., ISO– 9001, ISO-14001, OHSAS-18001, ISO/IEC-17025. It iscurrently assisting the Bureau of Energy Efficiency in Star Rating of electrical products andBureau of Indian Standards in management of their product certification scheme. It hasmade a small beginning in consultancy services for Clean Development Mechanism (CDM)Projects and will develop it further since the CDM field is a multi-billion dollar marketworldwide.

Total Transport Studies

RITES is the only consultancy organization in the country which understands thegrowth requirement of all modes of transport as they would integrate into the developmentalplans of the country. It is for this reason that various Ministries/ Departments of Govt. ofIndia and State Governments have been patronizing RITES’ one-stop-shop consultancyservices during the last 3 decades for developing national/state level transport plans/projects.

Planning Commission, Govt. of India, has recently entrusted RITES with a landmark“Total Traffic System Study” for prospective integrated planning in transport sector (for allmodes) in India. Earlier, RITES has conducted the Feasibility Study for Ministry of Railwaysfor construction of 2800 km long Dedicated Freight Corridors (Eastern & Western) forreliable movement of bulk, container and other freight traffic. The Perspective Plan – Vision2020 document for the development of major ports in India – was conceptualized by RITESfor the Ministry of Shipping & Transport.

RITES Design Capabilities

RITES has developed high-end designcapabilities due to its strong tradition of R&D andcontinuous technical upgradation. The Civil &Mechanical Design Wings are equipped with a widerange of state-of-the-art CAD and CAE softwarealongwith high performance computer cluster and high-end workstations and other equipment & facilities tostay current with Technology levels, trends andpractices, adopted by RITES competitors

20.10 RITES in Forefront of Infrastructure Development

internationally. Some of the salient features of this thrust are software packages for digitalterrain modeling, design of bridges and structures, tunnel investigation and designs, 3-Dimensional solid modeling of complex machine assemblies, finite element modeling &analysis of structures, including wagon under-frames, as also dynamic simulation of rollingstock using measured trackdata.

These efforts haveresulted in impressiveachievements of RITES inareas of computer baseddesigning of Track andHighways including Bridges/Tunnels and other structures.In association withinternational design experts/organizations, RITES hasundertaken the designdevelopment of (a) thecountry’s longest (12km)tunnel on the J & K Rail Link(b) the longest (4.7km) Rail-cum-Road bridge across riverGanga near Patna .

RITES played a critical role in development of crashworthy coaches, which havebeen adopted for series manufacture. It is now working on development of crashworthy

locomotive designs and use of state-of-the-art design methods for improving interiorcrashworthiness. The High-Speed ContainerFlat Wagons – designed by RITES inassociation with the Research, Designs &Standards Organization of Indian Railways –are widely in use by all the container trainoperators in the country. The frameless tankwagons and food-grain wagon designsdeveloped by RITES are in the process ofcommercialization. Special purpose wagonssuch as the 24-axle 300 tonne wagon forcarrying boiler drum and wagon for

transporting liquefied ammonia are other significant achievements in area of MechanicalDesign in recent years.

Export of Locomotives and Rolling Stock

Besides consultancy, RITES undertakes export of locomotives & rolling stockproduced by Indian Railways offering not just the equipment but complete packages

P. Kapur 20.11

including product redesign/modifications/customization, training, maintenance backup, spareparts, etc., in keeping with the requirements of the customer. This approach has been highlyappreciated by clients resulting in several repeat orders from Sri Lanka, Vietnam, Bangladesh,Myanmar, etc.

The first attempt to export Locomotives & Rolling Stock by India was made in 1975with sale of 15 metre gauge(MG) diesel locomotives of 1350 HP of DLW Varanasi make toTanzania. As a sequel to this, RITES has received a number of orders for export and leasingof Locomotives & Rolling Stock. In 1994 -95 RITES secured the contract for supply of 10 AC& 5 Non-AC MG coachesto Vietnam and supply of 2Narrow Gauge diesellocomotives and 6 coachesto Nepal. In 1995-96 for thefirst time, 2 Broad Gauge(BG) diesel locomotiveswere supplied to Sri Lanka.A year later, in 1996-97, theCompany exported thefirst ever consignment ofdiesel locomotive spareparts to Peru and Chile inSouth America. During thesame period, RITESexported 10 MG dual cabdiesel locomotives along with a 7-year maintenance contract to Bangladesh. This wasagainst stiff international competition, and the first time that dual cab MG diesel locomotiveswere exported by the country. This was followed by export of 10 in-service MG diesellocomotives to Myanmar in 1998-99 and 10 BG diesel locomotives to Bangladesh in 1999-2000. Since then, RITES has steadily exported diesel locomotives and passenger coaches,duly customized, to various developing countries.

In another first RITES, in FY 2008, exported Cape Gauge (CG) Diesel Multiple Units(DMUs) - two DMU sets each containing two driver power cars and four trailer cars, toAngola, specially customized for them incorporating several innovative features. Apartfrom this, one self-propelled accident relief train was also exported to Angola. RITES hasrecently bagged the contract for supply of 15 DMU sets and setting up of DMU maintenancefacilities in Sri Lanka.

RITES, in association with IRCON International & Indian Railways, hassuccessfully developed the 2300 HP MG/CG diesel locomotive for the international marketand these were exported to Angola, Sudan, Senegal and Mali. RITES is currently engagedin the process of developing a still more powerful MG/CG locomotive of 3000 HP for theexport market. These products are finding a good potential in African and Latin Americancountries.

20.12 RITES in Forefront of Infrastructure Development

Besides exports of locomotives on outright sale, RITES is also providing locomotiveson lease to overseas customers. RITES plans to make investments in the next few years forboosting its Locomotive & Rolling Stock leasing business overseas.

The major on-going leasing projects include:

• Leasing of 25 locomotives in Tanzania and 20 locomotives in Mozambique

• Leasing of 23 passenger coaches to Tanzania

In addition, services for rehabilitation of locos and rolling stock are being providedat site or if need be, in Indian Railway Workshops – 4 Nos. of Hitachi Locos of SudanRailways were transported to India for complete rehabilitation & upgradation in FY2005 & 06.

The rapid growth in exports of locomotives and rolling stock has been a majorachievement by RITES; starting from a trickle in 1994 it has reached a level of about Rs.250Crores (USD 50 Million) in FY 2008. In this endeavor, it has received full support from IndianRailways and its Production Units (ICF, RCF and DLW) and Zonal Railway Workshops.

Rail Concessions

RITES’s successful entry into the business of privatization & concessions is pathbreaking besides providing a boost to export packages. The first concession was securedin Colombia (Atlantic network) in 1999 with RITES as a minor partner, while the Spanishassociate was the main operator. The project was foreclosed in 2006 on account of a re-structuring carried out by the Govt. of Colombia.

Mozambique is the second country after Colombia where RITES is operating arailway concession in a Joint Venture named Caminhos de Ferro da Beira (CCFB). RITES,with 26 per cent equityis the lead partner inthe consortium,IRCON Internationalholds 25 per centequity, while theMozambique railwayhas a share of 49 percent. RITES andIRCON Internationalwill rehabilitate thecivil war ravagedrailway system inMozambique, and runit for 25 years afterfixing its own tariff.

P. Kapur 20.13

This contract involves construction and rehabilitation of two railway lines. One ofthem is the Beira Railway Corridor, which links the port of Beira to the Mozambique hinterlandand further to Zimbabwe. The other link is a 600 km track to coal mines.

More recently, RITES has secured the Tanzania Railway Concession Project on anew structure with RITES and Govt. of Tanzania as members of the consortium forimplementation. RITES and Government of Tanzania have set up a Joint Venture,‘TanzaniaRailways Ltd.’ (TRL), to operate and manage Tanzanian Railways with RITES holding 51 percent equity and the balance equity being held by the Government of Tanzania. The projectinvolves rehabilitation of the 2700 km Tanzanian Railway network and its operation andmanagement for 25 years.

It would be worthwhile mentioning that TRL, after taking over the Railways inTanzania, have restored passenger and freight operations from Tanzanian capital Dar-es-Salam, introduced time-tabled trains, enhanced traffic movement, and commenced trackrenewal works.

RITES intends to secure more rail concessions abroad by pursuing potentialopportunities in Senegal, Mali, Colombia, Ethiopia & Nigeria, etc.

The achievements of RITES are indeed creditable. Through its diversified set ofactivities, RITES has remained a strong performer on all major performance parameters likeRevenue, Profit After Tax and Manpower. It has consistently faced stiff competition buthas held its own against the best in the field overseas and at home. International businesscontributes to over 50% of RITES turnover, and the domestic business is spread overseveral sectors in the Infrastructure domain.

Future Outlook

In the International Consultancy business, RITES is in competition with reputedinternational technical consultancy companies based in North America & Europe. In thearea of packaged exports, major competitors are the top locomotive manufacturing companiesof USA, Europe and China. In the domestic Infrastructure Consultancy business, RITES’rivals are the reputed domestic firms/organizations and the local branches of InternationalConsultancy firms.

What do we see RITES to be in the near future? Given its competitive strengthsRITES is well-placed to benefit from the large scale investments planned by Indian Railwaysand capital expenditure plans of steel and power players during the 11th & 12th Plan periods.However, increasing competition from Chinese players in the export market could pose athreat to leasing, export and concession businesses in Africa. Given this environment theTurnover is expected to double in the next five years. RITES will continue to leverage itsstrength in domestic and international markets, particularly in Railways as well as emergingUrban Transport services. RITES is in the process of changing the way it structure itsdelivery of services through innovative strategies/mechanisms.

20.14 RITES in Forefront of Infrastructure Development

The recent crisis in financial markets has seriously impacted the economies of thedeveloped world and most other countries. While India will not remain totally unaffected bythe crisis, but by all accounts and assessments by independent agencies, its Gross DomesticProduct (GDP) is likely to grow at a rather impressive rate of 6.5 to 7.5% per annum, thoughdown from the 9% earlier estimated. The technical consultancy market is a function of GDPof the country. India, with a GDP of about USD 1.1 trillion and growing at a fast pace is fullof potential opportunities in the technical consultancy field. RITES could become a dominantplayer in the domestic market since large-scale investments are expected to take place in thenext decade in sectors where it already has a strong presence, viz., transport & infrastructure.

The investments during the 11th Five Year Plan are expected to be USD 400 billion(Rs.20 lakh crore), as against USD 160 billion (Rs.8 lakh crore) in the 10th Plan. In the 12thPlan Period the investments may climb upto USD 800 billion (Rs.40 lakh crore). This offerspotential for sustained growth of the Company in future. However, at the same time, RITESfaces challenges in terms of growing competition and changes in the way the infrastructurebusiness is being structured and operated. In future, the size of projects is expected to befar bigger than at present and the nature of contracts would be different from the traditionalconsultancy contracts awarded earlier.

In order to cope up with the changing business environment, RITES has recentlymodified its Articles of Association to enable the Company to undertake contracts on EPC,Build-Operate- Transfer (BOT), Build-Own-Operate-Transfer (BOOT), Build-Lease-Transfer(BLT), or any other like basis. Following this amendment, it has entered into Joint Ventures(JVs) with private sector companies to participate in Ganga Expressway & other HighwayBOT Projects. It is also actively considering a JV with a foreign partner to participate in themodernization of New Delhi Railway Station and setting up of a Special Purpose Vehicle(SPV) with a local company for leasing of rail assets.

Significant investments are also expected to be made in the coming years in keyforeign markets of RITES’ interest, viz. Asian & African Regions. Sizeable portion of theseinvestments will no doubt be earmarked for infrastructure augmentation/upgradation.

In the future, RITES would be driven by its core competencies and will leverage itsstrengths as a leading PSE and linkage with the Indian Railways to shape new markets andgrab a bigger share of existing business. It is foreseen that it will further build on itsdistinctive brand image in the eyes of both Public Sector, as well as Private Sector to tap theopportunity presented by Public Funded Projects and Projects Funded by the PrivateSector, as well as PPP Projects for high growth. In this context, RITES will no doubt maintainleadership position in select sectors/services while investing to build on others, as well asexploring opportunities in emerging areas.

Some of the important future projects and plans from RITES’ perspective are:

• Dedicated Freight Corridors, High Speed Passenger Corridors, WorkshopModernization and New Production Units – Indian Railways (IR).

P. Kapur 20.15

• Railway related services required by non-IR Clients primarily in the Power &Steel Sectors, concerning both expansion of existing units and setting up newunits. The crude steel production in the country is expected to increase from46 mill.T. in 2007 to 80 mill.T. in 2012. The coal based Thermal Power Generationcapacity addition during the 11th Five year Plan would be about 46635 MW.

• Operation & Maintenance (O&M) Services including maintenance workshopsfor catering to the rail-borne container traffic witnessing an explosive growth.

• Leasing of Locomotives & Rolling Stock in the domestic/foreign markets.

• Participation in BOT/PPP Projects in Highway Sector in consortium withFinancial Institutions & EPC Firms.

• O&M services for Metro Rail Projects. It is expected that 26 cities will becovered in the 11th Five Year Plan for provision of Metro Rail Systems.

• Participation as JV partner in Turnkey Ropeway projects, including provisionof O & M services in post construction period.

• Technical consulting business from developed countries on outsourcing basisor from other technical consultants in those countries.

• Undertaking work funded by multi-lateral agencies or line of credit from Govt.of India for projects in Ports, Waterways & Airports Sectors.

• Customize services for opportunities in Special Economic Zones (SEZs),Logistics Parks & Industrial Development Parks.

• Additional concession business in both the domestic and international markets.

Corporate Social Responsibility

RITES is not guided solely by profit motive in its endeavors. It has made significantcontributions towards society working under arduous conditions and at minimalcompensation for development of remote areas. It undertook the construction managementof Jawahar Navodaya Vidyalayas in Arunachal, Nagaland, Assam, Manipur & Meghalaya,3400 km Rural Roads under Pradhan Mantri Gram Sadak Yojna in Chattisgarh & Orissa andRural Electrification in 1200 villages in Jharkhand, to name a few.

Professional integrity and total transparency are the hallmarks of RITES practiceof Corporate Governance. RITES’ website, which gives all relevant information on the

20.16 RITES in Forefront of Infrastructure Development

Company regarding tenders issued, contracts awarded, job openings and inspection statusof materials, etc., is very well visited.

RITES strives to be a good corporate citizen. It promotes the cause of sustainabledevelopment and gives due attention to social & environmental aspects and their impactsin all its Studies, Investigations, Designs & DPRs.

Epilogue

RITES looks ahead with confidence ready to take on the challenges in the rapidlychanging and increasingly competitive business environment. RITES aims to updatecompetencies in high-end technologies and enter into strategic alliances forming jointventures/special purpose vehicles for handling mega projects to continue its success storyscaling new heights in ‘performance and excellence’. Hopefully, its income would touchRs.1150 crore (USD 230 million) by 2012 & Rs. 2500 crore (USD 500 million) by 2017.Enviable performance indeed.

References

1. RITES Corporate Plan, March 2008.

2. An approach to the 11th Five Year Plan (2007-12), Planning Commission, Govt. ofIndia, June 2006.

3. India Infrastructure Report 2006.

4. 11th Five Year Plan (2007-12), Planning Commission, Govt. of India, 2008.

5. Reports of the Planning Commission Working Groups for the 11th Five Year Plan(2007-12) for Railways, Power, Steel Industry, Urban Transport, Roads, etc.

6. ‘Results of Railway Privatization in Africa’, World Bank Group.

7. RITES Annual Reports and other Publications.

*****

Never mind how much you know!The important thing is what you can do with what you know.

– Napoleon Hill