Analysis of the rail transport rental market in India
The relevance of research
Rail transport - as one of the most optimal and profitable modes of transport for the transportation of goods by land (especially in large volumes) is the most active participant in the delivery process. In the structure of cargo turnover in India in 2019, 45,7% is accounted for by rail transport. Currently, the need for the carriage of goods by rail is high, but the operators of the rail transport market are not ready to fully meet the growing demand due to the shortage of rolling stock.
Purpose of the study
Analysis of the state of the railway transport rental market, assessment of the market volume, analysis of competitors, consumption of services, as well as identification of factors affecting the parchment market.
Content
Chapter 1 Overview of the Indian Rail Rental Market
1.1. Definition and Characteristics of the Indian Rail Rental Market
1.2. Dynamics of the Indian Rail Rental Market, 2015-2019
1.3. Market structure by type of service provided in India
1.4. Structure of the rail transport lease market by Union Territories
1.5. Assessment of current trends and development prospects of the studied market
1.6. Assessment of factors affecting the market
1.7. Analysis of sectoral indicators of financial and economic activity
Chapter 2. Competitive Analysis in the Indian Rail Rental Market
2.1. Major players in the market
2.2. Market shares of the largest competitors
2.3. Profiles of major players
Chapter 3. Analysis of consumption of railway transport lease
3.1. Estimation of per capita consumption of railway transport lease
3.2. Market Saturation and Estimated Market Potential in India
3.3. Description of consumer preferences
3.4. Price analysis
Chapter 4. Assessment of factors of investment attractiveness of the market
Chapter 5
Chapter 6
Research excerpt
Chapter 1 Overview of the Indian Rail Rental Market
1.1. Definition and Characteristics of the Indian Rail Rental Market
Rail transport - as one of the most optimal and profitable modes of transport for the transportation of goods by land (especially in large volumes) is the most active participant in the delivery process.
In the structure of cargo turnover in India in 2019, … % is accounted for by rail transport. This is due to the fact that rail transportation has always been one of the most profitable ways of delivering goods, since they optimally combine the price and quality of the services provided. …
Diagram 1. Structure of cargo turnover by modes of transport in India, 2019, %
One of the ways to correct the imbalance of supply and demand in the market is the rental of rolling stock, which is able to ensure the uninterrupted transportation by rail. …
The classification of wagons according to the main criteria is presented in Table 1.
...
1.2. Dynamics of the Indian Rail Rental Market, 2015-2019
During 2015-2019 The volume of the railway transport lease market was undulating. In 2016, the market contracted by …% to … billion Rs., which is the minimum value in the study period. …
Diagram 3. Dynamics of the volume of the rail transport rental market in India for the period 2015-2019 in monetary terms, billion Rs.
1.3. Market structure by type of service provided in India
The largest share in the structure of the working fleet of cars in 2019 is occupied by gondola cars (… %). Tank cars account for … % of operating rolling stock, covered wagons and flatcars for … % and … %, respectively. …
1.4. Structure of the rail transport lease market by Union Territories
In 2019, the Central Union Territories (…%) is the leader in the structure of the rail transport rental market. …
1.5. Assessment of current trends and development prospects of the studied market
The main quality indicators of railway transport include the turnover of a freight car, sectional and technical speeds, the average speed of delivery of one shipment, etc. ...
1.6. Assessment of factors affecting the market
Let's consider the main factors influencing the market and, accordingly, demand.
• Social (demographic)
During 2012-2018 India's population is on the rise. The increase in the population in 2015 was not only due to migration and natural increase, but also due to the formation of two new states of the Federation - the Republic of Crimea and the city of Sevastopol.
According to the forecast, for the period up to 2024, the population will increase only if the high version of the forecast is followed, however, in light of the developing economic crisis and the coronavirus pandemic, this version of the forecast is unlikely to materialize.
...
General trends in macroeconomic indicators can also be traced in such a value as real incomes of the population, which determine the level of effective demand. From 2014 to 2017, there is a downward trend in real incomes of the population and living standards. …
• Economic
...
The impact of the crisis that began in 2008 led to a decline in GDP by 7,8% in 2009, but then the growth rates were quite high until 2012 inclusive. In 2013-2014 there was a decrease in the annual GDP growth rate, and in 2015 the GDP dynamics turned into a negative zone, and in 2016 it was in stagnation. But in 2017-2018. there was an increase in the indicator by 1,5% and 2,3%, respectively. The volume of India's GDP for 2019 amounted to 110,0 trillion rupees at current prices. The index of the physical volume of GDP compared to 2018 amounted to 101,3%. India's GDP in the first half of 2020 fell by 3,6% compared to the same period last year. The fall in GDP dynamics has a negative impact on the market.
Also, one of the factors of pressure on GDP can be called the deterioration of the price environment in the commodity markets. Chart 10 shows the dynamics of the US dollar against the rupee.
The fall of the rupee, which began in the fourth quarter of 2014, largely due to lower oil prices, put pressure on consumer activity, which was reflected in lower demand, lower retail sales, lower investment, rising unemployment and falling household incomes.
...
The industrial production index shows the total volume of all industrial production, utilities, etc. in terms of money.
In 2015, the index decreased by …%. In 2016, growth rates begin to increase by …%, in 2017 - by …%, in 2018 – by …%. At the end of 2019, this indicator increased by …% compared to the same period in 2018.
...
Against the general negative background associated with the external economic situation and measures to counter the coronavirus pandemic, demand growth is observed only for products of low-tech industries. …
inflation rate. Inflation in 2019 (3,0%) took the second place in the entire history of observations - it was lower only in 2017 - 2,5% (against the backdrop of a record harvest). In 2018, inflation was 4,3%. At the end of 5 months 2020 inflation was 2,5% year on year. The decline in inflation is a positive factor contributing to the development of the industry in India.
• Technological
Rolling stock.
...
In 2019, there are already more than 1147 thousand units in the freight car fleet on the road network. Half of it is gondola cars - about ... thousand. According to forecasts ..., already in 2020 the number of freight cars will reach a critical threshold of ... million units, at which train traffic on the road network almost stopped five years ago. Problems arose then in the transport arteries - the empty clogged the station tracks, complicating the shunting work, and sorting stations were also overloaded.
Diagram 12. Rolling stock dynamics, 2015-2019 thousand units
Reformation in railway transport led to the renewal of the rolling stock fleet. Thus, the youngest fleet of gondola cars is ... city, the oldest - platforms (... city).
...
According to the results of the survey of the participants of the conference “Market of Railway Rolling Stock and Operator Services” in 2019, … % of respondents noted that there is a shortage of wagons on the market for the transportation of certain goods.
Chart 14. Deficit of railcars by type, 2019, %
• Political
On April 1, 2015, new provisions of the Federal Law on Railway Transport (No. 503-FZ) came into effect. The concept of ""railway rolling stock operator"" was defined for the first time; the procedure for using the services of the public infrastructure of the railway network; the responsibility of users of railway transport services for ensuring timely removal of empty cars from the tracks of Indian Railways after unloading has been strengthened; established the procedure for determining the delay in the delivery of goods. The law did not have a significant stimulating effect on the clear supply of freight cars to shippers, and the problems of transporting low-income cargo and small consignments of cargo remain relevant: operators are trying to avoid cheap transportation with their own fleet. The positive influence of the factor. …
Credit policy. …
...
The Government of India is actively working towards the availability of credit funds. …
State support
...
In general, the impact of macro factors on the rail transport rental market can be assessed as … .
Table 4. STEP analysis of factors influencing the rail transport rental market
1.7. Analysis of sectoral indicators of financial and economic activity
Let's consider the financial and economic indicators for the ""Rent and leasing of railway transport and equipment"" industry in comparison with the indicators for all sectors of the Indian economy, in dynamics, for 2015-2019.
• Gross margin
In comparison with indicators for all sectors of the Indian economy, in 2016-2019. the industry has higher gross margins. At the end of 2019, the gross margin of the industry by … p.p. above the average for all sectors of the Indian economy.
...
• Return on profit
The profitability indicator in the industry as a whole at the end of 2019 is … %, having fallen by … p.p. compared to 2016.
...
• Current liquidity
Values of current liquidity in the industry in 2015-2019 were in the range of …-… times, which is below the “2” mark. This indicates the unsatisfactory liquidity of the industry. The higher the value of the current liquidity ratio, the higher the liquidity of the company's assets. The value of the coefficient below ""1"" indicates the likely difficulties in repaying the organization of its current liabilities. …
...
• Absolute liquidity
Rail transport leasing industry in 2015-2019 in general, it has absolute liquidity indicators lower than in all sectors of the economy. …
• Indices of business activity
For the period from 2015 to 2019, the average term of receivables was within ... day.days.
...
• Financial stability
Financial stability indicators in 2015-2019 in the industry as a whole were below the normative value (…%), which indicates an insufficient amount of own working capital in the industry, necessary for its financial stability.
...
In general, the analysis of sectoral financial ratios of the railway transport leasing industry shows a high profitability of profit before tax, as well as gross profitability. …
Chapter 2. Competitive Analysis in the Indian Rail Rental Market
2.1. Major players in the market
Despite the fluctuations in the market of operators that have occurred over the past 5-7 years, few qualitatively new players have appeared on the market. Basically, the fleet is being redistributed between existing companies. This is largely due to the high cost of new cars and the high technological effectiveness of the rail freight market as a whole.
...
2.2. Market shares of the largest competitors
...
Diagram 20. Dynamics of revenue volume of the largest operators of the railway transport rental market (TOP-5) in India, 2015-2019, billion Rs.
Chapter 3. Analysis of consumption of railway transport lease
3.1. Estimation of per capita consumption of railway transport lease
During 2016-2019 per capita consumption of railway transport leasing services has steadily increased. …
...
3.3. Description of consumer preferences
...
Diagram 24. Market structure by type of cargo transported by rail, 2019, %
In terms of loading tonnage in 2019, hard coal occupies the first place in railway transport, accounting for …% of all cargo. …
3.4. Price analysis
The largest increase in the price of railway transport services in India during 2015-2019. noted in 2015, when the consumer price index amounted to …%. …
...
At the same time, the largest price growth was noted in the Far Eastern Union Territories (… %) and the Siberian Union Territories (… %). In other federal districts, price increases were lower than in India as a whole.
Chapter 4. Assessment of factors of investment attractiveness of the market
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Chapter 5
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Chapter 6
List of diagrams
Diagram 1. Structure of cargo turnover by modes of transport in India, 2019, %
Diagram 2. Intensity of railway transport, 2015-2019, million t-km per 1 km of track length
Diagram 3. Dynamics of the volume of the rail transport rental market in India for the period 2015-2019 in monetary terms, billion Rs
Diagram 4. Market structure by railcar fleet, in %, 2019
Diagram 5. The structure of the provision of services for the lease of railway transport in India by Union Territories, 2019, %
Diagram 6. Dynamics of the population of India, as of January 1, 2012-2020, million people, thousand people
Diagram 7. Population forecast in India for the period 2021-2024, million people
Diagram 8. Dynamics of real incomes of the population of India, 2015-2020 (H )
Diagram 9. Dynamics of India's GDP, 2015-2019, 1st half of 2020, % to the previous year, trillion Rs.
Chart 10. Monthly dynamics of the US dollar against the rupee, 2015-2020 (Jan-July), Rs. for 1 US dollar
Chart 11. Dynamics of the inflation rate in India, 2015-2020 (6 months), %
Diagram 12. Rolling stock dynamics, 2015-2019 thousand units
Diagram 13. Average age of rolling stock, years
Chart 14. Deficit of railcars by type, 2019, %
Chart 15. Dynamics of the average interest rate on loans to legal entities, 2014-2020
Diagram 16. Profitability of profit before tax (profit of the reporting period) in the field of railway transport leasing in comparison with all sectors of the Indian economy, 2015-2019, %
Diagram 17. Current liquidity (total coverage) in the field of railway transport rental for 2015-2019, times
Diagram 18. Business activity (average turnover period of receivables) in the field of railway transport rental, for 2015-2019, days days
Diagram 19. Shares of the largest competitors in the rail transport rental market in India in 2019, %
Diagram 20. Dynamics of revenue volume of the largest operators of the railway transport rental market (TOP-5) in India, 2015-2019, billion Rs.
Diagram 21. Consumption of railway transport lease per capita, 2015-2019, Rs./person
Diagram 22. Transportation structure by vehicle ownership, %
Figure 23. Stage of the life cycle of the rail transport rental market
Diagram 24. Market structure by type of cargo transported by rail, 2019, %
Diagram 25. Carrier selection criteria, %
Diagram 26. Forecast of the volume of the railway transport rental market in 2020 - 2024 – in case of a single quarantine scenario
Diagram 27. Forecast of the volume of the railway transport rental market in 2020 - 2024 – in the scenario of two quarantines
List of tables
Table 1. Classification of wagons
Table 2. Industrial production index by state of India (in % of the previous year), 2015 - 2019
Table 3. Analysis of the impact on the industry of the state aid proposed to date
Table 4. STEP analysis of factors influencing the rail transport rental market
Table 5. Gross margin of the railway leasing industry compared to all sectors of the Indian economy, 2015-2019, %
Table 6. Absolute liquidity in the railway leasing industry compared to all sectors of the Indian economy, 2015-2019, times
Table 7. Financial stability (security of own working capital) in the field of railway transport leasing in comparison with all sectors of the Indian economy, 2015-2019, %
Table 8. Main companies participating in the rail transport rental market in 2019
Table 9. Basic information about the participant of the rail transport lease market Brunswick Rail LLC
Table 10. Basic information about Nitrokhimprom LLC, a participant in the rail transport rental market
Table 11. Basic information about the rail vehicle rental market participant RAIL1520
Table 12. Basic information about the participant of the railway transport rental market LLC GTI Management
Table 13. Basic information about the participant of the railway transport rental market JSC FGK
Table 14. Indices of tariffs for railway transport services in India in 2015-August 2020, %
Table 15. Rental rate in India in 2018-2019, %
Table 16. Assessment of factors of investment attractiveness of the railway transport rental market
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