IRCTC tenders for Six RailNeer Plants by end of January

New Delhi: RailNeer, the Indian Railways’ bottled water, could see more volumes being added soon with the Indian Railway Catering and Tourism Corporation (IRCTC) planning to finish the process of floating tenders for six more plants by the end of next month.

The new plants would be set up under a ‘Design-Build-Operate-Transfer’ Public Private Partnership (PPP) model. Through this move, the contribution of Rail Neer in the total revenue share of IRCTC is expected to rise by more than Rs.100 crore.

“We are coming up with six more plants under the PPP mode and these plants would have a capacity of around 75,000 bottles a day,” said an IRCTC spokesperson. The six new plants would come up in Parassala near Thiruvananthapuram, Ahmedabad, Nagpur, Vijayawada, Nashik and Farakka. It might take another two years for the plants to be functional.

Under this model, IRCTC would provide land for the plant. The private player would set up the plant and run it. The cost of setting up each plant is between Rs.8-Rs.10 crore. IRCTC would buy the bottles from the private partners at a discounted rate and in turn sell it to the Indian Railways with a small margin. Distribution would be the responsibility of the private partner.

Till now, Rail Neer has remained at the peripheries, contributing only about Rs 56 crore or eight% to the IRCTC revenue of Rs.720 crore in 2012-13. Internet ticketing and departmental catering have been the bread earners for IRCTC, contributing about 37% and 35% respectively to the total income.

According to industry estimates, the daily requirement of packaged drinking water in the Indian Railway network is about 30 lakh bottles a day. Against this demand, IRCTC provides about four lakh bottles a day. It is expected that the soon-to-be-operational Ambernath plant near Mumbai would spike the supply by about six lakh bottles a day.

The total size of the packaged drinking water is not more than Rs.5000 Crore. Bisleri is one of the largest players with about 60% of the market share in metro and tier I cities. The overall market share of Rail Neer is below one%.

Currently, IRCTC has three plants in Delhi, Danapur (Bihar) and Plaur (Tamil Nadu). The capacity of these plants is between 1-1.8 lakh bottles a day. According to IRCTC officials, two more plants are to come up shortly in Ambernath, Mumbai and Bilaspur. These would be built and owned by the IRCTC.