Attributes turnaround to financial restructuring, strict measures
Konkan Railway Corporation Ltd (KRCL) for the first time reported a net profit of around Rs 3 crore in 2009-10.
“Initially, records indicated that we had brought down net loss to Rs 10 crore in 2009-10 from Rs 79 crore registered a year earlier. However, fresh numbers, which have come in, show we broke even last fiscal, making a net profit of around Rs 2.84 crore,” said B P Tayal, managing director of KRCL.
Tayal attributed the turnaround to a financial restructuring proposal that the company put in place and stringent measures implemented to bring in operational efficiency.
KRCL’s liability on bonds nearly halved to around Rs 1,700 crore from Rs 3,026 crore in 2008-09. Operating ratio (rupees spent out of every hundred rupees earned) improved to 77.78 per cent, compared to 83.82 per cent in the year-ago period.
KRCL was initially conceptualised to be constructed at an estimated cost of Rs 800 crore. However, cost on completion shot up by over four times to Rs 3,500 crore. In the early 1990s, KRCL raised Rs 2,500 crore from market to fund the project, incurring an interest liability of Rs 300 crore per annum.
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Indian Railways (IR) offered resources at an interest rate of seven per cent per annum. Tayal said, “At the rate our revenues were growing, it was not viable to make interest payments to the railways. We, therefore, decided to go in for financial restructuring to sustain operations.”
Loan from IR had accumulated to over Rs 3,000 crore by 2007. KRCL converted the amount into proportionate number of non-cumulative preferential equity shares. Under the restructuring norms, dividend is payable to IR on registering profit. “With our debt liability towards IR being worked out, we are concentrating on redeeming bonds issued in the market. This year, we are we are proposing to redeem bonds worth Rs 340 crore.”
On the operational side, KRCL reduced manpower from 9,000 to 4,000. This resulted in substantial savings on payment of wages to employees. Besides, intelligent lighting had been put in place on stations and office premises which, Tayal said, converted into savings on energy consumption between 20-25 per cent.