Earnings from ads pegged at Rs 1,000 crore

Earnings to support the railways’ investment plan.

Mamata Banerjee today set a goal of increasing non-core revenues to Rs 1,000 crore in 2010-2011 from Rs 150 crore through advertising and branding of railway properties.

“The untapped revenue potential from branding and advertising of railway properties will be harnessed to significantly increase earnings. The revenue is estimated to go up to Rs 1,000 crore from Rs 150 crore and will support the plan investment of the railways,” Banerjee said, while presenting the Budget for 2010-11.

Budget estimates for 2010-11 for other coach earnings and sundry earnings have been pegged at Rs 2,778.34 crores and Rs 3,170.81 crores, respectively, as against 2009-10 revised estimates of Rs 2526.23 and Rs 2981.99.

Other coach earnings registered a CAGR of 16.4 per cent in the five years ending 2008-09 against 7.3 per cent in the previous five years. Sundry earnings during the period achieved a CAGR of 20 per cent, against 8.6 per cent in the previous five years.

Sundry earnings represent earnings from advertisement and publicity, leasing of railway land, catering, parking facilities, dividend from railway PSUs, reimbursement of operating losses on strategic lines by finance ministry, profits earned from works executed for private parties and leasing of optical fibre among others.

“There is a lot of latent potential which could be utilised in ramping up the non-core revenues from Rs 150 crores to Rs 1,000 crores. This might look ambitious, but it is not impossible. How the minister plans to strategise this remains a question,” said Guru Malladi, partner and leader of infrastructure and governance, Ernst and Young.

Non-core revenues account for 3 per cent of railways’ total estimated revenue of Rs 90,626 crore for 2009-10. The advertising revenue target for this year has been pegged at Rs 360 crore. Some of the major initiatives announced by Banerjee that could lead to increase in non-core revenues are establishment of six bottling plants and five sports academies, say experts.