Financial Daily from THE HINDU group of publications
Tuesday, Jan 29, 2002
Logistics - Railways
Marketing - Strategy
`Railneer' to quench commuters' thirst
NEW DELHI, Jan. 28
THE lucrative and possibly single largest captive market for packaged water, the Indian Railways, seems to have gone beyond the reach of corporates, currently battling it out in the estimated Rs 1,000-crore bottled water segment.
Pouring water on the plans of the existing players is the public sector entity, Indian Railway Catering and Tourism Corporation (IRCTC), which is firming up plans to enter the fray under the Railways own brand name - Railneer.
The mandate for manufacture and supply of ``pure quality'' mineral water was given to IRCTC by the Railway Minister, Mr Nitish Kumar, himself following a litany of complaints on the quality of packaged water supplied to rail commuters and at stations.
Quality checks on the Northern Railways revealed that at least 30 per cent of the water samples tested were sub-standard.
At an all-India level, close to 20 per cent of the samples were found to be defective.
Besides meeting the basic requirement of rail commuters, Railneer could earn some extra revenues for IRCTC.
"Based on demand and consumption patterns, we hope to capture at least 20 per cent of the market segment for packaged mineral water,'' Mr Nitish Kumar said.
Several manufacturers currently supply packaged water of different brands to stall vendors and catering contractors.
Tenders are floated and based on price bids; vendors and catering contractors tie up with the manufacturers.
While there is really no estimate of the number of mineral water bottles sold at stations, which could run into lakhs, the number works out to around 1,000 bottles on a Shatabdi and close to 1,400 on a Rajdhani train.
With IRCTC now having been asked to speed up completion of work on this project, Railneer will be substituting other brands.
This, of course, is a minor deflection from IRCTC's original mandate, which was to take over the entire catering of the Railways.
According to Mr M.N. Chopra, Managing Director, IRCTC, talks have already been initiated with equipment manufacturers.
"The game plan entails identifying Railway lands, checking out the water quality on these lands and tying up with the equipment manufacturers,'' he said.
Officials reckon that the venture would turn out to be a money-spinner, given the huge premiums on water. The option of marketing Railneer outside stations and trains is not being foreclosed either, if the business proves to be lucrative.
Mr Ramesh Chauhan of Parle Bisleri Ltd told Business Line that Bisleri too had supplied its brand of packaged water on select trains and in different regions in the past.
"Since the tender system was started, only those quoting at low prices got the deal and we rarely got it. But that had not stopped us from participating in the tender process,'' he said.
It definitely is a very large market and according to the Railway Ministry, it takes about 200-odd brands to service all the trains across the country, he added.
"The move may help standardisation of the water brands on the Railways across the country. However, it would be a while before the logistics of supply gets ironed out,'' a representative of an MNC food company said.
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