This gives a brief of railway earnings and its potential..

1. WELCOME
Accounting Reforms – IR,
Performance Costing-
Role of CMA

2. Overview of Railway Accounts &
Finance

3. Total Receipts
Passengers
Other
Coaching
Goods
Sundry
Misc.
Receipts
Subsidy
Safety
Surcharge
Earnings of IR

4. Total Outgo
Operating
Expenses
Appropriation
to DRF
Appropriation
to Pension Fund
Misc Expd
Appropriation
to RSF
OLWR
RRSK
Appropriation
to DF
Appropriation to
Capital Fund
Expenditure of IR

5. BE 17-18 RE 17-18 Budget at a glance Rs. In Cr BE 18-19
188,998.37 187,225.00 Gross Traffic Receipts 200,840.00
500.00 200.00 Miscellaneous Receipts 250.00
189,498.37 187,425.00 Total Receipts 201,090.00
129,750.00 130,200.00 Ordinary Working Expenses 138,000.00
43,600.00 44,100.00 Appropriation to Pension Fund 47,500.00
5,000.00 5,000.00 Appropriation to D.R.F. 500.00
178,350.00 179,300.00 Total Working Expenses 186,000.00
2200.00 1700.00 Miscellaneous Expenditure 2100.00
180,550.00 181,000.00 Total Expenditure 188,100.00
8,948.37 6,425.00 Net Revenue (Receipts - Expenditure) 12,990.00
0.00 0.00 Dividend Payment 0.00
8,948.37 6,425.00 Surplus (Excess) 12,990.00
Utilisation of Surplus (Excess)
2,000.00 1,500.00 Appro. to Development Fund 1,000.00
5,948.37 4,925.00 Appro. to Capital Fund 6,990.00
1,000.00 Appro. to Rashtiya Rail Suraksha Kosh 5,000.00
94.6% 96.0% Operating Ratio 92.8%

6. Actl 11-12 PLAN OUTLAY BG 17-18 BG 18-19
INTL GENERATION
0 0.0% CAPITAL FUND 6000 4.6% 6990
6975 15.5% DRF 1000 0.8% 500
2223 4.9% DF 2000 1.5% 1000
R R Suraksha Kosh 5000 3.8% 5000
9198 20.4% TOTAL 14000 10.7% 13490 9.2%
BUDGETARY SUPPORT
20013 44.4% CAPITAL 39332 30.0% 40088
1060 2.4% Railway Safety Fund 668 0.5%
R R Suraksha Kosh 5000 3.8% 5000
R R Suraksha Kosh CRF 10000 7.6% 10000
21073 46.8% TOTAL 55000 42.0% 55088 37.7%
30271 67.2% IR + BUDG SUPPORT 69000 52.7% 47.0%
14790 32.8% IRFC 21686 16.6%
0 0.0% Institutional Finance 18314 14.0%
0 0.0% PPP 22000 16.8%
14790 32.8% External Resources 62000 47.3% 77422 53.0%
45061 100.0% TOTAL PLAN OUTLAY 131000 100.0% 146000 100.0%

7. CAPEX 2018-19 AS PER BUDGET DOCUMENTS
Rs in crs
GROSS BUDGETARY SUPPORT
(a) CAPITAL 35880
(b) RRSK 15000
(c) Central Road Fund (Safety Fund) 2180
TOTAL GBS 53060
INTERNAL RESOURCES
(a) CAPITAL FUND 5000
(b) DRF 500
(c) DF 1000
(d) RRSK 5000
TOTAL INTERNAL RESOURCES 11500
EXTRA BUDGETARY RESOURCES 81940
(a) New Lines 18735
(b) GC 1649
(c) Doubling 16708
(d) Traffic Facilities 1592
(e) Rolling Stock 30420
(f) ROB/RUB 2000
(g) RE 6300
(h) Other Elec. Works 1000
(i) Workshops 36
(j) Passenger Amenities 3500
TOTAL EBR 81940
GRAND TOTAL CAPEX 146500
(GBS+INTERNAL+EBR)

8. Annual Year Book 2016-17

9. Annual Year Book 2015-16 & 2016-17

10. Financing Plan Expenditure
20%
47%
33%
Internal
Resources
Budgetary
Support
Market
Borrowing
2011-12
11%
42%
47%
Internal Resources
Budgetary Support
Market Borrowing
2017-18
11%
38%
51%
Internal Resources
Budgetary Support
Market Borrowing
2016-17

11. IR maintains its Finance & Accounts under Cash based Government
Accounting in the form and format mandated by Controller General of
Accounts and Comptroller and Auditor General of India.
IR evolved its own classification of Accounts and is a hybrid system
of Accounting by adopting a few aspects of Accrual Accounting.
Linkages of Accrual Accounting were done by means of Suspense
Heads. Traffic Suspense, Stores Suspense, Demands Payable etc. to
capture the accrual impact of revenue and expenditure transactions.
To this extent, the Accounting system of IR is distinct from that of
the Government of India and other Corporate world.
Accounting Model & Changes

12. Accrual Accounting is a new concept, means to achieve an enterprise wide
focus on performance and cost parameters derived from the wealth of data
resident in the accounting system.
Accrual Accounting helps to gain a better understanding of managing
resources and helps in better evaluation of performance in terms of service
costs, efficiency and accomplishments;
Gain clearer insight into how to finance activities; Makes a better evaluation of
the ability to finance activities and to meet liabilities and commitments;
Better assessment of performance, financial position and cash flows of the
entity; Balanced comparisons between alternative deployment of resources;
A B C of Accounting Reforms: Accrual Accounting,
Outcome Budgeting and Performance Costing
Accounting Model & Changes

13. Back to basics:
Accrual Accounting involves recording financial transactions in the
accounting period in which they accrue and arise, whether or not a
receipt or payment occurs.
Cash basis of accounting records revenue and expenditure only when
the money is received or paid out.
Main difference between Accrual and Cash basis of Accounting is the
timing of the recognition of revenue and expenses.
Accounting Model & Changes

14. Railway Accounts vis-a-vis Commercial Accounts
 IR EXHIBITS “OPERATING RATIO” AS THE PARAMETER OF EFFICIENCY AND THAT
TOO ONLY AT THE ZONAL RAILWAY LEVEL.
 THE SAME NOT COMPARABLE WITH NET PROFIT (PBIT OR PAT) IN DEPICTING
TRANSPARENTLY ITS FINANCIAL HEALTH AND FOR BENCH MARKING.
 ’DIVIDEND’ TO EXCHEQUER ON IR IS A MISNOMER AS IT IS PAYABLE IRRESPECTIVE
OF PROFIT OR LOSS .THIS IS MORE LIKE INTEREST ON DEBT IN PERPETUITY WHICH
IS BOOKED TO ORDINARY EXPENSES.
 SIMILARLY ‘EXCESS/SHORTFALL’ IS A MISNOMER.
 ON THE SAME LOGIC, PLB IS NOT BONUS TO EMPLOYEES.
 DESPITE BEING A COMMERCIAL ORGANISATION, A TRANSPARENT, TRUE AND FAIR
PICTURE OF PROFITABILITY IS NOT AVAILABLE IN THE ABSENCE OF OBSERVANCE
OF STANDARD COMMERCIAL ACCOUNTING PRACTICES.

15. Railway Accounts vis-a-vis Commercial Accounts
 THE BALANCE SHEET OF IR DEPICTS BLOCK ASSETS AT THEIR ORIGINAL
COST AND NOT AT DEPRECIATED VALUE (WDV). AS PER PRACTICE
FOLLOWED IN GOVERNMENT ACCOUNTING, IR DOES NOT DEPRECATE
ITS ASSETS IN ITS FINANCIAL STATEMENTS. HOWEVER, IT DEPRECIATES
ITS ACCOUNT AT THE TIME OF REPLACEMENT/RENEWAL OR
CONDEMNATION WITHOUT REPLACEMENT.
 THE SYSTEM FOLLOWED IS TO SET APART AD-HOC AMOUNTS TO THE DRF
BASED ON THE RECOMMENDATIONS OF THE RAILWAY CONVENTION
COMMITTEE.
 THE AMOUNT DECIDED UPON NEED CUM AVAILABLITY BASIS AND NOT
ON ANY SCIENTIFIC BASIS RELATED TO THE INDIVIDUAL OR GROUPS OF
ASSETS.
 THIS GIVES OPPORTUNITY TO THE UNDERSTATE OR OVERSTATE THE NER
REVENUE.
 CONSEQUENTLY, REPAIRS AND RENEWALS FALL INTO AREARS,
NECESSIATING PERIODICAL BAIL OUT BY THE GOVERNMENT.

16. Structure of Railway’s Accounts
 PRESENT ACCOUNTING SYSTEM ON IR IS CASH AND NOT ACCRUAL BASED.
THIS IS IN CONSONANCE WITH GOVT. ACCOUNTING RULES.
 BUT, FOR A COMMERCIAL ENTITY :
 IT DOES NOT GIVE CLEAR PICTURE OF
CURRENT LIABILITIES AND ASSETS.
 IT IS NIETHER TRANSPARENT NOR MEANINGFUL TO OUTSIDERS LIKE
MULTILATERAL LENDING AGENCIES, CREDIT RATING AGENCIES,
FINANCIAL INSTITUTIONS ETC
 FURTHER, PRESENT ACCOUNTING REPORTS ARE NOT
MEANIGFUL TO RLY MANAGERS AT VARIOUS LEVELS.

17. Structure of Government Accounts
and Railway’s position in overall structure
 IR DOES NOT FOLLOW A SYSTEM OF DISCLOSING THE SIGNIFICANT
ACCOUNTING POLICIES WHICH SHOUD FORM THE VERY BASIS OF
PREPARATION OF ANY FINANCIAL STATEMENTS
(EG., ACCOUNTING OF FIXED ASSETS, PROVISION FOR DEPRECIATION AND
LIABILITY FOR PENSION)
 INDIAN RAILWAYS BEING A DEPARTMENTAL COMMERCIAL UNDERTAKING,
PREPARE A PROFORMA BALANCE SHEET AND A PROFIT AND LOSS
ACCOUNT IN SUPPORT OF THEIR APPROPRIATION ACCOUNTS.

18. Classification by Demands for Grants (Demand No.80)
• Railway Board
• Miscellaneous Expenditure (General)
• General Superintendence and Services on Railways.
• Repairs and Maintenance of Permanent Way and Works.
• Repairs and Maintenance of Motive Power.
• Repairs and Maintenance of Carriages and Wagons.
• Repairs and Maintenance of plant and Equipment
• Operating Expenses-Rolling Stock and Equipment.
• Operating Expenses-Traffic.
• Operating Expenses-Fuel.
• Staff Welfare and Amenities.
• Miscellaneous Working Expenses.
• Provident Fund, Pension and other Retirement Benefits.
• Appropriation to Funds.
• Dividend to General Revenues/Adjustments on amortization.
• Works Expenditure.

19. Ordinary Working Expenses
3A General Superintendence & Services on Railways.
4B Repairs and Maintenance of P.Way and Works.
5C Repairs and Maintenance of Motive Power.
6D Repairs and Maintenance of C and W.
7E Repairs and Maintenance of Plant and Equipment
8F Operating Expenses-Rolling Stock and Equipment.
9G Operating Expenses-Traffic.
10H Operating Expenses-Fuel.
11J Staff Welfare and Amenities.
12K Miscellaneous Working Expenses.
13L Provident Fund, Pension and
other Retirement Benefits.

30. Changes in Budget
Demands for Grants merged into single Demand for Indian Railways. Demand of
Ministry of Railways is 80.
Advancement of dates for RE/BE to align with the schedule of Ministry of Finance.
The erstwhile Demands 3 to 13 are now converted as sub-major head 1 to 11.
Earlier Demand 3A is now sub-major head 1.
Earlier Demand 4B is now sub-major head 2
Earlier Demand 5C is now sub-major head 3
Earlier Demand 6D is now sub-major head 4
Earlier Demand 7E is now sub-major head 5
Earlier Demand 8F is now sub-major head 6
Earlier Demand 9G is now sub-major head 7
Earlier Demand 10H is now sub-major head 8
Earlier Demand 11J is now sub-major head 9
Earlier Demand 12K & N is now sub-major head 10
Earlier Demand 13L is now sub-major head 11.
Earlier Demand 16 is now called Capital Segment of Demand 80.

31. Changes in Budget
•No dividend need be paid on Capital provided as Gross Budgetary Support from
General Revenues. No subsidy is available as dividend is withdrawn.
•Railway Convention Committee (Parliamentary Committee) has waived the
Dividend liability even in respect of 2016-17 (though merger took place w.e.f.
01.04.2017).
•Capital at Charge – the Budgetary Support provided to Railways since inception
stands extinguished due to merger.
•Interest on Loan Capital is however worked out just like Dividend by Ministry of
Railways but no amount need be paid.
•No change in details submitted by Zonal Railways to Board. Budget Speech of
Minister for Railways cease to exist.
•Capital Fund, DRF, DF, RSF, SRSF, Pension Fund, Debt Service Fund continue.
•Outlay is the budget allotment for the Financial Year.

32. Changes in Budget
• New Source named Extra Budgetary Resources – Institutional Finance (EBR-IF for
short) has come into being for funding Railway works w.e.f. 2015-16. This borrows
funds from Institutional sources to finance Railway projects for five year period.
This is outside the Vote of the Parliament.
• MOU signed between Ministry of Railways and LIC on 11.03.2015 to provide
Rs.1,50,000 crores over a 5 year period. This borrowing is through IRFC, which
issues Bonds to LIC for amount lent. Indian Railways licence Land to IRFC.
• IRFC will lease the assets created from this finance to Railways for which Railways
will pay semi-annual lease rentals every year at pre-determined rate. For first 5
years interest component of lease charges will be capitalised and paid from 6th
year onwards.
• The Capital component of lease will be paid from 11th year onwards till 30th year.
The interest will be charged to erstwhile Demand 9 (now sub-major head 7) and
Capital repayment booked to Plan Head 2200 (Leased Assets).
• SCR utilised around Rs.900crs during 2015-16 and Rs.623.35crs in 2016-17. This
year, Revised Estimates of EBR-IF funds to SCR is Rs.1421.40crs, which includes
massive amount of Rs.1200crs under Doubling Plan Head.

33. Accounting Reforms – Development of Unit Costs
In the back drop of Accounting Reforms the Zonal Railways should
develop a robust MIS, that would enable to measure actual on board
costs, revenues, profitability, performance & Outcomes of each
activity/line of business or service viz.
At present there is no scientific method of Costing system on the
above lines does not exist.
Passenger and Freight Traffic (class/commodity wise)
Train, Section, Route wise costs including Sub-urban, EMUs, Spl
Trains
Unit Costs against Production Units, Service units, Utilities etc
Geography, location, Zone, Division, Field Units etc.,
 Locomotive, Coach, Wagon, rake, formation wise etc.,
Costs of Accidents, and other abnormalities.
Deposit works of other departments

34. Performance Costing & IR
 A Performance Based Costing system focuses on
performance both financial and non financial instead
of activities.
 It is to support on availability of data for costing
the parameters and enabling the management for
Budgeting the activities accurately.
The basic principle of PBC is to identify the lines of
business or lines of service that add value to the IR
and calculate the related costs for the purpose.
The PBC requires identification of Value Creation
Areas and Critical Success Factors and linking the
costs associated with them.

35. Available services for creating opportunities

36. Approach of Performance Costing
In Indian Railways

37. Performance Costing

38. Performance Costing - ABUC

39. Performance Costing- Out Come Budgeting

40. Performance Costing - Milestones

41. Role of CMAs
in Expenditure/Cost Control
• Development of model Cost Bulletin by the
institute which is suitable for the POH
operations of Rolling Stock i.e. Locos,
Carriages and Wagons.
• Development of model ‘Bench marks’ for
model “Man Power Costing” of operations for
maintenance schedules of various Assets.
• Preparation of unit Costs for determining the
“Standard Costs of Operations” suiting to the
Customer needs.

42. • At Present the total expenditure is distributed to the
jobs under “Fully Distributed Cost” method.
• The Costing system is concentrated at Zonal level
should be extended to Field Activity Centers(Cost
Centers)
• The parameters like Repairs and maintenance cost of
Loco, Coach and Wagon per vehicle, per GTKM, per
EKM etc should be aimed at for cost control under
performance costing.
• This will enable accountability and cost control unlike
at present the system which is followed on incremental
costs.
• The system should enable cost comparison among
periods, between the shops/Units of IR and Trade.
Performance Costing –
Sheds/Workshops & Production Units.

43. Development of Unit costs in Field Units
• It is necessary that Unit Cost of operation of IOH/ROH
maintenance of Rolling Stock of IR is aimed at to fix
Budgetary Targets under the maintenance expenditure.
The Schedule is as under.
• A process of re-engineering among the activities is vital.
• Development of Unit Costs on the above activities.
Type of Rolling Stock Periodical Overhaul ROH/IOH
Wagons 4.5 years to 6 years 28 to 24 months
Diesel Locos 8 Years or 10 lakh kms
whichever is earlier
4 years
Electric Locos 6 to 12 Years or 8 to 18
lakh kms which ever is
earlier
3 to 6 Years or 4 to 10
lakh kms which ever is
earlier
Coaches 12 to 24 Months 12 months

44. Development of Unit costs in Field Units
• The planned/ expenditure under the unit cost of
maintenance of Rolling Stock should become the
Target cost for maintenance schedule and activities
in the Loco sheds, Coaching Depots and Wagon
depots aim for Cost as well as Expenditure control.
• The forecast of Revenue expenditure under various
budgetary stages should based on targets instead of
incremental mode and back work the activities so
that non performing activities are excluded.
• A cost sheet format has to be developed against the
each Minor Head(Activity) linking the Sub
Head(Official) based on the Unit cost arrived at for
each Cost review and to exercise the control.

45. Development of Unit costs in Field Units-
Areas of Operation

46. Development of Unit costs- Field Units
• Development of Unit Costs for recovery of
service cost:
– Railway owned Rolling Stock
– Military owned Rolling Stock
– Privately owned Rolling Stock
– Postal Vans owned by Rly/by Postal department
– Hiring of Saloons and other departmental vehicles
– Loaning/Hiring of Rolling Stock for use of Private
parties/outsiders.
– Hire charges for sparing of M&P
• Sale of Rolling Stock- Valuation of cost.

47. Development of Unit costs - Services
• The Standard Format for recovery of Costs:
Sl.
No
Cost Elements
Actual Cost of
Previous year
Estimated Cost
for the current year
1 Direct Labour
2 Direct Material
3 Shop & General on Cost
4 Freight
5 Storage & Supervision
6 Pro-forma-on-Cost
7 Repairs & Maintenance
8 Profit
9 Contingencies
10 Taxes

48. Standardization of Costing methods
• Development of new techniques in Repairs &
Maintenance of Rolling Stock:
Development of Man Power:
• In the back ground of change in technology and
change in type of Rolling Stock, the matching man
power with complete freedom to adopt strategies
for deployment of men.
• Multi skilling/tasking, movement of staff to the
required areas.
• Jobs identified for outsourcing outside the shops
and outsourcing with in the shops.
• Enabling flexibility to meet the changes in outturn.

49. Standardization of Costing methods..
• Development of new techniques in Repairs &
Maintenance of Rolling Stock:
• Outsourcing: In view of the changed circumstances it
has become inescapable to go for outsourcing under
various circumstances. Reasons:
– Non availability of components/sub-assemblies
– Need to optimize the capacity of the unit
– Introduction of new materials/technology for
which matching man power etc., not available
– Use of standard materials resulting lower costs
– Need for heavy inputs of infrastructure to reduce
the costs.

50. Standardization of Costing methods…..
• Development of new techniques in Repairs &
Maintenance of Rolling Stock:
• Outsourcing works within and outside:
– To maintain safety standards, and also utilize the
capacity of units it is necessary to outsource the
activities with in the workshop aiming overall cost
control.
– Avoiding large scale investment, forming part of
service process in the maintenance.
– Sharing Machines and Man power
– Decision on the supply of components/Materials

51. Adoption of Standard procedures
• Development of new techniques in Repairs &
Maintenance of Rolling Stock:
• Introduction of ERP based maintenance:
– ERP based system for cost optimization
– Linking Material management, M&P management
and other Assets Management.
– Obtaining approvals from authorized inspectors
i.e. RDSO for the scheduling
– Vendor Development/inspection for select items
of components of Coaches, Wagons and Vehicles.
– Selection of alternatives and prototypes.

52. Bench Marking for elements of Costs
• Development of Standards & Unit Costs:
• Benchmarking is based on dynamic and comparative
analysis and thus is a very useful tool to manage
efficient deployment of staff and monitor effects of
improvement in working practices, use of new
technologies and level of out sourcing.
• The Institute Central Command may have meetings
with Railway Board/MOR to have direction to all units
of IR for the requirements from the respective
chapters to associate IR field Units engaging
professionals to achieve average of the objective of
Development of Unit Costs and Indian Railway
Benchmarks.
• This is the right time to pursue.

53. Role of CMAs in fixing
fares & freight rates for IR.
• Development of model BEPs for each
commodity of the traffic carried in each Zone,
Region and to SEZs, by the institute which are
recommendatory to RDA(?) for further
recommendations for fixing the rates.
• Development of model ‘Tariff Structure for
each commodity” in each Zone.
• Preparation of “Annual Bulletin of Cost
Benefit analysis” of Passenger Services
instead of working on Averages.

54. A model sketch for apportionment of Electrical
Multiple Unit Services Cost among the other services.

55. A model sketch for apportionment of Coaching
Services Cost among the other services.

56. A model sketch for apportionment of Goods
Services Cost among the other services.

57. A CMA can be resource person to the IR at various
levels/Units of Indian Railways .
Who should bell the Cat?

58. Performance Costing lead to
Outcome Budget & - A Game changer
• Budget of field units should be connected to
activities and outcomes.
• Quantitative assessments of estimate of costs
and accomplishments is necessary
• This will eventually aim to improve
effectiveness and efficiency in public
expenditure.
• Effective cost control mechanism to be set up.
58

59. Examples of Budget proposals and
expected outcomes
S. No Activity for which
Budget is asked
Estimated Cost (Rs.
in lacs)
Outcome
1 Earthing of signals
to reduce the
incidences of failure
due to frequent
lightning (in nos.)
30
300 lacs 1. Reduced signal
failures in the
sections
2. Enhanced
GTKMs/NTKMs
for freight trains
3. Increase coach
kilometres
/PKMs trains
4. Savings per
month.
59

60. Examples of Budget proposals and expected outcomes
S. No Activity for which
Budget is asked
Estimated Cost (Rs.
in lacs)
Outcome
2 Fitment of fuel
efficiency kit in
Diesel Locomotives
45 lacs per kit
135 Crores
1.Improved SFC
2. Savings of HSD oil
in liters per month.
3. Savings in
monetary terms in
Rs. Lacs per month
3 Platform extension 42 lacs each
100 Crores
1.Increase in no. of
originating
passengers.
2. Revenue
expected to be
increased.
4 Improved platform
lighting
35 lacs at each stn.
60 Crores
1. Energy savings
in units
2. Savings per
month 60

61. PERFORMANCE UNITS OF REVENUE
DEMANDS OF IR
DEMAND NAME OF THE DEMAND PERFORMANCE UNITS
4 Repairs & Maintenance -
Permanent Way
(i) NO. OF DIRECT STAFF
(ii) Equated track kms.
(iii) Linear metres of water way
(iv) 10 sq mts. of plinth area
5 Repairs & Maintenance -
Motive Power
(i) NO. OF DIRECT STAFF
(ii) ENGINE HOLDINGS
(iii) REPAIR UNITS OF POH,
RUNNING REPAIRS IOH,
SPECILAL REPAIRS AND OTHER
REPAIRS.
61

62. PERFORMANCE UNITS- contd..
DEMAND NAME OF THE DEMAND PERFORMANCE UNITS
6 Repairs & Maintenance –
Carriage and Wagons
(i) NO. OF DIRECT STAFF
(ii) RUNNING REPAIRS FOR VEHICLE
UNITS FOR CARRIAGES
(iii) POH, SPECIAL/OTHER REPAIRS IN
REPAIR UNITS FOR CARRIAGE
UNITS(SUB ITEMS OF WAGONS AND
EMUs)
7 Repairs & Maintenance –
Plant and Equipment
(i) NO. OF DIRECT STAFF
(ii) NO. OF MACHINES AND EQUIPMENT
(iii) NO. OF EQUATED SIGNAL UNITS
62

63. PERFORMANCE UNITS – contd..
demand Name of the demand Performance units
8 Operating Expenses –
Rolling stock and
Equipment
(i) RUNNING STAFF ( IN 000s)
(ii) No. of ENGINES
(iii) ENGINE HOURS (IN 000 s)
9 Operating Expenses -
Traffic
(i) TOTAL STAFF
(ii) STATION OPERATIONS- NO. OF TRAINS
(iii) YARD OPERATIONS –NO. OF SHUNTING
ENGINE HOURS
(iv) TRAIN OPERATIONS- NO. OF TRAIN KMs
63

64. PERFORMANCE UNITS – contd..
DEMAND NAME OF THE
DEMAND
PERFORMANCE UNITS
10 Operating Expenses -
Fuel
(i) PASSENGERS AND GOODS
(ii) TRAINS IN MILLIONS GTKMs
(iii) SHUNTING (000 EKMs)
(iv) DEPARTMENT AND MISC.,- OOO EKMs
11
12
Staff welfare and
Amenities
Miscellaneous
Working Expenses
(i) NO. OF STUDENTS
(ii) NO.OF EMPLOYEES
(iii) 100 SQ mtrs. OF PLINTH AREA
(i) SECURITY-NO . OF STAFF
(ii) COMPENSATION CLAIMS NTKMs AND NO.
OF CLAIMS
(iii) CATERING- PKMs
64

65. OUTCOMES FOR PROJECTS
• New Lines – Expansion of network,
quantities/KMs as budgeted and as completed
will be compared.
• Similarly, for Doubling and GC works
• Rolling stock – coaches, wagons and locos- to
augment carrying capacity
• Automatic block signaling-Augment line
capacity, safety and reliability.
65

66. OUTCOMES FOR EARNING AREA
• Augmentation of Train services- Creating
additional carrying capacity by creating
additional berths – leads to optimum
utilization of resources and increase in
Revenue to IR.
• Augmentation of Coaches – Same as above.
During the year 2017, (up to October) 614
coaches added leading to 32812 additional
berths in trains.
66

67. OUTCOMES FOR EARNING AREA
VITAL CARGO FLOWS
• COAL- Leads to adequate and timely supply of
coal to Power house, coal stocks in power
houses increased due to better transportation.
• Fertilizers – leads to sustaining agricultural
production
• Cement and Steel – Bulk movement leads to
infrastructural development.
67

68. WHAT IS ABC?
• Activity Based Costing. It assigns indirect costs to appropriate
destinations such as products, customers, channels etc.
• It traces expenses to proper origin.
• Costing is a method of allocating indirect costs to
products/outputs.
• ABC assigns overhead costs to the products or services based
on activities used.
• ABC is a costly, time-consuming and complicated system. But
benefits are many.
• Since Railways have decided to go for Accrual Accounting and
Outcome Budgeting under Accounting Reforms, Performance
Costing through ABC has to be included.

69. Why ABC?
• ABC is essential for cost control.
• For Pricing competitively.
• For Budgeting.
• For Improving service levels.
• ABC is pre requisite for improving business
processes and re-engineering.
• It helps to decide on discontinuing non-
profitable routes/services.

70. ABC train flows like this………….
STEP 1: PUT ALL THE RESOURCES SUCH AS PEOPLE,
FACILITIES, EXPENDITURE
STEP 2: TRACE HOW THESE RESOURCES ARE
CONSUMED BY ACTIVITIES
STEP 3: LINK HOW THE ACTIVITIES ARE CONSUMED
BY COST OBJECTS (PRODUCTS, CUSTOMERS,
CHANNELS (CAPACITIES) ETC)

71. How ABC is used?
• ABC is used for product costing.
• Profitability of operations/routes.
• Customer profitability by offering competitive pricing.
• To bring operational improvement
• For resource planning.
• For scientific costing.
• For accurate information on costs and profits – for
decision making. Cost reduction, improve profits.
• To identify least and most profitable product, service,
customer etc.

72. How ABC is used for decision
making
• ABC is arrived, by Root cause or value
analysis and is done to find out the drivers of
the costs.
• Once drivers are known, action can be taken
to improve it.
• ABC is like thermometer which tells the
temperature. Then Doctor will analyse the
cause of high temperature and prescribe
medicines appropriately.

73. For whom is ABC suitable?
• ABC is suitable for Aviation, Transport, Banking and
other Service sectors.
• ABC helps measure costs and profitability for
Products, Services, Customers, Processes etc.
• Companies which have implemented ABC in India
are TCS, BEML, Bharat Forge to name a few.
• ABC is essential for large and mature
companies/organisations.
• ABC provides answers to the questions. What are
customer costs, Who are our best customers and
who are worst.

74. Road map to implement ABC in Railways.
• Identify activity beats as cost centres.
• Identify activities under cost centres.
• Define activity drivers i.e. measurable output/sevice
units provided by the cost centre.
• Identify interface with computerised application for
service output.
• Identify direct costs ie. Direct Labour, Direct materials
etc.
• Identify indirect costs ie., Operational overheads, Office
and Administrative overheads, Central Overheads etc.

75. Road map to implement ABC in Railways.
• Select cost allocation basis such as Kilometre
maintained, Square meter of area maintained,
GTKM etc.
• Compute total cost and rate per unit of output.
• Compare unit cost and identify high cost
activity units.
• Identify cost curtailment target and related
outcome.
• Outcome in numerical and quantitative terms
to be included in Budget formulation

76. PERFORMANCE UNITS IN REVENUE EXPENDITURE
DEMAND 4B DEMAND 5C
Engineering Dept. Mechanical & Electrical Departments
ACTIVITY UNIT OF PERFORMANCE
ACTIVITY
UNIT OF PERFORMANCE
Staff Number of direct staff Staff Number of direct staff
Maintenance of P.Way ETKMs
Diesel Locos – Running
repairs
Engine Holdings
Maintenance of Bridges
Linear meters of
waterway (in 000s)
Diesel Locos –POH Repair unit (Nos)
Maintenance of Service
Buildings (other than
staff quarters and
welfare buildings)
10 Sq. Mtrs of plinth
area.
Diesel Locos –IOH,
Special & Other Repairs
Repair unit (Nos)
Electric Locos – Running
repairs
Engine Holdings
Electric Locos –POH Repair unit (Nos)
Electric Locos –IOH,
Special & Other Repairs
Repair unit (Nos)

77. DEMAND 6D DEMAND 7E
Mech. & Electrical Departments All Departments
ACTIVITY UNIT OF PERFORMANCE ACTIVITY UNIT OF PERFORMANCE
Staff Number of direct staff Staff Number of direct staff
Carriages – Running
Repairs – Outturn in
sick lines
Vehicle units
Plant & Equipment
(Mech)
No. of
Machines/Equipment
Carriages – POH Repair unit (Nos)
Plant & Equipment
(Signalling)
Zonal Equated Signalling
Units
Carriages –Special &
Other Repairs
Repair unit (Nos)
Wagons – Running
Repairs – Outturn in
sick lines
Vehicle units
Wagons – POH Repair unit (Nos)
Wagons –Special &
Other Repairs
Repair unit (Nos)
EMU – Running repairs Vehicle units
EMU – POH Repair units
EMU – IOH, Special &
Other Repairs
Repair Units

78. DEMAND 8F DEMAND 9G
Diesel & Electric Operating, Commercial, Engineering Departments
ACTIVITY UNIT OF PERFORMANCE ACTIVITY UNIT OF PERFORMANCE
Running Staff (Diesel &
Electric)
Engine Hours ( in 000s) Staff Total Staff
DSl& Elec.: Shed & Yard
Staff (Excl. Fuel Orgn.)
No. of engines
Traffic & Movement
Inspectors
No. of Trains (in 000s)
Dsl & Elec.: Other
operating expenses incl.
Lubricants &
consumable stores
Engine Hours (in 000s) Yard Operations
Shunting Engine Hours
(in 000s)
C&W – Running &
Inspection staff
Train Kilometerage (in
000s)
Train Ticket checking
staff (other than squads)
Passenger Train KMs ( in
000s)

79. DEMAND 10H DEMAND 11J
Mech. & Electrical Departments All Departments
ACTIVITY UNIT OF
PERFORMANCE
ACTIVITY UNIT OF
PERFORMANCE
Diesel Traction –
Passenger &
Proportion of mixed
GTKMs ( in millions) Educational Facilities No. of students
Diesel Traction –
Goods & Proportion
of mixed
GTKMs ( in millions)
Medical, Health &
Welfare services
No. of employees
Shunting Engine KMs (in 000s)
Canteen & Other staff
amenities
No. of employees
Departmental &
Misc. services
Engine KMs (in 000s)
Repairs &
Maintenance of
Residential & Welfare
Buildings
100 Sq. Mtrs. Of
plinth area
Electric Traction –
Passenger &
Proportion of mixed
GTKMs ( in millions)

80. DEMAND 12-K
Security, Personnel, Commercial
Departments
ACTIVITY UNIT OF
PERFORMANCE
Security No. of Posts
Compensation Claims NTKMs (in millions)

81. Annual Year Book 2016-17

82. Annual Year Book 2016-17

83. Annual Year Book 2016-17

84. Annual Year Book 2016-17

85. Annual Year Book 2016-17

86. Annual Year Book 2016-17

87. 87
Thank You
Ph.98660 79807 venkataraghava.ponnaluri@gmail .com