Report on revenue loss due to running of rejected BOXN wagons!

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ananth

Report on revenue loss due to running of rejected BOXN wagons!

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Posts: 904

(10/22/08 22:11:00)

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This is an attempt to highlight the leakages in our train operations which have huge financial implications but often go unnoticed. Please go through this text at leisure (as it is 4 pages long) and comments/criticisms are welcome. There are certain assumptions which have been made to ascertain the financial loss due to detentions, which are a little subjective mainly due to lack of data in the desired format

A REPORT ON FINANCIAL LOSS INCURRED ON ACCOUNT OF CARRYING EMPTY REJECTED BOXN WAGONS FROM THE KORBA AREA

Efficiency of transportation of freight and passengers by rail depends on the quality of three inputs -

Path, which is the permanent way,
Capacity, provided by the coaches and wagons and
Motive power, provided by the locos

Track and motive power are more or less reliable factors, as they have a prescribed schedule of maintenance and are not prone to frequent failures. But it is the quality of wagons, which is of serious concern, which can hamper the growth of freight traffic in Bilaspur division, especially because it is a freight intensive division which single-handedly contributes about 13% of the freight loading of Indian Railways.

In Bilaspur division, the Korba area is the loading hub, comprising of 15 sidings, of which 12 are colliery sidings belonging to M/s South Eastern Coalfields Ltd. On an average, about 30 rakes are loaded daily in these 12 colliery sidings, including about 18-20 from the four loading lines of Junadih siding. This amounts to 4425 FWUs per day, which is about 40% of the total loading done in the division. It also amounts to originating earnings of about Rs.2300 crores per annum from this area alone.

So the quality of empty wagons being placed for loading is extremely crucial for faster loading and drawal of loaded rakes. During an inspection of Korba, it was noticed that there was a major problem with regard to rejected wagons running empty to their destinations. This is a serious issue as it has tremendous financial implications in terms of loss of revenue. So a study was conducted by the undersigned on the loss of revenue caused on this count for the Korba area alone. It may be clarified that Audit had carried out a study and raised an Audit Para on this issue. This is a study carried out independently, even going into the causes of the problem and possible remedies.

Facts of the Problem:

The data made available from the office of the Sr.DME/BSP reveals the following facts about the extent of the problem in the Korba area.

Month	April 08	May 08	June 08	July 08	Aug 08	Sept 08
No. of rejected wagons	516	487	557	600	714	663

It can be seen from the above table that the average number of rejected wagons running empty to their destinations stands at around 590. The financial loss on this count is as follows:

Average number of rejected wagons running empty - 590
Total number of tonnes of loading lost on this count - 34,810 (assuming every rake carries 3200 tonnes)
Average yield per tonne on S.E.C.Railway - Rs.663.61
Total loss of revenue per month - Rs.2,31,00,264/-
Total loss for the last 6 months - Rs.13,86,01,585/-

There is also an additional loss incurred on account of the detention caused by other damaged wagons, which are repaired after placement on the loading line. The figure of these wagons is almost the same as those as rejected wagons. The average number of such wagons for the period from April 2008 to September 2008 was 649. Though there is no record of what would be the average time taken to repair each wagon, even if we take it as 20 minutes, it amounts to a loss of 4327 wagon hours. Again though no records are available to ascertain as to how many rakes were affected, the general trend, as ascertained by Sr.DME, is an average is about two defective wagons per rake. This would indicate that about 325 rakes are detained on account of defective wagons and would entail a loss of about 108 engine hours. An attempt has been made below to convert these into financial terms.

The cost per wagon hour and engine hour have been taken from the calculations made for determining the ROR in PWP proposals for PH-16.

Cost per wagon hour - Rs.81
Financial loss - Rs.3,50,487/- per month
Cost per engine hour - Rs.7730
Financial loss - Rs.8,34,840/- per month
Total wasteful expenditure incurred - Rs.11,85,327/- per month

Hence the total financial loss per month = Rs.2,31,00,264+Rs.11,85,327 = Rs.2,42,85,591/-

Total financial loss for 6 months till September 2008 = Rs.2,42,85,591/- x 6 = Rs.14,57,13,456/-

Besides this, the hauling of empty wagons in a fully loaded rake has got serious implications on safety as well. Application of emergency brakes may cause an empty wagon between two loaded wagons to derail and cause a serious dislocation of traffic.

Causes of the Problem:

The main causes for rejection of the wagons by the siding authorities are related to the problem with door closure, floor sheet damage and side panel damage. These above damage to wagons are caused due to the following reasons:

Damage caused due to negligence in loading operations by the sidings is a major concern. The pay loaders used for loading often hit the side panel in order to finish the loading faster. The problem is more during the monsoon when the coal load lifted by the pay loader sticks to the bottom and the pay loader then dashes the arm against the side panel so that the coal stuck inside falls into the wagon.

Damage is also caused due to negligence at the time of unloading in various power plants and industrial sidings. The damage is caused by grab cranes, tipplers and by pay loaders. Sometimes, the gripping of the tippler is not proper and that can damage the side panel. The arm of the pay loaders, in order to salvage the coal stuck on the floor of the wagon, strikes the floor sheet with some speed leading to cracks and holes in the floor sheet.

Inadequate and poor quality of supervision of loading and unloading operations by the Railways is also one of the main reasons. If there is a presence of Railway staff at the time of loading and unloading, there will be a deterrent effect on the part of the siding authorities and the operations will be carried out with more care without damaging the wagons. The Railway administration also is reluctant to act tough against the sidings and levy punitive charges whenever such damage is caused to our assets.

Another major factor causing damage to the wagons is miscreant activity, associated with theft of coal. Miscreant activity of this kind normally takes place at the periphery of the PSU sidings and at places where detention of loaded rakes normally takes place at interchange points, junction lines and crossovers. The miscreants use crude tools like crowbars, spades, hammers etc. and cause damage to the wagon doors and side panels.

Means to combat these problems:

· The solution to most of the problems above lies in strengthening our supervisory mechanism of loading and unloading operations. The Operating and Mechanical departments should come out with ways to strengthen the supervision.

· We should also counsel and take up with siding authorities on proper use of loading and unloading equipment. We should act tough whenever such damage is caused to our wagons and levy damage and deficiency charges as per rule.

· Since we know the main areas where miscreant activity takes place, patrolling should be intensified in such areas and the results should be closely monitored in terms of arrests made, prosecutions effected etc. We should also take up with the state government the issue of removal of these slums and unauthorised structures which come up by the side of the track and indulge in these activities. If these slums cannot be removed then we should take up the intensification of policing in such areas with the state government to help curb the menace of coal theft and consequent damage of our wagons.

· In order to effectively repair the wagons found defective, portable welding-cum tool vans should be deployed at major loading points so that many of the common defects found in the wagons can be rectified within a short time. If such vans or trucks are not available in required numbers, they should be hired using DRM's powers.

The solutions suggested are of course, not very easy to implement but sustained initiatives in that direction, as suggested above, should be attempted so as to minimize the problem to a large extent. The solutions are also not the quick-fix type ones and the results will take a reasonable time to bear fruit, provided consistent efforts are made in the lines suggested above. There also needs to be a shift in our attitude towards the problem where we should refuse to accept such leakages in our revenue and incurrence of wasteful expenditure. I would like to end only with the sincere hope that the Railway Administration addresses the problem in an effective manner and help plug these massive leakages in our revenue.

Last Edited By: ananth 10/22/08 22:15:41. Edited 1 time.

Govindu96

Iron ore here

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Posts: 18

(10/23/08 03:40:54)

Dear Ananth,
Same is the story here for iron ore loading and coal unloading.

Govindu.

ananth

Rejected wagons!

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Posts: 905

(10/23/08 20:57:06)

Then my advice is not to keep quiet, Govindu. Make a noise about it and I am sure a Sr.DFM can make the noise heard by all who need to hear. I fear that the damage which can be caused by iron ore loading can be more than what can be caused by coal. I think all Sr.DFMs of freight-intensive divisions like Hubli, Chakradharpur, Adra, Waltair, Dhanbad, Asansol etc. should study this problem and assess the financial loss. The assessment made by me is very much on the lower side as I have not done a precise valuation of the loss caused due to detentions. And detentions on a loading line causes a greater loss as if the rake is detained for 3-4 hours for repairing wagons, it can lead to loading one or two rakes less during that day. And a rake less loaded means a permanent loss of revenue of about Rs.23 lakhs per rake as far as coal is concerned. And what bothers me is the attitude among many as if all this money comes cheap to Railways. I am of the opinion that all such leakages in train operations causes greater damage to Railways than the higher rates the engineers justify to execute works. And all of us, or at least most of us, seem to be more bothered about the latter.

I was discussing this issue with my FA&CAO yesterday and he, having been a DRM of an important division like Kharagpur, felt that all Sr.DFMs should spend one day every fortnight inspecting field units - either a station, a crew lobby, a PWI unit or even a goods shed or a loading point. There are a lot of inefficiencies in our train operations which often escape our attention if we sit in our offices. And there are a lot of statements generated by the executive departments like Operating, Mechanical, Electrical (Operations) etc. which highlight such inefficiencies and all these have serious financial implications. It is these inefficiencies which can put great strain on our budgetary targets. For example, I have made a conservative assessment that an hour of detention of a goods rake costs the Railways about Rs.12,500/-. If we can get the data on detention from the Operating Department, we will find that we are wasting lakhs of rupees per day. Not that it is possible to run trains without these detentions but they can certainly be minimized. Trains may be unnecessarily detained based on the decision of a Dy.Controller, who may not understand the financial implications of such detentions. Not that the executive branch officers are not concerned about these detentions. But if we point out the financial impact of such detentions to our colleagues in the division, it can help improve the quality of train operations and bring down the cost of transportation.

Ananth
Sr.DFM/BSP

pankajp

meetings

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Posts: 320

(10/24/08 00:48:28)

Respected Ananth Sir

Please make a similar study on wastages caused by numerous meetings.

It is time to have two branch managers in division, one nominated for attending all the meetings and the other one attending to field problems and solving them.

Your study is praiseworthy and is full of What "SHOULD" be done!

ananth

Rejected wagons!

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Posts: 906

(10/27/08 22:29:22)

Pankaj, thanks for the compliments. Let me tell you that my assessment of financial loss is very much on the lower side. And coming to meetings, various divisions have got different practices. In Bilaspur division, where the workload of most of the branch officers is heavy (except Accounts), meetings are completely need-based. No regular punctuality meetings are held. We have a safety review meeting every month which lasts for a couple of hours.Actually, it entirely depends on the DRM. Some of them have a fancy for holding meetings while like the ones I have worked under, do not like to waste the time of officers. And even when meetings are held, only those officers are called whose presence is essential and if the toipic is such is such that each officer is to briefed separately then the officers are called by turn and not all at a time. This saves time and enable officers to attend to and dispose their work/files faster.

Ananth
Sr.DFM/BSP

RAOCS

Rejected BOXN wagons

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Posts: 1

(10/29/08 21:48:31)

My Dear Ananth,

That's a good piece of work.

Now make the study incisive and effective so that it is not dismissed lightly. Provide answers, presumptuous or plausible, to 'whodunit'. Dredge out facts and figures - numerical ones and ones with tissue, bone and intent (to cheat) - supported with documentary evidence. Story complete. And you have not only the corpus delicti (body of offence), but also its perpetrators - by their short curlies.

It requires balls and a bit more. Keep going and best of luck

freefall

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Posts: 183

(11/01/08 03:07:21)

RAOCS: Allow me to disagree with you.

I can tell you from my experience that if the purpose of the exercise is to bring real and long term improvements, then 'whodunit' is the most counter productive strategy. First: inefficiency is different from malafide. And second: even if the malafide is noticed, it is the jurisdiction and responsibility of executive branch officer to determine 'whodunit'.

Departmental lines are sacrosanct in our working and when you violate them, the exercise soon degenerates into a battle of turf between two departments. Instead of improving upon the situation the other department makes every effort to rationalize the existing practices as the only possible alternative. Rest assured that they also have enough justification in their arsenal.

I have seen oneupmanship attempts go dirty. Finance officer put the blame on executive as per his study. Executive prepared another report of revenue loss due to Finance officer's inefficiency/ delay etc. and sent the report to Audit, and Vigilance. Finance officer hit back by involving his batch mate in CBI. Lot of dirty linen was washed with no productive results. In the mean time the whole purpose of the original study was lost.

The value of such study is that it reveals the system inefficiencies and operational gaps that lead to revenue loss. System inefficiencies can be fixed only through collective effort. If the entire problem is malafide intentions on part of certain individuals, then further inquiry should be handled by the reporting officer of the delinquent employees- not the Finance officer.

Last Edited By: freefall 11/01/08 03:34:11. Edited 1 times.

RAOCS

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Posts: 2

(11/02/08 22:13:49)

You are right freefall; the exercise in 'whodunit' always descends to inter-departmental bickering. We value narrow sectarian, even departmental, loyalty over 'truth'. However, few who value 'truth' and remain undaunted in its pursuit are the heroes one looks for.

ananth

Rejected wagons!

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Posts: 907

(11/02/08 23:43:42)

Firstly, Rao sir, thanks a lot for the words of encouragement. Freefall sir, you are bang on regarding the purpose of my study. It is not to nail anyone or settle any scores but to highlight how much these deficiencies cost us in financial terms. I am of the opinion that all my branch officers are responsible and the ones concerned with the above problem are equally worried about this problem. The Sr.DOM is worried because his loading comes down and the empties are wasted while the Sr.DME is also concerned because proper maintenance of wagons is his core responsibility. I would say that the above problem is one of the ineffciencies in our system which we should collectively rectify. There may be an element of malafide in the rejection of wagons but the extent is probably negligible.

The problem is aggravated, in my opinion, basically because we have given a long rope to our sidings and hesitate to deal strongly with them. When the empties are placed on the loading line and M/s SECL doesn't have adequate coal stock ready to be loaded, the siding in-charge uses this as an opportunity to delay the loading operation so that they get adequate time to build up the coal stock on the loading platform. By the time the siding authorities inform the ASM about the defective wagons and the information in turn reaches the C&W staff, the siding has gained adequate extra free time for loading. Secondly, everytime the siding causes damage to our wagon, they dispute and never agree to the damage charges we levy against them. But can we take strong action against them? We can't because our loading gets affected directly. And while there are railway staff present at the loading point, there are none at the unloading point. The presence of railway staff can have a deterrent effect on the siding autorities.

Another aspect of revenue loss I have missed out is the loss of loading capacity due to detentions on the loading line on account of defective wagons. For example, in ideal conditions during the peak loading season, we can load 8 wagons one one loading line in Junadih siding as the time taken from the placement of one empty rake to the completion of loading, drawal of the loaded rake and placement of the next empty rake takes about 3 hours. And if there is a detention of a rake for 3 hours on account of repair of defective wagons, there is a revenue loss of one rake or nearly Rs.22 lakhs. So ensuring the formation of a 'fit' rake and reviewing the frequency and quality of wagon examination is an aspect we need to look at for minimizing the problem. This is a delicate issue as increasing the frequency of rake examination also leads to the detention of empty rakes, which also has got financial implications. So a balance needs to be drawn on this issue.

But one thing about which I am certain is that there is a lot of knowledge to be gained and a lot to contribute to the system if we finance officers move out on inspections - inspections, which need not be regular 'accounts' inspections but 'executive' inspections, done with a view to study system deficiencies and suggest ways to overcome them. After all, we are all eating from the same plate called Indian Railways.

Ananth
Sr.DFM/BSP

Last Edited By: ananth 11/02/08 23:47:49. Edited 1 times.

prashant73

Computation of loss

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Posts: 26

(11/16/08 04:04:05)

Hi Ananth,

Congratulations for carrying out your studies and inspections. What has been the outcome? Or is it too early for that? Was your report discussed and deliberated upon in your division? Has there been any system improvement since then? If it has then that is a great achievement. And you deserve all the credit. But if it does not have the desired impact on the systems and processes, then we need to ponder why? So do keep us posted on the outcome of your report.

To tell you honestly, I did not read the entire text but quickly glanced through and got a sense of what it is. And that is exactly, how your DRM/FA&CAO would also have reacted. A one page executive summary with bullet points (highlighting core issues) is very useful in such cases.

This study resembles a typical Part 1 Audit report carried out by our audit brethren. The losses computed in bulk of audit reports are notional losses.

The loss computed is based on carrying empties of rejected wagons. If there was no other alternative in the prevailing circumstances then you have to ask yourself whether it is a real loss or notional loss. There would always be some defective wagons in the system as dynamic and huge as IR (because, the cost of ensuring 100% fit wagons would be very high and prohibitive). So we may decide to make do with perhaps 95% fit wagons and work them in the system. If we spend too much time in Repair and Maintenance of wagons, then we would lose a huge chunk of revenue due to unavailability of wagons. You may have already delved on this aspect.

My suggestion for system improvement is based on my understanding that, during peak traffic season we are unable to service all the demand, while during lean traffic season, there is insufficient demand for wagons. If we coincide our lean traffic season with the PEAK REPAIR AND MAINTENANCE cycle and our peak traffic season with LEAN REPAIR AND MAINTENANCE cycle, then we can ensure maximum availability of fit wagons at all times. And so the root cause of running defective empties would be taken care of.

Best wishes,
Prashant Nikam
IRAS-96

ananth

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Posts: 910

(11/17/08 04:28:55)

Prashant, thanks for responding. I do agree that my study is something like a study done by Audit. Let me tell you that with the kind of loading done and the anticipated growth of traffic on my division, the loss assessed is more real than notional. Both my Mechanical and Operating counterparts are concerned about this and are doing something about it. But I am of the opinion that unless the problem is quantified in financial terms, it will not get the kind of attention it receives. It was an attempt to quantify the approximate leakage of revenue and wasteful expenditure due to detentions on account of defective wagons.

I have discussed the problem with FA&CAO who has offered me some insight into the problem as he was earlier DRM at KGP. He said that there will be defective wagons running in the system, considering the scale of operations. But we have to see to what extent this problem can be minimized. My DRM has promised to discuss the problem shortly.

I have tried to get into the causes of the problem like where we have been slack, in what way we can improve our wagon maintenance and also spare a thought about how we can check the menace of miscreant activity.

I think your suggestion of peak maintenance during the lean season is a good idea and we can see how this can be implemented here. Probably , we need to also have a good re-look at the rake examination schedules of all wagons, including our premium and CC stock.

Ananth
Sr.DFM/BSP

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