Case Study
J&J Infra is a leading infrastructure developer active in large road and urban infrastructure project. The company recently started metro services in the city of Pune. The metro system was designed to daily carry 4 lakh commuters. Under public private partnership (PPP) programme of the Government, J&J Infra won the right to build, maintain, operate and transfer (BOT) the metro project for a period of 35 years, including construction period of 3 years. The company had bid for the lowest fare per passengers to win the project. As per the terms of the contract the fares can be revised by 50% after 3 years. The contractual agreement also had a 20% revenue sharing provision with the municipal corporation for the sales generated by revenues other than passenger fares. The company financed the project largely through debt raised from the domestic banks. The service was received well by the citizens of Pune. The company only relied on the buzz created by local newspaper to spread the awareness of the metro service. According to the passengers metro trains were comfortable and reliable than bus transport system, but it also reduced the travel time from 70 minutes to 21 minutes. Within a period of 6 months, the daily passenger using the metro service reached 2 lakhs. Daily ridership accounted for nearly 50% of the people travelling on the route. It was not as per the expectation of the company. As a result the company was making losses on the project. The operational expenses formed 90% of the revenues and high interest cost dragged the project into losses. Neither the capacity of the metro system could be increased nor the fares as part of the contractual agreement. The company was also liable to pay heavy penalty in case metro is closed except for maintaince. The management of the company was looking for ways to turn project profitable. Management decided to hire an external consultant to work out ways to open new revenue stream and bring down the costs. The consultant benched-marked revenue generation practices and cost structure of the metros around the world. The consultant had to submit its report on 12th August. As the company hired you as the external consultant and management expects report to be in the form of power point presentation. The management is expected to following question to the external consultant:

Q1) How company can increase the passenger traffic to daily 4 lakhs commuters? ..................1 slides Q2) How metro Infrastructure can be used to develop additional revenue sources? ….………....2 slides Q3) How can company bring down operational costs and fixed costs? ........................................1 slide Note: 1) Participating team can use their first slide to introduce team members. 2) Please use the following name convention for the entries <Institute Name>_<Team Name>


Sign up to vote on this title
UsefulNot useful

Master Your Semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master Your Semester with a Special Offer from Scribd & The New York Times

Cancel anytime.