Is it profitable?
Yes, it makes sense with the financing terms given by Japan
Japan will loan India Rs. 79,000 cr. for 50 years at 0.1%
Interest per year 79 crores.
The project cost is about 98,000 cr. over 7 years, with 500 kilometer of railway lines laid
Assume 36 trips per day, in each direction – total 72 trips.
Assume 1,000 passengers per trip - 72,000 passengers a day.
At a ticket price of Rs. 3,000 per trip, that’s about Rs. 21 cr. of revenue per day.
Assume that occupancy only for working days, about 250 days in a year giving about Rs. 5,000 cr. of revenue.
Assume 20% gross profit EBIT – Rs. 1,000 cr. of pre-interest profit per year.
RS. 79 crore interest per year can be paid.
The principal amount per year, after the 15th year, will be about Rs. 2,000 cr. per year.
It can be paid out of depreciation and EBIT. Railways have additional sources of income from monetizing station space and facilities.
This initial project will reduce cost for further projects like Mumbai - Pune and Ahmedabad - Delhi. Country has to be connected through high speed trains.