It's the rail to r(et)ail revolution

NEW DELHI: Get this: The Indian Railways has nearly 7,000 stations, 300 railyards and 2,300 goods sheds along 63,000 km of tracks criss-crossing India. And 7 cinema halls. This last and least-known railway asset is the vanguard of the latest Indian Railways venture: to offer retail biggies a chance to convert spaces in and around their properties into profitable ventures.

With an estimated 40,000 hectares of railway land lying unused currently, the Indian Railways is chugging along with plans to offer less-used spaces (like their cinema halls in 7 cities, for instance) to retailers like Reliance, Bharti-Wal-Mart and Pantaloon for warehousing and cash & carry ventures. The advantages are obvious: spaces like cinema halls and sheds are ideal for back-end retail work due to their closeness to railway stations for loading and unloading of goods.

“Big retail companies are in talks with us for taking various real estate spaces across the country, and these cinema halls are one of them,” says a senior Rail Bhawan official. “The real estate, including halls and clubs would be leased out to them on competitive basis, provided they cease to be of use to us any more.”

Cinema halls — started by Indian Railways as an employee welfare scheme before 1947 and highly subsidised at that — was very popular with railway employees till the early 90s. Now they are prime candidates for re-engineering, as the rise in disposable income levels of Railway employees coupled with the spread of multiplexes to smaller cities and towns has made these halls redundant.

But these cinema halls, conveniently located between 1-3 kms from a station, would gain a new relevance as prime commercial spaces given that they are in actual and potential retail junctions like Delhi, Chandigarh , Bhopal and Indore. Commercial space of 1 lakh sq ft near New Delhi Railway station, for example, is valued at Rs 250 crore, affording a rental income of around Rs 4 crore a month. Money spent on rents could easily be set-off by the gains in terms of time and money saved in transportation.

“We have decided to empanel real estate consultants to conduct a survey across the country to ascertain value of the Railways’ unutilised real estate. Then we will hold a formal meeting with interested retail sector players, to weigh the pros and cons of such tie-ups,” the official added.

But the offer does come with a rider: the retailers would be asked to assure continued traffic in the Indian Railways. That would mean a dual-track advantage for the railways in lieu of leasing space: a guaranteed share of the logistical expenses of expanding retailers as well as revenue through lease rentals.