Costing Finsl

Management
Accounting Practices in
Delhi Metro
Exploring Financial Strategies for Operational Excellence
BY
SHARUN 24PGDMFM025
ZOYA JAMIL 24PGDMFM057
ANKIT YADAV 24PGDMFM003
JUGRAJ SINGH 24PGDMFM012
ARCHIT VERMA 24PGDMFM035
TASLIM JAYSWAL 24PGDMFM045
Introduction to Cost and Management in Delhi Metro
• Why Focus on Management Accounting?

• Ensures efficient use of resources in a cost-intensive system.
• Aids in long-term sustainability and operational excellence.
• Significance of Cost Management in Delhi Metro:
• Optimizing high operational costs like electricity and
maintenance.
• Budgeting for expansions while maintaining profitability.
• Impact of Effective Management Accounting:
• Provides insights for decision-making on fares, services, and
expansions.
• Helps balance quality of service with financial stability.
Operational and Financial Highlights
of Delhi Metro
• Scale of Operations:
• Extensive network covering over 390 km across Delhi-NCR.
• 12 operational lines with over 286 stations.
• Serves approximately 4 million passengers daily.
• Financial Overview:
• Annual operational cost: Significant focus on electricity and
maintenance.
• Revenue sources: Fare collection, advertising, and real estate.
• Key Contributions:
• Reducing urban congestion and pollution.
• Supporting sustainable urban development through green initiatives.
Role of Management Accounting in
Delhi Metro
1.Operational Cost Management
1. Monitoring costs related to electricity, maintenance, and manpower.
2. Monthly and annual budgeting for routine operations.
2.Strategic Decision Support
1. Allocation of funds for metro line expansion projects.
2. Evaluating financial viability of introducing new technologies (e.g.,
automated trains).
3.Sustainability Focus
1. Investments in green energy initiatives, such as solar panels on
station rooftops.
2. Evaluating carbon credit benefits and their financial implications.
Cost Management Practices
1. Energy Costs
1.Electricity accounts for a significant portion of operating expenses.
2.Use of regenerative braking systems to save up to 30% on
electricity costs.
2.Maintenance Costs
1.Implementation of predictive maintenance systems using AI.
2.Cost of preventive maintenance vs. reactive repairs.
3.Lean Operations
1.Optimization of employee shifts and schedules to reduce overtime
costs.
2.Outsourcing non-core activities like station cleaning.
Revenue Management Practices
1.Fare Rationalization
1.Dynamic pricing models based on peak and off-peak hours.
2.Impact of fare hikes on ridership and revenue.
2.Non-Fare Revenue Streams
1.Leasing space to retail outlets, ATMs, and food courts.
2.Revenue from advertisements on trains, stations, and digital
screens.
3.Real estate development: Leasing land adjacent to metro stations.
3.Digital Ticketing Systems
1.Cost savings from reduced dependency on ticket counters.
2.Data analytics to forecast demand and improve resource
allocation.
Performance Metrics and Analysis
1. Cost Efficiency Metrics
1.Operational cost per kilometer.
2.Average cost per passenger trip.
2.Energy Efficiency Metrics
1.Energy consumed per train trip.
2.Energy savings from renewable sources (solar and wind).
3.Benchmarking
1.Comparison with global metro systems like London
Underground and Singapore MRT.
2.Metrics like punctuality, cost recovery ratio, and service
availability.
Decision-Making and Strategic
Planning
• Financial Planning for Expansion
• Cost-benefit analysis of constructing new metro corridors.
• Loan management (e.g., funding from JICA or multilateral banks).
• Risk Mitigation
• Hedging energy costs to tackle fluctuating electricity prices.
• Insurance for infrastructure against natural disasters or accidents.
• Technology Investments
• Cost implications of integrating AI for train scheduling and ticketing.
• Return on investment (ROI) for digitization projects.
Challenges in Management
Accounting
• High Capital Costs
• Construction costs of metro lines are substantial and require long-term
financing.
• Balancing debt with revenue from operations.
• Operational Cost Control
• Rising costs of electricity and manpower in a highly inflationary
environment.
• Managing costs while maintaining service quality.
• Ridership Fluctuations
• Impact of external factors like COVID-19 on ridership and revenue.
• Adjusting cost structures to align with reduced passenger flow during
lean periods.
Conclusion and Recommendations
1.Enhance Cost Efficiency
1.Expand renewable energy initiatives to further reduce electricity
costs.
2.Implement advanced cost-tracking systems for real-time insights.
2.Optimize Revenue Streams
1.Increase partnerships with retail and food vendors.
2.Monetize digital ticketing data for targeted advertising.
3.Strengthen Financial Resilience
1.Build contingency funds to handle unforeseen operational
challenges.
2.Diversify funding sources to reduce dependency on government
subsidies.

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Management

• Why Focus on Management Accounting?

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