Appraising Kolkata Metro Railway Corporation’s East West Metro Corridor Project|Finance|Case Study|Case Studies

Appraising Kolkata Metro Railway Corporation's East West Metro Corridor Project

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Case Details:


Case Code : FINC068 For delivery in electronic format: Rs. 400;
For delivery through courier (within India): Rs. 400 + Rs. 25 for Shipping & Handling Charges


Project Finance / Project Management
Case Length : 21 Pages
Period : 2009-2010
Pub. Date : 2011
Teaching Note : Available (6 Pages)
Organization : Kolkata Metro Rail Corporation
Industry : Transportation
Countries : India


Recognizing the need to improve the urban transportation infrastructure in Kolkata, a metro city in the eastern part of India, the Kolkata Metro Rail Corporation (KMRC) proposed an integrated rapid mass transportation system through its East West Metro Corridor (EWMC) project which would also involve the contentious issue of land acquisition. Another concern was that the existing North South metro railway corridor, which was to be integrated with the proposed EWMC, was making continuous losses since its inception as the demand remained about 1/11th of the forecasted demand in 1990. Yet another issue was that the KMRC’s proposal included removal of the existing competitive bus services running parallel to the proposed metro routes, which would adversely affect the general commuters who would then end up having to pay higher metro fares.

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Critics contended that society did not seem to be gaining anything from the project though the West Bengal Government was giving it concessions like electricity on a no profit no loss basis and there was project financing by the central and the state government. Moreover, it was feared that the project might face the same kind of fate as the North South metro railway corridor project. KMRC's proposed fares were significantly higher than some of the alternatives and even the existing metro.


This case is most suitable for the courses of Project finance, Project appraisal, Capital budgeting, Risk analysis, Economics, and any such course involving financing and appraisal issues of a large-scale project. In particular, it could be used to discuss the concept of Social Cost Benefit Analysis (SCBA) and risk analysis under project finance and appraisal using procedures like expected value analysis, sensitivity analysis, scenario analysis, and the Monte-Carlo simulation. It could also be used to explain in some part the concept of price elasticity of demand in economics and allied courses.

The target audience for this case may be those pursuing Graduate and Doctoral courses in management, the MS program, project finance programs, business finance programs, and programs relating to economics areas.

This case requires assumptions about probability ranges and distributions for some of the critical variables which could be identified through discussion. The instructor may supply those probability ranges and their distribution before case discussion. Otherwise, the students may be asked to make their own justifiable assumptions about these after identifying and classifying critical variables.


  Page No.
Introduction 1
The Challenge 2
The Project 4
The Project Rationale 5
The Debate 6
Epilogue 8
Excerpts 10


Social Cost Benefit Analysis, SCBA, Project Management, Project Finance, Project appraisal, Mass rapid transportation system, India

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