12 plants to come up in 2 years to cater to demand for 6 lakh bottles a day

Rail Neer, the packaged drinking water of Indian Railways sold at railway stations and onboard trains, is eyeing to become a R800-crore brand in a couple of years as 12 more of its production plants become operational.

To give a fresh lease of life to the brand, the railways is also planning to come up with an advertising campaign at railway stations.

The brand, which was announced in 2002, was seen as the railway?s first effort at branding its catering services, which would also be an additional revenue stream lost to other brands as it failed to spruce up its production capacity.

?Neer has established a good brand value and we need to encash it as we have a captive consumer base,? a rail official told FE.

The total size of packaged drinking water brand of India within the railways premises (read railway stations and onboard trains) is of R1,600 crore. At the time when Rail Neer was conceptualised, the railways had planned to slowly phase out other bottle brands from railways stations, but couldn’t do so as the demand was

too huge and other brands paid higher commissions to vendors.

Neer, which has three functional plants at present, produces 3.5 lakh bottles or 3.5 lakh litre water every day, whereas the demand at railway stations and onboard trains is around 30 lakh bottles per day.

?We have 12 plants in pipeline, which would be operational in two years after which our capacity would increase to 15-16 lakh bottles per day. To further reduce the demand-supply gap, we have recently launched 500 ML bottles,? an IRCTC official told FE.

Tenders for four plants ? Ambala, Amethi, Trivandrum and lalitpur ? coming up on the public-private partnership model, have already been called and the work on them will start soon. Another plant at Ambernath, Maharashtra, will be operational in a few months. ?The cost of building a packaged water plant comes out to be R6 crore, apart from the land cost, which is being provided by the railways,? the official added. A 1-litre of bottle of Rail Neer is being sold at R15, whereas the 500 ML bottle has been priced at R10.

Around 15% of the sales of packaged drinking water companies come from the railway segment.