In a first, Bengaluru Metro to wrap trains with ads to boost revenue; tender to be floated soon

Bengaluru Metro’s financial status

Delhi Metro, for instance, has been wrapping trains since 2014, while Hyderabad Metro even awarded train wrap advertising rights before commencing operations.

Bengaluru Metro has 57 six-coach train sets operating on its two operational routes, the Purple and Green Lines.

At present, only one train is wrapped, and not for commercial purposes. In March 2022, BMRCL wrapped a train with photographs and slogans highlighting the freedom struggle as part of the Azadi Ka Amrit Mahotsav programme to mark 75 years of Independence. BMRCL spent around Rs 8.5 lakh on the wrapping exercise, which was done in 10 days.

Also, read: Bengaluru Metro sees ridership and revenue surge despite free bus travel for women

BMRCL is now advertising only inside its trains as well as within station premises. A BMRCL official said some trains will be wrapped with advertisements on the external side walls. "Initially, advertisements will be put up on a few trains. After assessing the response as well as its impact on the side wall surfaces, further decision will be taken," he said.

Semi-naming rights of existing stations

For the first time, BMRCL will offer semi-naming rights, allowing the sponsor's name to appear as a prefix to the station name, for existing operational stations.

So far, naming rights  have only been given to upcoming stations. Firms can prefix their brand name to the station name and paint the sponsored station's exteriors in colours associated with the company.

Also, read: From funding stations to painting pillars, here’s how corporates are boarding the Bengaluru Metro

"We had roped in IIHS (Indian Institute for Human Settlements) to conduct a study. They consulted various stakeholders and recommended semi-naming rights for stations for a period of two to five years. However, we prefer a minimum of five years since the firms will be allowed to paint the station according to their brand colours. The tender for semi-naming rights will be floated after receiving approval from the BMRCL board and the state government," said Kataria.

She added that they are also now floating tenders for advertisements in all stations to increase non-fare revenue.

Under its financing scheme, BMRCL has tied up with various companies to fund stations. For instance, Infosys Foundation contributed Rs 100 crore to Konappana Agrahara Metro Station for naming rights, commercial space, advertisement space and direct walkway access (Foot Over Bridge) for 30 years.

Biocon Foundation provided Rs 65 crore for naming rights at Hebbagodi station, Delta Electronics India Pvt Ltd contributed Rs 75 crore to Bommasandra station for naming rights and walkway access, and Bosch Limited invested Rs 10 crore for direct walkway access at Lakkasandra station, all for 30 years.

Also, read: Delta Electronics gets Bengaluru Metro station naming rights; signs MoU

Ban on advertisements hits Bengaluru Metro

BMRCL officials said that revenue from advertisements on metro pillars and medians below viaducts ended in August 2018 when the Bruhat Bengaluru Mahanagara Palike, the city's civic body, banned outdoor advertisements following a high court order. BMRCL was earning around Rs 10 crore annually through these advertisements, and the revenue could have increased further considering the expansion of the network.

Currently, the BMRCL network stretches 73 km, with plans to expand it to 175 km by 2025-26 and 317 km by 2031.

Last year, BMRCL resumed granting permission to shoot films on station premises and inside train coaches to increase non-fare revenue.

The agency also rented out space for retail outlets, ATMs and parking lots at stations, apart from promotional kiosks, electric vehicle charging and battery swapping stations, leased space for telecom towers and optical fibre cables, and is also planning to auction pillars and viaduct spaces for the installation of 5G transmission cells, all to generate more revenue.

In 2017, it earned Rs 251 crore by leasing 13 acres to IKEA India Pvt Ltd near Nagasandra Metro Station under a long-term lease agreement (60 years).

Metro rail, a capital-intensive project

According to the ministry of housing and urban affairs' Metro Rail Policy, fares have to be revised every two years. The last revision in the case of Namma Metro, as the Bengaluru transit system is popularly known, was in 2017 (when ticket prices were increased by 10-15 percent once Phase 1 was fully operational).

The maximum fare on the network is Rs 60, and despite network expansion, fares have not been revised due to political pressure. Also, the thinking is that any further increase could discourage people from using public transport, forcing them to switch to private vehicles, which increases pressure on Bengaluru's already congested roads.

BMRCL records show that non-fare box and other revenue increased from Rs 26 crore in 2013-14 to Rs 171.4 crore in 2022-23, yet it comprises only around 29 percent of total revenue.

In comparison, the non-fare box revenue for Hong Kong's Mass Transit Railway, for instance, was 63 percent of total earnings, coming from property rental (22 percent), property development (45 percent), station commercial (24 percent), and advertisements and miscellaneous (9 percent).

That's not to say that BMRCL's books are unhealthy. Bengaluru Metro's daily ridership is around 6.8-7.5 lakh now. BMRCL has achieved operational profit  in 2017-18, 2018-19, 2022-23 and 2023-2024 (see graphic) . (Operational costs include paying staff salaries, as well as power and maintenance costs.)

While the project cost of Bengaluru Metro's 42 km Phase 1 was nearly Rs 14,000 crore, Phase II, covering 72 km, is estimated to cost around Rs 32,000 crore.

A senior government official said, "A metro project, being highly capital intensive and planned for a 30-year capacity requirement, cannot meet financing costs only from fare box revenue."

He said such projects have limited financial viability with a low FIRR (financial internal rate of return), despite major economic benefits with a high EIRR (economic internal rate of return).

"To improve financial sustainability, fare revenues need to be supplemented by non-fare box revenues such as rental income from commercial areas at metro stations and advertisement rights. Without a robust stream of revenues from non-fare boxes, the project's reliance on the state government to reimburse cash losses for debt servicing is likely to continue for a long time. All possible avenues of non-fare box revenues should be explored," he said.

"Property development at stations, either by BMRCL directly or through PPPs (public-private partnerships), offers huge potential. Metro operators across the world have leveraged this potential for better financial sustainability. The operational and upcoming metro stations, including Hebbal, Banashankari, SV Road, Mysuru Road, Nagawara, and KR Pura, have a very high potential for commercial utilisation. Realising additional revenue by building such infrastructure is crucial to sustain operations and reduce the burden on the state government,” he added.

Also, read: Bengaluru's traffic conundrum: Metro rail to the outskirts, suburban rail confined to city limits, and tunnel vision