The investment decision represents an important agent of the general policy, for the continuation and the increase of their activity. The necessity of achievement some important investments for national railway infrastructure is determined by the present situation of the railway transport system, insufficiently developed and an uncorrespondingly guality, this affecting the quality, the safety and travelling time from the departure point to the destination one, for persons and merchandise.investment decision, railway infrastructure, government policy, transportation system

Anduena FIRTAT

Nicolae SICHIGEA

English

Research Papers in Economics

Year VII, No.8/2008                                                                                                     51 
 
 
THE INVESTMENT – STRATEGIC DECISION FOR 
ENTERPRISE 
 
Prof. Nicolae SICHIGEA, PhD 
Anduena FÎRTAT, PhD Student 
University of Craiova 
 
1. Introduction 
 
The strategy of enterprise causes 
the selection’s activity fields in which it 
attends to development the activity, as 
their intensity and nature, estimated the 
competition and the dynamical and 
complex environment which the 
entrerprise will action. It describes the 
manner in  which this follows to achieve 
his purposes, taking into account by 
resources and abilities which it disposes, 
as well as the opportunities and troubles 
created by the environment of their 
activity. With a view to realize the 
enterprise’s strategy, within it, to different 
levels, it takes, at different tides, a lot of 
decisions, which can be headed for 
achievement properly activities 
(exploitation or operational decision), for 
assurance financing activities (financing 
decisions) or to development the 
business (investment decision). In the 
railway transport domain, as a strategic 
sector of national interest, the achieved 
investments follow the rehabilitation of 
the railway infrastructure in according 
with projected parameters and safety 
traffic, the assurance of the 
interoperability with the European railway 
transportation system, by the alignment 
to its technical and operational 
parameters, the modernization of the 
pan-European corridors that cross 
Romania and the main railway stations. 
All those involve an important financial 
effort, which requires a lot of property 
founds of railway intrastructure manager, 
the annual budgetary allocated transfers 
and external financing.  
 
2. Investment – strategic decision 
adjusting of enterprise 
 
The investment of capital on long-
term, to obtain profits represents an 
investment. Whether the funds is invest 
in immovable or circulating assets, 
investment represents an important 
immobilization of  those funds, as bulk 
and time, following to get in future a 
higher profitableness. So, investment 
decision handle to an immobilization of 
funds, achieved in the present, but who 
follows to recover during many exercices 
in risk conditions, to obtain a higher 
profitableness in the future. The forms of 
investment contain expenses for building 
equipments, lands, research-
development, modifications of stocks, 
financial assets. 
From financial point of view, 
investment induces a great expense of 
funds, which, in the future, have to be 
make up for returns, respectively profits 
generated by the financial investment, 
placed at all period of economic life. In 
financial sens, investment represents a 
renouncement of a sum of money, to 
obtain certain higher incomes in the 
future, but advantageous. 
In accountant sens, investment 
represents an assign of a available sum 
of money for obtaining an immovable 
assets, which will generate future high 
funds and  it will induce exploitation 52                                                                         Finance – Challenges of the Future 
expenses, which must be covered by 
future high funds. 
Investment decision is the main 
decision in the enterprise, because a 
wrong decision in this case causes 
important financial damages, and in 
certain cases it causes the bankruptcy. 
Investment involves inputs and outputs of 
high funds. If the initial expenses 
produced by an investment project 
named negative, there are known from 
general list, the future high tides 
generated by investment, named positive 
high tides, they must be estimated. The 
expenses are composed of annual 
profits, which will be obtain from 
exploitation of investment and from 
liquidation included on costs every time 
[Hoanţă Nicolae, 2003]. After 
establishment the positive and negative 
high tides follows their comparison for 
establish the opportunity of the 
investment 
 
2.1. Specific features of the 
investment decision for administration 
of railway intrastructure 
 
The administration of railway 
intrastructure is achived by The National 
Railway Company „NRC” SA, society 
resulted after the reorganization of the 
National Society of Romanian Railways. 
The company offers to railway transport 
operator‘s acces to an ecology 
infrastructure, which passengers and 
goods travel safety, any season, day and 
night, indifferently of meteorology 
conditions, with competitive costs. The 
finale purpose of the company is the 
commercial administration of the railway 
infrastructure and carry on national public 
interest activities, for assurance the 
public railway transport, for guarantee   
the satisfaction of specific needs for 
country’s defence. The railway 
infrastructure is currently in a difficult 
technical status because of important 
arrears concerning the accomplishment 
of the cycles of maintenance and repair 
of the tracks, the installation and the 
buildings and for the accomplishment of 
modernization works, arrears produced 
by the chronic absence of the necessary 
funds. 
 
2.2. Financing sources of the 
investments for national railway 
infrastructure 
 
In the last few years, together with 
the continous drop of the budgetary 
allocated transfers for railway 
infrastructure investment, as well 
because of the insufficiency of the proper 
funds allocated for maintenance and 
current repair of railway infrastructure 
components, the technical parameters 
have suffered a continuous degradation. 
In the years 2007, within objectives of 
financial investments from the state 
budget   there have been realized the 
following: the modernization of a few 
railway stations, the connection to energy 
of the railway line Doaga-Tecuci-Barboş, 
the reconstruction of the train bridge 
across the Gura Lotrului lake from the 
line Piatra Olt – Podu Olt upon an 
annexed emplacement, with a view to 
assurance the railway traffic mincing by 
natural calamities.   
The financial investments from self 
funds are forecast in the incomes and 
expences budget of the The National 
Railway Company „NRC” SA. In the year 
2007, from the whole incomes of 
1.599.669 thousands lei foreseen in the 
budget, the achivements are only 
1.428.990 tousands lei. From the whole 
programmed expences, in the budget of 
the year 2007 in value of 1.599.669 
thousands lei, the achievements at this 
chapter are in value of  1.743.402 
thousands lei, which represents a 8,99% 
exceeding. The results place an exercise 
result for the year 2007 incarneted in a 
loss of 314.412 thousands lei. The loss of 
the year 2007 amplifies the loss from the 
previous years in value of 1.860.503 
thousands lei., driving to the lack of cash 
necessary for the sustenance and current 
and capital reparation works, the pay of 
the obligations towards provider and 
state budget. For the year 2008, with a 
view to deploy of activities at a level, 
which can allow the public railway Year VII, No.8/2008                                                                                                     53 
infrastructure maintenance in according 
with functional parameters, in terms of a 
predicting of running income smaller than 
the year 2007, the necessary expences 
which must be performed by The 
National Railway Company „NRC” SA is 
2.781.814 thousends lei, which lead to a 
loss of 1.215.275 thousend lei.  
With a view to realisation 
investments financed from external 
funds, have been unrolled the following 
programs: 
PHARE 9604 - project for 
rehabilitation of railway . 
Allocated sum:  57.999.683 EURO 
Payed sum:  57.413.652 EURO 
The project is in the final stage of 
it’s succeeding and involved the 
acquisition of some centralization system 
for four railway stations, acquisitions of 
rail, machines and material of railway, 
equipments for Centre of Improvement of 
NRC, of a software for traceing the 
railway time-table, of some services of 
technical assistance, as well as the 
modernization of the Filaret printing 
establishment..  
PHARE 772 – assistance for 
consolidation the reorganization of the 
railway sector 
Allocated sum: 3.930.000 EURO, 
which 3.380.000 EURO funds PHARE şi 
550.000 EURO state budget.  
Payed sum:  0 EURO. 
The project includes three parts. 
One of these concerning the 
consolidation of the reorganization 
process for Romanian raiload and 
includes four body parts: financial 
application for railway companies, the 
railway time-table for passengers, the tax 
of infrastructure use, the rehabilitation of 
railway stations.  
BERD 12936 – project of 
modernization of five big railway stations: 
Cluj-Napoca, Iaşi, Constanţa, Craiova şi 
Timişoara. 
Allocated sum:  24.000.000 EURO 
Payed sum:  6.415.075 EURO 
Credit Suisse First Boston – 
the modernization of the main railway 
stations. 
Allocated sum:  60.000.000 USD 
Payed sum: 39.000.000 USD 
The railway atations included in 
the programme „Rehabilitation of some 
railway stations in Romania”, the value 
of approved achivement and the year in 
which the modernization achivement 
finalized, are according with the following 
programmes: 
- Ploieşti Sud (2,756 millions 
USD):  year 2006; 
- Arad (4,09 millions USD): year 
2006; 
- Deva (2,037 millions USD) – year 
2008  
- Alba Iulia (1,841 millions USD): 
year 2005; 
- Braşov (4,047 millions USD) – 
year 2007 
- Bacău (2,593 millions USD) – 
year l 2008 
- Suceava Burdujeni (3,5 millions 
USD): year  2007; 
- Buzău (2,275 millions USD) – 
year 2007 
- Focşani (6,055 millions USD): 
year 2005 
- Sighişoara (2,667 millions USD): 
year  2007;  
- Drobeta Turnu–Severin (6,825 
millions USD): year 2006; 
- Galaţi (7,352 millions USD): year 
2006;  
- Feteşti (4,701 millions USD):   
year 2007; 
  - Sibiu (3,854 millions USD)   – 
year 2007; 
- Oradea (3,992 millions USD) ) – 
year 2008;  
- Tulcea (1,415 millions USD) – 
year 2004 
BIRD 4757 – project concerning 
the reorganization of railway transport 
sector 
Allocated sum: 75.000.000,00 USD 
Payed sum:         44.110,00 USD 
The loan includes consulting 
services, market reserch concerning the 
public and social passangers services, 
the implementation of quality and 
environment management system, audit 
services for the period 2005-2009, and 
the aquisition of a signalization system, 
equipments for the increasing processing 54                                                                         Finance – Challenges of the Future 
capacity of the system IRIS as well as 
equipments for environmental protection  
Credit Suisse First Boston – 
stopping the degradation of railway 
infrastructure; the whole sum of business 
loan is covered by contracts unrolled in 
the middle of the company and within 
fillials branches 
Allocated sum: 120.000.000 USD 
Payed sum:  120.000.000 USD 
In coclusion, seeing all the project 
who are unrolled as well as the liabilityes 
to reimburse the external business loan, 
which finance all those project is very 
important than the company which 
manage the railway infrastructure to 
monitor and to control all the long-term 
financial perspectives. 
 
3. The assurance of the 
interoperability with the European 
railway transportation system 
 
For Romania, as a member of 
European Union, is essentially the 
alignment at the development projects of 
the European railway transportation. In 
keeping with the goal of the Union 
440/1991 of the European Council, 
Romanian Railways  have the role to 
integrate national railway infrastructure of 
technical and operational parameters at 
European level, for being a consistent 
and interoperabilite part of  trans – 
European railway network. 
Romania, by its geographical 
position, represents an intersection area 
of the railway transport international 
thoroughfares, that connects both the 
North from the South and West from the 
East of Europe. At the Pan-European 
transport Conference on 1994 
established the Pan-European corridors 
of transportation, and Romania is 
crossed by two of thease: the corridor IV 
Berlin – Praga – Budapesta – Constanţa 
– Salonic – Instambul and the corridor IX  
St. Petersburg – Kiev – Chişinău – 
Bucureşti – Alexandropolis. The 
Corridoars IV and IX are of various 
patterns, according to figure no. 1, with 
railway and road components, inclusive 
maritime and river ports. That importance 
in the structure of national railway and 
the necessity of rehabilitation consist of 
fact that, on the whole, on about a fifth of 
whole length of network unrolls about an 
half of traffic. For rehabilitation works of 
the corridor IV are estimated to 4.330 
millions euro investments and their ends 
is stipulated in 2011. For the railway 
corridor IX estimate a necessary 3.316 
millions euro. 
  
Figure no. 1 The Pan-European transport corridoars that cross Romania 
 
Source: Study concerning on rehabilitation and modernization of Craiova-Calafat railway line, 2005   Year VII, No.8/2008                                                                                                     55 
 
During the restructuring works 
and the endowment of the railway 
network, with new equipment, with a view 
to the integration into the European 
network, the main activity is to 
rehabilitate the railway lines, especially 
those with high traffic volume. These 
works have to ensure a good transport 
quality, punctuality, traffic safety, 
reducing the transport time period as well 
as reducing the maintenance and 
operation costs.  
In the railway infrastructure field, 
investments have the main 
characteristics: great initial investment, 
the benefits occur only after the project 
execution, after a long time. All these can 
be emphasis by the exemple with the 
rehabilitation and the modernization of 
the railway line Craiova-Calafat, part of 
the railway Pan-European corridor IV, 
that has a special importance for 
Romanian economy. The line is 107 km 
long, single and non-electrified. The 
present day condition of railway line is 
precarious endangering the traffic safety 
and having a lot of restricting points due 
to the line instability and faults lately 
occurred the latest years. The insufficient 
level of the offered services quality is 
determined by: 
 the reduced commercial speed 
for the passengers and goods traffic; 
 a traffic diagram with no 
flexibility required by the competition with 
the other means of transport; 
 the services required by train 
journeys is at an inadequate level; 
 lack of civilized conditions in 
station: platforms without modernizations, 
without sewage network for water 
discharge; inadequate waiting rooms, 
without endowments; incomplete 
information; tickets sale by obsolete 
technology; inappropriate water supply 
networks .  
In these conditions, the main 
objectives of the investment are: 
 the rehabilitation and 
modernization of the railway 
infrastructure; 
 improving the traffic conditions; 
 ensuring and supporting the 
mobility; 
 stimulating the economic and 
industrial increase; 
 developing the areas and 
adjacent regions. 
The rehabilitation and 
modernization of the railway line Craiova-
Calafat suppose the follwing works: 
rebuilding the railway substructure 
(embankments, consolidations, 
protection, drainage), rehabilitation of all 
the existing bridges and culverts as well 
as building some new culverts; 
electrification of both the open line and 
those in the stations; civil constructions in 
the stations. Those were estimated at the 
value of 630 millions euro. 
Carrying aut the works 
concerning the rehabilitation and 
modernization of Craiova-Calafat line 
leads to an increase of the traffic capacity 
from 13 train pairs/day to 35 train 
pairs/day. The foreseen increases of the 
freight and passenger railway transport 
after rehabilitation will generate new 
incomes. The technical parameters after 
the investment achivement have in view 
to increase the running speed between 
120km /h to 160 km/h. So, on about 41 
km the train will run at 160 km/h. The 
stations on the existing Craiova-Calafat 
railway line are to be systematized for the 
speed presented in Table no. 1  
                                                         
 
 
                                         56                                                                         Finance – Challenges of the Future 
Table no.1. The designed running speeds 
Denomination Position 
km 
Designed 
maximum speed  
(km/h) 
Craiova 250+002   
HM. Jiu  252+485  70 
Podari 261+757  90 
HM Sălcuţa 275+580  120 
Segarcea 284+173 85 
Portăreşti 295+094 160 
HCV Afumaţi 305+110  160 
Băileşti 319+212  160 
Moţăţei 332+050  115 
HM Golenţi 344+669  120 
Calafat 356+371  50 
Source: Study concerning on rehabilitation and modernization of Craiova-Calafat railway line, 2005 
 
According with increased of the 
running speed, the railway time-table of 
passangers train between Craiova and 
Golenti for 99 minutes will decrease at 56 
minutes, what means a reducing for 43% 
of way duration. The implementation of 
the rehabilitation measures leads to 
diminish the line faults and, 
consequently, the reducing of the number 
of railway accidents. The cost reductions 
are estimated at about 1.100 euro per 
year and per line km.  
3. Conclusions 
 
The investment decision is a 
strategic decision and it’s an incorporated 
part of the general politic of the 
enterprise. It means not only a capital 
movement but only a certain activity 
which follow to place the enterprises in a 
certain position on the market, the 
initiation and the continuation of some 
business relations with another 
enterprises on different activity sector. 
Through the investment achived at the 
railway infrastructure it’s carry out the 
improvement of the traffic conditions, 
assurance and sustain of the mobility , 
the stimulation of the economic 
increasing but only the development of 
the areas and the conexe regions. The 
preoccupations for energy saving and 
finding a solution for the environment 
problems with regard to the atmosphere 
pollution with motor-vehicles gases 
emission and the lives losses in railway 
traffic accidents accelerated the railway 
transport development stiring for railway 
lines development between towns and on 
the sections with dense populations. 
 
 
 
 
REFERENCES 
Hoanţă Nicolae  Finance of the enterprise, Economic Ed, Bucureşti, 2003 
*****  The strategy of the modernizing and the renewal of the railway 
infrastructure in view of the assurance of the integration in  the 
European Union, 2005 
*****  Study concerning on rehabilitation and modernization of Craiova-
Calafat railway line 
 

The investment - strategic decision for entreprise

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