For the Konkan Railway Corporation (KRC), the present environment is quite unlike anything they were prepared for. In the five years that the railway was under construction, the sea route emerged as a cheaper alternative for KRC's potential customers. Added to that, industries which were supposed to come up in the Konkan belt never did, and now, the economic slowdown. The result: freight did not materialise.

KRC freight earnings stood at Rs 1 crore for the first quarter of the current year. With passengerearnings expected to be in the region of Rs 50-60 crore for the year, KRC would be lucky to end the year with earnings of Rs 100 crore. Although they are making an operating profit, a Rs 280- crore per year interest burden has made the writing on the wall only too clear for the KRC management.

Roped in to provide crucial marketing inputs is premier management institute, IIM, Ahmedabad. Its brief was two-fold. One, to identify a new customer base and outline its profile, and two, suggest ways in which KRC could tap this market.

The IIM team, led by Raghuram, had to first understand the transport logistics of potential customers. They included corporates like Nirma that have a huge manufacturing base in Gujarat, cement companies, and chemical manufacturers. The results were a little unexpected. Says KRC chairman and managing director R Rajaram, "The IIM report dispelled a few myths." The first of these is that price is the most crucial factor for customers. On a list of eight parameters, price came last.

The reason is quite simple. While traditional freight goods like cement, fertilizer, and coal are extremely sensitive to freight rates, they are also low-margin goods for the railways. For instance, the railways earn only Rs 494 per tonne for foodgrains, Rs 803 per tonne on cement, but Rs 1,400 per tonne on steel. These goods also lend themselves quite easily to rail transport, since their volumes are rather high.

Since KRC was targeting the finished-goods market, where transport cost is just a fraction of the total cost, an assured delivery schedule mattered more to customers, as did door-to-door service of the kind KRC is ready to offer. However, since the railways carry freight by the rake (a rake is 2,000 tonnes), and most finished goods manufacturers transport in smaller quantities, a new service would have to be provided.

It was not just a case of reducing customers' woes. Surprisingly, the report threw up a negative perception of the railways as an important deterrent for finished goodsmanufacturers. Monopoly players for long, the railways had done little to keep their customers happy. The perception was proving costly for KRC.

KRC is putting its best foot forward. It will pick up cargo from wherever the client wants, with a guarantee to deliver on a specific date. It will be responsible for combining the cargo into lot sizes acceptable to the railways, loading and unloading. It has become a courier service, albeit on a much larger scale.

In reality, KRC seems to be doing what the Indian Railways as a service provider always should have done.

But the soft image donned has been by far the easiest thing to do. Says Rajaram, "Our success will depend on how well we are able to coordinate with the other railways." Although KRC's territory begins only at Roha, and extends to Mangalore, there is little cargo in this region. The catchment area for KRC, therefore, is Gujarat, Rajasthan and Madhya Pradesh - the territory of the Western and Central Railway. The railways' other division,therefore, needs to commit itself to wagons and delivery schedules so that KRC's own commitments hold good.

But what is in it for others? Till yesterday, there may not have been, but the economic slowdown is pinching even the most unlikely candidate. Central Railway moved 24.96 million tonnes from April to October this year. Although this is marginally higher than the 24.2 million tonnes moved for the same period last year, it falls short of the target of 25.7 million tonnes. In value terms, earnings from freight stood at Rs 1,080.31 crore between April and August, against a target of Rs 1,126.95 crore. A CR spokesperson admits that wagons are there for the asking. KRC's initiative may therefore swell their coffers as well.

However, the industrial slowdown seems to have left the Western Railway unscathed. As against a target of 32 million tonnes for the current year, it has already managed 17.19 million tonnes.

Will everyone pull in the same direction? Rajaram certainly hopes so. He has convened aforum for all of them to sit together and work out a programme to implement the plan. But mere intent to co-operate will not mean much for KRC. Rajaram hopes that the potential of higher earnings for everyone involved will bring him the kind of commitments he is looking for - which essentially means the same level of service they have promised their customers. And what better time to strike, than when business is dwindling?