Road map charts out ways for railways to chug on

Written by Sajan C Kumar | Chennai | Updated: Sep 10 2009, 05:24am hrs
In order to be more competitive and attain greater commercialisation, the railways needs to create a fixed base operator for parcel business, develop an IT strategy, improve on efficiency in production units, sheds and workshops. These forms part of an exclusive technical assistance report, prepared by PricewaterhouseCoopers, together with the Asian Development Bank.

The report also recommends a small-grant programme to support initiatives by individual employees within the railways and promoting and developing academic and research institutions.

Parcel business in the railways currently falls under coaching services. The railways has taken initiatives in divesting functional responsibilities like marketing, booking and dealing with retail customers on issues regarding parcel business, with the leasing out of parcel vans to contractors. These contractors pay a bulk amount to the railways which in turn, book parcels from retail customers. However, it has been seen that the focus of the railways has not been adequate. There is a need to provide specialised marketing efforts, customer-friendly policies, tie-ups with large courier/ parcel companies and state-of-the-art booking and tracking services. Indian Railways can also analyse the feasibility of having separate parcel trains if there is adequate business. Parcel business, currently a part of coaching services, loses the focus of the railways, said the report.

The approach paper on the 11th Plan has also identified parcel business as a good business opportunity and has proposed an investment of about Rs 100 crore per annum in infrastructure to develop parcel terminals and vans. The projections indicate doubling of the volumes and a five-fold increase in revenues (from Rs 650 crore to Rs 3,000 crore) during the 11th Plan. A study to recommend the upgrade of parcel business as a separate FBO is already underway in the railways. The consultants should study the entire sector and railways opportunities in detail and come out with clear recommendations, the report added.

In order to consolidate efforts, the report has recommended the development of an IT strategy, which would chart out the vision of computerisation in the next 10-15 years and identify important operations, which will be IT-enabled. This would help all departments to focus their energies in one direction, rather than doing things on their own. The IT strategy document could also assist in monitoring the progress of computerisation over the years. The time is ripe for the railways to focus on computerisation of internal processes such as accounting, costing and fixed asset management.

The report also proposed that the railways create a small grant programme, through which a small grant would be provided to employees to initiate and test their innovations in any IT effort. In case this is successful, the railways can then carry it forward to large-scale operations.

The railways, through the Research Design and Standards Organisation, has been working with various academic and research institutions for developing designs and standards for enhancing its transportation capacity, reducing unit cost of service and providing the best service to its customers. Recently, the railways has identified two key challenges, one in investments and the other in its core business of logistic solutions to freight customers and passengers.

According to the report, the 11th Plan will pursue the Indian Railways Modernisation Plan, 2005-2010, for modernising the passenger and freight business segments, while technological improvements are envisaged in fixed infrastructure and rolling assets. Also, a reduction in unit cost of operation by introducing heavier trains of 22.9t/ 25t/ 30t axle load will be pursued. High capacity wagons and longer freight trains on specified sections will also be explored during the 11th Plan. The freight operation information system has reached the next stage, where the customers will benefit from the implementation of the terminal management system.

The railways has been creating FBOs with an objective of divesting its non-core businesses and ones that require special attention. Organisations which provide specialised technical and consultancy services and require private sector participation (special purpose vehicles) have also been created by the railways in the past. Organisations like RITES, RVNL, CONCOR, and IRCTC have been formed as FBOs. However, these organisations face challenges such as an increasing level of competition from the private sector, new ways of structuring investments and operations because of requirement of funds for bringing in latest technologies and capacity expansion, and attracting and retaining talent. In this context, these FBOs, especially those are at least 10 years old, need to revisit their corporate strategies and while building upon their strengths, develop fresh strategies for retaining their competitive edge, said the report.

The report has also stressed the need for efficiency in production units, sheds and workshops. The railways has six production units spread across the country, besides a number of sheds and workshops and there is scope for increasing the efficiency in these units by removing bottlenecks and the induction of latest technologies in execution.

The railways has been taking various initiatives to increase commercial activities and bring in efficiency in non-core operations. Some of the examples are PPP in operations of retiring rooms, branding of trains, outsourcing of cleaning services, etc. However these initiatives are yet to be launched on a full-fledged manner. There have been instances of sporadic implementation, but a focused and mission-mode of implementation is yet to be done. The report has also proposed that the railways take up the measures such as formation of a task force that monitors adequate incentives for officers.

The railways needs to focus more on specific commodities and sectors rather than a generic model for all. Measures like tariffs, based on sectors, design of specific wagons for specific goods and inviting private parties for better design of wagons for specific commodities, will provide the railways with a niche area, said the report.