Page 138 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Strategic Management

Notes This was, indeed, alarming for the Indian Railways, which since the commencement of its
first journey on April 16, 1853, has come to reflect the pluralistic character of the country
with many unique features such as having the world's largest as well as the smallest
stations, the oldest running locomotive and a separate budget since 1924.
But from 2005, the signs of change were visible and became well entrenched by 2007.

"The railways' renaissance has been engineered by simple entrepreneurial practices, which
have evoked the admiration of internationally renowned institutions and companies
alike," said a report by KPMG, which also conducted an international conference on railways
in New Delhi last month.
"The railways are now working like a private sector corporation. This is great news for
India. We wish other public services, especially in the social sector, like education and
health would follow suit," Habil Khorakiwala, president of an apex industry group, the
Federation of Indian Chambers of Commerce and Industry (FICCI), said.
"The turnaround is not hype because the net revenues have increased sharply," said Prof.
G. Raghuram, who has thoroughly examined the performance of the Indian Railways as a
case study for the premier Indian Institute of Management at Ahmedabad, one of India's
best-known business schools.
"By increasing the axle-loading of wagons (which increases freight traffic) and, combining
it with a market-oriented approach, Lalu Prasad has contributed to the success of Indian
Railways," Raghuram added.
Lalu Prasad attributed the transformation almost entirely to improved efficiency that was
even able to withstand increased competition from budget carriers that were offering to
fly passengers for the cost of a second-class air-conditioned fare of the railways.
"Over the past 30 months, freight volumes have grown by 10 percent. Similarly, growth in
passenger volumes has been doubled," he explained to a group of 130 students from
Harvard and Wharton a few months ago, while delivering a lecture on the transformation
of Indian Railways.
"On the supply side, increase in load coupled with reduction in turnaround time of wagons
from seven to five days has contributed to an incremental loading capacity," the minister
said in the rather simplistic explanation.
With financial parameters back on track, the Indian Railways now has set itself ambitious
targets in areas such as refurbishment of stations, passenger amenities, better coaches and
new freight corridors as it approaches the 11th Five Year Plan that begins April 1.

And says KPMG: "Indian Railways is in a dynamic phase of growth with new initiatives
planned to capitalise on the existing gains and moving steadier and closer to the larger
objective of offering world-class services in both freight and passenger transportation."
Questions
1. Do you think that railways desperately needed a change? Why?
2. What factors were responsible for its turnaround?

Source: http://indiainteracts.in/columnist/2007/07/21/Tracking-the-Indian-Railways-turnaround
saga/

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