The Hindu Business Line : KPMG to help revamp postal network

THE Government has roped in global consultants KPMG to prepare a report on restructuring the postal network across the country. The mandate given to KPMG includes identifying new areas of business.

The idea behind this corporate restructuring is to wipe out the Rs 1,400-crore deficit of the Department of Posts. KPMG will also review the pricing of postal products and services and sustainability of loss-making and unpopular products.

Following the review, the prices of postal products, barring some essential "common man'' items such as inland letters, envelopes and post cards, could be increased to market rates. The DoP is also looking at the feasibility of sustaining the universal services obligation of the Government in a competitive market. At present, the postal network has 40 products and services, of which a number of them, such as mail services, have become obsolete with the availability of faster and more cost-effective modes of communication.

"With the fall in mail traffic, availability of phones, increase in pay and allowance of employees, the level of subsidy required for running post offices has gone up. This has compelled the department to examine the scope of expanding the network, redeploying existing manpower and introducing more cost-effective options," said a senior official in the Ministry of Communication.

KPMG has been told to assess the postal services in terms of their utility, viability and pricing and to suggest ways to re-engineer the existing products. The Government has also asked the consultants to specify a corporate strategy to take on competition. KPMG will also review the existing organisational structure, the communications systems, the performance accountability system and measures for human resources development.

"The aim is to achieve financial self-sufficiency by 2007. The entire exercise should be complete within three months," said sources in the Ministry. KPMG will also look at how best to use the vast real estate owned by the postal department and also the technology aspects to turn it into a profit-making unit even as it fulfils the social obligations.

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