The Hindu Business Line : Arrival on time!

It's a good time to be a top honcho in the Indian Railways, which made a profit of Rs 11,000 crore last year and has set a heady target of Rs 20,000 crore this year.

Thomas Varghese, General Manager of Southern Railway (SR), dwells on the management style of Railway Minister Lalu Prasad, and how he turned the Railways into a cash cow.

Excerpts:

Everybody is talking about the turnaround of Indian Railways thanks to Lalu Yadav's management style. What has been the single-largest driver of the profits made last year?

There was a time... when I was vice principal at the Railway Staff College in Baroda, when doubts were being expressed about the future of Indian Railways. The Rakesh Mohan Committee had prophesised that the Railways would have to be wound up in 10 years etc. Around 2000, we had a major convention in Baroda to discuss the recommendations; he had certainly predicted doom. But six years have passed, and we're talking of a profit of Rs 11,000 crore last year.

Which is the highest ever?

Oh yes, the highest ever by a long stretch. And this year our Minister expects a profit of Rs 20,000 crore.

What has been the largest driver of this profit and how did it come about?

The main driver has been improvement in our freight earnings. After a lot of study done by the ministry, it was found that many wagons were getting overloaded. For instance, of the 700 million tonnes moved by Indian Railways, almost 400 million tonnes consist of coal, iron ore, foodgrains, cement, etc. The carrying capacity of each wagon is 55 tonnes, but the user was allowed an extra two tonnes officially. But studies found that at least five per cent wagons were getting overloaded to the extent of 8-10 tonnes because of mechanised loading and perhaps a lacuna in supervising.

Mr Lalu Yadav decided why not legalise the whole thing; so now the wagons are charged at not 55 but 65 tonnes, which means we're getting 10 extra tonnes per wagon, almost 18 per cent of the wagon capacity. And 18-20 per cent of 400 million tonnes means an additional 80 million tonnes freight and additional earnings, taking the total to Rs 7,000-8,000 crore a year.

But the criticism is that by doing this the tracks are being overloaded.

This argument was made and all kinds of computerised tests have been carried out to show that the tracks can take this load.

You were GM of Northern Railways for a brief period and now as Southern Railway GM, what are your observations on Lalu's style of management. To what qualities would you ascribe his great success?

It is well known that half-a-dozen well-known universities including Harvard and IIM are studying his style of management. First of all he has given railway officers complete independence. He has a lot of common sense, he is a man of the world, and has realised that to succeed, his officers have to be given freedom. He has selected a few advisors who are giving him the right advice and he has given them the authority to work without fear or favour.

As far as my personal experience is concerned, Mr Prasad has not interfered in a single administrative decision in influencing me on a tender or a contract. This is a major reason for his success; he has allowed policies to be implemented. He has clearly and specifically told me, when I was GM in Northern Railways and even now, that `if anybody calls you from Bihar and mentions my name and asks for a favour tell them point blank that the minister does not permit any interference and has asked us to follow the rules'. We are constantly told this at meetings. And he has also given emphasis on safety and cleanliness, optimum use of Railway land for commercial advertising, shopping malls, etc.

Another unique initiative of his and his Officer on Special Duty, Mr Sudhir Kumar, is random and automatic upgrade of passengers without extra payment. For instance, during summer and festivals like Diwali the trains run full, but at other times AC I Class and AC II Tier coaches run only with 60-70 per cent occupancy, but there is always a huge waiting list for III Tier passengers. So we've started upgradation of passengers, after taking their consent while booking the tickets. If there are vacancies in the AC coaches, the computer randomly upgrades II AC to I AC, III Tier AC to II Tier AC, and ordinary III Tier to III Tier AC. This releases III tier seats, accommodating waitlisted passengers.

When was this started and what has been the experience?

This was started three months ago and on a passenger-intensive segment like SR, the results are very good. We find that in each train almost 100-150 seats are released and without any extra effort we get additional revenue. The average cost of a III Tier ticket in SR is about Rs 300 and if we push in an additional 100 passengers on the 100-odd trains we run daily, and take a modest number of 200 days in a year, it is still an additional revenue of Rs 6 crore, and without any extra effort or investment.

If we take the Indian Railways as a whole, on the 1,500-odd trains, we can safely say that the Railways would be getting an additional Rs 60-70 crore a year. And the passengers are very happy too; somebody who had never travelled by I AC may now get to do so! Somehow nobody had thought of such schemes earlier.

But why take the upgradation consent from passengers? Which passenger is going to refuse a higher class without extra payment?

Sometimes, when the computer does random selection, families or large groups may get split, and people may not like this.