‘Consolidation will be key strategy'

The last few years have been a roller coaster ride for firms in the container train business because of frequent policy changes by the Railway Ministry and trade fluctuations. Container Corporation of India's Managing Director, Mr Anil Kumar Gupta , spoke to Business Line on how the public sector unit has coped.

Excerpts from the interview:

How has the Railway Ministry's decision to change rating principles and the associated hikes in haulage charges since December 1, 2010 impacted your domestic business in terms of throughput?

In terms of throughput, up to November 2010, we recorded growth of a little over eight per cent in the domestic segment (over the previous corresponding period). Subsequently, for the full year, annual growth in the domestic segment was down to 0.89 per cent. Had the business continued under the same (unchanged) conditions, the full year's growth would have been around 7.5 per cent. Also, it is not a question of haulage charges alone, rather of the entire cost incidence. We have not been affected by haulage charges as much, but the viability of movement across the sectors has been affected.

Suppose Concor moved cargo in some trains from North to East; from East the trains picked up cargo which would move to West; and from West back to the North. With the new rules, some parts of the cargo movements on some of the sectors, like the East-West sector, became unviable. This pushed up the cost for entire operations.

If the cost for domestic traffic were to continue at current levels for the next year, Concor's domestic business will be hit…

Yes, that is a cause for concern. We have to look at new stream of business, new customers. Though the Railways have undertaken a review in February, wherein some of the conditions have been changed.

What will be the trend in container train operations as a whole?

I see consolidation and more co-operation. Private equity investment coming into some of the important players is likely to drive further M&A. Investors will now look at desirable options… it is a sign of maturity.

How has Concor changed with competition in the last few years?

We had to become more sensitive to customer requirements. We had the legacy of being a ‘public sector' entity. But, fortunately, our company realised this key change was required at the right time and started working on it very carefully. We have a staff strength of 1,150 — almost everybody has been exposed to training in attitudes — in last 2-2.5 years. We worked on specific aspects silently. For instance, with competition coming in, the customers would come to us citing discounts offered by competitors. We would explain to them our costs, and why we could not do business and provide quality services below costs.

Some of the Concor staff who were hired by private firms at much higher salaries, acted as a motivation for rest of us in Concor. Our people wanted to prove that they were no less talented than others. The results have been wonderful.

We also realised some of our customers would definitely move to the competitors if they were located closer to their facilities. For instance, if a customer has a factory near Garhi Harsaru (an inland container depot near Delhi, with GDL's stake), he will definitely go there, as it is more economical. But a large number of our customers, including those having their own container train operations, continue to be our large and valued customers.

On changing staff attitude, what areas did you work on?

Not rocket science, really. The emphasis was on inculcating ‘empathy' in everyone towards the customer and reconfirming the maxim of “customer is the king”. Listen to your customer. Many a time, customers will know that you may not be able to help them. But, make an honest and sincere effort to solve the customers' problems.

We have worked out benchmarking systems. We asked an international institute to design special benchmarking courses for our senior officers. Our facilities were benchmarked with specific activities, all of which had a bearing on customer service. Sorry, please don't expect that I will give you all the details on our business intelligence strategies… (smiles).

Have you adopted the Railways' policy of paying a premium for assured transit times?

No. There has been no need so far. We have internal benchmarks for deliveries. The actual transits times are quite good, could be in variance of 4-5 hours at times. But that does not affect the shipments which do get connected to the intended vessels most of the time due to the very high frequency of trains, especially over the Delhi-Mumbai corridor.

Are there premium services for your customers, based on timelines?

For customers using domestic train services, we have introduced a Tatkal service at a premium for those who book their cargoes with us at the last moment and want faster delivery. On very popular routes, from about a year now, up to 10 per cent (9 containers) capacity, is reserved for last minute booking.

What is the latest on your auto transportation project?

We have started well. We have acquired a full rake of specialised containers, each of which can carry six cars. The containers move on our scheduled trains between Tughlakabad (Delhi) and Chennai. The joint venture company operates this. After operating for some months, we will decide whether to import more of these.

Are you able to provide cheaper rates compared to roads?

Yes, we are. We are observing this business. We are also trying to have long term tie-ups with customers.

Does Concor plan to bid for any container terminals this year?

No plans as of now. We are in talks with some of the private port developers which are looking at developing container terminals. But nothing has been finalised as of now.

What is your strategy for this year – consolidating operations or expand into new areas?

Primarily, consolidation will be the key. But we will also focus on building logistics parks, which will have multiple components. The land will be managed by Concor, and we will certainly build and operate the ICD and/or CFS. But for other activities, such as warehousing, we are looking at various options, including that of other players coming in and developing and operating the facilities on a revenue-sharing basis, in the PPP mode.

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