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| Sudhir Kumar, IAS, Officer on Special Duty to the Minister for Railways, addressing the ISB students |
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| “If I have to summarise this turnaround in three words, it is: faster, heavier and longer trains.” |
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do not optimise the layout of the coaches. Such an optimisation would bring down the unit cost from 58 paise to 34 paise – a good reduction of around 40 to 42 percent.
About Footfalls and Eyeballs
In Mumbai, about seven million passengers board the train everyday. This can be translated into 14 million eyeballs, 14 million footfalls, and seven million mouths. We decided to leverage the eyeballs to multiply advertisement and publicity earnings. Our next strategy was to leverage the footfalls and multiply earnings from services like parking, cyber café, telephone booth, ATM, etc. The ambience of the station also improved. We went on to leverage these mouths to earn from catering. You now find services like IBM, Airtel, etc operating on the platforms. We transformed a loss-making business into a profit-making one by simply leveraging eyeballs and footfalls. Our earnings have galloped by over 10 times in the last three years.
In a turnaround scenario, one must have an acute perception of business environment, apart from an understanding of the socio-political context. The co-structures of business like variability, sensitivity, the demand side, and the elasticity of demand to price or non-price factor, should be properly understood. Consider this: The unit cost for a passenger train, per kilometre, is Rs.500. For a goods train, the cost is Rs.694.
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This implies that the unit cost per train kilometre of a goods train is 40 percent higher than that of a passenger train. In a typical passenger train, the gross load is about 800 to1,000 tons. The gross load of goods train is 5,000 tons – five times more than a passenger train. But, the unit cost has escalated by 40 percent. The finding of this analysis is that cost is sensitive to distance, but not to gross load. More train kilometres may mean more losses, but more passengers within the same train kilometres imply more money.
Let’s take another example. Air-conditioned first class fare is 30 times higher than the suburban fare. Sometimes, we think that 30 times higher fare means 30 times higher yield per coach kilometre or train kilometre. But, in reality, 30 times higher fare does not yield two times higher earnings. Thus, it is not tariff that matters, but the yield per coach kilometre and the yield per train kilometre that can turn the Railways around.
Leverage, Synergise, Optimise
Leveraging, synergising, and optimising – these are the three words which will summarise the entire strategy for operationalising those goals of faster, heavier, and longer trains.
When we mean resource leveraging, the resource covers all assets – the human assets as well as the physical assets – whether it is rolling stock, signal, tracks or bridges. The key element of resource leveraging is |
