Stamping a new image: India Post's Secretary Jyotsna Diesh with John Samuel, GM, and IMG Khan, Member (Operation)

In September this year, when Punjab chief Minister Amarinder Singh's helicopter crash-landed in a remote corner of Gurdaspur district, Punjab, Singh managed to escape with minor injuries but help also arrived in an unexpected form-India Post. Singh may have been whisked away by car but his chopper was grounded completely as its rotor blades and other essential parts were damaged beyond repair. Enter India's 150-year-old postal network. Two trucks from India Post arrived within 72 hours with more than 7 tonnes of essential components; soon the Pawan Hans chopper was repaired and it took to the skies.

Those who associate India Post with the image of a khaki-clad postman with a bag flung on his shoulder traversing the bylanes of bustling cities or walking through paddy-fields in far-flung villages are in for a pleasant surprise. In fact, the friendly neighbourhood postman is today many more things than just the man who stuffs envelopes and post-cards into your letter box. Soon he could be selling you insurance policies or mutual funds or even fast-moving consumer goods (FMCG) or just sitting you down and doing a market survey for a big corporate giant. Meanwhile, his organisation, India Post, could have metamorphosed from a deliverer of letters and parcels to a full-blown logistics management company that handles supply-chain needs of big business.

Hit by changing market realities (read: the burgeoning growth of private courier services, telephony and electronic mail) that have resulted in a significant decline in exchange of traditional post cards and inland mails, the state-owned postal department is fast trying to adapt to the new age.

World's largest network

The biggest thing going for India Post is its size. With 1,55,618 post offices- 1,25,148 of which are in rural India-no other distribution network comes close to its reach. There is one post office for every 21.13 sq km, covering on an average 6,602 people. That's what the Department of Posts wants to leverage.

Sitting in her sprawling first-floor office in Dak Bhavan, the department's headquarters, a few hundred metres from Parliament House in New Delhi, Jyotsna Diesh, Secretary, Department of Posts, offers a matter-of-fact explanation for the changes she is overseeing. India Post has no options but to diversify, she says, pointing to the growing competition in its traditional business and the changing behaviour of consumers. Her goal: to become the country's largest retail network with the widest reach. "We're working to change our image of just being the bearer of the mailbag. Just wait and see!"

It's under the leadership of Diesh, 57, a 1969- cadre officer, that India Post has started using its huge manpower and network for a gamut of new services-ranging from data survey and customer verification for corporate clients to transporting huge bulk cargo of any volume through extended logistical operations. It has also begun retail selling-its postmen and offices today sell anything from aloe vera personal care products and soaps to Darjeeling tea and mutual funds. They even deliver herbal potions developed by the popular Yoga guru Swami Ram Dev and organic food to consumers' homes.

Even other government departments use the might of India Post's network. The Election Commission, for instance, uses the post office to update its electoral rolls and the Income-Tax department uses it as a convenient collection point. "This year in July we raised it returns worth Rs 5.7 crore in just 3 days," says Diesh. Long queues at regional passport offices have now disappeared with the peripatetic postman taking over the processing, distribution and dispatching functions.

Financial marts: Aiming for new market

Retail tie-ups galore

Given the incredible depth and reach of post offices, several suitors are seeking tie-ups for distribution of their products and services. Post offices have been selling mobile phone recharge cards, admission forms for UPSC and distributing milk coupons for a long time. But now the department will launch a platform that will enable retailing of a range of around 200 standardised branded products, like pressure cooker, mixer-grinder and even furniture. "It will be based on a concept of virtual shopping whereby a customer can place order for a consumer durable on the catalogue at any post office, " says John Samuel, General Manager, Marketing. Adds Raghav Lal, Chief General Manager, Business Development: "We are helping telecom firms such as Reliance, Airtel and BSNL in bill collections." In fact, the department has added value to such services by even planning to print and distribute bulls and collect cash and cheques for service providers like telcos and power companies.

Meanwhile, the international money transfer chain, Western Union, a preferred channel for expatriate Indians to remit money to their families in India, has tied up with India Post to reach the last-mile recipient, while other companies are using the network for mutual fund schemes, personal loans and catalogue-based retailing.

For banks and other financial services companies, the reach of the postal network is a big opportunity. With a network that is more than double that of all bank branches put together and thrice that of the number of all police stations, India Post has been the primary repository of rural savings. The department has total deposits valued at Rs 3,75,000 crore from 140 million savings account customers.

The idea now is to transform the post office network from being a mere distribution hub of parcel and mails into a one-stop Postal Finance. Companies like State Bank of India Mutual Fund (SBIMF), UTI and ICICI have tied up with the postal department to enable investors to make their investments through post offices. The department has also begun selling insurance products for Oriental Insurance and processing loans for GE Countrywide. Even Indian banks have found an unlikely ally in India Post. Faced with fulfilling Reserve Bank of India's priority lending guidelines- which state that at least 40 per cent of funds should be lent to the rural sector-banks will now use India Post's network to reach the rural consumer.

Post-haste: Now, a range of services on offer

And the bottomline is?

If things seem so upbeat, could there be a catch? Well, yes. Although revenues of the Department of Posts have been growing steadily at an average rate of 8.4 per cent over the last six years and touched Rs 5,223 crore last year, India Post has social obligations to serve. For delivering a postcard from Indira Point in the far-flung Andaman and Nicobar islands to Ladakh in the upper reaches of the Himalayas, the department still charges a measly 50 paise (the price of a matchbox). The average loss that the department incurs for delivering a postcard is Rs 6.10 and for an inland letter it is Rs 4.10. For the average money order-the preferred way of sending money across the country for millions of Indians-India Posts takes a hit of Rs 30.

The imbalance of trying to match costly social obligations with revenues has meant that the department loses money every year. And although new initiatives to earn more revenue have had some impact, the average annual deficit over the past five years has been between Rs 1,200-1,500 crore. The big worry is India Post's ballooning non-plan expenditure, like salary bills, pension schemes, and economically unviable rural post office ventures, which comprise 99 per cent of the department's spending, while little or no productive capital expenditure is made by it.

This is precisely why India Post is adopting its new strategy of pursuing more revenue-generating capacity. In this, it is following what the US Postal Services began doing several years ago by tapping mutual funds and retail markets. Says Diesh: "The only thing is that they have been doing it since almost two decades, and we have just started."

The US postal services also enjoy monopoly in certain segments where some categories of mail are reserved for it. The Indian postal department has also been seeking similar sops and reservations. "It would just give us a fair ground in wake of our additional expenses to meet the social obligations," says Diesh.

Logistical link: India Post is gearing up for a bigger market share of the express business

The biggest competition for India Post has been the express (or courier) industry, which has been nibbling into its market share. Of the total value of Rs 1500 crore worth of revenues from delivery and dispatch of packages and parcels last year, about 200 private courier companies accounted for 72.45 per cent share, while India Post's express service, Speed Post, had a 27.55 per cent share.

India Post is also taking other measures to earn more revenues. Last year, it did away with the 35-kg upper limit for parcels and now delivers just about anything. "Logistics has a market potential of Rs 75,000 crore and we just can't afford to lose it," says MS Bali, Postmaster General in-charge of north-east, who till last month was general manager, marketing, at