Stamping a new image: India Post's
Secretary Jyotsna Diesh with John Samuel, GM, and IMG Khan,
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.
| INDIA POST'S NEW NEW THING
The good old post office is reinventing itself by:
the retail front for all kinds of products
bank extension counters for loans and micro credit
into premium services like selling mutual funds
from parcels to logistics support
a cash collection agency for private and public sectors
up 300 shop-in-shop financial marts to sell a variety of
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
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
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
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,"
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,