Harvard, Wharton vive for Lalu's success mantra

New Delhi, Dec 27: The rustic Lalu Prasad today donned the mantle of a 'Management Guru', explaining to the students of world famous Harvard and Wharton Business Schools the wisdom entailed in making success of a venture, even if it is a written-off entity like Indian Railways and who at the end of it all were left mesmerised.

The scene of action was the spacious auditorium of National Rail Museum and Railway Minister Lalu Prasad gleefully told the young corporates how he gave financial muscle to the government's biggest department that was ''teetering on the brink of a collapse'' barely five years ago.

It was not long after Mr Prasad began to speak on ''The strategy and Policy Framework for the Turnaround of Indian Railways'' that he held sway on the minds of high-profile students, used to employing sophistcated techniques, intriguing formulae and complex logic.

The author of an incredible success story of turning around Indian Railways without using the cold logic of a modern day Corporate entity --no retrenchment and no hikes in fare and freight charges-- Mr Prasad kept the group of bright students --100 from Harvard and 37 from Wharton-- wondering how it all happened.

The minister showed his astute understanding of market reality and the finer nuances of the functioning and finances of the railways by frequently using expressions like 'internal resources,' 'operating ratio,' and 'fund balances.' Paradoxically, in the US, the bastion of capitalism, the Railways run at a loss and in Europe it survives basically on subsidies.

The 'Professor' was at pains to explain how a huge organisation which was written off by the Rakesh Mohan Committee in 2001, had become the second largest profit-earning public sector enterprise after ONGC.

But belying all the gloomy forecast, the Railways had already made fund balances of Rs 13,000 crore and has now targeted to swell it to Rs 20,000 crore in the current fiscal.

The key to the turaround of Railways lies in a basic principle of micro-economics --optimum utilisation of resources. For instance, Mr Prasad launched empty flow wagon scheme entailing incentives to the business community whereby lower freight is charged at a time when wagons would have been empty. In another instance, the minister put to use the unutilised capacity of wagons after 1800 hrs by permitting loading of freight.

These plus some other mesaures have reversed the trend of Railways losing freight to the surface transport.

The freight corridor, which is to link four metros and major ports, will ultimately tilt the applecart with a significant diversion of road traffic to the Railways in view of freight trains set to cruise at the high speed of 90-100 km per hour as compared to existing 25 km.

In the passenger segment, Mr Prasad has created a heaven for the ordinary travellers by introducing 'Garib Rath' trains -- which allow travelling in airconditioned comfort at a price considerably less as compared to normal AC trains.

In short, his mantra is larger volume but low margins. By doing this, he has become the darling of the trading and manufacturing community and messiah of the masses.

''The Railways is like a Jersey cow. If you don't milk it fully, it will fall sick,'' goes his logic.

For the mandarins of Rail Bhavan, this has simply translated into the optimisation of the existing resources of the Indian Railways to bolster its revenues.

What is surprsing for the business experts the world over that the minister has been able to achieve such a turnaround without corporatising the Railways.

So far, he has been able to prove it without effecting any hike in passenger fare and freight charges for the last three years.

Necessity they say is the mother of invention. The compulsions of a mass political leader that Mr Prasad is has perhaps compelled him to work out a model which pleases everyone.

He has become a hot favourite for the community of managers having been invited earlier by the IIM, Ahmedabad and later by the IIM, Bangalore.

On his itinerary are a meeting with the World Bank in Washington, and a lecture at the Lal Bahadur Shastri Academy in Mussoorie.

UNI