W13585

INDIA POST

Dr. Arpita Agnihotri and Saurabh Bhattacharya wrote this case solely to provide material for class discussion. The authors do not
intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names
and other identifying information to protect confidentiality.

This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
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Copyright © 2014, Richard Ivey School of Business Foundation Version: 2014-01-15

The advent of the World Wide Web in the early 1990s and the entry of private players in India’s post-
liberalization era1 resulted in India Post losing a substantial volume of its business to e-mails, faxes, short-
message services and private-courier-service providers. Additionally, government policies regarding India
Post had remained unchanged for the last 100 years. As a consequence of these problems, India Post was
caught up in a vicious cycle of decreasing mail traffic, low levels of investment in technology, poor
financial performance and poor customer service. Critics also raised questions regarding India Post’s lack
of market orientation.2 Nevertheless, India Post responded by taking advantage of its huge distribution
network and modernizing its facilities. Despite these efforts, which were undertaken between 2005 and
2012, India Post was unable to report any profits, although the efforts generated revenue growth. Among
all the services that the postal department provided, only postal insurance generated significant profits.3 It
was from this perspective that India Post’s management wondered whether it should follow the example
of countries such as Germany and the Netherlands, where the postal services had been privatized,4 or
whether it should wait for the 2005-2012 initiatives to generate profits for India Post in the coming years.

HISTORICAL BACKGROUND

The postal system in India was established by Robert Clive5 in 1766. By the 1880s, mail- and money-
order services and banking facilities had also been introduced. In 1884, postal life insurance was
introduced for all government employees. Soon, the postal department and its mail services had become
an important component of the Indian economy. In 1947, when India gained independence, there were
23,000 post offices. Over the past six decades, India Post had not only become the world’s largest postal-
service provider but had also created the country’s largest retail network.6 As of March 31, 2012, there
were 154,822 post offices in India, of which 89.8 per cent were in rural areas. On average, each post
office covered an area of 21.23 square kilometres and served 7,817 Indians.7

Technological and Competitive Challenges of India Post (1980s to 2005)

Historically, India Post had been an early adopter of new technology. For example, since 1877 it had used
the services of the Indian railways to transport letters and other documents. A separate railway “parcel
van”8 was joined to passenger and goods trains for quick delivery of mail in most urban areas. However,

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in the late 1980s this service was withdrawn when the Indian railways decided to remove many
intermediary stations to increase train speed and decrease travel time. For distant destinations, India Post
also relied on the network of Indian airlines. Nevertheless, to enhance efficiency, the Indian airlines
stopped night flights. Consequently, the postal department’s quick mail-delivery services suffered.

In 1995, World Wide Web information technology was introduced throughout the country.9 India Post,
however, failed to adopt this new cyber technology. This evoked criticism from the media and industry
experts, who labeled India’s traditional mail delivery as “snail mail.”

At the same time, India Post also faced severe competition from private courier companies. Indian law
only permitted courier companies to carry documents, but since the definition of “document” was unclear,
courier companies handled all kinds of shipments, ranging from letters to heavyweight items.10
Additionally, courier companies personally collected documents from offices and homes, rather than
requiring customers to go to courier offices. India Post had a similar service called Expedited Mail
Services (EMS), as per which postal workers of designated post offices would visit business offices in
their areas to collect letters. However, the timing of this service was limited to before 2:30 p.m. In
contrast, courier companies collected documents until the evening, generally up to 6:00 p.m. Leveraging
new technology, courier companies also provided consignment tracking. Thus, courier companies, unlike
India Post, provided customers with both convenience and speed. The private courier services also
benefited from a flexible managerial approach that was absent at India Post. For example, the
management of courier companies was authorized to set pricing policies, such as deciding whether loyal
high-volume customers would receive a discount. India Post, being a public-sector organization, did not
enjoy such autonomy and had to wait for months to get pricing approval from the Ministry of
Communications and Information Technology.11 Additionally, the bureaucratic structure of India Post
slowed down strategic decision making and decision implementation. Critics also indicated that part of
the reason for India Post’s slow response to changing market conditions was unstable management. From
2001 to 2006, India Post was headed by three different chiefs, whose average tenure was only two years.12
Apart from managerial problems, India Post also suffered from late delivery and non-delivery of mail.
Private courier service providers seldom faced such challenges. This situation resulted in reduced
customer satisfaction with and poor perceptions of India Post, both in the consumer-to-consumer (C2C)
segment and in the business-to-consumer (B2C) segment. Consequently, over a period of 10 years, from
1996 to 2006, the quantity of mail handled by the postal department fell from 15,749 million to 6,700
million pieces13 — a decline of 57.5 per cent.14 Strict government labour policies further added to the
problem. For example, salaries, wages and pensions had to be paid in accordance with the Fifth Pay
Commission,15 which left India Post with a cost structure almost four times greater than that of the
average courier company.16

Turnaround Initiatives (2005 to 2012)

Postal organizations around the world were segmented into four strategic categories.17 Organizations in
the first category were known as global players. To be categorized as a global player, a country’s postal
organization had to earn more than 25 per cent of its revenue from international markets. The second
category of organizations were regional players — those who earned more than 12.5 per cent of their
revenue from international markets, particularly from neighbouring countries. The third category
consisted of service providers, who offered services such as banking, insurance and stationery sales, apart
from their core mail services. Additionally, they engaged in a small amount of international business. The
fourth category consisted of traditionalists, who had a national focus and concentrated mostly on mail and
other postal services.18 In response to increased competition as a result of new technology and the courier
industry, India Post repositioned itself from being a traditionalist to being a service provider primarily

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focusing on two broad categories — mail services and non-mail services (see Exhibit 1). As a part of its
restructuring efforts, India Post also announced a new vision and mission, with the slogan “India Post’s
products and services will be the customer’s first choice.” The critical element of the turnaround plan was
to leverage technology to implement new business initiatives and to bring India Post back to profitability
by the end of fiscal year 2013-2014.19 Thus, India Post decided to perform three broad functions: the core
business (i.e., mail and parcel service), fee-based third-party services (also known as “retail post”), and
administering financial services such as the post-office saving scheme, insurance sales and the like.

FOCUS ON THE CORE BUSINESS OF MAIL AND PARCEL SERVICE

Introducing Various Types of Post

India Post introduced Business Post, which provided special facilities for franking, gumming and
inserting documents.20 This service was generally used for bulk mailings such as mailing of monthly bills,
annual reports, dividend warrants and share certificates. In 2005-2006, using this India Post service,
India’s Vehicle Tax Department increased its single-day collection of taxes from a mere INR 7,000 to
INR 100,000.21 This happened because vehicle owners received their vehicle tax invoices on time.
Likewise, Business Post also helped the Income Tax Department increase its collection of income tax
refund orders.

Furthermore, India Post relaxed certain regulations for Speed Post service, such as the regulation that had
limited shipment weight to not more than 20 kilograms. It also launched attractive corporate schemes
such as insurance services for consignments. Similarly, express-parcel-post service was introduced for
shipments up to 35 kilograms, with added services such as free pick-up and a credit facility. For
shipments exceeding 50 kilograms, a Logistics Post service was offered. The tariffs charged by India Post
were reasonable and much below the courier company rates. As a consequence of all these initiatives, by
2011-2012 the combined use of Speed Post and express-parcel-post service had increased to 402 million
shipments as against 247.50 million in 2009-2010. Also, the contribution of Speed Post and express-
parcel-post service helped increase the overall mail traffic by 6 per cent in 2011-2012 as against 3.75 per
cent in 2009-2010. This was a significant development for India Post, as the contribution of registered and
non-registered post was declining22 (see Exhibit 2).

For non-business customers, especially in rural areas where courier companies did not reach, a service of
“e-post” or hybrid post was initiated in 2005. Customers using this service could send messages to their
friends and relatives through e-mails without computers and Internet access. Customers only needed to
submit a message on a piece of paper to the post office. The message was then scanned and sent to the
nearest e-post centre of the intended message recipient. There, the message was printed and delivered to
the addressee by the postal worker. This facility generated revenues of around INR 400,000 within two
months of launch.23

India Post also introduced Media Post, wherein postal assets such as envelopes, money-order forms,
inland letter cards, letter boxes and postal vans were used as a source of print-media advertising to earn
extra revenue. Companies were encouraged to print their logo on envelopes or write messages over letter
boxes. This attracted advertisers across the nation. Advertising postal cards were available in different
colours and were sold at slightly lower prices compared to ordinary postal cards, so as to draw customer
sales.24

In Pune, India, in 2011, India Post launched the innovative concept of a post office on wheels, i.e., a
mobile post office. This service was aimed at senior citizens, physically challenged people and office-

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workers. It provided three types of service: core mailing, retail post and financial administration services.
The mobile van spent two hours in each of several city localities. It was equipped with all kinds of
software and hardware. The success of the mobile-postal-van concept was evident from the fact that
within one month of launch, it had generated a total of 25,745 different transactions and INR 2 million of
revenue.25 Accordingly, India Post planned to aggressively expand this service.

To enhance its reach in urban areas, India Post started a business scheme for franchises in 2012. The
profit potential for each franchisee was estimated to be INR 50,000 per month. Heads of the Circles26
were also given more autonomy to change the regulations when they observed high-profit potential in a
franchisee situated in a particular urban or sub-urban area.27 However, India Post’s lower level employees
and their unions did not support this initiative and displayed resistence on the grounds that the franchisees
were inefficient, which was not true.28

Diversification into Retail Post

Retail post refers to the services offered by post offices through utilizing their retail network. Under this
initiative, India Post successfully signed agreements with companies, utility-service providers and
financial-service providers for the sale of various products at post-office counters. Products such as
prepaid mobile cards, cameras, application forms for competitive exams, personal loans and non-life-
insurance policies were made available at post-office counters. India Post had also tried to establish
partnerships with successful online retailers such as Snapdeal and Infibeam. The focus of India Post on
such partnerships reflected the fact that it was in the process of establishing 20 merchandise warehouses
and booking centres to take orders and handle shipments from these e-commerce companies.29 The postal
department also leveraged its tie-up with emporiums such as Cottage Emporium and Fabindia to set up
small offices inside the emporiums so that customers could immediately send gifts purchased from these
shops to their overseas friends and relatives.30

Focus on Financial Services

India Post started offering financial services such as insurance back in 1884, and by 2013 had a sum
assured of INR 640,770 million.31 By 2005-2006, approximately 53 per cent of its revenue was from a
vast range of financial services.32 Seeing the potential of financial services, in 2006 the postal department
decided to open Finance Mart, a one-stop shop serving all banking needs. In addition to postal insurance,
this mart provided mutual-fund services and money-transfer facilities.33 Fee-based services such as
insurance and banking services also were in demand in rural areas, since 80 per cent of the populace in
the rural market was not covered by insurance and 40 per cent had no access to institutional credit.34 India
Post tied up with reputable players such as Western Union and Oriental Insurance to provide money-
transfer and insurance services. In countries such as Japan and Germany, postal services were also
successfully playing the role of banks.35 Given the reach and strength of India Post, the Reserve Bank of
India and the Indian government planned to expand India Post into a full-fledged bank so that financial
services could be provided to people living in rural areas, where establishing a new bank branch was not
financially viable. The reach of India Post surpassed the network of any commercial bank operating in
India36 (see Exhibit 3). Based on the number of accounts and the amount of savings on deposit, India Post
was easily the largest bank in India.37 Furthermore, the postal worker was traditionally considered a friend
to rural consumers. This enhanced the effectiveness of postal workers and affiliated people in selling
banking services to residents of rural India.38

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Modernization of India Post—the Major Thrust

As part of its aggressive transformation, India Post hired the McKinsey global consultancy firm to chart
its roadmap for transformation. Under the modernization provisions that started in 2008, three major
projects were undertaken: Project Arrow, the Mail Network Optimization Project and India Post 2012.

Project Arrow

Launched in 2008, the objective of Project Arrow was to give a new image and look to India Post. The
project was expected to cost INR 9,000 million and was planned to be completed in phases. The first
phase covered 50 major post offices, and by the sixth phase in 2012, 1,736 post offices were covered.39
The project included civil-works renovations and construction of boundary walls that changed the internal
and external appearance of post-office buildings.40 The makeover of the post offices had a significant
impact not only on the minds of consumers but also on the productivity of employees.41 Apart from
renovations, Project Arrow also aimed to increase the delivery speed of customer services. Certain
measures for customers were taken, such as letting them open new accounts within seven minutes,
allowing them to deposit money in two minutes and issuing them savings bank certificates in exactly
seven minutes.42 India Post also hired Ogilvy, a reputable advertising agency, to design a new slogan and
logo. This was required in order to give India Post a competitive edge over the private courier players.
The new logo was designed in red and yellow to give it corporate appeal and reflected changes in the
postal-service officials’ attitude toward the content and quality of services that the department provided.
To maintain some continuity in the features of India Post, the wings in the earlier India Post logo were
retained. According to the Minister of State for Communications and Information Technology,
Jyotiraditya Scindia, new branding meant a “new destiny” for India Post. The print campaign was titled
“Give wings to your dreams.” The campaign was launched in 16 local newspapers in 2008.43 This dual
strategy of “look and feel” and “customer responsiveness” had enhanced the post-office revenues under
Project Arrow by approximately 18 per cent and the customer footprint by 20 per cent by 2012.44

Mail Network Optimization Project

This project was launched in 2010 to streamline India Post’s core and mail operations. The postal
department often suffered from the problems of late or wrong delivery of mail and valuable articles. This
happened because either there were problems in fleet operations or mail was processed incorrectly. To
overcome these problems, initiatives were taken under this project, including investment in dedicated
cargo carriers for mail and parcels. India Post also acquired some of the aircraft of Indian Airlines, the
country’s national carrier. As well, it set up automated mail-processing and sorting centres in six
metropolitan cities. These machines had the capacity to sort 35,000 articles per hour.45 For automated
mail sorting, India Post relied on one major supplier, Siemens, which not only provided machines that
could automatically sort letters but also provided consultancy services regarding data collection from
various cities and towns in India.46 India Post also implemented Global Positioning Systems in its mail
vans so that it could observe the movement of the vans and keep track of how much time it took for a van
to travel from one place to another.47 According to postal department authorities, it was important to keep
track of vehicles and delivery times in view of the competition that India Post was facing from courier
companies. The success of this Mail Network Optimization Project could be seen from the fact that it won
the National E-governance Award for 2012-2013 in the category “Outstanding Performance in Citizen
Centric Service Delivery.”48 Through this project, India Post was also able to reduce the percentage of
customer complaints to 0.046 per cent of the customer traffic.49

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India Post 2012

This was a multifaceted information-technology-implementation program initiated by India Post in 2009.

The objective of this program was to convert the postal department into a “technology-enabled, self-
reliant market leader.”50 Though IT initiatives had been undertaken in 2006 with the launch of facilities
such as e-money order and e-transfer, the adoption of innovative technology was further emphasized
under the project India Post 2012. For example, the India Post website was created and call-centre stations
were established. Furthermore, post offices were provided with wide area network connections and
broadband facilities. Apart from this, a program was implemented for integrating the financial services
systems of the postal department. Under the financial-services-integration scheme, postal banking and
insurance options were developed so that customers could avail themselves of banking anytime,
anywhere. The cost of the entire project was INR 18,770 million51 and, once implemented, India Post
became the user of one of the biggest electronic systems in the country. By 2012, 99.26 per cent of the
departmental post offices had been computerized.52 India Post also invested in core banking-solution
technology so that its saving bank and saving-certificate business could function properly. The core
banking solution provided customers with anytime banking services.53

Consequences of the Turnaround Initiatives

The turnaround initiatives undertaken by India Post from 2005 onwards were so successful that by the end
of 2009 India Post reported a 28 per cent rise in revenue earned.54 However, many problems still existed
in India Post’s financial performance, as explained below:

a) Mail and logistics services were the core businesses of India Post. As such, the minimum expected
outcome of the turnaround initiatives was growth in mail traffic. Unfortunately, a very low growth of
1 per cent on average in mail traffic was registered between 2008-2009 and 2010-2011, followed by a
3 per cent decline in 2011-2012 (see Exhibit 2). However, even the short-lived growth in mail traffic
had helped India Post to enhance its efficiency as it slowly moved towards achieving economies of
scale (see Exhibit 4).
b) Though the turnaround initiatives led to a rise in revenues, beginning with the fiscal year 2008-2009,
the revenue less expenditure deficit kept on increasing (see Exhibit 5). Nevertheless, a promising
aspect of the initiatives was that the revenue less expenditure deficit for India Post in 2011-2012 was
the lowest in the past 10 years.55 The overall market share of India Post by 2010 was only 10 per cent,
with organized courier players commanding 65 per cent of the market share and unorganized courier
players (small and regional players) grabbing the other 25 per cent.56
c) Among the various services provided by India Post, it was financial services, such as insurance, and
other services, such as competition postcards and letters, that had become profitable since 2004-2005
(see Exhibit 6). After the turnaround initiatives were implemented, improvements in profits occurred
mainly in just these services, with other services still incurring losses, though the losses were reduced
to some extent.
d) From 2005-2006 to 2011-2012, the ratio of employee costs to total expenses showed an overall
increase (see Exhibit 7), pointing to the fact that the initiatives undertaken by India Post between
2005-2006 to 2011-2012 were not producing desired outcomes.

WHERE DID INDIA POST STAND IN TERMS OFGLOBAL NORMS?

Comparing the performance of India Post with global norms, it was observed that in the fiscal year 2012-
2013, the United States Postal Service, with 31,272 post offices, ranked first with delivery of 550 million

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items every day; whereas India Post, which had 154,822 post offices throughout the country, handled
only 43 million items daily.57 Furthermore, revenues of the Indian postal department could match only 74
per cent of the department’s expenses. This deficit was greater than the deficit of China’s postal service,
where revenues matched 95 per cent of expenses. Countries that had successfully turned around their
postal departments mainly focused on three aspects. First, they separated government functions from
commercial functions. Second, they provided commercial flexibility to their postal departments. Finally, a
few of them were partially, if not completely, privatized. For example, the Netherlands privatized 57 per
cent of its operations and Germany vested 31 per cent of the ownership of its operations with private
players.58 Considering India Post’s level of performance, policy makers were debating whether India Post
should be privatized, or whether the initiatives would sufficiently enhance India Post’s profits in the
coming years.

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EXHIBIT 1: DIVERSIFIED PORTFOLIO OF INDIA POST

Platform Area Description

Non-mail
Services
Parcel Services Express and deferred services
Transportation
Logistics Contract and brokerage logistics
Selling of consumer durables and other fast-moving-consumer-
Retail
goods products
Money transfer, bill payment, retail banking, resale of financial
services (e.g., insurance and mutual-fund products)
Retail Services Banking
Decision to expand post offices into fully fledged banks is under
consideration
Insurance Postal-insurance schemes
Advertising Lending space to corporations for advertising their products on
Media Post
Services letter boxes, vans, inland letters and envelopes
Emerging
E-commerce Hybrid mail, provision of cyber cafes (current decision in progress)
Services
Government Survey-based
Collection of data for Consumer Price Index
Services Services
Document-
Logistics Post, Business Post, Mobile Post Office Service, Speed
Mail Services management
Post and EMS
Services

Source: Developed by the authors.

EXHIBIT 2: MAIL TRAFFIC UNDER INDIA POST (2005-2006 TO 2011-2012)

Premium
Mail Traffic Product (Speed
Year Registered Non-registered
(in millions) Post +Express
Parcel Post)
2005-2006 6,700.72 208.56 6,492.16 N/A
2006-2007 6,677.18 217.31 6,459.87 N/A
2007-2008 6,391.10 199.8 6,191.30 N/A
2008-2009 6,540.90 198.2 6,342.70 N/A
2009-2010 6,589.80 195.8 6,146.50 247.5
2010-2011 6,618.20 177.9 6,157.60 282.7
2011-2012 6,371.80 191.1 5,778.70 402

N/A: Not available.

Source: Compiled from Annual Reports of India Post, 2005-2006 to 2011-2012,www.indiapost.gov.in/Annual_Reports.aspx,
accessed April 16, 2013.

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EXHIBIT 3: NUMBER OF POST OFFICES IN INDIA (1980-2012)

165,000
160,000
Number of Post Offices

155,000
150,000
145,000
140,000
135,000
130,000
125,000
120,000
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Year

Source: Adapted from Universal Postal Union, 2013,

www.pls.upu.int/pls/ap/ssp_report.main?p_language=AN&p_choice=BROWSE, accessed March 23, 2013.

EXHIBIT 4: ECONOMIES OF SCALE

Year Expenses (in INR millions) Mail Traffic (in millions) Economies of Scale
2005-2006 62,334 6,700.72 0.107497
2006-2007 65,720 6,677.18 0.1016
2007-2008 70,063 6,391.10 0.091219
2008-2009 94,554 6,540.90 0.069176
2009-2010 129,080 6,589.80 0.051052
2010-2011 133,079 6,618.20 0.049731
2011-2012 137,052 6,371.80 0.046492

0.12
Cost Per Mail (INR)

0.1
0.08
0.06
0.04
0.02
0
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Year

Source: Developed by the authors using Annual Reports of India Post, 2005-2006 to 2011-2012,
www.indiapost.gov.in/Annual_Reports.aspx, accessed April 16, 2013.

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EXHIBIT 5: REVENUE LESS EXPENDITURE DEFICIT OF INDIA POST

160,000

140,000

120,000

100,000
INR Million

80,000

60,000

40,000

20,000

0
1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009- 2010- 2011-
99 00 01 02 03 04 05 06 07 08 09 10 11 12
Revenue (in million) 17,225 20,201 32,978 36,971 40,097 42,569 44,318 50,235 53,224 54,949 58,623 62,667 69,623 78,993
Expenses (in million) 33,573 36,718 49,072 51,945 53,741 56,322 58,137 62,334 65,720 70,063 94,554 129,080133,079137,052

Source: Adapted from Universal Postal Union, 2013,

www.pls.upu.int/pls/ap/ssp_report.main?p_language=AN&p_choice=BROWSE, accessed March 23, 2013.

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EXHIBIT 6: AVERAGE COST AND AVERAGE REVENUE

OF VARIOUS POSTAL PRODUCTS OF INDIA POST (IN INR)

2004-2005 2005-2006 2006-2007 2008-2009 2009-2010 2010-2011 2011-2012

Name of Service C R C R C R C R C R C R C R
Postcard 6.6 0.5 7.1 0.5 7.0 0.5 8.6 0.5 10.8 0.5 7.5 0.5 7.3 0.5
Printed Postcard 6.6 6.0 7.1 6.0 7.0 6.0 8.6 6.0 10.8 6.0 7.5 6.0 7.4 6.0
Competition
Postcard 4.4 10.0 4.6 10.0 4.1 10.0 4.9 10.0 6.3 10.0 7.5 10.0 7.1 10.0
Inland Letter 6.5 2.5 7.0 2.5 6.6 2.5 8.5 2.5 10.8 2.5 7.4 2.5 7.3 2.5
Letter 7.2 9.1 7.9 10.2 7.7 10.0 9.2 10.6 11.9 10.6 8.2 10.3 7.9 9.7
Registered
Newspaper-Single 8.4 0.4 8.6 0.4 8.1 1.0 9.2 1.0 11.7 1.0 9.3 1.0 8.8 0.6
Registered
Newspaper-Bundle 14.9 1.0 11.0 0.7 10.3 1.0 13.7 1.0 17.2 1.0 20.3 1.0 17.9 1.5
Book Post-Sample
Packets 8.6 8.3 8.6 6.8 8.0 6.6 9.8 8.3 12.4 8.3 9.2 8.2 8.9 6.7
Book Post-Printed
Books 15.7 3.9 14.7 3.7 13.4 3.6 14.2 4.0 17.6 3.9 13.6 4.2 12.6 3.1
Book Post-Other
Periodicals 14.5 12.7 13.4 13.8 15.3 17.2 14.8 16.5 18.5 16.6 11.7 15.5 10.8 8.6
Acknowledgement 6.0 3.0 6.5 3.0 6.0 3.0 7.5 3.0 9.5 3.0 6.5 3.0 6.4 3.0
Parcel 70.8 57.3 76.8 72.7 60.6 68.1 61.5 77.2 74.6 75.7 48.1 41.0 43.5 35.8
Registration 33.6 17.0 33.6 17.0 34.4 17.0 45.2 17.0 57.7 17.0 41.8 17.0 41.1 17.0
Speed Post 42.0 36.9 40.6 37.6 44.4 34.9 57.8 28.5 74.5 32.3 53.7 27.6 50.6 23.0
Valuable Payable
Post 23.0 4.4 19.9 4.3 20.6 4.2 31.9 4.2 41.2 4.2 27.7 4.2 28.3 4.5
Insurance 44.4 50.3 41.3 50.1 45.2 84.6 62.4 98.1 80.0 98.2 124.7 92.8 130.3 268.6
Money Order 56.2 26.1 57.6 26.7 63.6 35.2 86.7 37.0 123.3 40.5 93.5 42.2 86.7 63.0
Indian Postal
Order 24.1 3.0 22.5 3.2 33.2 34.9 32.5 4.7 50.7 3.4 38.9 3.9 35.4 2.7

Note: C = Cost; R = Revenue; data for 2007-2008 is not available.

Source: Compiled from Annual Reports of India Post, 2004-2005 to 2011-2012, www.indiapost.gov.in/Annual_Reports.aspx,
accessed April 16, 2013.

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EXHIBIT 7: EMPLOYEE COST AS A PERCENTAGE OF TOTAL EXPENDITURE OF INDIA POST

32.00

31.00
Employee Cost as a % of Total

30.00
Expenditure

29.00

28.00

27.00

26.00

25.00

24.00
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Year

Source: Developed by authors based on the Annual Reports of India Post, 2004-2005 to 2011-2012,
www.indiapost.gov.in/Annual_Reports.aspx, accessed April 16, 2013.

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ENDNOTES
1
In 1991, liberalization was introduced in the Indian economy.
2
V. Ranganathan, “Challenges in Reform of the Indian Postal Service,” Economic and Political Weekly, 40:38, 2005, pp.
4121-4125.
3
“Annual Report 2011-2012,” Department of Posts, www.indiapost.gov.in/Report/Annual_Report_2011-2012.pdf, accessed
April 16, 2013.
4
“India Post 2010: Conference on harnessing the outreach infrastructure of India’s Postal Network,”
www.yumpu.com/en/document/view/13723874/report-recommendations-invest-india-economic-foundation, accessed
February 15, 2013.
5
Major General Robert Clive (1725-1774) was a British officer who was largely responsible for establishing the political and
military domination of the East India Company in India. He is also credited with establishing the postal system in India.
Robert Clive established a postal plan (known as Jamidara Pratha) on 24 March 1766 in West Bengal, a prosperous state of
India. He was responsible for establishing post offices in Mumbai, Chennai and Calcutta between 1764 and 1766. The main
purpose of this postal system had been to serve the commercial interests of the East India Company. See www.heritage-
history.com, accessed February 16, 2013.
6
“Western Union, India Post striving to serve customer better,” Business Line, March 17, 2011,
www.thehindubusinessline.com/industry-and-economy/banking/western-union-india-post-striving-to-serve-customers-
better/article1547446.ece, accessed March 9, 2013.
7
Ibid.
8
The sorting of mail was done overnight in the parcel vans to ensure next-day delivery.
9
K. Banerjee, “Online services in India: A market analysis,” Journal of Computer-Mediated Communication, 3:1, 1997.
10
“Postal and Express Delivery Services,” Indian Council for Research on International Economic Relations,
www.wtocentre.iift.ac.in/EU%20BTIA/EU%20BTIA/Report%20on%20Postal%20Services%20-%20India%20-
EU%20BTIA.pdf, accessed March 9, 2013.
11
“Courier companies give India Post a tough time,” The Times of India, October 21, 2011,
www.articles.timesofindia.indiatimes.com/2011-10-21/mangalore/30305908_1_courier-service-courier-companies-india-post,
accessed March 10, 2013.
12
Bhanu Pandeand Souvik Sanyal,”India Post: Even with social obligation, it could be profitable,” The Economic Times,
March 7, 2011, www.articles.economictimes.indiatimes.com/2011-03-07/news/28666129_1_india-post-decision-making-
global-logistics, accessed April 5, 2013.
13
Proloy Bagchi,” Reinventing the Indian Post Office,” Ground Report, February 29, 2012,
www.groundreport.com/Business/Reinventing-the-Indian-Post-Office/2944560, accessed March 9, 2013.
14
“Annual Report 2006-07,” India Post, www.indiapost.gov.in/Report/Annual_Report_2006-2007.pdf, accessed April 18,
2013.
15
In India, a Pay Commission was responsible for the review and revision of salaries and wages of government employees.
Until now, six Pay Commissions had been set up and implemented. The Fifth Pay Commission was implemented in 1997
and had continued until the implementation of the Sixth Pay Commission in 2008. Under the Sixth Pay Commission, the
salaries of 5.5 million government employees were raised, leading to an additional burden of INR 200,000 million for the
government. See “Sixth Central Pay Commission,” Government of India, http://finmin.nic.in/6cpc, accessed April 19, 2013.
16
“Future of India Post: Rural Dimension,” www.indiapost.gov.in/PSCIB/Resource_files/Future%20of%20India%20Post.htm,
accessed March 26, 2013.
17
“Achieving High Performance in the Postal Industry,” Accenture Research and Insights 2012,
www.accenture.com/SiteCollectionDocuments/PDF/Accenture-High-Performance-Postal2012brochure-
FINAL1P.pdf#zoom=50, accessed April 7, 2013.
18
Ibid.
19
Bhanu Pandeand Souvik Sanyal,”India Post: Even with social obligation, it could be profitable,” The Economic Times,
March 7, 2011, www.articles.economictimes.indiatimes.com/2011-03-07/news/28666129_1_india-post-decision-making-
global-logistics, accessed April 5, 2013.
20
Franking is an official mark or signature on a letter or parcel to indicate that postage has been paid or does not need to be
paid. Gumming is the application of adhesive to the envelope or parcel to close or bind them so that the inserted documents
or items remain secured. Usually the customers both business and non-business undertook these activities. However, with
the launch of Business Post by the Indian Postal department, these jobs were also performed by the Post Offices for their
business customers who needed to send bulk mails. See www.oxforddictionaries.com/definition/american_english/franking,
accessed December 4, 2013.
21
INR stands for Indian national rupee, the currency of India. One INR = US$0.02 as of April 24, 2013.
22
“Postal Communication,” www.mospi.nic.in/Mospi_New/upload/Infra_stat_2010/10.ch_post.pdf, accessed April 8, 2013.
23
“Postal e-volution: Dakiya e-mail laya,” The Times of India, February 26, 2004,
www.articles.timesofindia.indiatimes.com/2005-02-26/india/28338617_1_post-offices-india-post-e-mail, accessed April 4,
2013.
24
“Postal Communication,” www.mospi.nic.in/Mospi_New/upload/Infra_stat_2010/10.ch_post.pdf, accessed April 8, 2013.
25
“Mobile post office gets over Rs 20 lakh revenue in 4 weeks,” The Indian Express, November 30, 2011,
www.indianexpress.com/news/mobile-post-office-gets-over-rs-20-lakh-revenue-in-4-weeks/882272/1, accessed April 18,
2013.

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26
To provide adequate postal services, India has been divided into 22 Postal Circles. Each circle is headed by the Chief
Postmaster General. The Chief Postmaster General is also referred to as the Head of the Circle. See
www.indiapost.gov.in/Pdf/40-28-2010-Plg_17-09-2012_Franchisee_Scheme.pdf, accessed December 4, 2013.
27
“Revised franchise scheme to access postal counter services in urban and upcoming urban areas,”
www.indiapost.gov.in/Pdf/40-28-2010-Plg_17-09-2012_Franchisee_Scheme.pdf, accessed April 14, 2013.
28
“Postal Employees Stage Protest,” daijiworld.com, October 17, 2012,
www.daijiworld.com/news/news_disp.asp?n_id=152884, accessed April 15, 2013.
29
Surabhi Agarwal and Suneera Tandon,”India Post may tap e-commerce market with its network,” Live Mint &The Wall
Street Journal, April 15, 2013, www.livemint.com/Companies/5Bf6zKckf7YbEVuG99btiN/India-Post-may-tap-ecommerce-
market-with-its-network.html, accessed April 15, 2013.
30
“India Post ties up with retail chain Fabindia,” Business Line, June 14, 2011, www.thehindubusinessline.com/industry-and-
economy/banking/india-post-ties-up-with-retail-chain-fabindia/article2104460.ece, accessed April 10, 2013.
31
M. R. Das, “A case for converting India Post into a bank,” Business Line, February 24, 2013,
www.thehindubusinessline.com/industry-and-economy/banking/a-case-for-converting-india-post-into-a-
bank/article4449366.ece, accessed April 18, 2013.
32
“Turning around India Post,” Business Line, December 4, 2007,
www.thehindubusinessline.in/bline/2007/12/04/stories/2007120450880800.htm, accessed April 18, 2013.
33
“Post office finance mart in M’lore,” Business Standard, June 7, 2006, www.business-standard.com/article/Economy-
Policy/Post-office-finance-mart-in-M-lore-106060701156_1.html, accessed April 17, 2013.
34
“Strategic Plan,” Department of Posts, www.indiapost.gov.in/Pdf/Strategic_Plan.pdf, accessed April 18, 2013.
35
“Financial inclusion: New Post Bank of India is an excellent idea,” The Economic Times, March 26, 2013,
www.articles.economictimes.indiatimes.com/2013-03-26/news/38040549_1_post-bank-india-post-new-bank, accessed April
21, 2013.
36
Ibid.
37
“Union Budget and Economic Survey 2004-05,” www.indiabudget.nic.in/es2004-05/chapt2005/chap95.pdf, accessed April
18, 2013.
38
M. R. Das, “A case for converting India Post into a bank,” Business Line, February 24, 2013,
www.thehindubusinessline.com/industry-and-economy/banking/a-case-for-converting-india-post-into-a-
bank/article4449366.ece, accessed April 18, 2013.
39
Simran Virk, “Project Arrow: Post offices to don new look,” The Times of India, March 27, 2009,
www.articles.timesofindia.indiatimes.com/2009-03-27/ludhiana/28044549_1_post-offices-postal-department-india-post,
accessed April 26, 2013.
40
“VIP post office gets Rs 10.5 L for renovation,” The Times of India, January 11, 2013,
www.articles.timesofindia.indiatimes.com/2013-01-11/hyderabad/36279152_1_postal-department-post-office-project-arrow,
accessed April 26, 2013.
41
“Project Arrow can modernise the Department of Posts,” The Economic Times, October 25, 2012,
www.articles.economictimes.indiatimes.com/2012-10-25/news/34729701_1_project-arrow-india-post-dop, accessed April
26, 2013.
42
“‘Project Arrow’ gives a new look to Mangalore post office,” The Hindu,
www.hindu.com/2009/09/13/stories/2009091358200300.htm, accessed April 26, 2013.
43
Gunjan Prasad, “India Post aims to fly high with new branding,” Campaign India, September 30, 2008,
www.campaignindia.in/Article/225280,india-post-aims-to-fly-high-with-new-branding.aspx, accessed April 27, 2013.
44
“Project Arrow: Reach of India Post,” India Post, www.indiapost.gov.in/Pdf/Project_Arrow.pdf, accessed March 6, 2013.
45
“India has Largest Postal Network in World,” Press Information Bureau, Government of India,
www.pib.nic.in/newsite/efeatures.aspx?relid=88330, accessed April 19, 2013.
46
“India Post ramps up postal service with Siemens automated mail processing system,” Siemens, August 21, 2012,
www.siemens.co.in/en/news_press/index/postal_service.htm, accessed April 21, 2013.
47
“Vadodara postal department mulls GPS for delivery vehicles,” The Indian Express, October 8, 2011,
www.indianexpress.com/news/vadodara-postal-dept-mulls-gps-for-delivery-vehicles/857318, accessed April 19, 2013.
48
“Mail Network Optimization Project (MNOP) gets National E-Governance Award 2012-13,” India Post,
www.indiapost.gov.in/MNOP.aspx, accessed April 22, 2013.
49
“Speed Post service to be modernised, vacant posts to be filled: Sibal,” Business Line, December 14, 2012,
www.thehindubusinessline.com/industry-and-economy/logistics/speed-post-service-to-be-modernised-vacant-posts-to-be-
filled-sibal/article4199624.ece, accessed April 23, 2013.
50
Adith Charlie, “TCS set to bag Rs 1,100-cr contract from India Post,” Business Line, March 24, 2013,
www.thehindubusinessline.com/industry-and-economy/info-tech/tcs-set-to-bag-rs-1100cr-contract-from-india-
post/article4544531.ece, accessed April 24, 2013.
51
“India Post 2012,” India Post, February 2011, www.indiapost.gov.in/Pdf/IndiaPost2012_PMU_newsletter_feb2011.pdf,
accessed April 24, 2013.
52
Gaurav Vivek Bhatnagar, “Waiting for the postman to ring twice,” The Hindu, August 26, 2012,
www.thehindu.com/news/national/waiting-for-the-postman-to-ring-twice/article3821884.ece, accessed April 10, 2013.
53
“India Posts 2009: Keeping Pace with Time,” www.pib.nic.in/archieve/others/2009/dec/r2009122301.pdf, accessed April
25, 2013.

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54
“Postal department earns high revenue,” The Times of India, April 15, 2009,
www.articles.timesofindia.indiatimes.com/2009-04-15/kanpur/28056532_1_postal-department-express-parcel-post-speed-
post, accessed April 18, 2013.
55
“DOP’s deficit falls the most in 10 yrs, revenues rise 13 pc,” The Economic Times,
www.articles.economictimes.indiatimes.com/2012-07-05/news/32551814_1_dop-india-post-revenues-rise, accessed April
29, 2013.
56
“Postal and Express Delivery Services,” Indian Council for Research on International Economic Relations,
www.wtocentre.iift.ac.in/EU%20BTIA/EU%20BTIA/Report%20on%20Postal%20Services%20-
%20India%20EU%20BTIA.pdf, accessed March 9, 2013.
57
“India Post 2010: Conference on harnessing the outreach infrastructure of India’s Postal Network,”
www.yumpu.com/en/document/view/13723874/report-recommendations-invest-india-economic-foundation, accessed
February 15, 2013.
58
“The Postal Industry in an Internet Age: Case Studies in Postal Reform,” World Bank, www.nalc.org/postal/pdf/wbpost.pdf,
accessed April 17, 2013.

This document is authorized for use only in Prof Ankur Roy and Prof. Meeta Dasgupta's Strategic Management -II/PGPM at Management Development Institute - Gurgaon from Jun 2021 to
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