LALU PRASAD YADAV,CEO,RAILWAYS: MANAGEMENT GURU
Ever one remembers Sri Lalu Prasad Yadav with Fodder scam and poor administered Bihar. He is remembered for his wit and brushing his teeth with “neem stick” and milking the cow on the backyard of his house. But he is one of the ministers every management institute knows all over the world. The CEO of Railways Lalu has done wonders to the railways. The white elephant become profit making golden goose, the railway stations are clean and many amenities were provided to the Passengers. When Yadav took over, the Indian Railways was a loss-making organization. In the 4 years under his leadership, a cumulative total profit of Rs. 25,000 crore (US$ 5.2 billion dollars) has been reported
Ironically, the Rakesh Mohan Committee in 2001 (headed by Rakesh Mohan, secretary, department of economic affairs) had termed The Railways a 'white elephant' and predicted that it would suffer a Rs 61,000 crore (US$15.4 billion dollars) loss possibly ending in bankruptcy by 2015.
Yadav is now credited with engineering the financial turnaround of Indian Railways that was on the verge of bankruptcy before his appointment to the office. He left passenger fares untouched and found several other profitable sources of revenue for the Railways. He also improved on his first year's performance by stating a profit of 14,000 crores with decreased freight and unchanged passenger fares in 2006. Then, in the 2007 budget, he increased the profit level to 20,000 crores with the introduction of cushion seats in all unreserved compartments. In 2008, profits were 25000 crore (equals $ 6.25 billion @ $1~Rs.40). This confidence is not only due to the rising trend of performance, but also due to the significant growth in the past two years. These two years coincided with Mr. Lalu Prasad being at the helm of affairs of the IR, having moved into his position on 23rd May, 2004.
Every one in the world appreciated Lalu and many Management institutions started beeline to hear his management mantra. IIM Ahemadabad has done special study ‘Turnaround’ of Indian Railways: A Critical Appraisal of Strategies and Processes” during 2007 it mentioned in the paper that “The operationalisation of the various strategies over the past two years depended significantly on the leadership style of Mr Lalu Prasad. It was a common sense based approach, showing an astute understanding of the market reality, the asset base of the IR and the expertise and capability of the IR’s management and systems. Consequently, he followed this up with the principles of leveraging the assets (“milk the cow fully”) and empowerment and delegation. With whatever has been achieved in the ‘turnaround,’ Mr Lalu Prasad has demonstrated that good economics is good politics. “Mr Lalu Prasad is a non-interfering, yet aware MR, who sets the goals and expects results.” was stated by most of the ex-Members and the current Members of the Board. “This has given him a position of strength to build organizational alignment to see through fundamental initiatives.”
To build alignment for execution, the Lalu periodically communicated to the GMs, setting and reinforcing Mr Lalu Prasad had a positive approach in dealing with the staff and unions. Given the financial performance of the IR, the unions wanted a doubling of the contribution to the staff welfare fund. He offered them more. When he saw that gangmen who had to walk on the stone ballast were not provided footwear as part of their equipment, he ensured the same.
What is the management mantra of Lalu? He has not gone to any premier management institute and born to poor family in village. His management mantra is “common sense and human approach to the problem” which made wonders to Indian Railways
He has plugged the loop holes where revenue is leaking.
Decentralization of administration and non interference.
Human touch to the problems of staff and rewarding the staff who has done good work to railways.
Providing amenities to passengers and decreasing freight charges
Speech of Shri Lalu Prasad, introducing the Railway Budget 2008-2009, on 26 February 2008
“I present the Railway Budget for the year 2008-09 with a sense of deep pride and satisfaction. Each year we have progressively raised the bar based on our own successes. The cash surplus of the Railways rose steadily from Rs 9000 cr in 2005 to Rs 14000 cr in 2006 to Rs 20000 cr in 2007. The august House would be happy to know that in 2007-08, we will create history once again by turning in a cash surplus before Dividend of Rs. 25000 cr. Our operating ratio has also improved to 76%. Indian Railways is a Government Department. However, we take pride in the fact that our achievement, on the benchmark of net surplus before Dividend, makes us better than most of the Fortune 500 companies in the world...”
Ever one remembers Sri Lalu Prasad Yadav with Fodder scam and poor administered Bihar. He is remembered for his wit and brushing his teeth with “neem stick” and milking the cow on the backyard of his house. But he is one of the ministers every management institute knows all over the world. The CEO of Railways Lalu has done wonders to the railways. The white elephant become profit making golden goose, the railway stations are clean and many amenities were provided to the Passengers. When Yadav took over, the Indian Railways was a loss-making organization. In the 4 years under his leadership, a cumulative total profit of Rs. 25,000 crore (US$ 5.2 billion dollars) has been reported
Ironically, the Rakesh Mohan Committee in 2001 (headed by Rakesh Mohan, secretary, department of economic affairs) had termed The Railways a 'white elephant' and predicted that it would suffer a Rs 61,000 crore (US$15.4 billion dollars) loss possibly ending in bankruptcy by 2015.
Yadav is now credited with engineering the financial turnaround of Indian Railways that was on the verge of bankruptcy before his appointment to the office. He left passenger fares untouched and found several other profitable sources of revenue for the Railways. He also improved on his first year's performance by stating a profit of 14,000 crores with decreased freight and unchanged passenger fares in 2006. Then, in the 2007 budget, he increased the profit level to 20,000 crores with the introduction of cushion seats in all unreserved compartments. In 2008, profits were 25000 crore (equals $ 6.25 billion @ $1~Rs.40). This confidence is not only due to the rising trend of performance, but also due to the significant growth in the past two years. These two years coincided with Mr. Lalu Prasad being at the helm of affairs of the IR, having moved into his position on 23rd May, 2004.
Every one in the world appreciated Lalu and many Management institutions started beeline to hear his management mantra. IIM Ahemadabad has done special study ‘Turnaround’ of Indian Railways: A Critical Appraisal of Strategies and Processes” during 2007 it mentioned in the paper that “The operationalisation of the various strategies over the past two years depended significantly on the leadership style of Mr Lalu Prasad. It was a common sense based approach, showing an astute understanding of the market reality, the asset base of the IR and the expertise and capability of the IR’s management and systems. Consequently, he followed this up with the principles of leveraging the assets (“milk the cow fully”) and empowerment and delegation. With whatever has been achieved in the ‘turnaround,’ Mr Lalu Prasad has demonstrated that good economics is good politics. “Mr Lalu Prasad is a non-interfering, yet aware MR, who sets the goals and expects results.” was stated by most of the ex-Members and the current Members of the Board. “This has given him a position of strength to build organizational alignment to see through fundamental initiatives.”
To build alignment for execution, the Lalu periodically communicated to the GMs, setting and reinforcing Mr Lalu Prasad had a positive approach in dealing with the staff and unions. Given the financial performance of the IR, the unions wanted a doubling of the contribution to the staff welfare fund. He offered them more. When he saw that gangmen who had to walk on the stone ballast were not provided footwear as part of their equipment, he ensured the same.
What is the management mantra of Lalu? He has not gone to any premier management institute and born to poor family in village. His management mantra is “common sense and human approach to the problem” which made wonders to Indian Railways
He has plugged the loop holes where revenue is leaking.
Decentralization of administration and non interference.
Human touch to the problems of staff and rewarding the staff who has done good work to railways.
Providing amenities to passengers and decreasing freight charges
Speech of Shri Lalu Prasad, introducing the Railway Budget 2008-2009, on 26 February 2008
“I present the Railway Budget for the year 2008-09 with a sense of deep pride and satisfaction. Each year we have progressively raised the bar based on our own successes. The cash surplus of the Railways rose steadily from Rs 9000 cr in 2005 to Rs 14000 cr in 2006 to Rs 20000 cr in 2007. The august House would be happy to know that in 2007-08, we will create history once again by turning in a cash surplus before Dividend of Rs. 25000 cr. Our operating ratio has also improved to 76%. Indian Railways is a Government Department. However, we take pride in the fact that our achievement, on the benchmark of net surplus before Dividend, makes us better than most of the Fortune 500 companies in the world...”
Ever one should learn the example of Lalu for better management of public sector undertaking and other government institutions
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