A study of performance of rail coach factory Kapurthala: a production unit of Indian railways

Abstract

Rail Coach Factory, Kapurthala, a wholly owned Production Unit of Ministry of Railways, Govt. of India with installed capacity of 1000 coaches per annum, manufactures passenger carrying coaches primarily to meet internal requirements of Indian Railways. The unit has been able to generally achieve annual production targets, set by Ministry of Railways and absorb stainless steel coach manufacturing technology, imported from LHB-Alstom. However, it has not been able to manufacture new design LHB-Alstom coaches in sufficiently large numbers or to enter the vast export market. It could not capture premium segment of metro coaches too and lost Delhi Metro (DMRC) opportunity to M/s Rotem, Korea. The unit is internally focused and apparently satisfied with captive Indian Railways demands and does not have external market-fit. This study focuses on Rail Coach Factory Kapurthala as a business unit. It attempts to analyze the performance of RCF and identify a variety of parameters that could be relevant for RCF in the changed context. The focus of the study is performance measurement system through which improvement in performance can be brought for sustainability and building competitiveness. Following the theoretical framework of Balanced Scorecard and Generic Strategy Map , a combination of methodologies was used as the nature of the study wasexploratory-descriptive.1. Archival analysis of documents.2. Interviews with critical decision makers in the organization.3. Analysis of last five years quantitative data on existing performance measures. The data analysis brings out the fact that the unit is not currently measuring/monitoring all the relevant performance measures in respect of `financial ,` customer , `internal business process and `learning and growth perspectives. Current performance measures are skewed in nature and grossly inadequate, as many relevant parameters are either not measured at all or partially measured. It also established the fact that the performance of the unit over the last five years has improved in respect of attributes being measured/monitored, whereas the performance has not registered any significant improvement or declined in respect of attributes not measured/monitored. Therefore, construction of appropriate performance measures becomes extremely critical as the context in which these are defined, real action takes place. In order to achieve balanced growth and stay competitive, the study recommends a set of performance measures in all perspectives following `balanced score card approach. Decision makers at RCF outline a revenue growth strategy for RCF. The growth strategy hinges on improvement in productivity, quality, competitiveness, and overhauling of internal business processes with clear perspective of long-term growth of the organization and investment in intangible assets to enable activities and customer relationship functions to be performed at high level of performance .A performance measurement system has been designed to improve existing performance and realize the growth strategy. The most vital suggested performance measures, in line with stated growth strategy have also been identified, to begin with, for Top management focus. Further performance measure cascade in respect of one of the departments has been designed for implementation of the suggested performance measurement system. Execution of the system involves vital managerial implications. Appropriate initiatives will have to be taken by the management and that shall require devolution of greater financial, operational and administrative autonomy to this production unit. It may need some change in governance structure, but while attempting any such change in governance structure, identified concerns of all stakeholders must be addressed.