Mail Network Optimization Project Interaction with the Staff

Mail Network Optimization Project Interaction with the Staff Side New Delhi, November 23, 2010

The Background ▪ Competition from Domestic and International players (e. g. Track & Trace) ▪ Inconsistent quality of service ▪ High operational costs ▪ Eroding customer base ▪ Low level of IT induction in mail processing ▪ Low productivity and ageing workforce ▪ Delivery inconsistencies and visibility ▪ Lack of customer focus India Post | 1 Printed 30. 03. 2010 23: 15: 37 ▪ Absence of regulation ▪ Change in mail profile ▪ Customer Demands Impact Systemic Issues ▪ Difficulties of existing mail network vis-à-vis changed mail profile Working Draft - Last Modified 31. 03. 2010 12: 13: 14 ▪ External Factors Declining mail volumes

The Scope of Project ▪ Optimise India Post's network from collection to ▪ ▪ Working Draft - Last Modified 31. 03. 2010 12: 13: 14 "Get the core right" delivery Standardize processes with focus on significant quality improvement & reduction in network complexity Put in place an effective performance measurement system through regular reviews and feel" Printed 30. 03. 2010 23: 15: 37 ▪ Improve the ambience of mail offices "Modernise ▪ Upgrade processing facilities and improve working conditions for employees the look ▪ Make staff and customers proud of being associated with India Post | 2

Start with limited product range for prioritised cities ▪ Early pilot Increase the product range for these prioritised cities ▪ Rigorous Working Draft - Last Modified 31. 03. 2010 12: 13: 14 and broad involvement of field units monitoring Printed 30. 03. 2010 23: 15: 37 PROJECT APPROACH The Approach Expand to all India for all products 3 India Post |

The Project Plan 2012 Roll-out Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Geographical reach All India 2011 Priority cities "Wave 1" 2010 Speed Post & International mail Scenariobased design Ist class Printed 30. 03. 2010 23: 15: 37 Scenario-based design and pilots IInd class Product range Approach reflects a strong need for immediate tangible impact India Post | 4

Project Waves for Speed Post 8 5 6 ▪ ▪ Mysore ▪ Howrah ▪ Bhopal Delhi ▪ Kolkata ▪ Chennai ▪ Bangalore ▪ Hyderabad ▪ Noida ▪ Gurgaon ▪ March-July ▪ Pune ▪ Chandigarh ▪ ▪ Ahmedabad ▪ Patna ▪ Kochi Trivandrum ▪ ▪ August-September SOURCE: Mail Network Optimisation Project Nagpur ▪ Printed 30. 03. 2010 23: 15: 37 Timeline Wave 3 Mumbai ▪ Cities in scope Wave 2 Working Draft - Last Modified 31. 03. 2010 12: 13: 14 ▪ Wave 1 Lucknow September-November India Post | 5

Network optimisation: Key Operational Areas (Speed Post) ▪ What are the right processes within the facility? – How to ensure standardisation? – How to maximize productivity and quality? ▪ What is the right network schedule? – Which cut-off times and processing windows at each processing step across the value chain would facilitate next day delivery? ▪ How to measure India Post's performance? – How is the share of next day delivery (D+1)? – Track & Trace: Are 100% scans ensured across the network? Printed 30. 03. 2010 23: 15: 37 What is the right network topolgy? – How many processing SPCs do we need within one city (and where)? – How many sorting hubs do we need across cities (and where)? Working Draft - Last Modified 31. 03. 2010 12: 13: 14 ▪ Optimization of delivery in wave 2 (1 st class mail) as Speed. Post only accounts for ~10% of delivery volume SOURCE: Mail Network Optimisation Project India Post | 6

Initial Impact of the Project in terms of Operational Improvement Easier sorting – Ensure minimum multiple handling Better equipment – Ease of working for staff at SPCs with new equipments Higher throughput – Ensure higher processing with improved process design Keep everyone informed – Regular interaction and display of SPC's daily performance, suggestions and feedback encouraged Training & Incentives – Incentivise high performers and help all staff with newly developed training modules SOURCE: Mail Network Optimisation Project India Post | 7 Printed 30. 03. 2010 23: 15: 37 Streamlined workflow – by having optimised inflow of mails in the processing centers Prioritized processing – Ensure processing prioritisation based on the time of the day for maximum connectivity Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Less workload – reduce no. of bags & missorts between different locations

The project has witnessed significant changes Hard facts Financial improvements 1▪ International EMS: IT ▪ 3 D+x performance in 6 metros improved by ~1. 0 day over last months 4 ▪ Productivity and throughput improved across centres by more than 50% Complexity reduction ▪ Directorate rigorously 18▪ Project has brought 13 10▪ Multiple sorting at 14▪ All CPMGs involved international EMS inbound network with Speed Post issued SPC "outlets" reduced, e. g. , Bangalore (6 sub hubs), Mumbai (GPO volumes) (focus until date on 8 circles) and actively participating 15 ▪ Performance Network topology model developed with revision of sorting hubs from 315 to 89 Detailed Speed Post Manual developed to ▪ Integrated Speed. Post ensure standardidatabase being sation of processes developed 12 across India cells institutionalized comprehensive look at the all the stakeholders 19 ▪ Comprehensive Look and Feel workstream initiated and institutionalized (run by BD team) dialogues initiated on 20 a daily basis across the organisation 11▪ 7▪ Quality management ▪ 8 monitoring the progress through score card Printed 30. 03. 2010 23: 15: 37 6▪ Proud to be part of India Post 9▪ Instructions to merge 5▪ Comprehensive set of 18 KPIs for Speed Post developed, scorecards and VCs institutionalised Changes in day-to-day life 16 ▪ New equipment tested and introduced to improve working conditions (e. g. , roller containers, revised sorting cases, roller trays, bag scissors) 17 Network schedules in 6 metros revised using comprehensive model SOURCE: Mail Network Optimisation Project Working Draft - Last Modified 31. 03. 2010 12: 13: 14 interface fixed (19: 59 timestamp) ~Rs. 1. 5 crore revenue recovery Quality/performance improvement Soft facts India Post | 8

Sorting complexities necessitated changes in the operational network for Speed Post Number of bags closed across Speed Post Centres 314 Selections 315 314 = 98, 9101 Printed 30. 03. 2010 23: 15: 37 315 NSPCs Number of final selections at each Speed Post Centre Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Number of Speed Post Centres 1 Assuming that there is at least one mail from every NSPC to every other NSPC SOURCE: Mail Network Optimisation Project India Post | 9

Input components of the network topology model Inputs Outputs D+x percentage Processing Volume data Air/road connections Volume flows Cut-off times Throughput requirements SOURCE: Mail Network Optimisation Project For different number of NSPCs India Post | 10 Printed 30. 03. 2010 23: 15: 37 Simulation of mail flow in the network NSPC-PO mapping Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Location information

Basic NSPC and Post Office information Data type Source ▪ ▪ 315 NSPCs delivery POs with unique pin codes ▪ Mapping of POs to corresponding NSPCs Classification of NSPCs done based on population ▪ Urban: Population >5 lakhs e. g. , Delhi, Mumbai Population figures taken from 2001 census reports ▪ Rural: Population <5 lakhs e. g. , Pauri, Vashi 1 SSPCs have not been considered for comprehensively modelling as they do not play a role in arriving at an optimal NSPC – PO mapping SOURCE: Mail Network Optimisation Project India Post | 11 Printed 30. 03. 2010 23: 15: 37 ▪ ▪ Consistency checks on NSPCs done by BD Directorate ▪ Urban/rural classification of NSPCs ▪ Working Draft - Last Modified 31. 03. 2010 12: 13: 14 List of NSPCs and Delivery Post Offices 1 List of NSPCs and delivery POs covered by Speed Post taken from the official Speed Post Directory Data characteristics

Post Office coordinates and booking/delivery volume Percent of average daily booking volumes 85% of data is usable which is sufficient for the purpose of modeling 12. 0 All coordinates Unique coordinates Duplicate 1 coordinates Used for modelling as is Note: 100% = 10 million per month Source ▪ ▪ Booking/delivery volume information at the post office level is used to split the “from-to” NSPC volume matrix (previous page) between the POs For post offices for which no volume information is available, the average daily booking and delivery volumes are assumed to be 1 Coordinate ▪ PO coordinates assumed to be same as NSPC coordinates Volume : http: //itouchmap. com/latlong. html : Jan - Apr 2010 PO level data from Speed Net 1 Duplicate coordinates exist since India (specially rural areas) is not yet completely mapped by latitude/longitude providers 2 The distance between PO and corresponding NSPC is more than 200 km as per the coordinates SOURCE: Mail Network Optimisation Project India Post | 12 Printed 30. 03. 2010 23: 15: 37 ▪ Booking / Delivery Volumes Questionable 2 Missing coordinates Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Coordinates (Latitude / Longitude)

Air connections ▪ Airports ▪ Latitude/longitude information taken from http: //itouchmap. com/latlong. html ▪ List of 6, 633 domestic flights collected from airlines ▪ Flights mapped to airports in the above airport list Airports classified in 3 categories based on domestic cargo traffic Example A 2. 0 1. 5 Bangalore B 1. 5 1. 0 Bhopal C 1. 0 0. 5 Dibrugarh SOURCE: Mail Network Optimisation Project India Post | 13 Printed 30. 03. 2010 23: 15: 37 Airport Loading Unloading category time, hours Loading/ Unloading Times Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Flights List of ~70 domestic airports in India picked up from a global list of airports

Road connections Factor Assumption ▪ ▪ MMS Speed ▪ Separate MMS speeds assumed for rural and urban NSPC-PO travel All NSPC-NSPC travel is assumed to be rural SOURCE: Mail Network Optimisation Project 1. 45 Rural 1. 25 Urban 20 km/hr ▪ Standard practice for distance calculation ▪ Detour factors taken based on sample calculations for a few NSPCs ▪ Based on inputs from the field Rural 35 km/hr India Post | 14 Printed 30. 03. 2010 23: 15: 37 ▪ Air distances multiplied by detour factors Detour factor Urban Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Distances Air distances calculated based on latitude/ longitude information Reasoning

Cut-off times (1/2) Paramete r Explanation ▪ All articles booked after this cut-off are assumed to be booked the next day ▪ Latest time by which MMS vehicles carrying articles from the destination NSPCs reach the delivery post offices ▪ Articles that arrive at the delivery post office after this cut-off, will not be delivered the same day ▪ Majority of post offices do not work beyond 16: 00 hrs but there a few post offices which offer booking up to 19: 00 hrs 2 or later Scenarios 16: 00 hrs 19: 00 hrs ▪ Metros Second delivery rounds have been introduced in the 6 metros 13: 00 hrs Rest 09: 00 hrs ▪ Only single delivery round is feasible in rural areas because of long distance 1 MMS vehicles leave the destination NSPCs 3 hours before this cut-off i. e. at 10: 00 hrs for urban POs and at 06: 00 hrs for rural Pos 2 Only for 6 metros which have 2 nd delivery round. 1900 cut off doesn’t mean commitment to customer. Not all mail booked till 1900 would be delivered in D+1 SOURCE: Mail Network Optimisation Project India Post | 15 Printed 30. 03. 2010 23: 15: 37 Cut-off to POs 1 ▪ Reasoning Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Cut-off from POs Time at which MMS vehicles leave booking post offices to take articles to origin NSPCs Assumption

Cut-off times (2/2) Paramete r Explanation Assumption ▪ 21: 00 hrs ▪ Articles unable to be processed at the origin NSPC by this cut-off, will not be connected on the same day A processing time of 120 minutes is assumed at both origin and destination NSPC SOURCE: Mail Network Optimisation Project Right cut-off time can vary depending on number of NSPCs and hence need to be optimized 01: 00 hrs Printed 30. 03. 2010 23: 15: 37 Processing time 20: 00 hrs ▪ 02: 00 hrs Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Cut-off between NSPCs Options Time at which articles leave origin NSPC to be taken (by flight/road) to destination NSPC Reasoning Articles need to arrive 2 hours before the cut-offs to be able to get processed and connected the same day India Post | 16

Contents Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Inputs to the model Working of the model Printed 30. 03. 2010 23: 15: 37 Outputs of the model India Post | 17

Output of the network topology model – Scenario 1 Configuration Comparison ‘D+1 plus D+2’ % ‘D+1 plus Network D+2’ % Complexity 1 ‘D+1’ % 42. 74% 62. 19% 0. 42% 56. 63% 84. 70% 5. 10% 80 57. 91% 85. 95% 6. 66% 90 58. 54% 87. 19% 8. 43% 100 59. 51% 88. 38% 10. 41% 110 60. 33% 91. 24% 12. 59% 120 61. 42% 90. 69% 14. 98% 130 61. 51% 92. 25% 17. 59% 140 62. 58% 93. 53% 20. 40% 150 63. 00% 94. 28% 23. 41% 310 66. 74% 98. 68% 100. 00% 1 Measured in terms of number of bags closed in a day assuming 1 bag from every sorting hub to every other sorting hub Printed 30. 03. 2010 23: 15: 37 70 No. of NSPCs ▪ SOURCE: Mail Network Optimisation Project Network complexity Working Draft - Last Modified 31. 03. 2010 12: 13: 14 No. of sorting hubs 20 ‘* Quality Percentage ▪ ▪ Cut-off from POs : 16: 00 hrs Cut-off between NSPCs : 21: 00 hrs Second delivery round : for all urban POs India Post | 18

Output of the network topology model – Scenario 2 Configuration Comparison ‘D+1 plus D+2’ % ‘D+1 plus Network D+2’ % Complexity 1 ‘D+1’ % 38. 13% 62. 57% 0. 42% 48. 79% 79. 95% 5. 10% 80 49. 23% 83. 97% 6. 66% 90 50. 26% 86. 29% 8. 43% 100 50. 97% 87. 97% 10. 41% 110 51. 57% 88. 53% 12. 59% 120 52. 37% 91. 09% 14. 98% 130 53. 03% 92. 48% 17. 59% 140 53. 41% 92. 28% 20. 40% 150 53. 91% 93. 36% 23. 41% 310 56. 83% 98. 46% 100. 00% 1 Measured in terms of number of bags closed in a day assuming 1 bag from every sorting hub to every other sorting hub Printed 30. 03. 2010 23: 15: 37 70 No. of NSPCs ▪ SOURCE: Mail Network Optimisation Project Network complexity Working Draft - Last Modified 31. 03. 2010 12: 13: 14 No. of sorting hubs 20 ‘* Quality Percentage ▪ ▪ Cut-off from POs : 19: 00 hrs Cut-off between NSPCs : 24: 00 hrs Second delivery round : for all urban POs India Post | 19

Output of the network topology model – Scenario 3 Configuration Comparison ‘D+1 plus D+2’ % ‘D+1 plus Network D+2’ % Complexity 1 ‘D+1’ % 41. 34% 66. 74% 0. 42% 52. 40% 84. 43% 5. 10% 80 53. 36% 85. 61% 6. 66% 90 55. 18% 87. 24% 8. 43% 100 55. 93% 88. 98% 10. 41% 110 57. 31% 91. 08% 12. 59% 120 57. 47% 91. 76% 14. 98% 130 57. 98% 92. 38% 17. 59% 140 58. 62% 92. 85% 20. 40% 150 59. 47% 94. 10% 23. 41% 310 62. 62% 97. 89% 100. 00% 1 Measured in terms of number of bags closed in a day assuming 1 bag from every sorting hub to every other sorting hub Printed 30. 03. 2010 23: 15: 37 70 No. of NSPCs ▪ SOURCE: Mail Network Optimisation Project Network complexity Working Draft - Last Modified 31. 03. 2010 12: 13: 14 No. of sorting hubs 20 ‘* Quality Percentage ▪ ▪ Cut-off from POs : 16: 00 hrs Cut-off between NSPCs : 21: 00 hrs Second delivery round : for POs in the 6 metros India Post | 20

Output of the network topology model – Scenario 4 Configuration Comparison ‘D+1 plus D+2’ % ‘D+1 plus Network D+2’ % Complexity 1 ‘D+1’ % 37. 12% 65. 35% 0. 42% 44. 28% 83. 92% 5. 10% 80 44. 94% 84. 32% 6. 66% 90 45. 72% 85. 98% 8. 43% 100 46. 30% 87. 02% 10. 41% 110 46. 53% 88. 50% 12. 59% 120 47. 29% 89. 88% 14. 98% 130 47. 71% 90. 58% 17. 59% 140 48. 02% 91. 46% 20. 40% 150 48. 46% 92. 52% 23. 41% 310 51. 32% 97. 25% 100. 00% 1 Measured in terms of number of bags closed in a day assuming 1 bag from every sorting hub to every other sorting hub Printed 30. 03. 2010 23: 15: 37 70 No. of NSPCs ▪ SOURCE: Mail Network Optimisation Project Network complexity Working Draft - Last Modified 31. 03. 2010 12: 13: 14 No. of sorting hubs 20 ‘* Quality Percentage ▪ ▪ Cut-off from POs : 19: 00 hrs Cut-off between NSPCs : 24: 00 hrs Second delivery round : for POs in the 6 metros India Post | 21

Deciding the ‘right’ number of sorting hubs 45% ‘Right’ number of sorting hubs? 7% Better quality due to improved network structure… ILLUSTRATIVE Operational complexity 2 48% 20% 310 51% 100% …will be compensated by delays due to increased operational complexity Subjective trade-off between structural quality and operational ease 1 Measured in terms of ‘D+1’ % as per the network topology model 2 Measured in terms of number of bags closed in a day assuming 1 bag from every sorting hub to every other sorting hub SOURCE: Mail Network Optimisation Project India Post | 22 Printed 30. 03. 2010 23: 15: 37 140 Working Draft - Last Modified 31. 03. 2010 12: 13: 14 80 Structural quality 1 Factor ~ 3. 0 No. of sorting hubs

Other outputs provided by the model ▪ List of sorting hubs Working Draft - Last Modified 31. 03. 2010 12: 13: 14 ▪ Mapping of post offices to sorting hubs ▪ Expected daily volumes at sorting hubs Printed 30. 03. 2010 23: 15: 37 ▪ Volume flows between sorting hubs ▪ Expected throughput requirements at sorting hubs Note: The above outputs are provided for specific configurations SOURCE: Mail Network Optimisation Project India Post | 23

New Speed Post Operational Network ▪ 89 Sorting Hubs Working Draft - Last Modified 31. 03. 2010 12: 13: 14 ▪ Sorting hubs: Location and number arrived at through a comprehensive modelling ▪ Only Sorting Hubs to close bags for each other, only a few intra -Circle hubs allowed Printed 30. 03. 2010 23: 15: 37 ▪ Booking interface not reduced ▪ Overall expedited processing, transit and delivery time, reduced sorting complexity (back-routing to a small fraction of mail notwithstanding) SOURCE: Mail Network Optimisation Project India Post | 24

Key Performance Indicators for Speed Post Performance Management: Fortnightly Review through VCs KPI D+X reports Supporting KPIs 1 b Transit analysis across city 1 c Time per leg of transit within city 1 d Time per leg of transit across city 2 a Scans compliance in the entire network 2 b Scan analysis per leg of transit within city 2 c Scan analysis per leg of transit across city 3 a Percent of F-scans in Speed. Net vs. F-scans in IPS 1 3 b Percent of F-scans in IPS vs. D-scans in IPS 3 c Share of Speed. Net Delivery scans vs. IPS F-scans (TBD) 4 a Articles processed per hour per FTE 4 b Staff absenteeism 4 c Share of bags without bag labels 4 d Share of articles not processed in Speed. Net 4 e Share of articles closed after cut-off time 4 f Share of missorted articles 4 g Share of articles with missing pin codes 4 h Share of articles not dispatched same set SOURCE: Mail Network Optimisation Project Measures speed and reliability of processing of Speed Post articles from booking to delivery Measures for each processing step whether articles got scanned as prescribed Measures for international inbound article the efficiency of movement at every step before merger with Speed Post Supports achieving better D+x and scan performance India Post | 25 Printed 30. 03. 2010 23: 15: 37 International reports Transit analysis within city Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Scan compliance reports 1 a What does it do?

System based Performance Report: Sample web page Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Printed 30. 03. 2010 23: 15: 37 SOURCE: Mail Network Optimisation Project India Post | 26

Sample Circle Score Card Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Printed 30. 03. 2010 23: 15: 37 SOURCE: Mail Network Optimisation Project India Post | 27

Impact in terms of improved transit and delivery performance NTD D+x of 6 metros Average of full month, in days Working Draft - Last Modified 31. 03. 2010 12: 13: 14 3. 57 -1. 01 days 2. 86 December May 2009 June 2. 60 2. 56 July August Printed 30. 03. 2010 23: 15: 37 2. 69 2010 SOURCE: Mail Network Optimisation Project India Post | 28

To ensure sustainability, a Speed Post manual has been developed Speed Post Manual Processes within facilities Network schedule Performance management How many processing SPCs should exist in a city? How to ensure standardisation and maximise throughput and quality? Which are the right cutoff-times and processing windows to allow for maximum next day delivery? How to use the to ensure constant performance monitoring and improvement? SOURCE: Mail Network Optimisation Project India Post Printed 30. 03. 2010 23: 15: 37 Network topology Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Objectives ▪ A relevant document for Speed Post operations across the country ▪ To help achive reliable, fast, and standardised Speed Post operations ▪ Modular approach allows for flexible updates to keep the Manual up to date | 29

Incentives for good performers being planned through training Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Recognition of good performers Printed 30. 03. 2010 23: 15: 37 Focus Training at Bangkok for SPC Managers, ASPs and training Find out need for training Train people to help them to also become star performers SOURCE: Mail Network Optimisation Project India Post | 30

The "look and feel" Look and feel Technology Ensure uniform brand/appearance across locations Develop standardised and consistent, interior and exterior of the building and supporting infrastructure to the line team Decide on the new tools and technologies to be used and also on how do we upgrade the exiting ones to ensure faster, better services SOURCE: Mail Network Optimisation Project Recognition and training Develop scheme for recognising star circles/ performers Ensure 100% trained staff on field India Post Printed 30. 03. 2010 23: 15: 37 Infrastructure Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Branding | 31

Speed Post update 2 Approach for First Class Working Draft - Last Modified 31. 03. 2010 12: 13: 14 1 Printed 30. 03. 2010 23: 15: 37 | 32 India Post

First Class Mail Network need a revamp as well The context for change Current performance does not match customer expectations, they expect a substantial improvement in D+x SOURCE: Mail Network Optimisation Project India Post | 33 Printed 30. 03. 2010 23: 15: 37 First Class Mail offers untapped potential that India Post could capture with high-quality network Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Volumes and revenues in First Class Mail are on a declining trend (- 20 to - 25% over the past 5 years)

First class accounts for ~63% of mail volumes and ~34% of revenues, but is on declining volume and revenue trends Share of traffic and revenue Crore items (%), 2008 -09 Volume (crore) 654 (*) First class mail 413 (63) 150 (*) International 17 (*) Speed Post 74 (*) 3, 436 (*) First class mail 1, 178 (34) International Speed Post Registered -5% p. a. 498 496 481 478 460 465 449 16 18 17 18 443 17 2004 -05 2005 -06 2006 -07 2007 -08 2008 -09 Revenue (INR crore) 1 Printed 30. 03. 2010 23: 15: 37 Postal Second class mail 579 561 INR crore (%), 2009 -10 (Projected) Unregistered -4% p. a. 1, 215 (36) 307 (*) 736 (*) 2004 -05 2005 -06 2006 -07 1 Revenue figures are for First Class and Second Class Mail as they are not separately tracked SOURCE: Mail Network Optimization Project, Book of Information 2008 -2009, MIS reports, Costing department Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Postal Second class mail Development of First Class over time India Post | 34

Customers are aware of India Post’s insufficient performance and expect improvements in the range of 2 to 4 days for delivery Unregistered mail N = 51 (non-bulk) NTD delivery metro to non-metro 2. 5 2. 0 4. 8 1. 8 2. 8 6. 5 1. 9 0. 8 2. 9 1. 6 4. 2 2. 2 0. 7 N/A 3. 3 4. 0 2. 5 1. 7 N/A 2. 8 2. 0 2. 5 2. 9 3. 5 2. 8 3. 2 1. 6 Expected performance N/A 2. 5 1. 5 Perceived performance Printed 30. 03. 2010 23: 15: 37 NTD delivery metro to metro 3. 4 Bulk mail N = 38 (bulk) Actual performance 1 Working Draft - Last Modified 31. 03. 2010 12: 13: 14 TD delivery 3. 5 Registered mail N = 69 (nonbulk) 3. 5 1. 7 2. 9 0. 6 1 Performance based on test-letter program conducted by Project Team from 31/08/10 to 06/09/10 (total sample size: 438, of which 238 unregistered letters and 200 registered letters) SOURCE: Survey of 120 retail customers and 38 corporate customers (30/08/2010 to 08/09/2010), Project team test letter program India Post | 35

India Post is in a good position to capture future growth opportunities in case it can turnaround its First Class mail business less than 10 mail articles/person vs. 200 articles/person in Germany and 600 articles/person in US ▪ India Post has a strong network with ~155, 000 post offices, which means that with a ratio of one office for ~7, 000 Indian citizens it provides a very dense service infrastructure ▪ Majority of ordinary non-bulk mail is posted through letter boxes. With ~685, 000 letter boxes across the country, India Post provides a wide network Capturing the growth opportunity in the future will only happen if quality is improved, which will require an operational transformation of the First Class product segment SOURCE: Mail Network Optimisation Project India Post | 36 Printed 30. 03. 2010 23: 15: 37 …by leveraging India Post’s unique and large network ▪ Indian mail market is underpenetrated with Indians receiving Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Untapped growth potential can be captured …

For First Class, we will focus on the same elements as for Speed. Post, while recognizing differences What is the right network schedule? How to measure India Post's performance? ▪ ▪ ▪ Higher planning complexity (multiple transport modes involved) Lower planning capacity Printed 30. 03. 2010 23: 15: 37 What are the right processes? ▪ Working Draft - Last Modified 31. 03. 2010 12: 13: 14 What is the right network topology? ▪ Main differences between First Class and Speed Post Higher fragmentation of network (more facilities, less concentrated volumes) Higher intra-city complexity (more facilities, less standardized flow) Relative importance of processes within sorting facilities lower in First Class Relevance of sorting automation and of improvements to delivery preparation higher in First Class (higher volumes) Lack of objective data hinders performance measurement Low performance management orientation and lack of consistency of existing reports for unregistered mail SOURCE: Mail Network Optimisation Project India Post | 37

Proposed approach for First Class wave – Initial efforts will focus on topology (country-wide and intra-city) and network scheduling Sep-10 13 Oct-10 20 27 04 Nov-10 11 18 08 15 22 29 06 Build comprehensive topology model Define facility for consolidation 1 in the 6 metros Define optimal Network Schedule (between 6 metros) Processes – Build First Class manual based on Speed. Post Manual Processes (delivery) – Identify improvements in delivery preparation Processes (sorting) – Implement First Class manual and develop additional improvements in consolidated facility Codif y best pract ices Printed 30. 03. 2010 23: 15: 37 “Getting the core right” in country-wide and intra-city topology is a prerequisite to achieve long-term impact as it will create the basis on which scheduling and process improvements can be built on and sustained 01 Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Build preliminary topology model 25 Dec-10 Build KPI architecture based on Speed. Post and redesign test-letter program Develop strategy for sorting machines ▪ SOURCE: Mail network optimisation project Continued support on Speed Post India Post | 38

First Class Mail Network Optimization: Study in Progress ▪ Study of mail profile in 6 cities currently undergoing Working Draft - Last Modified 31. 03. 2010 12: 13: 14 ▪ Mapping of P. O. s to mail offices undertaken ▪ Level I and II sorting offices being planned Printed 30. 03. 2010 23: 15: 37 ▪ Delivery Office process optimization pilot being undertaken in metro cities SOURCE: Mail Network Optimisation Project India Post | 39

Any questions or comments? Working Draft - Last Modified 31. 03. 2010 12: 13: 14 Printed 30. 03. 2010 23: 15: 37 | 40 India Post