TrafficInfraTech Expo: Seminar: May 18, 2012

Good policies and government support was helpful: Manjunata Prasad

Karnataka State Road Transport Corporation (KSRTC) is today one of the premier state transport undertakings in the country. As Sudhakar Rao said, in 2010 & 2011 out of all the STUs in the country, KSRTC was No. 1. My focus today is on how we were able to achieve a profit of My focus today is on how we were able to62.5cr, what were the policy issues that we took care of, what were the management issues and what were the technological issues. Karnataka public transportation is entering a new era of growth, progress and prosperity. Our objectives have always been to provide adequate efficient, economic and well coordinated road transport services and most importantly, to operate services on sound business principles.

KSRTC started in 1961. Last year we celebrated our 50 years of existence. In 1961 – 1962 when we started, we had just 42 depots and about 1792 buses and we were operating about eight crore kilometres with a revenue of about seven crore. In 1996 – 1997 major reforms took place in Karnataka. We now had about 108 depots and 10,000 buses and we were operating a distance of about 102 crore kms with a revenue of about र903cr. In 1996-97, this Corporation was bifurcated into four Corporations because of the reforms that were initiated for various reasons.

In 2000 & 2001, KSRTC exclusively had about 43 depots with 4115 buses, operating a distance of 59 crore kms with a revenue of about र708cr. Now, if you compare a decade later that is from 2000-2001 to 2011-2012, there was a quantum jump. During the past decade, from about 4000 buses we have almost gone double – to 7749 buses. The operated distance has increased from 59 crore kms to 92 crore kms in a decade and the revenue has increased from र708cr to र2302cr. And of course, we have consistently been making profits.

Our staff ratio too has been consistent for over five years now. What factors have led to this turnaround and success? One is fleet modernisation. We have almost 450 state-of-the-art Volvo and Mercedes Benz buses. We also have Volvo multi axle buses. It is a pleasure travelling in our high-end buses. As far as infrastructure is concerned, we have built modern high-tech bus-stands and bus-terminals and taken a lot of environmental initiatives. And on the revenue front, we have very good policy in Karnataka. Whenever there is a hike in the diesel prices or staff dearness allowance, we need not go to the government. Our board is competent enough to take a decision to hike the fares. It is automatic, based on the ASRTU formula, and is not subjected to any political decision. It is purely an economic decision. I just take the board’s decision and we go ahead and implement the fare hike. This is being done for the past ten years.

Then comes the Motor Vehicle Tax. In some states, it is about 15-16% of total traffic earnings but in our state it is just about 5.5% of the total traffic earnings. Another important area is the social cost of the subsidies. We give concessional passes to nearly four lakh students. We also give free passes to freedom fighters, MLAs, MLCs and concessional passes to senior citizens. They pay only 25% of the actual cost of travel. So, we ask the government to pay 50% of their travel cost and we bear the rest 25%. The consumer then bears only 25%.

We have also made many improvements in the systems and processes and have made extensive use of IT. We have also adopted cost minimisation measures and have ensured transparency in HR policies. This is one of the very important areas. Every year we recruit about 1000 to 2000 drivers and there is absolutely no human interference in the process. We have an electronic driving track system wherein the person who has to be tested for his skills, applies online. Then, on the date given to him, he just takes the vehicle and goes around the driving track. The moment he comes out, his marks are displayed by an automated electronic system which cannot be tampered with. Candidates, who are expected to apply online, get selected purely on merit. Hence, nobody can question the quality of our drivers. Because of this, our accident rate is minimum compared to the other states.

As far as IT is concerned, all our buses have electronic ticketing machines and ‘anywhere any time reservation’ system under which you can book your ticket through web or through your mobile. Also, like you have flexi-fares in flights, we too have different fares for weekdays and weekends (Fridays, Saturdays and Sundays). The weekend ticket prices are almost one and a half times the normal fare. Since the number of weekend passengers to and from Bangalore is big, nobody minds these fares in exchange for good services.

We have about 15 divisions with 7850 vehicles. Their reports and our training institutions’ reports are all delivered as everyday operations through customised IT programmes. Even though the government has given us clearance to have a staff ratio of 5.4, we have kept it as 5.03 because of various interventions.

In the nationalised sector we have covered 96% and in non-nationalised sector, 46% of the roads by our services. Our buses go to the remaining 4% where there are motorable roads. Earlier, private operators used to enjoy monopoly in the nationalised profitable routes in a clandestine manner – by encroaching on our roads. Then our approach was to complain to the regulatory authority. The latter never took action. So we thought that instead of complaining, why not we compete with them? So, if they ran five buses on a profitable route, we began introducing ten. Hence, after a period of time when they found that the business was sliding down, the private operators withdrew from there.

On an average, every year we invest in about a thousand new buses as we phase out 600 to 700 buses that have crossed a distance of about 7.5lakh kms. We either renovate or replace. About 350 buses are added every year. That increases the kilometres covered which, in turn, increases the gross revenue. The latter has been constantly increasing. Last year it was about र2302cr. This is mainly because of the policies we have adopted. Our government too is very supportive. Whenever we approach it with a particular problem, the finance department responds well. We have strongly proactive ministers who respond to all our needs.

Our biggest assets are infrastructure and manpower besides a functional autonomous Board of Directors. There is no centralisation of power. Thus, decision making is faster. We have found that there is a large segment of consumers which is ready to pay extra for comfortable and safe journey and replace the normal buses with high-end buses. So, we introduced Volvo and then, multi axle buses. As a result, those who had shifted from normal buses to Volvo now want only multi axle buses. For that even if we charge र200 extra on a particular route, they are willing to pay. But of course, they want live TV on every seat and 50-60 channels. Now, we are also introducing chemical toilets and pantries in these buses.

During the peak season and weekends, we increase 10% of the ticket value in Volvo buses and in flat season, decrease about 5% . So whatever losses are incurred in the rural segment – which is 60% – are recovered through high-end services. Rural routes are obligatory routes – we have to run our buses there whether we make profit or not. So I tell the government, “We don’t mind running a bus wherever you ask us but we will check it for 15 days first. If that route isn’t profitable, we will withdraw that service. We are not touching your obligatory route anyway”. The average age of our fleet is 3.32 years. It is a young fleet, so the cost comes down, breakdown reduces and drivers enjoy driving these buses. We launched multi axle Mercedes Benz buses in 2010. We take regular feedback from our passengers. There is a separate cell which goes through the feedback and we accordingly improve our services.

We have also launched city buses for Tier II cities like Tumkur, Davanagere, Hasan and Shikarpur. Initially these buses were incurring losses but over a period of time, they began making profits. We have 40-50 such buses in each town and have constructed bus stations and bus terminals all over these cities. We received a lot of funding from JnNURM. We spend about My focus today is on how we were able to100cr on bus stand modernisation and depot modernisation. We also carry out many projects under public private partnership (PPP) like construction of our bus stands and terminals along with big commercial plaza. Ten per cent of our total earning comes from commercial activities. We have bus stand on ground level, bus terminal on first floor and commercial establishments on second floor. But then, this year BMTC’s MD and I are paying र77cr as income tax. The government has removed the provision of charitable institutions for STUs. So whoever makes profits has to pay income tax. We are paying a huge amount as income tax and we have to take up this issue with the government. It says that commercial activities are not your cup of tea, your core area is transportation. But we feel that when there is a scope for good business, why should we not do it?

There is a र2000cr project in the heart of Bangalore under PPT for which bids are still open. We have put about five projects under PPF. We will showcase such projects at global investors’ meet. We have carried out some infrastructure projects in Mysore city under JnNURM. We have a very interactive website, email facility and we run sms campaigns. We have ITS for Mysore where 500 buses have real-time passenger information system and other ITS components. VTMS too is in the offing. To reduce emission, we blend ethanol in diesel and the move has been supported by the government.