KOCHI: Is there really a solution to the much-debated financial problems of the Kerala State Transport Corporation (KSRTC), yet another ‘white elephant’?
“Whatever studies you carry out or whoever comes at the helm, the KSRTC cannot be salvaged financially unless it creates other profit centres besides its core business. Otherwise, what one can realistically suggest is to keep the Corporation afloat with budgetary support rather than desperately kicking your legs each time to avoid drowning,” said a transportation industry expert while talking to businessbenchmark.news recently.
An analysis of the profit & loss statement of KSRTC amply proves this point. Close to 56 per cent of the gross income of the corporation is needed to cover the employee expenses alone (as per the financials of 2016-17) and with the fuel and power charge, the expenditure exceeds the gross income of the Corporation.
Now where does the corporation go for the money to pay for the interest to the tune of Rs606 crore, the other expenses at Rs1,018 crore and to provide for the depreciation pegged at Rs75 crore?
Currently there is no definite strategy to address this situation. Though the corporation was able to solve the issue of pending pension this time with the loans availed from primary cooperative societies, this sort of arbitrary and one-off solutions will not work for long.
It is intriguing to find that the salary expense of the corporation has increased by Rs290 crore or about 39 per cent during 2016-17 when the whole world is breaking its head on how to curb expenses at KSRTC.
During the year 2016-17 the net loss of the corporation has escalated by 45.15 per cent to Rs1,770.61 crore mainly due to the increase in salary, fuel charges and other expenses. The corporation has a negative networth of Rs7,179.59 crore as on March 31, 2017.
The huge debt built by KSRTC, Rs4,720 crore (from government and financial institutions) as of March 31, 2017 has nothing to do with the viability of KSRTC as the corporation’s finances are not viable even if the debt and its consequent interest are not taken into account.
The corporation is in the process of availing another loan of Rs3,350 crore (or has it been already availed) from a consortium of more than ten banks and this will be mostly used to retire expensive loans that sit on the corporation’s balance sheet.
The fact that 12 per cent of the fleet is under repair and 25.9 per cent are over-aged is not overlooked here. The breakdown rate is six per lakh kilometres for the KSRTC, and less than one for its counterpart in Karnataka. Another pointer to the basic malady of KSRTC is said to be the high average employees per bus, which is currently 7.2 – certainly above the national average of 5.2 and arriving at this realistic number would call for the firing of 10,000 of its employees, which is simply unthinkable. The corporation had close to 42,000 employees as on March 31, 2017.
An interesting fact worth musing about the Kerala PSUs is that the larger the workforce, the bigger the loss posted. Besides KSRTC, this theory properly fits with the big employers such as KSEBL and Kerala Water Authority (KWA), which are the other frontrunners in loss generation.
The issue with KSRTC is going to be graver going forward. The most instinctive solution to combat the mounting loss for a transportation entity could be hiking charges. But to one’s dismay, this strategy has ceased working. Talking to businessbenchmark.news, leader of a private bus owners association in Kochi testified that after the recent bus fare hike not only has the collection not improved, but on the contrary it has reduced marginally.
He says that beyond certain levels of fares, the passengers are tempted to use their own vehicles, especially two wheelers. Moreover, given the current bus fares, many passengers have started preferring trains for long journeys over bus.