Wet-leasing is way forward for embattled Corporation
KOCHI: If someone says he is trying to turn around KSRTC that sits on an accumulated loss of Rs8,031.56 crore, a negative networth of Rs7,179.6 crore (all 2016-17 figures), and obviously, a habitual loss-maker that reported a loss of Rs1,771.61 crore for 2016-17 and (a yet-to-be released) loss of about Rs1,400 crore for 2017-18, people are bound to frown upon his plans and the man behind the plans, for sure.
But for Tomin J Thachankary, the managing director of KSRTC, reviving the corporation is a challenge before him now, and he expects the employees and all other stakeholders in the game to throw their weight behind him on this forward journey.
The most striking of all revelations on KSRTC was from Bureau of Public Enterprises (BPE), which said that despite a marginal increase of 3 per cent in the revenue in 2016-17 compared with previous year, the corporation incurred losses owing to a ‘staggering increase’ in the employee expenses by 39 per cent and an increase in finance costs by 18 per cent.
And the data shows that this is despite a drop in the number of employees from 44,520 to 41,968 during the past one year – could be mostly to do with increments and salary dues for which there is no official confirmation though.
The KSRTC managing director has started prescribing a lot of ‘bitter pills’ for the state-owned entity, in an attempt to save the corporation that is mired in losses and debts.
The employees, who are cosy about the present goings-on in the corporation, are certainly up-in-arms against the new chief, who is bent on ‘foisting’ new schemes such as ‘single duty’, wet leasing, regularization of workforce and rationalization of schedules and the likes, on the employees arguably to resuscitate the corporation from an impending financial quicksand.
KSRTC is one of the largest public sector employers, and is livelihood for more than 40,000 people and feeds the families of another few thousands through pension.
Thachankary was briefing the media the other day when he disclosed some ugly facts too. He said the corporation owed the public sector fuel providers – Indian Oil Corporation (IOC) Rs196 crore, and Hindustan Petrochemicals Ltd (HPCL) & other private companies together another Rs205crore.
“My biggest worry is about when these oil companies will cut off this lifeline,” he said while briefing the media. Referring to the Rs1000 crore funding from the government, the MD said it was not able touch the surface of the corporation’s funding needs.
Out of that Rs1000 crore, Rs720 crore went straight down to settle the pending pensions, and the corporation was left with only Rs280 crore from which the expenses to the tune of Rs11 crore that was incurred on the loan restructuring were also met.
“This ultimately leaves us with about Rs20 crore monthly, which is certainly not sufficient to fill the huge gap between the revenue and expenses of KSRTC,” he said.
Thachankary said making both ends meet is a big challenge in KSRTC and that is the main reason why no one from the ‘higher-ups’ is keen to take up this thankless job.
KSRTC salary alone comes to Rs94 crore every month and pension another Rs60 crore though a portion from the aggregate salary amount may go to the employees’ pension funds or their repayment accounts with KSRTC.
However, deducting whatever possible on those heads, the salary alone comes to at least Rs84 crore per month and towards this, the government portion of Rs20 crore (leftover from the Rs1000 cr funding) can be counted, and it still leaves an amount of Rs64 crore every month.
And the income is Rs6 crore daily on an average (though August month income according to Thachankary was only Rs5.5 crore) and this adds up to about Rs2190 crore annual revenue. Diesel expenses have soared by about Rs15 per litre between April (when the price was Rs64.78 per litre) and September alone, as the diesel price [now] is above Rs79 per litre.
Since KSRTC consumes 4.5 lakh litres of diesel per day, the diesel expenses alone have surged by Rs20 crore monthly between April and September 25, 2018. The annual diesel bill alone at today’s price could be pegged at close to Rs1300 crore.
This alone shows up a gap of about Rs700 crore annually after accounting for the Rs240 crore squeezed from the Rs1000 crore of Government funding. It goes without saying that expenses are not just diesel and salary alone leaving the scope for a much bigger hole.
The loan restructuring that was initiated by the chief minister Pinarayi Vijayan has really helped the corporation in a big way.
“We were able to retire all those expensive short-term loans worth Rs3100 crore owed to financial institutions including Kerala Transport Development Finance Corporation (KTDFC), and convert them into a 20-year loan at a reduced rate of 9 per cent helping us save Rs2 crore monthly on interest payment alone,” he added.
He informed that the experiment like cutting 15 per cent diesel consumption by taking off schedules during non-peak hours really served the purpose as reduction in such schedules didn’t have any negative impact on revenue.
He sought the support and cooperation of the employees in the government efforts to save KSRTC before it goes too weak to stand up. “There may be many age-old practices the employees are entrenched in and this could be one reason why the employees are turning their back on reforms like doing away with the multiple-duty system, a practice which certainly is detrimental to the employees, passengers and also in violation of the provisions of Motor Transport Workers Act, 1961, and Kerala Motor Vehicle Workers Rules, 1962,” Thachankary reminded.
Wet-leasing of buses is a time-tested idea that could rejuvenate KSRTC from its chronic sickness. Thachankary said private bus owners are willing to wet lease buses to KSRTC with driver at Rs15 per km, so that the corporation needs to provide them only with conductors.
“Already, our cost of driver alone per kilometer works out to Rs20 and there are umpteen reasons how the private bus-owners are able to make this work, and they claim they will be able to recover their investment in three years,” the MD explained. He said KSRTC is not able raise funds and it needs to run the course too, and hence the way forward is wet leasing of buses.