In the third &
final part of the series on SRTUs, we look at the financial performance. While
revenues of SRTUs have increased over the years, the costs have increased at a
greater rate resulting in increased losses. Less than 10% of the reporting SRTUs
Debates on whether or not SRTUs need to be
privatised are frequent because of the incessant losses faced by them every
year. There are multiple factors such as increasing fuel prices, vehicle
maintenance charges, operational charges, staff payments and more which
contribute to these losses. Delay in governments’ reimbursement and subsidies
also add to the existing negative balance sheet of SRTUs.
This story is the third & final
part of the series on SRTUs which looks
at the financial performance of SRTUs in India between 2009-10 and 2015-16
based on the reports published by Ministry of Road Transport & Highways
(MoRTH). You can read the previous stories here & here.
Total revenue generated by SRTUs has gone up by
96% in six years
generated by SRTUs include both traffic and non-traffic earnings. While traffic
earnings are from ticketing, non-traffic earnings consist of income generated
through advertisements, sale of scrap, subsidies and other similar sources. Traffic
earnings or the income earned through passengers make up a large portion of the
revenue of SRTUs. The total revenue made by SRTUs has consistently increased
over the years. It can also be observed that the average income earned by a
SRTU has increased consistently.
Total revenue of reporting SRTUs has
almost doubled from ₹ 26,342 crores in
2009-10 to ₹ 51,748 crores in
2015-16, an increase of 96.4%. One of the reasons behind this is the growing
number of buses under SRTUs, that is, rise in the total number of government
buses which was already discussed in the first part.
Increased costs add to the woes of SRTUs
Concomitantly, it is evident from the
data that the total costs (expenditure) incurred by SRTUs has shot up. During
the same period, the costs have more than doubled from ₹ 31,079 crores in 2009-10 to ₹ 64,377 crores in 2015-16. Total cost incurred by SRTUs include operating
costs and non-operating costs. Expenses on fuel, lubricants, different parts of
buses such as tyres, tubes and spare parts which are required for running buses
are covered under operating costs whereas interest, depreciation, tax, rent and
other expenses which do not directly affect the daily operations come under
Total Expenditure of SRTUs up by 107%
Operating costs make up for
approximately 73% of the total expenditure while non-operating costs constitute
the remaining, around 27%. In the six-year period from 2009-10 to 2015-16, the
total expenditure has gone up by 107%. Of the total expenditure incurred, the
largest amount has been on staff- approximately 40% of the operating cost. This
is followed by expenses on fuel and lubricants.
Until 2014-15, the percentage of total
operating cost which was spent on staff was between 39% and 40.5%. In 2015-16,
about 45.2% of total operating cost was spent on staff. The cost incurred on
staff expenses increased by 4.7% in 2015-16.
Net loss of SRTUs has continuously increased
The expenditure of SRTUs has increased
at a greater rate than the revenues resulting in the increase in net loss over
the years. From a net loss of ₹ 4,737 crores in
2009-10, the net loss of SRTUs has increased to ₹ 11,350 crores in 2015-16, which is an increase of close to 140% indicating
that much needs to be done to make them profitable entities.
Only about 10% of the SRTUs are profitable
Hardly 10% of the SRTUs which have
reported to MoRTH make a profit while the remaining (close to 90%) face losses. Until 2015-16, the maximum number of SRTUs
which earned a profit in a financial year was five. This number increased to 7
in the year 2015-16. In other words, 7 SRTUs reported profits in 2015-16, which
is the highest for any financial year during the period of consideration.
Only PUNBUS SRTU in Punjab managed to
earn a profit in 2013-14. PUNBUS has earned profits since then. PUNBUS has over
1212 buses with an average age of 7 years. There are no over-age buses as per
the 2015-16 performance
report. The staff bus ratio is 2.78 and staff productivity is more than 100
kilometres per bus each day.
Since the number of SRTUs which report
every year is different, the percentage of SRTUs earning profits and facing
loss is given in the chart below. In 2015-16, Delhi TC faced a loss of ₹ 3,411.09 crores which accounted for 30% of the net loss of all
SRTUs. Every year Delhi TC reports the highest loss of all SRTUs.
Telangana SRTC has also been
continuously facing losses. In 2014-15 TSRTC ended up with a net loss of ₹ 401.4 crores which increased to ₹ 701.82 crores in the following year 2015-16 resulting in a 75%
increase in the net loss.
What should be
made to make SRTUs profitable?
It is true that public transport
undertakings make travel by buses simpler, convenient, cheap and reduce
traffic. Every nook and corner of the country is connected with public buses.
From the data in the MoRTH reports and
the issues discussed in these stories, it is pretty evident that ‘public
transport’ (buses) is highly unsustainable. While profit making is not the primary
motive of SRTUs, measures need to be taken in order to sustain the services.
Policy interventions are necessary to make bus operations more effective. Best
practices can be implemented from PUNBUS such as using newer buses and reduced
operating cost which has generated profits continuously for three years. SRTUs
also need to focus on the issues faced by common public such as frequency of
buses, connectivity and punctuality.
SRTUs serve a very important public purpose which indirectly helps development, economy among other things. Hence it is important that governments also extend support to make SRTUs more efficient & sustainable.
The post Part-3: Only about 10% of the SRTUs are profitable appeared first on FACTLY.
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