BMTC profits on downward curve

The profitability of state-owned Bangalore Metropolitan Transport Corporation (BMTC), a provider of public transport in Bangalore city and agglomerates, has been falling over the past few years. For year-ended March 2009, the corporation has reported a 60.6 per cent drop in the net profit at Rs 55.18 crore, compared to the previous year.

The corporation has reported an operating loss of Rs 20.6 crore compared to an operating profit of Rs 70.8 crore for 2008-09 as against the previous year. The total revenue, however, has shown a marginal increase of 6.4 per cent during the year as against the previous year, according to an audit carried out by Comptroller and Auditor General of India (CAG).

“Though the corporation is earning profits, the margin is declining mainly due to its high cost of operations and very meagre increase in revenue. The corporation can control the decline by tapping non-conventional sources of revenue and increased line checking,” the CAG report said.

BMTC had a fleet strength of 5,542 buses (own fleet of 5,312 and 190 were taken on lease from private) as on March 31, 2009 and carried an average of 3.66 million passengers per day. The earnings per kilometre (KM) was Rs 24.63 and expended Rs 23.28 per KM during the year.

Corporation’s fleet utilisation at 94.54 per cent in 2008-09 was above the all India average (AIA) of 84 per cent. Its vehicle productivity at 227.70 kilometres per day per bus was above the AIA of 187 KMs. However, the achievement of the corporation was marginally less than its own target of vehicle productivity. Its passenger load factor at 63.80 per cent was less than the AIA of 71 per cent.

The CAG report said that the corporation did well in its operational parameters. However, 44 per cent schedules were not earning enough to meet even variable cost of operation. Corporation’s performance on preventive maintenance was poor with only about 53.75 per cent maintenance done on time.

The vehicle productivity of BMTC was lower at 227.70 km compared to 229.70 km per day in 2004-05. However, it was much better than the all India average of 187 km per day. The management attributed the lower productivity to traffic blockages and bottlenecks on the routes operated by the buses.

The load factor (capacity utilisation) of the corporation decreased to 63.8 per cent in 2008-09 from 67 per cent in 2004-05.

The reasons for decrease in load factor were increase in the fleet of the corporation and lower line checking. Although the number of trips operated by the corporation increased to 25 million in 2008-09 from 16 million in 2004-05, the percentage of trips checked to the trips operated declined 1.17 per cent from 1.65 per cent in 2004-05, the report said.

The Comptroller and Auditor General of India has recommended that the BMTC may consider devising a policy for tapping non-conventional sources of revenue by undertaking public-private partnership projects.

The CAG has also suggested that the government consider creation of a regulator to regulate fares and also services on uneconomical routes.