DTC : A case study

        (Delhi's state run bus transport corporation needs an overhaul)

The Delhi Transport Corporation (DTC) is in news again. The state run bus transport company that has been only incurring losses since its inception days of 1971 is now finally experiencing success in its corporate history – the revenue of the corporation is skyrocketing. In the fiscal year of 2010-11, the average cash flow was Rs.2.5 crore a day (pegging close to Delhi Metro’s average daily cash flow of Rs.2.75 crore) which boils down to Rs.912.5 crore a year. On July 11, 2011, DTC registered highest revenue collection of Rs.3.3 crore in a single day that surpassed the Delhi Metro's daily revenue! As per monthly revenue collection, DTC collected Rs.101 crore as revenue in July, 2011 compared to Rs.62.18 crore the year before; in June, it was Rs.93.38 crore against last year’s Rs.49.72 crore. The reasons are manifold: Absence of the blue-line buses, overcrowded Metro, recent induction of swanky and comfortable low floor buses and finally, stringent monitoring of its operations.

But, amidst the celebration, there is still room for veritable concerns. DTC's cumulative loss had increased to Rs.4,008.46 crore in 2005-06 from Rs.1,082.14 crore in 2001-02. The main reasons behind the accrued loss was the diminished traffic and non-traffic income and augmented expenditure; especially high labour cost and spiralling interest on loans. The inflation adjusted Operating Cost per passenger per kilometer had been increasing steadily in the last decade from Rs.18 ($0.46) in 2002-03 to Rs.21 ($0.53) in 2006-07. Cost through interest payment was kicking off sharply too from 28 per cent of total cost in 2002-03 to over 50 per cent in 2007-08. The expenditure was increasing as a ratio of approved outlay, from 57.29 per cent in 2004-05 steadily climbing to 90.13 per cent in 2008-09! Further, according to an examination by Environment Pollution (Prevention & Control) Authority, 74.5 per cent of the DTC fleets had suffered from leakages in February 2005. The average distance travelled per passenger has decreased over the time – from 11.3 km in 2000-01 to 10 kms in 2008-09. The Load Factor as percentage has dipped too from around 80 per cent in 2001-02 to 69 per cent in 2008-09. The fleet utilisation which was at 90 per cent in 1997-98 was hovering around 78 per cent in 2008-09. However, the major component for rising cost is salary payment of staff. The DTC is a bottom heavy organisation resulting in swelling of staff cost-total revenue ratio from 68.42 per cent in 2001-02 to 101.76 per cent in 2005-06. Interestingly, the fare revenue had plummeted too from $0.02 per passenger per kilometer in 1999-2000 to less than $0.01 per passenger per kilometer in 2007-08. Thus, the current year is the only exception with a considerable fare hike.

This sudden surge in revenue, however, is only a glorified aberration as the causes that led to such gigantic loss have not been tackled yet. But as long as the DTC is enjoying monopoly, (with passenger base jumping from 8 crore in July 2010 to 14 crore in July 2011 – and a fleet size of 6,500 buses) the revenue is expected to rise further. However, it still has miles to go before it becomes a real success story!