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VOLUME NO. 9 (2018), ISSUE NO. 07 (JULY) ISSN 0976-2183

CONTENTS
Sr. Page
TITLE & NAME OF THE AUTHOR (S)
No. No.
1. A STUDY TOWARDS CUSTOMER LOYALTY IN LIFE INSURANCE 1

SWADESH KUMAR DASH, Dr. PREMVIR KAPOOR & Dr. R.K.S. MANGESH DASH

2. INDIA’S GDP TO GROW AT 7% IN 2018 6

BETSY MANUEL

3. IMPACT OF SITUATIONAL FACTORS IN STUDENTS’ PREFERENCE OF FAST 9

FOOD – AN EMPIRICAL STUDY

A. AYESHA SIDDIQUA & Dr. I. MOHAMED SHAW ALEM

4. DIVERSITY AND ITS IMPACT ON EMPLOYEE SATISFACTION AND 12

PERFORMANCE

Dr. ADIL RASOOL, GHANI KHATIR & NADIR SHAH NADIR

5. LIQUIDITY MANAGEMENT AND CORPORATE PROFITABILITY PERFORMANCE 16

OF TEA COMPANIES IN INDIA

S.MANJULA & Dr. S. SIVAGNANAM

6. FINANCIAL CRISIS OF STATE TRANSPORT UNDERTAKING - A CASE STUDY OF 22

KERALA STATE ROAD TRANSPORT CORPORATION (KSRTC)

Dr. INDU VIJAYAN

REQUEST FOR FEEDBACK & DISCLAIMER 31

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VOLUME NO. 9 (2018), ISSUE NO. 07 (JULY) ISSN 0976-2183
CHIEF PATRON
Prof. (Dr.) K. K. AGGARWAL
Chairman, Malaviya National Institute of Technology, Jaipur
(An institute of National Importance & fully funded by Ministry of Human Resource Development, Government of India)
Chancellor, K. R. Mangalam University, Gurgaon
Chancellor, Lingaya’s University, Faridabad
Founder Vice-Chancellor (1998-2008), Guru Gobind Singh Indraprastha University, Delhi
Ex. Pro Vice-Chancellor, Guru Jambheshwar University, Hisar

FOUNDER PATRON
Late Sh. RAM BHAJAN AGGARWAL
Former State Minister for Home & Tourism, Government of Haryana
Former Vice-President, Dadri Education Society, Charkhi Dadri
Former President, Chinar Syntex Ltd. (Textile Mills), Bhiwani

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Former Faculty, Shree Ram Institute of Engineering & Technology, Urjani

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Principal (Retd.), Maharaja Agrasen College, Jagadhri

EDITOR
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Professor & Dean, Faculty of Commerce, Aligarh Muslim University, Aligarh, U.P.

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Professor & Head, Dr.M.G.R. Educational & Research Institute (Deemed to be University), Chennai

EDITORIAL ADVISORY BOARD

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Professor & Director, Accurate Institute of Advanced Management, Greater Noida
Dr. CHRISTIAN EHIOBUCHE
Professor of Global Business/Management, Larry L Luing School of Business, Berkeley College, USA
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Research Professor, University Center for Economic & Managerial Sciences, University of Guadalajara, Gua-
dalajara, Mexico
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Dr. D. S. CHAUBEY
Professor & Dean (Research & Studies), Uttaranchal University, Dehradun
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ulty of Economics & Business Administration Sciences, Mustafa Kemal University, Turkey
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Dr. V. SELVAM
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Dr. N. SUNDARAM
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Dr. IQBAL THONSE HAWALDAR
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Dr. MOHENDER KUMAR GUPTA
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Dr. ALEXANDER MOSESOV
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RODRECK CHIRAU
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Dr. DEEPANJANA VARSHNEY
Associate Professor, Department of Business Administration, King Abdulaziz University, Saudi Arabia
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Associate Professor, School of Business, The Copperbelt University, Main Campus, Zambia

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Dr. SHIKHA GUPTA
Associate Professor, Lingaya’s Lalita Devi Institute of Management & Sciences, New Delhi
Dr. KIARASH JAHANPOUR
Research Adviser, Farabi Institute of Higher Education, Mehrshahr, Karaj, Alborz Province, Iran
Dr. SAMBHAVNA
Faculty, I.I.T.M., Delhi
YU-BING WANG
Faculty, department of Marketing, Feng Chia University, Taichung, Taiwan
Dr. MELAKE TEWOLDE TECLEGHIORGIS
Faculty, College of Business & Economics, Department of Economics, Asmara, Eritrea
Dr. SHIVAKUMAR DEENE
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SURAJ GAUDEL
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Dr. BHAVET
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FORMER TECHNICAL ADVISOR

AMITA

FINANCIAL ADVISORS
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NEENA
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BOOKS
• Bowersox, Donald J., Closs, David J., (1996), "Logistical Management." Tata McGraw, Hill, New Delhi.
• Hunker, H.L. and A.J. Wright (1963), "Factors of Industrial Location in Ohio" Ohio State University, Nigeria.
CONTRIBUTIONS TO BOOKS
• Sharma T., Kwatra, G. (2008) Effectiveness of Social Advertising: A Study of Selected Campaigns, Corporate Social Responsibility, Edited
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nal of Urban Economics, Vol. 21, No. 1, pp. 83-104.
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• Garg, Bhavet (2011): Towards a New Gas Policy, Political Weekly, Viewed on January 01, 2012 http://epw.in/user/viewabstract.jsp

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FINANCIAL CRISIS OF STATE TRANSPORT UNDERTAKING - A CASE STUDY OF KERALA STATE ROAD
TRANSPORT CORPORATION (KSRTC)

Dr. INDU VIJAYAN

GUEST LECTURER
BISHOP JESUDASAN CSI COLLEGE OF ARTS & SCIENCE
MULAYARA

ABSTRACT
Passenger road transport is an important segment of road transport industry in Kerala. It is carried out by the public, private and co-operative sector. Buses take
up over 90 per cent of public transport in Indian cities, and serve as a cheap and convenient mode of transport for all classes of society. Services are mostly run by
state government owned transport corporations. The oldest Indian state transport undertaking is North Bengal State Transport Corporation still vibrant and run-
ning, providing service to commuters of North Bengal region. In Kerala, too road transport is a very important segment of the transport industry. With the formation
of the Kerala State in 1956, the name of the Department was changed to Kerala State Road Transport Department and in 1965, it was converted to Kerala State
Road Transport Corporation, in order to expedite the process of nationalisation and receive the assistance from Government. The main objective of the corporation
is to provide an efficient, adequate and economical system of road transport service. Basically it is a service oriented organization and is obliged to provide eco-
nomical services. The scrutiny of the balance sheet revealed that the income of the Corporation was not able to meet even the operating expenses of the Organi-
sation. The actual and the exponential trend of total income and expenditure of KSRTC from 1991 to 2012 was analysed and it was concluded that the growth of
expense is high when compared to income. On analysing the scatter graph showing the relation between Income and Expenditure of KSRTC it can be inferred that
the strength of association between the income and expenditure of KSRTC is very high (r = 0.995) as significance level is less than 0.05. KSRTC continued to incur
losses during the period of analysis, which was mainly due to increase in the operational expenditure arising out of the huge amount for petroleum products, wage
rise and the non-revision of fare for the last ten years. In 2012, the net loss of the Corporation was ` 34,997 lakhs which is much larger when compared to the
previous years. A regression analysis was made on the determinants to estimate the conditional expectation of the net profit/loss made by the Corporation over
the years (dependent variable) and the determinants of loss over the years (the independent variables) and it was found that the determinants of the variables to
be 92.87 per cent. The pricing policy of the KSRTC should be profit oriented and dynamic in order to achieve a better financial performance of Kerala State Road
Transport Corporation could adopt an automatic fare revision system without political intervention. It should also focus to generate revenue that can ensure an
efficient and adequate supply of public transport service. Public transport pricing may also be expected to contribute to the reduction of congestion and environ-
mental impact of road traffic, efficient coordination between public transport modes and the reduction of poverty. The main features of poverty are poor connec-
tivity to jobs, services, education and recreational activity.

KEYWORDS
KSRTC, passenger road transport, Pricing Policy.

JEL CODE
E22

INTRODUCTION

I t has been seen throughout the history of any nation that a proper, extensive and efficient Road Transport has played a major role in its development.
‘Transporters' perform one of the most important activities, at every stage of an advanced civilization. It is small wonder therefore, that where roads are
considered as veins and arteries of a nation, passenger and goods transported are likened to blood in circulation.
Upon gaining independence in 1947, the government took on the responsibility to provide its people an affordable means of transportation and thus nationalised
most public transport operations. Except the Railways and Airways, all other modes of transportation were the responsibility of the respective state governments.
With the view to provide affordable, safe and reliable bus service to people both in rural and urban areas, the Road Transport Act was promulgated in 1950. This
enabled the State and Central Government to form Road Transport Corporation.
The Road Transport Corporations Act was passed in 1950 with the aim of encouraging and providing appropriate institutional set-up for individual states to operate
road transport services in their state. The goal was to offer significant advantages to the public, trade and industry through the development of road transport
(Government of India 1950).It was expected that if the state government were responsible for the provision of road transport, it would allow coordination of road
transport with any other form of transport that may be available. The state could also use its discretion to decide which areas needed expanded services and
improvements in road transport facilities.
The main objective of the corporation is to provide an efficient, adequate and economical system of road transport service. Basically it is a service oriented
organization and is obliged to provide economical services.
In 1937, the State Transport Development was organised for Public Road Transport Service in the estimated while Princely State Transport of Travancore in Kerala,
nationalising the Trivandrum Cape Comorian and Nagercoil – Colachal covering a distance of 112 kilometres.
With the formation of the Kerala State in 1956, the name of the Department was changed to Kerala State Road Transport Department and in 1965, it was converted
to Kerala State Road Transport Corporation, in order to expedite the process of nationalisation and receive the assistance from Government.
The study is made for the consecutive tenure of twenty-two years from the year 1990 to 2012. The performance of the Corporation was satisfactory at the time
of inception and during the period of study, the Corporation was operating at a heavy loss. Hence, the scrutiny of balance sheet was an inevitable area of study.

OBJECTIVE
To scrutinize the financial statement and examine the income and its utilization by Kerala State Road Transport Corporation from various sources.

RESEARCH METHODOLOGY OF THE STUDY

Exploratory research design was adopted for the study. The study was based on secondary data collected from the accounts and statements of KSRTC, Report of
the comptroller and auditor general of India, Economic Review brought out by the Planning Board, and other related sources.

ANALYSIS
INCOME
The International Accounting Standards Board defines Income as “increases in economic benefits during the accounting period in the form of inflows or enhance-
ments of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants." The amount of
money or its equivalent received during a period of time in exchange for labor or services, from the sale of goods or property, or as profit from financial investments
is income.

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The income of Kerala State Road Transport Corporation comprises of two factors: Sales/Service Charge and Other Income. The Sales/ Service category of income
comprises of the income from the transportation service offered by KSRTC to the common Public. The income from other source comprises of the income earned
by KSRTC from advertisements in the fleet body and hoardings in the Corporation owned premises, rent from Corporation owned buildings. A proposal was already
taken up by KSRTC to introduce courier service using existing fleet to earn non-operating income. But the proposal did not materialize.

FIGURE 1: SOURCE OF INCOME OF KSRTC DURING THE YEAR 1991

Sales/Service
charges
98%

Other income
2%

An overview of the income of KSRTC during the initial year of study is made in the figure. The major portion of the income of KSRTC is from the service provided
to the General Public. Two per cent of the total income comes from the other incomes like rent and advertisements. From the daily collection received by KSRTC
a fixed portion is set aside for making the liability of the Indian Oil Corporation (IOC) at 100 lakhs as if the credit with the IOC exceeds ` 100 lakhs the Corporation
will completely stop supply of diesel to KSRTC. It is to be noticed that during the final years under study, there is no income from other sources and the only mode
of income to KSRTC is only sales/service charges.

FIGURE 2: TOTAL INCOME OF KSRTC DURING THE PERIOD FROM 1991 TO 2012

160000

140000

120000
Amount in Rupees

100000

80000

60000

40000

20000

Source: A review of public enterprises in Kerala 1991-2012, Bureau of Public Enterprises, Government of Kerala
A graphical representation of the total income of the Corporation is done in Figure 2. The graph shows an increasing trend throughout the period of study even
though it has a minor decrease in the year 2004 and 2005. During 2008 the total income has decreased to ` 88,174 lakhs from ` 88,600 lakhs even though there
was an increase in the fare in the particular year. This can be because of the discontinuation of the Super Express Service for three years vide 2007, 2008 and 2009.
The Corporation has reinitiated the Super Express Service in the last year of the period of study. During 2009 the income of the Corporation has risen to 106,305
lakhs from ` 88,174 lakhs and continued to increase and during 2012 the total income is ` 151,711 lakhs which is high compared to other years of the study.

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TABLE 1: GROWTH STATISTICS OF TOTAL INCOME AND ITS SOURCES OF KSRTC DURING THE PERIOD FROM 1991 TO 2012
Total Income (3) Sales/Service charges (4) Other income (5)
Sl. No. (1) Year (2)
Amount in lakhs GR Amount in lakhs Percent GR Amount in lakhs Percent GR
1 1991 17,285 - 16,923 97.91 - 362 2.09 -
2 1992 20,548 18.88 20,112 97.88 18.84 436 2.12 20.44
3 1993 23,047 12.16 22,585 98.00 12.30 462 2.00 5.96
4 1994 25,086 8.85 24,515 97.72 8.55 571 2.28 23.59
5 1995 28,835 14.94 28,033 97.22 14.35 802 2.78 40.46
6 1996 31,909 10.66 30,952 97.00 10.41 957 3.00 19.33
7 1997 34,577 8.36 33,862 97.93 9.40 715 2.07 -25.29
8 1998 39,310 13.69 38,633 98.28 14.09 677 1.72 -5.31
9 1999 41,400 5.32 40,682 98.27 5.30 718 1.73 6.06
10 2000 47,505 14.75 46,858 98.64 15.18 647 1.36 -9.89
11 2001 56,725 19.41 55,975 98.68 19.46 750 1.32 15.92
12 2002 61,400 8.24 60,658 98.79 8.37 742 1.21 -1.07
13 2003 65,783 7.14 64,894 98.65 6.98 889 1.35 19.81
14 2004 67,519 2.64 66,810 98.95 2.95 709 1.05 -20.25
15 2005 74,201 9.90 73,401 98.92 9.87 800 1.08 12.83
16 2006 83,800 12.94 82,900 98.93 12.94 900 1.07 12.50
17 2007 88,600 5.73 87,600 98.87 5.67 1000 1.13 11.11
18 2008 88,174 -0.48 86,786 98.43 -0.93 1388 1.57 38.80
19 2009 106,305 20.56 104,769 98.56 20.72 1536 1.44 10.66
20 2010 115,913 9.04 114,232 98.55 9.03 1681 1.45 9.44
21 2011 127,612 10.09 127,612 100 11.71 NA
22 2012 151,711 18.88 151,711 100 18.88 NA
CAGR 10.90 11.01 8.42
Source: A review of public enterprises in Kerala 1991-2012, Bureau of Public Enterprises, Government of Kerala
A comparison between the growth rate of total income and its sources is done in the Table. Growth rate is the amount of increase that a specific variable has
gained within a specific period and context. The Compound Annual Growth Rate of the total income and it sources is also done within the years 1991 and 2012.
The Compound Annual Growth Rate of the different sources of income and also the total income’s growth of the Corporation during the period of study is calcu-
lated in the table. The growth rate is high in the Sales/Service Charge source (11.01). Even though the source of income from others contributes only to a small
portion of the total income the growth rate is not much lower when compared to sales/service charge. A graphical representation is given in the following figure.

FIGURE 3: GROWTH RATE OF TOTAL INCOME OF KSRTC DURING THE PERIOD FROM 1991 TO 2012

50

40

30

20
Total Income
10 Sales/Service charges
Other income
0
199219931994199519961997199819992000200120022003200420052006200720082009201020112012
-10

-20

-30

From figure 3 it is evident that major portion of the total income comprises of the income from sales/service and income from other sources contributes only a
small portion. The Growth Rate of income from sale/service charge is negative only in the year 2008(-0.93). The Growth Rate of income from other service has
gone negative in several years i.e on 1997 (25.29), 1998 (5.31), 2000 (-9.89), 2002 (-1.07) and 2004 (-20.25). Negative growth rate means that not only there is no
growth, but something which is getting smaller. This negative growth rate appears only in some years and after 2004 the growth rate shows a positive trend.
OPERATIONAL EXPENDITURE
In business, an operating expense is a day-to-day expense such as sales and administration, or research & development, as opposed to production, costs, and
pricing. In short, this is the money the business spends in order to turn inventory into throughout. On an income statement, "operating expenses" is the sum of a
business's operating expenses for a period of time, such as a month or year. The operational expenditure of KSRTC consist of purchases and raw materials con-
sumed, personnel expenses, other expenses which include stores, depreciation, rent rates and taxes and interest and bank charges.

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FIGURE 4: TYPE OF OPERATIONAL EXPENDITURE OF KSRTC DURING THE YEAR 2012

Other expenses
(stores)
1% Salary, wages &
other benefits/
employees expenses
46%

Purchases/
Consumption of raw
materials Interest & Bank
38% charges
9%

Sales Tav/KVAT
3%

Depreciation
3%

In 2012, the cost structure of the organisation shows that salary, wages and other benefits/employees expenses constitute 46 per cent of total cost. Interest,
depreciation and taxes – the costs which are not controllable in the short-term – account for 09per cent. Thus, the major cost saving can come only from manpower
and fuel. Low Kilometre Per Litre (KMPL) is a most important concern in KSRTC. At present KMPL of KSRTC is around 4 km per litre and considering the huge amount
spent in this account even a small increase in KMPL can save a very huge amount.

FIGURE 5: TOTAL OPERATIONAL EXPENDITURE OF KSRTC DURING THE PERIOD FROM 1991 TO 2012

200000

180000

160000

140000

120000
Rs. in Lakhs

100000

80000

60000

40000

20000

Source: A review of public enterprises in Kerala 1991-2012, Bureau of Public Enterprises, Government of Kerala
A graphical representation of the total expense of the Corporation is done in Figure 5. The graph shows an increasing trend from the year 1991 to 1994, and then
a small fluctuation in the expenditure is found till the year 1999. In 2006, a notable increase happens in the total expenditure of the Corporation, as there was a
price hike in the fuel charges. In 2008, the Government of Kerala avoided taxes for fuel and thereby there was a reduction in the price of the fuel. From 2008 to
2012, the graph shows almost a proportionate increasing trend.

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TABLE 2: GROWTH OF TOTAL OPERATIONAL EXPENDITURE AND ITS SOURCES OF KSRTC DURING THE PERIOD FROM 1991 TO 2012
Total Purchases and raw material consumed Other expenses (stores) Personnel expense (Staff) Interest & Bank charges Rent, rates and taxes Depreciation
Sl.No. Year
(3) (4) (5) (6) (7) (8) (9)
(1) (2)
Amt. in lakh GR Amt. in lakh % GR Amt. in lakh% GR Amt. in lakh % GR Amt. in lakh % GR Amt. in lakh % GR Amt. in lakh % GR
1 1991 20,439 6,412 31.37 621 3.04 7,748 37.91 2,046 10.01 2513 12.30 1099 5.38
2 1992 23,568 15.31 7,644 32.43 19.21 680 2.89 9.50 9,362 39.72 20.83 2,155 9.14 5.33 2,555 10.84 1.67 1172 4.97 6.64
3 1993 25,928 10.01 9,111 35.14 19.19 3,298 12.72 385.00 9,844 37.97 5.15 1,931 7.45 -10.39 409 1.58 -83.99 1335 5.15 13.91
4 1994 27,983 7.93 9,463 33.82 3.86 4,610 16.47 39.78 9,977 35.65 1.35 2,067 7.39 7.04 357 1.28 -12.71 1509 5.39 13.03
5 1995 28,825 3.01 10,451 36.26 10.44 4,647 16.12 0.80 9,388 32.57 -5.90 2,316 8.03 12.05 286 0.99 -19.89 1737 6.03 15.11
6 1996 33,570 16.46 7,726 23.01 -26.07 4,742 14.13 2.04 14,112 42.04 50.32 2,145 6.39 -7.38 2,922 8.70 921.68 1923 5.73 10.71
7 1997 37,380 11.35 8,174 21.87 5.80 4,028 10.78 -15.06 17,552 46.96 24.38 2,265 6.06 5.59 3,212 8.59 9.92 2149 5.75 11.75
8 1998 44,410 18.81 10,842 24.41 32.64 4,096 9.22 1.69 21,349 48.07 21.63 2,322 5.23 2.52 3,424 7.71 6.60 2377 5.35 10.61
9 1999 48,634 9.51 11,223 23.08 3.51 4,881 10.04 19.17 23,243 47.79 8.87 2,465 5.07 6.16 4,218 8.67 23.19 2604 5.35 9.55
10 2000 59,847 23.06 14,207 23.74 26.59 4,545 7.59 -6.88 30,909 51.65 32.98 2,907 4.86 17.93 4,542 7.59 7.68 2737 4.57 5.11
11 2001 68,345 14.20 20,500 29.99 44.30 4,850 7.10 6.71 31,875 46.64 3.13 3,165 4.63 8.88 4,955 7.25 9.09 3000 4.39 9.61
12 2002 74,260 8.65 24,790 33.38 20.93 2,106 2.84 -56.58 36,134 48.66 13.36 3,907 5.26 23.44 4,003 5.39 -19.21 3320 4.47 10.67
13 2003 76,716 3.31 26,257 34.23 5.92 2,988 3.89 41.88 35,658 46.48 -1.32 4,117 5.37 5.37 4,730 6.17 18.16 2966 3.87 -10.66
14 2004 79,515 3.65 28,810 36.23 9.72 2,630 3.31 -11.98 35,775 44.99 0.33 4,200 5.28 2.02 4,800 6.04 1.48 3300 4.15 11.26
15 2005 87,806 10.43 36,030 41.03 25.06 0.00 37,100 42.25 3.70 4,550 5.18 8.33 6,676 7.60 39.08 3450 3.93 4.55
16 2006 97,619 11.18 43,500 44.56 20.73 0.00 39,094 40.05 5.37 4,500 4.61 -1.10 7,025 7.20 5.23 3500 3.59 1.45
17 2007 100,350 2.80 42,000 41.85 -3.45 0.00 43,900 43.75 12.29 4,500 4.48 0.00 6,350 6.33 -9.61 3600 3.59 2.86
18 2008 101,813 1.46 42,024 41.28 0.06 4,237 4.16 45,286 44.48 3.16 5,432 5.34 20.71 989 0.97 -84.43 3845 3.78 6.81
19 2009 118,017 15.92 49,058 41.57 16.74 4,755 4.03 12.23 46,385 39.30 2.43 7,186 6.09 32.29 5,836 4.95 490.09 4797 4.06 24.76
20 2010 134,277 13.78 53,965 40.19 10.00 4,133 3.08 -13.08 55,770 41.53 20.23 9,653 7.19 34.33 5,875 4.38 0.67 4881 3.64 1.75
21 2011 167,342 24.62 63,862 38.16 18.34 5,507 3.29 33.24 70,585 42.18 26.56 14,593 8.72 51.18 6,370 3.81 8.43 6425 3.84 31.63
22 2012 186,708 11.57 69,911 37.44 9.47 871 0.47 -84.18 86,314 46.23 22.28 17,312 9.27 18.63 6,225 3.33 -2.28 6075 3.25 -5.45
CAGR 11.11 12.05 1.62 12.16 10.70 4.41 8.48
Source: A review of public enterprises in Kerala 1991-2012, Bureau of Public Enterprises, Government of Kerala
In Table 2 the Percentage, GR and CAGR of the operational expenditure of KSRTC is calculated. In 1996 and 2007 the growth rate of purchase and raw materials
was negative. In 1993 the growth rate of stores expenses was very high (385) and in 1997, 2000, 2002, 2004, 2010 and 2012 the growth rates were negative figure.
In 1993 the growth rate of rent rates and taxes showed the negative growth rate of 83.99 which is the second highest when compared to the growth rate of all
other expenses during the period of study. It also shows a positive growth rate of 490.09 in 2009 which is the highest positive growth rate when compared to all
other expenses of the Corporation during the period of study.
The major portion of the operational expenditure of KSRTC is covered by personnel expenses and the purchase of raw materials consumed. On percentage analysis,
in 2012it was found that 46.23 percent of the total expenditure is the amount spent on staffs and the expenditure on purchases and raw materials comes to only
37.44 percent. The expenses on personnel staff has the maximum CAGR (12.16) over the years of study which is even more than the amount spent on purchases
and raw materials consumed (12.05) when the CAGR of total expenditure counts only to 11.11.

FIGURE 6: TOTAL OPERATIONAL EXPENDITURE OF KSRTC DURING THE PERIOD FROM 1991 TO 2012

200000
180000
160000 Total
140000
Purchases and raw material
120000
consumed
100000
Other expenses (stores)
80000
60000 Personnel expense (Staff)
40000
Interest & Bank charges
20000
0
Rent, rates and taxes

Depreciation

Kerala State Road Transport Corporation continues to annually incur losses due to increase in operational costs arising out of the huge petroleum products and
wage bills. In 2012, the operational loss made was much larger to Rs186708 lakhs as compared with the loss making trend during the years under study. Even
though there was a fare revision during 2010, the loss could not be minimised due to wage revision, diesel price increase, the price hike in the raw materials
consumed and the loss increased to Rs186708 lakhs during 2012.
COMPARISON OF INCOME WITH OPERATIONAL EXPENSE
The income of KSRTC includes, as discussed earlier, income from rented premises and also other incomes from advertisement on buses etc. A comparison of fare
with the operational expense is necessary to ensure whether the fare covers the operational expense of the Corporation.

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FIGURE 7 THE ACTUAL AND THE EXPONENTIAL TREND OF TOTAL INCOME AND EXPENDITURE OF KSRTC FROM 1991 TO 2012

200000
180000
160000
140000
120000 t_inc
100000 t_exp
80000 Expon. (t_inc)
60000 Expon. (t_exp)
40000
20000
0

Source: A review of public enterprises in Kerala 1991-2012, Bureau of Public Enterprises, Government of Kerala
A graphical representation of the effectiveness of KSRTC is done in the figure given. Here it can be inferred that the income and expenditure of KSRTC is exponential
with minor irregularities. The income exponential curve is more bended when compared to expenses exponential curve. Thus it can be concluded that growth of
expense is high when compared to income.

TABLE 3: RESULTS OF FITTING THE EXPONENTIAL CURVE TO THE INCOME OF KSRTC DURING 1991-2012
Sl.No. Year X y Ln y x^2 x Lny
1 1991 1 17,285 9.76 1 9.76
2 1992 2 20,548 9.93 4 19.86
3 1993 3 23,047 10.05 9 30.14
4 1994 4 25,086 10.13 16 40.52
5 1995 5 28,835 10.27 25 51.35
6 1996 6 31,909 10.37 36 62.22
7 1997 7 34,577 10.45 49 73.16
8 1998 8 39,310 10.58 64 84.63
9 1999 9 41,400 10.63 81 95.68
10 2000 10 47,505 10.77 100 107.69
11 2001 11 56,725 10.95 121 120.41
12 2002 12 61,400 11.03 144 132.30
13 2003 13 65,783 11.09 169 144.22
14 2004 14 67,519 11.12 196 155.68
15 2005 15 74,201 11.21 225 168.22
16 2006 16 83,800 11.34 256 181.38
17 2007 17 88,600 11.39 289 193.66
18 2008 18 88,174 11.39 324 204.97
19 2009 19 106,305 11.57 361 219.91
20 2010 20 115,913 11.66 400 233.21
21 2011 21 127,612 11.76 441 246.89
22 2012 22 151,711 11.93 484 262.45
Total 253 1397,245 239.37 3795 2838.31

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TABLE 4: RESULTS OF FITTING THE EXPONENTIAL CURVE TO THE OPERATIONAL EXPENDITURE OF KSRTC
Sl.No. Year x Y Ln y x^2 x Lny
(1) (2) (3) (4) (5) (6) (7)
1 1991 1 20,439 9.93 1 9.93
2 1992 2 23,568 10.07 4 20.14
3 1993 3 25,928 10.16 9 30.49
4 1994 4 27,983 10.24 16 40.96
5 1995 5 28,825 10.27 25 51.34
6 1996 6 33,570 10.42 36 62.53
7 1997 7 37,380 10.53 49 73.70
8 1998 8 44,410 10.70 64 85.61
9 1999 9 48,634 10.79 81 97.13
10 2000 10 59,847 11.00 100 110.00
11 2001 11 68,345 11.13 121 122.46
12 2002 12 74,260 11.22 144 134.58
13 2003 13 76,716 11.25 169 146.22
14 2004 14 79,515 11.28 196 157.97
15 2005 15 87,806 11.38 225 170.74
16 2006 16 97,619 11.49 256 183.82
17 2007 17 100,350 11.52 289 195.78
18 2008 18 101,813 11.53 324 207.56
19 2009 19 118,017 11.68 361 221.89
20 2010 20 134,277 11.81 400 236.15
21 2011 21 167,342 12.03 441 252.58
22 2012 22 186,708 12.14 484 267.02
253 1,643,352 242.56 3795 2878.60
Operational Expenditure = 19293.67e0.101x number years from 90-91
A scatter plot or scatter graph is used showing the relation between income and expenditure of the Corporation. X Axis represents income in Rupees and Y Axis
represents the operational expenditure.

FIGURE 8: SCATTER GRAPH SHOWING THE RELATION BETWEEN INCOME AND EXPENDITURE OF KSRTC

160000

140000

120000

100000

80000

60000
Total income

40000

20000

0
0 100000 200000

Total expenditure

Here the pattern of dots slopes upwards from lower left to upper right with 45 degree in the X axis and thus suggests a strong positive correlation, in linear
manner, between the operational expenditure and total income of the Corporation.
In conclusion, it can be inferred that the strength of association between the income and expenditure of KSRTC is very high (r = 0.995) as significance level is less
than 0.05.

FINDINGS AND RECOMMENDATIONS

The scrutiny of the balance sheet revealed that the income of the Corporation was not able to meet even the operating expenses of the Organisation. Also, on
analysing the comments of the Auditor General of India it was found that a right kind of policy measures and better management of affairs, it is possible to increase
revenue and reduce costs, so as to limit losses and serve people better.
i. The income of KSRTC comprises of two factors: Sales/Service Charge and other income which includes advertisement in the fleet body, rent from the
Corporation owned premises etc.
ii. The income had an increasing trend during throughout the period barring very few years. The income earned did not even cover the operational expendi-
ture of the organisation and in 2012, the operational expenditure was much larger to ` 186,708 lakhs as compared with the loss making trend during the
years under study.

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iii. The actual and the exponential trend of total income and expenditure of KSRTC from 1991 to 2012 was analysed and it was concluded that the growth of
expense is high when compared to income. On analysing the scatter graph showing the relation between Income and Expenditure of KSRTC it can be
inferred that the strength of association between the income and expenditure of KSRTC is very high (r = 0.995) as significance level is less than 0.05.
iv. KSRTC continued to incur losses during the period of analysis, which was mainly due to increase in the operational expenditure arising out of the huge
amount for petroleum products, wage rise and the non-revision of fare for the last ten years. In 2012, the net loss of the Corporation was ` 34,997 lakhs
which is much larger when compared to the previous years.
v. A regression analysis was made on the determinants to estimate the conditional expectation of the net profit/loss made by the Corporation over the years
(dependent variable) and the determinants of loss over the years (the independent variables) and it was found that the determinants of the variables to
be 92.87 per cent.
Based on the findings the followings suggestions/recommendations could be made to the KSRTC.
i. The pricing policy of the KSRTC should be profit oriented and dynamic in order to achieve a better financial performance of Kerala State Road Transport
Corporation could adopt an automatic fare revision system without political intervention.
ii. The ticketing system may be rationalised scientifically to attract more passengers like daily commuters, long distance commuters etc.
iii. Bus drivers may be required to conduct fare collection, inspect a travel pass or free travels pass, or oversee stored-value card debiting. Smart card tech-
nology can be introduced for passengers, which will replace an ordinary ticket and allow travel on vehicles that have smart ticket machines, with easy
transfer between services. Customers will be able to buy and top up on-line, check the credit left on the card, or buy a card at outlets across the county.
iv. As present, the Motor Vehicle Rules the KSRTC is unable to operate conductor less services. Government may think of amending the rules to allow KSRTC
in operating driver only services.
v. Public transport buses may also operate on a zero-fare basis, or ticket validation may be through use of on-board/off-board proof-of-payment systems,
checked by roaming ticket controllers who board and alight buses at random.
vi. The Corporation can concentrate on long distance and super class services thereby avoiding competition with private services.
vii. Computerisation in all levels and in all activities can result in reduction of manpower, updating audit, control of inventory and minimisation of local
purchase.
The pricing policy of a State Transport Undertaking is to generate revenue that can ensure an efficient and adequate supply of public transport service. Public
transport pricing may also be expected to contribute to the reduction of congestion and environmental impact of road traffic, efficient coordination between
public transport modes and the reduction of poverty. The main features of poverty are poor connectivity to jobs, services, education and recreational activity. Lack
of access to services leads to social exclusion barriers to work, learning, health care, food supply etc. Improving access is a must, but it has to be affordable. Hence,
pricing policy of a public transport organization is not profit oriented. Development of society is the main objective.

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