If you thought bus travel in Mumbai can't get better than the air-conditioned buses plying the city, think again. Mumbai's public road transport undertaking, BEST (Brihan Mumbai Electric and State Transport) plans to borrow a leaf from the London Bus Service. Bus stops in Mumbai will soon boast of being well connected because BEST depots and bus stops will be linked with the global positioning system (GPS).
This system will relay bus schedules and the time taken by a bus to touch a particular stop. When the bus arrives at the stop, it will stoop down almost to ground level, like a majestic elephant or an elegant camel, for a comfortable entry. The entrance will also have a ramp to help passengers in wheel chairs slide effortlessly onto the bus. This month, 30 buses with low floors will hit Mumbai roads.
The century-old Rs 839-crore division of the dowdy public sector undertaking is not changing without a compelling enough reason.
Rs 2,353-crore BEST has traditionally straddled two business divisions "" electricity supply and transport. Transport has usually been the party pooper by consistently being in the red. The Electricity Act, 2003, signalled that this could not continue. The act put a bar on revenue surplus from electricity supply supporting public transport.
The transport division had to become self-reliant. "But that was a difficult task," says Swadhin Kshatriya, general manager, BEST. The reason: losses for the transport division were steadily mounting from Rs 56 crore in 1994 to an all-time high of Rs 178 crore in 2000.
Increase ticket size
The clean-up act began with identifying key revenue areas. Ticket revenues contributed to approximately 95 per cent of the revenue. But being a public service provider, BEST could not hike passenger fares. Diesel prices had increased from Rs 19 a litre in 2001 to Rs 32 a litre in 2005, and the minimum bus ticket had moved up from Rs 3 to Rs 4.
Now BEST had to explore alternate revenue streams. Traditionally, it had sold space on bus shelters and outside panels of buses for advertising. Since 2002, it introduced inside panels in buses and started accepting ads at the back of tickets. Kshatriya claims that advertising currently accounts for 3.2 per cent of revenues, up from 2 per cent in 2002.
Then, passenger loyalty was a concern, too, because Mumbai city has other efficient public transport options such as local trains, taxis and auto rickshaws. For starters, BEST is experimenting with smart cards on three bus routes in South Mumbai. The swipe card initiative helps because it works like a pre-paid card and customers commit revenue to BEST.
However, even as BEST enjoyed the advantage of charging much less than autos or taxis, the share-a-rick/ taxi concept at many railway stations has made it cheaper for commuters. BEST launched a "hail and board" (passengers can board buses in between stops) scheme on select routes in Mumbai suburbs.
Also, BEST has just begun leasing out additional space in the depots for commercial ventures like retail and is also mulling on creating pay-and-park zones for private vehicles.
Cost correction
Increasing revenue streams was not enough. It was also necessary to push down costs. Take employee costs as an instance. Like most PSUs, BEST also grappled with a mammoth employee size of 47,000 employees, who accounted for 55 per cent of the total expenses (for the transport division).
With VRS schemes and five-year leave schemes, the organisation was lighter by 3,000 employees; the employee costs are 54 per cent now. Also, recruitment of new employees "" excepting bus drivers "" was stopped. Though the bus-to-staff ratio (number of employees per bus) is still high, it has marginally reduced from 1:12 to 1:11 in the past three years.
It was also important to cut down operating costs to drive up profitability per bus. The number of routes was rationalised marginally "" from 354 in 2001 to 337. First, BEST focused on increasing the kilometre per litre (kmpl) average per bus. In 2004, three depots "" Deonar, Ghatkopar and Vikhroli managed to increase their kmpl average to 3.5. These depots account for 10 per cent of the 3,386 buses plying for BEST. "When we announced that target, employees said it was impossible," recalls Kshatriya.
Drivers were trained to cut down fuel costs by switching off the engine at long signal halts and staying within speed limits. To aid drivers, display instruments were fitted inside the bus to indicate time for changing gears. Stickers were put on windscreens to remind drivers about their targets. Once a depot reached the target, the depot staff were given cash incentives. In two years, the company managed to save Rs 18 crore towards fuel expenses.
Not so cool
BEST is not smiling with all its new initiatives. In 2002, the company rolled out air-conditioned (AC) buses for three routes in Mumbai. Since then, the company hasn't extended it to other routes, as planned initially. "It works as long as occupancy levels are high," admits Kshatriya.
But occupancy levels drop down drastically to as low as 10-20 per cent during non-peak hours (optimum load is 80 per cent occupancy). That matters because operational costs for AC buses are 52 per cent higher than that for non-AC buses.
To tackle this, the company is looking at diverting the AC bus route from the airport to south Mumbai (the commercial area) during the non-peak hours. The hail-and-board concept has also been difficult to execute in high-traffic areas. "There's still a long way to go," admits Kshatriya.
At present, BEST is not happy just making its old buses profitable. Beginning 2005, it issued an order of 30 low-floor buses to Tata Motors. It has also given a contract to Ashok Leyland to manufacture 644 semi-low floor (the floor being 850 mm above the ground level). And the new fleet will certainly be more fuel efficient than the old warhorses, believes Kshatriya.
But modernisation comes at a cost. For every low floor bus, BEST will have to shell out Rs 26 lakh "" that's almost twice of what an ordinary bus would come for. That obviously would mean longer break even points. And just procuring these buses will have the expenses shoot up by at least Rs 168 crore.
Even as BEST managed to contain its losses to Rs 151 crore in 2000, from its peak of Rs 178 crore in 1999, the diesel price hike sent losses out of control. In FY 2004, losses increased to Rs 175 crore from Rs 151 crore in the previous year. Will the red bus ever get a dash of black on its balance sheet?
