0115 966 7955 Today's Opening Times 10:00 - 20:00 (GMT)
Place an Order
Instant price

Struggling with your work?

Get it right the first time & learn smarter today

Place an Order
Banner ad for Viper plagiarism checker

Economic Performance of Kolhapur Division of MSRTC

Disclaimer: This work has been submitted by a student. This is not an example of the work written by our professional academic writers. You can view samples of our professional work here.

Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.

Published: Thu, 01 Feb 2018

Introduction

An attempt is made in this Chapter to analyses the economic performance of MSRTC in Kolhapur division based on selected indicators. The entire division is divided into twelve depots, viz. Kolhapur, Sambhaji Nagar, Gadhinglaj, Ichalkaranji, Gadhingla, Ichalkaranji, Gargoti, Malkapur, Chandgad, Kurundwad, Kagal, Radhanagri, Gaganbawada and Ajra. The activities of the MSRTC are governed by the corporate objectives set by the RTC Act. 1950. The main objective as indicate earlier are to provide efficient, adequate, economical and co-ordinated transport services to the laymen. However, it is to organise itself on business terms, while achieving the aforesaid objective.

Financial Indicators

– Cost per Kilometre (CPKM)

For any Road Transport Corporation the main and utmost important financial performance indicator is cost per Kilometre, because it together with CPKM decides the fare. The profitability of an organisation is a function of both costs and prices, which are equally valid in the case of the passenger road transport industry too. An organisation may incur loss either because the costs go up, the price remaining the same or costs remaining the same the price/fare may fall. The second phenomenon of fare coming down does not ordinarily arise in the case of passenger road transport industry for reasons of relative inelasticity of demand for the service monopoly rights conferred on the services and state regulation of fares.

The cost of operations in absolute terms does not by itself indicate measure of costs. Costs have to be worked out to compare the cost of providing the service with the rate of earnings. Cost per kilometre is one of such relative measure which is computed by selecting effective kilometre as a unit of measurement.

The cost per kilometre (CPKM) is computed by dividing the total cost of operations by the total effective kilometres. The CPKM is expressed in terms of Rupees. The CPKM can be worked out either in respect of the total cost of operations or in respect of each component of the cost separately. CPKM is calculated by the following formula –

The direct or operational or variable costs react proportionately with the change in volume of operations and the cost per unit, i.e., CPKM is constant with volume of operation. As indirect or fixed costs of not change with volume of operations the cost per unit, i.e., CPKM declines as volume rises or increases as volume falls.

In the Road Transport industry two different types of costs are considered:

Fixed Costs

The industry incurs fixed costs relating to part of crew wages, general administration, interest and debt charges welfare expenses and part of workshop mechanical wage. This cost per Kilometre varies inversely with the kilometre range achieved but is constant in total rupee amount.

Variable Costs

Variable costs are uniform per kilometre but fluctuate depending on the volume of activity in Kilometre. Under this head depreciation, HSD Oil, Tyres, Tubes and spare parts and included.

– Earnings per Kilometre (Epkm)

The earning per kilometre (EPKM) is computed by dividing the total earning of operations by the total effective kilometres. Revenue in absolute terms without reference to Kilometre will not correctly reflect the ‘Profitability’ of the operation. An Earning per Kilometre (EPKM) is one of the useful ratios to indicate the earning potential of a route/depot/division organisation. The EPKM is related to the carrying capacity of the buses, fare structure and the earning potential of route. The EPKM is calculated by dividing total earnings by total effective Kilometres. EPKM is calculated by the following formula –

The EPKM is expressed in terms of Rupees. The EPKM may be in relation to either traffic or gross revenue.

– Margin

The margin is computed by subtracting the total cost from total earning. Positive margin values indicate the profit, while negative margin values indicate loss or deficit.

Margin = Total Earnings – Total Cost

Depot-wise Economic Performance of Kolhapur Division

– Economic Performance of Kolhapur Depot

Economic performance of Kolhapur depot is explained in the following table:

Table 4.1

Economic Performance of Kolhapur Depot

(In Rs.)

Year

Variable Cost

Fixed Cost

Total Cost

(CPKM)

Total revenue

(EPKM)

Margin

2001

9.09

8.05

17.13

13.67

-3.46

2002

9.14

8.20

17.34

14.47

-2.87

2003

9.91

8.38

18.29

14.47

-3.82

2004

10.57

7.90

18.47

14.48

-3.99

2005

11.50

8.38

19.88

15.29

-4.59

2006

12.79

8.64

21.43

17.75

-3.68

2007

13.51

8.62

22.13

18.92

-3.21

2008

13.69

8.97

22.66

19.45

-3.21

2009

15.13

9.43

24.56

20.99

-3.57

2010

15.06

10.09

25.15

21.03

-4.12

2011

17.26

10.86

28.12

23.70

-4.42

2012

18.95

11.70

30.65

26.19

-4.46

2013

20.86

12.26

33.12

28.49

-4.63

Mean

13.65

9.34

22.99

19.15

-3.85

SGR

129.48

52.30

93.35

108.41

Source : Official Records of Kolhapur Division of MSRTC

Above table No 4.1 shows that, cost and earning of Kolhapur depot as per kilometre. Variable cost of Kolhapur depot is increased from Rs 9.09 to Rs 20.86 per km during the investigation period. Average variable cost is Rs 13.65, while its SGR is 129.48. Variable cost is highly increased because of the prices of diesel, spare parts and lubricant is continuously increased. In the study period, fixed cost of Kolhapur depot is increased from Rs 8.05 to 12.26 per km. Average of fixed cost is 9.34 and its SGR is 52.30. Total cost of Kolhapur depot during investigation period, is increased from Rs 17.13 in 2001 to Rs 33.12 per Km in 2013, average total cost is 22.99 and its SGR is 93.35.

Total revenue of this depot from year 2001 to 2013 is increased from Rs 13.67 to Rs 28.49 per Km; average total revenue of last thirteen years is Rs 19.15. Its SGR is remained 108.41. Due to the low load factor of the buses, total revenue growth remains low as compare to the total cost of the depot.

Margin shows always negative trends during the study period, it means the Kolhapur depot experienced always loss during study period. In the year 2002, loss of Kolhapur depot is minimum i.e. Rs – 2.87 while it maximize in 2013 (i.e. Rs. – 4.63). Average margin of Kolhapur depot during the study period is Rs -3.85, it means economic performance of Kolhapur depot is insignificant.

Above figure No 4.1 reveals the trends in the total cost and revenue, it is found rising in almost same manner. Hence, there is not so much variation in margin, it always perform negatively.

The economic performance of Kolhapur depot is not up to the mark, in the study period variable cost, fixed cost and total cost of continuously increased, comparatively rate of variable cost is highly increased i.e. SGR 129.48 and fixed cost SGR is 52.30 and total cost SGR is 93.35. The average of variable cost, fixed cost and total cost (CPKM) is Rs 13.65, Rs 9.34 and Rs 22.99 respectively. In the same duration SGR of EPKM is 108.41 and its average is 19.15. Average margin of CPKM and EPKM is Rs. -3.85. It is clear that in the study period, Kolhapur depot experienced loss in the investigation period.

– Economic Performance of Sambhaji Nagar Depot

Economic performance of Sambhaji Nagar depot is explained in the following table:

Table 4.2

Economic Performance of Sambhaji Nagar Depot

(In Rs.)

Year

Variable Cost

Fixed Cost

Total Cost (CPKM)

Total revenue (EPKM)

Margin

2001

9.50

7.54

17.04

13.53

-3.51

2002

9.61

7.57

17.19

13.99

-3.2

2003

10.29

7.70

17.99

14.41

-3.58

2004

10.75

7.66

18.41

14.18

-4.23

2005

11.70

8.13

19.83

14.71

-5.12

2006

13.10

8.22

21.32

17.36

-3.96

2007

13.89

8.41

22.30

18.26

-4.04

2008

13.80

9.07

22.88

18.58

-4.3

2009

14.86

9.74

24.60

20.06

-4.54

2010

14.84

9.93

24.77

20.47

-4.3

2011

16.66

10.84

27.50

23.91

-3.59

2012

17.73

11.89

29.62

23.82

-5.8

2013

19.36

12.34

31.70

24.95

-6.75

Mean

13.55

9.16

22.70

18.33

-4.38

SGR

103.79

63.66

86.03

84.41

Source : Official Records of Kolhapur Division of MSRTC

Above table No 4.2 depicts cost and receipts as per kilometre of Sambhaji Nagar depot during last 13 years. Its variable cost increased from Rs 9.50 to Rs 19.36 with Growth Rate of 103.79. Fixed cost also increased from


To export a reference to this article please select a referencing stye below:

Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.

Request Removal

If you are the original writer of this essay and no longer wish to have the essay published on the UK Essays website then please click on the link below to request removal:


More from UK Essays