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BMTC and Rs 750 crores

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Written By silkboard - 7 August, 2008

Bangalore BMTC Citizen Reports competition public transport

BMTC has postponed its Rs 750 crore IPO for the time being due to volatile market conditions. But its never too late to look at their plans. BMTC had submitted a Rs 3000 crore plan tothe center under JNNURM to "modernize and expand its network to meet the public transport demands of a growing city.". The plan is (source: Livemint) "to raise money from the public to add luxury buses on newer routes".

Going by the year old LiveMint article, BMTC certainly has a good image:

  • only profitable public transport company in india
  • earned a profit of Rs224 crore on an income of Rs887.59 crore for the year to March 2007
  • employs around 6 people for each bus, as against 10 people per bus at the loss making BrihanMumbai Electric Supply and Transport Undertaking (BEST).

Now, as per another news sources (Hindu), here is how BMTC plans to use this money:

The capital raised from the IPO is to be used for fleet acquisition, including buying 1,000 Volvo buses, 500 other buses (for “Suvarna Karnataka Service” that will have no standing passengers), bus shelters, and other expansion plans of the corporation

Now, for me as an investor, I need two critical pieces of information before rating this IPO.

  1. What is BMTC's track record in modernization efforts? To be more specific, how are their Volvo services faring (overheard - not good)? How are their Suvarna services doing (overheard - okay)? How much investment do these bus shelters need, and do they have the required jurisdiction to design bus shelters (we know via some recent news sources - BBMP is building bus shelters for BMTC, and they are running late).
  2. Using public money is a good idea - adds the pressure of performance to BMTC. But I wonder if the present tightly monopolized setup guarantees that the public money will be put to the best use. Perhaps the monopoly is required to ensure the success of this IPO - we will have to use BMTC for lack of choice. But if public transport sector in Bangalore is opened for competetion later on, will that be akin to cheating those will buy into the BMTC IPO today?

I wish BMTC all the success, so don't get me wrong. But success of BMTC as a public entity, and with the shield of monopoly, is first in making sure it can carry 50% of city's commuters on its buses. Whether it makes money or loses some, that comes next (sorry to say this, but a public body exists for service first, profit later). And thus, its financial restructuring requires a closer scrutiny from us - the people. I was not sure if that is happening today, and thats why this post.

cheers,

Pranav.

COMMENTS

BMS College

s.yajaman - 8 August, 2008 - 08:40

rkay,

BMS College of Engineering used to offer Bachelor in Transportation Engineering and I am one of those who passed out. Unfortunately due to university grants, aids and other issues they do not offer this course anymore but have started a Masters in Traffic Engineering.

Regards,

Suhruta

departments not necessary

tsubba - 8 August, 2008 - 09:24

actual departments with specific labels are not necessary. what is necessary is the attitude to think through the problems. to respond to a problem with a response that is not ad hoc. i said academicians because they tend to be systematic. and tend to build on knowledge. in any case, for the types of problems BMTC has generic departments suffice. some statisticians, some communication-walas(signals not jhola), some algorithm-kaararu, some HMI-types and so on... all these in abundant supply in bangalore.

how about basics?

tsubba - 7 August, 2008 - 14:03

the bread and butter of this type of company is routing and planning. how about hiring knowledgeable heads who can make educated decisions? they need not hire full time, they can seed some professors/students the tata institute and iim, rvce and isi etc. to brainstorming bmtc operations during summer, when the colleges are in recess. i am pretty sure there are enough problems that can fund atleast a few master's thesis at these colleges. how about investing in systems that will help gather the various parts of bmtc are performing. automated counters, automated time logs, analysis software, linear solvers. how about the most basic of them all. a truely useful website? no jingchak and chamku stuff with flashing images and zooming text. simple. solid. info rich. useful website.

Transportation Engg?

rkay - 7 August, 2008 - 19:21

Where does one find "knowledgeable heads" on Transportation Engineering?  I have not come across any Engineering college offering that as a major.  I presume most people with any academical interest in Transportation would be glorified Civil engineers at  best.  In US schools, it is very common to see graduate level programs in Transportation.  Are there equivalent ones anywhere - IISc for instance?  What practical projects have they undertaken?

Illi Iddeeni - alutukondu

murali772 - 9 August, 2008 - 09:06

Apart from their answerability to the people (supposedly through questions raised in Assembly/ Parliamant), government organisations are supposedly under the close scrutiny of the CAG (Controller and Auditor General) in order that stakeholders' (citizens) interests are safeguarded. That is theory. How ineffective and plainly useless they are, in practice, is clearly brought out by this one example.

There are millions of scams going on all around, and, all they could zero in on is this non-issue involving a piddly (comparatively) Rs 1.5 crores. This does not pertain to 'Yelli Iddira?" alone. The so called technical problem was not a serious problem at all, quite like the techies here have pointed out. The GPS system was indeed working well and providing useful data. If I remember right, the signals were coming in every 20 seconds (or even faster) and a few interruptions didn't matter at all. As to how well BMTC was putting the data to use is another matter.

BMTC had tied up with two agencies - Mobiapps and Arya Omnitalk for providing the service. The Mobiapps contract covered some 200 buses, including the 50 VOLVO buses. The contract required Mobiapps to furnish data according to some 20 parameters for BMTC's MIS purposes. All the hardware were installed on the buses and maintained by Mobiapps, all at their cost. This apart, they were required to pay BMTC a certain fixed amount per bus, which figure was covered by an annual escalation clause, in addition. In return, Mobiapps were given specified advertisement space, within the bus. Apparently, Mobiapps had not done their homework well at the time of negotitaing the contract, and within a few months of the operations, they realised the mistake they had made in over-estimating the revenue potential of the ad space within the bus. But, with being stuck with a 5 year contract, and were trying to figure out solutions.

It was around this stage that I conceived the "Yelli Iddira?" idea, having got a fair ubnderstanding of BMTC's operations in my capacity then as the co-Chairman of their CCTF, and from my close interactions with my neighbour and friend, Mr Sujit (an IIT,K alumnus) of CL Infotech P Ltd. We sensed such a service would be best appreciated by VOLVO commuters, and since Mobiapps were already tied up with BMTC for capturing the signals from the VOLVO buses, we approached them for carrying out the trials. They readily co-operated, possibly expecting that this tie-up could bail them out of their predicament. And, within weeks, we presented a demo before Mr Tripathy, the then MD of BMTC. He was genuinely floored, and readily ordered a 6-month trial contract for a total value just under Rs 1 lakh (the figure beyond which tenders have to be called for), covering the 50 odd VOLVO buses. Within a month thereafter, the service was launched with BMTC itself coming out with press releases and also printing hand-outs. Over the next 6 months, except for some operational hitches, it worked fairly smoothly, with an average 1,000 SMSs being handled daily (weekdays) at about 80% reliability. Many users, particularly women executives, were beginning to swear by the service. Higher reliability, add-on services, infact - becoming the public face for BMTC, etc, were all possible. But, with Mobiapps, finding the going difficult due to mounting losses, and decided to pull out, the signals died out, putting an end to "Yelli Iddira?". And, BMTC just didn't bother to sort out the problem.

As compared to the Mobiapps agreement, Arya Omnitalk had a fairly good deal going, supposedly decided through a tender, where they were being paid a fixed sum per bus for providing the data according to the 20 parameters. When Mobiapps withdrew, I am told they were asked to install their devices on the VOLVO buses and provide the data for them. As for "Yelli Iddira?", they said they could do it themselves, though the demo that was presented to me clearly showed it to be a total hoax. BMTC, not even Mr Tripathy, couldn't be bothered, since they had moved on to to the next "jingchak and chamku stuff with flashing images and zooming text", as Tarle has aptly put.
You may make out what you want of it yourselves. May be if it was packaged as some Rs 20 crore deal, with all 'stakeholders' being taken care of, it can be revived.

Sujit tells me that he has now re-worked it, based on GSM, requiring just a SIM card on the bus, thus making it much cheaper. Though less accurate, it more than suffices the "Yelli Iddira?" purpose. He is targeting his marketing today at school buses.

If TATAs or TVS were operating bus services, I expect, such a service would have landed up getting nominated for a Nobel prize.

Muralidhar Rao

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