I P T R O D U C T I O U

Olre of tho Lportant i o m of publlc antar-

prisor h u boon tho public utALiti.8. The oonapt

of public u t l l i t i o r merged i n ooanactitm with

tranaportatLm .ad varahoures docks, crrner .ad

charts necosrarp t o ~ a n r p o r t . t l o n . ~ Among tbo

public u t i l i t i e r , tMusport p r r t i c u l u l y plryr a

key role i n the economic datrolopment of our

couuw. Transport a c t i r i t l w , which canprise the

moving of men and materials fran one p lam to

another, are an ereential krfrastnrcturo in the

.O(RImy of m y country.

Modern trancrport ~ y r t m s ensum continuow

and m o t h flow of travell ing public, mawrial

inputs and output8 of a l l m m i c sectora frm

origin t o destination M nqulrsd and mable tha

eomany'r production and dirtr ibution ryrtclar to

iunctioll ottectively and e f f i c i m t ~ y . ~ aeti-

vlti.8 of tho transport rector .re alro a povorful

growth want for dweloping ecoamiu erp.aal1p

for -it hCkWUd and d.pm88d -ion#. hanrport

f ac i l i t i a r a lu , make tho poop18 in backward araer

mobile .nd help bring thom in to the mln r t r em of

rod^^ -noaic

In a muntq ubich ha8 not baa adequately

mer~ad by advanad Pod- of t r a n w r t , suoh u

railway8 and airway#, r o d transport becam88 the

mo8t rignificant mode of tra.U.port. & one author

put. it, Yndoubtadly, rail, shippfnp and air

trua.port occupy an important place in our modem

society, but tho baslo n o d i r fu l f i l l ed bg read

tran-Tt alone. Oocr can exis t without rail,

hipping or air transport but not vfthout the

road.. tven t h m rail, .hipping and air depend

upoa the mad for cap le t ing the transport a e ~ i c e * . ~

m, Road TrMapXt h~ greater m8ponsibilitier

to ahoulder i n the u g p a r s , c c r p a w to th.

railways, in view of p u t -riencea and much

o t rrsponaibility tal l8 m the poblic

Th8 importanco of public tran.port a8 againat

private ttansport is k i n g incrauingly rowqniaed

etan by the developed wrmtrie8 and particularly less

dmlopad 0ountri.s cannot afford to noglect public

tM.pQrt.

m a r , the oontributim to tha aaheqwr

as a wrcmt.0. of the wi+rl irm8t4d i 8 as low

as 4.71 per oont in c u e of railways, while in the

c u e of Steta Road T m . p o t t d a m n p a , it 18

emthat04 to be a8 Ugh a8 44-24 per Whlla

jwtiflc.tioa 18 8ulmerntial on the gmmrKl of ,yaa

direat flnanctal r e t u n to the inmatot., *itbar

to tho Ooverparnt o r to private o p t a t o m , it gains

i n might &on w introduce th. concept of lnd i r rc t

bmofi+. of tho read* and rood +ran.pott d u m ~ o p a n t

fo r the econaay a8 a -10. 7

~ n r p i t . of N& a situation, the a l l o c a t i o ~

t o road transpott roun t to l mere fractlon of the

8-t on r r ~ l w a y ~ . ~ ~ h o faa t tha t ro- and

road transport -ei+d a vary low pr io r i ty can be

8O.n frop T.bl0-l.l., Table-1.1 &OW8 tho flnMc1al

outlays prooidd for road. and road transport in the

varima Tlve Yaar Plan*. Tho -10 reveal8 that

tho- tho oatlay i n t am8 of abwlute amount may be

i n c m s l n g peu a f t e r year, tho parantage shrrr i n

the total outlay 18 decroulng. In the N r s t Tiva

Y o u Plan, the plan outlay f o r road transport ru

R8. 33.8 m-8, rrhich ha8 colw d m to j u t Ra.8.6

c m r u In the 8eventh Five Y o u Plan, regi8terlng a

docroue of (-174-56 per ant. 'Ih. probrble m u o n

for a 8 awy be that during tho lut ten y o u a moat

of +b. 8lV8 ham incurring lo88e8 and they .re

-10 * 9.O.LIa COOwh i n a L P d IeaOW?CO8.

Tko Road net work has rscorrlal, inspi te of a

re la t ively low pr ior i ty , a canpa ra t i a ly bet ter

gmwth9 .ad t h i r fur ther p m s that i f only

proper p r io r i ty was accorded to roads and road

tranrport, t h e i r growth and contribution to the

econany would have h e n mom 8ub~tantial . In t h i r

context, it is relevant t o quote the opinion of

Road Transport Taxation Enquiry CamrZtteo. 10

"In India too, modera road t t a n r p o n can make

(and i s making inspi te of tho barr iers to it8 develop-

ment) a aipaificant wntribution to India's ecoouaic

.ad social devulopm.nt. Failure to r ea l i r e the

potential ru le of road tranrport i n econanic dwelop-

merit and continuance of o b t a c l e s and barriers ( l i ke

unduly hamy taxation burden, regulations, o c t m i and

other check posta, etc.) uhich keeps road tranm

from doveloping .ad making it. full contribution, would

only b. a t the expense of country's oooncmic and w c i a l

development am3 themfore miaidale .

In view of the f ac t t h a t i nveshen t i n road

transport leads t o numemu 6p in4f fa besides the

incroMed pay-offs to the owners, i.8. the Oovenment8

investment i n t h e road t ranspor t 8 e M r i a w r t h v N 1 e

frm both oconomlc and aoc ia l considerations.

In a v u t country l i k e India. w i t h U p h e r pace

of agrltmltural and i n d u s t r i a l develcpwnt and grea te r

in te rac t ion among people, increase i n mad system and

mad t ranspor t aoctor i s necessary f o r tho wall being

of t h e nation. Thus, adclition to road network and

increa6o i n vehicles are inevitable. In India tw major

modes of t ranspor t have been adopted f o r gooda and

pusengor t r a f f i c . There a r e railways and roadways.

By t h e very nature of t h e system, Railways cannot reach

every nook and c o m e r of tho oountzy whereas roads have

t h e possibility of roaching w r y v i l l a g e i n t h e -try.

W i t h i n d u s t r i a l i s a t i o n and inprovenent i n agr icu l tura l

produca in t h e country, it was but na tura l t h a t groatar

proportion of transportat ion wa8 taken by roads1' a s

evidenced by Table-1.2.

Fdeght (XI Pasaanper (X) Year

Rail Road R a i l R&

The above table brings to l ight the

notable ohi f t from ra i l to road transport fmm

1970-71 th~8 8Xplaidop the bpOrt~cO Of mad

transport.

1.2. UESD FOR AUD m R T A U Q 01 THE STUDY

Ibe s i g n i f i w c c of financial appraisal of

any bruiness ur1d8rt.Wn9 i n general and of a public

enterprise i n particular hardly needs m y a m p h a ~ i s . ~ ~

I t i s especially more jmpo*mt in a developing

emnany lib India which i s str iving fo r rapid socio-

8oonomic transfornation through a vibrant public

seator. A. the role of public seator i n India i s

crucial and strategic, it can be said tha t the very

health of tho econcpy i s dependent upon the 8ff ic i -

ant functioning of the public sector.

An important aspect of the developnant of

public ent.rpris88 tha t has been r ea iv ing t h

attention of -8 and all i s relatsd t o the ~ ~ e s t i c n

of t he i r perfoxmanee and productivity. A. the

objectives of sett ing up of the public enterprises

have been varied, i t kecsna d i f f i cu l t t o properly

meamre the perfonaMce of such entarprises.13 Their

PerfozmMm could not be evaluated as per the s t ~ d u d

Profitabil i ty cr i te r ia typically adoptd for other

types of enterprises run i n the private soctor.

Further i n the l i gh t of the growing rea l i sa t ion of

the problem of inefficiency of public enterprises,

the need f o r f inancial appraisal assumes added

significance. A well meaning and appropriately

designed f inancia l appraisal not only helps latpely

i n detecting goal-devlation of an undertaking but

a l so guides i n ensuring ef fec t ive and e f f i c i en t

u t i l i s a t i on of available resourcas, both physical

and financial .

Roads and Road Transport cons t i tu te the

essent ia l inf ras t ructure f o r the growth and

developnent of any economy. By ensuring the smooth

flow of both men and materials fran one place t o

another, modern transport systems have evolved i n to

important neme systems of the ewnany. h e transport

industry has a lso becane an important 'changing agent',

especially Fn a developing economy, i n transforming

an economically backward region in to an Lnportant

c e n M of t raae and industry.

However, "the importance of Road Transport i n

general and t h a t of passenger Road Transport i n par t i -

d a r , does not seem t o have been realised by the

Govenments i n our country as revealed by the low

p r io r i t y and consequently low level of al locations

mad..14

Even i n those S ta tes , where attempts have been

made t o na t iona l i se the passenger t ranspor t by e a t &

b l l sh ing road t ranspor t corporat ions proper considera-

t i o n ha8 not been paid t o def ine t h e pr inc ip le r on

which t h e m S t a t e managed road t ranspor t corporat ions

have t o be run. The working of most of t h e road

t ranspor t corporationa i s subjected t o a divergent

s e t of p r inc ip les resu l t ing i n the i n e f f i c i e n t func-

t ion ing of these corporations. I t may be p e r t i n e n t

t o quote here t h e views of t h e Study Group on Road

Transport Financing i n t h i s context: "We have received

the impression a s a r e s u l t of our examination of t h e

working of these undertakings general ly, t h a t no proper

thought o r considerat ion has been given t o the

pr inc ip le on which nationalised road t ranspor t under-

takings should be run'.15 This study reveals t h a t

unfortunately, even many years a f t e r t h e above comnents

were made, no s i g n i f i c a n t change i n the a t t i t u d e of

t h e Government has come about.

I t is i n t h i s context t h a t a study of "Financial

Performance of S t a t e Road Transport Undertakings'

assumes importance, as it throws l i g h t on t h e develop-

ment of passenger road t ranspor t and t h e f inancing of

t he #amel i n the absence of a nat ional t ranspor ta t ion

policy and i n view of t he inedeguate a l locat ion t o t he

passenger road t ranspor t i n t he Five Year Plans.

In t h i s connection, it is re levant t o note t h a t tha

Corporation i s under an obl igat ion t o run unremunera-

t i v e services. The presence of these services lowers

the revenue and i f surpluses from other remunerative

services a r e not more than compensating, then i t might

even r e s u l t i n overal l losses. The inev i t ab l e presence

of soc i a l obl igat ions combined with the absence of any

provision f o r t he payment of subsidy r e s u l t s i n a

res t ra ining influence on the already low r a t e s of

return.I6

1.3. STATEHXWP Or THE PROBLEM

I t i s i n t h i s background tha t it i s proposed t o

undertake a study of t he Financial Performance of the

Nationalisad Transport Corporations i n Tamil Nadu

Sta te . Unlike i n m a t of t he other s t a t e s i n India,

where the t ranspor t corporations a r e managed under

corporate t om, tha t ranspor t corporations i n Tamil

Nadu a r e mn under canpany form of management. A t

present, there are f i f t e e n t ranspor t corporations in

Tamil Nadu. These corporations have no c a p i t a l p a r t i -

cipat ion from t h e cen t ra l Government as these a n not

formed under RTC Act and so these companies a r e f u l l y

owned and funded by the Oovernment of Tamil Nadu.

Insp i te of the f a c t t h a t severa l crores of mpces

have been invested i n a l l these corporations, it i S

qu i te disheartening t o note t h a t ou t of f i f t e e n

transport corporations i n Tamil Nadu t h i r t e e n corpora-

t ions a r e running under continuous losses desp i te t h e i r

being small and manageable i n size. Further t h e ne t

e f f e c t of various po l ic ies followed by both Central and

S ta te Governments have almost cr ippled the f inanc ia l

condition as revealed by t h e high r a t e s of motor

vehicle taxes, inadequate c a p i t a l contr ibutions some-

times necess i ta t ing cos t ly borrowings, and considerable

laps i n permit t ing f a r e revisions t o canpensate for

cos t increases. Thus faced with inadequacies of c a p i t a l

even for replacements, l e t alone expansion, t h e corpora-

t ion was obliged t o make use of scarce resources comnit-

ted t o it mest effect ively. I t i s thus a study of

f inanc ia l performance of these corporations assumes

importance, Hence the present study t i t l e d ,

"FINANCIAL PElVOWCE O? NATIOIOUISED ROAD TRANSmRT

CORWIUTIOBS I U TAUIL BADU WITH SPECIAL RE?BREUCE

TO TmmHAI PERTYAR TRANSPORT COR#)RATION ( T m ) Y

r igh t ly attempts a t analysing the u t i l i s a t i o n of the

resources ava i lab le a t the disposal of the corpora-

t ion. The present study is a modest attempt t o

appraise cer ta in aspects of f inanc ia l performance of

the corporation and t o f ind ou t t o what extent it has

been ab le t o f u l f i l the object ives f o r whifhi t has been

established.

The Corporation i s s t a t u t o r i l y obliged t o follow

*business pr inc ip lesn but t h e ne t e f f e c t of Oovernment

po l ic ies impose various constraints , both e x p l i c i t and

implici t , i n t h i s regard, because of cer ta in s o c i a l

objectives. Thus the p r o f i t earning poten t ia l of the

Corporation i s concealed and could be mischievously

used as an a l i b i f o r concealing t h e inaff iciency i n

the e f fec t ive u t i l i s a t i o n of the resources. Hence, a

micro study of t h i s type, involving an indepth study

of a public s e c t o r passenger Road Transport Corpora-

t i o n a 8 s m s addit ional importance. I t is hoped t h a t

a c r i t i c a l study of various f a c t o r s t h a t influence

the f inanc ia l performance would reveal the s t rengths

and weaknerses. T h y would a l s o help i n t he evolution

of a policy which would h o p f u l l y help i n f u r t h e r

strengthening the r t rung point8 while rlmultaneourly

attempting t o eliminate the weak points.

Macro s tudies would be useful i n underatanding

the broad t rends of an induatty bu t an indepth micro

study of t h i s kind haa a chance of being d i r e c t l y use-

f u l not only t o t h e organisation under study, but a l so

t o other s imi l a r organisat ions i n t he countty and t o

t he S ta t e Oovement8.

Thanthai Per iyar Transport Cdrporation was the

seventh Corporation t o be formed i n the S t a t e under t he

Companies Act, 1956. The cmpany was incorporated as

a public Limited Canpany with the object of providing

be t t e r , e f f i c i e n t , adequate, economical and a viable

sys tsn of road t ranspor t rervices i n South Arcot and

North h o t D i s t r i c t s and s t a r t e d functioning with

e f f ec t frmp 16-01-1975. The f i r s t Annual Report of

t he company was publirhed on 31st March 1916 covering

a period of 15 months from 16-01-1975 t o 31-03-1976.

As on 31st March 1976, the Corporation hsd 218 buses,

employed 1,399 persons with a gross capi ta l of Rupes

196.59 lakhs (vide Table-5.1) of which the S ta t e

Government contributed Rn.35 lakhs as the cap i t a l

contribution.

Aa on 31st March 1989, the l a s t year of the

study period, the TVK: own. a f l e e t of . 908 buses,

employing well over 6200 persons, having Rs.4294.59

lakhs as the gross capi ta l employed (vide Table-5.1)

with a cap i t a l contribution of Rs. 250 lskhs by the

Tamil Nadu Government. By 31st March 1989, the

Corporation operates 546 routes with 52,202 route

kilometres and provides 1139 lakhs ef fect ive bus

kilanetres carrying 2,407.40 lakhs of passengers.

The reasons for se lec t ing TFTC f o r t h i s study

a re mainly based on three considerations. F i r s t ly ,

i n t e n w of ahare capital , M on 31st March 1989,

other than TTC and PTC, TPTC has the highest

ahare capi ta l of a l l other Corporations with Rs.250

lakha. In the case of Tn3, it opcrates only long

dirtance services and in ter -s ta te services and does

not operate laofusail o r towa services. Again, i n

the care of FTC, it operater only c i t y ~erVice8 and

dose not operate mofurril remices. Therefore there

two are considered as extreme cases and excluding

these two cases of extrcrmity, TFX! occupies the f i r r t

place in posrersing highert amount of rhare capital .

Secondly, i n terms of f l e e t rtrength, TPK: occupies

the recond place with 908 bures, the f i r r t one being

rn with 1259 burner. Though PTC har the highest f l e e t

strength of 2202 buses, because of i t s extremity it i s

excluded from consideration. And thirdly, i n terms of

number of personnel employed a lso TPTC has the credi t

of giving employment opportunity t o the largest number

of peraonr with over 6200 persons ar mentioned already.

A 1 1 the above mentioned three important parameters vir . ,

rhare capi ta l , f l e e t strength and employment potential

merit the relection of TPTC fo r the present study.

The term financial performance pertains t o the

funds employed t o conduct the ac t iv i t i e s of an organi-

sation t o achieve the objectives f o r which it i s fonned

over a period of time. The objective of SrVs i s t o

operate an ef f ic ient , adequate, economical and properly

coordinated tranrport rervice on 'business principles ' .

The techniques of financial analyrir are employ& f o r

changing the economic health of the enterprise and

thus evaluation of the p rof i t ab i l i ty and f inancial

strength of the organisation under stuby'. This i s

done through a process of making an anatomical study

of the financial, physical and operational data con-

tained i n the Profi t and Loss Account, Balance Sheet

and S t a t i s t i c a l Reports. I t i s i n t h i s context, a

micro study of t h i s nature would be useful i n under-

standing the broad trend8 of an industry.

Successful business operations demand s t r i c t

obrervance of certain rules which remain substantially

the same whether the business i s under private o r

public ownership. However, it i s generally said, and

not without basis, tha t as finance i s readily availa-

ble from the Oovernment, managments of public sector

undertakings, by and large, pay scent regard t o the

proper and effect ive u t i l i za t ion of funds, Moreover

they do not care t o econmise on the use of funds a8

they do not have t o struggle fo r funds i n the money

market l ike t h e i r private sector counterparts.

In rhort, poor financial manapanent i s chiefly reaponri-

ble for the unsatisfactory performance of the public

sector undertakings.

he performance8 of Public Ssctor Road ~~~~~t

undertaings are no exception t o th i s general contention.

The Public sector road transport undertakingr which had

a f l e e t of more than 35.6 per centi7 of the to t a l

paasengar rod transport f l e e t i n India are facing un-

pracented mmtra in t s and c r i r i s i n managing the i r

financial p m b l e f ~ . In the year 198899, the Sms have

suffered a 108s of ooet 428.29 crorer18 due to several

factors l i ke increasing cast of operation, uneronanical

fares, increased social obligations, high rates of taxa-

tion, dif f icul t ies i n obtaining capital a t wncessional

rater of interest , etc. Graphs shoving the distribution

of to t a l cost and to t a l material cost are given in the

appendix. (1 - G )

- e r a on financial management are of the view

that improper capitalization and unround capital struc-

ture, e x a r r i v e investment i n inventory or w e r invert-

mmt in fixed asreto or indequate working capital may

lead to financial pmblmr Md resul t i n poor ra te of

return on investment. TNa atudy proceeds on the

hundr t h a t one of the iaportant maaonr uhy the

public rector Road Tranaport Vndettakinga have not

p m e d t o be financially viable can be traced t o

the i r poor financial management. It w i l l , themfore,

go in to v a r i m aapecta of t h e i r financial management

indepth i n order t o identify the weak apots and to

mggest poasible remedies.

The main objectives of the present study are

outlined a s under:

1. t race out the evolution of Road Tranaport

Services i n India i n general and T&l N a b

Gtate i n particular.

2. To study the nature and source# of finance of

Thanthai Poriyar Tranaport Corporation (TPTC)

and t h e i r implications on financial performance.

3. To atudy the u t i l i aa t ion of finance i n terms of

i t a deployment i n fixed and w r u n g capital areas.

4. To malyae cost and examine the coat - f a n

inter-relationshipr to ge t an insight i n t o

the relat ive significance of variour canponents

of costs and assess t h e i r effect on f inancial

performance.

5. analyre the influence of changes i n the

various physical and operational performances

of the Corporation and t h e i r m a c t on the

financial performance.

6. To evaluate the factors t h a t have influenced

the f inancial performance and consequently

affected the s ize of internal resourcar f o r

financing expansion.

7. To study the impact of the presence of s o d a 1

obligations on the finances and f inancial

performance of the organisation, and

8. To incidentally make inter-film canparison# i n

respect of cer tain aspects of TPTC with other

Corporations i n T-1 Nadu State as -11 as

certain other selected SRTCs i n India t o judge

the efficiency of the Corporation under study.

m e scope of the present rtudy, t i t l e d

.Financial Performance of rat ional isad Road Transport

Corporatiolu i n Tamil Nadu State with Special Reference

to TFFC9 i s 1lmit.d to the analysis of the aspects of

financing, deployment and performance b r i d e s covering

such rspects as physical and operational perfonnance,

coat - fa re relationships since these aapectl h w a a

clear bearing on the finances a d financial perfomances.

This study incidantally cwer r the financial oowtraints

&poled on the Corporation by the partlcip8ting W e m -

ment and lays aaphaais on the contribution of internally

generated funds f o r financing expanmion.

M the present study i s with a particular refer-

ence t o Thanthai Periyar Transport C ~ r p O t a t i ~ n (TPPC),

t h i s study i s conducted t o cover a period right f m

the inception of the Corporation. Thanthai Periyar

Transport Cnrporation came into existence on 16th January

1975 and the f i r s t m u a l Report of the Cclrporation was

releaaed i n 1976 covering a period of 15 months fm

January 1975 to 31st March 1976. Thus th i s study covers

bp and large a fourtam year period f m 1975-76 to

1988-89.

Tae methodology of the present study can be

broadly outlined aa under:

M U y , the present study i s an erapirical

investigation of a micro nature ralat inp to one

part icular undartaking.

&corrdly, the present research work i s based

on both pr imaq and sacondary sourma of data.

Secondary data ham been a major sourca of data

collection.

Thirdly, the broad inferences tha t a m dram

f m the analysis are supported by the views and

opinions exprersed during the discussions with the

o f f i d a l r concerned.

Tinllly, cer tain suggestions are offered in

the l i g h t of the findinga, to improve the financas

and f inancial performance.

An organiaation'a performance can be caapared

with (a) its OM p u t . (b) with the average fo r the

period and (c) also with tha t of s i s t e r undertakings.

A l l these three methods of canparison were made in

the prssent study a t appropriate places.

A8 the study relates t o one undertaking, the

published accounts and the Annual Administration

Reportd of the Corporation form the main sources of

data f o r t he study. To f a c i l i t a t e capparison of the

undertaking's performance with tha t of s i s t e r corpora-

t ions, the performance reports compiled by the Central

In s t i t u t e of Road Transport (CIRT) and the Association

of S t a t e Road Transport Undertakings (ASRTW) ars con-

sulted. The d e t a i l s ragarding vadoua i t a s a m collect-

ed f m t h e o f f i c i a l rcwrQs of the Corporation. Fnrther

d i s m s i o n s were held with the off icers of the Corpora-

t ion to obtain an ins ider ' s view of the problems faced.

In addition, t he Road Transport Corporation Act, the

TPTC Rules and Regulations and the o f f i c i a l doclnaents

pertaining to the f inancia l performances of the Corpora-

t i on have a l so been referred. The perfonnance report8

published the Central I n s t i t u t e of Road Transport

are a l so consulted besides t he various o f f i c i a l reports,

seminar papers, a r t i c l e s i n relevant journals, l i t e r a tu re

available i n t he f i e l d of study, etc.

The performance of a passenger mad transport

uadartaking i r dependent on inany factors, many of than

Outride the control of the organisation. Thus i n the

abencs of accepted noms against r N c h public rector

passenger road transport industry could be ampared,

the generally accapted methods of analysis have t o br

suitably modified. General I t a t i s t i c a l measurvr l i ke

averages, percmtwer , r t andud deviation, a - e f f i c i e n t

of variatim and c o a f f i c i e n t of wr ra l a t ion ham barn

applied wherwer the data l en t thamselvaa t o such appli-

cations. Various accounting and financial measures l i ke

calculation of w s t of capi ta l by the wightsd average

method, sourcea and was, and return on investinents (ROT),

baaides the various techniques of financial analysis such

a s accounting ra t ios , etc. were an(p1oyed.

In t h i s section, an attempt i s made to briefly

discuss the studies made i n the past relating t o State

Road Transport Corporations. With the increasing

importance given to the public sector both a t the

Central and Sta te level i n the national econany, the

study of several aspects l i k e the evolution, function-

ing, personnel and indust r ia l relations and financing

have become the major focus of several research studies,

While sana studies are of macro nature covering a l l

unde-ngs a t Cantral o r Sta te level, other studiee

haw apecif ical lp selected a g i m industry. There

ate a few studies which covered a spec i f ic aspect.

l i k e working cap i ta l management or p rof i tab i l i ty .

There a r e also a f a r s tudies t h a t copsred a l l

aspects of f inancial management i n reapect of a

g i w n undertaking.

Regatding the studies made on public enter-

prises par t icu la r ly i n the f i e l d of finance an early

a t taap t was made by Prof. V.V. ~ a m a n a t h a n ~ ~ on

*Finances of Public Enterprises*, wherein he underlined

d i f fe ren t aapecta of public enterprises. He mainly

focussed h i s at tention on the profitd and prof i t c r i t e r -

ion of public enterprises. R.P. shanna20 i n h i s study

on 'Corporate Financial Structure' dea l t with the

Corporate Pinancial Structure which plays an iuportant

role i n the f inancial planning of a concern.

A study on 'Financing of Public Enterprises in

Ind.laa done by 0. ~enketachalam~' dea l t with the pattern

of financing in the public enterprises so a s t o under-

l ine the re la t ive role. of d i f fe ren t sources in the

financing of the public enterprises i n India. In h i s

Wrk on 'Capital Structure and Profi tabil igy Analysir

Of Central Public Sector Undertakings', P.K. ~hattacharya"

emphasirad the need fo r more equity capital i n the

capi ta l structure of the public entezprises, since

heavy in t e re s t burden on loan capital s m m l y cur ta i l s

the prof i tabi l i ty .

An f a r a# the studies on the public entorprirer

a t the s t a t e level are cancernod the studies of A.S.

on Rajarrthan enterprises and A. ~ a n k a r i a h ~ ~

pertaining t o 9Budgeting i n State Undertakings of

Andhra Pradesh deserpa to ba mentioned.

Amlata R402' in her study on 'Financial Per-

formance of Public Enterpriser (A Study of urnataka

Elect r ic i ty Board) made an indepth analysir of the

financial trends and t a r i f f policy of the Electricity

Boards and identified the factors fo r the poor perfor-

mance of the Board. choyalZ6 in his work on 'Financial

Hanaganent of Sta te Enterprises', made an attempt to

appropriate the financial performance of selected State

Warehousing Corporations.

Amongst the studier made on public sector road

transport industry, the ea r l i e s t study was done by

~ammat imi~ ' I on the functioning of Road Transport

Deparbnent of the present APSRTC. R.C. Saxena2' also

attempted a similar study on the transport department

of Madhya Pradash.

The study of E.S. 6astry2' on the physical and

Financial Performance of s m e selected road transport

undertakings i n India d a s a m r special mention. Thin

study lay8 emphwis on operational efficiency without

neglecting e i the r the cost o r the revenue implications.

A special mention may be made of the work done by V.

v i s ~ a n a d h a m ~ ~ on 'Pinancer of Public Enterprises - A

Focus on APSRTC'. He has made an indepth analysis of

the nature and sources of finance of APSRTC and the i r

u t i l i s a t ion i n fixed and working capital areas. A

similar study was done by Mohamaed Akbar Alikhan3l on

'Financial Management of SRTCs in India'. In th i s

work, he has s t u d l d the financial management in

Maharashtra Sta te Road Transport Corporation.

S.K. Arora3' made a study on 'Econanics of

UanagQent i n Road Tran-rt Industry'. The study

aimed a t determining the roost appropriate pattern

of organisation fo r passenger transport semices.

F i n a d a l Performance has a lso teen evaluated on

the basin of coats, rwvenuer and prof i tabi l i ty .

Ratan KiaMr ~ i n g h 3 ~ i n h i s work on 'Road Transport

and Econanic Dovelopaento has studied the Bihar

Sta te Road Tranmort Corporation. This study aims

a t waluat ing the crucial ro le played by mad

transport aa a basic in f r aa t ruc tun in emnanic

deve lmen t .

The work of Harish Qlandra and B.D. singh31

is concarnM with the study of growth and achieve-

ment i n Ut tar Pradesh Sta te Road hansgor t Corpora-

tion. 8.5. M ~ r t h y ~ ~ has a lso attanpted to investi-

gate the working of UPSRTC.

A s imi lar study was conducted by K.K. Bhama

and R.K. ~p~~~~ on the working capi ta l management

i n Rajasthan S ta t e Road Transport Corporation. The

work i s an attempt made t o examine the position of

wrkinq capi ta l i n RSRTC and t o evaluate the perform-

ance i n t h i s area.

h e work of D.K. Kulshrestha3' on 'Financial

Manapament i n Sta te Road Transport Undertakings in

Indiao, emphasised the need fo r more capi ta l i n the

Sta te Road Transport Undertakings, as they being

Public u t i l i t i e s , the ploughing back of funds s t a r t s

late. sudsraaaam padem3' i n h i s study on l ~ u s

Traasport i n India' examined the -act of organisa-

t ion s tructure of selected road transport corporations

on the i r operational and financial performance.

1.13. LIMITATI~SOF~SZVDY

I. Though the period of the present study covers

fourteen years frcm 1975-76 t o 1988-89, the

inter-firm canparison could not be made fo r the

en t i re fourteen year period. This i s because

sane Corporations were s tar ted years before

1975-76 and certain other Corporations were

s tar ted subsequent t o 1975-76. Therefore only

a cer tain selected representative years have been

chosen fo r the inter-firm comparison.

2. As emlained in the source^ of data Collection',

the data f o r t h i s study were mainly collected

fmm Me Annual Accounts and Audit Reports and

Anrmal Administr8tion Rsports of TnC. Scme

adjustments or recanputations were dons in the

various items of the annual accounts i n the

in te res t of uniformity o r c o n f h i t y w i t h the

standard practices. A t the end of each annual

reports, aud i t report is a l so presented. AB,

t h i s repor t is presented f ron the point of view

of audi tor ' s review, these were not considerad

a s benef ic ia l and hence iqnored.

3. m e published accounts do not give any break-up

regarding physioal, operational and f inancia l

performance d i s t r i c t -v i se o r depot-wise and

consequently the d i s t r i c t s o r d-ts t h a t are

consis tent ly losing could not be ident i f ied and

causes analysed.

4. As the published accounw do not give s t a t i s t i c a l

data regarding leakage of revenus and quantun of

soc i a l c o s t incurred i n regard to various socia l

obl igat ions undertaken, a deta i led s t a t i s t i c a l

analys is of tha problem could not be attempted.

5. In M e Annual Reports, except f o r adnl t t ing the

presence of ce r t a in uneconomic routes, no d e t a i l s

regarding t h e i r ac tual impact on the revenues

were avai lable and hence except fo r recopnising

t h e i r presence a deta i led study could not be made

f o r want of deta i ls .

8QIEn& or PRESmTTATIca

The present study i e divided in to eleven Chapters

aa mentioned blow:

The r i r r t Oaptar i s introductory i n nature,

I t introduoas the problem under study aad focwar

on the need f o r and mor t anoa of Ma prurant rtudy

and review8 ea r l i e r studies related to the topic.

I t a lso explains the objec t lws of the study, scope

of the study, methodology, and data collection, 1 M t a -

tions and chapterisation scheme.

The Second Chapter, traces out the evolution of

Road Transport Services i n India i n general and in

Tamil Nadu i n particular. It also discusses the history

of the developent of the industry leading t o the

establishment of public sector transport undertakings.

The Third Oapte r deals with the Financial

Structure including the capital structure of the

Corporation. In t h i s Chapter, the caPponents of

capital structure have h e n analysed and cost of

capital calculated.

Qugter Pow is divided in to two parts. The

role of in ternal Vs. external financing and own funds

Vs. outside funds have been studied in the f i r s t part.

Tha second pa r t deals v l th the depreciation as a 'source'

of fundr. Here both the conceptual and the contextual

background are discussed.

In Ch.pUr B i n , deployment of funds of the

Corporation i n fixed and Working Capital components

are analyadl.

The Clixth QupUr i a dovoted to the u r a l y r i ~

of costa and revenues and evaluation of cost

effectiveness. The influence of a s t - fare

relationship on the net margin has a lso been analysed.

In the Seventh Qlapter various indicators of

judging physical and operational performances are

analysed. Such aspects as average vehicular u t i l i s a -

tion, average vehicle u t i l i s a t i on , occupation ratio,

bus-staff ra t io , r a t e of fue l consumption have been

analysed besides the analysis of the extent of quali ty

of service achieved by the Corgoration.

Chapter Eight i s devoted t o anlyse the financial

performance of t he Corporation i n terns of analysis of

operating revenues, costs, ne t margin, prof i tabi l i ty ,

return on capi ta l employed besides analysing various

capi ta l turnover ratios. The impact of i r n p r m e n t i n

the physical and operational performance on the financi-

a l performance i s also studied i n t h i s chapter.

In C b g t e r Bim, an inter-firm comparison of

financial perfomance of TPK: with that of other

mister Corporations i a presented. The ampariaon

has been done through the use of selected financial

indicators affecting the financial performance.

brapter Ten deals with the concept of social

objectives, social cost and measurement of social

cost. The impact of social obligations on the

finances and financial performance are discussed

i n this chapter.

The La8t Chapter gives the chapter-wise

4Conclusions and Suggestions'. Conclwions of the

present study are drawn out of analysis and i n the

l igh t of conclusions, suggestions are offered to

improve the finances and financial performance of

the Corporation in part icular and t o serve as guide-

l ines f o r policy makers, planners and the Government

i n general.

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