For an organisation undercut by severe losses, the BMTC has received a jolt with global credit rating agency ICRA downgrading its score from ‘stable’ (“B”) to ‘default’ (“D”) grade, highlighting the “delays and irregularities in servicing of long-term loans”.
The review released recently notes that the financial performance of the Bangalore Metropolitan Transport Corporation (BMTC) remains weak in 2019-20 due to continued loses and strained liquidity position.
“The stressed cash flows resulted in delays in debt servicing, despite the support received from the government of Karnataka... The company has substantial annual debt repayments amounting to Rs. 224.42 crore, during FY2020 and FY2021,” the agency noted.
The corporation has been in the red ever since the hike in employee salaries, which was soon followed by skyrocketing of diesel prices. The operating losses of Rs 4.32 per km during 2019-20 as compared to an operating loss of Rs. 1.06 per km during 2018-19.
The negative rating makes it further difficult for the corporation to borrow money and depend further on the government grants.
Plans afoot
However, newly appointed Managing Director C Shikha, said measures will be taken at strategic and operational levels to avoid further slide. Reducing trips that bring low earnings per kilometre (EPKM), running more trips during peak hours and curtailing non-viable trips are some of the steps planned.
Shikha said she will adopt zero tolerance for delay in servicing debts. “As of now, there are no overdue payments to any term loans as we have cleared it. Steps will be taken to get balance grants from the state government,” she added.
The managing director also spoke about the need to induct more buses to the fleet to cater to the demands. The improvement in operational efficiency includes the introduction of services to bridge first and last mile connectivity gaps.