Professional Documents
Culture Documents
CORPORATE
RESTRUCTURING
OF THE GUJARAT
STATE ROAD
TRANSPORTATION
CORPORATION
Submitted By:
WITT-I (IIM Indore)
Shreyasi Samanta
Unmesh Ganesh Rajguru
Under the USO The introduction of P-tax added a Private parties used Customers wanted Since GSRTC was
norms, GSRTC had the private parties as financial dynamic pricing to better service, at under the GoG, they
to operate in well as the contract disadvantage. The increase the low prices and had to take up any
profitable and lean carriage operators private parties used revenues, but for faster travel norms that were
routes this was not who started to misquote the GSRTC any methods. They introduced by them
profitable, so they operating illegally , number of days of changes had to have started using their even if it involved
balanced the losses increased the operations and had a Govt Approval. personal vehicles procurement of low
from the profits competition and to pay less tax as and even the rural bid, poor quality part
earned from the disrupted the cross compared to areas had low or purchasing the
lucrative ones. subsidy. GSRTC. passenger density. expensive CNG
powered bus etc.
All these problems could be
The
economic Since solved but they need to bear the
Under the The
scenarios
also
GSRTC was
under the new costs associated with it.
After the
USO norms,
GSRTC had
introductio
n of the
P-tax added
a financial Private
changed.
Now
GoG, they
had to take Some even require some
liberalizatio
n in 1991,
to operate
in
private
parties as
disadvantag
e. The
parties
used
customers
wanted
up any
norms that structural changes in them
the state profitable well as the better were
private dynamic
governmen and lean contract service, at introduced
parties pricing to
t also routes this carriage low prices by them
used to increase
started was not operators and faster even if it
misquote the
allowing profitable, who started travel involved
the number revenues,
private so they operating methods. procureme
of days of but for
players to balanced illegally , They nt of low
operations GSRTC any
operate the losses increased started bid, poor
and had to changes
state- from the the using their quality part
pay less tax had to have
owned profits competitio personal or
as a Govt
transport earned n and vehicles purchasing
compared Approval.
services. from the disrupted and even the
to GSRTC.
lucrative the cross the rural expensive
ones. subsidy. areas had CNG
low
passenger
powered
bus etc. These changes could be
density.
outsourcing buses and drivers,
renting repair and maintenance
facilities to third parties etc.
But these solutions were taken
as a threat by the Trade Unions
There has been a revenue loss as a result of the lengthy procedure of obtaining prior clearance from the Gujarat government for rate modification. The new system can
be configured in such a way that no clearance from the GoG is required for 5.5 percent annual basis revisions. Inflation, diesel, and CNG price patterns in India can
justify this 5.5 percent increase.
GSRTC must focus on capacity utilization to maintain the growth pace spurred by the tariff change. Cost savings would derive from improvements in load factor
and fleet utilization.
Even though GSRTC consented to pay the enhanced salary, it was due to the government of Gujarat's tacit approval, hence the government should morally pay for
it. As a result, GSRTC can use its position as a conduit for social subsidies and an income producer for the government to negotiate grant agreements and a five-
year freeze on arrears of $5 billion.
The land space used by GSRTC as a bus stop could be rented out to private stage carriers for fee-based berthing and parking. Which will help in generating revenue.
GSRTC in tribal area has been a loss-making operation. There was little evidence of progress even after the government gave subsidies. As a result, certain routes and geographic
areas can be delegated. This step will not only save money, but it will also assist to avoid illicit actions.
Restructuring
Financial Operational
Restructuring Restructuring
Abandonment of
M&A
Production Lines
Private Placement
Downscoping
of Equity
Adding new
Debt Financing
Products line
Recapitalization Downsizing