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Synergy Case
Submission GSRTC
Ashutosh Trivedi
Aditya Chowdhury
SWOT Analysis
Weakness:

1. Strong trade unions

Strength: 2. Government norms and regulations like hiring
freeze, acceptance of lowest bid in procurement
even if it is of cheaper quality, expensive CNG
1. Strong brand value buses
2. Great network of connection and buses 3. Disproportionate tax burden
3. Huge supplier power over vendors 4. Socio -political interference concerning route
4. Loyal customer base selection and concessions
5. Access to intellectual employees as 5. Working in regions which are not profitable
compared to new private players 6. Moral obligation to provide subsidy
6. Experience 7. Cannot promote itself against other private
7. Govt monetary backing players

Threat:
Opportunity:
1. Different Modes of transport
1. New age IT systems
2. New players ,some of whom break rules,
2. Market research and advertisement revenue
not burdened by govt norms like GSRTC
3. Increasing population that requires their
3. Price advantage to some competitors
services
over GSRTC by compromising on safety
4. Dynamic Pricing by competitors
SPACE Matrix Analysis
GSRTC should take competitive position. short-term strategy should concentrate on generating money, increasing
profitability, or pursuing a merger with a cash-rich company. The same thing is done in the options available in next slide i.e.
improving the profitability

Financial Strength : Poor (based on following factors which are

all low - ROI, cashflow )

Industry Attractiveness: Good (based on following factors which

are all high - growth potential and access to financing)

Competitive Advantage: Good (Based on following factors which

are all good -Brand, Image, Product Quality, Market Share)

Environmental Stability: Bad (based on following factors which

are all high -Inflation, demand price elasticity, taxation, pressure
from substitutes)
 2) Reduction in passenger tax is long due since it is quite
high as compared to other states. Hence a demand of

Options reduction to 7.5% is completely justified. The subsequent

loss of 1667 million in 2011-12 in taxes to the govt. is
immaterial since the govt. was bearing the loss of GSRTC.

1) Outsourcing operations in tribal areas would result in

3) Writing of depreciation account for 5 years may not be a
profit of 1200 million from saved wages + 150 million in net
sure shot yes by the govt. Since govt has to take out the 7015
income per year
million for 5 years from its own budget, hence the decision is
based on planned govt spending. But some part of it can be
This will not result in a backlash since freed up workers can
deferred. Since GSRTC is not a for profit organisation, Govt.
be shifted to meet the current workforce shortfall. 1200
may only wave off the amount which reduces its losses,
million savings out of 7500 million salary is 16% saving i.e.
not turn it into profit making organisation.
16% reduction in all category of jobs. This is still below
the minimum of all categories : 34% expected shortfall in
4) Similarly govt. may not agree for full debt to equity swap
workforce. Hence manpower can be reassigned.
since it would prefer to get its money quickly before than
waiting for GSRTC to turn to profit, which may lead to
Additionally new jobs for local tribals would result in a
wasteful spending.
political incentive for the CM.

5) Partial deregulation of route can be approved by the govt

While implementing this option along with other measures,
(526.8 million) along with depot fees(91.2 million), 1% cess
GSRTC can turn into profit making thus removing the
for MACT fund and toll tax(1000 million) and market survey
govt. Imposed hiring ban and thus new jobs can be
revenue.
created.
Conclusion

Total savings for 2011/12= 4635 million.

This value more than offsets the loss projected with the status quo of 4359 million

GoG grant for arrear payments may not be of complete amount like debt equity swap and depreciation
account write off. But whatever be the amount it would result in additional profitability apart from the
total savings of 4635 million INR.

Revenue enhancing like premium service at higher price etc(747 million) and cost controlling initiatives
like outsourcing, contract hiring, merger of divisions etc (1380 million) would further add value.

The CM should agree to measures which don’t result in heavy burden on state budget. Write off
depreciation account, debt to equity swap and grant for arrears payment may or may not be done
completely. Status quo leads to huge manpower shortage since the corporation is not profitable,
which would harm the functioning and also not create new jobs if the corporation, thus the govt has
incentive to turn around GSRTC.
Thank you.