Bangalore: In a first of its kind IPO by a state-run transport corporation, Bangalore Metropolitan Transport Corporation (BMTC), that runs the city bus service in India’s tech hub, plans to raise money from the public to add luxury buses on newer routes.
BMTC needs to raise Rs1,500 crore — 50% of the Rs3,000 crore proposal it has submitted to the Centre under the Jawaharlal Nehru National Urban Renewal Mission to modernise and expand its network to meet the public transport demands of a growing city.
The Centre and the Karnataka government, which owns the corporation, would contribute the remaining amount subject to certain conditions.
“Part of the money (Rs1,500 crore) would come from the issue,” said Upendra Tripathy, Managing Director of BMTC.
The state cabinet, however, is yet to approve the divestment of stake in BMTC, which has an authorized capital of Rs854 crore, he said.
SBI Capital Markets Ltd has been appointed as the merchant bankers for the issue and Tripathy expects it to be completed by March 2008.
Analysts say BMTC would be a good pick for investors due to its profitable track record, better utilization of resources and investment in technology.
“It is one of a kind corporation. Investors will find it worth putting their money,” said Ashish Misra, member of faculty at the Centre of Transport Planning and Economics, at the Pune-based Central Institute of Road Transport.
The BMTC, the only profitable public transport corporation in the country, earned a profit of Rs224 crore on an income of Rs887.59 crore for the year to March 2007.
The decade-old BMTC has plans to increase its fleet size by 50% to 6,000 vehicles and launch services to suburbs such as Devanahalli, 35 km from the city, where a new international airport would be operational from April 2008, and Nelamangala, 30 km North on the highway to Mumbai.
BMTC employs around 6 people for each bus, as against 10 people per bus at the loss making Brihanmumbai Electric Supply and Transport Undertaking (BEST), the road transport company in Mumbai, said Misra.
“It (BMTC) is a tight organization. It has no excess staff or inventory and has used technology to the maximum,” he said.
BMTC operates 4,500 buses on 1,400 routes to carry 3.7 million passengers every day across Bangalore, while 4.5 million passengers travel on 3,380 buses owned by BEST on 335 routes in Mumbai.
Nearly half the residents of Bangalore own a two-wheeler or a car, and the city of 6.5 million adds 1,000 vehicles everyday to the over three million vehicles already on road.
BMTC, the first corporation to introduce air-conditioned buses on local routes, plans to add over 1,000 luxury buses to its fleet to woo more and more commuters to public transport. The corporation has fitted more than half its fleet with geographical positioning systems to track movement, and has issued smart cards to student bus pass holders.
“Our plans are big. The focus is on the commuters,” said Tripathy.
Public Affairs Centre, a non-profit agency that works on improving quality of governance in India, said residents of Bangalore have rated BMTC services better compared to other utility providers such as the electricity board in a survey done two years ago.