The Hindu Business Line : Fleet operators feel the heat of slowdown

Chennai, April 1 At the dawn and the dusk on any working day, it was a common sight in the recent several years to see at the entry points of Chennai’s industrial corridors clogged by a convoy of buses transporting staff to various companies.

Now, with the economic slowdown taking its toll on jobs and number of shifts in both the manufacturing and service sectors, the convoys have shrunk.

According to fleet operators, there were over 1,500 buses, operated by about 10 players, plying on the stretches each day. That number has shrunk by a third.

Mr A. Afzal, Managing Director of the city based Parveen Travels, a major player in the staff transporting business, says there has been a 25 per cent drop in staff traffic in those corridors.

Parveen Travels has been plying 470 buses in the two stretches – Old Mahabalipuram Road and Sriperumbudur, and transporting each day close to 19,000 employees of Cognizant Technology, Eicher Motors, Flextronics, Hyundai Motor, Nokia, Samsung Electronics, Tata Consultancy Services and Wipro.

“Now we are operating only 370,” Mr Afzal says.

Since many IT companies have started charging for transportation, employees are opting for other means of personal commute — such as car pooling and chartering vans.

Sri Bhagyalakshmi Travels, another major player in employee transportation, used to run 200 buses. “Now more than 50 buses are just confined to parking bays,” says Mr D. Krishnan, a partner in the firm. Sri Bhagyalakshmi is operating buses for companies including Hexaware, Reliance Infocom, Foxcon, Addisson and Honeywell.

Om Shakkthi Travels Pvt Ltd, another operator who runs 350 buses on these routes, says there is a 30-40 per cent drop in demand. The company currently operates only 280 buses. “TCS alone has cut down 100 buses,” says Mr Rama Saravanan, Managing Director of the Om Shakkthi Travels.

Delayed payments

According to some operators, most companies, including IT majors, now take more than two to three months to disburse payments, despite the agreed credit period of 45-days. “They also insist on reducing transportation charges to below Rs 2,600 per day per bus, which will not be viable for us, as the IT companies work only 5-days a week,” says Mr Saravanan.

Even at Rs 3,000 a day, each bus would get only Rs 66,000 a month. The EMI for the bus alone would chip away Rs 40,000 a month, and fuel, another Rs 20,000. “With what remains, it would be impossible to manage expenses like salaries and maintenance,” he says.

Forced into a tight spot, the operators are approaching banks to drop interest rates or rework the payment schedules.

The story is far from over. With the US Government imposing restrictions on outsourcing, which may hit major IT companies further, “we feel, the worse is yet to come,” says Mr Saravanan.

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