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Nov 30, 2003
A turnaround story from Assam

When Mr Anjan Datta took over as the Transport Minister of Assam two years ago the Assam Road Transport Corporation (ASTC) was a basket case. Today it is a profit making outfit. How did he do it? Here’s a lesson from a politician that is worth the attention of many B-School graduates.

First let us see where Datta started: total debt was Rs.120 crores and 74 employees per bus. Incredible though it may seem, some of them had not been paid for 18 years! Given that fact it seemed a good idea to tempt them with a voluntary settlement scheme (VRS), by which at least the employees stood the chance of getting one large payment in full settlement. The ploy worked and today the ratio of employees per bus is 9:1.

But the retirees had to be paid. How did Datta manage that? He looked into his stores and workshops and found enough old tyres, battery cases and overstocked spare parts that could be sold off to raise some initial capital to work with. He also leased many of ASRT’s workshops, godowns and spaces to rent paying tenants.

Datta then worked an ingenious way around the lack of new investment capital. He brought in private investors to buy and run buses that would sport ASRT’s flying rhino logo. The idea was brilliant because a small private entrepreneur could fund a single bus easily and get into business and ASRT would not lose management control. Datta had unbundled a big and impossible shopping list and parcelled it out. Private investors not only paid for the buses but also a one-time entry fee plus monthly commissions. There are today 1200 buses plying under this scheme earning ASRT Rs.85 lakhs per month. They work under ASRT’s strict supervision. When those that you supervise are not a part of a unionised mass, service quality invariably improves as it has done in Assam.

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