Interstate network to take tourist buses on distress sale

Given the terrain, these vehicles have the lowest number of kilometres operated when compared to other large states, according to the CCOA.
Interstate network to take tourist buses on distress sale

THIRUVANANTHAPURAM: Interstate groups have smelt an opportunity to purchase tourist buses at throwaway prices as the tourist bus owners in the state are in the red, owing to their inability to operate services as a result of lockdown restrictions. The bus owners are under compulsion to sell off the vehicles in order to ease the mounting debt. The vehicles are purchased in bulk either for operating them in other states or as scrap. The vehicles are in demand in Andhra Pradesh, Telangana, Karnataka and Tamil Nadu, where contract carriages are allowed to function with restrictions. As many as 3,000 49-seater buses are for sale and 10 per cent of the 16,000 contract carriages are set for scrap sales, according to the Contract Carriage Operators’ Association (CCOA).

“The bus operators keep getting calls from agents in other states . They function like a mafia and manage to clear the administrative hurdles with ease. When the going gets tough, we consider such alternatives even if the prices offered were quite low,” said CCOA general secretary S Prasanthan. The demand is for 49-seater buses, the category most affected during the lockdown, built between 2004 and 2010.

“They come for old models because they get it for Rs 2 lakh to Rs 6 lakh. They can still run a 2004 model for three more years using various exemptions and then sell it off as scrap,” said Prasanthan. A 2004 model bus is sold for Rs 2 lakh when it has a resale value of Rs 5 lakh while the 2010 model bus with a resale value of Rs 11 lakh is sold for Rs 6 lakh. A contract carriage bus owner spends Rs 50-60 lakh on a new bus.

Given the terrain, these vehicles have the lowest number of kilometres operated when compared to other large states, according to the CCOA. This ensured that buses from Kerala were much in demand  even before the pandemic. The bulk purchases used to happen before the Sabarimala season when the transport is in great demand from pilgrims from other states.

A  Kottayam-based  fleet owner, who has 26 buses, said that he is planning to sell some of them as scrap as he was finding it difficult to service the loans. “There is huge pressure from finance companies to surrender the vehicles. But the managers collude with local agents to conduct a private sale. Often the price we fetch is even less than the scrap price. When the price becomes lower we still have to service the outstanding loan,” he said. It requires a certificate from the motor vehicles department to consider a vehicle for scrapping and clear the tax liabilities. But the people involved in the scrap business are capable of obtaining the certificates without any issues, said the vehicle owner.

The CCOA has been educating its members on the pitfalls involved in surrendering vehicles. But many are forced to resort to distress sale as the crisis deepens. “A bus owner has to service a monthly debt of Rs 60,000-Rs 80,000. So, it is only natural that people take less desirable steps when there are no earnings,” said Prasanthan. With no income, many of them have started alternative livelihood such as roadside vending, delivery for online companies,  drivers in ride hailing companies etc.

The lockdown restrictions have worsened the situation when contract carriage operators are often caught unawares of the restrictions at the local-level. “The bus operator is not aware of the TPR (test positivity rate). It is like a rat trap. There will be no warning. But as soon as you enter, you are slapped with a fine. How does the government expect us to survive? “ said CCOA president Binu John.

BANKS DENYING LOANS: OPERATORS’ ASSN 
The Micro, Small & Medium Enterprises (MSME) status to get easy loans have become a burden for contract carriage owners as some banks refuse to restructure loans under the ‘Atmanirbhar Bharat’ resolution framework 2.  The Contract Carriage Operators’ Association (CCOA), which represent over 3,000 contract carriage owners, alleged that the banks have misinterpreted the central government directives to deny loan restructuring and Emergency Credit Line Guarantee Scheme (ECLGS). “While these schemes are availed at the individual level, the banks deny these facilities to micro enterprises like us. The MSME tag has become a burden in this regard,” said CCOA president Binu John. 

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