Productivity, Prices, and Profitability: A Case Study of Apsrtc

Abstract

In this paper, the link between productivity, prices, and profitability are examined for Andhra Pradesh State Road Transport Corporation (APSRTC) using its annual data from 1979-80 to 1999-00. We find that, by and large, productivity gains achieved by APSRTC are being passed through to customers. However, the data reveal a significant change in the pattern during the 1990s, particularly from 1995-96 onwards. During these periods, on an average, productivity of APSRTC declined, whereas its input factor prices compared to output prices increased significantly. This has resulted in deterioration of its financial condition.

Keywords: Profitability, productivity, bus transport company

JEL Classification: L92, M20, R40