CAG finds flaws with designing of Golden Chariot tourism project

Pact with private partner led to losses for KSTDC, says report

If there is one tourism promotion project which is badly designed, it is the Golden Chariot project. This is not an observation by the train users but by the Comptroller and Auditor General (CAG) of India.

The CAG’s report on public sector undertakings which was placed in the State legislature on Friday throws light on how the premier tourism project has become a loss-making venture.

The objective of the project to promote tourism and showcase unique tourist attractions was not achieved as the project had not been well thought out and planned. The KSTDC has paid excess commission to the management partner, Ninth Dimension Hotels and Resorts Private Limited, a consortium of General Sales Agents (GSAs), the report says.

The longer tenure of the service agreement with the management partner meant that the company had no option but to continue till the expiry of the term of agreement, though the terms were unfavourable for KSTDC.

The commercial operations of the train commenced in 2008. The itinerary included two trips - Pride of South and Southern Splendour. It incurred losses till 2012-13. Between 2008-14, KSTDC earned gross revenue of Rs 43.24 crore from 131 trips. The net loss was Rs 27.08 crore. It could have been reduced to Rs 10.34 crore had the haulage charges been appropriated with the management partner proportionate to its revenue share of 45 pc. As the service agreement did not provide for sharing haulage cost, the management partner was allowed to benefit by Rs 16.74 crore over six years.

The overall occupancy increased from 23 per cent in 2008-09 to 36 per cent in 2013-14. But the rate of increase was very erratic and not indicative of improvement of operations. The occupancy rate was not encouraging as KSTDC had not formulated any marketing strategy for improving it. There were no effective advertisements for promoting the train.

Operational deficiencies included running of more coaches than required, resulting in unnecessary haulage charges and operating the train even when occupancy was less than stipulated for running it. The various deficiencies contributed to the company not even recovering its operating cost despite receiving financial assistance of Rs 13.22 crore from the government.

The result was a loss of Rs 27.11 crore, up to March 2014, sustained by the company.

The CAG has recommended that KSTDC should renegotiate with the management partner for sharing the haulage charges in proportion to its revenue share thereby driving the partner to improve the occupancy rate. A fixed sum out of ‘other income’ earned by the management partner should also be shared by the company.
KSTDC should adhere to the tariff policy on ticket bookings and the discount allowed on bulk ticket bookings should be rational and uniform. The service agreement should be renewed every three years and the terms and conditions reassessed, the CAG has said.  
DH News Service