*Associate Professor, Post Graduate Department of Management Studies, Siddaganga Institute of Technology, Tumkur, Karnataka, India
**Student, Post Graduate Department of Management Studies, Siddaganga Institute of Technology, Tumkur, Karnataka, India
Online published on 6 January, 2014.
In India, more and more people are moving to urban areas for their livelihood. Therefore, there is an increasing demand for a comfortable, reliable and eco-friendly public transportation system in the country. At present, there are 55 State Road Transport Undertakings (SRTUs) operating nearly 1,47,000 buses and another six lakh buses operated by private transport operators. The SRTUs are not able to keep pace with the growing needs and therefore the contribution of private sector in providing passenger transport services is growing. As a dominant player in Karnataka, Vijayanand Travels is expanding its transport services by connecting different destinations.
While providing bus services to different destinations, capital intensive proposition, Vijayanand Travels needs to ensure the investment made is viable and sustainable. Decisions pertaining to investment in long term assets are classified as capital budgeting decisions. The Travels is continuously expanding its business and incessantly faced with the capital budgeting decisions. This paper delves in detail the different process of capital budgeting namely identification of new passenger routes (project), sources of fund, estimating different costs and evaluation of the project using different techniques. Further, the paper illustrates the usefulness of capital budgeting techniques in deciding the viability of project in altogether different field such as public transport services.
Capital budgeting, capital expenditure, public transport, passenger route, project evaluation
