1. ECR and Operating ratio 1

2. What is ECR? It shows how much expenditure is covered by the revenue earned by that unit Value can be less than 100 or more than 100 If <100: revenue is less than expenditure. (Loss) If >100: revenue is more than expenditure (Profit) 2

3. Why needed?  Is a measure of profitability or loss  If each unit earns as much as it spends, deficit can be wiped out  Puts focus on unit level profitability  Helps sensitize staff towards earning potential of each office. 3

4. To achieve the ideal operating ratio/ Expense Coverage Ratio:- ◦By controlling/minimizing the revenue expenditure, ◦By achieving revenue targets and preventing the Revenue pilferages, ◦By maximizing the revenue collections/ recoveries from other organizations for the services rendered to them, ◦By properly implementing the opportunities of new schemes/services introduced from time to time. 4

5. How to calculate ECR? Sale of postage stamps/stationery100% Postage in cash, unpaid article amount, franking machine amount 100% Money order commission100% IPO commission100% Telephone billTotal no of bills collected x Rs.5/- GEBTotal no of bills collected x Rs. 5/- SB accountRs.175.46per live account yearly SB accountRs.26.61 per silent account yearly KVP/NSC certificateTotal No of certificate(issue/Discharge) x59.95 IVP certificateTotal No of certificate (Discharge) x 15.88 PLI7% of premium collected RPLI10% of premium collected Railway/telecom pensionersRs. 80/- per payment EPF pensionersRs. 53.6 per payment Total income of the Post office: 5

6. How to calculate ECR? IMTSRs. 260 per transaction Post box/post bag rent100 % Post office quarter rent100% Advertisement income100% Exam fee income100% MO/VPMO from /sale of AD income 100% Issue of identity card100% Sale of old records100% Speed post revenue100% Sale of gold coin4% of Total amount Sold Judicial/non judicial stamp3% of Total purchase (for HO only) Sheetal alovera sale30% of Total sale Any other income which are not included above 100% Total income of the Post office: Cont…. 6

7. ◦(a) Establishment charges of the office. ◦ The average cost of the establishments. ◦The pension and leave salary element equal to 12% and 11% respectively, on the average cost of the time scale of pensionable posts should be added. ◦ All allowances such as DA, HRA and CCA admissible on the average cost should be taken in to account while calculating the establishment charges. 7 Cost :

8. (b) A fixed addition to the establishment charges. (Rs.49.50 for the Sub Office) © Fixed house rent in the case of rented building or assessed rent of the office if it is in the departmental building. (d ) Fixed stationery charges for the office. 8 Cost

9. (e) 2/3 rd of the Line Establishment charges that are maintained solely for the benefit of the office. (f) 5% of the total value of postage stamps sold at the office to cover the cost of printing stamps, Post cards etc., and the cost of Direction and Audit. 9

10. Expense Coverage Ratio ECRNet Revenue receipt x 100 ECR = Net Revenue receipt x 100 Net Working Expenses Where : Net Revenue receipts = Gross Revenue receipts (-) Refunds; and Net working expenditure = Gross working expenditure less depreciation and recoveries. ECR Figure of more than 100(ECR )means a profitable state of business 10

11. Operating Ratio Operating RatioNet Expenditure Operating Ratio = Net Expenditure Net Revenue Where : Net Revenue receipts = Gross Revenue receipts (-) Refunds; and Net working expenditure = Gross working expenditure less depreciation and recoveries. Operating Ratio Operating Ratio of less than 1 indicates profitable state of business. 11

12. Exercise Calculate the ECR for an office under your sub division with the help of information brought by you. 12

13. Thank You 13