Option 3 is the right answer. 'His and Her' --are third-person personal pronouns. It's is a contraction of “it is” or “it has.” "Its" is a possessive determiner. We use it to say that something belongs to or refers to something. The complete sentence is--The Thane Municipal Transport (TMT) has seen a 6% drop in passenger density after the Brihanmumbai Electric Supply and Transport (BEST) reduced its bus fares recently.