IRCTC makes a comeback with rail tourism, non-railway catering business

Rail tourism and non-railway catering (NRC) have helped Indian Railways Catering and Tourism Corporation (IRCTC) to increase its profit by 20 per cent and add Rs 166 crore to its FY13 income. This is a comeback for IRCTC after it lost Rs 300 crore business of railway catering in 2010.

IRCTC, the mini ratna public sector undertaking of Indian Railways, has seen an increase of 30 per cent in its FY13 income, compared to the previous year. The income stood at Rs 720 crore for 2012-13 compared to Rs 554 crore in FY12. The profits before tax stood at Rs 92 crore for 2012-13 compared to Rs 76 crore in the year before.

“Many thought we will not be able to survive without the railway catering business as the business on the platter was lost,” says Rakesh Tandon, managing director of IRCTC.

Rail tourism has been the key bailout ticket for IRCTC, whose revenue share has increased six times. “We have bulk agreements with the governments of Madhya Pradesh, Chhattisgarh and Rajasthan, under which we run pilgrim special trains for them,” Tandon adds.

IRCTC has leased five rakes comprising 18 coaches each from Indian Railways for special trains on an annual contract basis. It runs about 100 such trains. Rail tourism generated Rs 45 crore in 2010; the revenue stands at a Rs 190 crore in 2013. This also includes the luxury tourist trains.

For non-railway catering, IRCTC currently runs about 100 kitchens at various ministries, Bhilai Steel Plant, high courts and Delhi University. It also provides food to 12 multinational corporations in Noida and Greater Noida. NRC has added Rs 34 crore to the total income of IRCTC.

After catering in Indian Railways’ trains was taken away from IRCTC in 2010 after, the profits fell from Rs 61 crore in 2010-11 to Rs 49 crore in the next year, while income fell to Rs 111 crore. A major chunk of IRCTC’s current revenues still comes from railway catering at 100 food plazas across the country. It has also partnered with Comesum, a multi-cuisine food chain, to run the joints to hold down manpower costs.

IRCTC is likely to see major business expansion in the coming years with new e-ticketing website and 10 new plants coming up for Rail Neer. The other sectors of expansion would be air-ticketing and e-commerce.

“Public sector undertakings of railways have been performers all through. The story of IRCTC is very positive. But they have to leverage their engagement with the private sector to further growth”, said Abhaya Agarwal, partner (infrastructure and public-private partnership) at Ernst and Young.

Experts also claim that in the current economic slowdown, it is the engagement with the public sector that has helped IRCTC and made the comeback slightly easier as the private sector currently suffers in the economic slowdown.

The net worth of IRCTC has increased from Rs 247 crore in FY12 to Rs 292 crore in FY13. It is expected to pay a dividend of Rs 11.77 crore, compared to the Rs 9.71 crore it paid last year.