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IRCTC has complete autonomy in deciding convenience fee: Chairman


Internet ticketing and packaged drinking water businesses are making profit while for the catering business, loss is down to Rs 19 lakh, says Rajni Hasija, Chairman & MD, IRCTC



I am going to keep last week’s confusion and chaos on convenience fee aside and let us focus on how the quarter gone by for IRCTC has moved. Has life normalised? Are you getting a sense that this time the entire business which you had in terms of bookings and also commuting pre-Covid levels?
There are different segments but as far as the positivity in the environment is concerned, it came when vaccination started. We find drastic changes in travel patterns. Earlier, there was only need-based travel happening. Now theme-based travel has also started happening. There is a sudden jump in booking as our internal booking section is doing much better than even pre-Covid levels. A lot of offline transactions have got converted into online and we are a gainer out of that also.

The tourism services are gradually getting restored. All our products in tourism — whether it is cruise, railway based or mass tourism — all are gradually getting restored. In fact, we have already operated three-four theme based trains and one such train is scheduled on November 7. It is the Ramayana Express and it is all full. My other departures are also full. That is a good indication to the industry that people are now coming back for more than the need based activities.

Apart from ticket booking, the other big business of IRCTC is the catering business. We are going through a whole cycle of inflation like never before. What happens to your catering business when food inflation is very high?
Very right but as of now because of the Covid guidelines, IRCTC is only providing ready-to-eat food on trains. Initially, on March 19, we were about to implement a tariff hike for catering but somehow that could not be implemented because there was a complete lockdown in the country. So the inflation at that particular time was taken into consideration when this tariff was increased. So far we have not seen the benefits of that.

Once everything normalises and our cooked food service is restored, we will go for a tariff once an assessment is done of how much increase is required or if a rationalisation of the menu is required etc. These decisions may require some time at policy level. But we are eagerly waiting for the cooked food to start because the normalisation is happening in the catering industry also. Even though mid-day meal had started, airlines have also started serving cooked food. We have already requested our parent ministry to work on that.

Now that the entire convenience fee issue with the rail ministry is behind us, have you been given any assurance that you will have complete and absolute autonomy now on internet ticketing, service charge pricing, etc, or could there be any interference in future as well? The minority shareholders of IRCTC want to know.
I appreciate the concern for the minority shareholders but perhaps the letter which has been issued by the ministry of railways has to be read very carefully, where it is clearly mentioned that the charges imposed on the sharing as decided has been withdrawn. Secondly, whether IRCTC has complete autonomy in deciding the convenience fee, yes IRCTC has complete autonomy. In fact, it is the board of the IRCTC that decides on the convenience charges. As long as we are able to take out our cost, expenditure and can contribute a sufficient amount of revenue in the form of a profit and at the same time we are able to provide services to the customer, IRCTC does not find any need to increase.

Once it is felt that there is a mismatch between the two, IRCTC management is free to take a call. So in that case IRCTC enjoys autonomy. Rest of the thing is history. Let us forget and move on.

What is the run rate of tickets per day which is being booked? Would you have that figure on you?
I can tell you the figures of the last quarter, July, August and September figures. In July, IRCTC could book around 3.43 crore tickets and in August, it was 3.82. In September, it was 3.95. In any case, October is a festival period and in November also we are going to have a good number. So the number of tickets are increasing because of the increased 2S class also and in other categories like sleeper, AC chair car, AC 2-tier we have found an increase.

Why is IRCTC looking at diversifying into the hospitality industry? Getting into the hotels and the hospitality business means you will have to invest a lot and it is not a business where you will enjoy some degree of monopoly.
I would like to mention that IRCTC works with many hotels and we work on a commission-based model. It is only in the budget tourism where we are providing, where we are in the process of making a few budget hotels at a few locations where we have some investment. Our model is such that whatever capital we invest is taken into consideration while realising the license fee.

Now properties are getting created meanwhile we are also providing the services. For example, for any budget hotel, IRCTC is providing a capital support of Rs 20 crore or so. The cost of the construction is going to be borne by our service provider or our licensee who is now our partner and in the end, that cost is gradually getting reimbursed through IRCTC in the form of the license fee.

It is a win-win situation for the company where the investment is returned back gradually with inflated returns. This is a very unique kind of a business model proposition. Generally we are not a very asset heavy company. We have only (two, three offices of our own and our 18 Rail Neer plants which are coming up, out of which 15 have already been commissioned and six to seven are budget hotels. The rest of our general model is based on a commission based model where we are providing them a platform to sell the things and earn through commission.

You are a high margin, asset light, technology platform company where the cost of technology upgradation is not that high and the cash flows which you are generating will keep on multiplying higher. Are you looking at increasing your dividend policy or beyond a threshold are you unlikely to give the cash back and look at creating new avenues of growth?
We have recently passed through very tough times and the year has been very bad for the hospitality sector. Our two segments have started generating profit. Internet ticketing and packaged drinking water both have landed now in the profit range. In catering, we have reduced our losses to the extent that in this quarter the losses were only Rs 19 lakh. Maybe in the next quarter, we would be able to cover that up also and once the cooked food services open, we are going to be even better.

Tourism is going to take some time and the third wave apprehension is also there despite the positivity. So let us wait and watch the situation. If there is a surplus kitty, then we will certainly follow the DIPAM guidelines in the matter and inform our investors accordingly.



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