MUMBAI | NEW DELHI: The government’s push towards a digital economy has been a sore point for one of its own and among the country’s biggest ecommerce firms, the Indian Railway Catering and Tourism Corporation (IRCTC).
The government’s decision in November 2016 to withdraw service charge on etickets, to promote digital payments, cost IRCTC a 26% drop in internet ticketing revenue to Rs 466.05 crore in financial year 2016-17. IRCTC used to levy a service charge of Rs 20 on every non-AC eticket and Rs 40 for every AC eticket. At 30%, internet ticketing forms the second-largest category for IRCTC.
The online railway-ticketing platform sold about 209 million tickets through 2016-17, a modest 5% increase from about 199 million tickets sold in the year before. The value of tickets booked online increased just 2% to Rs 24,485.21crore.
That is still much higher than India’s largest online travel agency, MakeMyTrip, which recorded about 9.3 million transactions in 2016-17 with gross billings of $2.3 billion, or Rs 14,800 crore.
IRCTC clocked a 4.7% increase in total income at Rs 1,596.31 crore in 2016-17 even while both gross margin and profit before tax grew just over 7% to Rs 353.42 crore and Rs 211.71 crore, respectively.
However, service charge withdrawal took a toll on operating margins, which came in lower at 41.17% in 2016-17 as compared with 42.93% in 2015-16.
IRCTC’s key revenue-churning verticals include catering and hospitality, bottled water Rail Neer, travel and tourism, and internet ticketing. Travel and tourism grew 41% in 2016-17 to Rs 527.35 crore, contributing the most to the company’s revenue at 34%.
“The impact (of scrapping service charge) will be more visible in the current financial year (2017-18). However, we are trying to make up for the revenue loss through the travel, tourism and hospitality segments,” IRCTC chairman MP Mall told ET. “We are launching new tourism circuits to make the most of increasing domestic tourism… Also, we are launching various luxury initiatives for foreign tourists.”
Of the Rs 1,246.3 crore worth of expenditure that the company clocked in 2016-17, about Rs 100 crore of annual expenditure was accrued on the back of the ticketing system on the website, marketing, operation and after-sales service, IRCTC said in its annual report for 2016-17.
With low-cost airlines also impacting the number of passengers availing IRCTC’s value added tour packages, which fell by 40% this year, the firm is now looking to build its topline through monetisation of its website and mobile apps.
“There’s a huge opportunity there (to earn revenues),” said Mall. IRCTC has also widened the fleet of trains for its on-board catering service by more than three times in a bid to boost revenues.
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