IRCTC on new tech track to ramp up revenues

IRCTC on new tech track to ramp up revenues

IRCTC on new tech track to ramp up revenues
The trailblazing journey of the Indian Railway Catering and Tourism Corporation (IRCTC) — a subsidiary of the mammoth Indian Railways — which started operations in 1999, has attracted considerable attention, since it has emerged as an unconventional, yet major player in the ever-growing Indian eCommerce space. In an interaction with N V Vijayakumar of Deccan Herald, IRCTC Chairman and Managing Director A K Manocha explains the new business model of the company, growing from the existing ticket-booking, catering and hospitality services.

The IRCTC has really set a new benchmark in the Indian eCommerce segment. How do you view the emergence of its platform?

We are fortunate to have 3.5 crore registered members, and they have really placed us in a unique position as a platform. Our net sales is two times more than that of the leading eCommerce company in India, and can handle more customers than any website in the country. For instance, during the peak tatkal booking session, we receive a record 80,000 transactions. We are happy to see that one-out-of-five online users in India visits our website, and we sell more than 2.1 crore tickets annually. We sold 13.45 lakh tickets on April 1, 2015. This was 2.5 times more than our peak sales of 5.5 lakh. The number is more than all the flight tickets sold by airlines globally.

Can you share details about IRCTC’s financial performance?

Backed by solid technology, IRCTC has emerged as the largest single destination in the country to book tickets for trains. This has helped the company generate total ticket sales/revenues worth Rs 20,620 crore, during FY2015, registering a growth of 34 per cent, compared with the same period of the last fiscal. We also registered a profit after tax value of Rs 130 crore, up from Rs 72 crore, in the same period of FY2014,  a growth of 80 per cent. Besides tickets, IRCTC succeeded in increasing its revenues via sales of Rail Neer, onboard catering services, and licence fees from outsourced catering vendors.

Can you elaborate on your game plan to create a full-fledged eCommerce platform?

We have already begun operating a ticket-booking platform. We have the mobile app ‘IRCTC Connect’, available for both Android and iOS, to book tickets. The Android app has already seen more that 50 lakh downloads. We have extended it by bringing on board e-meals. We also plan to supply flowers, and any other items a traveller would require. IRCTC is fully ready to foray into shipping merchandise from one destination to another, using its platform, and the strength of the Railways’ logistics. We are also operating packaged tour programmes in India and abroad. You can book your hotels and air tickets via IRCTC. We are running our own budget hotels in association with third party on the PPP model.

How are you ramping up the operations of IRCTC?

We are expecting an annual growth of more than 30 per cent in this fiscal as well. Also, for this plan, we have made concrete steps by tapping more of our existing resources. We are going aggressively on the e-catering services by partnering with over 100 suppliers on trains, and at stations. We have tied up with food vendors such as McDonald’s, KFC, Switz Foods, Idly, Bittoo Tikki Wala, Only Alibaba, Dominos Pizza, Haldiram’s, Bikanervala, Sagar Ratna, and Pizza Hut, among others, to offer our travellers a wide delectable menu. Recently, IRCTC also roped in Food Panda. We are planning to open up 145 food plazas across the country. We have established our own centralised kitchen, and our revenues from franchising eateries is also increasing.

Rail Neer has been assessed as a  Rs 10,000 crore business. Do you have any specific plans for it?

Rail Neer is IRCTC’s branded packaged drinking water for rail commuters. We admit that it is really a business division that is witnessing exponential growth. Besides our first plant in Nangloi in Delhi, which started operations in 2003, we have set up completely automatic water purification units in Patna and Chennai. We have also decided to open a new plant in Maharashtra. IRCTC has also identified locations like Bhopal, Nagpur, Ahmedabad, Bhubaneswar, Cuttack and Hyderabad to set up new plants on a PPP model, to meet the growing demand across the country. We are also planning to install a 220-litre-per-hour purifying capacity of 4,500 water machines in various parts of the country. Besides reducing the cost of water by 75 per cent, it will also give more employment opportunities, including empowering women through self-help groups across the country.

Will IRCTC also be known as a hospitality venture?

Hospitality is an important thrust area for IRCTC. We have budget hotels, tour operations, and tie-ups with majority of state governments for tour operations, tour packages in India and abroad, and so on. IRCTC’s tourism revenues have increased 200 per cent since 2008. We have been awarded for the second time in a row as the most visited tourism website. But here we want to be more than a hospitality venture by getting into other areas.

What are the ideas to monetise IRCTC’s growing traffic?

We have decided to go for data analytics, which was initiated six months ago as a pilot project. We are planning to further rope in a third party to do it in a professional way. We are ready to partner with any government body if there are any specific requirements.