IRCTC shifts tracks to boost revenues

Written by Rajat Arora | New Delhi | Updated: Dec 16 2012, 06:36am hrs
Looks beyond Railways; hopes for 30% of its earnings to come from facility mgmt services, budget hotels

Almost two years after its on-board train catering services was discontinued, Indian Railway Catering and Tourism Corporation (IRCTC) is devising a new model to stay afloat, with less reliance on Railways. For its revival, the mini ratna PSU under the railway ministry is banking on its newly-started facility management division through which it provides a one-window solution for catering, front office, housekeeping, security, laundry, and horticulture services to private companies, government organisations and educational institutes. The corporate also has plans of setting up budget hotels near railway stations in state capitals and is in talks with several states for the allotment of land.

After the new railways catering policy was implemented in 2010, IRCTC lost the on-board catering services in around 250 trains and was left with a handful of trains, including a few Durontos and Rajdhanis. Its revenue from on-board train category came down from a staggering R321 crore (roughly 50%) in 2010-11 to R33 crore in 2011-12.

IRCTC hopes that the newly-started facility management division has a potential to contribute around 30% to its total revenue in coming years.

We are expecting our newly-started facility management services to make up for the loss in revenue caused in on-board catering services. We are already providing facility management at a few educational institutes, IT parks and government organisations and are also in talks with various government departments, PSUs and IT majors, said a senior IRCTC official.

At present, IRCTC is providing facility management services at NIFTEM, Sonepat, Bureau of Indian Standards and a few IT companies in Kochi, besides others.

The work on getting into the hospitality sector is progressing and we are in talks with various state governments for a tie-up. We plan to start budget hotels near railway stations in state capitals where the state government would provide land and we would build and operate the hotels as a concessionaire, the official added.

In 2011-12, IRCTC had a total income of R554 crore, whereas in 2010-11 its total revenues were R765 crore. In the past one and a half year, after the new catering policy was implemented, we have suffered a loss of around R250 crore in our catering business. However, revenues from our institutional catering, running cafes in government and private offices and sale of Rail Neer bottled water for Indian railways have seen a spike. From R229 crore in 2010-11, revenues increased to R250 crore in 2011-12, the IRCTC official said.

Along with catering, IRCTC has also spruced up its online ticketing business by converting itself into a full-fledged online travel agency.