Investors have reposed tremendous faith in us and we would like to repay it: IRCTC chairman
In future, there will be two private trains and maybe we will request railways for another route also.
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IRCTC had a fantastic debut on listing. What is your view?
I can only say that investors have reposed a tremendous faith in us and we would like to repay it. We still have not been able to digest it completely. Allow us to get into this completely. Yes it is a great listing and we are really enthused and, of course, this has put more and more responsibility on us to continue and do better. I can assure you that we will not leave any stone unturned.
As far as the business is concerned, you have primarily four segments -- ticketing, water, catering and tourism. What kind of revenue does each of these segments provide to the company? Now that the company is listed, what is the kind of uptick that you are expecting?
Among the four business segments, catering accounts for about 55% of revenue, tourism about 24%, internet ticketing 11% and Rail Neer 9.5% or 10%. But this will undergo change. In this financial year, the convenience fee has been re-introduced on internet ticketing. With that, the share of internet will go up and this year it will be only for seven months.
In the next financial year, it will be for the whole year. This distribution of products in our revenue metric will change. In addition to this, another segment which has emerged for us is private train operation. We had been given two routes and in the first route, the train is already operational. It was flagged off on 4th of October and so far, response is very good and much better than what we expected.
Public is also appreciating. We have to sustain and improve the level of service and infrastructure. We plan to start the second train in the first week of December. So, in future, there will be two private trains and maybe we will request railways for another route also. Gradually, we would like to operate more and more trains. So in future, this metric may change.
Could you give us an understanding of the kind of margins that four of these segments bring to the company?
Currently, the catering margin is about 10% to 11%; tourism is also 10% to 11%, Rail Neer is about 12% to 13%. In internet ticketing, we have a margin of about 30% roughly, which again will undergo a change the convenience fee is reimposed.
You spoke about the privatisation of the train routes, you already have two. One is already started and you said that you will ask the government to give you a few more routes. Have you identified in terms of which routes are you looking at right now?
Initially, when we were given to operate on two routes, we conducted demand survey for four-five routes. Out of that, we had listed three routes, of which, Lucknow-Delhi is already there. Second route is also decided. Third is in the south -- Madurai-Chennai is under consideration. Then we will do a demand survey for some more routes and wherever there is a demand, we will certainly go for it.
What is the kind of revenue addition you are looking at, from the privatisation of train routes? You have also said that for the first time, you will be compensating customers for delay of over an hour. How will that impact the revenue of the company?
We have done a complete financial analysis of this train on the Lucknow route. Our break-even is about 70% of occupancy and at that occupancy level, we will get a turnover of about Rs 50 crore per year and may be a margin of about 10%.
Now coming to the compensation for delayed payment, this is the first time that it has been introduced by IRCTC. This is just to show our faith in the system and show our accountability towards operation of the train. Of course, we have got this ensured. Our liabilities are limited to insurance premium.
You also said that starting September, you have started the service fee on online ticketing since it started in the ninth month of the year. What kind of revenue addition are you expecting this year from this additional fee itself?
With the number of tickets which are being booked and the service charge, roughly it will be about anything between Rs 320 crore and Rs 350 crore for this year and may be double for the next year when it will be the complete year.
Can you talk to us about the capex plans for the current year in each of the sector categories that you are operating at currently?
Currently, in catering, we have to modernise and upgrade the base kitchens, there are 46 of them. We have done phase one of modernisation where we had upgraded and automated. Now we will need to do complete renovation, pantry car modification and for tourism, we plan to buy two rakes of sleeper class for our domestic tourism products. In addition to that, for the private train operation, we intend to purchase two rakes which currently we have taken on lease and then for Rail Neer, we plan to put four more plants this year and next.
What amount have you set aside for all of this investment?
The system replacement for internet ticketing will cost around Rs 180-200 crore. For train, we intend to purchase at least two rakes at a cost of about Rs 50 crore each. For domestic tourists, rakes which we are planning will cost about Rs 80 crore. Rail Neer plant is about 12 to 13 crore per plant so may be about Rs 50 crore total for Rail Neer.
Last time when we spoke you also said that tourism in terms of cruise and cargo is also two sectors that you are looking at. Any progress on that?
Yes, for cruise, we have already tied up with one Norwegian cruise and we have booked a few passengers on that. Of course, it is just the beginning. For cargo, we have participated in a few bids but we did not succeed. But we will certainly go ahead.
Given all of these new segments that you are entering to and the kind of investment that you are putting in, what is your outlook for this year?
Outlook is quite positive that is call I can say.
Any growth rate you can give us?
Wait for a few days.