Скачать или смотреть How IRCTC Turned Train Travel Into a Billion-Dollar Business

Indian Railways (IR) recovers only 57% of the travel cost on an average.
IRCTC reported a net profit of Rs.255 cr in the quarter ended Dec 2022.
Two seemingly contradictory statements. For many of you, this might not make sense until you realise IRCTC is just a subset of IR. Indian railways has many subsidiaries for building coaches, laying railway lines, managing freight operations etc., One such subsidiary is IRCTC whose sole responsibility is to issue railway tickets online and provide catering service. It is the most profitable subsidiary among all subsidaries. Hence the dichotomy of IR being a loss-making entity with IRCTC as its profit making subsidiary.
Incorporated in 1999 to upgrade and maintain the hospitality services at railway stations and on trains, IRCTC became an indispensable profit driver for IR in no time. IRCTC revenue comes from 4 major activities
Online ticket reservation
Catering & Hospitality :
Providing packaged drinking water (Rail Neer)
Travel & tourism
Online ticket reservation :
Here are few eye popping stats about ticketing division of IRCTC
IRCTC is one of the most transacted websites in Asia Pacific with a transaction volume of over 34.5mn per month and 6.27mn logins per day
1.1mn tickets are booked per day in IRCTC website and app in FY 22
IRCTC has market share of 80% of reserved train tickets
All these impressive stats aren’t the result of IRCTC’s product superiority (Remember? Once IRCTC used to be worse than Internet explorer) or great customer experience or deep discounts. But with one unassailable advantage - Monopoly. IRCTC is the only authorised entity to issue railway tickets online.
Customers of Indian railways are no different from that of iPhone users. iPhone users can use any operating system until it is IOS. Same way IR customers can reserve seats only via IRCTC. Meaning,
Any upside in e-ticketing growth is completely captured by IRCTC
IRCTC doesn’t need to sweat much in upgrading customer experience very often and hence can keep costs extremely low
Result? Very few can dream of EBIT IRCTC’s ticket segment boosts.
85%! Insane. Isn’t?

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Source: IRCTC FY 22 corporate presentation
Catering and hospitality
As in online ticketing, IRCTC is the only authorised entity to do catering service in railways stations and in trains. Catering comes under three category
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I am personally bullish about e-catering growth. Users are already used to the convenience of getting food at their doorstep, thanks to Zomato, Swiggy & VC monry :) As government launches high speed trains such as Vande Bharat catering to upper middle class, e-catering can easily become a significant contributor to IRCTC.
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Source: IRCTC FY 22 Annual report
Packaged drinking water:
IRCTC sold ~22.6k water bottles every hour in FY 2022. Another astounding fact!
As per IRCTC’s red herring document, total water demand in railway station is ~1.8 M litres per day and Rail Neer is satisfying only 45% of the demand. IRCTC ramped up production capacity across India to capture the increasing demand.
Indian Railways has made the distribution of Rail Neer in railway stations mandatory depending on their distribution capacity and capability. However, in the places where the Indian Railways is not able to distribute, IRCTC approves certain companies through tender bidding to provide packaged drinking water.

IRCTC shares a part of its revenue to the Ministry of Railways (MoR) and the total share of such contribution was Rs.420 crore (~2.5% of revenue) in FY 22. Contribution to the revenue of MoR comprises Haulage Charges, Railway's Share and Dividend.
Otherwise all finance metrics are looking very healthy.
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How do future prospects look for IRCTC?
Plan to expand premium train service augurs well for IRCTC: Budget 2022 laid out a grand plan of introducing 400 semi-high speed trains (Vande Bharat) in next 3 years. Users of Vande Bharath trains are the core TG of IRCTC who books ticket online, pre-book food and willing to pay premium for the services offered during travel.
Monetising IRCTC website through digital advertisement: Millions of users visit IRCTC each day. Work is already in progress to monetise the attention of IRCTC users. But this area definitely need a big push.
Selling Rail Neer packaged water outside stations: With new production capacity in place, there is enough spare capacity (current plant utilisation - 45%) to produce water bottles for domestic customers. Though IRCTC needs to build branding and distribution muscle for this to go through.
All said and done, GOI plays a critical role in determining the fate of IRCTC balancing shareholders’ and citizens’ interest at the same time.