The Ministry of Railways has conveyed its decision to share the revenue earned from convenience fee collected by IRCTC in the ratio of 50:50 from November 1, IRCTC said in an exchange filing after market hours on Thursday.
Sharing started in 2014 in the ratio of 80:20 between IRCTC and the Indian Railways. The ratio was changed to 50:50 in 2015 but the charge remained withdrawn for three years from November 2016.
According to IRCTC’s Annual Report, it earned Rs 299.13 crore from the convenience fee (also called service charge) during 2020-21.
These gains were lower owing to the fall in railway ticket bookings after the pandemic came. IRCTC had earned Rs 349.64 crore in 2019-20.
The state-owned IRCTC is the only firm authorised to manage food services on trains and has a monopoly in the online ticketing and catering services for the Indian Railways.
Income from the convenience fee was the largest revenue earner for IRCTC in 2020-21. This is because income from the catering and comprehensive services fell from Rs 512.45 crore in 2019-20 to Rs 87.31 crore in 2020-21 due to Covid-related restrictions.
IRCTC shares traded 19 per cent lower at ₹ 739.35, underperforming the Sensex which was trading on a flat note.
“After this move, investor confidence will be hit hard. The government will earn roughly Rs 350-400 crore as additional revenue, but the impact on the valuation of IRCTC is likely to be big,” said an analyst at a large brokerage.“These moves will hurt sentiment as regards other public sector stocks,” he added.
The Indian Railway Catering & Tourism Corporation Limited(IRCTC)
Indian Railways currently earns from a slew of sources, including the booking of tickets, catering services, packaged drinking water and food sold in trains and at several railway stations.
IRCTC, which is a Central Public Sector Enterprise (CPSE) under the Ministry of Railways, is expected to release its financial results for the second quarter of FY22 on November 1.
Convenience fees charged from customers generated a sizable revenue for both IRCTC and the Railways. The fee is not part of the rail fare.
It is for the service of online ticket booking offered by the IRCTC.