Interview| Let's forget the history and move on, says IRCTC's CMD Rajni Hasija

Just a week after her company’s stock recovered from the fallout of certain decisions, Rajni Hasija, chairman and managing director of Indian Railway Catering and Tourism Corp Ltd (IRCTC) is now looking to focus on the positive trend of the recovering Indian economy and is hopeful that IRCTC’s strong performance in July-September is replicated for the rest of the year.

Last week shares of IRCTC fell 27 percent intraday on September 29 after the company informed exchanges that the railway ministry had asked it to share half of all the convenience fee revenue it earned. They recovered later in the day after the decision was withdrawn.

In an interview with Moneycontrol, Hasija said that the company’s management has full powers to decide the rate at which the convenience fee can be charged for bookings tickets on its online platforms and that it’s now time to forget the past.

She added that IRCTC is expecting its trend of strong bookings to continue in the first half of November and December and is hopeful that a third wave of COVID-19 does not play spoilsport.

Edited excerpts:

Last week we saw the Railway Board pass an order to reintroduce the revenue sharing agreement for convenience fees with IRCTC, which was then withdrawn. Do you expect the board to try and reintroduce the agreement? What discussions has IRCTC had with the ministry on the same?

I would like to assure our investors out there that IRCTC’s management has full powers to decide the rate at which the convenience fee can be charged. This power was delegated to IRCTC in 2019, when the convenience fee was restored. The letter that was issued by the railway ministry last week mentions that the revenue sharing agreement has been withdrawn.

As far as whether the government is going to try and re-impose this agreement, I may not be able to comment on this. At this juncture, I think let's forget the history and move on.

With the number of COVID-19 cases fading, more people getting vaccinated, the economy recovering and the travel and tourism industry opening up again, what is your outlook now for the sector for the rest of the year?

I think the bad phase for the hospitality industry is now over and there are good days ahead. There is now a lot of positivity around the entire sector, hotels are running at full capacity, we at IRCTC are also getting good numbers for booking, the number of operational passenger trains has risen to more than 3,000 now compared to the 3,500 trains that were operating in the pre-COVID period. So we are nearly getting there and our railway bookings at the moment are even higher than pre-COVID levels. Earlier people were travelling on a need-be basis but now we see that luxury travel has also started happening. Our deluxe trains are also running at full capacity.

In packaged drinking water as well, sales have gone up because of the festive season and sales are rising in our catering segment, too. We provide catering services in 600 trains, out of which around 378 trains are running with pantry cars as well.

However, there is still some uncertainty surrounding a third wave of COVID-19, and if we don’t strictly follow COVID-appropriate behaviour, it might negate the progress we have made till now. So we need to keep our fingers crossed and follow all the protocols and we hope that trend continues.

In October you mentioned that daily train bookings had reached around 13 lakh. Do you expect bookings to remain at the same levels in the next two quarters or will we see a fall again?

October has passed and in that month around 4.38 crore tickets were booked on IRCTC’s online platform, which is much higher than the bookings we had in the last four months. In September, around 3.95 crore tickets were booked on IRCTC’s online platform. So you can see that trend is good.

We expect the trend of daily ticket bookings to continue at current levels till mid-November, around November 11, then there will be a slight fall in bookings. But we expect bookings to pick up again in December around the holiday season; sales of our travel packages and our tourism products have been good for December till now. And our air bookings are gradually picking up as well.

IRCTC had planned Rs 100-crore as capital expenditure in FY22. How much of that has been utilized and in which areas?

Out of the Rs 100 crore we have already given orders for Rs 45 crore. The second wave hit our capital expenditure plans a bit, but I think if things continue as they are, we would likely exceed our Rs 100 crore capex plans.

Our capex plan for FY23 will be higher than that of this year because our servers were installed in 2015 and will now require hardware and software updates. Wherever changes are required, wherever hardware is required to be replaced, wherever it is required to be strengthened, we will look to spend on the same.

We will also look to spend some more money and do some research work on our disaster recovery site also.

IRCTC had earlier said that it will look to earn from its data monetisation operations by pushing advertising revenues, or by tying up with banks to offer special discounts. What is the update on this?

IRCTC has a lot of potential as far as digital advertising is concerned—we have a website, we have a mobile application and other modes through which we can advertise products as well. We can certainly tap government departments which we have been able to do in the past.

We have also already tied up with Google and their DFP (DoubleClick for Publishers) tool, and we are getting a good amount of advertisement from that as well. This industry had taken a massive hit due to COVID-19, but now things are crystallizing and good offers are coming in.

We are also planning to launch our own payment gateway for online payment transactions. As of now we are testing our payment gateway internally and will launch it once we complete the licensing formalities with the Reserve Bank of India (RBI). Our gateway is called IRCTC iPAY and is currently available as a payment option on our website but to operate as an aggregator we need to have a licence from the RBI, for which we have already started the process.

You had tied up with the National Investment and Infrastructure Fund Ltd as strategic partner for private train operations in the country, but the rail ministry withdrew its last tender. When can we expect a new tender for running private trains? What is your outlook on private train operations in the country?

We are the only private company in the country that has actually operated private trains and, yes, we will bid for more routes to operate private trains when the government comes out with a tender. The ministry is coming up with new guidelines to operate private trains and a new tendering process, and I wouldn’t be the right person to comment on how long it would be before they come out with a new tender.

Before the outbreak of the pandemic our Tejas trains were operating at high capacity and we were making good profit from their operations. But after the outbreak of COVID-19, this particular segment has been adversely affected. We still haven’t been able to restore the occupancy level on our Tejas trains to pre-COVID levels. Yes, occupancy has risen due the festival period, but we will have to wait and see if that sustains. We are now exploring how to curtail our expenses and bring operating these Tejas trains on a breakeven basis. At the moment we are focusing on non-fare revenues to boost our margins.

Indian Railways has suspended all mobile catering contracts with IRCTC that involve providing food prepared at base kitchens in March this year. By when can we expect catering contracts to be restored?

We have already made a request and presented our case with the railway ministry and the minister is examining our request. There is some hesitancy at the moment due to the fear of a third wave and the ministry is going to do all due diligence before they decide on this issue.

IRCTC had planned a capital expenditure of Rs 200 crore to develop six hotels in Lucknow (Uttar Pradesh), Kevadia (Gujarat) and Khajuraho (Madhya Pradesh). What is the status of the same?

We are working on developing six hotels in Lucknow, Kevadia, and Khajuraho and one educational institute in Faridabad. Out of these hotels, one should be developed by 2022-end and three more will be ready by 2023.

IRCTC is a very asset-light kind of organization, our business model is different from the rest of the industry and we try to tap our strength by capitalizing the strength of others also. While we are looking to expand in the hospitality sector, we are not looking at investing directly into the sector. We are looking to partner with hotel chains and hotel operators to sell their holiday packages and other products through our online channels and earn a nominal commission fee from them. Unlike other online travel agencies, we charge very nominal fees from hotels.

Even for the planned hotels, we have taken land from the state governments and partnered with other companies to redevelop and operate these hotels. We have a revenue-sharing model with our partners for these hotels.

Is IRCTC looking to take any steps to further diversify its revenue operations in order to not be heavily dependent on one source of revenue? Are you also planning to foray into the cruise segment for bookings?

We have just started listing cruises on our website and have tied up with Antara Luxury River Cruises as well. We were earlier operating cruises in the luxury segment and now we have started them in the budget segment as well.

We are also looking to tie up with other cruise providers in Banaras.