Ser­vice Charge Waiver on Rail Ticket Book­ing may Hit IRCTC List­ing Plans

The Economic Times - - Economy: Macro, Micro & More -

PROFIT & LOSS

Ra­jat Arora & Dheeraj Ti­wari

New Delhi: The gov­ern­ment’s de­ci­sion to waive ser­vice charges on rail­way tick­ets sold on­line could af­fect its plans to list In­dian Rail­way Cater­ing and Tourism Cor­po­ra­tion on stock mar­kets be­cause the com­pany could land up in losses with­out ticket book­ing rev­enues.

“The list­ing po­ten­tial of the com­pany will come down since it will not be prof­itable any­more,” a top rail min­istry of­fi­cial said. The mat­ter will come up for dis­cus­sion when the road map for list­ing of In­dian Rail­way Cater­ing and Tourism Cor­po­ra­tion (IRCTC) is pre­pared, the of­fi­cial said.

In 2015-16, IRCTC posted reve- nue of ₹ 1,500 crore, of which around ₹ 550 crore came from ticket book­ing. The com­mis­sion IRCTC makes from ticket book­ing cross-sub­sidises its loss-mak­ing ven­tures such as cater­ing ser­vices. IRCTC re­ported a profit of ₹ 189 crore last fi­nan­cial year. The gov­ern­ment waived ser­vice charges on train ticket book­ing on the IRCTC web­site in Novem­ber 2016 to pro­mote dig­i­tal trans­ac­tion.

Fi­nance min­is­ter Arun Jait­ley in his bud­get speech had said that rail­ways will of­fer com­pet­i­tive ticket book­ing fa­cil­ity to the pub­lic at large. “Ser­vice charge on e-tick­ets booked through IRCTC has been with­drawn. Cash­less reser­va­tions have gone up from 58% to 68%,” he had noted. Jait­ley had also men­tioned in his speech that the gov­ern­ment will list shares of rail­way pub­lic sec­tor en­ter­prises such as IRCTC, In­dian Rail­way Fi­nance Cor­po­ra­tion and Ircon In­ter­na­tional.

Mar­ket ex­perts, how­ever, warn that there won’t be many tak­ers for IRCTC shares.

“Ei­ther rail­way has to pay IRCTC for its ser­vices or the com­pany needs to find other sources to boost its rev­enue. Oth­er­wise, there will be lit­tle in­ter­est from in­vestors,” said a mer­chant banker who re­quested not to be named.

The rail­way min­istry of­fi­cial quoted ear­lier said, “If waiv­ing ser­vice charges is a per­ma­nent plan, we don’t think there is any point go­ing ahead with the list­ing.” The per­son said the min­istry had floated a draft note for form­ing a hold­ing com­pany for 14 of its com­pa­nies. “Hav­ing a hold­ing com­pany would have en­sured that pro­ceeds from divest­ment ac­crue to the hold­ing com­pany, which the rail­ways can use for de­vel­op­ment and ca­pac­ity build­ing,” he said.

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