IRCTC ticketing revenue drops 26% on service charge withdrawal

Indian Railway Catering and Tourism Corporation's internet ticketing revenue dropped by 26 per cent in FY17 after the government withdrew a service charge on e-tickets to promote digital payments.

A report in The Economic Times says internet ticketing revenue dropped to Rs466.05 crore despite a 5-per cent increase in the number of railway tickets booked online on the IRCTC platform. The online ticketing platform sold about 209 million tickets through 2016-17 compared to 199 million tickets sold in the previous year.

The value of tickets booked online increased just 2 per cent to Rs24,485.21 crore, said the report.

In November last year, the government withdrew service charges levied on tickets booked online to help push India towards a digital economy. Before this, IRCTC used to levy a service charge of Rs20 on every non-AC e-ticket and Rs40 for every AC e-ticket.

Overall, IRCTC's total income increased by 4.7 per cent at Rs1,596.31 crore in 2016-17. However, its gross margin and profit before tax grew just over 7 per cent to Rs353.42 crore and Rs211.71 crore respectively.

Since internet ticketing forms the second-largest income category for IRCTC at 30 per cent, the service charge withdrawal took a toll on operating margins. IRCTC's operating margin dropped to 41.17 per cent in 2016-17 as compared to 42.93 per cent in 2015-16.

Of the Rs1,246.3 crore expenditure that the company clocked in 2016-17, about Rs100 crore was incurred on the back of the ticketing system on the website, marketing, operation and after-sales service, IRCTC said in its annual report for 2016-17.

The ticketing platform churns revenue from other facilities including catering and hospitality, bottled water Rail Neer, travel and tourism, and internet ticketing. In 2016-17, travel and tourism contributed nearly 34 per cent of the company's revenue.

The government is now taking steps to make up for the revenue losses.  "The impact (of scrapping service charge) will be more visible in the current financial year (2017-18). However, we are trying to make up for the revenue loss through the travel, tourism and hospitality segments," IRCTC chairman M P Mall told ET.