This is about a PSU.
But the narrative, for a change, doesn’t hinge on its poor performance, humungous losses and inability to rebound or find buyers. This is simply because we are talking about IRCTC here.
A subsidiary of Indian Railways, created in 2002, IRCTC has become synonymous with mega success. It makes headlines routinely for its record-breaking performance – a week back it was in news for a whopping 500 percent gain in its stock price in as less as four months’ time after a bumper listing on the stock market.
Its fundamentals are solid, and it seems poised to scale new heights in the near future. Few PSUs have been able to achieve what it has.
So, how did the Indian Railways subsidiary, currently in charge of online ticketing, catering, packaged drinking water and tourism, manage to script such a jaw dropping success story while most state-owned organisations floundered?
Nothing’s favoured IRCTC more than having Indian Railways as its parent company. It has meant assured business all along - be it in online ticketing, tourism or catering food to passengers. In fact, it has the sole right to sell online tickets of Indian Railways and other agents, namely MakeMyTrip, Paytm, etc. have to rout their booking through the IRCTC platform. It also has the sole right to cater food and packaged water at stations and inside trains.
Despite this massive advantage, it took the company almost a decade to build its presence and become profitable.
The digital path did not pay off immediately. In its early days, plagued by a slow website and technical glitches it failed to stop customers from queuing up before physical ticket counters.
To overcome the obstacles, IRCTC worked on bettering its website features and functionalities and of course its speed. It added new services and launched a mobile app in 2014. All these along with faster internet speeds in India finally helped it draw hordes of travellers to its website.
Business picked up and circa 2015, IRCTC saw a dramatic turn in its fortunes. It finally managed to tap into a major chunk of the 23 million people that travel by train daily.
Since then, there’s been no turning back as it achieved one milestone after another.
Every morning, millions open the IRCTC website to book online tickets at tatkal or the short-notice ticket. The ease of access has actually driven up the number of travellers by train India.
From 29 tickets booked in a day in 2002 to 13 lakh tickets in day now – it’s come a long way. Currently, IRCTC can handle 3 lakh users simultaneously to handle any surge in demand and can book 15 lakh tickets in a day. Ability to handle such large volumes has made it Asia Pacific’s largest ecommerce – it is said that www.irctc.co.in, is one of the most-transacted websites in the Asia Pacific region.
No wonder then, 76 percent of IRCTC’s profits and 32 percent of its revenue came from internet ticketing for the quarter ended 31 December 2019.
Apart from the e-ticketing platform, other businesses of have managed to rake in profits as well. Prominent among those are tourism packages, hotel and flight ticket bookings, catering and packaged drinking water. These have consistently posted double digit growth. IRCTC’s large customer base alongside the fact that it has the sole right to provide catering services and packaged drinking water at railway stations and trains in India has helped it gain maximum market share.
To further its position and keep rewarding its shareholders, the company is now diversifying into other areas such as non-railway catering, e-catering, budget hotels and executive lounges.
But the most noteworthy of all has been the move to roll out private trains. In October last year, the first one called Tejas Express started plying between Lucknow and Delhi. Now its all set to launch the third one. All tickets are sold online and IRCTC gets to fix fares and take charge of catering and other services.
Such sound business plans have delighted shareholders and going forward will help in tackling capacity constraints of the Indian Railways alongside securing funding for infrastructure development. Could it get any better than this?