IRCTC, the catering and ticket booking division of Indian Railways, anticipates a rise in income, driven by better margins of approximately 15 per cent, in the foods vertical. This surge is expected to stem from pre-booked meals on trains like Vande Bharat; and expanded coverage through partnerships with food delivery platforms like Swiggy and Zomato.
Upgrade of 1400 stations under the Amrit Bharat scheme allows for tapping into “static business opportunities” which include food plazas, retiring rooms, and so on. Margins from the catering business was at 12 per cent for FY24 and earnings were.
At present, IRCTC is running catering services on 1,265 units (trains), which include over 470 high speed trains (where meal services are pre-booked with tickets). There are 120 prepaid trains, like Vande Bharat, 443 mail express trains.
“But as the new trains will get introduced, we’ll add numbers,” Sanjay Kumar Jain, Chairman and Managing Director, IRCTC Ltd, said during a post results earnings call. Jain said, introduction of more Vande Bharat trains by the Railways are on-cards.
“This opens for us a very good opportunity to add numbers,” he said adding: “(Catering on) prepaid trains will have certainly better margin or better revenue potential than the mail express because here, you charge the customer at the time of booking the tickets. So it is certainly more.”
E-Catering picks up
The e-catering business – bookings made through Swiggy and Zomato - has already crossed 1 lakh mark per day.
“We started this year (FY25) with around 60,000 bookings per day. It has crossed 1 lakh mark during this month only (May). So it’s a very good growing and already, we have boarded 2 main aggregators. So I feel that it’s good business for us and we have 15 per cent margin,”Jain said.
According to him, gross value of orders books were around ₹1.5 crore, per day with IRCTC’s margins being in the target range.
Scale up in services
Increase in segmental revenues (for catering) “underscores the increasing demand” and IRCTC’s ability to scale ops effectively, he said adding the company was “already working on long-term contracts”. In Q4FY24 (Jan – Mar), catering segment revenues were at ₹531 crore, up 34 er cent y-o-y.
According to Jain, incremental growth in the ticketing segment is expected in FY25 but other three verticals – catering, Rail Neer (bottled water services) and State tourism packages - present an opportunity for additional growth and can be tapped further.
“Our product mix will certainly change. And is changing quarter-by-quarter. As the product mix (catering) increases, profit margin of the segment will decide the ultimate things,” he said.