Service charge withdrawal hits IRCTC’s e-tickets FY17 revenue

Indian Railway Catering and Tourism Corporation’s internet ticketing revenue dropped by 26 percent in FY17 after the government withdrew service charge on etickets to promote digital payments.

A report in The Economic Times stated that internet ticketing revenue dropped to Rs 466.05 crore despite a modest 5 percent increase in the number of railway tickets booked online on IRCTC platform. The online ticketing platform sold about 209 million tickets through 2016-17 compared to 199 million tickets sold the previous year.

The value of of tickets booked online increased just 2 percent to Rs 24,485.21 crore, said the report.

In November last year, the government had withdrawn service charges levied on tickets booked online to push India towards a digital economy. Prior to the decision, IRCTC used to levy a service charge of Rs 20 on every non-AC eticket and Rs 40 for every AC eticket.

Overall, IRCTC’s total income increased by 4.7 percent at Rs 1,596.31 crore in 2016-17, however, its gross margin and profit before tax grew just over 7 percent to Rs 353.42 crore and Rs 211.71 crore, respectively.

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

Of the Rs 1,246.3 crore worth of expenditure that the company clocked in 2016-17, about Rs 100 crore of annual expenditure was accrued 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 inculding catering and hospitality, bottled water Rail Neer, travel and tourism, and internet ticketing. In 2016-17, travel and tourism contributed nearly 34 percent 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 the paper.moneycontrol