IRCTC files for IPO, eyes up to 600 crore

  • Government to reduce its stake in the company by about 12.5%
  • The proposed share sale is part of the government’s plans to take rail entities public

MUMBAI : State-owned Indian Railway Catering and Tourism Corp. Ltd (IRCTC), which sells tickets for Indian Railways and manages its catering services, on Thursday filed draft papers for its initial public offering (IPO).

The government is looking to offload up to 20 million shares in IRCTC via the IPO, which could fetch the Centre around 500-600 crore. The stake sale will result in the government reducing its stake in the company by about 12.5%.

IRCTC’s business is divided into four segments — internet ticketing, catering, packaged drinking water under the ‘Rail Neer’ brand, and travel and tourism. While its sales rose 25% to 1,899 crore, its profit grew 23.5% to 272.5 crore in fiscal year 2019, compared to the previous fiscal.

The company is also one of the most transacted websites in the Asia-Pacific region, with a transaction volume of more than 25 million per month and 7.2 million logins per day and about 800,000 tickets booked every day through IRCTC website and Rail Connect.

Catering has, however, emerged as the firm’s biggest contributor to sales over the years. While more than half of its revenues at 1,044 crore came from its catering business as of fiscal year 2019, the internet ticketing business contributed about 12%. The remaining 444 crore came from its tourism and travel related services and 176 crore from its Rail Neer packaged drinking water business.

IRCTC provides mobile, static and online catering services to railway passengers.

While mobile catering is provided through pantry cars attached to trains or base kitchens in the railway premises, static catering is provided through ‘Jan Ahars’ that serve economy meals on platforms, food courts, refreshment rooms and food plazas. The firm managed 57 Jan Ahars, 169 refreshment rooms, 27 cell kitchens and 14 base kitchens as of June 30.

In September 2014, the firm launched an online food ordering service that allows rail travellers to order food from partner restaurants listed on IRCTC’s Food on Track app.

IRCTC also offers optional travel insurance for rail passengers as part of its new product offering and cross-selling effort. The scheme offers coverage of up to 10 lakh for death and permanent and total disability and 7.5 lakh for permanent partial disability for a premium payment of 49 paisa. Over 900 million rail passengers opted for this travel insurance as of June.

The railway ticketing and catering company, incorporated by the government in 1999, was conferred the Miniratna (Category-I Public Sector Enterprise) status on May 1, 2008.

The firm’s proposed listing on the stock bourses is part of the government’s plans to take public several entities operating in the railways sector.

In April 2017, the central government approved listing of five railway entities—IRCON International, RITES, Rail Vikas Nigam Ltd, IRFC and IRCTC. Of these, IRCON International and RITES made their market debut in fiscal 2018-19.

The government aims to raise 1.05 trillion from divestments in the current financial year, up from 80,000 crore it had budgeted in the last fiscal.

The divestment plan included listing of profitable CPSEs, minority stake sales, strategic disinvestments, buybacks of shares and exchange traded funds (ETFs).

In fiscal year 2018-19, the government raised about 85,000 crore, exceeding its budgeted target. While it raised 62,900 crore via IPOs, buyback of shares, ETFs and their further fund offers (FFOs), 15,913 crore was raised through strategic divestments and 6,157 crore came from sale of shares in private listed firms that it held through Specified Undertaking of Unit Trust of India (SUUTI).

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