How Rajni Hasija spearheaded IRCTC's turnaround

 when rajni hasija took additional charge as the Chairperson and Managing Director of the Indian Railway Catering and Tourism Corporation (IRCTC) in February 2021, the public sector undertaking (PSU) was reeling from the body blow of the pandemic like other entities in the travel and tourism sector.

No stranger to the IRCTC, she had served two terms at the PSU in the capacity of Group General Manager, handling the IT business segment, and being overall in-charge of an entire zone. She also played a pioneering role in the inception and development of the internet ticketing site of the railways, www.irctc.co.in.

But those stints did not prepare her for the unprecedented challenges facing IRCTC—which focusses on rail ticketing, catering, tourism, and bottled water product Rail Neer—in 2021. “When I signed my first balance sheet as CMD, the total revenue from operations had fallen to Rs 783.05 crore in FY21 from Rs 2,264.31 crore in FY20, due to the pandemic. But we took it as a challenge, and the IRCTC team worked upon it, and the next two balance sheets were very good and [showed] remarkable performance,” recalls Hasija, who superannuated on May 31, 2023, after holding additional charge as CMD of the PSU for a little more than two years. She was also Director (Tourism and Marketing) at IRCTC for five years.

The recovery was remarkable. IRCTC posted an 88.5% jump in its revenue from operations to Rs 3,541.47 crore in FY23, the highest ever, compared with Rs 1,878.57 crore in FY22. Net profit also jumped 52.5% year-on-year to Rs 1,005.88 crore. The key contributor to revenue in FY23 was the catering business with 41.69%, followed by e-ticketing at 33.83%, tourism at 15.98%, and Rail Neer at 8.5%. Return on equity in FY23 was a solid 46%.

Hasija, winner in the Travel category of the BT-PwC India’s Best CEOs ranking, highlights that by the end of FY23, all business segments had been restored to pre-Covid levels and were turning a profit.

For the uninitiated, the scale of operations of IRCTC is gigantic, despite having just 2,229 employees. As the only entity authorised to provide railway tickets online, catering services to railways, and packaged drinking water at railway stations and on trains in India, IRCTC served over 7.7 million passengers in FY23, with 6.12 million daily logins and an average of 1.18 million tickets booked daily. From the 891 pairs of trains it catered to pre-Covid, it now caters to 1,284 trains.

As many as 14.8 million meals were booked on its e-catering platform in FY23, and it was present in over 474 trains equipped with pantry cars and 713 trains under train side vending (TSV). Its 16 Rail Neer plants produced 357.7 million bottles last fiscal and produce an average of 1.2 million litres of Rail Neer bottles per day. In the tourism business, it operated 140 chartered trains, and 91,555 passengers used its tour packages last fiscal.

For Hasija, the first few months after joining were a challenge, as the pandemic was at its peak and train travel and tourism had come to a grinding halt during the lockdown. Hasija remembers spending much of that time ensuring that passengers were refunded for their train tickets and that community kitchens and Shramik trains to transport migrant labourers operated efficiently.

But as a listed entity, profitability and revenue continued to be key focus areas, and slowly, as train travel resumed and the tourism sector got back on the recovery path, reclaiming the trust of passengers and convincing them to come back was the main priority.

Since railway ticketing was yet to pick up and full-fledged catering in trains only resumed from November-December 2021, IRCTC took that time to get its staff trained in safety standards through Bureau Veritas (a French firm specialising in testing and inspection), technical service provider TUV-Nord, and the Ashok Institute of Hospitality and Tourism Management under the India Tourism Development Corporation (ITDC). “A strategic decision was also taken to go for horizontal rather than vertical growth,” Hasija says, adding that several initiatives were taken to boost the catering and tourism businesses.

Bharat Gaurav trains, Tejas trains, an online travel agency certificate from the Ministry of Tourism, and a shift to a deluxe model of tourism from budget tourism helped the PSU in this journey even as it tightened its belt and cut expenditure.

Vikas Gupta, smallcase Manager and CEO, Chief Investment Strategist, at investment advisory OmniScience Capital, notes that IRCTC’s revenues had already nearly touched the pre-pandemic level of FY19 in FY22. And it had extraordinary growth over that in FY23. “In fact, FY22 had roughly the same level of revenues as FY19, that is, the pre-Covid year, and in FY23, the revenues were such that they had a CAGR of more than 17% from FY19 to FY23. Profits, too, have been growing at a good pace. FY24 again promises to be a 15% growth rate year, and this momentum is likely to be continued in the future, albeit at slightly lower growth rates, comparatively,” he says.

Gupta notes that one of the factors underlying that revenue growth was that trains with a pantry car increased significantly from nearly 400 to nearly 500 and were further supported by train-side vending on nearly 700 trains. “Tejas, Maharaja, Teerth, Bharat Gaurav, and air ticketing were other factors driving growth. Customers have responded well to the IRCTC’s theme packages, especially as pent-up demand comes back after the Covid hiatus,” he says.

And Gupta expects this growth to continue. The launch of more than 400 high-speed Vande Bharat and a similar number of Amrit Bharat trains, as part of the 3,000 new trains to be launched in the near future, and numerous railway station upgrades promise to aid the growth of IRCTC in terms of ticketing, catering, and tourism for several years, he adds.

Jinesh Joshi, Research Analyst at brokerage firm Prabhudas Lilladher, says that post-Covid, the pick-up in tourism has benefitted all companies in the travel segment, including IRCTC. “The rail PSU also took several steps, such as launching 10 Bharat Gaurav trains, that helped boost its business further. The major driver of IRCTC’s revenue remains the ticketing business, and we do not see much change in the non-suburban ticketing volumes or traffic,” he says, adding that any upswing in its earnings per share from the current level may be challenging. “The key earnings lever for IRCTC is an increase in the convenience fee or retail price of Rail Neer. However, we believe the possibility of any revision in the near term is limited,” he notes. Hasija agrees and says that ticketing through IRCTC has risen to 82% of the total tickets, and the rail PSU will now have to focus on resources other than the convenience fee, which was about a third of the total internet revenue.

Having spent 13 years at IRCTC in various capacities, Hasija is a firm believer in its bright future. “IRCTC’s business model is resilient,” she declares. According to her, catering will grow as more Vande Bharat trains come up and the dedicated freight corridor frees up more line capacity for trains. The demand for Rail Neer is also growing, and production capacity is being expanded.

Hasija’s term at IRCTC was followed by the appointment of Seema Kumar as additional CMD at the railway PSU. Recently, in January, Sanjay Kumar Jain was appointed as the CMD. IRCTC seems keen now to expand its footprint in the payments space and recently incorporated a wholly-owned subsidiary, IRCTC Payments Ltd.

As it embarks on its next phase of growth, the foresight and determination Hasija instilled in the PSU will hold it in good stead.

@surabhi_prasad