The business model and growth of IRCTC in its catering and tourism division

By Editorial Tuesday February 7, 2023

The catering industry is a well-established division and demands service all throughout the year. In this sector, several thousands of customers are being treated with world-class service and keep on matching the standards of the customer’s requirements. There are several types of catering like one in event management but is not limited to one.

In our country, India, the catering business is a sustainable venture as it requires offerings at parties, weddings, ceremonies, and many more. Apart from all of these, the catering service of IRCTC is also a recognizable part that is keeping on giving stellar services. The Indian Railway has collaborated with several public and privately licensed contractors that handle the catering services.

IRCTC is one of the largest catering service providers of Indian railways and is owned by the Indian Government. IRCTC stands for Indian Railways Catering and Tourism Corporation Limited. It is a Centrally operated company in the Public Sector department of the Ministry of Indian Railways.

Services like catering ticketing and tourism are handled by IRCTC. IRCTC was formed in 1999 by the Indian Railways to take care of the catering and tourism section of the Indian railway stations.

What is IRCTC?

IRCTC or Indian Railways Catering and Tourism Corporation is owned by the Central Public Division of the Ministry of Indian Railways, Government of India. The objective for the creation of IRCTC was to provide catering and tourism services to all the Indian railway stations and also offer inexpensive accommodations, customer-focused touring packages, several promotions along with informational resources, and the global system of reservation for developing a sustainable growth of Indian tourism.

IRCTC is headquartered in New Delhi with several other offices in places like Lucknow, Chandigarh, Bhopal, Bangalore, Bhubaneswar, Patna, Ahmedabad, Ernakulam, and Jaipur. In New Delhi, IRCTC’s ticketing along with a touring office is situated. Some of the activities that come under IRCTC’s duties are E-ticketing, Travel and Tourism, Rail Neer or Packaged Drinking Water and also Catering with several Hospitality services.

Some of the manufacturing plants for Rail Neer are situated in Nangloi in Delhi, Danapur in Bihar, Palur in Tamil Nadu, Ambernath in Maharashtra, Amethi in Uttar Pradesh, Parassala in Tamil Nadu, Bilaspur in Chhattisgarh, Hapur in Uttar Pradesh, Sanand in Gujarat, Mandideep in Madhya Pradesh, Jagi Road in Assam, Maneri in Madhya Pradesh, Sankrail in Kolkata and Nagpur in Maharashtra.

There are about 11 kitchen setups in places like Howrah, New Delhi, Ahmedabad, Patna, Mumbai Central, Mumbai CST, Ballarshah, Nagpur, Balasore, Sealdah, and Kharagpur. The company also has about 5 zonal offices in New Delhi, Kolkata, Mumbai, Chennai, and Secunderabad. IRCTC also provides international services for several tour packages to countries like Australia, Europe, Russia, Hong Kong, the USA, Malaysia, Thailand, Nepal, Sri Lanka, and Macau.

The Industry of IRCTC-

IRCTC handles the catering and tourism department of the Indian Railways. It was during the 19th century when the railway system in India was gradually growing and people started traveling to different parts of the country. And they needed refreshments and food during their travels.

Currently, travel has risen significantly and the catering business is growing at a phenomenal pace. Reports indicate that in 2018 the revenue of the Indian tourism and hospitality sector was about $28.9 billion and is expected to reach about $50 billion by the year 2028. IRCTC is led by Smt. Rajni Hasija is a scholar in the field of science from Delhi University.

Smt. Rajni has a postgraduate degree in Human Resources and Management with a law degree. Smt. Rajni Hasija is the Director of Tourism and Marketing of IRCTC along with the Managing Director along with the Chairman of IRCTC.

With over 29 years of magnificent experience in the industry of Indian Railways, Smt. Hasija has led several top-executive posts in several undertakings of the public sector. She played a pivotal role in building the IRCTC website for facilitating online ticketing services.

Her impeccable leadership allowed the company to complete several time-constraint projects of IRCTC like the setting up of an online platform for ticketing during the 2010 Commonwealth Games, the Maharaja Luxury Tourist train, and many others.

The Business Model of IRCTC-

IRCTC was formed in 1999 and incorporated with the vision of the Ministry of Indian Railways. Previously, the Government of India completely owned the IRCTC until 2019, when the company opened itself to the public and got listed in NSE (National Stock Exchange).

The Indian Government owns about 67% of IRCTC. IRCTC is the only company in its industry to provide certain services to the Railway sector of India. These services include selling packaged water bottles on trains and several railway stations, e-ticketing, catering services, and many others.

The company was titled Mini Ratna in 2008 as a public enterprise and got the ability to utilize the funds in an independent manner. The ultimate objective of IRCTC is to provide unparalleled services in travel, tourism, catering, and several other similar services to the public. The tagline of IRCTC portrays itself as the ‘Lifeline of the Nation’.

The company is categorized into sectors like tourism along with hospitality services, e-ticketing for flights, trains along with buses, several tour packages for travels in the country and around the world, and providing packaged drinking water or Rail Neer.

IRCTC is one of the largest catering and hospitality services groups in India. Their business is extended to several passenger trains and railway stations in our country. The company looks after the catering operations in more than 460 passenger trains that include pantries like Rajdhani, Shatabdi, Gatimaan Express, and many more.

The service is also being offered to trains like Vande Bharata Express along with Tejas Trains in their pantry carriages. The efficient service of IRCTC is also present in train side vending or TSV on several superfast express trains that do not have a pantry system. Upon receiving an order from the passengers, the meals are picked up by the vendors for specific spots and provided to the passengers.

The base kitchen setup of IRCTC is also present that cooks good meals for the passengers. The Indian Government is setting up improved technology of CCTV cameras for streaming live of these services and providing the passengers with a QR Code for getting information on meal packets.

Along with these services, IRCTC also provides several fast food centers, refreshment rooms, several food plazas, and many similar offerings. There are executive lounges provided by IRCTC that offer services like WiFi, reclining sofas, facilities for showers, and many more to high-class and mid-tier customers.

This was taken from the airport lounges that provide similar offerings to the passengers. The executive lounges are present in stations like New Delhi in Paharganj and Ajmeri Gate sides, Sealdah, Madurai, Varanasi, Ahmedabad, Agra Cantt along with Jaipur. Retiring rooms are also being developed to provide top-notch services to passengers.

The Rail Yatri Niwas is being built in New Delhi and Howrah railway stations and the BNR Hotels are present in Odisha, Puri, Jharkhand, and Ranchi. The e-catering initiative by IRCTC is a smartphone-based application used by customers for ordering food from partnered restaurants.

Upon booking in advance, food is delivered to the berth of the passengers. In 2002, IRCTC started an online ticketing service for Indian railways and provided great convenience to passengers and customers for seamless booking of tickets. Reports calculated in 2022 suggested that there have been about 15.88 lakhs e-tickets.

The tourism website of IRCTC started with the goal to provide high-class service to customers. In 2015, the touring packages provided several services for both national and international trips like hotel bookings, sightseeing, and many more. The website also offers packages specific for tirtha darshan, cruise bookings, flight bookings, and many others for national and global markets.

There are reports that suggest that IRCTC generated most of its revenue from online ticketing services which was about Rs. 38,178.32 crores in the year 2021-2022. About 4,174.49 lakhs of e-tickets were made by customers which are significantly more than the previous year.

IRCTC’s revenue is about 63% from online ticketing systems, 22% from the catering business, about 8% from Rail Neer, approximately 7% from the tourism department, and others from several pilgrimage divisions.

The roadblocks of IRCTC-

The Mumbai Police made a case against IRCTC in 2016 for not following an efficient system for maintaining the data of the customers. Reports have suggested that the private data of about 10 million customers have been compromised due to the inefficiency of the company.

There also has been speculation that targeted advertisements have been made with the use of customer data that has come with several security breaches.

The collaborative process of IRCTC-

IRCTC in order to provide ease to the customers regarding booking tickets has been partnering with several payment providers in India through ATVM or the Automatic Ticket Vending Machines with the help of QR Code.

The company has also collaborated with several banks to provide better operations of payment services and create a travel credit card. These credit cards come with features like lounge service, several rewards, discounts, and many such offers.

The Central Government of India is also in the process to merge public sector enterprises like RVNL or Rail Vikas Nigam Limited with IRCON or Indian Railway Construction Limited, IRCTC or Indian Railway Catering and Tourism Corporation with the RailTel Corporation and RITES or Rail India Technical and Economic Services with Braithwaite and Co Ltd.

IRCTC is also very active on social media like Twitter, Facebook, and LinkedIn. IRCTC also has competitors like Interglobe Aviat., Indian Hotel Co., Delhivery, Devyani Internationals Ltd., Easy Trip Planners Ltd., Sapphire Foods, TCI Express, Chalet Hotels, Mahindra Holiday, Lemon Tree Hotel, ITDC, Thomas Cook and many others.

Several notable achievements by IRCTC include the semi-private train ‘Tejas’ from Mumbai to Ahmedabad in 2020, a payment wallet called iMudra for booking railway tickets, paying and sending money introduced in 2019, the e-ticketing platform for booking railway tickets was launched in 2020 and many more.

The survey suggests that IRCTC’s market capitalization is about Rs. 63,726 crores in the year 2021. The company is set to sustainably grow further and provide more value to the stockholders.