Business Model of IRCTC | How does IRCTC Make money

Abinaya Arangarajan Abinaya Arangarajan
Aug 18, 2021 5 min read
Business Model of IRCTC | How does IRCTC Make money

Of course, being an Indian, you would definitely travel a lot by train even if the distance is literally from one city to another. But what if you have to itinerant from one state to another for instance- You canโ€™t run for each train in each station from Chennai to Mumbai right? Thatโ€™s Why the Indian Government established IRCTC - an effortless e-ticketing booking website & mobile app, scheduled train system, hospitality and catering services to travellers.

Besides, IRCTC promulgates One-Stop Solutions such as Tour Packages, Packaged drinking water Lounges & restaurants according to the touristโ€™s budget and global reservation.

IRCTC launched on 27th September 1999 and over 20 years the organisation has become an ultimate revenue source in the development of GDP in India. Currently, the corporation is worth 460 million USD and earning around 900 USD per day by generating services.

Where does IRCTC operate?
Main Products and Services of IRCTC
Target Audience of IRCTC
Business Model of IRCTC
What is unique about the IRCTC business model
FAQ

Where does IRCTC operate?

IRCTC operates around and across India, 14 Rail Neer plants at Nangloi, Danapur, Palur, Ambernath, Amethi, Parassala, Bilaspur, Hapur, Sanand, Mandideep, Jagiroad, Nagpur, Sankrail and Maneri;

These centres have been established for low-cost packaged drinking water to tourists. Moreover; 11 Base Kitchen has catering services which are located in New Delhi, Patna, Mumbai, Central Mumbai, Ballarshah, Nagpur, Howrah, Balasore, Chennai, Kolkata, Kharagpur, Sealdah and Secunderabad.

With the expectation of services, IRCTC bestows 5 zones offices at New Delhi, Mumbai, Chennai, Secunderabad and Kolkata.

Ten regional offices at Lucknow, Chandigarh, Bhopal, Patna, Ernakulam, Bangalore, Bhubaneswar, Ahmadabad, Guwahati and Jaipur.

Besides; IRCTC owns One e-ticketing and tourism office in New Delhi.

Other than that, IRCTC offers foreign destinations to the USA, ย Russia, Australia, Europe, Hong Kong, Nepal, Macau, China, Dubai, Thailand, Singapore, Malaysia and Sri lanka etc.


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Main Products and Services of IRCTC

IRCTC is an Indian Railway Catering and Tourism Corporation Ltd. with a main purpose to facilitate the development of rail tourists across the country. Apart from railway, IRCTC provides domestic and international tourism that subsumes flight or bus tickets, accommodations, tour packages inside and out- sightseeing and other travel needs.

Furthermore, IRCTC eases foreign tour packages to Dubai, Thailand, Hong Kong, China, Nepal, USA, Singapore etc.

Does it sound so fun, when you are travelling on IRCTC along with your friends, Damn, what else is needed? When IRCTC is ready to provide all facilities you are looking for from the beginning to end of your journey at an affordable price which depends on the booking class- AC first class, AC 2-Tier, AC 3-Tier, First class, AC Chair Car, Sleeper and second sitting. For instance, if you are in an AC F-class then the fare costs an arm and a leg.

IRCTC provides Air Packages, Rail Based Tourism, Tourism accommodation, Air e-ticketing, Bus ticketing and sells packaged drinking water.

Target Audience of IRCTC

IRCTC focuses on the citizens who travel from one place to another. Additionally, as of 2019 more than 20 million users have been registered on the IRCTC portal.

Business Model of IRCTC

The IRCTC offers five major services to the Indian public. The services offered are E-Ticketing, Packaged Drinking water, Catering, Tourism and State Teertha.

As of 2021, the IRCTC makes most of its profit from e-ticketing and catering services as it provides 63% and 22% of the total revenue respectively.

Travel and tourism contribute to 7% of the revenue with packaged water about 8%.

The Tatkal scheme by IRCTC is a scheme that is widely used by people in which people can book the tickets for travel one day prior to their travel on the Indian Railways Internet Portal.


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What is unique about the business model of IRCTC

What makes IRCTC stand out apart from the fact that it is a monopoly in India are the services offered by the company:

E-Ticketing

The Internet ticket sale by IRCTC was launched in 2002 and it is the only authorised application to sell railway tickets by the Indian Railways. The website is managed by TCS. IRCTC books nearly 8 lakh tickets daily through this feature.

Catering

IRCTC is the largest catering company operating in India. In 2020, catering accounted for 38% of the revenue. The catering services given by IRCTC are Static Catering, Mobile Catering Business, E-Catering and other services like executive lounges, budget hotels at major railway stations, etc.

Tourism

IRCTC offers budget and deluxe packaged tours for foreign and domestic tourists. The company also offers adventure tourism packages that include activities like water sports, wildlife treks, etc. It also offers services like Air tickets and corporate travel, Mass tourism, etc.

Packaged Drinking Water

IRCTC has a packaged drinking water service known as Rail Neer that offers pure and safe packaged water to customers. On average, it sells about 34 million water bottles per month.

State Teertha

State Teertha is a scheme sponsored by the state governments for pilgrimage trains and due to the COVID pandemic, this scheme did not see much success. ย 

Conclusion

Gone are the days when long queues were the only way to book a railway ticket. With the IRCTC offering online ticket booking people from anywhere in India with a smartphone can book their tickets hassle-free.

Despite the COVID pandemic and the profit drop of 26.6 percent suffered by the IRCTC, the company has bounced back. The expected growth in online ticketing with a CAGR of 17% in the upcoming years; the growing catering industry is also expected to have a growth rate of CAGR of 18% making the IRCTC a successful venture.

FAQ

What is IRCTC?

Indian Railway Catering and Tourism Corporation(IRCTC) is a subsidiary completely owned by the Indian Railways. It provides services like ticketing, catering and tourism.

Is IRCTC a private company?

No, IRCTC is majority-owned by the government of India.

What is the revenue of IRCTC?

IRCTCโ€™s total revenue for FY20 was INR 2353.53 crore with a net profit of INR 528.57 crore. As of 2020, the companyโ€™s net assets are valued at US $460 million with total equity being US $ 190 million.

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