IRCTC :: Business Model :: "Indian Railway Catering and Tourism Corporation Ltd"

Executive summary 

Indian Railway Catering and Tourism Corporation (IRCTC) is a public sector undertaking under Ministry of Railways and a fully owned subsidiary of Indian Railways, which was formed for upgrading, modernizing and professionalizing catering services, managing hospitality services at railway stations and promoting international and domestic tourism in India through public – private participation. IRCTC has diversified into many non - railway businesses such as air ticketing, travel services, bottled water (Rail Neer), budget hotels, food plazas and has recently introduced numerous value added services for the train traveler such as e – catering. 

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INTERNET TICKETING	TOURISM	CATERING	RAIL NEER
Key focus is primarily online train ticket booking through IRCTC website and mobile app	Key focus is tourism related products namely holiday packages, train tours, hotel and airline ticketing	Key focus is catering on trains linked to base kitchens, food plazas, fast food units, executive lounges, retiring rooms, ecatering and budget hotels	Key focus is on production and distribution of bottled water and construction of Rail Neer plants

IRCTC has grown at 29% CAGR since 2012 powered by internet ticketing and tourism segments. The internet ticketing segment contributed only 37% of the overall revenues (FY 16), but accounted for 83% of the overall gross profits. Other segments have shown low to negative profitability.

The key growth and optimization opportunitiesfor the different business segments

Internet Ticketing

Knowledge process outsourcing & Affiliate Marketing

• IRCTC has access to demographic and spend data of millions of users. It has a large user base of more than 4 crore users and daily logins of more than 40 lakh. Joining the hands with e-commerce, the variety and volume of such data may further surge dramatically.
•  Entry into this segment will leverage the huge customer data base with IRCTC and will be targeted at providing customer insights to companies through use of data analytics and data warehousing tools.
• The use of an in-house analytics team will ensure the privacy and confidentiality of sensitive IRCTC data. 

Value added services

• IRCTC hosts 6 lakh+ visits on its booking confirmation page per day. With myriad of Value Added Services that IRCTC already has, and others that it may offer in future, this a tremendous volume to create leads for online businesses and generate revenues by cross-selling products/services.
• Value added services will involve delivering various services either directly such as e-bed roll, book-a-meal, airline tickets, concierge service or through alliance with various service providers such as cab aggregators, food aggregators and event ticket aggregators and help in enhancing customer engagement and deriving topline growth.

Lead Generation Scheme

• Lead generation is the method of getting inquiries from potential customers for the purpose of expanding the scope of a business, increasing sales revenues.
• In the old pre-Internet days of sales, lead generation occurred at places like trade shows – visitors to a company's booth would fill out a card with their contact information and turn it in to receive a call back from that company's sales team. In the present world, this activity has now started happening online. IRCTC hosts 6 lakh+ visits on its booking confirmation page per day and more than 40 lakh daily logins to IRCTC website.
• There is a tremendous volume and opportunity to create leads for online businesses and generate revenues by providing those leads (inquires) products/services of other merchants. 

Digital Advertisement

• The large number of daily visitors to the website throws a opportunity of Digital advertising of IRCTC’s Soft Assets.
• The modern day Digital Advertising techniques though Double Click for Publisher (DFP) tool can be used to advertise in most optimal way. 
• Use of Captcha on website for differentiating between humans and machines can also be used for Digital Advertising.

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Tourism

Creation of a separate subsidiary for non-railway tourist segments

• Given that tourism is an industry with high competition requiring specialized human resources, IRCTC may consider creating a separate subsidiary for non – railway tourism services and products, as well as a separate marketing team.

Increasing market penetration in the air ticketing business

• The Indian aviation market is the fastest growing major aviation market in the world. 
• A dedicated strategy for this opportunity will enable the company to increase its market share in the rapidly growing air ticketing business.

Outbound and Religious tourism

• The company can generate substantial growth by providing international tour packages customized for tourists travelling both for religious purpose and sightseeing.
• There is also strong potential to tap inbound tourist for leisure and pilgrimage, especially Buddhist pilgrimage tourism.

Catering & Rail Neer

Expand E-catering business

• Introduce innovative online marketing strategies to ensure a faster growth of the e-catering business.
• New marketing channels such as Search Engine Marketing (SEM) and Social Media campaigns are recommended based on the behavior of the target segment which is mainly smart phone users
• These marketing channels will not only create awareness but also provide more accurate Return on Investment(ROI).

Improve base kitchen infrastructure and network

• The existing infrastructure of base kitchens needs to be improved using modern technology
• the base kitchen network should be expanded in order to have greater reach, higher quality control and more cost-effective operations.
• There is a need to attract reputed private catering players through an improved selection model as envisaged in catering policy 2017. 

Unbundling of catering service

• The policy envisages unbundling of food preparation and distribution to achieve quality in catering deliverables over IR.
• Operational efficiencies in delivery of catering services over the food production, logistic and distribution cycle will be enabled through a variety of IT and quality tools.
• The latter will assist in positioning a robust feedback mechanism to ensure customer friendly catering services.

Improving food quality and hygiene

• Food quality will be an outcome oriented aim by duly implementing a Comprehensive Quality Assurance Programme (CQAP) over the food production and distribution cycle.
•  Use of IT tools and quality processes will be an important component of the CQAP initiative.
• Hygiene initiatives will involve implementation of all food and beverage regulatory standards at onboard and off board locations.

Capacity enhancement and improved demand coverage over IR

• Faster capacity enhancement to achieve 70% demand coverage over IR by 2019. Achieving cost efficiencies in Rail Neer operations through PPP combining capital support from IRCTC will be strategic aim to grow and consolidate the business. 

Key business segments

According to the currentstructure, IRCTC is divided into four main businesses:

• Internet Ticketing
• Tourism
• Catering
• Rail Neer  

The following diagram elaborates on the key business segments:

INTERNET TICKETING	TOURISM	CATERING	RAIL NEER
• Internet train ticket booking   o IRCTC website   o Mobile App • IRCTC Wallet • IRCTC SBI Cobranded Credit Card	Air Travel • Air ticketing • Travel and tour packages (outbound and inbound) • Domestic air packages Train Travel • Train tour packages • Special trains / Luxury trains / Semi luxury trains • Other tours and services	• Departmental catering     o 5 Base kitchens     o 1 Central kitchen     o Food kiosks for DMRC     o RRs,Jan Ahaars & Cell Kitchens • Licensee Catering     o Serves food in trains     o Food Plazas     o Fast food units • E catering / Food on track • E bedroll • Executive lounge • Retiring Rooms • Budget Hotels	• Procurement of raw material • Manufacturing of Rail Neer o 5 IRCTC owned plants o 2 PPP based plants • Sales and distribution o Railways o Kiosks at stations on Trains

Disclaimer : This report is for information purpose only. No recommendation to buy/sell.