Project 1

Key Factors Impacting I.R.C.T.C’s Future

Submitted towards partial completion of B.B.A (Semester VI), course – Financial

Modelling

By:
Aditya Tripathi, Hersh Vijaykumar, Sri Teja, Pallavi Rathore, Keshav Hurkat, Yash Kannodia
 Introduction

Overview of IRCTC
The Indian Railway Catering and Tourism Corporation (IRCTC) is a public sector enterprise under the
Ministry of Railways, Government of India. Established in 1999, it was formed to professionalize and
improve catering and tourism services in Indian Railways. Over the years, IRCTC has evolved into a
diversified organization, playing a crucial role in online ticketing, catering, packaged drinking water
(Rail Neer), and tourism.
As the exclusive entity authorized for railway ticket booking in India, IRCTC operates one of the largest
e-ticketing platforms in the world, handling millions of transactions daily. It also offers a wide range of
travel and tourism services, including luxury trains, pilgrimage tours, and domestic & international
holiday packages. The company has capitalized on digital transformation, integrating AI-driven
dynamic pricing, seamless e-payment gateways, and an advanced mobile application to enhance
customer experience.

Business Segments of IRCTC

IRCTC's operations are spread across four key business verticals:
1. Online Ticketing: IRCTC holds a monopoly in railway ticket booking in India, processing over
80% of railway reservations through its website and mobile app. The company has expanded
into air ticketing and bus bookings, competing with major travel aggregators like MakeMyTrip
and Ixigo.
2. Catering Services: IRCTC provides onboard catering for premium trains like Rajdhani,
Shatabdi, and Vande Bharat Express. It also operates food plazas, fast food units, and e-catering
services, collaborating with brands like Domino’s and Haldiram’s for in-train food delivery.
3. Tourism and Hospitality: IRCTC offers rail-based tourism packages such as Bharat Gaurav
Trains, Maharajas' Express, and the Buddhist Circuit Tourist Train, catering to domestic and
international travellers. It also provides tour packages to destinations like Dubai, Singapore,
and Thailand.
4. Rail Neer (Packaged Drinking Water): IRCTC manufactures and distributes Rail Neer,
ensuring the availability of safe and standardized drinking water at railway stations and onboard
trains. With multiple bottling plants across India, the company has a stronghold in the railway
water supply market.

Market Position and Competitive Advantage

IRCTC enjoys a strong competitive moat due to its:

 Monopoly in railway ticketing with over 90% market share.

 Exclusive agreements with Indian Railways for catering, tourism, and Rail Neer supply.
 Government backing, ensuring regulatory support and infrastructure access.
 Technological edge with an AI-driven ticketing system handling millions of bookings daily.
 Diversified revenue streams, including non-fare income from advertising and co-branded credit
cards.
Despite increasing competition from private train operators, low-cost airlines, and third-party travel
aggregators, IRCTC remains the undisputed leader in railway-related services in India. Its future growth
is driven by railway privatization, increased tourism demand, and digitalization efforts.
 Economic Indicators

International Engagements of IRCTC

IRCTC primarily works in India, but through strategic partnerships, rail component procurement, and
tourism, it has increased its global presence. Important foreign engagements consist of:

 Switzerland: Advanced coach design collaboration with Swiss Car & Elevator Manufacturing
Co.
 Germany: Linke Hofmann Busch (LHB) coaches are imported, improving passenger comfort
and safety.
 Japan: Cooperation on the high-speed rail technology-integrated Mumbai-Ahmedabad bullet
train project.
 South Korea and China: Purchasing railway parts and providing Indian Railways with
technical assistance.
 LHB Coaches: Are exported to Bangladesh and Mozambique to aid in the development of
regional rail.
 Coaches and locomotives: Are being supplied to support railway infrastructure in Sri Lanka,
Nepal, and African countries.

Economic Indicators of Key Markets

IRCTC's operations are influenced by economic conditions in India and its partner countries. The table
below summarizes key economic indicators (2023):

Country GDP (Trillion) Inflation Rate % Unemployment Population

Rate % (million)
India 3.5 5.5 7.2 1400
Switzerland 0.82 1.2 2.5 8.7
Germany 4.2 3.1 4.4 83
Japan 5.1 0.8 2.8 125
China 17.7 2.3 5.0 1410
South Korea 1.8 2.5 3.6 51
Bangladesh 0.42 6.1 4.2 166

Future Economic Trends and their Impact on IRCTC

1. India:
- GDP Growth is expected to remain strong (6-7% annually), driving higher demand for rail
tourism and e-ticketing services.
- Inflation Risks, rising operational costs may increase ticket prices, but demand is expected
to remain stable.
- Urbanization & Rising Middle-Class gives more disposable income will boost premium
train travel and tourism services.
2. Switzerland & Germany
 - Stable economies with low inflation ensure continuous collaboration on railway design and
safety improvements.
- Technological exchange will support IRCTC’s high-speed rail and modernization projects.
3. Japan, China & South Korea
- Bullet train investment from Japan will enhance IRCTC’s future expansion into high-speed
rail.
- Ongoing procurement of rail components from China and South Korea will keep
operational costs optimized.
4. Bangladesh & Mozambique
- Growing rail infrastructure in these emerging economies presents an export opportunity for
IRCTC’s LHB coaches.

Factors and their Financial Impact on IRCTC

Following are the factors having an impact on the IRCTC Finances,
Factors Projected Financial Impact
Tourism and Ticketing Expected to grow 8%-10% annually, in line with GDP growth.
Revenue
International Travel 15% growth due to rising demand for overseas tourism.
Packages
Operational Cost 5-7% decrease through automation and procurement efficiency
Optimization
Labour Costs Expected to decline due to increased automation in ticketing and
catering
Digital Transformation AI-based booking & dynamic pricing to increase profit margins
 Industry Analysis

Industry Overview
Making up almost 2% of India's GDP, the railway industry plays a significant role in the country's
economy. The industry is changing quickly as a result of growing modernization, privatization, and
digital transformation. IRCTC, a government-supported organization, uses its robust digital
infrastructure and exclusive agreements with Indian Railways to play a significant role in ticketing,
catering, and tourism.
Increased railway investments, the expansion of semi-high-speed trains, and increased tourism demand
are expected to propel the industry's growth at a compound annual growth rate (CAGR) of 5–7%.
IRCTC is well-positioned to benefit from these changes because of its high brand trust, exclusive
relationships, and diverse revenue streams, even if it is experiencing new competition from private train
operators and online travel firms.

PESTLE Analysis
Political
 Government policies on railway privatization and public-private partnerships (PPP) are shaping
the competitive landscape.
 Budget allocations for railway modernization and infrastructure impact IRCTC’s revenue
potential.
 Regulatory changes in GST, ticket pricing, and revenue-sharing agreements could affect
profitability.
Economic
 Rising disposable income and middle-class expansion drive demand for premium railway
services.
 Fuel price fluctuations impact operational costs and ticket pricing strategies.
 Economic slowdowns, such as during COVID-19, highlight revenue risks in tourism and
ticketing.
Social
 Consumers prefer hygienic, high-quality catering services, increasing demand for IRCTC’s
branded food offerings.
 Religious and heritage tourism, supported by IRCTC’s Bharat Gaurav and luxury train
packages, is growing.
 Digital adoption has shifted consumer behaviour toward e-ticketing and mobile bookings.
Technological
 AI-based dynamic pricing and automation are improving revenue optimization.
 IRCTC’s investment in secure digital payments, mobile applications, and cloud infrastructure
is enhancing customer experience.
  Integration of real-time tracking and predictive analytics is helping improve operational
efficiency.
Legal
 Changes in tax policies (GST on ticketing and catering) impact pricing structures.
 Compliance with data privacy and cybersecurity laws is essential for maintaining trust in
IRCTC’s digital platforms.
 Indian Railways may revise revenue-sharing agreements, affecting IRCTC’s long-term
profitability.
Environmental
 IRCTC is aligning with government initiatives for eco-friendly packaging, waste reduction, and
green energy adoption.
 The push for carbon-neutral trains and sustainable catering services increases initial costs but
offers long-term savings.
 Fuel efficiency improvements in railway operations may reduce environmental impact and
operational expenses.

Porter’s Five Forces Model

Threat of New Entrants – Low
 High capital investment and regulatory barriers limit competition in railway services.
 IRCTC’s exclusive government contracts make it difficult for new players to enter the railway
ticketing market.
Bargaining Power of Suppliers – Moderate
 IRCTC relies on Indian Railways and third-party vendors for catering, tourism, and ticketing
infrastructure.
 The limited number of rail infrastructure providers increases supplier power, but IRCTC’s
government backing ensures stability.
Bargaining Power of Buyers – Moderate to High
 Consumers have alternative travel options like low-cost airlines, luxury buses, and private
trains, increasing pricing pressure.
 However, rail travel remains the most cost-effective option for the majority of Indian travellers,
ensuring continued demand.
Threat of Substitutes – Moderate
 Growing competition from low-cost airlines and well-developed highway networks poses a
challenge to short-distance rail travel.
 IRCTC’s expansion into luxury train services, international tourism, and premium ticketing
helps mitigate substitution risks.
Industry Rivalry – Moderate
  IRCTC competes with MakeMyTrip, MakeMyTrip, and Paytm in online ticketing and Zomato,
Swiggy, and RailRestro in catering.
 The entry of private train operators like Adani and L&T in premium routes increases
competition, though IRCTC retains monopoly rights in ticketing.

Future Trends and Financial Impact

IRCTC is facing both possibilities and problems as a result of privatization and the growth of railway
infrastructure. Competition will come from the emergence of private train operators and internet travel
companies, but IRCTC's robust digital infrastructure, support from the government, and reputation will
help it maintain its position as the industry leader.
Premium service offerings, AI-based ticket pricing, and more disposable incomes are anticipated to fuel
revenue growth of 15–18% CAGR. Long-term profitability, however, can be impacted by legislative
changes like updated revenue-sharing plans and higher operating expenses. Maintaining solid financial
performance will require cost minimization and diversification into non-fare revenue streams, bus
reservations, and airline tickets.
 Company Analysis

Business Overview
The Ministry of Railways, Government of India, is home to the Indian Railway Catering and Tourism
Corporation (IRCTC), a public sector enterprise (PSU). It was founded in 1999, has a monopoly on
online train ticketing, and has expanded into packaged drinking water, catering, and tourism (Rail
Neer). To continue to dominate these industries, the business makes use of its exclusive railway
partnerships and digital infrastructure.
Booking train tickets, onboard dining, luxury and pilgrimage travel, and water bottling facilities are
among IRCTC's primary business activities. It has increased its market reach and revenue streams in
recent years by branching out into hotel reservations, corporate travel services, and airline and bus
tickets.

Product Portfolio
1. Online purchasing: Through its website and mobile app, IRCTC manages more than 80% of
all railway ticket reservations in India. To compete with MakeMyTrip, EaseMyTrip, and Ixigo,
the company has branched out into bus and airline ticketing. The user experience is improved
by features like waitlist forecasting, AI-based ticket pricing, and premium Tatkal services.
2. Services for Catering: IRCTC provides onboard services for high-end trains such as the Vande
Bharat Express, Rajdhani, and Shatabdi. It collaborates with Domino's, Haldiram's, and
regional food aggregators to offer food plazas, fast food restaurants, and e-catering services.
Initiatives for sustainability and hygiene, like waste management and environmentally friendly
packaging, are being put into practice.
3. Travel and Tourism Services: Under the Bharat Gaurav Scheme, IRCTC offers heritage tours
and opulent trains like the Maharajas' Express. It provides both domestic and foreign vacation
packages to places like Thailand, Singapore, and Dubai. A significant market is pilgrimage
tourism, which includes religious travel packages to places like Vaishno Devi, Char Dham,
and Rameshwaram.
4. Drinking Water Packaged by Rail Neer: IRCTC produces and distributes Rail Neer, bottled
water, to train stations and passengers. In response to growing demand, the firm is increasing
its production capacity and running several Rail Neer factories.

Geographical Segments
With ticketing, catering, and tourism services available in both urban and rural areas, IRCTC has a
national footprint. IRCTC has branched out into international tourism, providing travel packages to
Dubai, Singapore, and Thailand, even though India is still its core market. It also works with
international partners for component procurement and rail technology exchange, including Switzerland,
Germany, and Japan.

Customer Profile
IRCTC caters to a wide range of clients, including corporate customers, religious pilgrims, luxury
tourists, and visitors on a tight budget. The largest group consists of middle-class families who use
IRCTC for reasonably priced rail travel and food. Another important source of income is religious and
heritage tourism, which offers special packages for pilgrims visiting holy locations. IRCTC also
provides business clients with corporate travel options and caters to high-end passengers with luxurious
trains like the Maharajas' Express.

Competitive Moat & Strategic Advances

IRCTC enjoys a strong competitive advantage due to its monopoly in railway ticketing, government
support, and diversified business model. Its exclusive contracts with Indian Railways ensure a steady
revenue stream and operational stability. Additionally, its AI-powered ticketing system, e-catering
partnerships, and luxury train operations enhance customer satisfaction and revenue growth.
Despite increasing competition from private train operators and online travel agencies, IRCTC retains
its dominance due to strong brand loyalty, economies of scale, and regulatory backing. With continuous
investments in technology, sustainability, and service expansion, the company remains well-positioned
for long-term growth.

Financial Performance and Future Projections

IRCTC has demonstrated consistent revenue and profit growth, driven by its monopoly status, service
expansion, and digital adoption. In FY 2023-24, the company reported ₹4,434.66 crore in total revenue,
a 21.1% YoY increase. Profit after tax (PAT) stood at ₹1,111.08 crore, reflecting a 10.46% growth.
Looking ahead, IRCTC’s revenue is projected to grow at 11-12% annually, driven by increased digital
adoption, tourism demand, and premium train services. AI-driven ticket pricing and automation will
help improve operational efficiency and profit margins. However, potential regulatory changes in
revenue-sharing with Indian Railways could impact future profitability.
 References

1. IRCTC Annual Report 2023-24 – Financial and operational insights on IRCTC’s revenue, profitability,
and business strategy.

2. Indian Railways Budget 2024 – Government policies, railway infrastructure investments, and
privatization strategies.

3. SEBI Guidelines for PSUs – Regulatory compliance and corporate governance norms for listed public
sector undertakings.

4. MakeMyTrip & EaseMyTrip Reports – Competitive analysis of the online travel booking industry in
India.

5. Economic Times & Business Standard – Articles on IRCTC’s financial performance, privatization, and
industry trends.

6. World Bank Reports on Indian Railways – Data on railway sector growth, GDP contribution, and
modernization efforts.

7. IRCTC Official Website (www.irctc.co.in) – Service offerings, business expansion updates, and
ticketing statistics.

8. Reserve Bank of India (RBI) Reports – Macroeconomic indicators such as GDP growth, inflation, and
government spending that impact IRCTC.

9. Press Information Bureau (PIB) Releases – Official announcements on railway projects, policy
changes, and tourism initiatives.

10. Industry Research Reports (ICRA, CRISIL, and Deloitte) – Market trends, competition analysis, and
financial forecasts for the railway and travel industry.