In Conversation With IRCTC's CMD Sanjay Kumar Jain

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Watch In Conversation With IRCTC's CMD Sanjay Kumar Jain - NDTV Profit on Dailymotion

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00:00Good morning and welcome to Earnings Edge right here at ATV Profit.

00:03We are now taking stock of IRCTC on the back of their quarter 1 numbers.

00:08Revenue grew by roughly around 11 odd percent while margins, while D grew compared to the

00:12same time last year, profitability was very strong up roughly 33 odd percent.

00:17To talk about the numbers and a little bit more on the segmental performance of the company,

00:21we are now joined by Mr. Sanjay Kumar Jain, the CMD of IRCTC.

00:26Good morning Mr. Jain and thank you so much for joining us today.

00:29I want to just start with, you know, the quarter 1 numbers.

00:33It's been a decent set of quarters, you know, which is impacted by, you know, elections

00:37as well as other heatwave and other issues as well.

00:41Talk us through, you know, how has this quarter been because we have seen some growth in segments

00:47such as, you know, catering as well as rail need, but seen some degrowth in tourism and

00:51internet ticketing.

00:53What led to this particular quarter on quarter impact and if you could talk us through the

00:56demand environment as well.

00:59Puneet, first of all, I wish good morning to everyone and let me clear you that this

01:11is not the excellent result only, it is the highest ever Q1 result, both in revenue and

01:18margin and another thing, all our segments except tourism has done equally well, they

01:27all grew in two digits and in tourism, yes, certainly because of code of conduct, model

01:34code of conduct due to election declaration, we could not do good, but we will be coming

01:43back very quickly in this quarter.

01:47Now, I just want to talk about the business per se, sir.

01:52As you get into quarter two, how are you seeing the demand environment currently?

01:57Are you seeing like starting July, have you seen an increased, you know, from passengers

02:02to go out and travel a bit more?

02:04What is it that you are seeing on the ground currently?

02:08You see, going forward, the environment in India today is that the investment in rail

02:18infrastructure is growing, economy is booming and we are in an environment where we are

02:25expected to get more number of trains in the days to come, so our all segments, be it catering,

02:33be it rail, be it IT and tourism also, because we mostly do rail based tourism, these all

02:41are likely to grow exponentially.

02:43Now, I just want to talk about, you know, the tourism business specifically.

02:50You've seen, you know, in this quarter there was an impact on the macro factors, but this

02:55business has seen quite a revival from the last year, we've seen positive margins also

03:00coming in compared to last year when it was negative about 20 odd percent.

03:05What is it that's changed in this particular year?

03:07What has the company done to improve these margins and how does this year look for the

03:11company for the tourism space?

03:14You see, largely our tourism business, we are doing two kinds of tourism business.

03:20One is mass tourism through our Bharat Gaurav trains and in that, certainly, yes, we could

03:28not do much because of Model Code of Conduct, but other business like RTP rail based tourism

03:35packages that has seen a growth of 26 percent and in our outbound tourism, it has increased

03:43by 229 percent in this quarter and we are seeing the same kind of things happening and

03:50when and as now Model Code of Conduct has gone, eight state, we have already done MOs

03:56with them.

03:57So our margin certainly will grow because of all these segment, which are highly profitable

04:05we have, we have included in our business.

04:09Anything in particular that you know, that has come about in the last two quarters, any

04:13kind of new MOUs that you signed with certain specific states that you want to call out?

04:18Yeah, we have signed our MOU with DMRC, CBI and couple of other MOUs are in the way and

04:28we have signed MOU with state government, eight state government, we have already signed

04:33two other state government, already the process is on, most likely we will be signing in this

04:40quarter only.

04:41Now, just let me take a step back from the segmental performance and talk about, you

04:45know, the two main triggers for you, which is going to be Vande Bharat as well as, you

04:49know, a larger focus on high-speed rail trains.

04:54What is the long-term benefit that you are seeing from these particular segments, which

04:59are the verticals, because you are present across a few verticals, which are linked to,

05:03you know, the tourism space as well as, you know, ticketing as well, what is the benefit

05:08that you see from, you know, these two spaces, the Vande Bharat as well as increased penetration

05:13of high-speed rail?

05:14You see, Vande Bharat and high-speed trains are certainly going to add infrastructure

05:20for free and smooth movement of passengers across India and that will give challenge

05:29to the even low-cost airlines and the more number of trains are coming, the more business

05:37is there for IRCTC, our only challenge will be to grab as much as possible as quickly

05:43as possible.

05:44Thanks.

05:45Well, that's good to hear, sir.

05:46Just one follow-up.

05:47What is the current contribution from Vande Bharat specifically for IRCTC and are you

05:53the sole supplier for across verticals of rail near tourism as well as, you know, catering

05:59or is there some other supplier also currently for the Vande Bharat?

06:02No, no, you see, so far as catering is concerned and rail near is concerned, IRCTC has been

06:10given the mandate and in rail near, as we are not able to supply the complete demand,

06:17though we have improved our rail near production, we have enhanced the capacity and are further

06:23enhancing the capacity, but as we are not able to fulfill the demand, so other players

06:29are also coming, but once we put our things in place, we will be gaining too much.

06:37You can specify on what's the current contribution from the Vande Bharat trains to revenue?

06:42It's a sizable one, you see, we have a total 51 pair of Vande Bharat, out of which catering

06:51we are doing on 48 Vande Bharat trains.

06:55So all the Vande Bharat trains are with us.

06:57So somewhere in the mid-teens, is that a number that we could go with?

07:02If you can't specify the exact number, somewhere in the mid-teens?

07:06Yes, certainly yes, because now you see the trains, the future trains are only Vande Bharat.

07:13So certainly when the number will add, so we will improve our share.

07:20Now just one question on the license fee, do you see IRCTC increasing the license fee

07:28any time over the next 12 to 18 months, because we are going to see a lot of demand, as you

07:32said, Q1 was affected due to Model Code of Conduct, but we will see, we are expecting

07:37a larger push on consumers from quarter three itself.

07:41Do you see any kind of impact on increasing the license fee currently?

07:46Do you see that happening over the next 12 to 18 months?

07:50Not now.

07:52My final question, sir, now margins we've seen for the internet ticketing segment be

07:56upwards of around 18%.

07:58You are guiding for better margins in the tourism space as well, and increasing the

08:03capacity of RailNil going forward.

08:05Do you see that this year will be a better year for margins for IRCTC compared to the

08:10last year?

08:11And how are you seeing the revenue potential, because there's a lot of impetus on growth

08:15in the second half itself.

08:18So if you could just guide us on these two things, margins across verticals, as well

08:21as revenue growth higher this year, because there's a lot of pressure on H2 to deliver.

08:27Good question.

08:28You see, what we are trying to do as of now, we want to improve our product mix, we want

08:36to improve certain segments which were laggard earlier, and our main target is to provide

08:45affordable facilities to the customers, so that we be competitive in the market, and

08:52we gain the major chunk of the market slowly.

08:55So our strategy would be at the moment, that add more and more number of business there,

09:02more and more customers there, and for that, even if we have to trade off with the same

09:08number of margins, we would like to add volume and the numbers.

09:16So our strategy is to improve the revenue first, and keeping and maintaining the same

09:21level of margins.

09:22Understood, sir.

09:23Revenue growth this year, while maintaining margins, it's a good outlook for IRCTC this

09:28year.

09:29Thank you, Mr. Jain, for joining us today and speaking to us on quarter one, as well

09:32as what looks like a good set of numbers, as well as a promising year for this particular

09:36financial year 2025.

09:38We wish you the best and look forward to our next conversation, but thank you so much for

09:41joining us today.

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