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Sagar Malviya, The Economic Times

Mumbai, 27 November 2015

Revenue from online ticketing on Indian Railway Catering and Tourism Corp crossed the Rs 20,000-crore mark during the year to March 2015, nearly double the turnover of India's largest online retailer Flipkart.

IRCTC generated Rs 20,620 crore, or nearly $3 billion, through online ticket sales in the last financial year, up 34 per cent from a year ago when it sold tickets worth Rs 15,410 crore. But unlike loss-making marketplaces, IRCTC posted profit after tax of Rs 130 crore, up from Rs 72 crore in the previous year.

"Bulk of the sales may be attributed to IRCTC's rapid growth in e-ticketing which has been due to its interface and setting up of a very robust process. Capacity enhancement was done to book 7,200 tickets per minute as against 2,000 tickets per minute in the existing system," said Sandip Dutta, public relations manager at IRCTC, which set a record in April when it booked 13.4 lakh etickets on a single day. That compares with 27 tickets a day when it began in 2002. In fact, 55 per cent of all rail tickets sold are booked online.

The government-owned portal posted a 19 per cent increase in income at Rs 1,141 crore, which mainly includes service charges on tickets, sales of Rail Neer water, onboard catering services and licence fees from outsourced catering vendors.

This is similar to online marketplaces where sales don't include actual goods sold but instead count commission from sellers and revenue from advertisements on their ecommerce sites. IRCTC's combined income from commissions on ticketing, travel and tourism was Rs 670 crore, a tad higher than Flipkart's turnover of Rs 659 crore earned from shipping fee and selling commission on its ecommerce portal.

By having a monopolistic position, higher web traffic and sales, IRCTC can attract several brands on its portal, feel experts. "A large part of the Indian population trusts IRCTC and brands across consumer, food and tourism can use it to advertise or sell their products on the portal," said Devangshu Dutta, chief executive at retail consultancy Third Eyesight.

Since IRCTC doesn't compete with any of the online marketplaces in India, Amazon has partnered the rail portal for two years with an annual guarantee of Rs 18 crore a year. India's ecommerce market is expected to breach the $100-billion mark by FY20, triggered by increasing internet usage, discounting and investment by online retailers, according to Goldman Sachs that has revised its previous estimate. The majority of an upward revision of 27 per cent is contributed by the e-tail segment, which is estimated to reach $69 billion by FY20.

ET View: Expand the IRCTC Menu

There is a huge potential to capitalise on the large and fast-growing cash-flow. The Railways now need to visualise IRCTC as a major-league online retailer, and not merely for rail tickets. IRCTC needs to be positioned as a huge online market place, bringing together buyers and sellers for myriad goods and services. It needs to leverage its expertise in bringing individually ordered food for passengers to provide doorstep delivery for a wide variety of goods and services. The Railways need to explore stock market listing for IRCTC.

(Published in The Economic Times.)