IRCTC, Railway Ministry discussing new revenue share model where interest of minority shareholders will be protected: Sources

Indian Railway Catering and Tourism Corporation (IRCTC) charges a convenience fee of Rs fifteen for reservations in non-AC coaches and Rs thirty for those in AC ones once somebody books the price ticket on-line.

On Gregorian calendar month twenty eight, the govt. proclaimed it might take fifty p.c of the entire convenience fees collected. ensuing morning, the shares of IRCTC nosedived, falling the maximum amount as thirty p.c, the steepest intraday decline since the company’s 2018 listing.

The shares recouped most of their losses and terminated seven.5% lower when the govt. reversed its call.

Given the sharp market reaction, senior officers of IRCTC don’t expect the railway ministry to aim a revenue-sharing agreement within the close to future.

“The ministry won’t look to undertake Associate in Nursingd re-impose such an agreement anytime presently, they need learnt from their mistakes,” a senior official from IRCTC same.

However, the official value-added that talks ar still on with the ministry to come back up with a model wherever the interests of minority shareholders ar protected and IRCTC’s profit doesn’t take successful.

Senior officers from the ministry confirmed this, spoken communication they’re in discussion with IRCTC, one amongst the most important sources of revenue for the ministry, to develop a model wherever the interests of minority shareholders ar protected.

“IRCTC sharing its revenues with the ministry can solely facilitate the additional development of railway infrastructure within the country and can allow us to supply higher services to the shoppers,” a senior government official same.

He value-added that it’ll take your time before a brand new revenue-sharing model are unrolled which the ministry is additionally trying to ask trade specialists to recommend a practicable arrange.

On Gregorian calendar month twenty eight, Indian Railways reintroduced its revenue-sharing agreement with IRCTC beneath that the latter was to share financial gain from convenience fees for bookings created on its platform in a very 50:50 quantitative relation with the railway ministry, the corporate same in a very restrictive filing.

The arrangement was to be implemented from Hallowmas.

The re-imposition of the revenue-sharing model for convenience fees was in line with the agreement the ministry had with the IRCTC until 2016.

However, in 2016 the railway ministry had scrapped convenience fees on on-line payments so as to push customers to book tickets on IRCTC’s portal.

In 2014, IRCTC started sharing revenue from convenience fees with the govt. in Associate in Nursing 80:20 quantitative relation, that was modified to 50:50 in 2015 when the fee was doubled.

According to Dalal & Broacha analysis, the revenue-sharing model would have meant a Rs 138.5-crore hit on the revenues of IRCTC in 2021-22, rising to Rs 495.7 large integer in 2022-23.

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