Indian Railway Catering And Tourism Corporation Limited

An HR cost of INR10 crores was booked in the catering segment, which includes gratuity plus post-retirement benefits.

And secondly, also from a future perspective given the fact that share of prepaid trains is rising, and if my understanding is correctly we do not get the ITC benefit on the prepaid trains which essentially means that our margins tend to be slightly lower. So how to think of the steady-state trajectory over here? Management: See IRCTC is a Navratna PSC of Indian Railways. So we have to align with the socio-economic fabric of the country also. So as far as the GST part you said you said rightly. If we take the Vande Bharat GST plus license fee for this quarter, we are earning INR105. But if you take GST 5% for which we cannot claim input tax credit, like the Vande Bharat charges it is INR222. We give to the licensee INR222 for arranging food and all. Out of which GST is 5% which we have to pay, that is around INR11. So we lose there INR18, but as a combined project of license fee from that plus the GST, we earn around INR105. So the Vande Bharat trains have to be proliferated, this aspect we will address. But at the same time we cannot stop providing service and all. This is a small retrograde step in the GST thing but overall it increases. And rest the remaining part of the question can you please repeat. Jinesh Joshi: Reason why the margins were lower. You mentioned some transit catering projects were there and also some other reason. Management: Last year in quarter one financial year 2025-2026, quarter one we did not, you must have heard about proof of concept. So, we introduced the proof of concept in few trains, right now five trains were there. In which -- six trains were there but the issue is that in that proof of concept we increased the amount to be given to the licensees at the cost of IRCTC focusing on the customer and taking it as an experiment. So in this quarter, the impact of that proof of concept on six trains around about maybe around more than INR4 crores, was impacted, plus there are two more impacts on the catering margins because we have seen the margin has come to 9.29% while it was around 10.42% for the financial year 25-26. One was the gratuity has increased from INR20 lakhs to INR25 lakhs, and the HR cost of INR10 crores has been booked in this segment because catering takes care of around 54% of the entire revenue. This INR10 crores includes the gratuity impact plus the post retirement benefits to the employees. This thing will not be repeated for the next quarter, because it has already been taken care of in this quarter. So the next quarters can be immune or safe from this aspect. So this is one, and proof of concept will slowly die down. There are two trains I think they will finish by September and the remaining two trains will finish by November. So that way it will help and the catering margin traditionally have been between 10% to 12%. So we will try to maintain that. Plus considering the fact that there will be increase in number of passengers, there will be increase in number of trains, the 20 trains will be included, and there is 8% growth in passengers also year-on-year from the railways figure.

And then how fast we can expect business ramp-up in these trains, any visibility that you would have or expectations that you would have would be great. Management: See, as far as this introduction of new trains, it is a decision by the ministry. But whenever there is a passenger growth, the trains, normally there may be around 20 Vande Bharat sleeper trains introduced in this financial year or the period of next one year. So, the license fee of this can be calibrated to around INR6 crores per train to INR120 crores. This is one factor where the number of trains will increase, the licensing, catering, the revenue, the top line will increase, number one.

And was that also one of the reason why our margins got impacted just in case if they are lower, trying to think from that perspective? Management: In election special, it all depends on the elections like this time it was West Bengal and Tamil Nadu and Puducherry. Jignesh Joshi: Understood. Kerala. Management: Kerala. So basically, in election special, we get revenue from 2 sources. That is the FTR business and the catering business. So the catering business, it varies from 11% to 13%, 14% and FTR at a fixed 5% convenience fee. The revenues -- the ticketing revenue goes to railways and 5% service charges, you can call it service charges by IRCs to facilitate this. So that way, election special, we all depend upon the elections happening in the country, but we come into to the extent of, you can say, around 10% to 12% for the catering component.

But there has been also an expense of around INR10 crores on the maintenance of the website and investment in that in this quarter? Madhuchanda Dey: Okay. So I can say that it is a combination of investments and some one-off factors in the nonconvenience fee side that has led to the lower EBIT margin of around 80%, right? Management: Correct. It has gone to 80.33 from 84.12. Madhuchanda Dey: Right. So my second question is on the margin in the Rail Neer business. That has also fallen. So any particular one-off or what is the reason and what is the sustainable margin in that business? Management: See, basically, in Rail Neer, like I have already explained, you must have gone through the number of plants we have got in Rail Neer and the production capacity, 17.77 lakhs with closing of one plant, and we are supplying 15.4. This year, the margin has gone, if you compare quarteron-quarter, from 14% to 10%, is basically due to around 30% decrease in the resin component. The resin helps us in making preform, cap, shrink roll. Due to the increase of petroleum product due to West Asia crisis, the material cost increased from INR55 crores to INR61 crores. There was a dip of INR6 crores. You have seen that the margin has gone from 15 to 11. Some profit, like 106 to 109 plus some administrative cost, combining everything, the profit decreased only by delta of INR4 crores. Basically, there was the West Asia crisis, which caused this increase in the expenses and reduction in the margins. Thank you.