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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Thank you, Steve. Hello, everyone. On behalf of IDBI Capital, I welcome you for Indian Railway Catering & Tourism Corporation, or IRCTC's Q3 FY '21 Earnings Con Call. On behalf of IDBI Capital, I thank IRCTC's management for giving us the opportunity to host the call.Before handing over the call to sir, with this call being CMD's last call, I would like to thank him for this opportunity given to us. CMD, sir, it has been an excellent and a very insightful experience every time we have interacted with you. And of course, nevertheless, you have led the company through multiple transitions, which have been visible in the performance, both as regards to company's financial and at the capital market as well. Of course, you will be missed, but we will still thank you and all the best for your next innings.From the management, we have IRCTC's CMD, Mr. Mahendra Pratap Mall; and their Director of Finance and CFO, Mr. Ajit Kumar.I'll now ask him to give his opening remarks. Over to you, sir.
Yes. Good morning, everybody. I wish you and your dear ones a great and safe 2021. We are meeting for the first time in this calendar year. I welcome you all to IRCTC Earnings Con Call for the quarter and 9 months ended 31st December 2020. Yesterday, the company had announced the unaudited financial results for the third quarter and 9 months financial year '21, and same have been disclosed on both the stock exchanges.As you know, the COVID-19 pandemic has impacted us across all the business segment and hospitality was the worst affected, which weighed on the year-to-year performance. However, quarter 3 has seen good improvement in revenue and profitability on quarter-to-quarter basis. All the segments, apart from tourism, have seen quarter-on-quarter improvement in profitability. Even the tourism segment would have seen an improvement but for partial operation of Tejas trains.I shall now hand over the con call to our Director of Finance and CFO, who will provide details of Q3 results, after which we'll have a question-and-answer session.
Thank you, CMD, sir, and a warm welcome to one and all to our Q3 FY '21 earnings con call.Let me first give the overview of the financial results, followed by a brief of our performance of each segment. Q3 revenue came at INR 224 crores, which implies a strong growth of 153% on a quarter-on-quarter basis. Though on year-on-year basis, it's still lower by 69%, impacted by the pandemic, as sir had discussed earlier. EBITDA margin for the quarter touched a new high of 42.2% versus a loss of 6.3% in Q2 FY '21 and EBITDA margin of 37.1% in Q3 FY '20. This was driven by the quarter-on-quarter increase in profitability of the Internet ticketing segment and lower loss in the catering segment. Tourism was the only segment which saw quarter-on-quarter increase in loss, but was largely offset by the decrease in losses in the packaged drinking water segment. Even the tourism segment would have seen improvement but for partial operation of Tejas trains. Now the net profit for the quarter stood at INR 78 crores versus INR 33 crores quarter-on-quarter and INR 206 crores year-on-year.Now let me now move to the business segments of the company. The first one, the Internet ticketing. The Internet ticketing segment generally has the second largest contribution to company revenue. However, due to the impact of the pandemic, it has been the largest segment for Q3 FY '21 and 9 months FY '21. For quarter 3 FY '21, revenue for the segment improved to INR 143 crores versus INR 58 crores in Q2 FY '21 and INR 227 crores in Q3 FY '20. Income from service charge was about INR 95 crores, with 55 million tickets being booked through IRCTC. The EBITDA margin for the segment improved to 76.3% versus 58% in Q2 FY '21 and 85.2% in Q3 FY '20.Now coming to the catering segment. In Q3 FY '21, the revenue for the segment was INR 49 crores versus INR 17 crores in Q2 FY '21 and INR 269 crores in Q3 FY '20. The loss at EBITDA level declined to INR 8 crores versus a loss of INR 33 crores in Q2 FY '21 and EBITDA profit of INR 30 crores in Q3 FY '20. This segment continue to see the impact of the pandemic and only ready-to-eat meals were in service on the trains and precooked meals were allowed for the static catering units only, that also for part of the quarter. On the positive side, the precooked meal through e-catering have been allowed with the SOPs, so we may see that there's further improvement.Now the next segment is Rail Neer. The Q3 FY '21 saw a quarter-on-quarter pickup in revenue to INR 17 crores versus INR 9 crores in Q2 FY '21, was still lower than INR 59 crores in Q3 FY '21 (sic) [ FY '20 ]. The current capacity is around 14 lakh liter per day, which will increase to around 15 lakh liters per day by end FY '20 (sic) [ FY '21 ]. This will be achieved through additional plants at Una and Bhusawal. Now the higher capacity will enable IRCTC to be ready with supply volume as demand normalizes in the future.Now next segment is tourism. Of course, the tourism segment has been impacted the most for the industry, which is the phenomena worldwide. And so for IRCTC, while the revenue improved quarter-on-quarter to INR 15.5 crores from INR 4 crores, it is lower than INR 161 crores in Q3 FY '20. Due to lower revenue and partial operation of the Tejas trains, the loss at EBITDA level increased quarter-on-quarter to INR 11.4 crores versus INR 9.5 crores in Q2. For Q3 FY '21, the CapEx was INR 15 crores. And for 9 months FY '21, it has been around INR 80 crores. And the cash on the books as of end of Q3 FY '21 was INR 1,560 crores, with core cash of INR 404 crores.With this, we can now move to the question and answer session.
We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Ashwini Agarwal from Ashmore Investment.
A couple of questions. How do you see the tourism business evolving in the current quarter and the next few quarters? I believe you're restarting some of your Tejas express trains with effect from middle of February, if I'm not mistaken. Could you give us some outlook here?
Yes. I'll first mention about tourism. See, Tejas is slightly different from tourism because Tejas you can see it primarily as a travel mode. Now coming to tourism, tourism, we have a wide range from mass tourism to customized tours. So our unique proposition is about this mass tourism by way of Bharat Darshan trains and pilgrimage special trains, whereby we carry almost 700, 800 tourists on a sleeper class train to various places or touristic or religious importance. And we take care of everything. This is primarily senior citizens.In this segment, yes, we have made some inroads in the month of December. We ran 2 Bharat Darshan trains, which ran to almost 90% occupancy. January, we have already done about 3 trains. And until end of the financial year, we plan to complete about 14 such tours. You see, each such tour carries about 700 to 800 passengers for a travel of 12, anything between 10 to 14 days. So in this segment, we are receiving very good response. In fact, this last group train which started on 12, it got filled up within 4 days. So that means it implies that the fear of COVID is gradually going away, and these are the times where social distancing and other things are also, I mean, difficult to, frankly speaking, follow. People have started moving. So we are hoping that by March, things should improve drastically.
Okay. And sir, any update on the Tejas trains because you started and then you stopped again because demand wasn't there.
Tejas, we started in the last festive season, that is between Dussehra and Diwali. And you recall that was the time when COVID cases were also at peak. So we didn't get a viable occupancy on those trains, right? After that, the cases have drastically come down. Now we have come down to a level of almost 15,000, 16,000 cases per day. And positivity rate also has gone down drastically, I mean, barring 2 states that is Kerala, primarily Kerala and to some extent, Maharashtra. Now this is perhaps a good time to start, and we'll start these things from 14th February.
And will you be starting all of them or you will start...
I mean, we run 2 Tejas and and one Mahakal. Tejas are basically intercity trains. Mahakal is overnight train. So we'll start with 2 Tejas and then decide about Mahakal also.
Okay. And sir, on the water business. I mean, you had a capacity constraint in the past, but there is a significant investment going on right now. You will get to 14 lakh, 15 lakh liters per day, but over the next 12 months, I think capacity is expected to increase, if I'm not mistaken, to 27 lakh, 28 lakh liters or something like that. How is the...
Capacity by March end will go up to about 18 lakh bottles per day. You see what happens when any plant is set up. Normally, during the first year, it runs at about 50% to 60% capacity. And once it stabilizes, in second year, it touches a level of around 75% to 80%. And third year onwards, it touches anything from 90% to 100% or maybe even more in some cases. So most of our plants were commissioned in last 3, 4 years. So every plant will give us enhanced input, in addition to 3 plants or 4 plants which are commissioned during 2021.
So sir, how will the profitability change here? Will you see operating leverage play out? And I just wanted to compare, as you migrate your customers from bottled water to Neer in your trains, I'm assuming that you will sell Neer first, and if Neer is falling short, you will sell a Bisleri or Aquafina or whatever else. So how do the economics from a profitability perspective?
There's a major difference. See, what happens when some stations and some trains are exclusive Rail Neer stations. As and when our production and capacity and logistics stabilizes, we request railway both to declare more and more stations and Rail Neer stations. So on those stations and those trains, nothing except Rail Neer is sold. It's only at these stations where Rail Neer is not available either because of production constraint or logistic constraint that Indian Railway, I mean, the zonal railway administration, it approves various brands which are sold at those stations. So gradually, as and when our reach goes up, we approach Railway Ministry to declare more and more stations as Rail Neer mandatory stations.
And how does the profitability on a per bottle basis differ between Neer and between bottled water?
In bottler water, we have no control over that. We have no accounting for that. We are responsible only for producing and distributing and selling Rail Neer.
Okay.
And profitability, obviously, depends primarily on the cost of production. There will hardly be any variation. It's basically logistics cost.
But on bottled water, do you make any margin?
We don't take any margin. Bottled water is purely handled by railways. We don't have any stake in that.
Okay. Okay. So there, you don't have any play?
No.
Okay. Unlike the food which gets ordered, where you get a certain...
Yes. That is different.
Okay. So as you said...
Mr. Agarwal, sorry to interrupt, sir. Sir, this is the operator. For any follow-ups, I request you to rejoin the queue, please. [Operator Instructions]The next question is from the line of Jinesh Joshi from Prabhudas Lilladher.
Sir, I have 2 questions. If I'm not mistaken, in the month of November, some of 465 trains were operational. So what I want to know is that, what is the current count as of now and by when is the full capacity expected to ply?
I mean, the answer to your question is purely in domain of Indian Railways. November, what you mentioned, 465, I can say there's a lot of festival special trains also running during that period, right? Currently, we are running about 400 trains. I mean, Indian Railway is running 400 trains, for which we are booking the tickets. And this number keeps on changing. Like in a particular section, if your waiting list has gone beyond a number, then immediately another train will run after that.
Sure. And sir, these 400 trains, what proportion of total capacity do they represent?
It's about, see, I mean, it's a very wide question because these 400 trains are primarily mail express trains and Shatabdi, Rajdhani type train. Now if you compare it only with mail express train, then it may be around 60% of the trains, but if you compare with total number of trains, which includes passenger and other trains, then perhaps the ratio will be lower, which may be around 35% to 40%.
Sure, sir. I think in the opening remarks, we mentioned that the convenience fee income was INR 95 crores. Did I hear that right?
Yes. For the quarter.
Yes. So if I look at that Internet ticketing revenue, that figure was INR 143 crores. And if I reduce the convenience fee of INR 95 crores, we have some balance in term of INR 48 crores, which has come from other non-convenience-related charges. This appears to be slightly higher than what it was in the last 2 quarters. So has anything changed between now and then?
No significant change, but see, I mean, the one major thing, number of ticket has gone up. Number of tickets has gone up so financial charge transaction has gone up. This money comes primarily from the footfall on our website. Number of ticket going up, footfall on the site increases, advertisement potential goes up. Transaction volume goes up, we have some share in that, so that also goes up.
Okay, sir. Got it. One last question. Sir, in the catering business, by when will the tariff hike start getting reflected in the numbers and what kind of margin expansion can we expect because of this?
See, catering currently, we have instructions to serve only ready-to-eat meal, which is on MRP basis. So as and when this relaxation for supplying regular meal which was done pre-COVID, then revised tariff will be effective from that period only. Because revised tariff was issued on November, I think October, November end, which was implemented for mail express train, but for Rajdhani, Shatabdi, this has to be effective from 28th of March. So the moment this relaxation of supply of precooked meal is given, revised tariff will be applicable from that period only.
And sir, margin potential?
In potential. I mean, if we compare it with pre-COVID period, obviously, the margin will be much higher compared to earlier.
[Operator Instructions] The next question is from the line of Ankit Gupta from Alchemy Capital.
Can you tell me the number of tickets booked in this quarter as well as in 9 months?
See, currently, we are booking almost 8 lakh tickets per day. Pre-COVID, we were booking about 9 lakh to 9.5 lakh tickets per day. This quarter, we have booked 5.5 crore tickets. That is 55 million.
Okay. Okay. Now we are booking 8 lakh run rate.
About 7.5 lakh to 8 lakh tickets per day.
And you said our trains are only 35% to 40% of the total trains, but it seems the number...
Mr. Gupta, sorry to interrupt, sir, but your voice is breaking up. May we request you to move to a better reception area, please?
Yes. Yes. Now it's good?
Yes, sir.
Yes. So as you said, our trains are only 35% to 40% of the total trains, but our tickets have already reached 80% to 90% of the pre-COVID levels. So why is there a discrepancy?
You see all these mail express trains, they have 3 or 4 -- they used to have 3 or 4 unreserved coaches.
Yes.
Now those unreserved coaches have been converted into seating reserved coaches. So each seat is allotted. Each seat is reserved to a particular passenger, right? So those tickets are also booked by us now. Earlier, it was part of unreserved ticketing system, which was ended by railways. Now with the conversion of these seats to 2S class, this reserve booking is done by us. And when I mentioned about 8 lakh tickets per day, roughly 30% is from that segment.
Okay. Okay. And sir, do you expect that once this COVID is out, then this will again be converted to unreserved tickets?
I don't think so.
Okay. Okay.
Unreserved will largely be for passenger trains. These are long-distance trains. I think it will continue.
[Operator Instructions] The next question is from the line of Sanjay Bembalkar from Canara Robeco.
Sir, first of all, thank you for your leadership and best wishes for the future. Just one area which I want to probe more, is that when can we get more clarity on the future leadership for the company, sir?
It should be, I mean, the government has a procedure of appointing directors. So applications have been called up. The only thing, interview will be held. Maybe another 3 to 4 months things should be clear.
[Operator Instructions] The next question is from the line of Sujit Jain from ASK Investment Managers.
Mr. Mall, good wishes to you and best of luck for your future endeavors. I have a question on number of tickets, the 5.5 crores, INR 95 crores convenience revenue, which means INR 17 per ticket in this quarter.
Yes. It's approximately INR 18. You see, I mean, we charge INR 20 on sleeper and INR 40 on AC classes. However, for UPI and BHIM, we charge INR 10 and INR 20. So our average realization pre-COVID was about INR 20, INR 20.5, which has recently gone down to around INR 18-point-something because the share of BHIM and UPI is going up. And as I told you, this segment of unreserved seating which was unreserved earlier has been converted into reserved segment, and this is a class from which more and more BHIM and UPI bookings are coming.
And they will be non-AC?
They are non-AC. Seating unreserved is non-AC.
Yes. So AC tickets as a percentage of the overall booked in the quarter would be what, roughly?
AC, non-AC ratio is about 1/3, 2/3. But again, this 1/3, 2/3 was excluding this 2S category. So suppose 10 lakh tickets are sold per day, so out of that 3 lakh is this 2S, out of balance 7 lakh, roughly 1/3 is AC and 2/3 is non-AC.
So 2S, meaning the remaining that you just explained?
2S is seating reservation.
Got it. Got it. And you're saying 2/3, 1/3, so 35% would be AC of the remaining 7 lakh, correct?
Of the remaining 7 lakh, yes.
Okay. In Rail Neer, if you can quickly explain the business model, the bottle gets sold at INR 15 a liter. For every bottle that gets sold in Rail Neer, how much comes to your P&L as revenue? How much you have to give to the bottler or to the manufacturer?
See, I mean, most of these plants, they are on the PPP mode wherein we give them land and we give them the cost of, I mean, capital support also. What happen normally, we buy this water at about INR 5.5. Then to this, we add the GST and the logistic cost, and we transfer this bottle to seller at INR 10 for distance within 50 kilometers and INR 10.50 for distance beyond that. And in this entire process, we have a margin of about INR 1.3 per bottle. In addition to this, we get about INR 40 lakhs as a license fee from each plant in lieu of land given to them. And in addition to this, sometimes you must have seen the labels on the water bottle having some advertisement. So that is extra source of revenue.
License fees per annum and you'll book it every quarter or divided by 4?
Yes. Yes.
Okay. Okay. And one quick question is that the OFS has happened, government stake at 67.40%. When will be the next tender of OFS?
It's difficult for me to decide. It's basically Ministry of Finance and DIPAM, when they decide and convey to us and then we...
No. No. We understand that. What we are asking is, when is the next that they are allowed of this OFS because then we have cooling-off period in between.
I think 2 years is cooling-off period for us.
The next question is from the line of Sanjay Kumar from L&T.
I wanted to know that when the long-distance trains are going to be restarted? A lot of trains are still on hold.
See, it is for Indian Railways to decide, and they are restricting the occupancy level at various routes and various trains. And trains are being started in phases wherever demand is there. There are sections where in addition to running all the regular trains, some clone trains are run because there is heavy demand.
Yes. But will there...
We have no control over, frankly speaking, starting or stopping a train, except 3 of our trains. Indian Railway is doing that exercise.
And when Tejas is going to be resumed, Mumbai-Ahmedabad Tejas?
We'll start from 14th of February again, both the Lucknow-Delhi and Mumbai-Ahmedabad Tejas.
The next question is from the line of Prolin Nandu from GMO.
Sir, a couple of questions from my side. Sir, one is that with run rate that you have mentioned of 7.5 lakh to 8 lakh. Is this the current run rate of the bookings per day?
It is current for January so far.
Okay. Okay. And sir, in terms of Internet booking of the railway tickets, I mean, the overall market share was around 75%. 25% was still booked on the ticketing window before COVID. What is the number right now?
It's around 91%, 92%.
Okay. And I mean, once, let's say, this pandemic, we are out of it, what is it that you think that this number will settle at?
See, we are hoping that this will sustain at this level because all of us know the comfort level in booking a ticket sitting at home rather than going to a booking office, standing in queue for an hour and doing all that exercise. So anyone who has, once seen the convenience, I don't think they will go back to window again. So we hope that this ratio, this percentage, this market share will continue.But at the same time, we also know that a certain percentage will always be there on window because there is a basic difference in the nature of ticket bought from window and bought online. See, if somebody has bought a ticket from window and he is waitlisted and he boards the train, he is authorized passenger. He is not treated as ticketless traveler. Whereas with online ticket, I mean, with this e-ticket that we give, if somebody is in waitlist and he travels on the train, he is treated as ticketless traveler and he is charged penalty accordingly. So a small segment of passengers, those who have to travel by any means in any case, he will buy ticket from window and then even with waiting list he'll board the train because his main objective is to reach the destination.
Got it. Got it. And sir, last question is that, we get so many hits per day on our portal. We have such a rich customer database. What are the plans apart from advertisement to monetize this data?
See, somebody, I mean, asked the question, I think, before that. With a calculation that INR 95 crores is from ticketing revenue and non-ticketing non-convenience fee was about INR 45 crores. So we are doing all-out efforts. Out of that INR 45 crores, roughly INR 7 crores to INR 8 crores, maybe INR 10 crores will be from advertisement and rest is from this type of effort which you are mentioning. And we are executing more and more projects for monetizing the footfall.
Sir, in terms of the potential of monetizing the footfall, where are we? I mean, are we 20% there, 30% there? Just a rough number, just if you can put a number to it.
So it is very difficult to define. At least hundreds of people, they have approached me that I'm sitting on a gold mine. And then somebody says potential is INR 500 crores, somebody say INR 5,000 crores, but nobody comes with a concrete vision for how to extract the gold from the mine. It's an unknown potential, frankly speaking. So whoever comes with any concrete proposal, we allot it. We'll go and do it, roughly not more than 10% to 12%, 10% to 15%. If you have any concrete proposal, you are most welcome.
The next question is from the line of Nihal Jham from Edelweiss.
Just one question from my side. I just wanted to know what would be the proportion of tickets that are booked via the UPI and the BHIM route? And the discount that we are offering, does that have a definite period after which you'll get over or it's going to be permanent in nature?
See, BHIM/UPI booking earlier was in the range of 15%. Now it has reached about 22%, 23%. And there is no definite period, but we can always change it. And discount given is, I mean, as I mentioned in reply to one of the queries that for AC class normal it is INR 20 -- for non-AC INR 20 and AC class is INR 40. For BHIM and UPI -- sorry, it is INR 15 and INR 30. For BHIM and UPI, it is INR 10 and INR 20.
So do we have a plan of wanting to conclude this discount anytime soon or that's a call we'll take later?
We will take later.
The next question is from the line of Manish Poddar from Nippon India AIF.
Just a few questions. So one is, if you could probably talk about the CapEx, let's say, for FY '22 and '23 in terms of both the network capacity CapEx and the CapEx which you were intending for the hotels business?
We had planned for about INR 150 crores for all the projects. Now see what has -- we have virtually deferred the CapEx by 1 year, especially this CapEx on the Internet ticketing segment. We got all the licenses renewed by year and deferred it by 1 year. Total CapEx also because there was delay in finalization of build. I mean, so far, we could finalize the tender only for Khajuraho. There are some issues with the Kevadia hotel. So virtually, you can say that entire CapEx is deferred by 1 year.
Okay. And would you be able to achieve, let's say, airline ticketing in quarter 3 versus quarter 2? How many could we truly book, let's say, for the quarter overall?
5,000 tickets per day is the current volume. And quarter 3, it was around 3,500. Currently, it is 5,000. Up to quarter 2, it was around 3,000. So there is a growing trend in that.
Okay. And just one last one is that, have we launched the miles program or when is it expected to launch?
I think within this financial year, it is expected to be launched. We are doing the technical integration for that.
The next question is from the line of Dharmesh Kant from Art Ventures.
Congratulations on a very good set of numbers in the given environment where there were too many challenges. So I have 2 questions. First one is on the convenience fee. What's the outlook going forward? Is there a likely chance that this fee can be revised upward? And the second one is, like this quarter, the margins were exceptionally high. So when the things are normalized, assuming that, I mean, FY '20 kind of operation is back to where it was in FY '22 and '23, so is this margin sustainable going forward? I mean EBITDA margin?
Your answer to your first question is, currently, we have no thinking about increasing the convenience fee because, I mean, our current margins and revenue is good enough to take care of the company. Now your second, obviously, it's a matter of calculation, simple calculation that once the operation normalizes to pre-COVID level. Now in all segments, you see, I mean, ticketing because of number of tickets going up, in catering because of increase of tariff, tourism also by increase of volumes. So obviously, it's a sheer calculation that will tell you that EBITDA margin should, will go up if operation normalizes to pre-COVID level.
Okay. So just EBITDA margin will go up from where it was reported in Q3 FY '20. I mean, this quarter the margin is likely to go up on normalization of operations, that is what you're stressing now?
Q3 onwards, it will improve quarter by quarter because there is a growing trend.
[Operator Instructions] The next question is from the line of Ashwini Agarwal from Ashmore Investment.
Sir, just in the past, what was the kind of full capacity number of tickets being sold on a per day pre-COVID compared to the 7.5 lakh, 8 lakh number that we have now? What was that at the peak?
Pre-COVID, like peak, there may be exceptional days of peak when even 15 lakh, 16 lakh tickets are sold. But pre-COVID, if you take a broad average, it was about 9 lakh tickets per day. Currently, even with around 40%, 45% of the trains running, we have reached a level of 8 lakh tickets per day. I mean, this increase is contributed largely, I mean, largely by conversion of unreserved seat into reserve seats in mail express trains. Each mail express train used to, I mean, runs with about 4 to 5 unreserved seating coaches. So all these seats in these coaches have been converted into reserved seats with a new class of 2S, second seating. And this unreserved ticketing has now moved to reserved ticketing, and we are beneficiary. Currently, the figure which I mentioned about 8 lakh tickets per day, roughly 30% is contributed by this class 2S.
So there were 2 drivers for you. One is the shift from unreserved to reserved because this 2S class came in. And second is your 75%, 78% went to 91%, 92%?
Yes. And in the future, what is going to happen, more and more AC coaches will be put into service instead of sleeper. So that will be another growth driver because for every AC, your realization, your revenue is almost double.
And just to confirm, the charge for a sleeper is INR 20, for AC is INR 40 per ticket and for 2S?
INR 15 and INR 30.
INR 15 and INR 30. And for 2S, also you charge INR 15 or it's a lower number?
INR 15.
INR 15 only.
The next question is from the line of Susmit Patodia from Motilal Oswal Asset Management.
My first question, what is the total database now and what are the number of active users?
Total database is about 6 crores. Active users is about 5 crores. Daily new registrations are about 25,000 users per day.
Okay. And sir, my second question is the no run period, the agreement, the discussion that you're having with Indian Railway, how much is the amount?
This is for Tejas train you are mentioning? Lease charges for that?
From 1 April to 15 October.
The lease charges for that and fixed dollars, it will be around INR 14 crores for both the trains.
Only INR 14 crores? And the last question is, with respect to the interest rates coming down, is there an unfunded pension or liability?
No. Urmil? Is Urmil listening?
Yes, sir.
Urmil, I have some other pressing engagements. So now, Mr. Ajit Kumar, our Director of Finance and CFO, will reply to all the queries, please excuse me. And thank you, everybody.
[Operator Instructions] The next question is from the line of Sujit Jain from ASK Investment Managers.
I just had a query. In the beginning, when we actually had this ticketing platform, who delivered that and what are the costs?
Ticketing platform?
Yes.
In fact, the Internet ticketing, it started in 2013. And from there, only this journey of this convenience fee and the service charges started. Of course, in one time also this was a digital promotion, this was taken away also. But of course, we were compensated. But then after that, the Ministry of Finance and as well as the Ministry of Railways have given this authority to decide this, fix up the convenience charges, so which we termed as a convenience charge. And then from the 2018, '19, we are charging this around INR 15 and INR 30. And for UPI and BHIM, of course, it is discounted around INR 10 and INR 20.
Seems like we lost the connection for the current participant. We move to the next question from the line of Tushar Bohra from MK Ventures.
Just quickly checking, and I'm not sure whether this was covered earlier. I would like to understand when the dedicated freight corridor comes in over the next couple of years, structurally, what are the positives that we could see for the passenger trains and in turn for IRCTC across our different lines of business?
Yes. The DFCCIL when it will start the operation, already there's some stretches, some of the segments already, I mean, this started. But once from end to end it start, then we'll have the capacity to handle those passengers because there is always, I mean, a gap between demand and supply. So the demand is more, so that means more number of passenger trains will be running. And DFCCIL will also offer its track and all that maybe on whatever charges, Indian Railway will run more passenger services. And the number of, the quantum number, the lift will be there of the number of passengers. And most probably, what we told in the COVID time, around 90% of the booking is by the online ticketing.So the number of passengers will increase, so the volume will increase and then we intend to benefit from that because you have more number of bookings, so more of the convenience fee for the Internet ticketing as well as catering also because catering and other segment are in need also in other segment. I mean, whatever the services which we'll offer apart from Internet ticketing, then catering that they need, so all these things we intended to benefit. So that will be beneficial to us in the long run.
Sir, it would be fair to assume that with a dedicated freight line and a separate passenger line, the overall train speed should move up and therefore, your travel time?
Yes, very, very correct. Now there's almost saturation in the route. So once this, I mean, this is freed, I mean, the capacity will be more and the trains will be run at a higher speed. And of course, I mean, there's more number of the end to end, so whatever the services the trains will start running. So that is the projection, that is the prediction also.
And behaviorally, is it a good assumption to make that as your travel times shorten significantly, for shorter distances, the tendency would be to go for external catering a lot more in percentage terms?
It all depends because one is, if you see the geographical location of India, I mean, they're both end to end. I mean, this is a long-distance train, 1 night, 2 nights and all that. And then, of course, the Shatabdi type of trains would be intercity. So both will increase. The volume will increase. The number of passengers will increase. So I mean, this is not that there is a real shift immediately from the train to this roadway. So for example, from Delhi to Lucknow, we told you that, or let's say from Mumbai to Ahmedabad. Already, the roads are in a very good condition. I mean, the people have their own cars and all that. But there's still, and the railways also are running their train. And we are running the private train, the Tejas train that is from Lucknow to Delhi and Mumbai to Ahmedabad. And we are running on, this is on profit. I mean, this is, except for this COVID time, of course, then we had to stop due to the low occupancy. But normally, there is a good profit.
Sir, one last, if I may, quickly squeeze in. I would like to understand your 2-, 3-year vision or outlook for what are the noncore services today, but which are more optionality like having your own wallet or the payment gateway or insurance and things like that. If you can help us understand, is there any optionality, is there significant profit optionality in any of these that you're looking to tap over the next 3 years?
Yes. Payment gateway, of course, we are very serious. We already have iPay, iMudra, we already have. In our current state, there is a license. We have to take it from the RBI. The Board has already passed and we are applying for that. And then also, we would like to, I mean, one of the great, what you say, the mover here in the payment gateway segment. And we will try to have more number of, many of the state governments do not have this payment gateway so that we want to cater to that. And of course, then we'll keep on expanding as the demand, but yes, that will be one of the more noncore areas which will give a good profit margin in the years to come.
And how about the wallet service?
Wallet service also, the same, same. We are, I mean, serious on both. We already have the iMudra. We are trying to get into the market. And already this, what you said, if you see the percentage of the revenue, this is one from, of course, the core areas of Internet ticketing and the non-convenience fee also. So we have the co-branded card from the SBI. So we intend to get something from ad, something from this wallet, something from the payment gateway, something from the co-branded card. So these are all the segments which will keep on adding up our revenue.
So the co-branded card, so the wallet rather, we intend to build this as an offering beyond railways as well, I mean, go partner with others?
Yes, yes, yes, of course, that is the intention. So we want to, I mean, this is one of the features because we have a database, then if you see, we are the only one, I mean, who have the authority to book the tickets online for the railways and we have been given this license to, I mean, for the air ticket also. If you see this, we are charging the lowest service charges for the air ticket and those passengers who want to have a flexibility of this railway as well as tie up with the journey through the airways. So we are the one who can provide a very good solution. And of course, the last-mile connectivity and all that we are trying to think of. So this will increase only.
The next question is from the line of Priyank Chheda from Standard Chartered Securities.
Just wanted to understand the update on railway privatization agenda and how IRCTC is going to participate or benefit?
You see that the Government of India for the first time has come out with the tenders for the running of the private trains. These are around 150 trains will be there and the train clusters are there. We are a serious bidder because we are the only entity, I mean, apart from Indian Railways, who have the experience and the expertise to run private train. We already run, of course, I mean, a timetable train, the 2 Tejas trains and one overnight, this Mahakal Express we run. Apart from that, of course, the tourist trains and all that, this Maharajas' Express and all that we have the experience of running. So we are very serious here.And then just out of 10, 11 clusters, 10 clusters, we have qualified on our own. I mean, one of the cluster we could not qualify because of network and all that because of stringent criteria, but out of 11, 10 we have qualified. Our expert team or the consulting expert team in-house, they are, I mean, this, I mean, on job. And Indian Railways have deferred this, what you said, this bidding for the next 2 months. So we are very serious on this, and we will be an active participant and active player in this field.And the way in which we have seen the Tejas trains because you see in India, the passengers of mobile, this, what you say, the passengers or the high-end passengers, they want to pay, but they want good services. So in the Tejas trains, though what you said, the fare is slightly 10%, 15% higher than the Indian Railways. And you will be surprised to note that from Ahmedabad to Mumbai, 30 minutes before our Tejas and 30 minutes after our Tejas. I mean, the 2 trains of Indian Railways are running, and we are sandwiched between them and we are still running profit.I mean, from the Day 1, I mean, we had thought earlier that from 1 year after, 1 year, 2 years or something like, we will breakeven. But I mean, whatever, there was a slight publicity, slight marketing. But Day 1, we started breakeven and profitable. This is profitable segment. And then day by day the occupancy increased and we also started taking the feedback from the passengers and we try to take it to a level. And we were surprised to know the level of services, the level of food and level of catering and level of, whatever, the cleanliness, hygiene and all that, it is better than the airlines. I mean, this is the comment of those satisfied passengers. So therefore, there are definitely a big amount of majority of passengers who want to pay slightly high, but want the premium services, and we are ready to cater to that.
So sir, just to add on this discussion, do we plan to add more Tejas trains? Tejas trains would be our focus or participating in the privatization agenda solely or which would be our focus?
I meant to say that Tejas trains, this has to be decided by the Ministry of Railways. We have asked for it. But we don't know the response of the Ministry of Railways. Maybe that if the private trains are running in operation, they may not, I mean, give the license for more Tejas trains. That is up to them. But we are open for both because there is a real demand and supply gap. And between a few sectors, I mean, there's so much of the waiting list and all that. So we are ready for both. We are geared for both. We are already in the talk of this regarding this private trains that how this, with the lease financing and the rates and all that. We will take private trains also. On Tejas trains, we are open. We are open for both. Whatever is the company, what is profitable, we will take it. And according to us, both are profitable venture.
And just the last question, sir, on the catering segment...
Sir, sorry to interrupt, but for any follow-up, request you to rejoin the queue, please. The next question is from the line of Agam Shah, an individual investor.
Most of my questions are answered. Just a follow-up and I wanted to comment again. So sir commented that for AC compartment, an opportunity might open up. So can you just elaborate on that? I missed the point on that.
Please repeat your question slightly. I mean, please be clear what exactly you want to update.
For the AC compartment, I think, what are the opportunities? I think you had said about that. So I missed the point there. So can you just repeat.
AC compartment? I don't think that we have commented. Right, right, right, just a minute. What you see is, as of now, the Internet booking, the convenience fee, it is INR 15 for the non-AC, everyone, and INR 30 for AC. Now suppose that, suppose that this number are either trending like this, that more number of AC trains will be there, more number of coaches will be there. So certainly, the revenue, that is the convenience fee, will increase from INR 15 to INR 30 in the percentage term also and magnitude also. So we stand to gain by the more number of AC coaches.
[Operator Instructions] Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to Mr. Urmil from IDBI Capital for closing comments.
Thank you, Steve. Thank you, everyone, for logging in for the call and have a good day ahead. Thank you, everyone.
Thank you.