Rail Ministry reverses decision on sharing convenience fee after IRCTC shares crash

11:57 AM Oct 29, 2021 | FPJ Web Desk

After shares of Indian Railways Catering and Tourism Corporation (IRCTC) fell sharply in opening deals on the bourses due to the Ministry of Railways' decision on IRCTC convenience fee sharing decision, the Ministry withdrew its decision.

That decision changed the trajectory of the shares of the Indian Railways' catering, tourism and online ticketing arm which staged a quick recovey.


After shares nosedived by 25 percent to Rs 685.15 from previous close at 10.11 AM, the shares recovered. Its fall was arrested by 5.23 percent to Rs 865.70 per share at 11.53 AM.


The Secretary, Department of Investment and Public Asset Management tweeted, Ministry of Railways has decided to withdraw the decision on IRCTC convenience fee.

On Thursday (October 29), the Railways has asked its online ticketing arm IRCTC to share 50 per cent of its revenue earned as convenience fee from bookings on its website with the national transporter, an arrangement that had been discontinued since the pandemic.

In a regulatory filing on Thursday (October 28), IRCTC informed SEBI that the Railways has said the revenue-sharing arrangement would be enforced from November 1.

Convenience fees charged from customers generated a sizable revenue for both IRCTC and the Railways. The fee is not part of the rail fare. It is for the service of online ticket booking offered by the IRCTC.

In 2014-15 when the revenue sharing ratio was 20-80, the Railway's online ticketing and catering arm received a majority of the Rs 253 crore revenue. The following year, the revenue generated from this was Rs 552 crore with a 50-50 share arrangement.

In 2016-17, with a similar revenue-sharing model, the fee generated Rs 362 crore as earning for the IRCTC-Railway combine.

However, the convenience fee was discontinued thereafter and the duo did not earn any revenue from it till 2019.

The IRCTC began charging the fee again during the coronavirus crisis mainly to boost its revenues during the slowdown. The Railways, however, gave up its share.

In 2019-20, IRCTC earned Rs 352 crore from convenience fees and in 2020-21, it earned Rs 299 crore.

Till August this year, the IRCTC had earned Rs 224 crore.

''In compliance with the Regulation 30 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, it is to be informed that Ministry of Railways vide above-referred letter has conveyed its decision to share the revenue earned from convenience fee collected by IRCTC in the ratio of 50:50 w.e.f November 1, 2021,'' IRCTC stated in the filing.

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