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Indian Railway Catering and Tourism Corporation Ltd
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Thanks, Janice. Good evening, everyone. On behalf of IDBI Capital, I welcome you all to the IRCTC Q3 FY '20 Earnings Con Call. From the management, we have Shri Mahendra Pratap Mall, our Chairman and Managing Director of IRCTC; and Shri Ajai Srivastava, our CFO and Group General Manager, Finance. I would like to thank the management for giving us the opportunity to host the call and also congratulate them on a very strong performance in Q3 FY '20. I would now request, Mahendra, sir, to give a brief on the company's performance for the quarter. Post that, we shall have the Q&A. Over to you, sir.
Okay. Good evening, gentlemen and ladies. I'll request my CFO, Mr. Ajai Srivastava, to give you the brief, then I'll be ready for your questions.
Thank you. So good evening, everybody. We welcome you all to the con call of IRCTC Limited for the quarter and the 9 months ending 31st December 2019. Yesterday, as you must be aware, the company has announced the unaudited financial results for the third quarter and the 9 months for FY '20. And the same has been disclosed on both the stock exchanges also. So I shall first talk about the Q3 FY '20 results, post which we can have the question-and-answer session. So let me first begin with the overview of the financial results. In Q3 FY '20, the revenue from operations have been to the tune of INR 716 crores, which implies a growth of 39% on a Q-on-Q basis and 65% on year-on-year basis. The service charge on the e-ticket booked through IRCTC platform, which was introduced with effect from 1st of September 2019 and which has been the main driver of growth in revenue in this quarter. The EBITDA margin for the quarter have been 37.1%. PAT in this quarter has grown up by INR 206 crores, a growth of 106% Q-on-Q and 180% year-on-year.So let me now move to the business segment of the company, the first being catering. In this segment in Q3 FY '20, the revenue for the segment was INR 259.2 crores, which implies a growth of 8.2% year-on-year, and this is similar to that in Q2 FY '20. The PBT margin was at 11.11%, and it is the same as was that in the previous quarter. So prime facie, it appears that there is a year-on-year decline in the PBT margin, but this is primarily because prior to the listing, there were certain provisions which we made in the quarter 4 and, post listing, we are including these provisions in the respective quarters and because of this, these such changes are there. So on a comparable basis, the EBIT margins are stable in year-on-year basis in this particular segment. In this quarter, the Indian Railways has also approved the revision of tariff for premium and nonpremium trains as well as the static units. Also, there has been a change in the menu, keeping in mind the customer preferences. The impact of these changes will come into effect in the coming months. While these changes will increase absolute revenue and profit from the sector, the company would target to maintain the margin and enhance the monitoring and control to enhance the customer experience. Now moving on to the net segment, that is Internet ticketing. This Q3 FY '20 saw a full quarter impact of the service charge introduction on Internet ticketing and which led to the revenue in this segment growing up by 94% on a quarter-to-quarter basis. The income from service charge for Q3 FY '20 was about INR 160 crores, with around 7.75 crores tickets being booked through IRCTC in this quarter. For the 9 months in FY '20, about 23.3 crores tickets have been booked through IRCTC. And the revenue from service charge has been to the tune of INR 211 crores to INR 112 crores for the period ending December '19. There has been also a good growth in the other revenue streams, which has contributed to the tune of INR 182 crores in the 9 months as against to INR 146 crores for the entire year in the previous fiscal. Moving on to the third segment, that is tourism. In Q3 FY '20, the revenue has been at INR 161 crores, which is more than double on a Q-on-Q basis. Growth has been driven by both the tour packages business as well as the state business, which has picked up in this particular quarter. Moving on to the new trains that we have taken over where, in this quarter, Lucknow-Delhi Tejas train was launched on 4th of October 2019 and operated for almost the full quarter and has gross revenue of around INR 15 crore. And the Mumbai-Ahmadabad train has been launched in this quarter from 17th of January and is doing better than our expectations. We are also going to soon launch the Indore-Varanasi train and the commercial run of which shall begin from 20th of February. Now the next segment, that is Rail Neer. In this particular segment, in quarter 3 FY '20, the Q-on-Q growth has been to the tune of 7%. In this quarter, we have also added 2 new plants at Bhopal and Jagi Road, and we also intend to add 2 more plants in this quarter, which will be at Sankrail and Jabalpur. And the current capacity with the operation of these plants is around 12.3 lakh liters per day and which shall increase to around 14.08 lakh liters per day when these other 2 plants also become operational by the end of FY '20. The Board of Directors of our company have also approved interim dividend of INR 10 per share, and this is in line with the payout trends that have been followed in our company in the last 3 years. We can now move on to the question-and-answer session.
[Operator Instructions] We take the first question from the line of Sanjay Bembalkar from Canara Robeco.
Congratulations on the great set of numbers. Sir, my first question is on the Internet ticketing vertical. Sir, can you please give us some more color as to revenues? Apart from these convenience fees which you mentioned, what is driving this growth in this part of revenue?
Mainly our main revenue, which is almost 77%, 78% is from convenience fee of this segment. And in this segment also, still we are covering only 73% of total reserved tickets of Indian Railways. So still, that gap of 27% is there. Of course, now it's broad-based, which is growing at a rate of about 2% to 3%, that is number one; then addition of more and more trains by Indian Railways. And these are the 2 major things. And then now we are concentrating more and more on the monetization our website. As you see, around 23%, 24% income is from monetization of website, monetization of transaction charges and other miscellaneous things. So we are concentrating more on that also, advertisement on website. So that is the scenario.
Sure. Sir, secondly, my next question is on the catering vertical. We have taken menu price increases. And what is the time line for the menu price increases to get reflected in our revenues? Do we have any time line with respect to when this -- we should see a bump-up in the revenues for that vertical?
Yes, yes. In fact, you see there are 2 types of trains. If you talk of trains, one is prepaid trains, which are trains like where you pay for the food along with fare. That is an Rajdhani, Shatabdi, Duronto type of train. And second is normal where you buy the meal. So you see our revenue will bump up from a revision of the license fee of all these trains. And license fee, we have to do this sale analysis. By whatever amount the sale has increased, license fee will increase accordingly, right? So this has already taken effect from 19th of November. Now we have to do the sale assessment then, accordingly, we'll revise the license fee retrospectively. So this will come in from 19th of November. I'll comment to this prepaid train Rajdhani, Shatabdi, Duronto. Since money for food is taken along with fares and there is advanced reservation period of 4 months, so keeping that window, this will be effective from 28th of March, right? So 28th of March, there'll be revised tariff also. And in this also, license fee will be revised in the same fashion.
Sure. Sure. And sir, what are the plans to upgrade the pantries? Any CapEx which is earmarked for this purpose and number of pantries, et cetera? This will also give us some bump-up with respect to the sharing with railway will reduce.
Will reduce. Actually, we have put 2 consultants on the job. They have given the design. We have submitted it to railways. It is to be cleared by the Research Design and Standards Organization of railways. And they had raised 1 or 2 issues which we have clarified. So this should be cleared by them maybe within the next 8 to 10 days. Then we will introduce this design in some of the new pantry. And once it is done in some production unit, we will apply this to existing pantry cars. And the moment we apply, our revenue share will reduce from 40% to 15%. So this will be for us CapEx neutral, I can say.
Okay. Great. Great. Sir, last question is on the Rail Neer segment. I just wanted to understand what is the current utilization at overall Rail Neer segment for us?
See, I mean Rail Neer, what happens whenever we set up a plant -- because there's a production issue and there's a logistics issue, distribution issue also. So whenever we set up a plant, normally for first year, we operate that plant at a capacity of 50% to 60%. And second year, we increase it to around 80%. And third year onwards, we take it to full capacity. So all those plants which are functioning today, which are more than 2 years old, are working at about 93%, 94% capacity. And other plants, depending on the age, they are functioning.
[Operator Instructions] The next question is from the line of Parag Gupta from Morgan Stanley.
And congratulations for a successful IPO. I just have 3 questions. Firstly, on the Internet ticketing charges, you talked about INR 160 crores is the convenience fee on 7.75 crore tickets. So that's roughly about INR 20, INR 25 per ticket on an average. Could you just give us some understanding of how should we think about this going forward? Can this increase? Or are these kind of regulated by the government, so no real possibility of an increase out there? And related question to that is, how should we think about these convenience charters going forward? How do we -- is there anything from the government that suggests that these will not be taken away and, hence, this is a revenue stream that will continue? So that's the first question. And the second question was, how should we think about your growth drivers going forward. So within your current segments, which segments do you believe are good or still show significant growth? And are there any new business streams that can potentially come up that could potentially get monetized and add to your revenues? So those were my 2 questions.
So you have mixed 4, 5 questions in 2. Anyway, I'll answer it. Earlier, this convenience fee on the Internet ticketing was INR 20 and INR 40 on nonsleeper and sleeper. And this was shared with Ministry of Railways 50-50. Now when it was reintroduced in September, we were given freedom to fix it, and there is no sharing with Railways. So we put it at INR 15 and INR 30 with no sharing with Railways. That is number one. Along with this, to promote all these UPI, BHIM and RuPay, any transaction on these instruments, we will levy a charge of INR 10 and INR 20. Now second thing you asked, basically about upside of this, so I don't see in the near future we will increase it because, ultimately, we are a government company and it is basically a public service also. And in any case, we are making profits, so we should not be greedy. So increase in tariff will -- I don't see in the near future. But increase in volume, just -- I mean it's still 27% segment of railway reserve ticketing is on window. With the spread of Internet and more and more smartphones and all that, this is gradually increasing by about 2% to 3% per year. So that is one. And secondly, I mean we are trying to monetize more and more our website by way of advertisement, transaction charges and promotional mailers, promotional SMSs. So that is our strategy for this segment.
Got it. Okay. And how should we think about growth drivers going forward within your current segments and any new segments that can come through?
See, any -- I mean, currently, as you know, 4 segments, IT -- I mean, Internet ticketing, I've already told you. Regarding catering, yes, tariff revision is one which will result in increase of revenue as well as profit. In addition to that, recently, government of India, I mean, Indian Railways had announced that pantry cars will be added to more and more trains because there are still a lot of long-distance trains which do not have pantry cars. So with more and more pantry cars being added, that business will come to us. So that is one. In addition to that, we are putting emphasis on e-catering whereby when sitting on your bus or seat, you can order food, so which is also increasing. And we have streamlined the system of train-side vending. This is a service where there are no pantry cars in the train, somebody comes and takes the order and supplies the meal at next station. So we are working on all these segments, all these factors. So I'm hopeful that this will grow. Now coming to the state [ Tirah's ] EBITDA, I mean, recently, Delhi elections were held and a manifesto of AAP Party, which had a thumping majority. In their manifesto, they had mentioned that they will carry 10 lakh pilgrims senior citizen of Delhi to various pilgrim sites. And we are the only agency for them who -- rather, we are the only agency -- we carry in bulk. Last year, we did -- business was about 70 crores, 80 crores with Delhi government. Now with this kind of allotment, this segment is likely to get a major boost. Coming to new segments, yes, as the CFO mentioned, we have entered into operation of trains, which is a new thing. We started with 1 train, and we are hoping that this will break even in -- by the end of year 2. That was Lucknow-Delhi Tejas train. But the performance is better than what we expected. Second train which we introduced between Ahmadabad and Mumbai, here, occupancy and response is much better than what we expected. So now we are trying the third train, which will be a slightly different category of train. It will be a pilgrim train between Varanasi and Indore, connecting 3 Jyotirlingas. And there's a huge demand of pilgrims in this catchment area of Eastern UP and Bihar who are likely to take this train. So we will work on these 3 trains, consolidate for about 2, 3 months. And then we will take forward with more and more trains and the new opportunity, which is Railways, coming with 150 trains with new kind of rolling stock in different sectors. So we will participate in that also.
We take the next question from the line of Rajiv Mehra from JM Financial.
Congratulations on a great set of numbers.
Thank you.
So I just wanted to know, you just spoke about the Tejas trains where you're running between Ahmadabad and Mumbai and then Lucknow and Delhi, and you will be breaking even in the second year you're saying. And now the third one you're talking about Varanasi and Indore. Going ahead, how many more Tejas trains are in the pipeline or are planned? And how could we factor in what kind of growth rate could be coming in from this segment area?
Initially, we were offered to run 2 trains and we selected the routes. And as I told you, we're expecting them to break even by end of year 2. But you will be happy to know that, I mean, the earlier train is in Lucknow. Lucknow-Delhi Tejas is nearing breakeven in...
First quarter.
First quarter itself. So we are highly encouraged with this. Ahmadabad-Mumbai is performing even better. Occupancy-wise, it is much ahead of Lucknow-Tejas. So you can expect it to break even in the first quarter -- I mean, certainly, this will break even in the first quarter. We are a small organization of about 300, 400 executives. Now to run more and more trains, we need our own staff. So we have to go for a recruitment drive also. We will consolidate on this. We will learn from the mistakes, whatever has happened, assimilate the success of these trains. And then we'll go and operate more and more, so that there's no short-term measure.
Right. So sir, if you could just tell me certain cost dynamics. Suppose if you have to run a train from a route, what kind of costing is really needed? And what kind of additional recruitment would you have to do for the same?
Our trains, we are -- operation of trains is managed by Railways. I mean driver, guard and all that and the station staff, signaling staff, track maintenance is done by Railways. For that, we pay Indian Railways haulage charges. There's a fixed formula as per which we pay them the haulage charges. And for other services onboard, which is catering, security, housekeeping, selling of ticket, ticket checking, all this is on PPP model. We engage 1 agency, which does this. But yes, for every train, we need about 5 to 6 of our own staff to -- for supervision because the moment we dilute this, it will be uncontrollable.
Next question is from the line of Sujit Jain from ASK Investment.
Congratulations on a good set of numbers.
Thank you.
So you said 2% to 3% growth in the overall tickets that Indian Railways sells?
That is number of tickets. There is 2% to 3% growth in passenger segment. That is the number one, right? And then second is passengers migrating from window booking to Internet booking. That's another 2% to 3%.
Correct. That's the way to look at it. That kind of growth, that can happen steady state once the next full year.
Yes. Plus addition of these new trains, like 3 trains we are managing, that is a straightaway addition. And now Railways is opening sector for 150 more trains. So obviously, any party which takes 1 sector for 10, 12 trains, they'll not set up their own website.
So this 2% to 3% growth will go higher.
Yes.
In your estimate, what that number will go up to?
It's difficult to say because passenger movement dynamics is -- currently, growth is only 2% to 3%. Earlier, it used to be 7% to 8%. So depending on the situation of the economy, movement also increases. So I'm being conservative when I say 2% to 3% in passenger growth and 2% to 3% in migration from window to web.
Okay. And of the INR 225 crores, INR 160 crores from convenience fees, the remaining INR 65 crores is monetization.
It's from advertisement on website. And you see on our website, there's a total transaction of almost INR 35,000 crores in a year, right, so now we are peeking into that also, a share of that; then the advertisement on website; then we are using our database for sending promotional mailers, promotional SMSs, targeted marketing. And then we have a network of agents. We charge them annual maintenance fee. All -- this is all in the account.
At what rate this can grow? What rate it has grown for 9 months?
Nine months, it has grown up by about 12% to 13%. And it will grow as more and more people are being -- I mean targeted marketing is one area where we are growing at about 12% to 13%. Last year, our total revenue from this was 146 -- INR 145 crores roughly. You see this year, within 9 months, we have touched INR 177 crores. Of course, there is a lot of uncertainty because we are doing a lot of pilot projects. So we exactly don't know what will succeed. But so far, we have succeeded and growth rate is appreciable.
Okay. And in catering, like you mentioned, actually, kicks in for prepaid trains almost at the end of the year. That is for March.
20th of March, yes.
And what you can buy off the shelf, it kicks in immediately, right?
Yes.
So for the company as a whole, IRCTC as a whole, if you were getting INR 100 from catering, both license and direct sales, because of the increase that you have in tariffs, on a blended basis, what that number will go up by in the next year? By what percentage roughly it can go up by, that realization of INR 100 in catering?
We have to do a sale assessment of all the trains. And then we have to work out the percentage. And then we have to correlate it with the price increase, which has taken place.
No, but you already have the number of price increase that has happened in the menu, right?
Yes, number of price increase is there. But still -- volume, whether it has gone up or gone down, still, we have to assess because -- in Rajdhani, Shatabdi prepaid trains, which I mentioned. Now Railways have given the option of opting out also. So passenger has the option of not taking meals and purchasing only travel part. So all that assessment we have to do, we should be doing it by March end.
Understood. But just last one question related with this is, how much of the catering revenue for 9 months is direct sales? And how much is license and concession fee? And when you charge concession fee to the person who's handling the particular catering, what percentage of his revenue you typically charged at IRCTC company level as a whole?
See, our turnover of that is -- still potential in Rajdhani, Shatabdi, Duronto is, for 9 months, it is about INR 430 crores, right? And this license and concession fee which we take, that is about INR 240 crores for the first 9 months. This will certainly go up. But by what extent, we'll be able to tell only when we are able to do the sale assessment.
Sorry, but that adds to only INR 670 crores. You've done a turnover of INR 808 crores 9 months. You said INR 430 crores prebook.
I told you about the mobile portion only. Then we have static units like food plaza, fast food units, refreshment rooms, Jan Aahars, cell kitchen, base kitchen, e-catering. And all that is another INR 110 crores.
Okay. And one last question was on the monetization on your website, which we just spoke about in terms of targeted marketing, et cetera, the margins remain in line, which is about 80% overall. Would they remain in line with what you get with the service charges?
No, it depends. I mean it's difficult to charge margin of 80% from your marketing activity and all. But it changes from product to product.
What that would be, the number?
Like you see, the advertisement on website, it has no cost. So the entire thing is margin. But when we go for sending promotional SMSs, then margin is much less. Same happens in the case of payment gateway and financial transaction charges, which we recover from the instruments, there is no cost as such. Whatever we get is margin only.
[Operator Instructions] Next question is from the line of [ Jinesh Gandhi ] from Prabhudas Lilladher.
Sir, I just want to know that on a sustainable basis, what can be the annual operating cost for running the Internet ticketing business? So in this quarter, we reported an EBIT margin of 85%. So I want to know whether this is sustainable or not.
This is sustaining. This Internet ticketing has a peculiar feature that every 5 to 6 years, you have to go for a major CapEx, which is almost INR 250 crores to INR 300 crores when you change over the entire system, right? After that, it is only annual maintenance contracts and annual support, Internet leasing charges, staff cost that is there. So I mean margin of 85%, what you are mentioning, yes, it will remain more or less same because the depreciation and all that is already provided in this. So this -- we do not see any major changes.
Okay. And where are we in terms of time line? You mentioned that after 5 to 6 years, we'll have to do a major CapEx. So is it nearby or, I mean, we are still far away in the cycle?
No, it's nearby.
FY '21, '22.
FY '21, '22, we'll do it. In any case, this changeover, it is not that, overnight, you buy a new server and put -- this changeover itself is a 2- to 3-year exercise. So we keep on doing something. I mean next year, we will start doing something. We'll do about 20%, 30% of the work in 2021. Major work will be in '21, '22.
Okay. And secondly, does the service charge revenue have any receivable component from Railways? Or is it that when a customer...
Please speak a bit louder.
Does the service charge revenue have any receivable component from Railways? Or is it that when a customer books a ticket and pays the money to us, we keep our service charge component and hand over the ticket fare to Railways? I mean basically, how does this transaction function?
Actually, we pay to Railways in advance because railway earning is a central government earning. And any central government of earning has to go to Consolidated Fund of India first. Then only any party can have charge on it. So we maintain and advance with Railways in a rolling deposit. Again, that rolling deposit, we purchase ticket on behalf of all the passengers who book it and add on our service charge, convenience fee on that and then replenish the rolling deposit with Railways. So you see, in true sense our business cycle in Internet ticketing is 48 hours. I'm sure there is no other business or no other product which has a business cycle of 48 hours, maximum 72. I mean we give the ticket and get back the money along with profit within 72 hours is outer limit. Normally, we get within 48 hours, unlike a construction company or any other company where it may be 48 months.
Okay. Okay. And one last question. Post this tariff hike in mobile and static catering, I understand that our license fee income will rise. But does this income have kind of cost attached to it apart from the Railways share, which we have to pay?
No, on the license fee, there are 2 major expenditures. One is Railways share that we pay and second is our administrative costs. Railways share will obviously because it is a percentage function of the revenue. Our administrative cost will remain the same or maybe increase at the same pace with which the entire staff cost grows.
Okay. So loosely speaking, the increase in license fee is virtually a proxy for your EBIT, right? It will directly move down to your EBIT.
Largely.
[Operator Instructions]
Can you just excuse me for 1 participant? Ajai, our CFO, will reply. In fact, I have got sore throat. Despite that, I'm shouting. So just give me some relief. Next participant, our CFO will address, then I'll come back.
Manish Poddar from Nippon India.
Congrats on a great set of numbers. I just want to understand, let's say you know the periods which we've been running these trains, so what sort of revenue would we have clocked and let's say what sort of EBITDA would we have clocked? I understand it's for a smaller period, but I just want to get a sense on that.
The Tejas train?
Yes, the 2 trains, which you have.
No, actually, in this particular quarter, we have operated only 1 train that is Lucknow and Delhi Tejas and in which we have clocked the revenue of around INR 15 crores and almost achieved a breakeven. And so far as the other train is concerned, it has been in operation only with effect from 17th of January. So -- and it is so far, as the figures and the indications are, the occupancy level, it is quite encouraging sign. And we hope that it will be -- we'll also be seeing the breakeven in this quarter itself.
And any update on the airline ticketing? How is that progressing? How -- what is the road map in that?
Airline ticketing has also picked up. And we have increased -- yes, it has -- on an average, if we see for the 9-month period, it has been to the tune of 4,750 tickets we are booking on an average per day. And specifically, where we see it is in the October to December, it is more than 6,000 tickets per day. So which initially, prior to this fiscal, it was around 4,500 tickets. So it has picked up significantly.
Next question is from the line of Ashish Aggarwal from Principal Mutual Funds.
Just wanted to get a sense, why are receivables so high? I just wanted to get some sense on that.
Our receivables are largely from Railways. I mean it's more than 60% is receivables from Railways in the sense that for all these prepaid trains, Rajdhani, Shatabdi, Duronto, we pay to the license fee and we get back from Railways. Now to overcome -- and it used to take about 2 to 3 months. To overcome this, we have worked out a merger with Railways whereby 80% of this segment will be made to us on the day of journey. This will start from next financial year. So at least INR 700 crores of services which we offer, 80% we will get on the day of service. And then for the balance, we will raise the bill and existing system will follow.So it will come down. Now coming to this year's outstanding, there were some issues with Railway Ministry and Home Ministry. So I mean it will be cleared in the month of April because for the Home Ministry, we carry all these parliamentary stuff for elections and all that. So there, our receivables is about INR 100 crores with -- I mean, with April -- coming of April, we should get it.
Okay. Got it. And what shall be the cash in our balance sheet as of December end?
INR 1,160 crores.
INR 1,160 crores.
Next question is from the line of Manish Ostwal from Nirmal Bang.
My question is on the revenue per ticket. In the 9 months, it works out [ INR 9.06 ]. In this quarter, it is INR 21. So basically, in the coming quarters, this INR 21 number should be sustainable number, right, sir?
About the INR 21, it's sustainable because we are charging INR 15 and INR 30. And almost 45% of the tickets are in AC category. So this INR 20, INR 21 is the average yield for this. I don't know wherefrom you got this figure of INR 9. It is perhaps on account of the fact that in that quarter, the service charge, we levied only for 1 month, that is September. And July and August were without any service charge.
Okay. Okay. And the second question, on the occupancy level of the first 2 Tejas trains, what is the occupancy level in terms of percentage, sir?
So this Lucknow-Tejas, it is around 65%. And Ahmadabad, it's about 80% to 85%.
80% to 85%. Sir, can you explain the revenue model in this Tejas train? What is -- how are we generating revenue? The revenue model, can you explain to us, sir?
See, these trains, we have taken from Railways on payment of lease charges. So that is one outgo. And second is we pay to Railways haulage charge. Haulage charge is the payment to Railways on account of operation of the trains, the engine of the train, driver of the train, guard of the train, entire track, signaling, station, fuel. Everything is given by Railways. So for that, we pay them haulage charges. These are the 2 major outgo. And then some expenditure on account of staff, which we engage, but that is a miniscule portion of overall expenditure. Regarding revenue, we have full freedom of fixing the fare in these trains, unlike Railways where it is administered price and only that much can be taken. So we have introduced the concept of dynamic pricing just like airlines. And we get money from there, and money comes directly to us. So that is a model. Out of that, we pay to our service provider who gives catering services, who maintains the housekeeping, catering, security.
Next question is from the line of Rahul Jain from Dolat Capital.
Congrats on very strong numbers.
Yes. Thank you.
Yes. Sir, so my first question is for the tourism business. We saw a jump of INR 85-odd crore Q-o-Q. What are the contributing factors here? I think Tejas contributed INR 15 crores.
Yes. Tejas is one of the reasons which has contributed. The second biggest reason is our luxury train that we run in Maharaja. It run only largely in the winter. So it generally starts in the last week of September and operate till end of March, right? So that entire revenue in previous quarters, there was no revenue from Tejas -- no revenue from this luxury train. But this quarter was a busy season. That is number two. Thirdly, you see there is a pattern in India that almost all tours, there is a massive tourist movement in third quarter. So tour packages and all that which we sell is accounted for in third quarter. And lastly, we got an order of INR 70 crores from Delhi government for carrying pilgrims to -- sorry, that is state Tirtha segment. There also, you will see a growth. And there, we took most the passengers in third quarter.
Okay. And from -- in Tejas business, I think you said on the media interview the revenue was INR 15 crore for the quarter. So why we say this is a breakeven? I thought based on the base fare computation, the breakeven point must be much lower than this number.
Are you aware about the costings?
I think what we said during the IPO that 70% utilization on base fare basis is what we should be able to achieve.
Yes 70% was conservative. Around 65%, 66% is the figure which we arrived at. We have done some cost reengineering. And we are reaching at about 65%, 66% occupancy for Lucknow-Tejas. And that is what I'm saying. I mean still, I stick to that 70%. With minor costing reengineering, we have reached a figure of 66%, which we are achieving.
Okay. And one question on the catering business. Last year, Q4, we saw a good jump in catering revenue of around 18%. Is there any seasonality in Q4 in this business that we can expect this year also?
See, last year, Q4, I mean we were not a listed company till last year. We were making all the provisions in the last quarter. And this year, we are making provisions quarter-to-quarter. So there, you must be seeing a drop in our...
Third quarter.
Margin in third quarter vis-Ã -vis last year, vis-Ã -vis last quarter. But it will stabilize by end of -- in the last quarter and annual accounts.
Your next question is from the line of Harit Shah from IndiaNivesh.
Just wanted to get a sense, so in your Rail Neer plant that you are expanding, what would the approximate CapEx that will be required for that?
See, one Rail Neer plant, what we -- what is our model that we buy the land from state government or any stage agency. And then on a transparent bidding process, we select one experienced party in packaged drinking water manufacturing and distribution. And then depending on the capacity of the plant, we make an assessment what is the likely CapEx in that for setting up the plant. So we -- in the bidding document itself, we mentioned that this much money will be paid to you, which is being paid based on the progress of work. So on an average, Rail Neer plant needs about an acre of land. And since we buy it from government or government agencies, it's generally INR 2 crores to INR 3 crores maximum. And an average plant of about 6,000 cartons per day cost about INR 10 crores to INR 12 crores of CapEx, out of which, 80% we give and 20% the partner has to bear.
Sir, did you say INR 12 crores?
Yes.
Okay. Fair enough. And this is like paid, as you know, upfront or it's generally over the period of the construction of the plant?
It's over the construction of plant, construction length and machinery supply length. Like out of INR 12 crores, there is -- construction was about INR 3 and rest is machinery. So based on the supply of machinery, escalation of machinery, commissioning of machinery and progress of civil construction work, we -- I mean it's predefined in the bidding document.
Okay. Okay. That's helpful. Secondly, I think earlier in the call, you had mentioned that -- so you charge the convenience fee from customers for the Internet ticketing. When you -- I think you mentioned something about if they paid through UPI or RuPay, you charge some additional INR 20 fee. Was that correct?
Not additional. It is like on -- our normal charges are INR 15 was for sleeper class and INR 30 for AC classes. For UPI, BHIM and RuPay, instead of INR 15, we charge INR 10. And instead of INR 30 for AC class, we charge INR 20. It is less than normal.
Next question is from the line of Ikshit Naredi from Naredi Investments.
So my first question is government decided to privatize 150 trains and in that, private companies like Tata and Adani have also shown interest in this offer. So how much trains are we expecting? And what is the time line to get those trains? And anything you want to add in?
They have just come out with RSP, and we're also waiting for that. We have engaged consultant for entering into this segment and what should be the exact model, whether we should enter through SPV or JV because this business basically has 2 components. One is investor or rolling stock provider, second is operator. So to date, in India, there's no other operator other than IRCTC, right? So we have to tie up with some manufacturer of rolling stock or some investor who can organize rolling stock for us. Obviously, he will also come then -- and he is putting major investment, what structure will be more suitable for JV, SPVs, all that we are studying and we'll certainly participate in that bid.
Okay. And my second question is the company is going to construct 2 hotels, one in Lucknow and one in Gujarat, the Statue of Unity. So what is the expected budget of this? And instead of managing the hotels, why are we going for construction and owning these hotels?
You see, Lucknow, if you take example, Lucknow, we had got a land for about INR 8 crores is the cost of land, and we are constructing the shell only, right? And furnishing and interior, money is being spent by PPP partner. So he's our partner for 25 years, within which he will pay: number one, this opportunity cost of money which we -- say, Lucknow hotel, we have put in a cost of INR 20 crores for construction of shell, which will pay him. And cost of land is about INR 8 crores. So for this INR 28 crores, he will give us a fixed return of 10%, which we have worked out that immediately he has to pay. And once he starts operation, he will share his revenue with us. So it's a safe model. Instead of keeping money in bank, we are creating an asset which is generating money more than banks as well as asset that has been created. Same model, we will follow for Khajuraho and Kewadiya also.
Next question is from the line of Pritesh Chheda from Lucky Investment.
Yes. Sir, we have one question on the ticketing system and one on the balance business. For the ticketing business, if you could tell us what is the net working capital number of days.
You see, as I mentioned, we have to maintain advanced with Railways. That is the perhaps only working capital required. On an average, we issue tickets worth about INR 70 crores per day, average. And normally, we get our money back into the bank in 48 hours. Outer limit is 72 hours. So we have to maintain a balance of about INR 210 crores, which is normal time. Now then we also study what is peak time of booking because there are days when, especially festive days and holidays and all that, when we book tickets, it's worth almost INR 200 crores per day. So that we study in advance and, accordingly, pull in more money in the rolling deposit. Then depending on the holidays, I mean in any financial year, there are 4 or 5 occasions when banks are closed for 3, 4 days, Saturday, Sunday preceded or followed by holiday. So then we have to make that extra provision.
So basically, sir, the year-end number will only be about INR 200 crores because that's a March end number and there is no...
Depending. Like I mean for the -- like last year, what happened, 31st March was Sunday. There were 3 holidays. And that is the peak time of booking because that is the peak time where tatkal booking is at its highest. So we had to maintain a balance of almost INR 500 crores, INR 550 crores, a good maintaining...
INR 550 crores.
because the moment balance in this rolling deposit goes below INR 5 lakhs, ticketing automatically stops. And we cannot afford that situation.
Okay. My second question is on the nonticketing business sum total. So all your verticals put together, based on your business plan that you have, what should be the projected growth that we can see in sum total of these businesses? What will be your capital commitments there? And what is the ROC that you seek on that capital commitment? So I'm okay if you give sum total of nonticketing. I don't want it individually.
See, being in hospitality, our CapEx requirement is not much except for this Internet ticketing, which is spread over, right? Coming to it, all other CapEx, which we may have at our business, cycle is very short. So normally, CapEx, if we are incurring something, when we start getting result out of that within a year or 2, really, we make investment of about INR 14 crores. So it takes about 9 to 10 months of setting up a plant, and we start getting our return within -- I mean immediately after 1 year. Pantry car upgradation, which we mentioned, I mean it will take about 45 days for upgradation. And the day we upgrade, our revenue share to Railways will go down. So that is the situation.
Next question is from the line Tushar Bohra from MK Ventures.
Congratulations, sir, on an excellent set of numbers.
Thank you.
Sir, just a few points. First, there was a news article regarding some investment we were to make in Delhi, about INR 600 crores for a 5-star hotel, along with ITDC. If you can just explain what would be IRCTC's role and, say, proposed investment in this? And why are we looking at such a large number as spend?
There was a talk, but it is not relevant now.
Okay. So we aren't doing anything of the sort, right?
No.
Okay. And along the lines of the budget hotels proposed in Lucknow and a couple of other places, we're also making these pods. I believe we've started one already in Bombay.
Bombay, we have started with one. Yes, it's basically pods. We don't invest in that. Pods, if you have traveled in the U.S., there's a concept of retiring rooms and stations, which are budget accommodation at the stations. So this is primarily on PPP model, we give the -- we get it from Railways and pass it on to a partner who upgrades the retiring room, gives us minimum committed license fee and then he operates and manages it.
So we would not be investing again on these. It would just be your revenue share?
Yes. Yes.
All right. Just how much would we be getting from retiring rooms, et cetera, right now? And what could be this number, say, in 3 years as our target plan?
I mean in our scheme, it's a comparatively much smaller business. Retiring room license fee, which we get, is about INR 3 crores to INR 4 crores only. But yes, this has resulted in a much improved service to passengers. If you see some of our retiring rooms, they're as good as -- you can compare it to 3-star hotel at very nominal price in stations like Katra, Jammu then Madurai and Erode, all that, Lucknow, Gorakhpur. So it's more of a passenger amenity.
Understood, sir. Sir, second, very quickly, the newer initiatives that we had highlighted in the prospect document, payment gateway wallet, et cetera, if you can just share some light on what are the initiatives being done around those?
Payment gateway, we have already started. We have done a pilot project with one firm. And normally, we enter into this kind of agreement for 1 year then go for -- then we go for open bidding process. You see our revenue from iPay which is our payment gateway to book...
INR 17 crores.
INR 17 crores. So I mean, we have a -- that we did in this filer...
INR 2.5 in the previous year.
In the previous year, it was [ INR 2.56 ]. This year, first 9 months, we have made about INR 18 crores.
The next question is from the line of Deepak Poddar from Sapphire Capital.
Sir, my first question revolves around your revenue now. This is a quarter where we have seen a full impact of basically higher revenue in terms of your entire impact of service charges coming in. So with this base as a INR 715 crores-odd on a quarterly number, so what sort of growth from this base is what we can envisage going forward?
If you recollect, I have already replied to this. Because there is a growth in passengers, currently because of recession, this growth is about 2% to 3% only but it generally used to be 5% to 6%. In railway passenger segment, the growth was there. And then still 27%, 28% of reserve segment is unmet. Reserve segment on web is unmet. People are still buying a ticket from window. Gradually, they are migrating to this. And that growth is also on about 2% to 3%. Then addition of new trains, announcement of more and more private trains, these are basically the growth drivers.
Sir, I heard that. Basically, my question was more on the perspective of overall revenue growth we are talking about because you're talking about other growth drivers as well, right?
We are doing a lot of experimentations on our website. As I replied in the previous question, this payment gateway was a thing which we have been experimenting for the last 2 years. And total revenue on payment gateway last year was INR 2.5 crores. This year, in first 9 months only, we have touched about INR 18 crores. So now we have launched our -- this payment gateway. Then we have launched own card also, iMudra. So there, we are likely to get transaction charges also. So we are experimenting, and a lot of pilots are in pipeline. These I am mentioning are some of the successful pilots. There are a few where we have not been successful, but we have not invested anything. It's a private partner who comes and invest and takes the risk.
Okay. Fair enough. Understood that. And sir, my second question revolves around your margin. So sir, can you comment on sustainability of 37% EBITDA margin that you reported this quarter? And scope for improvement over and above that because of your tariff revision in catering business?
In ticketing?
In catering business.
Overall, I mean yes, next 1 to 2 years, I don't see any problem because all the -- if you stick in catering, then revision of license fee is due, really, we are getting more and more plant commission. And the plant, which we commissioned last year, we'll run at 60% this year. And then -- okay, this is catering. And these new trains which we are doing, it's showing good results.
So sir, what is the scope of improvement basically? On 37%, we are kind of -- so what is the scope of the improvement on this 37% that we are kind of currently reporting?
Scope is unlimited, and we are making our best efforts. And you should be happy with 37%.Now I'll suggest that question is taken by our CFO, Mr. Ajai.
Sir, that was the last question. I would now like to hand the conference over to Shri Mahendra Pratap Mall for closing comments. Over to you, sir.
Thank you. Closing remarks, I think CFO will give.
I thank all the participants. And if there are any queries at any point still left, you can write to us, and we'll be answering it. Thank you.
Thank you.