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Indian Railway Catering and Tourism Corporation Ltd
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Ladies and gentlemen, good day, and welcome to IRCTC Limited Q3 FY '22 Post Results Conference Call hosted by Haitong Securities. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Sidharth Agrawal, Executive Director, Sales at Haitong. Thank you, and over to you, sir.
Hello, everyone. I trust you and your dear ones are in good health. On behalf of Haitong Securities India, I welcome you to the Indian Railway Catering and Tourism Corporation, that is IRCTC's Q3 FY '22 Earnings Con Call. On behalf of Haitong India, I thank the management for giving us the opportunity to host the call.On the call, we have IRCTC's management, led by Chairman and Managing Director, Shrimati Rajni Hasija-ji, and the Director, Finance, Shri Ajit Kumar-ji. CMD ma'am and Director, Finance sir shall first give the opening remarks, post which we shall open the floor for Q&A. I would now request CMD ma'am to provide her overview on Q3 FY '22 results. Ma'am?
A very good morning to all. I welcome you all to this con call of IRCTC Limited ended 31st December [Audio Gap]. I hope that you and your dear ones are safe, and I wish for a great and a healthy 2022. As we are interacting for the first time this year, so I thought these wishes are very important. Now when we talk about the results of the Q3 of the fiscal '22, well, it has been a very good quarter for the travel and hospitality industry and which was also contributed by the festive season. It would have been even better had the Omicron infections were not there.Thankfully, the nature has been relatively kind, and the Omicron infections have been much moderate as compared to the previous wave, that is the first and the second wave, which were pretty bad. Hopefully, we are completely out of the current wave, and there are no new waves of infection. That is what we pray to Almighty.Yesterday, our company has announced the financial results for the quarter ending December '21, and the same has been disclosed on the websites of both the stock exchanges, too. We shall first share a brief overview of the quarter 3 of financial year '22 results, post which we shall also have a question-and-answer session with all of you, and you're free to ask.In the third quarter of financial year '22, IRCTC has not only demonstrated the resilience but has also reported the operational improvement in all of its business segments. While revenue for the quarter is still below the all-time high, but the absolute EBITDA hits a new high.On a consolidated basis, quarter 3 of this financial year, revenue came to INR 540 -- nearly INR 540 crore, where we have seen a strong growth of 33% over -- quarter-over-quarter and significant improvement on year-on-year basis also, that is 140 -- nearly more than 140%.EBITDA margin for the second consecutive quarter is at 51%. Net profit of INR 208 crores also saw strong growth over the quarter-over-quarter performance at 32% and 168% in year-over-year basis. So both the results have been pretty good. But for the emergence of another wave of infections, the travel and hospitality industry can look forward for a much better fiscal year, that is '23 and beyond. IRCTC's business segments like catering, packaged drinking water and, importantly, tourism, can look up for a better performance in the changed industry environment. Things are improving. Vaccination is improving. We can apprehend good results.I shall now hand over the call to my colleague and our CFO, Mr. Ajit Kumar, to brief you on the financial and segmental performance of the company.
Good morning, everybody, and wishing you and your dear ones a much better 2022, especially as regards health. I shall first give a brief overview of our Q3 FY '22 results, post which we shall have the question-and-answer session.Q3 FY '22 revenue saw another quarter of a strong improvement on improvement both on Q-o-Q and Y-o-Y basis. Revenue of INR 540 crores grew by 33% quarter-on-quarter and by around 1.4x year-on-year basis, given that Q3 FY '21 had the impact of the pandemic.Given the Internet ticketing continue to drive the growth, as you know, it has the highest margin amongst the business segments, EBITDA margin remained at around more than 50%-plus mark for the second connective quarter and was at around 51.7% versus 52.2% quarter-on-quarter and 42.2% on a year-on-year basis.Let's now move to the different business segments of the company. The first one is Internet ticketing segment. That has continued to be the more resilient business segment. And Q3 FY '22 third quarter revenue, Internet ticketing hit another all-time high at around more than INR 312 crores, so growing by around 17.9% quarter-on-quarter and significantly higher than INR 143 crores in Q3 FY '21. The growth was driven by both, the growth in ticketing volume and in nonservice charge revenue. EBIT margin remained above 80% and was at 84.8% versus 83.1% quarter-on-quarter and 76.3% year-on-year basis.The other segment is the catering segment, which has moved back to profit after EBIT after 6 quarters of losses. For Q2 FY '23 (sic) [ Q3 FY '22 ], the segment reported EBIT of INR 5.7 crore versus a minor loss of INR 0.15 crore quarter-on-quarter and loss of INR 7.94 crore year-on-year. Resumption of cooked food was only a part of the quarter and should help better performance in coming quarters because this is going to be a permanent feature now.Rail Neer has also maintained the momentum in improvement of revenue and EBIT. The Q3 FY '22 revenue for the segment grew by 21% quarter-on-quarter to INR 49.9 crore. EBIT margin got back to double-digit margin at 10.1% versus 6.8% quarter-on-quarter and a loss, of course, in Q3 FY '21.The next segment, the tourism segment, which has, all over the world has been the most hit by the pandemic, saw a sharp revenue growth of 15.2% quarter-on-quarter to INR 68.25 crores, which was the highest revenue in the last 7 quarters. EBIT loss also now narrowed down to INR 7.93 crore versus INR 21.2 crore quarter-on-quarter and INR 11.4 crore year-on-year basis.The cash and bank balance, the net worth of company, at the end of the Q3 FY '22, the cash and bank balance is INR 1,821 crores, and the net worth is now INR 1,840 crores.So that brings to the end of the opening remarks. Now we can straight move to the question-and-answer session.
[Operator Instructions] The first question is from the line of Jinesh Joshi from Prabhudas Lilladher.
Yes. Madam, can you help us with the number of tickets which were booked for the quarter and share of non-convenience revenue to begin with?
Well, the number of tickets which have been booked, the -- it has been very good growth. In October, we booked around 4.38 crore tickets. In November, it was again 4.18 crore. I'm giving the absolute numbers, and I'll give the average also.Then in the month of December, the number dropped a bit. It was 4.02 crore when I say this. And in January also, the figures have been around 3.41 crore because it was -- we were impacted by pandemic again in the month of January.And the second question, can you please repeat the second one?
The share of non-convenience revenue.
Yes. The total revenue in the -- when we talk about the non-convenience fee revenue, because the revenue is earned in one month but realized in another month, so it is better if we take the consolidated 9 months kind of a figure.In this 9 months kind of a figure, the total revenue which we earned from the Internet ticketing was INR 728 crores, out of which INR 499 crores was of the convenience fee, that is 68%, and the rest 32% was INR 229 crores of the non-convenience fee. And if you want further detail, I can give you that also.
No, madam, that should be fine. And my second question is on the tourism segment. Now despite a swift recovery in the tourism revenues, the segment reported an EBIT loss of about INR 8 crores for the quarter. So can you highlight the reason behind it? Because if I look at FY '20, especially 1Q and 2Q, our revenue run rate was far lower in the region of about INR 45 crores to INR 50 crores. But despite that, we were into profit back then, and right now at INR 68 crores, we are into EBIT loss. So if you can just throw some light on that.
See, as far as the tourism sector is concerned, we have reduced the losses. That you have noticed that from the losses which were earlier were more, have got reduced to INR 7 crores only. And we are trying -- although in October and November and December, all efforts which we started, we could start only in the month of October.So we were about to succeed, our efforts were fructifying in the month of November, December. And -- but when we were doing this, the pandemic had already started entering in the month of December. So our December sales from the tourism also got impacted. And January was pretty bad for the tourism. So January figure, in fact, you will see in the next quarter.In tourism, when you start selling a thing, you start selling 6 months in advance. All our departures for that period were fully sold, but we had to cancel a few because the pandemic had already started entering, and the impact was seen even in the month of December also.So the tourism still is passing through very, very bad phase. And the bookings which you had earned earlier lost again in the January. Again to regain that in the month of February or March, you need some time.It is a continuous process. Any breakage in between is going to impact your next 3 months. It is a consecutive or a cascading kind of an effect tourism always has. So anything pertaining to law order, anything happening adverse in the country, it impacts your businesses in the tourism sector. It is only IRCTC which has been able to come back at least. I think things are pretty bad in the other -- with the other private companies where people had to lose plenty of jobs also.
Sure, madam. I fully understand that. The reason I was asking is because earlier at INR 50 crores, we were profitable, and now at INR 68 crores, we are into losses. So is there any change in the cost structure, which you would want to highlight is what I was technically speaking about.
Frankly speaking, there is not much change in the structure. But the bookings, the sales, we have to -- sales are not -- sales which were picked up, we lost our sales. There were many cancellations.The efforts by the teams are even more, but the results are not forthcoming because we are losing business because of the pandemic. People are hesitant of traveling. It is only in the deluxe segment or in the -- the mass level, the quantum of the mass travel that it used to be is no longer there.It is only the very, very necessary. Thanks to the festive season, during the month of October, there we could gain something. And the marriage season also in the month of December, that we could retain some bookings. So otherwise, the things would have been even worse, had those seasons were not there.Tourism has started picking up. It will pick up further. But you need some time. You need 6 months' time at least of the steady environment without any change so that you can get a good result in that.
Sure, madam. One last question from my side. Is there any rollback of seats happening from 2S to general category given restoration of a normal fee? I guess...
There was a clipping, press clipping which we shared in the last call, and we mentioned also that we have not heard of any such thing so far that the Ministry is thinking of rolling back the reservation fee on the second tier. And put together, both segments, second seater and the sleeper, is contributing to the 76% of the bookings.
The next question is from the line of [ Urmil Shah ] from Ageas Federal Life Insurance.
Yes. Ma'am, my first question was on the catering segment. So now that the precooked meals are being allowed, how has the transition to new tenders happened? And would it be too early to speak about the erstwhile price increase that was supposed to happen?
The cooked food decision came in the, I think, last week of November. And we started giving the trains on tender from the 1st December onwards, out of which few trains which were canceled with documents, we could restore them a little early as compared to the other where we had to do a tendering.If you recall my earlier discussions, the total number of trains where the tenders were to be awarded with the pantry cars, that number was 417. So this number is, out of the 417, 20 trains were not restored. But 44 new trains we got. So nutshell, there is a gain of 24 trains.So as of now, my total trains with the pantry car is 441, out of which, 428 trains are running with the pantry car with the cooked food while 13 are still on the ready-to-eat food because tender for those trains could not be materialized because of either very low bid or no bid.Then we also have a Train Side Vending trains. Their number is nearly more than 700, for which the tender process has already been started. And very soon, you will see the result and increase in the revenue from this segment.So you can say from the pantry car segment and from the Rajdhani, Shatabdi, Duronto, all Rajdhani, Shatabdi, Duronto has been now tendered, and license fee has started accruing. And same is the our turnover from the sale of our Rajdhani and Shatabdi and Duronto food also has been restored.But for TSV, yes, tender process have started. The licensee will serve food from the month of January onwards -- from February onwards because those tenders take time. These are the small value tenders, and generally, you need some more hard work in tendering those trains.
Ma'am, on the price hike, when should we expect that it would be reasonable?
February, we are -- in February, we are likely to close all the tenders for the Train Side Vending.
Ma'am, I was talking about the price hike which was supposed to get implemented and because of the pandemic, it got delayed.
I think it is there in the balance sheet note also. There, we have given the impact very clearly. I'll read out that for the catering contracts awarded before 22nd of March have been treated as a zero period due to the pandemic. Accordingly, no income as well as the railway share payable has accrued during the year 2021 and the period up to 26 November.Railway Board's order dated 23rd of February 2021 for the termination of a tender document due to the change in the scope of work has been withdrawn on 19th November. And appeal filed to the Railway Board has been on hold. Honorable High Court of Madras has withdrawn -- a case, particular case has been withdrawn by the Ministry of Railways, and catering services started from 27th of November in the case manner.The income and the railway share payable has been accrued accordingly. The effect of enforcement of the license fee is from 27th of November to 31st of December has not been recognized on account of an increase in the catering tariff as per the CC-63 of 2019 issued from the Railway Board.So it is -- sales assessment happens in 2 periods only. And it -- one is a lean period and other is the peak period. Peak period is now coming in the Holi. So one, that part will be taken care of in that. But in January, that is considered as a lean period we could not do because of the pandemic.So that sales assessment, we are likely to complete in the month of March for the peak period. And for the lean period, we'll see we can do now because February is again a little high figure, not lean, not considered as lean. So after that assessment is over, we'll see the increase in the license fee impact.
Sure, ma'am. Ma'am, coming to the e-catering part, in last con call, you had talked about that we are looking at onboarding partners for the food delivery point of view, given that with the large aggregators, it is taking time to conclude on the commercial. An update on that would be good and also the volume of e-catering.
Well, we have been able to bring on board quite a few of them. I'll share that figure with you shortly before I conclude. As of now, I think I missed that particular thing. So my team is collecting that. So we have been able to bring many of them on board.
Sure, ma'am. My last question was on the non-service charge revenue within Internet ticketing. So if you look at the 9 months number which you shared at INR 229 crores, and if I just adjust for the INR 126 crores kind of number, which was there in the first half, that means we have crossed the Q3 number of INR 100 crores. If you could share which are the subsegments that are driving that revenue? And should we expect that this INR 80 crore to INR 100 crore range on a quarterly basis to be sustainable?
Internet ticketing has been contributing the maximum -- not only the maximum revenue as of now but also contributing the maximum of the profit because all other segments, the profit share is less, and in turn the maximum contribution has been from the Internet ticketing.Whether we'll be able to sustain the same patterns, January is impacted because of the Omicron, yes. Some impact will be seen in the month of January. February is -- we -- February and March, we have this Holi period which is considered as a peak period. So my indirect answer is already there, that we can expect certain increase in the booking.We normally have high bookings in the month of Holi because of the travel happening towards the eastern region and return travel also happening. And when you said the other segments, how the Internet ticketing, other segment would be doing, yes, we have done some hard work in the advertisement, et cetera. The results for the same normally frutify in the month of March. So you will see some impact in that also. As far as our own payment gateway is concerned, it is doing pretty well. We have -- if you ask me, the 9 months period worth all marketing revenue we have got. It is -- if I say the percentage sharing with you, the total marketing revenue in the -- has been around INR 56 crores. And other than that has been INR 172 crores for non-convenience fee resource which is contributing around 32% of the total revenue of Internet ticketing, out of which about 75% share is of the other resources, and 25% share is directly of the marketing revenue, that is the advertisement revenue.And there, we have done very well. Our payment gateway is also doing well and some of the business will frutify. And we are also working very hard and reworking all of our policies so that more and more efforts in the government business can be achieved in the month of March. So things look good so far.
Sure, ma'am. And whenever it's possible to share the e-catering volume...
Yes, I will certainly share the e-catering figure with you soon.
The next question is from the line of Mayank Babla from Dalal & Broacha.
Congratulations on a great set of numbers. Ma'am, could you please give me the capacity of Rail Neer as of end of last quarter, capacity utilization and the units sold, please?
Well, capacity utilization was again impacted by the Omicron. And up to, I think -- current production of the Rail Neer has been to the tune of 5.5 lakh liters a day, where the capacity is around 14.8 lakh liters a day because of the -- though the demand has increased as compared to the previous month.But still it has not come up to the maximum level, one, because of the winter, where the consumption of the water goes low; and secondly, because of the travel. The second tier travel is happening, and second tier travel is around 38%. With the restoration of cooked food by extended catering that is Rail Neer has picked up.So production level is to the tune of 45%. The plant utilization has been to the tune of 41%. Recently, we have done close to 100 tonne also. And that also, we have found that our production capacity is being utilized in the percentage of 45% to 63%. Average is nearly 46%.
Okay. Sure, sure. And ma'am, my second question is regarding the tickets booked. Ma'am, could you give us the segmentation between the AC, non-AC and the general 2S class in this quarter?
Okay. Let's start from the highest. Sleeper class is the highest. That is 38.1%. And -- sorry, 2S is the highest, that is 38.6%. Sleeper class is 38.1%. And put together, second AC, third AC and AC chair car is 22%. And first AC executive class is less than 1%.
The next question is from the line of [ Manoharan ] from -- a retail investor.
Madam, just want to know like in the Internet ticketing, madam, like, if there is a split that you can share between the train and the bus? Just to know like how it's progressing, the bus and air that we ventured into, right, how it is progressing, madam, and any share you can do it?
I think these things cannot be compared because bus is -- in ticketing, we have a sole right. But in bus, you have an open competition, and there, the bus booking is ticking up as compared to the pervious. So -- and the air booking has also started ticking up, but air booking was pretty bad in the month of January and December.January it picked -- sorry, December it picked up. January, it went down again. So there, you have many more competitors like OTAs are competing with you. In the bus also, there are other partners.So in -- railway share cannot be compared with the bus and the air share. However, our share -- online share of the railway ticketing is -- we are maintaining at more than 80% level. And the system ticket, which is being booked through counter, is nearly 18%.
Okay. And the next one, madam, like -- so there is an auction for the private trains, right? That got canceled by the government, right? So any update on that, madam? Anything that's coming up sooner?
Discussions are still happening with the Ministry of Railways on this issue. In fact, today also, there is one meeting with them, one of the directors. We are still -- I think Ministry is still working on that, so I will not be able to give you a major update on this, but things are still under being...
Okay. And then last one, madam, if I may. So the payment wallet, madam, look, so is it in terms of growth percentage? Or like how are you progressing there, madam? In the growth-wise, not in the profit or not in the number-wise, just to see how it is progressing, right? So any growth number, percentage number you can share, madam, of the wallet alone?
Growth opportunities.
Growth opportunity, I think every segment has because in the catering segment, more and more trains are being tendered out. The Train Side Vending is going to be added. So there also there is a scope of...
On the payment wallet, madam. Only on the payment wallet.
You said payment wallet. Payment wallet, of course, payment wallet there is -- some growth is going to happen because gradually, gradually the wallet number -- the wallet user number is increasing.
[Technical Difficulty].
And -- but the open wallet, yes, in iMudra, there are certain challenges because now we have changed our partner. From one bank to another bank, we have shifted.
[Technical Difficulty].
And there is -- however, we have found a marginal increase in the business, was not very considerable in the open wallet also.
Okay, madam. And last one, madam, the Swiggy and other things, right, the last time when we spoke about the aggregators, we said actually we are trying our own aggregators, right, madam? Is that -- have we made any progress there, madam? Anything that...
We have got some progress. Our MOA changes are being discussed at various levels in the Ministry of Railways. I think they are in a concluding stage now. So once it is approved by our parent ministry, the things will be send to -- for further action, and the MOA changes will be executed, and we'll also have to follow the course through our AGM. So we are working on the same very thoroughly.
So we will have our own aggregator, is it? Like our aggregator? We'll have to similar to Swiggy?
We'll have our PG. We will have an aggregator license, and we will be taking that -- we will be free to take our PG as an aggregator to other companies to work upon. So that will be an additional source of revenue for us in the coming years to come. Maybe the next year will maybe the year.
The next question is from the line of Shridhar Mandke from FIS Global.
First of all, congratulations on excellent set of numbers there. So am I audible?
Yes, you are.
Okay. So I have a few questions. First is on the tourism segment. So I see that expense on the tourism segment from last quarter has almost doubled. So could you shed some light on that? The second question is about the profit margin in catering segment. The EBIT seems to be at 5% at the moment. So do you see it growing maybe in double digits in coming quarters? So that's the second question. So I'll carry on after that. So if you could...
I'll answer your second question first. The profit margin in the catering segment is 5%. Yes, it is going to increase further because more and more trains are going to be tendered, so your segment vis-a-vis the expenses are going to remain the same. The main expense is generally on the HR and expenditure that you do.And we are getting good bids as far as the licensing of the trains is concerned. So the margins are going to increase. If I recall correctly, in '19/'20, our margins in the catering segment has been around, I think, 10% to 12%. 12% was the total margin and which increased at time in the peak season.In the catering segment, in the quarter, if I see the -- as compared to the consecutive quarter, we have done much better. That is around INR 34 crores better than the previous quarter. And in profit, in the last quarter, catering was a losing segment. Now it has become a profitable segment. So profit margins are going to increase further. That is what we are anticipating. And while the tourism, our expenses have gone up because in the tourism, many trains have run because of the...
Revenue increasing there.
Revenue increased. The revenue has also increased in the tourism segment because of the running of the Tejas, and some fixed expenses of the Tejas had to be paid. So that was paid. So I think that could be probably one of the very important reasons that our tourism profit was -- expenses were a little more.
Okay. Yes. Another set of questions is that how is the booking shaping up on IRCTC Air? Probably you've answered that earlier, but just wanted to have more highlight on that.And the last question was...
We are yet to achieve the '19/'20 levels, sir. That's because the air bookings have not been -- we have not been able to gain the same momentum as we had earlier. In fact, in December and for January, we had many offers received from the airlines. But somehow we could not execute -- we could not get -- avail them because of the massive cancellation happening because of the Omicron. And we are anticipating good bookings now once the air traffic is resumed to its full.So there we -- and we may also work on the booking charges also again. We're also reconsidering and rediscussing our sales incentive, PLBs, MLBs, technical bonus, et cetera, with the airlines also so that the bookings in this segment can be restored.
Okay. Yes. And the last one from me is that do you any plans to open IRCTC executive lounges at more stations? And how is the response on existing stations?
We have executive lounges at -- I think 8 executive lounges as of now we have with IRCTC. Because of the Omicron, the sale of those executive lounges was also impacted. We also have a plan to open in the other segments for which very soon you will see some tenders.
The next question is from the line of [ Sheikh Mohammed ], individual investor.
And many, many congratulations for excellent results. My question is, madam, during the pandemic, there was also the reservation of second-class, means seating book -- seating was also being reserved. What is the position now? Now, still it is going by reservation? Or general ticketing has been started from the counter?
It is still -- second class is still reserved, and IRCTC is booking around 38% of that area. It is still reserved. So entire booking is with the IRCTC. And through system also, of course, is there. 38% of such quantum is being booked through IRCTC portal.
Ma'am, what performance -- means, in next quarter, what kind of performance you are expecting from IRCTC? There will be improvement from the December quarter? Or there will be slight less?
It is very subjective. Omicron has already picked up in the month of January. And being the hospitality segment, all our segments were impacted. In fact, we had a very, very good growth in the tourism segment. All our trains were full, et cetera. And we had to cancel all the departures till February. Most of the departures were canceled. Now we are gradually resuming the business. So in tourism business, there's going to be some hit because 1.5 months is already lost. And for gaining the rest of 1.5 months, you need another 1 month. As I said in my previous -- in the earlier remarks, tourism has a cascading challenge. If you want to sell your product, you have to look 1 year in advance. Any month lost in between, you add to that. So booking of that particular month is in -- not only gone, but booking for the next 3 months is also gone. So you have to plan in advance, you have to do so many things. And Rail Neer, yes, if it is an extended catering, the train number -- as the train number has increased, you will get -- we can apprehend certain growth in the catering and the Rail Neer and the Internet ticketing. We can foresee. But even the Internet Ticketing in the month of January was impacted because of the Omicron.
Okay, ma'am, that will help. Another question is, ma'am, Vande Bharat trains are coming on board or when it will start, do you have any idea?
When it is offered to us for providing hospitality service, we'll certainly come forward. I can only say this, but the rest is to be handled by Ministry of Railways.
The next question is from the line of Rahul Jain from Dolat Capital.
Congratulation on very strong number. Firstly, my question is on the catering business. How the pricing...
Which segment did you mention?
Ma'am, I said about catering segment.
You need to be a bit louder.
Just a second, ma'am. Is it any better now?
It's little better.
Okay. So what I'm asking is about catering business. So what are the prospects here? I mean how the pricing has changed? I mean what kind of premium we have seen in general on the re-tendering basis because earlier, the tenders were going on discount.So what is the difference between what typically what we used to get for the particular [ path ] versus what we are getting now? Any [indiscernible]? And you also said that there is 2 period assessment with lean and peak, and we have done it for the lean season right now.But I think the assessment in current year would not be much ideal, given that January has seen significant drop in the passenger traffic. So will that also have some bearing in terms of the minimum license fee that we will put in our contract here and the assessment will be lower?
Catering-wise, there are 2 portions to what we handle. One is that, yes, the first challenge with IRCTC was to restore the services and put the train on track as far as the catering was concerned. So that particular job is over, and we have got very good bids.There, we have seen some improvements. That is the improvement that we were already posting. The rest of the SBD contract were also restored, but the license fee structure remains the same. But the increase in the tariff had been there, which has been made effective as far as the percentage is concerned. So the corresponding increase in the license fee is anticipated. That is based on the assessment that you have mentioned. Yes, January, we had identified as a lean period for doing the assessment, we could not do because of the Omicron. But we are going to encash.Hopefully, everything goes fine, and there is no fourth wave and no effect of the pandemic further, then we will do. Certainly, we'll carry out our assessment in the coming months for that increased year. But for making that effective in the catering segment, you need to have a lean period as well. So we'll see what lean period we need to choose and then pick up the -- we pick up the figure and do the assessment as per the availability. Once it is completed, certainly, the impact on the increase in the license fee will be very visible. But that perhaps to the best of my knowledge and the consolidation practices that are being followed in the IRCTC, we will be able to see that impact, I think, in the end of March only. So we'll start working on that. So in the years to come, you will see some good improvement as far as the catering is concerned rather, I would say, good improvement in the catering, and Rail Neer is going to be a part of that. And as far as our turnover from the Rajdhani, Shatabdi food is concerned, since the price has increased, you can find marginal increase because of that in the turnover also.
Right, right. So 2 more clarification on funds that we have raised earlier. One of the points was that if you read out that note from the result, which clearly says that there is some advantage of this increased license fee, which will come for the period of 27 November to 31st of December, has not been accounted. So is it safe to assume that the revised price for this period will come in this quarter, in January, Feb, March quarter. That is point one.
Increase in license fee, 27th November...
[Foreign Language] our license fee will increase from 27th November only.
But current [Foreign Language] already [Foreign Language]. That's what I'm trying to clarify.
[Foreign Language] assessment [Foreign Language]. It will be only after assessment. Technically, as per the contractual commitment, we cannot do without assessment. More than vendor, we are in a hurry to do that, and all our team efforts got wasted because of Omicron. We had made all the teams, et cetera, everything was ready.
But revenue will come later on.
But revenue will come later on.
It will come in the Q4? Or it might take more time than that?
No, it will come in the next financial year only for us. Q4, we may not get -- Q4, we'll get the benefit of the increase in the turnover because of the RFP sales. And the CST contract, we could not do earlier, but some increase in the earning will be there because those tenders are getting materialized now. These are new tenders. And a few -- I think 24 trains have also increased. So that impact is also there. And the festival season ahead, so you will get even the sales are going to be better.
Right. And the number of CST contract, I think I heard the number to be 700. Was that number right?
Yes, it is nearly 700.
And this number in the previous quarter was 280.
That was -- we had not done that analysis completely. Now we have completed the -- this is a section-wise analysis. In overall contract, it maybe a little less, but the tenders will be like this.
Okay. So you mean to say the lower number was for -- so higher number is for section-wise while total contract would be...
But total number of the trains is also going to be more.
Right. I mean, this has gone from 280 to 700 on like-to-like basis.
Yes.
Okay. And there is one mentioned in the Note #7 regarding non-provision of charges till December 31 for the use of PRS for online ticketing by the company for running 2 private trains. Can you throw some light what is this pertaining to?
As of now, we -- for booking Tejas trains, we are using the PRS of Indian Railways. And that booking engine is being used. Our own engine is not yet ready. We are in process of making them, we are in talks with various agencies.Since -- because of the pandemic, Tejas operation itself was impacted, so we thought let's put our efforts on making the booking engine on hold. We did not make our own engine because it involves expenditure. So we were using their PRS, though, in future, Railways may claim PRS charges on that for the 2 trains, which are not going to -- which is not going to be very huge. So that charges, we may have to pay. So we are making certain provisioning for that. And that, as I mentioned, as of now, we have not made any provision. Maybe in the end of the year, we will make some provisioning for -- we'll keep some provisioning for that.
So the benchmark for this number would be -- what is the total...
As of now, let us do the bidding first. Only then we can do the benchmarking because Railways may charge X amount but as per the market demand, the amount may be X minus 1. So we will negotiate for the X1 rather than paying X.
So ultimately, the tickets will be -- you mean to say instead of hosting it on IRCTC website, we could also use other channels if those are price effective.
See, the booking inventory is going to be -- is with IRCTC. The booking engine has to be for IRCTC. IRCTC can make its one engine or can take the PRS engine. We may continue with the PRS engine if the rates are negotiated well. If it is -- rates are exorbitantly high, then we continue with making our own engine and go for our own kind of a setup, our own system.
Okay. Just to understand this, for example, if CRIS -- if government is imbursing X rupees to CRIS for this PRS, so total number of train, which is 2 divided by total number of total trains...
IRCTC has no business in that. Entire marketing revenue is with the IRCTC. For maintaining the infrastructure, we are already paying to CRIS. And for using the PRS charges, we would be paying to CRIS. Marketing -- even their marketing work is also being done by IRCTC, for which we charge 50% of the revenue share.
Right. Okay. And second and lastly, from the luxury tourism prospect, I can see on the website that we have started this for this October booking, October season. Have we started getting some response or these are just closed right now?
We have got certain queries from the U.K. market. U.S. market, we have not yet started. In fact, we are making efforts to run through [Audio Gap]. You might have seen some revenue also in this segment in the last year -- in the current quarter also. We had ran 2 departures of Maharaja Express.Our third departure was due -- scheduled on 22nd -- 20th January, got canceled because of the Omicron. Then the deluxe tourist train, the Buddhist train, we had to cancel because all our bookings got canceled, and the bookings are coming from -- either from -- or from the other countries. Few bookings were there from the U.S. also. So for the month of October, yes, we have started booking because these bookings in the luxury segment start 2 years in advance. So as of now, we have published only 1 year calendar for 2023. We are in process of publishing the calendar for '23, '24 also, for which I think the calendar is going to be done very soon.
So technically, if there is no new pressure from COVID, we may see this season playing out for Maharaja...
Yes, not only that. If let's say countries are opening up, we will also -- very soon, we will start our outbound business also, which is now put on hold. So we have -- within a day or 2, we are going to take a call, countries which are open like Dubai. And except -- we are going to start our outbound, and we are going to encash the upcoming holiday season, that is May, June.
Right. And just lastly from my side, which is on the cash utilization. I think you said the cash number is INR 1,800 crore right now. Any plan -- any allocation strategy that you would like to discuss?
Out of this reserve, we are -- we have to have -- our bookings on the ticketing has gone up. INR 700 crores are on a revolving. It will keep revolving. If 2 holidays come, then it may reach up to INR 800 crores also because every day, you get a booking of nearly more than INR 100 crore kind of...
In advance.
In advance, and you have to deposit with the Indian Railways. If 2 holidays come, then you have to deposit more. So one is the revolving, for revolving the thing that you want to know. And secondly, we are also in process of changing the infrastructure for the Internet ticketing.Again, when we started giving the tender, we were hit by the various supplies. Now again, we are reviving that. So we are thinking of doing some capital expenditure on Internet ticketing, where we really want to improve the infrastructure. Our talks with the agencies and the tender process, we have already initiated. So you will see some expenditure on the Internet ticketing and some expenditure on -- in the upcoming railways plans and infrastructure projects that are coming up, budget orders, et cetera.
The next question is the line of Nilesh Jethani from BOI AXA Mutual Fund.
Ma'am, my first question was on the 2S booking side. So I wanted to understand, today, it is coming under reserved category. And what is the potential opportunity of tickets over here? And today, what would be the tickets being booked?So the reason I'm asking this question is, so for example, you want to travel from Mumbai to Ahmedabad, I would be a passenger who is booking, say, from Mumbai to Valsad and booking from Valsad to, say, Ahmedabad. So the same seats can be used WiFi from any phone. So I wanted to understand what is the potential over there. And today, where are we as far as booking is concerned?
As far as the potential of the sectional booking is that this is going to be for -- this segment will always be there, right? So your assessment is right. In 2 ways it happens because the bookings are done from the section-wise. And even in sleeper also, the bookings are done section-wise.The train runs -- the bookings happening from end to end are there, but the entire pool booking, you cannot stop. It happens, and there are pools defined for that. I worked earlier in that segment, so I can share that segment with you.But the intersection booking also happens. That is why the utilization in few trains is always more than 100% because of the inter-sectional bookings. So this is there in sleeper class also and this is going to be in the 2S also.
So just wanted to understand, today, what is the booking done? And what could be the potential?
Okay. So second tier booking is nearly 38% of the total booking being offered on our portal. And the -- and last 6, 7 months, from the day it has started, we are seeing that this booking is nearly up to 42%. In 2, 3 months in the peak season, it has crossed 42% also.So one can -- it all depends how many classes are run by Indian Railways in the 2S. And as of now, we have not got any decision from the Ministry of Railways that they will not run second tier in the reserve segment.In fact, in one of the press clippings, clarification was also issued by the Ministry of Railways where they had mentioned that 2S is going to be -- continue to be in the reserve segment because they also get additional revenue on that. So that is the only, I think, supplement.
And say, now the share of this tickets have gone up, I mean absolute term growth also has been...
I could not hear you. Could you come again?
So I wanted to understand for the next, say, 12 to 18 months, what kind of growth we can expect as far as 2S tickets are concerned.
If the overall passengers on Indian Railways is going to increase, all classes will gain out of that. You might have heard -- read in the newspaper also, that ministry is targeting good number of passengers this year. So IRCTC may also be a beneficiary of that.
And second question is on the catering side...
Sorry to interrupt you, Mr. Jethani. The audio is breaking from your line, sir.
Just a sec. Am I audible now?
Yes.
Better. Little better, sir.
Okay, madam. So my next question was on the catering side. So today, I want to understand, in the total runs -- total trains running on the Indian Railways, how many have restarted the catering? How many is left? And earlier margins used to be in the range of mid-teens. So what is your sense on margins going back, say, in the next 12 to 18 months?
See, the total number of our trains which were running were to the tune -- in the October, there were 3,000 such trains where IRCTC was providing the booking. They went up nearly 6,000, 5,997 trains where we provided booking in the month of November. In December, again, they went down to the tune of 4,500. And in January, again, the figure went down, and the trains were around 4,051 where we provided the reservation. So that is...
I was asking about catering, ma'am. I was asking about catering.
In catering, we have -- by January end, we could provide catering services in the 428 trains with the pantry car. We could outsource all those licenses and we could award all the contracts.And in addition to this, we are also running around, you can say, 112 contracts which are still running on our team, and we are trying to give them again on the cooked food. Somehow the bidding process has not been very successful in this because of some or other reasons. We are doing such re-tendering again.
Okay. So instead of 400, 420 trains that you are providing catering today, what was the number pre-pandemic?
It was 417. We got 44 new trains, but at the same time, 20 previous trains were canceled. So net gain is 24. So you have -- now your number is 441, out of which 420 trains have been tendered with the cooked food, 13 are running in the -- with [indiscernible].No train is running without any contract, by the way. Either you have cooked food. Majority, 99% is with the cooked food, where you get better license fee, and rest is with that.
Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to Mr. Sidharth Agrawal for closing comments. Thank you, and over to you, sir. Mr. Sidharth Agrawal, please go ahead.
Yes, just a second. I would like to thank CMD ma'am, Shrimati Rajni Hasija-ji; and Director of Finance and CFO, Shri Ajit Kumar-ji, for another insightful session on IRCTC and its growth prospects and also to my colleagues and all the participants of today's call. Trust me, ma'am, it was indeed a huge [indiscernible]. Thanks a lot.
Thank you. And before I close, the e-catering figures, I would like to share. We have, I think, 5 partners in the B2C segment: ixigo, Paytm and this Railofy. We have made them access. But since the cooked food has started, the e-catering average has gone down. So -- but it will pick up when the festive season is here.
Commission is INR 5.5 crore.
And the commission that we have received is nearly INR 5 crores. So that is all from our side. Thank you very much.
Thank you, ma'am.
Thank you. Ladies and gentlemen, on behalf of Haitong Securities, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.