The Ministry of Railways has decided to withdraw the decision on The Indian Railways Catering and Tourism Corporation (IRCTC) convenience fee, Department of Investment and Public Asset Management Secretary Tuhin Kanta Pandey said in a tweet on Friday. The decision comes when the company's shares fell as much as 25% on the BSE during the morning trade.
It regained nearly all losses after the withdrawal of the decison. The share were trading 3.15% lower at ₹885/share at 11.17 am.
On Thursday, the IRCTC said that the Ministry of Railways has asked the company to share 50% of the revenues earned by it from convenience fee, next month onwards. "...it is to be informed that Ministry of Railways...has conveyed its decision to share the revenue earned from convenience fee collected by IRCTC in the ratio of 50: 50 w.e.f 1st November 2021,” the company said in a filing to the stock exchange.
IRCTC is a Mini Ratna company which is the sole entity authorised to deliver catering, online ticket booking and packaged drinking water in trains and railway stations.
As per the company’s annual report, it earned service charge or convenience fee of ₹552 crore in 2015-16 and ₹362 crore in 2016-17, after which service charge was withdrawn by the Ministry of Railways from November 2016 till August 2019 for promotion of digital transactions.
IRCTC restarted collection of convenience fee on e-ticket bookings September onwards, earning ₹352 crore in 2019-20 and ₹299 crore in 2020-21. “Due to the Pandemic, the bookings during FY2020-21 have dropped by 42.35% over FY 2019- 20. Therefore, there has been a substantial decrease in the Convenience Fee also,” it has said in the report.
Additionally, in a recent earnings conference for April-June 2021 quarter, IRCTC CMD Rajni Hasija had said that IRCTC had earned about ₹149 crore from internet ticketing during the quarter by booking around 6.37 crore tickets. Convenience fee accounted for about 69% of these revenues.
