Industry

IRCTC expects business to normalise by October

‘Adverse impact on Apr.-June revenue’

The Indian Railway Catering and Tourism Corporation (IRCTC), whose operations have been hit due to the suspension of passenger train services due to COVID-19, is hopeful that the business would normalise October onwards.

In a communique to the stock exchange, the state-owned firm said that it was a debt-free company and had no liquidity-related concerns.

“Due to the lockdown, the revenue and profitability are likely to be adversely impacted for the April-June, 2020 quarter. As the situation is very dynamic, the company is closely monitoring it. The company expects that the business situation could normalise during the third and fourth quarter,” it said in the document.

The statement comes amid the Indian Railways’ announcement cancelling all regular passenger trains till August 12, barring the 230 special trains. Following this, IRCTC’s scrip closed 2.80% lower on the BSE at ₹1,381.60 per share.

IRCTC’s Board was to meet on Friday to approve the financial results. However, this has been postponed “due to unavoidable circumstances”. It, however, added that the impact of COVID-19 on the financials of FY20 would be minimal.

The company said Internet ticketing business had been adversely impacted due to decrease in train travel in March and then suspension of passenger train operations by Indian Railways “This drop in bookings is expected in the coming quarters also though in a decreased manner,” it said.

Stating that catering business may be adversely affected in the April-June, 2020, period as only few trains are running with limited supply of meals, IRCTC said it has supplied around 1.7 crore meals (at Rs 50 and 35/meal) on Shramik Special Trains from May 1 to June 22, 2020.

It further added that the Company's capital and banking facilities remain intact. “There are no liquidity concerns as we have sufficient cash/bank balance. The Company is debt free Company and is able to make its own financing arrangements for its projects from its internal accruals.”

It added that as the major receivables are from Ministry of Railways, Ministry of Tourism, and some PSUs, the Company does not foresee any problems in realising the same.

On demand for its various services going forward, IRCTC said in the present circumstances of maintaining social distancing, there is high demand for the e-ticketing services, though it is directly dependent on the operation of trains by the Indian Railways.

It added that due to suspension of the majority of passenger trains, sales of its packaged drinking water, Rail Neer, is expected to be low in the upcoming six months. “Travel pattern of railway passengers may change leading to reduction in average occupancy of trains. Eating preferences may also see a change with people preferring to carry their own food wherever possible,” it added.

On tourism it said there is temporary reduction in demand due to lock down, which the company expects to improve in the third quarter and normalise by the fourth quarter.

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Printable version | Jul 13, 2020 5:02:22 AM | https://www.thehindu.com/business/Industry/irctc-expects-business-to-normalise-by-october/article31926811.ece

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