convenience fee sharing decision of irctc withdrawn by railways ministry
This decision to withdraw the previous direction came after IRCTC stocks witnessed a sharp slump on Friday. On October 28, the Indian Ministry of Railways had asked the e-ticketing and catering arm of the Indian Railways to share 50 percent of its revenues with the ministry. IRCTC share plummeted to as much as 40 percent hitting a new daily low on the BSE on Friday after the railway ministry’s decision of revenue sharing. “…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 on Friday in a filing to the stock exchange.
Sources have revealed that a board meeting of the IRCTC was called by the CMD to discuss the fee sharing issue at 10 am today. The board had asked DIPAM and other departments to intervene in the revenue sharing decision by the ministry. “The step was taken as the move would have created a big uncertainty for investors of PSU stocks. This, at a time when the center’s strong steps had created confidence in PSU stocks in the market. Hence, the decision is being reversed,” a government official said. In an attempt to increase the valuation of PSU stocks, the government has also blocked piecemeal sell-offs of PSUs that were done earlier through ETFs. “PSU stocks always had great value, but were lagging behind because of its role in managing them,” the official said.
Convenience fee has always been a sizable source of revenue for both the Ministry and IRCTC. In 2014-15, the revenue sharing was of 20-80 model that brought majority share to the catering arm of the Rs 253 crore revenue. The following year, the revenue from this was Rs 552 crore with a 50-50 share arrangement between Ministry and IRCTC. However, convenience fee was discontinued after 2017 and both, Ministry and IRCTC, did not earn any revenue from it till 2019.
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