🚂 IRCTC Explained: How this government controlled monopoly BEATS Amazon & Flipkart!
IRCTC earns ~2200 Cr in revenue, with 40% profits! Such high margins are unheard of, in e-commerce. So, here's a break down of this monopoly.
If I ask you to recollect any one experience with the Indian Railways, there's a good chance you may end up telling me how the IRCTC website would never load when you were booking a Tatkal ticket.
Or if you're among the lucky ones, you'd narrate your fabulous victory when you actually booked a Tatkal ticket!
Of course we're all familiar with the IRCTC, yet how it functions is a big blackbox for most of us.
You've possibly visited the IRCTC website tons of times, even seen their logos embedded on train coaches or products sold on the railway platform. But I bet you'd know very little about what the company does or how it performs as a business!
But worry not, we've got your back here. This article is the deep dive on IRCTC you've always wanted to read :)
Firstly, a bit of background about IRCTC
Indian Railways by itself is a beast. It has its own central ministry, an annual budget and employs 1.4 million people.
Back in 1999, the Indian Railways was looking for a partner to manage and improve its catering, hospitality & tourism. So, they gave birth to their own partner organization, IRCTC, short for Indian Railways Catering & Tourism Corporation. See, the name itself gives away what exactly the company is supposed to do 😛
When IRCTC was founded, its goals were very well laid out:
Offer convenience to passengers traveling in trains through online ticket booking, food services etc.
More importantly, make Indian Railways’ customer service more efficient
And as a result, bring more revenue for the Railways
So, IRCTC is the organization created by the government and for the government. But, this relationship between IRCTC and the government isn’t as simple as it seems. And it heavily impacts IRCTC’s business, both positively & negatively, as we’ll see later.
Got it, and is IRCTC doing well as a business?
To answer that, let’s look at some of IRCTC’s numbers. In the 3rd quarter of FY22, IRCTC had:
Revenue: INR 540 Cr
Profits: INR 209 Cr
Profit margin: ~40% 🤯Â
These numbers are almost unreal for an e-commerce company! To give you some perspective, let’s look at India’s other top e-commerce companies:
Flipkart loses INR ~1300 Cr every quarter, on a revenue of INR ~1250 Cr
Amazon loses INR ~1200 Cr every quarter, on a revenue of INR ~500 Cr
You know, when I first realized this huge discrepancy, I thought to myself - maybe it’s because IRCTC is the oldest e-commerce player in India. Maybe they know some tricks that Amazon & Flipkart are yet to figure out?
Don’t worry, I am just pulling your leg there! The real reason is quite sound and convincing 😎
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That's it for today! We will be back with more interesting articles!
Stay tuned and keep buildd-ing 🚀
Cheers!
Hrishikesh