IRCTC to share 50% convenience fee with Railway Ministry, should investors worry?

IRCTC will now share the revenue earned from convenience fees in the ratio of 50: 50.

New Delhi: The Indian Railway Catering & Tourism Corporation Limited (IRCTC), on Thursday (October 28), announced that the Ministry of Railways has decided to share the revenue IRCTC earns from convenience fees in the ratio of 50: 50. 

The latest will come into effect from November 2021. Following the IRCTC announcement, market experts are expecting a fall in the share prices of the state-owned firm that currently enjoys a dominating monopoly. 

“ln compliance with the Regulation 30 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,2015, it is to be informed that Ministry of Railways vide above-referred letter 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,” Suman Kalra, Company Secretary and Compliance Officer at IRCTC said in an official announcement dated October 28, 2021. 

Indian Railways currently earns from a slew of sources, including the booking of tickets, catering services, packaged drinking water and food sold in trains and at several railway stations. 

Out of all such revenue streams, the Railway Ministry will now take a slice of convenience fees collected by IRCTC in the ratio of 50: 50. However, IRCTC investors are now worried that sharing of the revenues is going to impact the stock’s performance which has given bumper returns to investors in the past few months. Also Read: SBI Customer Care Number: Bank releases new toll-free number to solve customer queries

IRCTC, which is a Central Public Sector Enterprise (CPSE) under the Ministry of Railways, is expected to release its financial results for the second quarter of FY22 on November 1. Also Read: Flipkart Big Diwali Sale now live: Pixel 4a at Rs 24,749, check offers on iPhone 12, Realme X7