The Hindu Business Line : Panel slams Rlys for limiting IRCTC’s profits at Rs 30 cr

A Parliamentary panel has pulled up the Indian Railways for “arbitrarily” limiting the gross profit of its tourism and catering subsidiary, IRCTC, at Rs 30 crore. The committee has asked Railways to reconsider its decision on the issue.

Railways had decided to impose haulage cost in 2006-07 on its subsidiary Indian Railways Catering and Tourism Corporation (IRCTC) for hauling the pantry cars in rakes by issuing a directive. Since the haulage cost would have been in the range of a few hundred crores annually, Railways had asked IRCTC to limit its gross profit at Rs 30 crore (in 2006-07) and pay the rest of the surplus to the Indian Railways.

Expressing its displeasure on the move, the Parliamentary Committee on Public Undertakings has stated it is surprised to note how the Railway Ministry can put a cap on the gross profit of IRCTC by imposing an abrupt and arbitrary decision on IRCTC.

Moreover, noting that there was no such clause in the memorandum of understanding signed between IRCTC and the Ministry of Railways, the committee said it fails to understand how the Ministry can impose haulage charge through a directive.

IRCTC had contested the move of Railways by saying that haulage costs for pantry car will add at least ten per cent to the overhead costs and adversely affect the quality of food and services on trains, unless tariffs for food items are suitably raised.

The committee had recommended that the request of IRCTC for withdrawal of haulage cost should be considered favourably so that the company is not forced to transfer this cost to passengers using catering services.

RAIL NEER

Moreover, the committee has also asked the Indian Railways not to delay IRCTC’s plan to set up two new packaged drinking water — Rail Neer — plants, pointing out this is actually benefiting other companies that sell branded packaged water.

“There is huge demand for Rail Neer in the market but due to inadequate supply by IRCTC, certain other brands are also managing to sell their packaged drinking water at railway stations thereby, eroding the profitability of the company,” it stated.

IRCTC presently owns and operates two Rail Neer manufacturing plants at Nangloi (Delhi) and Danapur (Bihar). IRCTC’s plans to set up two more plants in Palur (Tamil Nadu) and Ambernath (Maharashtra) are on hold as it is awaiting approval from the Railway Ministry for taking possession of the land.

Moreover, the committee has asked Railways to suitably rationalise the procurement prices of the “highly popular” packaged drinking water Rail Neer so that IRCTC does not have to register losses by “under-pricing” it.

Indian Railways had asked IRCTC to supply Rail Neer at Rs 6.50 per bottle to Patna and Delhi, and at Rs 7 per bottle to other areas. Rail Neer has been highly popular among the passengers since the brand provided good quality drinking water by international standards and is cheaper compared to other brands, the committee stated.

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