M.N. Chopra, MD, IRCTC: Railway catering is a lucrative business

IRCTC By The Numbers

Turnover*: Rs 300 crore Number of trains managed: 60 Number of food plazas: 6 Revenue from food plazas: Rs 30 crore No. of empanelled caterers for trains: 40 Average number of meals served per day: 1.5 lakh *Estimated for 2002-03

On a hot mid-May Friday, which happens to be a Central Government holiday on account of Buddha Purnima, Mahendra Nath Chopra, dressed in casual attire and wearing tan-coloured sandals, decides to go on a 250-kilometre drive up to Chandigarh in his Tata Indigo. That certainly isn't the best way to enjoy the extended weekend break-especially when the temperatures are nudging the mid-40s in the shade. But for the 56-year-old Managing Director of the Indian Railways Catering and Tourism Corporation (IRCTC), the time is as good as any to be doing the rounds.

For one, it is the holiday season and the small and mid-sized railway stations along the northern route are bustling with passengers. If Chopra wants to get a feel of the travellers' spending pattern and choice of food, this is likely to be the best time. For another, come June, IRCTC will have catering responsibility for another 220 trains, in addition to the 60 it already feeds. In terms of meals served, that'll take the number up from 1.5 lakh currently to a staggering 7-8 lakh.

If Chopra is nervous about the huge ramp-up, he isn't showing. Since August 2001, when IRCTC was carved out of the Ministry of Railways, the career railwayman has run the entity like a mini corporate with just 35 executives. It caters to about 60 trains, including the Rajdhanis, Shatabdis, Jan Shatabdis, and mail expresses. The business is completely outsourced to third-party caterers, who make food to IRCTC's specifications. With some 60 lakh passengers travelling on the 60-odd trains everyday, that's Rs 6 crore to be made on food every day-assuming an average spend of Rs 10 per passenger.

INSIDE THE KITCHEN... ...AND HOW THE FOOD CHAIN WORKS.

IRCTC's base kitchen: Indian Railways' new recipe for success Tucked away in one of the narrow, winding serpentine alleys of Paharganj called Besant Lane, just a stone's throw away from the New Delhi Railway station, is Doon's Caterers' two-storey base kitchen. Doon's is one of the 40 licensed caterers empanelled with IRCTC. Its 20 neatly uniformed cooks working in two shifts prepare nearly 4,000 sets of meals and breakfasts for three trains managed by IRCTC-the Bilaspur Rajdhani, Dehradun Jan Shatabdi, and Jammu Tawi-Sealdah Express. The Work at the kitchen goes on virtually round the clock. To serve breakfast on a train that leaves Delhi at 6 am, work begins in earnest at midnight since the food should be delivered at least a couple of hours before the departure time. The months of May and June can be particularly back-breaking, thanks to a huge number of people taking their summer vacations. A typical breakfast in a Rajdhani requires more than 1,000 slices of bread, nearly 300 omlettes and 500 tea bags. And that's for a single train on one morning. The food is then neatly packaged in paper bags and aluminum foil by glove-wearing workers. The menu and quantity of food is specified by IRCTC. But since the current menu hasn't been changed since the 1980s, the corporation is working out plans to serve some more interesting and newer fare on the trains. The caterers also need adequate infrastructure in the form of base kitchens at various points on a particular route, especially for long-distance trains as there is only a limited amount of cooking that can be done in the pantry car.

When Chopra came into IRCTC, one of the first things he did was to overhaul the franchisee system. Reason: Even before corporation was formed, 85 per cent of the catering was done by franchisees. But this system was seen as corrupt and inefficient. Ever since IRCTC came into being in 2001, tender notices have been put on the company's website for greater transparency. Because the number of trains under the control of IRCTC will grow nearly five-fold after June 2003, the corporation is looking to increase the number of empanelled contractors to keep pace with the demand. What Chopra has managed to do is ensure that there is a wider participation in the bidding process and that there is no cartel of franchisees. The eligibility criteria to bid for catering on Rajdhani and express trains is simple: the players must have five years' experience in the business with multilocational infrastructure and a minimum turnover from catering business of Rs 5 crore in last two completed financial years.

To monitor quality, IRCTC employs external agencies like SGS, a Swiss testing and verification agency. The corporation also ensures that the managers, cooks, and stewards are regularly trained at five-star groups like Indian Hotels and ITC Hotels. Last year, for instance, IRCTC spent nearly Rs 35 lakh on such training programmes. Says Sushil Tandon, Managing Director of the Rs 12-crore Doon's Caterers, one of IRCTC's 40 franchisees: "There has been a discernible change after IRCTC came into the picture. Dealing with them is far more easy and transparent."

The New Gravy Train

Overhauling the franchisee system, however, is just one half of Chopra's plans. His bigger challenge is to exploit other opportunities in food service. Already IRCTC has six food plazas with an annual revenue of Rs 30 crore. Chopra plans to increase it to 50 by April 2004-again by roping in private players. "The only eating options available for people in railway stations are limp dosas and aloo puris. There is a huge latent market for hygienic food in good ambience," points out Rakesh Saxena, Head (Marketing), IRCTC.

THICKENING THE GRAVY IRCTC's initiatives for adding new revenue streams.
» Will convert nearly 50 poorly performing Rail Yatri Niwases into budget hotels with private sector participation » Expanding the number of food plazas up to 50 by the end of FY 2003-04 » Runs the online ticketing system for Indian Railways where, on an average, 2,500 reservations are made every day generating an average sales of Rs 8 crore a month » Will introduce specialised product vends at railway stations that will sell the local food specialities » Has introduced its packaged water Rail Neer, with a production capacity of 1.2 lakh litres a day

Take, for example, the food court at the Chennai railway station run by the fast-food chain Hot Breads, and where the local restaurant major Saravana Bhavan is also a sub-licensee. The Chennai plaza alone clocks a healthy daily sales of Rs 3 lakh. The food plaza operators too have a revenue sharing arrangement with IRCTC where the percentages range from 2-12 depending upon the location and likely customer traffic.

Water is another market that the corporation has targeted. Not surprising. According to the Indian Railways' internal assessment, almost a quarter of all the bottled water sold in stations and on board trains is contaminated. The result: Rail Neer, the railways own bottled water brand. IRCTC has two bottling plants, one in Delhi and the other in Patna, with a capacity of 1.2 lakh litres a day. The cost of building the two plants: Rs 5 crore each. "Rail Neer is safer than any other bottled water available in the country," claims Chopra.

After food plazas, streamlined catering services and e-commerce, IRCTC's other thrust area in the next few years will be to get private sector hospitality companies to take over the day-to-day running of underperforming and hitherto poorly maintained Rail Yatri Niwases. "The dormitories in most places are centrally located and lend themselves to be converted into good budget hotels," says Chopra. There have been a few private players who have evinced interest in the proposal, but for that the basic amenities at these niwases need to be spruced up quite a bit.

Train journeys often, even if you are travelling first class, can be harrowing thanks to ordinary standards of service. Maybe Chopra and his small team of managers can raise the bar by sacrificing a few holidays, in what is officially the Indian Railways' 'Year of Customer Satisfaction'.