Citizens' Issues
Rot in the Railways – II: The Tatkal scam

How the Railways the artificial pricing and flawed ticketing process is allowing tickets touts to skim off hundreds of crores a year

In part 1, Moneylife showed how the higher classes of travel on railway trains were being subsidised by the unreserved general class travellers and pointed towards how the concept of totally unreserved trains on certain routes and at certain times of the year were money spinners for the Indian Railways. In effect, what used to be called the “White Man’s Burden” in the colonial days has now become institutionalized in favour of the neo-colonials in Independent India.

And this disparity is growing. Lower revenue earning sleek luxury trains with brand new coaches like Rajdhanis, Durontos and Shatabdis get priorities on scarce shared resources like path, platform, waiting rooms, manpower, track, engine and station. The higher revenue earning freight trains, passenger, express and superfast trains with general unreserved compartments wait it out to provide a clear path—their rakes usually consisting of older coaches and low maintenance as well and nil facilities.

This then brings out the next part of the series: Why is reservation of railway tickets such a major issue almost throughout the year, especially but not restricted to peak seasons?

To help reach some answers, the writer not only analysed reports on the subject by Indian Railways, CAG, CRIS and other entities, but also discussed the issue with past and present employees of the Railways who have thorough knowledge of passenger reservation systems. In addition, contact was established with some technologically savvy touts and ticket providers, who know an assortment of methods by which to beat the system.

Also, I myself went through a large number of bookings and cancellations as well as analysis on some routes (typically Delhi-Patna, Delhi-Mumbai/Pune, Delhi-Bengaluru and Delhi/Goa and some more including what is probably the only one-way train in India, the 02779 on the Goa-Bengaluru route) and used three different identities in the bargain. Here’s how the Indian Railways, constantly complaining about a lack of resources, is on the other hand letting this huge amount of revenue leak through.

There are approximately 105,000 tickets kept aside for Tatkal reservations on a daily basis. Of this, it is estimated that at the very least 60% of them are booked with the assistance of agents, touts and others. The typical unauthorised add-on charges levied by the touts vary from about Rs300 for sleeper class to about Rs3,000 for 2AC tickets. This can be easily re-verified with any tout at any PRS centre, especially if you choose to go there around 4 or 5 in the morning, hoping to be first in queue, only to discover people are already sleeping or sitting in position from the night before.

Taking even Rs1,000 as an average, that is a straight Rs6-Rs7 crore worth of cash industry, everyday, thanks to Tatkal tickets because the present system of booking Tatkal tickets creates more problems than it solves. The big problems with Tatkal tickets are that:

(a) there is a fixed official premium for a product that has a much larger demand than supply and therefore people are willing to pay more as well as go through fake identity options.
(b) all the Tatkal bookings open at one fixed time—the day before the actual date of departure of the train—and therefore there is this huge surge and crowd, both physical and online.

The railway authorities have ostensibly been trying to solve this issue by making the process even more complicated, which only benefits the touts and others outside the system some more, without applying the real fixes, which are to:
a) make the premium dynamic, by a process of automated bidding, which handled transparently and simply, would remove all outside interventions.
b) make the timeline of these Tatkal bookings relative to the scheduled departure of the train.

The revenue currently lost would accrue to the railways. This is like dynamic pricing on airlines—some of us will recall paying premiums for airline seats when prices were fixed, and how that has vanished now that the airlines are allowed to vary pricing within price bands as per demand. This is simple yield management, and not rocket science—and it also permits the various discounted and other fares to co-exist.

This suggestion came from somebody within the Railways, as well as others who follow the subject, and when it was discussed with some touts, they were all universal in agreeing that it would put them, the touts, out of business. What better validation do you need?  And the revenue generated would be diverted to the Indian Railways—whose perishable commodity the reservation is, in the first place.

(Veeresh Malik had a long career in the Merchant Navy, which he left in 1983. He has qualifications in ship-broking and chartering, loves to travel, and has been in print and electronic media for over two decades. After starting and selling a couple of companies, is now back to his first love-writing.)


Unitech enticing new buyers by advertising hot returns of a selected past period

Unitech is facing a severe liquidity crunch and needs to repay about Rs1,000 crore debt in FY13. With severe funding constraints, the real estate company is assuring huge “sure shot” returns, advertising a carefully chosen past period. Why are SEBI and exchanges quiet?


Real estate giant Unitech is in dire need of cash flow as it faces a severe liquidity crunch and has to pay about Rs1,000 crore debt in current fiscal, out of its total debt of over Rs5,100 crore. In order to garner cash, the company has come out with a “Invest in Sure Shot Money Gainers” scheme, which promises huge returns on investments on some of its sold-out projects.

According to an email campaign launched by Unitech, the difference between launch prices and current resale market prices of some of its projects ranges from 88% to 127%. The company claims that its projects launched in 2009 have given huge returns for the buyers in just three years.
Its project ‘Vistas’ was launched with a price tag of Rs2,765 per sq ft in 2009 and the same property is now sold at Rs5,200 per sq ft, giving a return of 88.1% in just three years. Similarly, the company claims that its projects, ‘Residences’ and ‘Gardens II’ have given returns of 112.4% and 127.1%, respectively on their launch price. 

Citing a great returns on investment made in 2009, Unitech is now asking people to invest  in its new projects “South Park”, “Crestview” and “Anthea Floors”. The price for a flat in these buildings starts from Rs72 lakh onwards.

The problem with this pitch is that it highlights the excellent returns of just one specific three-year period. This is pure mis-selling since returns carefully chosen for a self-selected period and that too starting with 2009 when values were extremely depressed is a false pitch. The Securities and Exchange Board of India (SEBI) insists on making mutual funds and others write that past performance is no guide to the future. Without this, fund companies would misuse past returns, highlighting the self-selected best periods (as L&T Mutual Fund was doing in 2009) while investors would unquestioningly be enticed by such selective performance. SEBI has since plugged this kind of sales promotion. Without a real estate regulator in place, Unitech of course can claim that it is not violating any law. But SEBI and the exchanges regulate listed companies and can easily pull up Unitech—if they want to.

Unitech is also offering a zero pre-EMI facility for 18 months from leading banks. The zero pre-earnest monthly instalment (EMI) offer is nothing new but is used by several realty players. The scheme also known as EMI subvention scheme or 80:20 scheme is quite simple. The buyer pays 20% amount of the total agreed price, while bank or financial institute provide loan for the rest 80%. While the buyer needs to pay the EMI as soon as he gets the loan, in this scheme, the developer takes care of the EMI for agreed period. In Unitech’s case, the buyer will not have to pay EMI for 18 months and instead the company will pay it to the lender.

For the fourth quarter to end-March, Unitech’s consolidated net profit fell 97.8% to Rs2.26 from Rs102.5 crore, a year ago period. The real estate company’s total revenues, including sales, also fell to Rs716.1 crore from Rs1,054.3 crore in fourth quarter last year.

Ajay Chandra, managing director, Unitech, had said, “Financial year 2011-12 was a very challenging year particularly in terms of availability as well as cost of funding for real estate projects. The company has a healthy balance sheet and it has been continuously reducing its debt by utilizing cash flows from operations.”

During the fourth quarter Unitech managed to re-finance about Rs500 crore of repayment for FY12. This has led to temporary respite and its impact can be seen in the form of a sequential improvement of around 33% in revenue booking from its real estate projects.

“While the management has hinted at strong execution ramp-up in FY13, we believe the ability to manage liquidity would be the most crucial factor, especially given that the company has higher repayment of over Rs1,000 crore scheduled for FY13. We expect near-term outlook for Unitech to remain challenging due to liquidity headwinds adversely impacting execution ramp-up and cash conversion cycle,” said Motilal Oswal Securities in a report.

Due to severe liquidity pressure, Unitech’s project execution, cash flow and revenue bookings were adversely affected in FY12. This resulted in lower booking run-rate of about Rs400-Rs500 crore per quarter in FY12 from sales run rate of Rs900-Rs1,000 crore over the last eight quarters. Similarly, its average cash-flow from sales declined to Rs600-Rs700 crore per quarter in FY12 to normal run-rate of Rs900 crore per quarter in FY11.

According to media reports, during FY11, there were about 1.02 lakh units that remained unsold just in Delhi-National Capital Region (NCR), while the same for Mumbai was 90,512 units.



ajit vadakayil

5 years ago

Nothing wrong in what Vayalar Ravi said about Rockefeller foundation Magsaysay awards being given to potential desh drohis.
NDTV anchor asked Ravi—“ if so what about Nobel prize given to Tagore and Amartya Sen ?”
Ravi shied off— but then all Nobel peace and literature prizes are also vested.
Punch into Google search—
Rockefeller was the US agent for opium drug runners / black slave runners and owners of British East India Company Rothschild who enslaved India.
Every body knows this including NDTV.
capt ajit vadakayil

Sight seeing in America: Providing assistance to hotel guests

Hotels conduct customer service programs which also trained front office staff in acquiring knowledge of the prominent places in the area. This helped the guest in making their visit a memorable one

Our customer service programs involved acquiring of intimate knowledge of the places, markets and other specialities of the area in which our hotel was located. I was working in Alexandria, Virginia, commonly known as the "Old Town".  Back in 1749, it was one of the most important river (Potomac) front towns, where vessels from England used to dock in, bringing materials and immigrants.
It was a centre of trade and other related activities. Even today, many of the streets are laid with cobblestones and there are a number of historical colonial type houses; the oldest of the taverns, popularly known then and now as Gadsby's Tavern, still operates (partly as a museum) and most English visitors would make it a point to visit the tavern and have a 'beer' for old times' sake! There are other important houses that still stand, perhaps, as a monument to the efficiency of the builders of the past! Even today, when there are floods on the Potomac, we have the river water overflowing in some of the streets nearby.
As against this picturesque historic background, just across the Potomac river, stands the majestic Washington DC, which, too has a lot to offer, all built in the last 250 years! These protected monuments are a sight to see, and it was mandatory for all the staff members to have some idea of these because a guest can always look you up and find that you are a staff member and so they can seek information and assistance from you.
The amount of complimentary magazines, brochures and leaflets that the hotel's front office received regularly was huge and we would distribute them as and when they came in. On the top of these, the library and lounge shelves had tonnes of these materials for customers to browse, after which, invariably, they would come and seek our advice, and assistance in booking/making their travel plans to these places.
America itself is a land of immigrants and so it is normal to meet people from hundreds of countries in a matter of minutes, if you were walking down the street in Washington DC for example.  By and large, people here are cheerful and friendly, greet you even if you are taking a morning walk, and helpful. I would not dare to say this, if I were walking in a London street; likewise, New York City is a rush hour town, where everybody is in a hurry!
We had basically two kinds of guests; one that came on government related matters-busy, punctual and professional; and the other covered the rest who come on a holiday to see the capital and visit the historical sites.
I had a group of visitors, who came in a bus, and wanted to have a general idea of what they could do in two days as they all wanted to see important places. So, I began, if you wanted to see the very first aircraft, which the Wrights Brothers flew in 1903, well, you had to come down and look it up at the National Air & Space Museum. Or like the Charles Lindbergh's "Spirit of St. Louis", which is also on display.
If you are the historical buff, and you wanted to really visit the Ford's Theatre, where Abraham Lincoln was assassinated, you had to visit DC. Some others would love to visit the JFK Centre for Performing Arts; for the great speech "I had a dream", you would love to visit Dr Martin Luther King Jr National Memorial.
Where else you can see $800 million being printed, everyday, but in the huge mint in DC? And you would wonder how they are able to bring in such a large quantity of paper, print them (which you can see, by taking an admission ticket early in the morning) and how they are distributed (or removed from the mint?)  This is one amazing place to visit.
Of course, if you were keen to see the Apollo rockets and other spacecraft that landed on the moon, or the rocks that were brought back to earth, where else can you see them except at the Aerospace museum, near the Dulles airport?
If you wanted to see the Blue Hope Diamond, which originally came from India, you will have to visit the world's largest museum-the Smithsonian Institution, which includes research complexes and 15 other speciality museums. You need to decide and be guided by what is of your specific interest before you venture out to visit this monumental place. Even then, you would need a few days just for this purpose!
Members of the Jewish community would invariably visit the Holocaust Museum to see with horror Hitler's gas chamber and feel sad how people perished because of this tyrant.
There are other institutions like the National Art Gallery, Library of Congress (which has 532 miles of shelves and some 115 million books, and counting) and the beautiful Washington National Cathedral, the 6th largest in the world, built in gothic style, where many important activities have taken place.
The list is actually endless. There are two more things that I could suggest, because the weather prediction is good.  One is to take the amphibian coach, which will take you around most sites in DC, and, at the end of which, the coach will get into the river and go about as a boat. Yes, it is amphibian!
The other is the trolley tours, which again will cover all these places and more, and has a fixed route for their trolleys. What you could do is get into the trolley and as it stops at a given site that you would want to explore further, you could get off, spend some time and take the next trolley (schedules are kept), and keep doing this-on and off the trolley-till the very evening, and return back to the hotel! A single ticket will cover the whole day trip, regardless of the number of times you get in and get out, in different trolleys!
There were a few others who would want to take a trip to a casino; the nearest one for us in Alexandria is the Charles Town in West Virginia (some 70 miles, I guess) and the other is in Atlantic City (New Jersey, some five hours by car). There are many other casinos in the country, with Las Vegas as the world's largest gambling town.  Most people, however, take a chance at buying a Lotto or the weekly high value jackpot tickets and take a shot at their luck!
Upon completion of this introduction to the sites to see, the group leader took some time to have a discussion in the restaurant after which we arranged for their tours through organized tour companies, so that everyone in the group enjoyed their visit to the city.
It was customary for us to advice them to keep the valuables in safe custody; safety vaults were located in the front office. We would suggest them to go in groups and hold on to children when they cross roads and take all precautions.

Every visitor had an area location map, which included our hotel and nearby landmarks, restaurants, medical stores and shopping area. This map also included our drop off and pick up points within the area so that every conceivable assistance was made available to the guest so that the visit was a memorable one!

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts. From being the advisor to exporters, he took over the mantle of a trader, travelled far and wide, and switched over to setting up garment factories and then worked in the US. He can be contacted at [email protected].)


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