CONCORNSEQ2 FY2023November 11, 2022 Container Corporation of India Limited
8,962words
166turns
20analyst exchanges
4executives
Management on call
Bhoomika Nair
DAM CAPITAL ADVISORS
V. Kalyana Rama
CHAIRMAN & MANAGING
Manoj Kumar Dubey
DIRECTOR (FINANCE) - CONTAINER CORPORATION OF INDIA LIMITED
Sanjay Swarup
DIRECTOR (INTERNATIONAL
Key numbers — 40 extracted
30%
e. Overall, the growth is good. Domestic we are doing very well. In fact the domestic growth of 30% plus we are able to maintain and that is because of the new products what we launched. They are g
10%
lly dependent on the export import scenario. Otherwise, the guidance given on the revenue side as 10% to 12% growth on both topline and bottomline we are confident of achieving that. With that the fi
12%
endent on the export import scenario. Otherwise, the guidance given on the revenue side as 10% to 12% growth on both topline and bottomline we are confident of achieving that. With that the first hal
100%
growth and we are able to declare good dividend for both the quarters as well already we declared 100% dividend on the share combined for Q1 and Q2. We have come up with good schemes during the quar
6%
licy the land license fees for the 26 terminals which we are operating on Indian Railways land is 6% of the market value of the land and the market value is the industrial price announced by the rev
380 Crore
here is absolutely no doubt in this. For this year, we are paying at the present at the rate of 380 Crores to 390 Crores. In the first half year we made a payment of around 190 Crores as the land license
390 Crore
tely no doubt in this. For this year, we are paying at the present at the rate of 380 Crores to 390 Crores. In the first half year we made a payment of around 190 Crores as the land license fee. Even t
190 Crore
esent at the rate of 380 Crores to 390 Crores. In the first half year we made a payment of around 190 Crores as the land license fee. Even though we have given estimate for the total year the land license
450 Crore
d license fee. Even though we have given estimate for the total year the land license fee will be 450 Crores that additional 60-70 Crores is towards the adjustments which we may have done because the lan
70 Crore
have given estimate for the total year the land license fee will be 450 Crores that additional 60-70 Crores is towards the adjustments which we may have done because the land rates are existed by revenue
7%
some more information so is there a provision of escalating this at a certain rate like say 6% or 7% this amount of 450 Crores or 390 Crores or every year depending on what is the price of land 6% o
450
Crore
d revenue officer for the base rate of land even if that comes the total pay will not be crossing 450 Crores. This is what company feels and this is what we told you right now. Atul Tiwari: I got that po
Guidance — 20 items
“Otherwise, the guidance given on the revenue side as 10% to 12% growth on both topline and bottomline we are confident of achieving that.”
“Land license fees front that will be one question every analysts would like to ask us so let me clarify that.”
“Even though we have given estimate for the total year the land license fee will be 450 Crores that additional 60-70 Crores is towards the adjustments which we may have done because the land rates are existed by revenue authorities once in six months so to cater to this exigencies we have taken the estimate as 450 Crores so now we are very clear and confident that the land license fee payment for the railway land will be not more than 450 Crores.”
“Sir just a couple of followup questions on land license fee policy just wanted to get some more information so is there a provision of escalating this at a certain rate like say 6% or 7% this amount of 450 Crores or 390 Crores or every year depending on what is the price of land 6% of that will be recalculated and you will have to pay?”
“How do we look at the employee cost going forward?”
“We are not recruiting fresh faces to fill up those vacancies so the employee cost is slightly come down or otherwise it will be at the same level last year.”
“The first question is on basically the step that you have taken that are quite commendable, new schemes announced, double stacking going up so what kind of margin improvement can we expect going forward in the next 1 or 2 years as a result of this?”
“If we have more volumes then we can have more double stacking as CMD has already mentioned in his opening remarks there has been 32% growth in double stacking and more than 2000 trains already we have handled in the first half and we are likely to cross 4000 double stack trains in this year which will be all time record for the company so all these things clearly point out that more traffic is coming on rail.”
“Understood Sir and Sir last question on the LLF the new terminals which will be competitive bid for what is going to be the criteria for the bidding.”
“Today say it is 1.6 lakh per rake tomorrow what rate will be there from the railways side nobody knows so the parameter will be in terms of the percentage of the railways rate or 1.6 lakhs as a fixed cost nobody is aware right now.”
Risks & concerns — 1 flagged
Okay and are we seeing the trends to continue currently because I think we are still facing the issues regarding the slowdown and all that.
— Vikram Suryavanshi
Q&A — 20 exchanges
Q
Thanks a lot Sir. Sir just a couple of followup questions on land license fee policy just wanted to get some more information so is there a provision of escalating this at a certain rate like say 6% or 7% this amount of 450 Crores or 390 Crores or every year depending on what is the price of land 6% of that will be recalculated and you will have to pay? Manoj Kumar Dubey: No, Atul it is like this. This escalation is a mandatory clause of the policy so what CMD spoke about is the value of the land is to be taken on industrial rate as on 01.04.2020 and based on that every year 7% escalation is t
Atul Tiwari
I got that point that the total will not be more than 450 but say like thinking slightly longer term say if a take a period of 5 years we should be building on 7% excalation on whatever amount you actually pay this year. Manoj Kumar Dubey: Absolutely in the existing policy. Sir the LLF policy which has been approved by the government there is a provision that existing players can move to say paying 1.5% of price of land from 6% so is there any plan on the part of CONCOR to take advantage of that or you will continue to pay 6% as you are paying right now? The first clarification is this 1.5 is
Q
This is Siddarth actually. I am from SBI Pension Fund. Sir I just wanted to ask one question regarding September update on 9th September that you have got in some ratings for raising of close to 9000 Crores from ICRA so if you could share your insights as to are there any plans to raise debts on the books and have any further capex plan or something so if you could just throw some light on that?
V. Kalyana Rama
We could not get you. You got the information that we are raising that. There is a Bombay Stock Exchange filing that you have got a AA plus rating. We do take ratings from these agencies because that is a regular process, yearly process we do the rating and keep them ready. We have no plans of raising any debt as of now. Thank you Sir.
Q
Good morning Sir. Thank you for the opportunity. Sir if you could help us understand in terms of the realization if we see on handling basis the realizations are down 15% in the EXIM segment compared to first quarter so if you could help us understand what is driving this?
Sanjay Swarup
As CMD has already explained that for doing last mile first mile logistics this service we have started few months back and big volumes have been added which are not giving very high margins to us but they are service to our customers that help us to bring more volumes to us so because of this per TEU margin is subdued. Per TEU EXIM originating impact is quite high which is 27980 per TEU which is more than the first quarter. If I see the realization on the originating basis it is showing an increase of 7%? Actually if you see on originating basis only then it is showing an increase. Understood
Q
Thank you for the opportunity. Sir in your opening remarks you had mentioned that the turnaround times have come off significantly in some cases by half so in your experience have you seen any shift of market share from road to rail because of this and have you started offering more and more timetable train schedules now helping that market share growth?
Sanjay Swarup
As the CMD has mentioned in his opening remarks the response of time table trains has been very good for us and we have been able to shift sizeable road traffic to rail traffic. In fact we have started a train called Retail Express from Dadri to Mundra via Khatuwas which is run by CONCOR in association with Maersk which is a very big hit for the customers and all live cargo what used to go by road has come to rail so this really has been very, very beneficial for our company and we have been able to shift sizeable amount of traffic from road to rail. Now that we have already seen this kind of
Q
Good morning everyone. The first question is on basically the step that you have taken that are quite commendable, new schemes announced, double stacking going up so what kind of margin improvement can we expect going forward in the next 1 or 2 years as a result of this?
V. Kalyana Rama
This question I was answering for last four to five conference calls. See the margin where we are operating in a logistics sector is a very good margin so now we have to ramp up more volumes and take more share in the market rather than increasing further and further margins. We are operating at 32% EBITDA margin is very high margin business in the logistics sector that you people understand because you analyze lot of logistic company. This sort of margins, are not really sustainable in our system. I do not see any further quantum jump in the margins. Our endeavor is to maintain the margins at
Q
Sir good afternoon. Sir on the market share front versus road there have been significant schemes that you all have launched could you tell us how the rail coefficient has improved in the past six months versus what it used to be last year?
Sanjay Swarup
Deepika, we are not maintaining the ICD wise rail coefficient but we are able to see the market growth in rail by various other parameters we are monitoring like empty running coming down, increase in double stacking. If we have more volumes then we can have more double stacking as CMD has already mentioned in his opening remarks there has been 32% growth in double stacking and more than 2000 trains already we have handled in the first half and we are likely to cross 4000 double stack trains in this year which will be all time record for the company so all these things clearly point out that m
Q
Thank you for the opportunity and couple of book keeping question so can you give us the EXIM lead and the domestic lead for this quarter?
Sanjay Swarup
EXIM lead for this half year is 675 kilometers, domestic it is 1344 kilometers total is 779 kilometers. Okay and can you give us port wise market for container port? JNPT is 36%, Mundra 36.4%, Pipavav 11.2%, Vizag 4.3%, Chennai 5%, Tuticorin 1.6%, Kochi 2.3%. These are the main ports. Okay and the rail coefficient at ports? Rail coefficient at JNPT is 18.2%, Mundra 26%, Pipavav is at 17%, Last question could you throw some light on the agri the bulk commodity side so how are we gaining the traction on the agri side if you can just provide some color on it? The agri commodities that you were pl
Q
Thank you for the opportunity. The first question that I had was more on the land license that recently came out the question was that if CONCOR was to go for long-term lease arrangements of let us say 30 to 35 years for its existing terminals will this get rebid or by virtue of CONCOR holding them today they pay whatever rate it is decided for 35 years without any competition coming inside?
Manoj Kumar Dubey
That is right. That option is there. If we chose to go ahead on the same old conditions we are going to have it for next 35 years without any competition. In the new policy also we can shift that choice is also given once the details come out the only thing the bidding will take place and we will have first right of refusal in case we are not the highest one, so in either case one thing is clear this is land or the railway parcel which CONCOR is having right now if CONCOR wishes to continue for next 35 years there is no hindrance in that. That clarifies. The second thing I wanted to clarify wa
Q
Good afternoon Sir. Sir can you help us with the empty running cost for both EXIM and domestic?
Sanjay Swarup
Empty running cost for the half year for EXIM was Rs.52.7 Crores, domestic 133.8 Crores, total 186.5 Crores. Sir just one suggestion if you can please think over it. Since now we are saying that originating is something that we have to be looking at and that is important to look at so if you can share the originating along with the handling when we disclose the volumes if you can please consider that suggestion? When should we share it? Sir when you disclose the volumes on the exchanges for the quarter along with the handling if you can also share originating it would be really helpful. If you
Q
Thank you for the opportunity Sir. I just wanted one followup question on the originating volume handling. We have seen that handling is now 2X of originating versus say 1.6X which is the normal rate. Now we understand that originating is more reflecting port volumes and handling is all this new function that you are kind of introducing so will this ratio will continue to remain in this 2X range because of the new first mile, last mile logistic that you are undertaking?
Sanjay Swarup
More or less it will be like this. It is likely to remain like this only. So there will be a substantial increase in handling ratio going ahead? Yes that is right. That was my question. Thanks a lot.
Q
Sir it is not Asset Management it is from the Research side and thanks for taking my question. Sir when I am looking at our originating volumes in this quarter and I look at the last 26 quarter average and we have been doing about 5 lakh container on the EXIM side every quarter and we are in that range even right now whereas when I look at domestic we were at about 55,000 to 70,000 and now we are doing almost 1 lakh right now since everybody ask about your dedicated freight corridor its benefits etc., is it fair to say that whatever we have done so far the benefits are really being only felt i
Sanjay Swarup
I do not think your conclusion is very correct because domestic we are able to develop new streams so it is clearly reflected in the volumes which is quite robust but in EXIM we are able to divert lot of traffic from road to rail but as CMD also mentioned in the interview in the morning we suffered in many places due to the geopolitical reasons and recession in Europe and US which is slowly receding down now so the negative growth that we witnessed due to those reasons has been more than compensated by the shift in traffic from road to rail that is the reason why you are seeing the volumes tha
Q
Sir can you share what is the rail freight margin this quarter and also outlook on that?
Sanjay Swarup
Rail freight margin for this half-year is 26.48% and the figure that you should like at is overall operating margin which is 32%. As CMD also mentioned in his opening remarks this is quite good for a logistics company, 32% operating margin is quite high. Got it and if you look at there has been sharp rise in empty running cost particularly for EXIM trade if you compare to first quarter and this so what was the reason or if you can explain something on that and that would be helpful? Empty running has slightly increased because there is lot of imbalance in imports and exports so that is the bas
Q
Thanks for the opportunity. My question is on domestic volume growth. It seems that we are focusing on cement, RoRo and food grains is it fair to say that cement will be the bulk of doubling of volumes or revenue that we are talking about over three years?
V. Kalyana Rama
See first of all we are not doing any RoRo. RoRo volumes are not here and cement is a new product and the present volumes, is not with cement. Cement we just started which explained to the earlier analyst by my colleague, Sanjay Swarup. We did some now around five, six rakes of cement movement in bulk but there is an accepted very high growth area. In the present volumes it is not a big contributor it is a very small contributor. When we had once said that we will try to double our domestic revenues within that is cement a big part? Who said that? You are telling that or have I mentioned any t
Q
Thank you for the opportunity again. You have shared data points on share of different ports and rail coefficient could you also give data for the market share that you have at JNPT?
Sanjay Swarup
Which market share you are asking? The market share that CONCOR has in JNPT, Mundra and Pipavav the ones that you typical give? JNPT if you take the short lead movement then we have market share of 79%, Mundra we have 40%, Pipavav we have 48%. 48% and what will be the numbers let us say an year ago just for comparison sake since you are giving X of short lead in JNPT if you could share that number, last year? The number I do not have with me at the moment. I can tell you afterwards. Thank you. That was the only question from my side. Thank you.
Q
Thanks for the opportunity again. Sir I just wanted to discuss a bit on the capex outlook so for the first half we have spent probably close to 140 Crores what we see from the cash flow statement so what is the outlook for this year because I think we had guided for something in the order of 700 Crores for this year?
Manoj Kumar Dubey
Second half will be obviously quite better than what we have spent in first half. As you know there is lot of rolling stock procurement in pipeline including containers and wagons so apart from many depots also under completion so will be in the same range of last year what we spent and maybe more than that also in the second half this FY. That is all. Thank you.
Q
Thank you for the followup. What I wanted to check on this rail operating margins, you mentioned 32% operating margin can you help us understand how you calculate that in terms of is it rail freight revenue minus the rail freight expenses?
Sanjay Swarup
I do not think you heard me correctly rail freight margin is 26.48% and overall operating margin is 32%. I will take it offline. Second clarification I just wanted pardon me if I am asking the same question again but given our 26 terminals they will be up for renewal over a period of time and that is when we have the opportunity to extend it for 35 years or we can straightaway to lock in the current industrial land rates we can renew it in between? Friend, there is one good saying to much analysis leads to paralysis. We already told you what we wanted to do as of now we are waiting for the gui
Q
Thanks for letting me ask a question, again. Just on the capex front, sometime back you had highlighted a pickup in capex to confirm more to DFC overtime can you give us some update on those procurement plans?
V. Kalyana Rama
Our procurement plans are intact. We are adding up new rakes now because of certain constraints in wheel set, the rake addition has slowed down. The program is to add to 270 rakes out of that we added till now 34 rakes so 270 minus 34 with simple arithmetic how can know how many number of rakes we are going to add in the next 3 to 4 years and containers I already mentioned that we are trying to take the inventory of our own containers to roughly 1.5 lakhs to 2 lakhs in the next 3 to 4 years for that we already started developing container manufacturing in India. It is going to give result. We
Q
Sir just one question from my side. Regarding this terminal concession period of 35 years so for you terminals when does it start from is it from April 2020?
V. Kalyana Rama
People are I think too much again I am repeating do not do too much of analysis. We are operating on these terminals right from year 1989 onwards. The terminals they were constructed till 2006 on railway land because till then it was the only company in this sector. After 2006 with the change in the policy, company started acquiring its own. Now those terminals which have been in operation from 1989 they will be progressively coming after completing the 30 years or 35 years, it depends on whatever has been written in the first instance. The clause is very clear. The next 35 years is available
Q
Sir on the double handling rakes for this quarter if we can just get the number?
Sanjay Swarup
Double stack in this quarter is 963 trains and total for the half year is 2108. Thank you Sir. Sir the other question was in terms of the EXIM the first mile last mile connectivity that we are doing which has resulted in the handling volumes going up, now this service that we are offering what percentage of our EXIM volumes is already covered or EXIM services would be covered and how much more is there scope to scale up this further? At present we are doing around 20-25% of the volumes which we are handling and our aim is to take it to minimum 50% of the volumes which goes to our terminal. We
Q
Container Corporation Of India Ltd. Q2 FY23 Earnings Conference Call Hosted By Dam Capital Advisors Ltd.
Time
November 11, 2022 11:30 Hrs India Time Main Speaker(s): Ms. Bhoomika Nair - Dam Capital Advisors Ltd. & Management Of Container Corporation of India Ltd. Total 177 Participants including the Speakers. Participants List Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Name Phone HOST : Anifa Fernandes HOST : Bhoomika Nair HOST : Manangement Aakash Goel Abhay Modi Abhinav Bhandari Abhishek Ghosh Abhishek Nigam Abhishek Verma Achal Lohade Adil Khana Aditya Kumar Aditya Mongia Ajay Kumar Alok Deora Alok Deshpande
Opening remarks
Bhoomika Nair
Thanks. Good morning everyone. Welcome to the Q2 FY2023 Earnings Call of Container Corporation of India Ltd. I have with us today the management Mr. V. Kalyana Rama, Chairman and Managing Director. I will now hand over the floor to him for his opening remarks and post which we can open up the floor for Q&A. Over to you Sir!
V. Kalyana Rama
Thank you Bhoomika and good morning everyone. We are happy to come out with again a good financial results. I am now today having with me my Director Operations, Mr. Sanjay Swarup and Director Finance, Mr. Manoj Dubey with me. Overall, the growth is good. Domestic we are doing very well. In fact the domestic growth of 30% plus we are able to maintain and that is because of the new products what we launched. They are giving us good headway and also the earlier system improvements what we have taken of introducing high capacity rakes and high capacity containers is really giving us good business from the west coast to east coast and to the south side and also we are able to pickup volume from outside as well so that is a good scenario. The empty running is coming down and good circuits are getting build up in domestic and on EXIM side we had good handling volumes but overall EXIM scenario was subdued because of the existing conditions in the world markets and we talked about recession in