CONCOR targeting 18-20% volume growth, planning Rs 610 crore capex in FY25: CMD Sanjay Swarup

Jun 6, 2024 India Shipping News

NEW DELHI : Container Corporation of India (CONCOR), the country’s largest container freight operator, is looking to raise its overall cargo volumes by 18-20 percent on year in 2024-25, and plans to spend Rs 610 crore in the ongoing financial year on the same, the company’s Chairman and Managing Director Mr. Sanjay Swarup said.

“In FY 25, we expect growth of 15 percent in EXIM and 25 percent in the Domestic segment. This will translate to overall growth of 18-20 percent for CONCOR,” Swarup said in an exclusive interview.

He added that CONCOR plans to spend Rs 610 crore to develop terminals, procure wagons, containers and IT equipment, and acquire land.

The company incurred a capital expenditure of Rs 745 crore in 2023-24 and added three new terminals at Jajpur, Kadakola, and Paradip.

Concor also commissioned 14 new high-speed heavy capacity rakes, taking its total fleet size to 377 at the end of the year. In addition, the public sector undertaking procured 7,653 new containers, taking the total count to more than 44,000.

What are CONCOR’s top line and EBITDA margin targets for FY25? And what are your capital expenditure plans?

CONCOR is slated to grow at 18-20 percent in FY25 and we expect to maintain an EBITDA margin of around 24-25 percent. Our capex target for FY25 is Rs 610 crore, which we will be spending on development of terminals, procurement of wagons/containers/IT equipment, and acquisition of land.

CONCOR’s volume growth in 2023-24 was around 8 percent. What kind of volume growth do you expect in FY25? Could you break it up between exports and domestic?

In FY 25, we expect growth of 15 percent in EXIM and 25 percent in the Domestic segment. This will translate to overall growth of 18-20 percent for CONCOR.

The Indian Railways imposed a busy season charge of 10 percent on container traffic last October. What was the impact on CONCOR’s volumes and how did you deal with it? Is the charge still active?

There was an initial dip in volumes after introduction of the Busy season surcharge from October 1, 2023 by Indian Railways. Now, traffic has stabilised and the trade has accepted the increase in tariffs.

With our consistent good service to Trade despite this increase in tariffs, we were able to register the highest-ever throughput of 4.72 million TEUs in 2023-24, which was a growth of around 8.25 percent over the previous year.

There was a report by BNP Paribas that talked about your realisations or pricing being relatively higher than some of your peers and that this could be leading to some market share loss. Will you look at slimming down pricing and go for market share? And what is your market share?

It has been our company’s policy for the past several years to provide excellent service to Customers without compromising on margins. This will continue in future and we don’t intend to reduce prices to capture additional market share.

What are the major benefits that you have seen from the operationalisation of the Eastern Dedicated Freight Corridor? By when do you expect the Western Dedicated Freight Corridor to be fully operational?

There is not much container traffic on the Eastern DFC. The Western DFC is likely to be fully commissioned by March 2025, as per information from DFCCIL.

However, we have been using a part of the Western DFC that has been commissioned to run time-tabled double-stack trains from our multi modal logistics park (MMLP) at Dadri to Mundra port. This has helped us to shift cargo that was earlier moving by road to rail.

Can we expect CONCOR’s EBITDA margins to rise once both the Eastern and Western Dedicated Freight Corridor are 100 percent operational. And if yes, can you quantify the impact on your EBITDA margins?

CONCOR has been consistently maintaining its EBITDA margin in the range of 24-25 percent, which is quite exceptional in the logistics sector. In logistics, EBITDA margins are generally in single digits. I am quite hopeful that CONCOR will maintain an EBITDA margin of 24-25 percent in future also.

The government has since December said that the Eastern Dedicated Freight Corridor (EDFC) is fully operational. But there are news reports that say that parts of the EDFC are still not operational. Can you set the record straight?

As per my information, the Eastern Dedicated Freight Corridor is fully commissioned.

Last year, CONCOR spoke about transporting bulk cement and getting permission from Indian Railways for the same. Can you share an update on the same?

We have held extensive discussions with major Cement companies and we are going to start bulk movement of cement in tank containers very soon. We are hopeful of getting good business in this segment.

Last year CONCOR said that it would look to haul FMCG products across India and also deploy 12-feet-high containers for the same. What is the progress on this initiative and what percentage of your revenue do you expect to come from the FMCG segment in 2024-25?

We have conducted trial movements of 12 ft containers for FMCG cargo that have been very successful. We hope to operationalise this movement on a regular basis very soon. With this, we hope to capture FMCG traffic, which will be a new business for CONCOR.

Shipping container rates have been volatile in the past year. How has this affected trade volumes and what are the expectations now?

Due to various geopolitical reasons, shipping container rates have been impacted in the past year. I have been informed that these rates are more or less stabilised now.

The government has started beta testing the Unified Logistics Interface Platform, which was proposed under the National Logistics Policy. Have you been using any of the datasets available on the platform?

We are getting regular analytical reports based on data available on ULIP. These are very helpful reports and we are using these reports for our various decision making processes.

What is CONCOR’s total land leasing fee for 2024-25? Have you completed the surrender of a portion of land at your inland container depot (ICD) in Tughlakabad? Are there plans to surrender more land in 2024-25?

Our total Land licence fee for FY 25 will be around Rs 400 crore. We have surrendered around 60,000 sqm of Railway land at ICD Tughlakabad with effect from April 1.

It is a continuous exercise in CONCOR to identify surplus land, and wherever we are constructing new terminals on our own land, we surrender Railway land to Indian Railways. This exercise will continue in FY25 as well.

The divestment of CONCOR has been under consideration for the last three years. What is the status of the proposal?

This is a policy matter of the Government of India. I have no comments to offer on this matter.

The government is working on new warehousing standards. Will CONCOR look to invest in warehousing once those standards are announced?

We are operating 4 mn sq ft of warehouse space at our various terminals across the country. We have received proposals from various members of trade for development of new warehouses and we are going to do that in the near future.

CONCOR recently came out with a tender to set up three container freight stations in a joint venture with private firms at Kathuwas in Rajasthan. By when can we expect the tender to finalised? How many firms have shown interest in the tender? Can you name some companies that have shown interest in partnering?

The tender process has been initiated and several leading Logistics companies have shown interest in setting up a container freight station (CFS) at MMLP Khatuwas. Since the process of tendering is underway, it would not be prudent to disclose the names of the bidders at this stage.

Is CONCOR planning to shift to the Gati Shakti Cargo Terminal (GCT) scheme in 2024-25 to run terminals built on Indian Railways land?

Our stand remains unchanged on this subject. We are not planning to shift to the Gati Shakti Cargo Terminal (GCT) scheme for existing terminals built on Indian Railways land, in 2024-25.

The central government is betting on the railways to reduce cargo logistical costs. Given that you are the head of the largest logistics player in India, what are the biggest bottlenecks the government faces in reducing these costs?

The government of India is creating infrastructure in a big way in the railways and road sectors. This will ensure supply chain efficiencies and this is likely to reduce logistics costs in the country.

What further steps does the government need to take for Indian Railways to achieve its target of 3 billion tonnes of cargo movement by 2030?

CONCOR’s share in total loading of Indian Railways is around 4-5 percent. Therefore, I request that this question be placed before the concerned officer in Indian Railways.

Last year, the government (specifically DPIIT) had come out with an estimate of total logistics costs in India, putting them in the range of 7.8-8.9 percent. In your opinion how accurate is the government’s estimate?

This question pertains to DPIIT and I request that you ask for their response.

Source : Money Control