Adani Ports and Special Economic Zone Ltd

NSE:ADANIPORTS

Earnings Call Transcript 2022-Q1

[Swarnim Maheshwari, Research Analyst]

On behalf of Edelweiss, I welcome you all for this Adani Ports Q1 Conference Call. From the management today, we have with us Mr. Karan Adani, CEO and Whole Time Director; Mr. Subrat Tripathy, CEO of the port vertical; Mr. Vikram Jaisinghani, CEO of the Logistics vertical; and Mr. Satya Prakash Mishra from the IR team. Without further ado, I would like to hand over the call to Mr. Karan for his opening remarks, post which we'll have the question-and-answer session. Over to you, Karan. Thank you.

[Karan G. Adani, CEO & Whole Time Director]

Ladies and gentlemen, welcome to the conference call to discuss the operation and financial performance of APSEZ for the quarter ending 30th June 2021. Let me start by quoting our Chairman from his message in our recently published integrated annual report. He said, we must leave in our own capability and must be able to depend on it for economic construction, especially in times of crisis to ensure our economical, the intrinsic robustness to manage disruptive black swan events like COVID-19. We must unhesitatingly write our own definition and only when we are able to fully mobilize the efforts of our own people, we will be able to develop our economy in a way that we can take advantage of our country's demographic dividend that we have not yet been able to fully unleash.In line with this wise advise, we believe APSEZ is competently placed to address the new normal. We possess the advantages arising out of efficient port operations, seamless multimodal integration, proprietary cargo evacuation network and the ability to manage large holders. Our strategy of increasing investment in cutting-edge technologies to integrate our strength will create an enhanced customer experience. To evolve and emerge as logistics partner of preference, we will continue to manage for cargo of our customers while growing proportions of our revenue, is likely to be derived from logistics, where we deliver directly to our customers, saving them time, cost and effort. We have started the year FY '22 by hitting the ground running. All our large ports have performed well and have grown in high double digits. This is on account of our strategy to add capacity during a time when sweating of existing capacity was a constraint. But this has turned the tide in our favor and helped them turn this adversity into an opportunity. APSEZ has gained 310 basis points in terms of market share in overall cargo and stands at 28.6% and 163 basis points in container, which now stands at 42.7%. Mundra, our flagship port and is the largest commercial port and in the past year, has overtaken JNPT as the largest container handling port. Our growth journey will further fortify with the recent announcement of the acquisition of Gangavaram port. Our efforts to create a transport utility, which banks on our network, of course, as its cornerstone is forging ahead. We are expanding our capacity in rail logistics and are currently operating 66 rails, which includes containers, rails, auto and bulk rates. We have started consolidating all rail track assets under 1 roof in APSEZ, and we are in the process of acquiring SRCPL from the group entity, which will take our rail track assets to 620 kilometers. Coming to the operational performance for the quarter. The presentation on operational and financial highlights were sent to the stock exchange and uploaded on our website. I hope you have had time to look at it. APSEZ handled a cargo volume of 76 million metric tons, a growth of 83% as against 33% growth registered by all India ports. Our strategy to achieve East Coast, West Coast parity, handle all types of cargo and diversify cargo mix ensured continuous gain in market share in India. Our cargo basket is well diversified with dry bulk constituting 48%; container, 40%; and liquid cargo, which includes crude constituting 12% of our total basket. You may refer to the presentation for further details on port and cargo segment wise breakdown. Let me give you a brief on the status of the announced acquisition. Now let me give you a brief on status of announced acquisition. On Gangavaram port, the intend is to acquire 100% stake of Gangavaram Port Limited. We have already acquired 31.5% stake from Warburg Pincus at a consideration of INR 1,954 crores, which works at INR 120 per share. We have also reached -- signed an agreement with DVS Raju and Family for their 58.1% stake at the same price of INR 120 per share. We are in advanced stocks with Government of Andhra Pradesh to buy out their 10.4% stake. The process is expected to be closed in the next 30 days for GoAP stake. If GoAP stake is acquired, then we -- then our option -- first option is to merge Gangavaram port and APSEZ to evaluate that merger and independent -- Committee of Independent Directors has been talked. If the merger is approved, then DVS Raju and Family will be paid in the form of APSEZ shares. In this case, we do expect that the financial consolidation of Gangavaram port will happen as of 1st April 2021 on APSEZ balance sheet. As announced in March 21, APSEZ has also commenced the process of consolidation of this rail track assets and acquisition of SRCPL from one of the group entities through a composite scheme of merger, which has been approved by stock exchange, will now be filed with NCLT for seeking approval of stakeholders. This includes taking approval from minority shareholders, which is in line with our APSEZ Board-approved policy on related parties. The entire purchase consideration will be paid through equity swap of a volume-weighted average price of INR 675 per share, resulting in issuance of INR 7.06 crores new shares of APSEZ. The meeting of stakeholders for approving the merger will take place in last week of September. We expect the transaction to complete in next few months and financial consolidation with APSEZ will happen from April of '21. I'm happy to inform you that in July 21, as part of our capital management plan, APSEZ has become the first Indian infrastructure company to issue U.S. dollar bonds of $750 million, dual tranches of 10.5 and 20-year maturity at a full fixed coupon of 3.8% and 5%, respectively, in global capital markets. APSEZ has given a longer yield curve to investors and has elongated its debt maturity profile to 7 years. Let me now introduce you to Mr. Subrat Tripathy, who is now heading our port vertical; and Mr. Vikram Jaisinghani, who is heading our Logistics vertical. Subrat and Vikram will brief you about the performance of their respective verticals, and I will give you the update on the strategic and financial performance at the end. Over to you, Subrat.

[Subrat Tripathy, Chief Executive Officer of Dhamra Port]

Thank you, Mr. Karan Adani. Good evening, everyone, on the call. Let me give you an overview of the performance at the port vertical. I will start by cargo segment wise. In the container business, in quarter 1 of FY '22, APSEZ handled a total container volume of 2.08 million TEUs, a growth of 69% compared to an all India growth of 51% on a year-on-year basis. This was led by Mundra port, which grew by 65%; Hazira, which grew by 32%; Ennore by 211%; Kattupalli by 16%; and the addition of Krishnapatnam volume by nearly 84,000 TEUs. Mundra port continues to stay at the top in terms of container volume. In Q1 of FY '22, it handled 1.61 million TEUs, which is nearly 18% ahead of JNPT, its nearest competitor. This is on account of our strategy of partnering with large shipping lines of the world through our strategic JVs and continuos gaining of market share. During the period, 2 new container services were added, one each at Mundra and Hazira, which will contribute about 1,25,000 TEUs of container volume per annum. In the dry bulk segment, in quarter 1 of FY '22, the total dry bulk cargo handled was 36 million metric tonnes, a growth of 104%. Within this segment, minerals grew by 90%; coking coal by 42%; fertilizers by 32%; and agri products grew by 37%. Coal volume registered a growth of 126% on the back of higher imports by Adani Enterprises, Adani Power, JSW and TATA Steel. As a part of the diversification of cargo market, we have added 2 new cargo types, namely sulphur at Dahej port and dolomite at Kattupalli port. In the liquid segment. In quarter 1 of FY '22, APSEZ handles liquid cargo, including crude, of 9 million metric tonnes, a growth of 57%. This was led by higher volume handled at Mundra and Hazira ports. As a part of our cargo diversification, we added LPG and LNG cargo into our portfolio. In Q1 of FY '22, APSEZ handled 3,55,000 tonnes of LPG and LNG. The volume in this segment will continue to grow to cater to the addressable market segment, which has led our growth as a result of the government's favorable policies on the cash-based economy. Coming to the recently completed acquisition of Krishnapatnam Port. The port is progressing well for the past 9 months under the management of APSEZ. With the integration of operations fully completed, which is reflected in its superior cargo and financial performance, I am confident that it will achieve new heights. The port has registered a cargo volume of 13 million metric tonnes, which is a growth of 39% on a year-on-year basis. Similarly, through our efforts to eliminate bottlenecks, 3 orient operations by benchmarking into APSEZ standards, we have been able to further enhance its EBITDA margin by another 250 basis points and reached 73%. We expect the port to handle 52 million metric tonnes in FY '22, which is a growth of 30% on a year-on-year basis. As demonstrated in case of Krishnapatnam port, the operating team of APSEZ has been exciting the Gangavaram port team to benchmark its operations to APSEZ standards, leading to savings in cost and improvement in efficiency. This has resulted in EBITDA margin improving from 59% to 70% in quarter 1 of FY '22. In the full year of FY '22, Gangavaram port is expected to handle a cargo volume of 39 million metric tonnes, generate revenue of INR 1,400 crores and EBITDA of INR 970 crores. As seen by Mr. Karan Adani, APSEZ that have commenced consolidating its rail track assets and is in the process of acquiring Sarguja rail corridor, SRCPL. As all of you know, it is an annuity business with take or pay contracts with a sovereign equivalent counter-party. In the full year of FY '22, the business is expected to handle cargo volumes of 19 million metric tonnes, generate revenue of INR 500 crores and EBITDA of INR 430 crores. Now I hand over to my colleague, Vikram, to update you on the Logistics vertical. Over to you, Vikram.

[Vikram Jaisinghani]

Thank you, Subrat. Good evening, everyone, on the call. Let me give you an overview of the performance at the Logistics vertical. Adani Logistics is continuing with its strategy of expanding our logistics footprint across India, building multimodal logistics park, warehousing, and a rail distribution network in line with our vision to become an integrated logistics service provider in India. Coming to Logistics operations. Adani Logistics has witnessed an increase in rail volume for Q1 FY '22 as compared to last year. That is 84,717 TEUs versus 76,925 TEUs, translating into a 10% Y-o-Y growth. This is achieved despite disruptions at Kila-Raipur Logistics Park. Currently, we have 2 logistics park at [indiscernible] and Virochan Nagar under development. We have also received ICD approval for Panipat, for which construction will commence this year. GPWIS vertical continued its growth trajectory, and we handed 1.42 million metric tonnes in Q1 FY '22, against 0.89 million metric tonnes in Q1 of FY '21, translating into a 59% Y-o-Y growth. 5 new rigs were inducted in the last quarter. And we have a firm induction plan for this year to take the total GPWIS rates up to 25% within the year. New circuits with respect to movement from mines to power plants have been kick started and this is expected to gain further momentum. We have successfully commissioned the [indiscernible] silo project with 50,000 metric tonnes capacity in Agri Logistics business in the last quarter. And another 3 projects are under construction, each having 50,000 metric tonne storage capacity at Panipat, Kannauj and Dhamora. Warehousing transactions across top 8 cities expected to achieve CAGR of 19% for the next few years as we continue to witness strong demand in the grade A warehousing segment. Accordingly, we have commenced construction of new projects totaling 0.8 million square feet in Indore and Mumbai in Q1 FY '22. Back to you, Karan.

[Karan G. Adani, CEO & Whole Time Director]

Thank you, Subrat and Vikram Coming to the financial results for quarter 1 of FY '22. The strong performance in operations is reflected in the financial performance. Consolidated revenue grew by 99% from INR 2,293 crores in quarter 1 of FY '21 to INR 4,557 crores in quarter 1 of FY '22. During quarter 1 of FY '22, the total EBITDA grew by 82% from INR 1,438 crores in quarter 1 of FY '21. INR 2,620 crores in on the back of 99% growth in revenue. Revenue from port operations increased by 75% from INR 1,904 crores to INR 3,339 crores. Increased cargo volumes and operational efficiency and 6% savings in operating costs enabled port EBITDA to grow by 78% from INR 1,324 crores in quarter 1 of FY '21 to INR 2,356 crores in quarter 1 of FY '22. Overall, port EBITDA margin has improved from 70% to 71%. In quarter 1 of FY '22, the Logistics business have reported an EBITDA of INR 62 crores, a growth of 42%. EBITDA margins improved by 125 basis points to 23%. Tax incidents during the period was lower due to the lower composition of profit from the APSEZ stand-alone entity, which was impacted by ForEx [indiscernible]. Profit before tax and profit after tax increased by 60% and 77%, respectively, due to higher operating profit. To conclude, I must acknowledge the resilient spirit of Adani Ports workforce, who through the second end of these times, stood resolute to deliver this spectacular performance in the first quarter of FY '22. During the first 4 months of FY '22, we have handled a cargo volume of around 100 million metric tonnes. Based on the current market trends, we expect the cargo volume in FY '22 to be in the range of 350 million to 360 million metric tonnes, which includes approximately 39 million metric tonnes of Gangavaram port. The consolidated revenue is expected to be in the range of INR 18,000 crores to INR 18,800 crores. Consolidated EBITDA is expected to be in the range of INR 11,500 crores to INR 12,000 crores. We expect our port EBITDA margins to be at 71% and CapEx for the year to be in the range of INR 3,100 crores to INR 3,500 crores. With all of this, we expect our free cash flow to be in the range of INR 7,100 to INR 7,600 crores. This guidance keeps in mind that we will be consolidating the Gangavaram and Surguja Rail balance sheet and P&L as of 1st of April '21. In the end, I just want to say that we are well on our target of achieving 500 million metric tonnes of cargo throughput and target to have 40% of India's trade, [indiscernible] trade. We do believe that we will be able to achieve this target much ahead of our time line of FY '25, and this will also ensure that progressively, we increased our port EBITDA margins to the range of 72% to 73%, and doubling our EBITDA well before full year guidance of 2025, which obviously results in increasing our ROCE on a consolidated basis of 20% and above. With this, we can open the lines for question and answers. Thank you.

[Operator]

[Operator Instructions] The first question is from the line of Mohit Kumar from DAM Capital.

[Mohit Kumar, Research Analyst]

Congratulations on good set of numbers. My first question is on the guidance. Do you think the guidance is conservative given the opening of a global and domestic economy, I think we are just in 10 million tonne additional. And the related question is, does the rising container freight prices is a worry? That's the first question.

[Karan G. Adani, CEO & Whole Time Director]

Sure. So I think -- I don't think guidance is conservative. I think what we have given guidance now looking at the 3, 4 months of operations as well as looking at global scenario as well as the COVID scenario, we think it's a realistic guidance that we have given. In terms of -- based -- your question on the container freight, I think it is not a worry. We do -- even with the rising freight, we have seen that market has bounced back quite significantly on a pan-India basis. And we do believe that the similar growth will continue for the rest of the year.

[Mohit Kumar, Research Analyst]

Okay. My second question on DFC, I think that we are reaching closer to the DFC operation. Sir, my question is, does the current connectivity from Palanpur to Mundra, which is -- which doesn't have doubling electrification. Do you think that affect or efficiency in near term? And is there any proposal to upgrade the railway line connected Mundra to Palanpur to 25 million tonne axle load and when we expect the doubling electrification to be completed?

[Karan G. Adani, CEO & Whole Time Director]

Well, thank you. The DFC is slated for completion by about mid of next year. And by the COVID standards, we are expecting it to get completed by December '22. In line with our aspiration to connect with the DFC, we have taken 2 steps. One is that the present line from Adipur to Mundra port is a double line. We are electrifying it to coincide with the electrification of Palanpur, Samahali and the DFC connectivity. Also in line with the aspiration and not waiting for the DFC to kind of commence with what is the best offering is to run double stack trains. We have already started running double stack trains from Mundra to the NCR region, and you would be pleased to know that we have had quite a significant growth in double-stack in this particular year. across the overall last year. So we are in line to coincide with the DFC's commissioning as well as the electrification. Your question on 25-tonne axle load, this would be more prevalent for the Eastern part of the country where we run bulk. On the Western part of the country, where the train loads and the tonnages on each train is lesser than what is required on the Eastern side. On the Eastern, the legs, we are already getting converted to 25-tonne axle load, and we will be in line with the DFC's expectations. Thank you.

[Mohit Kumar, Research Analyst]

So one clarification, so you don't require 25 million tonne axle-load upgradation of railway line connecting from Munda to Palanpur. Is that right?

[Karan G. Adani, CEO & Whole Time Director]

Yes, it's 25-tonne axle load, which means that each axle over the bogey exhibits a load downward on the railway track for 21, which is over the conventional railway track of 22.5, which we are already aligned with. The 25-tonne axle load is basically for heavy haulage of trains, for open and dry bulk, which we are in our eastern ports at Dhamra, Gangavaram and Krishnapatnam. So your don't require a 25-tonne axle load on the western DFC literally because the loads per container train are much lesser than the dry bulk trains. But let me also clarify, as and when 25-axle load does happen, we would be increasing 225-tonne axle load between our Adipur and Mundra line, which is basically a combination of increasing the sleeper density and the rails which we are already equipped with.

[Operator]

The next question is from the line of Parash from HSBC.

[Parash Jain, Head of Transport Research, Asia]

My question is more around given the recent flurry of acquisition, can you talk about how much room does your balance sheet have to based on further acquisitions. I'm particularly interested on your thoughts on potential divestment of container costs from government of India. And secondly, for your team and just a clerical one. Does the first quarter FY 2022 volume, does it include Gangavaram already?

[Karan G. Adani, CEO & Whole Time Director]

So Parash, let me answer your second question first. The quarter 1 FY '22 numbers does not include Gangavaram volume. It is ex of Gangavaram, the 75 million tonnes. To answer your first question in terms of acquisition, today, see our balance sheet, we -- our net debt to EBITDA is around 3%. And the way we are looking at the growth and we are looking to hit our targets, we do believe that our balance sheet will remain at a net debt-to-EBITDA of 3%. So that gives us a room of almost 1 turn on net debt-to-EBITDA minimum, without hampering our investment-grade rating to do acquisition. In our view, CONCOR is a very strategic acquisition, and we do believe that raising funds and -- without stretching the balance sheet, we should be easily be able to do it. We should easily be able to do that acquisition.

[Operator]

[Operator Instructions] The next question is from the line of Prateek Kumar from Antique Stockbroking.

[Prateek Kumar, Vice President]

My first question is regarding the guidance for Logistics segment. It seems there is some reduction in the guidance in target revenues for the segment. Any specific reason there when we are looking to like sort of accelerating this segment?

[Karan G. Adani, CEO & Whole Time Director]

So I think the guidance reduction is mainly because of the Kila-Raipur ICD, which has been -- which has, as you know from the news item that it has remained shut. That's the only reason. Otherwise, we are on track on others.

[Prateek Kumar, Vice President]

So the ICD revenue, which we are closing to an extent of INR 300 crores from that particular asset?

[Karan G. Adani, CEO & Whole Time Director]

No, the ICD plus the rail revenue, which we would be getting out of running -- moving boxes over there.

[Prateek Kumar, Vice President]

So we don't have any terminal which can compensate for loss at Kila-Raipur and this just goes straight away to some competition, I mean, the coal business in the season?

[Karan G. Adani, CEO & Whole Time Director]

Yes, that's it.

[Prateek Kumar, Vice President]

Okay. Secondly, we have -- last quarter, we said that we will be integrating all our businesses, acquired businesses, SRCPL and GPL from FY '22. Why has this been generally accelerated or like sort of [indiscernible] to 1Q '22?

[Karan G. Adani, CEO & Whole Time Director]

Yes. So just so that we clarify. GPL Gangavaram port earlier when we gave the guidance, we were not too sure whether it will be a cash deal or a share swap deal. After negotiation, we have come to an agreement that we will be merging both the companies that is GPL with the APSEZ. And once we are merging, we have the option of consolidating the balance sheet from first April, and we have opted for it. And keeping that in mind, we have also put in management in place from 1st April 2021. On SRCPL as well, since we are going through the merger route, we have followed the same. We have followed the same strategy. And that's the reason for the addition.

[Prateek Kumar, Vice President]

Okay. And in -- I mean, the inter increase 10 million tonne of guidance related to the revised number [indiscernible] corporate full year of numbers. So this is related to container segment doing better than expected? Or overall any other commodity doing better?

[Karan G. Adani, CEO & Whole Time Director]

Yes, I'll ask Subrat to explain to you the -- where we're seeing the growth in commodities.

[Subrat Tripathy, Chief Executive Officer of Dhamra Port]

Yes. Thank you. So we are seeing a very robust growth, both in the container segment. You would be watching that Mundra, our flagship port has emerged truly as the gateway port of Indian exempt trade and its nearest competitor, which we kind of outran last year, and we continue to hold a very strong lead in this quarter, and we believe this will continue as well as across the Eastern growth, you will see that we are balancing growth, both on East and West, and that's a part of our strategy. So the growth clearly comes from 2 large segments. It's container at Mundra, Hazira and the Southern cluster, which will catch up after the lockdown has improved. And also on the -- sector on the eastern and dry bulk with our very robust connectivity to the steel plants. You're aware and you've seen kind of an unprecedented growth of steel industry in India and that's been propelled to our Eastern ports of the gateway. So clearly, and truly, we see the growth areas on 2 fronts. Containers in the West, which Mundra will continue to lead and hold its pole position as well as dry bulk in the East, which will continue to align with the major industries, and these will be growth drivers on both the sides. Thank you.

[Prateek Kumar, Vice President]

And one last question. There is some adjustment in Krishnapatnam port revenue and EBITDA, onetime and dispense services maintained axle. What is this related to?

[Karan G. Adani, CEO & Whole Time Director]

So Prateek, this is a onetime income that we have booked in Krishnapatnam this time. So we expect this income not to be repeated. Hence, we have kind of kept it out of our port business, I'll probably take you through the details offline, okay?

[Operator]

The next question is from the line of Amish Shah from Bank of America.

[Amish Shah, Director]

So Karan, if I look at the port market share broadly, it's about 50% with major ports, almost 30% now with you guys and about 20% with smaller private companies. The question was how much of the -- if it is possible to know, how much of this 20% over time, would you argue, can be acquired from the smaller ports? And how does the major ports authority bill help us get some share of the 50% major ports as well?

[Karan G. Adani, CEO & Whole Time Director]

So the major port authority build doesn't per se help us in terms of acquisition of market share. In terms of -- to answer your first question, we do believe that on our market share, currently at 25%, 26%, we do believe that we can go up to 40%. And it is not necessary just from minor ports, but we also believe there is an opportunity from taking market share from the major ports. On the minor port side, as I've been saying, there are basically 2 acquisitions, which are -- which could be on the block, which is Karaikal port and Gopalpur port, which combined volume is in the range of 40 million -- 40 million to 45 million tonnes. So it's not a major shift in terms of market share, but that is the possible upside if you were asking.

[Amish Shah, Director]

Got it. About 15% of the existing volumes. And while I understand acquisitions in the major ports is not possible, but could we look at them as a private sector, outsourced operator within the major ports?

[Karan G. Adani, CEO & Whole Time Director]

Amish, to be honest, we -- if you look at our past experience where we have assets in Vizag, Goa, Ennore, Tuna. Financially, they are not one of the best operating assets for us. So I think -- and that's mainly because of constraints that are there in major ports. I think it's a conscious decision that we are taking to stay away from major ports, especially where you have 1 particular commodity that you can handle. So we have seen that as part of risk, you can't be -- you can't have capacity linked to only 1 particular commodity. And unless it's very, very strategic in nature, like just thinking out loud, if it is like something in JNPT or in west in Haldia port, we would ideally be avoiding getting into biddings into major ports.

[Amish Shah, Director]

Got it. Makes sense. And Karan, is it possible to give some update on the potential policy of major -- sorry, of the land utilization around ports in general?

[Karan G. Adani, CEO & Whole Time Director]

So we are looking at development in -- large scale development in Mundra and Krishnapatnam. That's where we are looking at 2 large-scale industries to come. We are seeing a lot of uptick happening now that we are seeing the overall economy improving and capacity utilization is increasing. We are seeing a lot of people looking to build new capacity. We -- our guidance of around INR 800 crores to INR 1,000 crores of revenue coming out of port development income, those guidance continue. And as you've seen this year, we've already booked. In this quarter, we have already booked a majority of it. So -- but we do expect the similar guidance to continue in the future -- in the near future as well. So for the next 5 years, minimum.

[Operator]

The next question is from the line of Ashish Shah from Centrum Broking.

[Ashish Shah, Analyst of Infrastructure and Airlines]

So my first question is on the thought process of merging Gangavaram instead of keeping it as subsidiary. Sir, any particular reason we are looking at Gangavaram differently as compared to all the other assets, which continue to be subsidies.

[Karan G. Adani, CEO & Whole Time Director]

No, we are merging Gangavaram mainly due to tax -- mainly because of tax reason as well as to give a tax-efficient share swap. Basically, that's the only reason.

[Ashish Shah, Analyst of Infrastructure and Airlines]

Okay. And the government of Andhra Pradesh stay. So that will be bought out in cash in we are not -- that is not contemplated as a share as well.

[Karan G. Adani, CEO & Whole Time Director]

No, that will be bought out in cash, and we expect that to be completed by 15th August.

[Ashish Shah, Analyst of Infrastructure and Airlines]

Sure. Second question is on the multi-model logistics park. So in the annual report, you have spoken a lot about that, and we've also acquired 2 big land parcels. So can you just update where are you on the development of those logistics parks? And what kind of potential do you see in terms of this year or EBITDA over thethe next 3, 4, maybe 5 years.

[Karan G. Adani, CEO & Whole Time Director]

I'll ask Vikram to answer that, please.

[Vikram Jaisinghani]

So we are seeing that the next few years, there is a lot of demand for build-to-suit grade A warehouses, both for e-commerce and for industrial purposes. And in line with that demand, we have acquired these 2 land parcels where construction has already commenced. In Bombay, we are building about 538,000 square feet e-commerce warehouse for Flipkart. And this development will continue. We've got about 42 acres of land for development in Bombay. Similarly in Ahmedabad, Virochan Nagar, we have made an MOU with the government of Gujarat to develop 1,400 acres of land for multimodal logistics park, primarily focusing also on grade A warehouses. Out of this, about 850 acres of land has been acquired, and we'll be breaking ground in a couple of months to start development of the rail connectivity and the grade A warehouse, in line with the aspirations I just mentioned.

[Ashish Shah, Analyst of Infrastructure and Airlines]

Sure. So both of these facilities should then be completed by '23. Is that the timeline that we're looking at?

[Vikram Jaisinghani]

No, I think this development, this is a pretty large parcel of land that we're talking about. We're talking about 1,400 acres in Gujarat and 442 this will typically consume the next 5 years and at least 5 years for the development, full development of both these land parcels.

[Ashish Shah, Analyst of Infrastructure and Airlines]

Sure. And just lastly, in Dhamra, the port development income that is booked, is it for the LNG business?

[Karan G. Adani, CEO & Whole Time Director]

Yes. So Dhamra -- in Dhamra, we have -- as you know, that we have a joint venture with Total for the LNG terminals. And as part of that deal, we -- Dhamra port is constructing the jetty. And so that income -- now that the asset has been completed, and hand it over to the JV company, that's why we have booked that income.

[Operator]

[Operator Instructions] The question is from the line of [ Ivor Single ] from Phillip Capital.

[Unknown Analyst]

Sir, just 3 questions from my side. One is, if I look at our guidance increase in the cargo volumes, assuming that we were earlier contemplating a Q4 integration of Gangavaram. And now for Q1, the incremental Gangavaram volume that we're looking at is around 15 million tonnes. So the 10 million incremental cargo that we're expecting from the beginning of the ports of our portfolio. So any specifics or ports that you believe is still -- that will probably have a large sum of this kind of this incentive growth that we're looking at? Or is it going to be just driven by the overall macroeconomic recovery and the lease spread across all the ports?

[Subrat Tripathy, Chief Executive Officer of Dhamra Port]

Well, thank you. It's going to be a combination of all that you mentioned. One, there is a overall macroeconomic growth, we are seeing that much better handled kind of slated to handle the third wave band as and when it were to happen. We've seen the ports registering very robust growth. We've seen that all the Indian maritime sector has come back in a sense -- we have come back with the bank. The growth that we're expecting is clearly placing a lot of bets on India's exim trade. You've seen that Mundra is leading, and this lead is consolidating to become a gateway. So the growth will come from clearly containers at Mundra we've got. We've also mentioned that we've added new services. We've got consolidating services at the southern side of Ennore where we're having mainline vessels. So the Overall gateway trade ventures that are opening up, both in the West at Mundra and Hazira and in the East Ennore, will give us the opportunity to drive growth on containers. Now coming to the other balance growth that comes out of the very, very strong growth we are seeing in major industry, particularly in steel. And the fact that our ports are very intrinsically connected to the steel sector in the East and it is also visible in a kind of a balance that we are having between our East and West strategy. So you'll see that Dhamra, Gangavaram, as and when it is entirely getting consolidated into the APSEZ portfolio, and Krishnapatnam these will be drivers for our growth. So the balanced growth will come from container and from the dry bulk from these main ports that I mentioned, Mundra, Krishnapatnam, Gangavaram and Dhamra clearly. Thank you.

[Unknown Analyst]

Just one more last question from my side. On the [indiscernible] side, we booked really strong income this quarter from around INR 30 crores, INR 40 crores [indiscernible] by the some of [indiscernible]. So any more [indiscernible] some time is looking at for the beginning part of the year. Overall, what is the kind of revenue that you're expecting from APSEZ for FY '22.

[Vikram Jaisinghani]

Yes. So for this year, for FY 2022, this is the total amount that we have. We don't expect any more transactions for the year. We do have -- as I mentioned earlier, we do have other projects which are in pipeline, which will get materialized in the coming 2, 3 years. And so our guidance continues of approximately INR 800 crores of port development income recurring almost every year.

[Operator]

The next question is from the line of Atul Tiwari from Citigroup.

[Atul Tiwari, VP & Analyst]

Congrats on a pretty good set of numbers. Sir, just, again, one more question on these 2 large land parcels, which have been acquired. So how much -- I mean, annual report mentioned is about INR 2,300 crores. So -- but on an individual basis, how much you have paid separation for the land parcels. Is that the final amount or do we need to pay more in the future?

[Vikram Jaisinghani]

This is the final amount. Just give me 1 second. I don't have the exact amount in place, Atul. What I will request is the IR team to share with you separately what is the exact amount each passes by. But this is the final amount that we have paid, and there is no more further payment on it. Whatever CapEx will be going, which is in our CapEx guidance of INR 3,000 crores to INR 3,500 crores that goes into the development of our assets as part of that developmen also as the construction in these parks.

[Atul Tiwari, VP & Analyst]

Okay. So broadly INR 2,300 crores is the total final amount for both of these land parcels?

[Vikram Jaisinghani]

Yes, that's right.

[Atul Tiwari, VP & Analyst]

Okay. And broadly, I mean, I don't know how best to ask this question and answer it. But what would be the comparable prices of land in these areas? I'm asking because, obviously, Bombay land 442 acres. First of all, it is a very large parcel for a city like -- for an area like Bombay. And yes, the prices could be much higher than what is implied by this INR 2,300 number. So any idea what could be the market price for industrial land around these 2 areas that is acquired?

[Vikram Jaisinghani]

Yes. So market price for industrial land in the area where we have acquired in Bombay, where the market price is approximately INR 5 crores per acre. However, you will see that we have acquired at a much lower price than what the market is growing at. And in Ahmedabad, in Sanan, we -- where the price is growing roughly at INR 2 crores an acre. And again, over there, if you see, we have -- our acquisition cost is much lower than the market rate.

[Atul Tiwari, VP & Analyst]

Okay. And let me kind of stretch my luck a little bit. So why would you be able to acquire it at lower -- much lower prices than the market side? Any color on that? Whatever you can share.

[Vikram Jaisinghani]

[Foreign Language] We'll talk offline.

[Operator]

The next question is from the line of [ Sita Raman ] from Spark Capital.

[Unknown Analyst]

I mean the first question is what is the -- on the Gangavaram port, the volume that you are expecting guiding close to 39 MMT. What is the commodity split that you are expecting of that?

[Vikram Jaisinghani]

We have given this split in the presentation. Let me just pull that out. Yes, so if you see from the 39 million tonnes that we are guiding, approximately I would say 50% comes -- sorry, 60% comes from minerals and coking coal. Roughly 10% comes from other dry cargo and then the remaining comes from thermal coal. We have given that the breakup -- we have given the breakup in the report, in the presentation, Page 25.

[Unknown Analyst]

Okay. My second question is basically, I mean, in the Logistics segment, you have acquired few assets along the DFC for -- to be done as a CFS but ICD, right? So what is the plan on those -- on the development of those land passes?

[Subrat Tripathy, Chief Executive Officer of Dhamra Port]

Yes. So we build -- there was an open bidding process run by DFC. And we have acquired 8, in our opinion, strategic assets on these DFC corridors on the Western DFC as well as the Eastern DFC. Now the conditions stipulated in the LOA is that we have to sign the formal agreement in the next few months. and we have to construct ICDs in these 8 strategic locations in the next 3 years, which means acquisition of land, making the detailed project report, commencing the construction and operationalizing this asset. And these 8 stations, we are well poised to complete within the business stipulated lines of 3 years. And this will add on to our current fleet of ICD, and we will incur a CapEx of about INR 50 crores per station to develop these ICDs.

[Unknown Analyst]

And what is the capacity that you expect to handle [indiscernible] as a cumulative or individual level in these ICDs?

[Subrat Tripathy, Chief Executive Officer of Dhamra Port]

So each station will have a different capacity that we will keep in line with the market demand of the region around that station. So I can't give a fixed number that it will be 40,000 or 50,000 but it does vary between 20,000 to even 40,000. So some places like Dadri, which is right in the heart of NCR, the capacity will be much larger in some of the other stations like [indiscernible], new [indiscernible] Jaypur, it might be even 20,000, 25,000 TEUs to start with.

[Karan G. Adani, CEO & Whole Time Director]

So just to supplement over there, there is no condition in the bid that you have to build a particular capacity. So it is left to the developer and looking at the market scenario, how much they want to develop.

[Unknown Analyst]

Okay. Is there any sort of guidance that you can give what is the total capacity of -- from the rate you would be your planning to build ?

[Karan G. Adani, CEO & Whole Time Director]

We can give it to you in -- give us a month's time. We will give it to you separately.

[Operator]

The next question is from the line of Pulkit Patni from Goldman Sachs.

[Pulkit Patni, Equity Analyst]

So my first question is on the Logistics business. I mean, when the government put CONCOR on the block, it used to be a $3 billion company. Today, it's a $5.5 billion company. I just wanted to get your thoughts given that we are already investing into logistics. Is it not that we can create a business of that size on our own in the next few years? Or something like this would be essential for us to get the scale? That would be my first question.

[Karan G. Adani, CEO & Whole Time Director]

Pulkit, to answer your question, it is possible to create an alternate, but it takes 10 years' time to create that alternate. You are paying basically the time value that you're paying to fast track your strategy?

[Pulkit Patni, Equity Analyst]

Sure. So even at $5.5 billion, it is an asset that's definitely interesting. My second question is Kattupalli. We've seen on a last couple of quarters, the performance there has been relatively weak. So just wanted to get a sense of what's happening there? And when should we expect a return of growth for that asset?

[Karan G. Adani, CEO & Whole Time Director]

So I'll give you a broad strategy and then Subrat can give you the numbers. But the way to look at Kattupalli, especially in container is to look at Kattupalli and Ennore together. The reason I say that is because we look at both the terminals together and we gave a solution to our customers, looking at the windows that they want. And so when you look at both of them together and also 1 or 2 shipping lines have shipped -- have shifted from Kattupalli to Ennore. So it is not that we have lost to competition. It's just that we look at both the terminal together, and I'll ask Subrat to give you the details.

[Subrat Tripathy, Chief Executive Officer of Dhamra Port]

Yes. In continuation to what Mr. Karan Adani has clarified, we're also looking -- if you look at the Southern cluster of ports and you look at where Chennai and Ennore and Kattupalli are situated, so we're looking to maximize Kattupalli's presence over a bouquet of cargoes. One on the container front, which Mr. Karan clarified, we haven't really lost is just that we've taken a merged service to Ennore. And then we will be -- on Q3, we'll be seeing volumes coming back to Kattupalli that's our belief, and we've got some strategic discussions already with the new shipping lines on the container front.If you'll also understand, Kattupalli is also a replacement for the entire portfolio of maritime activities that go in and around Chennai. Ennore may not be entire answer to that. Kattupalli being slightly situated away from the city, a little more distance from Ennore will handling cargoes. And testament of that is that in this quarter, we added a new coal cargo dolomite in the dry bulk. We're looking to enlarge the liquid business. So in a sense, we want to establish the footprint of Kattupalli handling a bouquet of cargoes. That particular answer, as it scales up and gets into the rhythm, you'll also understand that the Southern cluster was hit rather badly in the COVID. We have experienced more lockdowns in other places then. So the South versus the other growth has been a little subdued. But in Q2, we are seeing a revival and Q3, we are very confident with the new lines coming for container with a preference for dry bulk and the liquid business, establishing itself. Where we take a lead over Ennore, Kattupalli will certainly a part of the future over there. We look to consolidate, but it will certainly take a little time to scale up. And yes, we haven't lost between Kattupalli and Ennore. We would like to balance and see that the cargoes get retained with an APSEZ as it were.

[Pulkit Patni, Equity Analyst]

Sure. That's helpful. Maybe just 1 last bookkeeping question. So after the 25% acquisition, the balance acquisition of Krishnapatnam, can you highlight what is the exact debt and equity split there?

[Karan G. Adani, CEO & Whole Time Director]

Just 1 second. Debt equity in Krishnapatnam is 70-30.

[Pulkit Patni, Equity Analyst]

The absolute amount, if you could?

[Karan G. Adani, CEO & Whole Time Director]

Absolute amount, we'll give you a...

[Pulkit Patni, Equity Analyst]

I'll take it separately. No worries.

[Operator]

[Operator Instructions] The next question is from the line of Swarnim Maheshwari from Edelweis Securities.

[Swarnim Maheshwari, Research Analyst]

Congratulations on numbers, Karan, once again, all the acquisitions that you have done, they are pretty attractive, both in terms of valuation and growth. I just wanted to understand from the container side. Now we are seeing that there is a shortage of containers for the past about a year or so earlier this was supplied. There was a supply disruption, but then it is more for the demand side. Is there any kind of a volume loss on account of container shortages? And do you think that the government's recent push towards the container manufacturing in the country could reduce our dependence on the import.

[Karan G. Adani, CEO & Whole Time Director]

Yes. Swarnim, on the short-term basis, we have not seen any volumes because of the container shortage. We have actually end up seeing is that the supply chain has become more efficient because people are now pushing to reduce as much time as possible. To answer your second question, yes, the container manufacturing initiative by government of India will definitely help India in terms of addressing these container shortages issues that we are facing.

[Operator]

I would now like to hand the conference over to Mr. Swarnim Maheshwari from Edelweiss Securities for closing comments.

[Swarnim Maheshwari, Research Analyst]

Thank you to the management of Adani Ports for allowing us to host the call and thanks again for your detailed insights Karan and team. Would you have any closing comments over here?

[Karan G. Adani, CEO & Whole Time Director]

No. Thank you. Thank you, Swarnim. Thank you, everybody, for joining the call. And our IR team, Satya is there. If there is any questions that any of you have, we are happy to answer you. Thank you so much.

[Operator]

Thank you. On behalf [Audio Gap].