Adani Ports and Special Economic Zone Ltd

NSE:ADANIPORTS

Earnings Call Transcript 2022-Q3

[Bharanidhar Vijayakumar, Assistant Vice President]

Good morning. Thank you, everyone, for logging in for the 3Q FY '22 and 9 months FY '22 Earnings Conference Call of Adani Ports and SEZ. From the management, we have Mr. Karan Adani, CEO and Whole Time Director; Mr. Subrat Tripathy, CEO of the Ports Vertical; Mr. Vikram Jaisinghani, CEO, Logistics Vertical; Mr. Sanjay Chauhan, VP Finance; and Mr. Satya Prakash Mishra from the Investor Relations team. We would have initial remarks by the management team. Post which, we'll open it for Q&A. Over to you, sir.

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

Gentlemen, welcome to the conference call to discuss the operational and financial performance of Adani Ports and SEZ Ltd for the quarter and 9 months ending 31st December 2021. Let me start by wishing you all a very happy new year and a great year ahead. At APSEZ, we have laid strong foundations during the first 2 years for leapfrogging into a new growth trajectory, which is a key character of our growth story. Our strategy of expanding in the East Coast of India with a focus on higher growth regions, balancing cargo mix, expansion in the logistics business, rail transportation and venture into warehousing echoes our transformation towards a transport utility business model. In 2021, recovering from the impact of the pandemic, global growth was higher than most people's expectations at 5.5% as per the latest World Bank report. Global inflation during the period expectedly was high due to higher liquidity and due to disruption in the supply chain. During this period, India has harnessed a resilient growth turnaround in spite of a severe second wave early this fiscal. We are in the midst of a third wave, but the government has shown tremendous courage to ensure balance between life and livelihood with minimum impact to economy. Now coming to APSEZ. Last year, I have shared with you my vision of making APSEZ the largest port company globally by 2030 and the largest transport utility in India. In the past year, we have taken concrete actions to achieve this strategy. With one port on the East Coast namely Gangavaram and one port on the West Coast namely Dighi added during 2021, which will provide a much needed impetus on diversification and growth. The under construction port of Vizhinjam, along with the new terminal at Colombo, will work in tandem as the new transshipment hub in Southeast Asia, providing multiple options to the shipping lines for their transshipment trade, while adding volumes to APSEZ's cargo basket. Coming to the logistics business. To strengthen our hinterland network of logistics infrastructure for providing integrated end-to-end solution to our customers, we increased our rail rolling stock by 18% to 71 rakes, commissioned multimodal logistics park at Nagpur and ventured into Grade A warehousing and increased warehousing capacity by 108%. Let me review on the status of Sarguja Rail Corridor and Gangavaram port acquisition, which was announced in the current year 2021. I'm happy to inform you that the merger of SRCPL is now completed and consolidated into APSEZ's financials in the 9 month FY '22 result. With this, APSEZ debt will now consolidate all its rail assets under a single business entity, Adani Track Management Services Private Limited, creating a center of excellence under one entity and help create a strategic platform and considerable value for all stakeholders from day 1 as it aligns with APSEZ's vision of being a leader in the transport utility space. APSEZ holds a rail portfolio of 620 kilometers. With the acquisition of Sarguja Rail, which has 70 kilometers of rail line, will enable us to create a platform of owning and operating such assets. This will enable us to bid for expanding the network to reach its target of 2,000 kilometers of rail track network by 2025 by participating in PPP projects of Indian railways and improving our hinterland rails. Coming to Gangavaram port acquisition. Process for acquisition of 100% stake of Gangavaram port is underway. APSEZ currently holds a 41.9% stake in GPL. Balance 58.1% stake in Gangavaram port is being acquired. The scheme of merger is now filed with NCLT, and we expect an approval in the next few months. In 9 months FY '22, Gangavaram port handled cargo volume of 22.35 million metric tons, resulting in a revenue of INR 899 crores and an EBITDA of INR 598 crores, which is not consolidated. In our view, GPL will add revenue of approximately INR 1,200 crores and EBITDA of INR 800 crores in FY '22, which will consolidate retrospectively from 1st April 2021 after receipt of approval from NCLT. APSEZ continues to work on ESG framework adopted by it with a focus on sustainable growth. We are working towards achieving carbon neutrality by 2025. Some actions already undertaken and are in progress include electrification of rubber tyred gantries, electrification of mobile harbor cranes, purchase of electric internal transfer vehicle and the ongoing mangrove plantation. APSEZ has significantly enhanced its ambition for mangrove plantation beyond its earlier announced target of additional 1,000 hectares. The company is now formulating its net zero plan, which will be announced in the second half of this year. This is in line with the commitment made for the Science Based Targets initiative. Let me now invite Subrat and Vikram, who will brief you about the operational performance of port and logistics vertical. Thereafter, I will run you through the financials.

[Subrat Tripathy, Chief Executive Officer of Dhamra Port]

Thank you, dear Karan. Hello, everyone on the call. Greetings on behalf of the Ports division of APSEZ for a wonderful 2022 and ahead. Let me give you an overview of the performance of the Port Vertical, and I will start with the cargo volumes. APSEZ continues to outperform all India cargo volume growth and in the first 9 months of FY '22 handled a cargo volume of 212 million metric tons, a growth of 22% as against 7% growth registered by all Indian ports. Our overall cargo market share stands at 28.1%, thereby implying a market share growth of 350 basis points, whereas our container market share has grown by 189 basis points to reach 42.2%. Mundra port grew by 8% during the period. While the APSEZ portfolio, excluding Mundra, grew by 42%. Non-Mundra ports in the portfolio, especially on the East Coast, are growing faster and has contributed 47% to the cargo basket, which is higher by 7 percentage points. Including Gangavaram port on a pro forma basis, the number further improves to 52%. This growth is primarily due to our strategic focus on achieving East Coast/West Coast parity and diversifying cargo mix. With this, we have kept steadily moving towards the balance between the West and East Coast and improved to 69% versus 31% from 76% versus 24% earlier. Our cargo basket continues to see all India growth and constitutes 43% container, 44% dry bulk and 13% liquid cargo. Other products like LNG and LTE that we have added to our cargo basket continued to add and spur growth. Let me share segment-wise cargo data. First of all, on the container cargo, during the 9 months, APSEZ handled a total container volume of 6.2 million TEUs, a growth of 25% compared to all India container growth of 19% on a year-on-year basis. While Mundra port grew by 26%, Krishnapatnam port grew by 58% with a volume of nearly 134,000 TEUs. Mundra continues to be the largest container handling port, truly the EXIM gateway of India with 4.9 million TEUs, which is 17% higher than JNPT. Our strategy of providing multiple entry and exit points by diversing our geographic footprint, single-window service to the shipping lines, integrated supply chain solutions to end customers, along with partnering huge and large shipping lines through our JVs enables and fosters continuous gain in market share. Our efforts to strengthen the position in container segment at new locations and offer unique solutions to shipping lines resulted in the addition of 8 new container services, of which 5 services were added at Mundra port, 1 each at Hazira, Kattupalli and Ennore ports. This will contribute 230,000 TEUs of container volume per annum. Talking about dry bulk cargo. During the 9 months of the year, the total dry bulk cargo handled was 94 million metric tons, which is a jump of 21%. With this segment, minerals grew by 46%, coking coal by 34%, and total coal volume registered a growth of 18%. To enrich and diversify our cargo basket, we have added 4 new cargo types, namely sulfur at Dahej port, dolomite at Kattupalli port, gypsum at Krishnapatnam port and LD slag of the steel plants at Dhamra port. We have added new customers at Dhamra port, including names in the Internet such as Bhushan Power & Steel Limited. Krishnapatnam port, which was acquired in FY '21, continues to see the adoption of the best practices of APSEZ. We are enhancing capacity by key bottlenecking and mechanizing operations at a brisk pace. For the first time, limestone was handled through a mechanized conveyor, improving both productivity and efficiency, at the same time, helped increase margin portfolio for the products. This is a first amongst all Indian ports. During the period, we have added 12,000 square meters of covered godown to handle agri products. We continue to add new customers at Krishnapatnam port, and this will go a long way towards achieving a full operation of the port. Moving to liquid cargo. APSEZ handles liquid cargo, including crude of 26 million metric tons, implying a growth of 22%. All liquid cargo handling ports registered double-digit growth led by Hazira. This was led by higher volume standards, especially at Hazira as well as at Mundra ports. As part of our cargo diversification, we have added LPG and LNG into our portfolio. In the 9 months, APSEZ have handled 1.2 million tons of LPG and LNG. As the rise in demand for gas products has a greater source of energy, we expect to see volume growth in this segment also. Coming to the performance in Q3 of FY '22. Cargo volume during the quarter saw a decline of 8 million metric tons, around 11% compared to Q3 of FY '21 and added 68 million metric tons. Cargo volume was particularly subdued on account of lower import of coal by key [indiscernible]. And a lower trading coal volume which was impacted due to higher commodity prices, disruptions in the supply chain and incessant, unpredictable rain in the southern and eastern ports for the year. Of the 8 million metric ton decline in the cargo baskets, coal volume at the following ports declined by 9 million metric tons on a year-on-year basis. At Mundra, 6.4 million metric tons. At Dahej, 0.5 million metric tons. At Dhamra, 0.5 million metric tons. And at Krishnapatnam, 0.9 million metric tons. If we look at key customers on account of [ why ] the cargo volume declined, the key names are Adani Power at 4.5 million metric tons, Tata Power at 1.5 million metric tons, Sembcorp at 0.8 million metric tons at Mundra and Krishnapatnam, respectively. However, on a sequential quarter-on-quarter, the volume was flat. We believe in the revival of the non-coastal power plants. Due to increase power demand and softening of prices globally, all volume in Q4 of FY '22 will certainly improve and is already showing such signs. Now coming to APSEZ performance during the period. As emphasized by Mr. Karan Adani, we march firmly and steadily towards carbon neutrality by 2025. APSEZ has scaled up its ambition for renewable electricity given the earlier announced 100-megawatt generation capacity. The company is now discussing the tie-up of electricity supply from a renewable developer. We have now completed the climate risk vulnerability assessment of certain ports to ascertain their exposure and sensitivity to changing climate so as to guide the development of an adoption plan for key individual ports, particularly the ones with high sensitivity. To give you a brief about the ESG performance, as of the end of December '21, APSEZ has managed to improve its energy intensity by 31% and reduced its carbon intensity by 29% from the 2016 base levels. I am sure and confident that this performance will further improve to lead to carbon neutrality vision by 2025. Thank you. With this, I will now hand over to Vikram to update you on the Logistics vertical. Over to you, Vikram. Thank you.

[Vikram Jaisinghani]

Thank you, Subrat. Greetings for the new year to everyone on the call. I am delighted to share that Adani Logistics Park at Nagpur was successfully commissioned in quarter 3 FY '22. With this, we now have a strong central India presence and have 6 multimodal logistics parks. Furthermore, the logistics park at Virochan Nagar, Taloja and Panipat are under development. We are working in line with our vision to become an end-to-end integrated logistics service provider in India by creating logistics infrastructure, including multimodal logistics parks, warehouses, [ Grade A tires ] and complete rail solutions for container, liquid, grain, bulk and other cargo. Speaking about logistics operation in the past 9 months, Adani Logistics witnessed a 25% increase in rail volume. As compared to last year, that is 284,477 TEUs versus 227,047 TEUs. This has been achieved despite blockade of the Kila-Raipur logistics park, our operations at Kila-Raipur, which resumed in December 21, and we are working to reduce our volume at [indiscernible]. GPWIS vertical continued its growth trajectory. And with new circuits added from mines to power plants, the bulk cargo transportation is gaining momentum and helped us achieved 86% growth in the 9 months FY '22. During the period, Adani Logistics handled 5.7 million metric tons against 3.08 million metric tons in 9 months of FY '21. We have also commissioned 11 new rakes during that period. With that, we have 21 GPWIS rakes in our stable. We have a firm investment plan to take the total GPWIS rakes up to 25 by end of this financial year. Coming to Adani Agri Logistics, 5 projects of 250,000 metric tons capacity at Panipat, [ Kannauj, Dhamra, Daruna and some multiple ] are under construction, each having 50,000 metric tons storage capacity, which will increase the capacity by 30%. Two of these projects will be commissioned in quarter 1 FY '23, 1 in quarter 3 FY '23 and the rest in FY '24. In warehousing, our new Grade A warehousing facilities at Mumbai, Indore, [ Alwal ], [indiscernible] Kochi and Virochan Nagar are under construction, totaling 4 million square feet, which will be commissioned by Q4 FY '22. We are also in final stages of signing LOI with clients for 0.5 million square feet built to suit warehouses. Adani Logistics is on its trajectory to emerge as a leading company in Grade A warehousing, with the commencement of new projects while also focusing on strategic acquisition of warehousing assets. Alongside port business, logistics business is also successfully implementing low carbon solution in its business segments to reduce the emission profile of its customers. All ceramic goods transport from Morbi and Gujarat are now transported through rail versus road earlier. The greenhouse gas emission reduction from this transition is estimated at over 50,000 tons in 2025, implying taking 20,000 cars off the road. Back to you, Karan.

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

Thank you, Subrat and Vikram. Now speaking about the financials. Consolidated revenue grew by 35% year-on-year to INR 12,089 crores in 9 months FY '22. This impact by 27% growth in port revenue, logistics revenue growth of 22% as well as a higher SEZ and port development income. During the corresponding period, total EBITDA grew by 29% to INR 7,428 crores. Speaking about port operations. In 9 months FY '22, revenue increased by 27% year-on-year to INR 9,706 crores. EBITDA for the same period grew by 27% year-on-year to INR 6,876 crores, in line with the revenue increase with Krishnapatnam port contributing INR 987 crores to this number. Overall, port EBITDA margin stood at 71%. Speaking of the logistics business, in 9 months FY '22, revenue from the logistics business stood at INR 845 crores, a growth of 22% on account of improving container and bulk rail and terminal traffic, along with improvement in rolling stock for both container and bulk cargo move. Our efforts to diversify by adding bulk cargo, elimination of loss-making routes and operational efficiency resulted in a significant increase in EBITDA and margin. While logistics business EBITDA grew by 32% to INR 214 crores, the EBITDA margins expanded by 179 basis points to 25% on a year-on-year basis. During these 9 months, profit before tax stood at INR 4,776 crores, and PAT stood at INR 3,762 crores. In conclusion, as I said earlier, India's story of becoming [ the second ] manufacturing hub and assumption of a virtuous cycle of investment in infrastructure, capital goods and booming consumption will lead to expected GDP growth of more than 9% in the next couple of years, giving a [ springboard ] to Indian EXIM trade. We are ready to capture such growth by having a footprint in all key geographies of India EXIM hub. Creating a strong network of multimodal logistics park and owning and expanding container and bulk rolling stock to reach the customers will help us provide end-to-end integrated service as part of our customer-centric business model. As the supply side disruption continues, we are integrating technology into our platform to provide tailor-made, single window solution to our customers and capture a higher wallet share of their supply chain. I'm sure with all of this, we are on right track to achieve our FY '25 business growth target of reaching cargo volume of 0.5 billion, growing rakes down by over 3x to 200, own railway tracks of 2,000 kilometers, implying a growth of over 200% and build 15 MMLPs, which is 3x the current count. Also, we have a target for warehousing capacity of 60 million square feet by FY '26. With this, the [ tapestry ] of our India story will be complete. I will conclude by saying that our effort to create the largest port company globally by 2030 and the largest transport utility in India, combined with a green and sustainable future, are key pathways to value creation for all our stakeholders. With this, we can open the lines for question and answer.

[Operator]

[Operator Instructions] The first question is from the line of Atul Tiwari from Citi.

[Atul Tiwari, VP & Analyst]

Sir, my first question is on Sarguja Rail. So it is being consolidated now from FY '22 onwards. Sir, in which are the segments where the numbers are there, SRCPL, port, SSL, logistics or other?

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

We have consolidated the SRCPL numbers in ports.

[Atul Tiwari, VP & Analyst]

Okay. So SRCPL is a part of the port. So I mean just trying to understand that why -- I mean because it's like a rail link, and it is also not connected to any particular port RPOs, right? So...

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

Yes. No, so because it is not just SRCPL. Because after -- once this asset comes in under Adani Track, you will have assets of Dhamra, Mundra, Krishnapatnam and Dahej, which will be coming in. So you will have predominantly port assets which are linked to port, which will be driving. So that's why we are consolidating Adani Track Management and the ports.

[Atul Tiwari, VP & Analyst]

Okay, sir. Okay. And sir, you have revised down your revenue and EBITDA, et cetera, guidance down for this year. What is the new volume guidance for this year?

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

Actually, we are not giving volume guidance because we are more focused on making sure that, financially, we are reaching the numbers that what we have guided. And it's a little bit -- let me put it this way, it's very difficult for us to give the guidance right now, keeping in mind the full scenario what is happening.

[Operator]

The next question is from the line of Sumit Kishore from Axis Capital.

[Sumit Kishore]

My first question is on the container volume growth dynamic. Could you elaborate on the almost flattish growth that we saw in container volumes for Adani port in Q3? All India growth is about 2%. I mean particularly, I know we sell better in the 9 months period. But what is the [indiscernible]?

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

Subrat, do you want to answer this one?

[Subrat Tripathy, Chief Executive Officer of Dhamra Port]

Yes. I will take this. Thank you so much. See, the container growth, as we have clarified, it is not about being flattish. It's about the emergence of Mundra as the preferred EXIM gateway. And if you really look, Mundra at 4.9 million TEUs consolidate itself as the most preferred gateway serving the entire northwestern region of India. And therefore, volumes have been growing significantly. If you look at Mundra itself, the growth at 4.9 versus about 3.8 last year, is pushing a growth of about 26%. Now in line with the pandemic and the automobile sector being a little depressed on the southern part of India, which is the automobile hub on and off Chennai, so there have been a little depressed volumes. But if you were to pick it out from the Western India and which is truly where the EXIM rate of India is conducted, we see a very strong rally in Mundra. And that is confirming also with the growth in volumes at the port, the discharges to the rail method, the growth in CFSs and the connect that we are establishing to each of the ICTs and the CPOs in Mundra and in Northwestern India. So we would like to believe that the container story is very robust, is very sound. Let me also further clarify. If you look at the nearest competitor in this region, both at JNPT as well as at Pipavav, JNPT does register growth but is now clearly behind which means Mundra emerges ahead in the race and consolidates position. This is to clarify that container growth on an India basis may look to be flat, but our position consolidate truly ahead. That is the clarification we'd like to give.

[Sumit Kishore]

Another question on volumes. Again, when you look at Mundra port coal volumes for the December quarter, they were almost flat on a year-on-year basis versus the declines seen around [indiscernible]. I know a lot of it is attributed to the Mundra terminal power plant. But still, I mean, excluding that there was a decline in coal volumes versus a flat outcome at major ports, I mean, what is the difference?

[Subrat Tripathy, Chief Executive Officer of Dhamra Port]

See, you have yourself the genesis of the answer lies in the way, as Karan has guided, to the India story of coal now is a replacement of domestic coal from the Indian mines to -- within the coastal movement, whereas the EXIM thermal coal, in which the dependence of the IPPs, which have been established, especially Adani and CGPL at Mundra, where we have seen declines because of these 2 significant reasons. One is the disruption in the cycle, the high-priced arbitrage being demanded in the international market. And of course, the disruptions emerging out of Indonesia, especially in Q3. Now this, coupled with the fact that the Government of India's guidance is to shrink out dependence on imports and migrate to a little bit of coastal coal, especially in the eastern part, puts us in a very [ little sequence ] position. On one side, we are seeing a bouncing trade of India on the EXIM volumes. So Indian trade volumes are at all-time high. If you look at the guidance of government and the [indiscernible] and replacement, coupled with the price arbitrage and the disruptions in Southeast Asia, especially in Indonesia, has turned the situation where cargoes in Eastern India, especially at Paradip and at Ennore have grown. And all along, the dependence on thermal coal for the IPPs has reduced. So the story is the same throughout in India. We have been particularly hit, as I have already clarified, at Mundra in terms of Adani Power and coastal power on behalf of Tata. That's how it stands out, Sumit.

[Sumit Kishore]

Sure. Finally, on logistics, one question. In terms of the [indiscernible] revenue growth of 15%. The commentary on rail volume growth, bulk volume growth has been pretty strong, warehousing capacity addition. So I mean how should we read the absolute revenue growth number for the quarter?

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

Can you repeat this question, the last line?

[Sumit Kishore]

Yes. So I mean there was a 15% revenue growth in Q3 for logistics, while rail volume growth for the quarter was up 30%, bulk volume growth up 63%. There has been warehousing capacity addition now that logistics park has come into the picture. So versus the volume growth numbers, the revenue growth [ for the businesses ]?

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

So I think a number of actions have taken place over here. Okay. We have reset our rail network. We have brought in new routes, stopped our loss-making routes, okay, increased operational efficiencies, focused on train turnaround times. And all these levers have been effectively used to get the results that we have got. That's how we have achieved these results and the growth that is seen over here.

[Operator]

The next question is from the line of Swarnim Maheshwari from Edelweiss.

[Swarnim Maheshwari, Research Analyst]

My first question is when I look at Gangavaram predictions. This implies that there is a 21% growth in realizations on a Y-o-Y basis. If you can just explain what is leading to such a sharp jump in the realization?

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

Subrat, do you want to answer this one, on the cost improvement that we have done in Gangavaram?

[Subrat Tripathy, Chief Executive Officer of Dhamra Port]

Yes. You see Gangavaram, typically, we are doing a reputation of the story that has been done with each acquisition. First at Dhamra, I'd like to put a little bit of perspective so, Swarnim, you get it appropriately. We acquired Dhamra. We turned it around from EBITDA levels and take it to 70% EBITDA levels, bring in efficiencies, become a magnet for attracting cargo in the hinterland. We go into Krishnapatnam, do the same reputation of what is the best skill sets of APSEZ that is focusing on efficiency, extremely good control on our financial discipline. We turn the port around and achieved EBITDA of beyond 75%, 76% the moment we stepped in. In line with the same kind of philosophy that APSEZ is forced to believe in, we've come into Gangavaram. We turn around the efficiencies. We improve the EBITDA. We take out the otherwise inefficiencies, which are ingrained in the system. We connect with the customers appropriately. We make an outreach to rail. We're getting some amount of outreach to the GPWIS rakes. We understand that [indiscernible] Western [indiscernible] are deeply connected to the development of Gangavaram port. And we provide the proper solutions to customers, namely steel plants in these 2 sectors as well as the steel plant, which is right in our backyard, and this is the only steel plant and a port which live in conjunction. All this means that a virtuous cycle of which APSEZ is known to normally practice brings around Gangavaram story. We would have otherwise -- I would impact my -- I would say that if the thermal coal story would have been a little more stronger, you would have seen that Gangavaram portfolio would be exceeding even better. Notwithstanding that, efficiency of operations, better control and financial discipline and eradicating otherwise inefficiencies, which we have seen in the Indian port, but which it is at is distinctly different, brings the story of Gangavaram place. Thank you, Swarnim, for giving me an opportunity to tell you the APSEZ's story.

[Swarnim Maheshwari, Research Analyst]

Right. Got it. Subrat, my other question is on Kattupalli. So now I think it's a third consecutive quarter of a significant volume decline. And in this quarter also, there is a 30% kind of a decline on the volumes. So what is -- if you can just explain what is actually leading to such a sharp decline and when it is expected to stabilize.

[Subrat Tripathy, Chief Executive Officer of Dhamra Port]

Well. Thank you. The first question on stability, we will be introducing a new service very, very soon. You have seen that the international supply chains, especially in the container trade in Southeast Asia and particularly focusing on the Eastern Seaboard of China, have gone for massive disruption and the fact that the pandemic has not led to a [ thrift ] in the automotive sector. Besides that, we will be adding a service in Kattupalli, and it will be my pleasure and privilege to -- when we do year ending and come back in the Q1 of the next year that you will be seeing an added service. But let me also clarify. I would, as we have always guided, not like to look at Kattupalli in isolation. Rather, we look at Kattupalli as in its own internal end. Competitive as it were, along with Ennore terminal and Kattupalli, which actually reside beside each other and also Krishnapatnam, where you would have seen we would have grown significantly at about [ 130,000 ] TEUs in this particular quarter. So if you were to look at Kattupalli and Ennore and if you look at Chennai, which again has 2 terminals, we continue to sustain our market penetration and share of about 39%, 40%. So it's not that Kattupalli in isolation gets down. Rather, the APSEZ portfolio for containers remains steady. Is that adequate? No, we want to build on. And as we clarified, a new service will be introduced in this quarter. It will be consolidated. A new service will also come into Ennore. As you have seen, coming back to the first question that Atul has asked, when we expect that the growth of containers has been flattish, but you see at Mundra, which is a driving 4, where we added 5 services. Likewise, we have added a new service, it will start bearing fruit in the Q1 of the next year. And along with Ennore, Kattupalli, Krishnapatnam, I urge you to see this as a composite market. We retain our share, we retain our cutting edge over there. Yes, we wish to take Kattupalli portfolio even higher. Thank you.

[Operator]

The next question is from the line of Mohit Kumar from DAM Capital.

[Mohit Kumar, Research Analyst]

Yes. First question is how the containers and bulk behaving, especially in the month of January 2022. Are we seeing the bulk coming -- the coal coming back, especially in Mundra? And do you see any improvement in container vis-a-vis other ports?

[Subrat Tripathy, Chief Executive Officer of Dhamra Port]

Well, coal continues to disappoint because the issues around Indonesia have not been sorted out in conclusion. The disruptions and the regulatory interventions on behalf of Indonesian government has led to shipping line disruption. So we have not seen a rally that we were expecting to see. Though the electricity demand as such is growing, and we are -- we were trying to kind of build ourselves into the larger growth story of electricity demand, which we are experiencing in other places.So container continues to dry. In fact, every second or third day, we have these minor records coming out of Mundra in terms of -- you would have seen we handle the biggest vessel to ever visit India in the month of January. And that was quite an event, not necessarily about the big vessel per se, but the fact that you are a chosen terminal for such a preferred gateway and that you are able to attract as a magnet. So container volumes continue to be extremely bullish. Mundra is the magnet without a doubt. It has remained flat as such for various reasons because of the disruption, but coal continues to disappoint. We are, however, expecting in line and in the lap of the budget announcement yesterday and focus on infrastructure and the fact that the EXIM trade is also booming high, we're expecting some rally in the month of mid-February onwards. That's the kind of focus we are getting. If you want to look at the coal otherwise, that is the core portfolio of EXIM thermal coal and if you were to look at otherwise into the coking coal story, that is extremely robust. And that also contributes to this shift we are having, and the parity between west and east is driven by the fact our ability to have better coking coal, the fact that India's steel production in 2021 at 118 million tons, a jump of 18%, means the driving forces of our ports in the east continues to do that. And along with the GPWIS, it is a virtual cycle we can do. But otherwise, thermal coal in the west is disappointing, but we are expecting a rally from mid-February onwards. Containers, booming. Every record, every day, big vessel, better discharges, highest number of trains. And my friend, Vikram, has been filing with all the efficiencies we're bringing in all to the ICDs and the fantastic turnaround. We are having record dispatches from Mundra at the moment. Over to you.

[Mohit Kumar, Research Analyst]

Secondly, are you participating in the bids for the terminals in major ports? And have you won any concession agreement at Kolkata port?

[Subrat Tripathy, Chief Executive Officer of Dhamra Port]

Yes, without a doubt. Thank you for that. I thought I would save it as a kind of a crowning piece at the end of the call, and I would have let Karan do the talking. We have already won a bid to develop a bulk terminal at Haldia, and that is in line with the way that the Eastern Seaboard operates. And by all accounts, we should be receiving the formal LOI in the first week of February. As I speak to you in about next week, we should be able to have the formal LOI with us. It has already been indicated. So one terminal in the Kolkata port complex at Haldia Dock. The complex itself is already as a part of the APS, which means APS is truly, truly pan India. There's no state on which we are not present. We are looking to also participate in other kind of terminal developments which are coming through at JMPCC, which we are very eagerly looking forward to. So also in all the other major ports, including at Paradip, for all cargoes, including at Kandla for the DPT for bulk and fertilizer cargo, so as a part of the basket diversification of commodities, identification of the best commodities and the best hinterland, we are going to participate, and we are very confident just the way we have seen our confidence materializing into an actual -- rectifying the tender in the Haldia Dock complex. Yes, we wish to qualify and we will be participating.

[Mohit Kumar, Research Analyst]

Sir, lastly, sir, are we hearing more inquiry for land given the PLI is picking up? Can you take some sharp jump in revenues from ACC in FY '23?

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

Yes. So we are seeing a lot of traction on the land side. One -- we are expecting a land sale to happen in Q1 of next year on the -- for one of the refineries to set up their crude oil terminals. We are also in discussions for a petrochemical plant to be set up in Mundra. And apart from that, we are seeing -- as you have seen, we have signed an MOU with POSCO for a steel plant, 5 million ton steel plant in Mundra in which we -- if everything goes through, we should be expecting that investment to come through in the next 18 months. So there are a lot of inquiries which are coming, and we are very hopeful that we should be able to fast track some of our land sales, not just in Munrda but even in [ Hambro ] as well.

[Operator]

Next question is from the line of Ashish Shah from Centrum Broking.

[Ashish Shah, Analyst of Infrastructure and Airlines]

Sir, first question is on our volume numbers. I know you said it is difficult to give the FY '22 volume number. But broadly, if I extrapolate the current numbers, it looks like you might be somewhere around 310, 315, including Gangavaram. And you said by FY '25, you want to get to 500. So with this kind of uncertainty on coal, how do you think this journey from 310, 315-odd will happen to 500 in about 3-odd years?

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

So predominantly, growth is going to come from 3 big commodities. One is container. Second is gas business, so that is LNG and LPG. And the third, which we expect growth to come out of is of metal space. So whether it is bauxite, aluminum, steel products. So basically, metal is another big focus area where we do believe that a large part of volume driver will happen. As we have always said that the coal -- we are not very bullish on coal. We don't expect more than a 1% or 2% growth on a CAGR basis, which includes coking coal as well. So coking coal and thermal coal together, we don't expect more than 1% CAGR growth over the course of next 5 years. So -- but predominantly, growth is going to come from these commodities.

[Ashish Shah, Analyst of Infrastructure and Airlines]

Okay. And the 500 number is organic, right? It doesn't include any acquisitions that we might do along the way.

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

No, this is just organic based on whatever assets that we have.

[Ashish Shah, Analyst of Infrastructure and Airlines]

Sure. On the CapEx side, while this quarter we have not given any explicit number, but given that coal is a little bit of a problem, are we looking at slowing down the CapEx -- kind of CapEx numbers? Or this year, we revised downwards as well as for '23 or something like that?

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

No. So most of our CapEx right now which is going on is predominantly not coal-related. It is predominantly container-related. So whether you take Vizhinjam port, whether it is Colombo port terminal or whether it is expansion in Dhamra, these are not all -- even the liquid tank farm expansion in Hazira, so none of this is coal-related. So we don't expect the CapEx to slow down because of coal. We expect CapEx to be in the range of INR 3,000 crores to INR 3,500 crores even for next year.

[Ashish Shah, Analyst of Infrastructure and Airlines]

Sure. And just a last bookkeeping question. The tax provision for this quarter seems significantly lower than what we have seen otherwise in trailing quarters. So is there anything in particular we should note here?

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

Sanjay, you want to add -- take this one?

[Sanjay Chauhan]

Yes. On overall basis, our tax position in the current quarter has been lower on account of the contributions that we see coming out from non-Mundra ports because we have got ADI jurisdictions, which are lower tax jurisdictions. And on an annual basis, we expect, assuming no ForEx adjustment, an annual average tax effect of around 19% to 20%.

[Ashish Shah, Analyst of Infrastructure and Airlines]

Okay. So for F '22, after considering Gangavaram, we should have 19%, 20% sort of effective tax.

[Sanjay Chauhan]

Yes, excluding FX adjustment.

[Ashish Shah, Analyst of Infrastructure and Airlines]

Excluding FX adjustments.

[Sanjay Chauhan]

Yes. FX adjustment, if there's a loss on FX, we have a better tax rate improvement because everything comes in 35% tax jurisdiction with this Mundra. And if that's the case, again, the taxes are higher. If there's exchange gain, it will increase that effective tax rate. If there's an exchange loss, it just reduces the tax rate.

[Operator]

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

[Pulkit Patni, Equity Analyst]

My first question is more near term. I mean I understand a longer-term growth for containers, et cetera. But given that we are seeing some bit of pent-up demand now go away with where logistics costs are, shipping costs are, is there a risk that for the next 6 months, even the general import volumes in India, particularly related to containers, might see some weakness relative to what we have seen in the last, say, 18 to 24 months? That would be my question #1.

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

So on a near-term basis, when I look at EXIM volume for containers, we are not seeing any slowdown. As the global demand increases and keeps increasing, we don't see any change in that. Actually, we are seeing a stronger demand coming in for the next year as well. I think one thing there to keep in mind is that we do expect shipping freight to normalize. I would not say it comes down to the original level, but at least to come down from the peak and to normalize by October of '22. So we will continue to see -- I don't see any indicators where we can see that the demand is going to slow down. And as the production in the country keeps increasing, I think the import side of -- our import leg is going to increase in my view.

[Pulkit Patni, Equity Analyst]

Sure, sure. So basically, next 3 to 6 months, we don't really need to worry about container volumes, is what you're saying.

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

No, we don't need to.

[Pulkit Patni, Equity Analyst]

Sure. My second question is on classification of Sarguja rail. So as you said that some of the other rail assets are also classified in port, is there a plan that at some stage as this become sizable, this would be carved down and move to the logistics business? Or the way we should look at it is that it would continue to be modeled within our ports business only at least for the foreseeable future?

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

So today -- Pulkit, today, even without the asset, let's say, for example, Mundra rail asset even -- it is part of Mundra port. And even today, that revenue from that asset is considered in the port revenue. So we are not looking -- that's the reason why we want to bring all rail assets under port itself. We -- there is no plan to bring it under logistics because most of our -- even the future rail infrastructure that we are looking to bid out and to build will be linked to the port. So it is very heavily dependent on how the port performance is going to be. And we would be looking at building the strategic lines which will help make our ports more competitive.

[Operator]

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

[Parash Jain, Head of Transport Research, Asia]

I have got 3 questions. One is housekeeping, but let me get off all 3 together. First of all, when we talk about becoming the largest port operator by 2030, it by default means that you have to very aggressively grow overseas. Is there any change in the strategy? Or is there a strategy? Or it will still be hovering around South Asia, going from Sri Linka on one end and then only Bangladesh on the other? Secondly, on the logistics front, are you still very keen to remain a B2B player? Or given the opportunities, B2C is or potentially could be one of the areas that -- where the investments will drive or the growth will come from? And finally, the housekeeping question is when I look at share of profit from associates and joint venture, your overall profit seems to be lower than your share in Gangavaram. Is it that the rest of the businesses have some sort of drawdown? Or I'm just getting it wrong?

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

Thanks, Parash. I'll answer the first 2, and I'll ask Sanjay to answer the last one. So I think when we are talking about being the largest port operator by 2030, our strategy -- internationally, our strategy does not change. I think we are very bullish on India and we will be looking at increasing our footprint in India and diversifying our footprint in India and try to connect our dots with the neighboring countries. And the eventual goal is to make India a hub, logistics hub for our neighboring countries. So I don't think that aspect changes. And our firm belief is that if India is to grow significantly and with the growth rates that we are talking about, the trade in the country, you can't find a better geography in this state than India. So we are not -- as international strategy, it does not change, keeping this in mind. To answer your second question on the logistics front, no, we are still focused on B2B. B2C, yes, you're right, it is a potential area, but it is -- today, as of right now in India, it is still a loss-making -- operating -- operational loss-making business. So I think we'll keep our eyes open for that opportunity. And as and when we do feel that there is a return to be made in that side of the business, then we would be looking at B2C as well. And -- but right now, it is predominantly B2B business model that we are looking to build out on logistics side.

[Parash Jain, Head of Transport Research, Asia]

Maybe kind of before we go to the third question, just on the logistics front, given Vizhinjam and Colombo, is the trader service, is there an opportunity? Or do you think that it's a broken business model and far too competitive and you have enough supply, and therefore, there's little merit to control that part of the value chain while offering service to your clients?

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

So you're right, [ feeding ] for us to do by ourselves between Vizhinjam and Colombo really doesn't make sense. I think there are enough players in the market and there is enough assets in the market. The way we would look at it is if nobody is willing to take a position, we don't mind taking a position in terms of guaranteeing the [ loan ], but owning the asset and running the asset is not -- is not our -- it is not our core competence. So we would be staying away from it. But as I said, if a client needs it and if nobody is willing to take a position, we don't mind taking a position by underwriting the capacity.

[Parash Jain, Head of Transport Research, Asia]

Okay. Perfect. That makes sense.

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

Sanjay, you want to answer the last?

[Sanjay Chauhan]

Yes. So on the profit pickup from associates, I'd like to clarify that there are no losses that are getting consolidated or picked up from EPS point of view. The 2 profit that we pick up is investments in Adani Total JV and other profit we pick up is from Gangavaram. If you look at the Gangavaram numbers and if you look at the -- if you arrive at the associate, there will be a difference. Essentially, we have done a purchase price allocation. The numbers which you are looking here is a stand-alone pure profitability. So we have INR 181 crores equity pickup for Gangavaram for 9 months, which is adjusted by INR 58 crores on account of amortization of intangibles that we identified as part of the purchase price allocation process. So there is no cost, but just an accounting adjustment.

[Operator]

The next question is from the line of Prateek Kumar from Antique Stockbroking.

[Prateek Kumar, Vice President]

My first question is regarding -- we'd have seen that the divesting target and budget seems to have come down. So it's not clear what will happen to Concur, what is the time line, et cetera. But with that adoption, do you think that adding debt and catching your balance sheet in second quarter would be too preemptive?

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

We've not heard anything in terms of that Concur is not going to happen or the plans are shared. So I think we -- until the time we get a firm signal that it is not happening, we are assuming that it will happen next year. And we keep our plans -- we work towards that plan of the acquisition. If for whatever reason, it doesn't or if we do feel or if we do get a signal from the stakeholders that it is not happening, then the unwinding is -- we will start the unwinding process.

[Prateek Kumar, Vice President]

Sure. Secondly, when we say that the container segment is doing very well and Mundra is doing records all sorts so -- but last year, Q4 had a record in itself in terms of absolute volumes, I think on a total basis as well as Mundra. So when we now look at 4Q growth, so are we looking to outgrow a very strong 35% growth rate we saw in...

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

We'll see growth in containers without a doubt. We've already said because of this little subdued kind of demand that we are seeing in the thermal coal sector for the various clarifications that we have issued, it's a little premature to take a stand at the moment. But then yes to come back, clearly, the container growth is certainly, without a doubt, very, very bouncy. And the Q4 that we are looking to kind of -- we should be certainly outperforming Q4 of last year, that's by all indications. We would look to be, as I clarified earlier in the call, that rally from the thermal coal, especially at the 2 major IPPs at Mundra, is what is going to tilt the balance. Otherwise, we will be seeing, as I've already clarified, that there will be a very strong rally in the other segments, container throughout. Even in the south, we will see a revival. Yes, coal will be a little, keeping fingers crossed on the thermal part of it. On the coking part of it, we are very steady. In fact, there will be growth without a doubt. By all accounts, we should be outperforming Q4 of last year if any indications as it comes.

[Operator]

It seems like we lost the connection for the current participant. We move to the next question from the line of [ Jim Zaveri ] from Intera Securities.

[Unknown Analyst]

So I want to know the reason for underperformance in the Q2 in terms of -- Q3 in terms of the volume where the all-India cargo volume has fallen by 8%, whereas our APSEZ volume has fallen by 11%.

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

Well, thank you. Again, to clarify, as we said, segment-wise, we are having this mixed story. There is huge growth on the container side. There is growth on the liquid side as we have seen. It's only on the dry and especially on the dry to distinguish one particular commodity that is EXIM thermal coal into India and particularly the narrowing down, as you've given in the earlier clarified, it's at Mundra where we have seen a little bit of downward trend, especially in coal. And if I take up, for example, if you see that APL Power, which as Q3 last year, which is about close to 5 million metric tons, 5.20. This time, it was only 0.71. So there's significant decrease arising out of these disruptions of Indonesia, and that is what it has been. In Q4, as I clarified, we are hoping for a rally around the mid of February, and then we should be recovering. But to answer specifically your question, Indian cargo has dropped everywhere except the coastal for coal. Likewise, at Mundra, despite our growth, which is outperforming Mundra on a portfolio-to-portfolio basis, if you look at the thermal coal segment, it is APL and it is CGPL. Both have registered close to about against 5.2% last year for APL. We have done 0.71 this year against 2.27 for CGPL. We have done about 0.7% for both logging, close to about 86%, 68% drop. That explains why there has been a drop. But if you look at, again, let me get you back to a 9-month basis, there we see that we have been outperforming and we continue to beat the all-India growth significantly certainly. These aberrations do happen. And -- but on a year-to-year basis, when you look at it, the 9-month story is certainly far more robust and gives a lot of hope that the rally will be quite successful.

[Unknown Analyst]

Okay. Second question is on the Hazira port. Where we can see the Hazira port as a prospect of good revenue growth as well as the good jump in the realization also? So what are the reasons for this growth in the realization? And will it be sustainable for the coming 2 to 3 years point of view?

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

See, Hazira, like Mundra, emerges as the gateway for container EXIM trade of India. Hazira, if you look at the geography of South Gujarat into the Northern Maharashtra and part of it into the Suraj region across the Gulf of Cambay, it's the most prosperous part of India in terms of the pharmaceutical sector. And therefore, if you look at Hazira, its entire portfolio of liquid cargo, particularly chemicals, is truly, truly the Indian port. So therefore, Hazira reporting a very strong, robust liquid cargo growth. In fact, it's for better capital expenditure over there, which we are going ahead, which in -- shortly, we'll be also telling you subsequently. Sustains cargo growth, sustains revenue because this is a high EBITDA margin cargo for us. Also the fact that in and around Hazira because of the industrialization, we are seeing record utilization of our assets over there in terms of both available utilization as well as both productivity. It's my pleasure to tell you that as our utilization has improved, so also the team at Hazira has opted itself in productivity on all accounts, especially on liquids as well as dry cargo, particularly even with cargoes like gypsum, et cetera, we're doing record volume. That explains the growth. That also explains the accompanying EBITDA growth that we are experiencing.And to also finish by telling you, we see this to sustain. In the next 3 or 4 years, we have a very strong reason to believe and we are working towards that, that as with geographies, as with particular hinterland, we will consolidate Hazira as the leading liquid cargo port of India, answering the entire needs of India, in line with the manufacturing story that we want to do.

[Unknown Analyst]

Okay. And the last question is on the impact of Omicron on the -- our volume in January and what -- when we are seeing the revival from -- for the volumes.

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

Omicron has absolutely no effect on our port operations or on volume. If anything, it is the regulatory and the dislocation in the Indonesian shipping cycle and the position the Indonesian government took regarding availability of thermal coal, that is which has caused a disruption. Omicron per se has caused no disruption whatsoever in any of our ports or the logistics business for that matter.

[Operator]

The next question is from the line of Aditya from Kotak.

[Aditya Mongia, Vice President]

I have a few questions. I'll go with the first one. So Karan, the question I wanted to ask you was that what you were saying imported coal will not grow from here on and that will be a drag. Results -- positive side of it, which relates to the transportation of domestic coal as well as the handling of domestic coal at ports. I wanted to hear your thoughts whether that by itself can be a meaningful boost to your support portfolio now that you have [indiscernible] side?

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

Subrat, around it?

[Subrat Tripathy, Chief Executive Officer of Dhamra Port]

Yes. Thank you, Karan. Yes, what I'll clarify, you see, we are already in this particular quarter as in Q4 also, one of our key customers, NTECL, a JV between NTPC and Tamil Nadu government, which is the [ department ] present at Chennai at Ennore, hitherto was not taking as much coal through the Dhamra port. So we have seen sufficient volumes coming through and in line with the government's thought that we do domestic coal production. We are aware that domestic coal production is well established on -- in the eastern part of -- especially NPL and all. We were hitherto not a part of it, but now we believe that we have to become a part and we are seeing that emerging very strongly. Secondly, at Krishnapatnam port, where we have 2 major power plants nestled along the port boundary, Sembcorp as well as [indiscernible], we are looking at record volumes in Q3 and we are also seeing volumes coming in Q4. Interestingly, these volumes are also happening both by what is called the rail come sea route as well as all-rail route into Krishnapatnam port itself. So the growth of the domestic coastal coal will happen and the ports that will participate quite strongly, and we see that emerging would be Dhamra, would be Gangavaram when we link it to the mindset East Valley, would also be APM core at Krishnapatnam, Sembcorp at Krishnapatnam. And very recently, the south powerhouse of Andra, which is [ Mundra loop ] has asked for a tender and it will be routed through Krishnapatnam. So we see opportunities and we will be participating in those opportunities. And to further clarify and to make the puzzle more clearer, which you asked, look with Harguda, we are linking a mine deep insight into a power utility in Rajasthan. We're also looking -- wishing to do this across India, and that's the story that -- which Karan and I was clarifying about FR CPL and our opportunities that we sense and clearly see in the domestic scenario of India per se. We will also -- for example, we'll be linking all these coal mines to our port and also from the landed coal mines to the power utilities inside the country. That's how the overall story of APSEZ will emerge and that's how we will also fund FRP into that.

[Aditya Mongia, Vice President]

Got that. The second question that I had was related to just the quantum of opportunity that is coming up from the perspective of adding terminals inside India. How much can we expect to be without and, let's say, some city or an investment opportunity within for the next 2 years or so?

[Sanjay Chauhan]

See, in line with the landlord model that the government of India through the major ports desires to do, and first off the block will actually be JMPCT, which will now you will see that JMPT will truly be a landlord with all terminals, which will be run by a PPP mode. And we are looking to participate, and we are very, very kind of buoyant on that opportunity. Similarly, in all the ports, the Government of India would give a guidance on giving a longer concession period. There has been a place of change in the stand regarding the concession agreements that will be either to look into so that it gives longer period of concession and an automatic renewal, which is either to not a part. Therefore, the government of India understands that, a, it's outmost to do its own investments within the port; that b, it should evolve the major ports as landlords, and therefore, they have come out from trust into major port authorities; and c, that they will give a longer period of concession so that it is attractive to private capital and to build modern terminals. Do -- how does APSEZ see this opportunity? I told you about the Haldia, which we want to kind of you want to add to the value chain. And you want to play the game in Eastern India, you want to be in Gangavaram as we have done. We want to be in Dhamra, which we are. We're looking at a very good opportunity at Paradip, and we have taken the opportunity at Haldia. We punch all this into one story. Likewise, Mundra, Kandla, which is Bindal port, we look at these opportunities to look -- let's say, fertilizer, if I want to pick a cargo. Here is Mundra. The fertilizer stability that Indian farmers deserve and need is answered by Mundra. Then that opportunity comes up in Kandla, we will participate as we are going to do. So each of these are good opportunities. So to sum up, move Kandla, Mundra will play the fertilizer story very well. JLPT and Mundra will pay the story of containers. Vizhinjam, you see the state governments are very keen to bring about opportunities, and we're going to build what will we call a state-of-the-art terminal for transshipment. Kattupalli, in line with that, we will see the opportunity coming, then you come to -- if you come out to Dhamra and Paradip. So we will be present in each of the geographies, in each of the ports, we will look to opportunity and in line with the government's vision, landlordism and private capital plunging in together, that's for sure.

[Aditya Mongia, Vice President]

Sure, that clarifies. The third question that I had was related to the remained related to India, let's say, becoming a logistics hub for the neighboring countries. I wanted to get a sense of how far are we from kind of seeing that effect being set a lot more meaningfully in our numbers. And just to kind of get a sense for FY '25, is it a good time line or is it more long drawn from the perspective of benefiting from...

[Sanjay Chauhan]

No. Let me clarify -- before Karan clarified, let me clarify. The fact that the Indian Peninsula with its geographical structure and the subcontinent, with its arms into Bangladesh, it will give you 2 things which have already emerged and have consolidated itself very strongly. Look, Bangladesh, for various reasons, cannot afford a deep port. But it is a consuming economy, it is an aspiring economy with a very good growth of GDP and steady. Since it cannot have a deep port, we play out what Karan and I have already told you in this call that we -- when we become a logistics hub, we play out a story of what is called an anchor and a tenant. So at Dhamra, we are seeing that the security of the gas cargoes for [ Chita bone ], for [ Monga ] and other consuming ports in Bangladesh is being provided from Dhamra. So today, we are doing what is called a ship-to-ship operation at Dhamra and we are servicing the Bangladesh market, which otherwise cannot. So we achieve economies of scale with the call of a mother vessel at Dhamra and we run out a feeder vessel into Bangladesh. It reversed the story. When we do this for containers, we will be taking in feeder vessels from Bangladesh, getting an amalgamation to our ports, and we are already building the container terminal in Dhamra and Gangavaram. The other story, let me tell you, is what is coming in Nepal, a landlord country, Riparian, India's obligation to serve that. Today, we have already had that [ ISACs ] recognized to true policy adverse government of India has recognized and they've already permit either to only Concur was permitted in the rail services agreement to service Nepal. That has been relaxed. So we will be looking for ALL to make inroads into the Nepal market and with the permission to handle Nepal cargoes through all Indian ports with the honorable commerce minister has already declared should happen, we will be seeing cargoes for Nepal. So these are 2 concrete stories that I can give you. Further to that, I will see that -- I mean our belief, and I think Karan will certainly clarify further, our belief is that India, which is peninsula, its geographical structure, consuming market, manufacturing hub, makes its tentacles not just in South Asia, but also to the larger part of the Middle East, where we'll be becoming a very important core in running out these services, and that is how the vision of story runs out very well. So each of them becomes a fulcrum. I hope I clarified that.

[Aditya Mongia, Vice President]

Sure. So as and again, if Karan wants to ask anything, but what -- the way I summarize what you are saying is Dhamra and bid income can play their part in attracting cargo from both the nearby geographies as well as mitigate over a period of time. And the fact that geographically, where we are placed in terms of volume generator generating countrywide consumption and whatnot, it can be a meaningful gain.

[Sanjay Chauhan]

Yes. Indeed, indeed. And let me clarify. If you look India's position today in the FINSEC, it has been very well thought out at the new political alignment to the FINSEC which comes in gives a larger foray for India to play in what is the FINSEC market, which is also servicing landlord countries like Bhutan, Nepal. Nepal is coming into the portfolio very soon and the fact that it has a very good economy around agriculture, fruit and all, which the consuming markets in the world needs. And the FINSEC also goes into the Southeast Asian countries. So we have these multiple structures on the FINSEC, particularly is the logistics hub that is going to emerge certainly.

[Operator]

We take the next question from the line of [ Harsha ] from Jefferies.

[Unknown Analyst]

Yes, my question has been answered.

[Operator]

Thank you. Ladies and gentlemen, due to time constraint, we take that as the last question. I now hand the conference over to the management for their closing comments. Over to you, sir.

[Bharanidhar Vijayakumar, Assistant Vice President]

Thank you, participants. Yes, sir. Go ahead, sir.

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

No, go ahead. Go ahead.

[Bharanidhar Vijayakumar, Assistant Vice President]

Thank you, participants and investors, for participating in the call and patiently listening to management's commentary on APSEZ 9 months and quarter 3 results. We are -- our team are available for all of you for further queries, so do not hesitate to write a mail or call us back. Thank you for participating once again.

[Operator]

Thank you.