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Earnings Call Analysis
Q1-2025 Analysis
Gateway Distriparks Ltd
The recent earnings call highlighted a challenging Q1 primarily characterized by decreased volumes and tough market conditions. The company acknowledged that despite an improving port situation, global demand, particularly in the U.S. and Europe, remains subdued, affecting their performance. Year-over-year comparisons indicate a lost market share in specific regions due to increased price competition. This is particularly evident in the lower-value commodities sector, such as waste paper, which continues to underperform.
While Q1 presented challenges, the company remains cautiously optimistic about a recovery trajectory. They indicated that Q2 is expected to be better than Q1, but full recovery remains uncertain due to ongoing macroeconomic variables. Management is withholding specific guidance on growth expectations but hinted at potential single-digit to double-digit growth based on improving market conditions and customer demands.
The EBITDA margin saw a slight decline due to lower volumes, particularly impacted by a reduction in double stack operations, which fell from 39% to 33%. This reduction has had direct implications on profitability. Nevertheless, management confirmed that they would not compromise margins for the sake of volume growth, hence prioritizing profitability over revenue increase. Looking ahead, they anticipate regaining business from existing clients and a recovery in volumes, which would positively affect margins again.
The company discussed its strategic initiative to monetize Container Freight Station (CFS) assets. Although competitive intensity in this space remains high, management is optimistic about achieving favorable valuations during the asset sale process. They confirmed a comprehensive evaluation of existing CFS sites is underway and there’s an expectation for high returns given the competitive land prices.
Management is cautious about giving definitive volume growth figures but shared that overall EXIM growth in India is expected at a level of around 5-6%. Specific market conditions, such as the ones in Ludhiana and NCR, have seen fluctuations, with Ludhiana experiencing a notable market decline of 15% to 20% from Q4 to Q1. This has added to competitive pricing machinations and margin pressures.
In terms of expanding their operational footprint, the company is advancing on several key projects. This includes a new terminal being developed in the northern part of India, which is forecasted to have a significant throughput. They estimate operational volumes could reach around 23,000 TEUs monthly in the medium term once the new facility commences full operations, around 12 to 15 months from now.
On a promising note, a new contract signed in the ice cream and dairy sector is anticipated to contribute between INR 15 crore to INR 18 crore per quarter, which will improve revenue streams. The management expects warehousing realizations, currently at about INR 1,400 per month, to experience a 1-2% increase in the forthcoming quarters as pricing adjustments take effect.
The company confirmed a stable tax rate around 6-7% for the next couple of years, alongside managing operational costs effectively by monitoring one-off expenses which affected quarterly results. Total capital expenditures are projected at INR 200 crore for ongoing projects, signifying continued investment in growth despite the current economic landscape.
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Ladies and gentlemen, good day, and welcome to the Q1 FY '25 Earnings Conference Call of Gateway Distriparks Limited and Snowman Logistics Limited.
This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of the future performance and involve risks and uncertainties that are difficult to predict.
[Operator Instructions] Please note that this conference is being recorded.
Today on the call, we have Mr. Prem Kishan Dass Gupta, Chairman and Managing Director; Mr. Ishaan Gupta, Joint Managing Director; Mr. Samvid Gupta, Joint Managing Director; Mr. Rajguru Behgal, President, Rail; Mr. Manoj Singh, President, CFS; Mr. Kartik Sundaram Aiyer, CFO, GDL; Mr. Sunil Nair, CEO and Director, Snowman Logistics; Mr. N. Balakrishna, CFO, Snowman Logistics.
We will begin with a question-and-answer session. [Operator Instructions] We take the first question from the line of Bhoomika Nair from DAM Capital.
Yes. So this quarter has clearly been a very tough quarter given the macro situation. But just want to understand when we look at the port volumes has been a decent growth, whereas when we look at your counterparts, volume numbers, it is appearing fairly weak. And it seems that the rail coefficient has kind of declined. So can you explain what's really happening in an environment where rail infrastructure is actually improving? How should we read into this quarter's weakness when it comes to the rail industry, industry volumes as well as our weak volumes?
Samvid here. So overall, that will -- [ large ] impact will continue. There's a lot of port congestion at the international ports. Investment schedule has been erratic over the last few months. But slightly, we've seen some improvement over the June, July also looking slightly better. Do we think -- we see things improving, but last quarter was weak in the markets that we were operating. So it's not that we've actually lost out compared to competition that much. Between Q4 and Q1, we are at the same market share that we had. But it's on a year-on-year basis, we have lost market share in places like Uttarakhand, Ludhiana, which we've mentioned in the last few quarters due to pricing competition. So that's the main thing, the low-value commodities like waste paper and scrap, those imports continue to be weak for us. And that used to contribute a bigger chunk compared to competition for us.
So how are we seeing the volumes as one moves ahead? I understand this quarter has been weak, but what is the outlook that you're seeing, saying, for the balance part of the year?
It will definitely be better than Q1. But still because of global uncertainties, demand in U.S. and Europe is still subdued. So we haven't been able to get a clear picture of how much we'll be growing. So we'll wait maybe another quarter to give proper guidance, but it is slightly lower than what we were targeting earlier.
Okay. And in terms of the -- in terms of the margin profile for the rail business, it's -- from what I understand, it's around 9,400 is what you given a TV interview. That's the level that we should kind of look at moving ahead as well?
Yes. So we are not compromising on margin because some volumes are there which are contributing little or nothing to the bottom line. So just for the sake of increasing the revenue per throughput, we don't want to go down on the EBITDA margin. The EBITDA margin has slipped a little bit because of the low volumes and the double stack that we could -- double stack percentage has gone down by, say, 2% in this quarter. So that reflects on the EBITDA margin.
But in the quarter, I mean, itself, June was better than July is better than June, and so far this month is also better than July. So we will regain business from our existing customers as well as, I mean, we are doing something to take some additional business at some lower margin, but that is in some spot business. Our revenue customers are coming back with a high volume and requirements.
So there were a lot of factors in Q1, election being one of the things that during the election period business activity slowed down. And then in volumes, specifically slowed down and now [ with the budget ] and with duties and whatever the policies. So I think the growth will continue. How much? That is too soon. And we cannot make any forward announcements of looking at what is happening everywhere. We will continue to grow at what pace as a single digit or double digit. So that I think we will be able to, say, the end of this quarter.
Sure, sir. And if I may just squeeze in one last question. You mentioned about what do you say, selling of the -- or monetizing the CFS land, et cetera. Any progress on that front, if you can give some color. There was also comments on TV, but it wasn't really clear so if you can just kind of elaborate a little bit out there.
Yes. So we have 5 locations with CFS, [indiscernible] [ Prem Kishan ] all of the -- we are de-notifying it because the container business has been stopped at the port of [indiscernible]. So were part of the land we where we sold to Snowman, and we still have a warehouse and the land and infrastructure for -- I would not say [ CFS ] now, but for where are we and then we have land in [indiscernible] partner -- sorry, [ Wiser ], [indiscernible] and [indiscernible].
So we are evaluating, first of all, like if you had on the [ channel item ] but we will evaluate the assets that we have. Then the ongoing business at all these locations and someone who is interested in some new players -- some existing player [indiscernible] [ in getting price CFS ] and the land and [ together with it ]. So it depends on what valuation we get. Our expectation is quite high. So we wouldn't definitely -- definitely -- we definitely want to get out of the CFS business because even though the margins have increased in the first quarter compared to last quarter of the year. But at the same time, we don't see any uptick on CFS business because the competition is so intense and there is hardly anyone who has moved out of this business.
So of any value one can ascribe to this whole sale of...
When you will be at the development, I mean the land prices we have to find out more of existing land prices according to [ us and now our shareholder alone ] should give us a very good valuation. So I mean we are in the process of putting now everything on paper and preparing the information memorandum for any potential buyer to look at it.
We take the next question from the line of Amit Dixit from ICICI Securities.
I have a couple of questions. The first one is on volume growth, again, growing from Bhoomika's question that we are -- first of all, the Jaipur terminal might still not come up very soon. And secondly, there are headwinds that we see. So what kind of volume growth do you think we should pencil in because EXIM growth for one of your prominent peers was around 3.3. For us, we have seen decline in growth in both rail as well as CFS business. So just wanted to get your sense around it at what kind of volume do we see for next 2 years?
So the volume decline has been in rail business in Q1. CFS has maintained the same volume. And I mean the margins on CFS if you compare from the last quarter, which was -- and [indiscernible] has gone up to [indiscernible] last quarter, it was INR 540 only. So our volumes in rail, we will remain that because I will, again, it depends on location that you are present, ICDs are -- we have in NCR 2 ICDs where we have in fact, gained a little bit overall NCR volumes in spite of the -- but the fact remains that the overall pie has become smaller in this quarter. But other locations, we have lost our business from very aggressive pricing, which we are trying to address in this quarter. So we will definitely gain volumes in this quarter, what we can see from July and first half of this month. So we cannot give you guidance whether it will be 10% or 12% or 8%. I mean we will definitely be looking in double digit, but it all depends on the macro.
Okay, sir. The second question is on Kashipur. So if you could highlight the kind of volume that we did from there if we are still facing issues on the basic paper and pulp business over there. So what kind of volume is going there and the ramp-up that we expect for the rest of the year?
For Kashipur, again, a big decline because of waste paper volumes going down. What we were consistently doing [ about 3,500 ] last few months. Ever since Red Sea started, it has declined. But actually, going forward, we're going to see a bit on terminal-wise volumes due to sensitive competition data we won't be sharing. But it's a general trend, you can see since it's been over a year of Kashipur being there now.
Okay. Okay. Fair enough. But the third and the last one is there is -- you mentioned that because of the accounting policy change, the CFS revenue is impacted by INR 8.43 crores so if you can just elaborate a little bit more on that, what kind of accounting change was that?
Yes. So this is basically a business model done with consolidators, but it was a discount being passed on was actually earlier being counted in the revenue. But as per the accounting standard now, we have to -- that comes under gross revenue, but under net revenue, we have to remove this discount. So it was like a pass-through almost. So it's gone away from this quarter on. We informed everyone last quarter also that we'll be doing this from the starting of this year.
So if you add that back, CFS revenue is pretty much flat. But in the same time, it doesn't make any difference in the operational cost of EBITDA for the year and the -- so it is a question is netting off the revenue booked earlier less the discounts. So the net revenue has been recorded from this call, and it will continue from this quarter onwards.
The next question is from the line of Krupashankar from Avendus Spark.
My first question would be on your outlook. What you're seeing with respect to the specific markets? The NCR market, the Ludhiana market, how do you see the volume increase and competitive intensity in this region, if you can throw some light on that?
But we've seen in the last couple of questions. Also right now, we're not really giving guidance because it depends a lot on the macro. So we can't really predict where it's going, like just for example between Q4 and Q1, Ludhiana [ saw big dip ] of about 15%, 20% in the overall market. NCR was flat, so it keeps going up and down a few months. It depends on port congestion, double stacking, sometimes weather-related issues, crew shortages. So it's hard for us to say.
Overall, I think India is expected to go at a 5%, 6% level in terms of EXIM volume.
Understood. Now with respect to your double-stacking capability, was it significantly [ impacted ] during the quarter due to imbalance and probably that's something which can come back quite strongly benefiting your overall [ EBITDA per key ]? Is that something which is a fair understanding?
Yes. So last year, we averaged at about 39%. But this quarter, we were at 33%. So as and when the volumes cut back and the [ imbalance ] between -- within the ports also like Mundra, Pipavav, JNPT volumes, some were import heavy, some were export heavy. Once this number comes back to, say, 40%, which we've done in the past, we've even gone up to 45 in the past. It will just straightaway add to the EBITDA and the bottom line.
Got it. Last question was on Jaipur facility. Any update you would like to share on that?
Yes. According to our present estimates, we will be operational in about 12 months from now.
The next question is from the line of Nihal Shah from Prudent Broking.
My question was like how much percent of our volumes would be coming from low-value products like scrap, paper and such low-value things?
[indiscernible] So if you look at the low-value commodity. So we need to see, set into import and export. So what we are talking about that we do the different imports on the low value. So basically, one is [ trade centers ] that constitutes about 20% of the overall volumes, especially in the markets like Ludhiana and Kashipur. It will split further into the geographical region and then Kashipur waste paper is close to 80%, then Ludhiana is close to 22%, 25%. So in the overall city, you can say 20% of the low-value commodities apart from the waste paper and scrap also. So you can take another 5%.
Okay. And how do we plan to like diversify this number? Do we plan to bring it down from around 25% to 15%, 17% odd?
So there are a couple of things. One is like [ CM Peter ] has mentioned that we lost some business due to the margin pressures. But at the same time, we are also targeting the business which was lost and some of the new waste paper and scrap importers, which have already started coming in the month of July and August.
So with that in mind, I think we don't have to actually diversify and plus one of the major reason is Red Sea issue, which is also -- so all these low-value commodities are coming from Europe and U.S. And due to longer transit time, the overall volumes have also gone down. It is not our volumes or the total market volumes. And there has been port conditions also if you look at Colombo, Singapore as well as Port Klang. So right now, the latest news is that they are trying to manage the issue they are facing, and we will be seeing good number of bookings for these low commodities going forward.
Okay. And the last question was like, as you're planning to monetize our CFS effect. So already, I guess, we have more than INR 200 crore of investments with us and we have -- the average background of generating cash from our operations. So how do we plan to deploy our cash that we will generate from monetizing the assets as well? Because as per our policy, around 70% of capacity utilization is when we try to add in new capacities. So that, I guess, right now is a bit low. So how do you plan to use the funds that we'll get?
It's too early to say. And when we have this [indiscernible] ideas that we don't want to continue the CFS business, but that does not mean. But we are in hurry to invest [indiscernible] I mean we should get a proper valuation. And until then, we are running on that business with full steam and the business has started generating some good cash in the last quarter. And hopefully, we continue with that.
I mean it is again a question of valuation. And once the money comes in, then we will decide what to do with it. It is -- at this point, that nothing can be said because it's just an idea, but we want to sell the CFS business and assets and how the money and how much money will -- how much money will come and how much we will deploy in which, obviously, various big business for us and we continue to explore opportunities of revenue terminals so that will be one of the place we would like to deploy those on.
And I mean our debt situation is very good at right now. I mean we are at our lowest debt amounting to INR 245 crores compared to it was at one time were INR 800 crores or something. And even from last quarter or last year, if you see it has come down significantly.
The next question is from the line of [ Anu Pama from Red Matiara Capital ].
[ Pama ] here. I just wanted to understand [indiscernible] we are about the market share in different geographies that we used to share? And also, if I look at the volumes in Mundra and the rail coefficient in Mundra, basically, they have gone up. But still, we have basically shown around 10% decline in volumes. So I just wanted to understand, is there any kind of permanent shift in market share from us to any other bigger players? Or how does that work? And if there has been any market share shift, can that be actually gained back? So those are my questions.
NCR, we've marginally gone up from, say, 16-point something to almost 17%. In Ludhiana, on a year-on-year basis, we've gone down from 28% to 22.5% but even Q4 -- sorry, Q1 is higher than Q4 last year. So Ludhiana, we started gaining back a little bit of market share and that should improve going forward. Uttarakhand is at about 25% and this fluctuates plus/minus 2% every quarter because the market itself is small. In terms of Mundra coefficient you're saying, we don't really measure it that way because Mundra rail volume caters to a lot of regions where we don't operate. It could be [indiscernible], and there are a lot of markets where we are not present. So we don't count that as our addressable volume. So we only look at it where our ICDs are present and that's why we give that market share instead.
Okay. And you mentioned that double stack [indiscernible] was 33% this quarter, is it?
Yes.
Okay. And what would be the proportion of [ MP ]?
[ MPs ] varies anywhere from 10% to 20% depending on month-to-month. So we try to fill as much that we don't go under frame running. So sometimes we take [ MP ] at a spot basis to cover up the rail haulage cost.
Okay. But I was just more curious this quarter. [ MP ] proportions were significantly more or something went wrong, I mean I'm just trying to understand why the -- basically what was the overall issue.
No, it's just overall investment schedule, sometimes we wouldn't have enough to double stack. Mundra imports went down, but Pipavav imports went up, exports to Mundra went up. So that was causing situation where we couldn't fully double stack. But finally, on account of that, margins also reduced a bit over there.
Okay. And last question, can you just indicate what was the drop in, let's say, waste paper volumes that you carry?
So like I mentioned in earlier Q&A, so waste paper happened to Ludhiana and Kashipur [ majority ]. So Kashipur, 85% of the waste paper is import. So there have been close to a 30% drop in Kashipur. And in Ludhiana, we have 20% of our import volumes. And there has been almost 10% drop in the import waste paper. But as I also mentioned that now we are getting the booking of waste paper in the pipeline. We are able to win back a couple of customers. And now the vessels have more or less started arriving, there is minor improvement. So we are expecting that as a percentage of waste paper, again, we will improve from here on.
Longer term, can you get in the 10% volume growth on rail?
We'll wait until like next quarter, just to give us future guidance. But that is the target to go have a double-digit growth.
Okay. And what was the EBITDA [ that you laid in particular ]?
9,400.
9,400, okay. And any CapEx numbers that -- for this particular quarter?
Almost INR 1,400 crore just below that.
I'm asking about CapEx this quarter, sir.
Okay. That's a -- we'd have to get back on that, actually, but not significant CapEx this quarter. But for the overall, we still have some like we've been announcing for one new terminal is in [ immediate ] side, plus some balance on Jaipur land. So total outlay for these 3 projects could be about INR 200 crores.
Okay. And what was this INR 1,400 crore, sorry?
The CFS EBITDA [indiscernible].
The next question is from the line of Achal Lohade from Nuvama.
Can you help us understand, just to clarify on the Jaipur land acquisition, is it completely done now? What is the status on that litigation? And last time, you had indicated that we will figure out whether we want to go for a CFS or ICD at that location. So when you say will commission by in 12 months. Can you help us understand what exactly is the land size, land parcel price? What kind of CapEx, what kind of capacity, et cetera?
Yes. That litigation is still going on. We have a notes to account also the date is scheduled for next week. But that will probably take time. We are still proceeding with our plans to make a full-pledge ICD here. But since we're still in progress, once we've fully done it, we'll make a proper announcement with an exact plan of what exact CapEx and increased land area would be.
And it's a bit of a rolling basis that we said 12 months last time also. But until we've just finalized and we've announced that, okay, construction has now begun. It will be 12 months from then. So 12 to 15 months kind of window, you can keep but we'll inform all of you when we get more clarity.
Got it. In the earlier question or other answer, you said INR 200 crores CapEx for Jaipur and one more terminal. So which location is this terminal, can you help us understand it's more on the same?
It will be north of India. So it is yet to pressurize. I mean, we have identified the land. And once we have a deal and we acquired the land, I mean that maybe the time to inform the location.
Okay. So land parcel is identified and it will be satellite terminal, right, which is what you had earlier indicated? Is that right?
It will be a full-pledged ICD on its own also, but we will have at one of our hubs in the north and double stack it from that.
Understood. To clarify, can you give us some more sense with respect to the market size of Ludhiana, NCR in terms of total TEUs annually, roughly, that would be very helpful. And how they've grown in the past. I understand it is fluctuating right now [indiscernible] number. Can you give us some sense to what the market sizing of these 2 or 3 pocket?
Yes. So these are broad estimates, I mean we don't get 100% accurate data. But roughly, if you look at NCR, it was about INR 2.9 lakhs for the quarter. This is the whole volume of NCR. And if we look at it Q1 last year, it was a very similar figure, so less than 1% variance. And Q4 was slightly higher. It was crossing INR 3 lakhs. So we've seen a dip in Q1 compared to Q4. Ludhiana is about 65,000 for the quarter, whereas for Q4, it was at almost 80,000. And Q1 last year, it was 75,000. So overall, Ludhiana market has significantly come down which is why you're seeing a lot of pricing pressure there because everyone is scrambling for the same volume, which is reducing.
And Uttarakhand?
Uttarakhand is fluctuating anywhere from 20,000 to 25,000 TEUs. Uttarakhand is actually a wider market if we compare to Kashipur. I know the limited ICDs over there, only 3 of us, but some of it is nonaddressable to Kashipur actually, which comes more closer to the NCR side. So we have to -- while it's 25,000, not that entire 25,000 is targetable by ICD Kashipur.
Understood. And these numbers are the rail volumes, right? Or these are the total volumes and of this, what, 70%, 80% will be rail, most are rail, right?
These are the ICD volumes for EXIM, so no domestic counter here and then we don't really get a sense of if other operators are really using rail or road to move them, but these are the ICD handled volumes.
Got it. Understood. The one more thing with respect to the port volume growth. Is it possible to get some sense, what has been the first quarter West Coast port volume growth and rail volume growth in area that has stopped giving out the numbers. Any sense you could provide?
Sorry, we don't have access to that data either.
Okay. Understood. Understood. I think that's from my end. I wish you all the best.
The next question is from the line of Yash from ithought PMS.
My question is related to Snowman. So the first question is relating to the 5PL business. We have very ambitious growth targets for this 5PL piece, we did INR 85 crores in FY '23 and INR 145 crores in FY '24. But since the last few quarters, it seems that this business is slightly losing steam. So from a longer-term perspective, maybe a 3- to 5-year view, what is our aspiration for this business and where will this growth come from? And if you can give some guidance on 5-year growth as well.
Yash, This is Sunil Nair. So as we explained last time, we have expectations of more than 25% year-on-year growth on this particular verticals we distribute, which is the 5-year vertical. If you see, we have grown 29% over last quarter and 12% over last year same quarter. And we have a new client signed up this month and the revenue will start coming from [ others mid ] onwards, which would help us a reasonable improvement in the revenue numbers. So we will continue to ensure that it is 25% plus growth year-on-year when it comes to [ store distributed ] business.
Right. Got it. And the second question was relating to margins. Referring to the results release that you are given margin -- across PBT margins across the business segments have fallen, be it warehousing, transport or 5PL. I think in 5PL, we have also gone to 10% EBITDA margins in certain quarters. So if you can help me understand why this margin drop in each of the verticals?
So there are 3 reasons. One is Q2 results. One is there has been some costs, one-off costs, which we accounted in this particular quarter, which were onetime costs, and we had to take that in repairs and maintenance and some of the accounting directions. At the same time, in the earlier quarters where we are comparing, there has been some reversal of provisions. Otherwise, from a pure business point of view, there has not been any change. And very soon in the subsequent quarter itself will come back to the margins of individual verticals as we were having. So it is just a one-off corrections in this quarter.
So can you quantify this one-off costs for the quarter, if possible?
So it is to the extent of around INR 2.5 crores.
INR 2.5 crores, okay. And this is across the business segments right, not related to only one segment?
It is allocated across the verticals.
Right. Sure, sir. And one question probably to the GDL management. So now we have been increasing stake in Snowman consistently. I think we have gone above 47% or close to 47% with our last buy from the open market. So is there any target stake that we want to acquire in Snowman, let's say, maybe more than 50%? And is there any specific time lines for the same?
We are allowed to acquire 5% of the creeping acquisition rules. So last year, we had and acquired 5%. This year, we have acquired a little over 1%, and we are at 46.4% now, and we complete the full 5% acquisition in this financial year. So we should be ending up a little over 50%. So our aim is to -- because the business is good and company is doing well. So in the longer term, I mean, it is in the interest of [indiscernible] keep on increasing the stake as long as the cash flow support give you a level to acquire those number of shares.
Sure, sir. That's great. So maybe by the end of this year, we go above 50%. And sorry, one final question on the warehousing piece. Again, on this warehousing, I think we have been in the range of between INR 50 crores to INR 60 crores since the past many quarters. I think maybe because of the capacity constrained. But with the new warehouses coming in this year, what sort of growth are we targeting in the warehousing segment?
So you'll see when we do even the more distributed business, it does contribute revenue in warehousing as well as [indiscernible] business. So we don't usually talk warehousing alone. But yes, considering the new facilities, which are going to be functional in next month like now and after that [indiscernible] and also some of the lease capacities which we are yet to fully utilize. Considering all this, we expect around 12% to 15% growth in the warehousing business this year.
The next question is from the line of [ Maval Shah ] from JM Financial Limited.
Sir, whenever the Jaipur plan, Jaipur gets operational. So what would be our targeted volume maybe in the first 12 to 24 months?
So it takes time to ramp up the ICD, the first 12 months may be negligible volume. But thereafter, in the medium term for 3 years, we're looking at least 23,000 TEUs from there per month.
Okay. And sir, for the Kashipur, we indicated that in the first half of last year, the range was broadly 3,000, 3,500 TEUs per month. So it came off significantly in the second half last year?
It came down actually in the second half last year because of the waste paper and Red Sea. Thanks for last 6 months has been low there. But longer term, what we were saying in 5 years, we should be doing 5,000, 6,000 from this location that will remain the same.
But you indicated the Uttarakhand market was around 20,000, 25,000 TEUs. So how do I correlate the book?
I mean on 20,000 TEUs, yes, we basically in 1 quarter, like in Q1 last year, we did about 8,000, 9,000. But this Q1, we've done fairly low. We've done about slightly about 6,000 TEU for the quarter.
And what should be the case in next few quarters as well until the paper imports improved?
Some uptick we've seen again in this month and last month. But last 6 months is like exceptionally bad for Kashipur. But we do see improvement coming on.
And how do you see the Uttarakhand market growing maybe over the longer term, maybe over the next 3 to 5 years?
It will grow, but we don't know exactly. I mean it's a bit of a big figure to kind of throw out. But what we're trying to do is target other parts. There is some road improvements happening there. So attachment area is increasing. So we are looking at targeting something beyond 50 kilometers right now which were a bit limited. We're increasing our last-mile capabilities by increasing our fleet there as well. So that -- all that will contribute to increasing our market share over year.
Okay. And lastly, sir, what was the gross debt? The net was [ 245 ]. What was the gross debt out of this?
[ 310 ].
The next question is from the line of Pranay Khandelwal from Alpha Invesco.
This will be opportunity. I want to ask [indiscernible], I think there was some mention that you have signed up a new client. So can you give you more details on that, what kind of client? It's not the main opportunity. Like the scale of the brand or what can we expect from them in ballpark number, any guide?
Sorry, you were not clearly audible. But if I understand right, you are asking the new client, which is this client and what revenue it can contribute, am I right?
Yes, some guidance on that. Any details you can give if not the name of the client itself.
So as we said last time, we are avoiding mentioning the client's name but I can tell you that it is from ice cream and dairy industry. And this is expected to contribute anywhere between INR 15 crores to INR 18 crores per quarter.
Okay, INR 15 crores to INR 18 crores per quarter. And since it's in the ice cream and dairy industry that will improve our realizations in the warehousing business as well. So it's more freezing kind of temperature that would be used for that?
Yes. But the price of warehouse utilization is going to be very small as compared to the size we are at. So against the size of [ 1 lakh 13,000 pallets ], this would use only 600, 700 pallets. So it won't impact much when it comes to the overall average yield per pallet. But yes, from a business side point of view, 5PL business, it is a bit time for us.
Okay. So was this client signed in the last quarter or this month itself, so the revenue will start showing this quarter for quarter 2?
It just began this week. Maybe this quarter and next quarter onwards will contribute.
Okay. Because I think the dairy and ice cream revenue as a percentage of total is up this quarter. Is that just summer impact? Or is there anything else?
No, that's clearly the summer impact.
Okay. And any guidance on warehousing realizations that we currently are around [ 1,400 ] per month or so?
So warehousing realization has gone up by 2.5% as compared to last year. And we expect it to go by another 1% in the next quarter because some of the price corrections have happened now which will start yielding in the coming quarter. So that's what we think this year we will achieve.
And also on the one-offs that you mentioned this quarter, if we adjust for that, it still does not come in to this like margins would still be lower than last quarter itself. So can you give more details on that what exactly happened even if we add that INR 2 crores, INR 2.5 crores, I think we would be flat in terms of operating profit.
Sorry, last quarter being the last quarter of the year, there has been some balancing and reversals done in terms of provisions. So netting that, that is -- this -- it will be slightly very marginally higher than the last quarter. But yes, that is what it is.
Okay. So last quarter, you were saying there were some benefits, one-off benefits, and there are some one-off expenses this quarter. So both combined is the sort of effect we have seen? That's why the profits are flat.
Yes, you are right. So some provisions are kept throughout the year for contingent costs that are expected. And end of the year, once we have more visibility and closures on them, their reversal that's what happened in Q4. So yes, and some one-off expense booked in this quarter. So that's the main difference.
The next question is from the line of Aditya Mongia from Kotak Securities.
Firstly, on the CFS business, I wanted to check whether there is interest for letting go the 5 locations CFS all in one go? Or do you think this is going to be [ piecemeal offer ]?
I don't think it will be a [ piecemeal offer ] the locations, the proper valuations.
Understood, understood. The second thing that I want to ask you was on the [ Pipavav ] double stacking. I think last time around, you had suggested 3, 4 months from there. How far away are we now from realizing that?
Yes. So I'll just update you on that. So being a very busy track. So some of the work was really going slow because then we have to stop the train and there has to be a special permission to go along [ to the trade and carry out the work ]. But at the same time, we have been meeting the senior officials of Indian [indiscernible]. So they have assured us that they are going to expedite the work. And thus, they were -- due to election also, there was a 10-minute delay. But now Indian [indiscernible] have showed us that they have sent a special team and now the work has started in full swing. So we are expecting that another couple of months soon it will be operational.
Understood. And just on the Jaipur asset, maybe I missed it on the call. Of the issues on land that were there, you were talking about 2 possible scenarios, one having [indiscernible], the second one thing of intermediate solution. What is the solution we are going for when we say, in 12 months, you will set this up?
We're looking at a [indiscernible] that's the third route, once all our plans are clear and we are on -- and the we start construction [indiscernible] we'll publicly announce [indiscernible].
Okay. So there are no land issues now is what you're trying to say?
The existing litigation is still going on, but there's notes to our accounts also over there. So that can carry on. But we have a backup plan, if that doesn't resolve fast.
Understood. On the rail EBITDA front, which has fallen by almost INR 500 from INR 19,900 to INR 19,400. I wanted to check if this only an issue limited to the [ VSP per ] scrap portfolio on the area of yours, which is, whatever, 20%, 25% of everything? Or are there pricing actions being taken outside that bucket also that are impacting?
It's a combination with the biggest component is the double stack component coming down from last year average of 39% to 33%. So once that improves, again, our margin can also improve also Q1, the annual increments and costs that get added. So fixed costs are always rising year-on-year in Q1 so it's the first impact of that.
Understood. Any general comment on pricing that you would want to make? I think we have seen the model share across ports as per -- continue to kind of go down. Is the price hike that we have taken or everyone have taken and passed on the haulage side making roadways more competitive and is a requirement to kind of rethink on pricing itself because of that?
A little bit -- road does have an advantage with the 10% [ they received in surcharge ] that came in, although we passed it on -- we had no tool to pass it on to our customers that then fully implemented now. Maybe hopefully, this can get device in the near future and then can get a better pricing to make it more competitive?
Understood. Maybe a last question from my side. Again, on pricing, the fact that your assets are moving faster because of their DFC. They're also getting more idle assuming the quantity work or the quantity of movements that are required are the same of cargo. Is that leading to pricing pressure by itself within with operators? Or am I thinking too much right now?
In the last 2 years, transit time has roughly been the same only. We saw big gains from 2020 to 2022. But since '22, it's been roughly the same transit time. So that's not the reason why pricing is at. But double stacking has become more accessible to other competitors also, some people have taken switching out operation in the north. They're using some [ CIP ]. So some of that has been passed on. But with declining volume in places like Ludhiana, everyone is wanting to fill up their train. So that is, no one was to run [ NPR on the train ] basically.
Yes. But just on that part, your larger peer has not seen the double stacking [ salience ] coming down over the past few quarters, it's been quite resilient, whereas for you, it has come down from a high of 40%, 44% to 35% in the last quarter and now 33%. What are the factors that are kind of specifically impacting [ GRF ]? And how will they -- and what would be reversed?
One big factor is on location, which has been [indiscernible]. And that's why [indiscernible] is gaining from that as soon as, [ Samvid Gupta ] just mentioned, is nearing completion. That is what is operational. We will get quite a good share back what we have got because of internal advantage to our competitor. So whether it takes 2 months, 3 months, it is not far away. And we are closely watching and once [indiscernible] becomes double stack, definitely double stack -- our volumes will go up, and we'll be able to pass on the same to the customers also to gain back the volumes.
The next question is from the line of Sumit Kishore from Axis Capital.
I have two questions. One is if you could comment on [indiscernible] [Technical Difficulty]
Your audio is not clear, sir.
Is it better now?
Yes, sir. Please, go ahead.
Yes. So the imbalance that you had spoken about at the end of Q4. How is the situation now? You had mentioned that the EXIM ratio was around 43 is to 57. How has it played out in Q1?
Yes, it's about 52% import right now, 48% exports for the quarter.
53% is the import.
Yes.
So it has somewhat improved from Q4 end?
Yes, but then if you look at within the ports, what used to be -- like Mundra imports have gone down, Pipavav imports have gone up. So within that, there is in balance. So for an earning perspective, it is still in balance in certain markets.
Okay. And on ground, what is your sense on the DFC commissioning? Now we understand that there is -- this is not likely before end of CY '25 now. Is that the right understanding? [ The connectivity to GNPT ].
DFC has given us a guidance of December 2025. In the sector, is the same that 93% of the total WDFC has completed up to the third -- and the last leg of 100 kilometers that is still going to take a lot of time.
Okay. The principal player in the sector has said that we're going to run a double stack up to [indiscernible] and then that is going to help them take market share. Any thoughts on how a player like [indiscernible] will be able to account to that?
We already have our [ The Raman ] terminal, and we've been doing this for the last 5 years or so. So we have this like already protected.
The next question is from the line of Jainam Shah from Equirus Securities Private Limited.
Sir, my question is, of course, there has been some percentage change in terms of rail coefficient at the ports. But after Western DFC probably 8 to 9 quarters now, have you seen any movements from road to rail shift? Of course, the decision surcharges made it a bit difficult. And in terms of percentage, what would be the differential in terms of costing for a player if they opt for a road versus rail?
See, it really depends on route to route and balance the time of the month also, like, for example, in the last 10 days of the month, the road is much more in the [indiscernible] rather than the first 20 days of the month. There was a model shift from rail to road, especially in the first 3 levels of DFC started. But thereafter, we're only seeing maybe a minus 1% to 2% additional for your kind of growth. Last, I think the figure was mentioned is around 27% is on rail. But that also has a lot of factors because it include bulk finish wagon, special freight wagon, all sorts of different types of rates that includes domestic, it includes the [ MP ]. So we don't really get an accurate picture of how much of our addressable market is on road versus rail?
Okay. And sir, any broad number for the cost differential in a normal market?
It's really varies a lot. We won't be able to give an accurate figure as such.
Okay. So maybe because if we see our major [indiscernible] entire terminal as of now is on the Western DFC. We are coming on the central part of India with [indiscernible] Jaipur is also part of this and new terminal that you are talking about is also into this particular part. So have we seen any kind of a bigger benefit that may flow in next 3 to 5 years with the Western DFC? Or if this is a situation that what region should we might have thought is not eventually coming up with the road becoming more competitive?
So for longer distance, first 500, 600 kilometers and above, we think rail is still beneficial. So while it's -- say, if we assume this 27% figure to be right for the country, we feel that NCR, Ludhiana, Uttarakhand, about 70%, 80% is already on rail. For our addressable container market, we are talking about bulk. And there are a few things like time-sensitive cargo, the refrigerated cargo, LCL Cargo, which flows through multiple hubs. It still might carry on load even when DFC connect all the way.
So our strategy is still to connect to Northwest corridor only because it's double stack. And this is the only proper DFC right now. So when more terminals will come in, they'll get all the advantages of faster trains, heavier trains and longer trains. So that's our plan.
Got it, sir. And sir, just last one part. Just assuming that there will a cash inflow from the CFS division, by any chance, are we planning for any domestic kind of a [indiscernible] and that the growth number for the domestic railway has been growing rapidly.
Domestic, we still don't have a large enough network and it's on a very long-term plan, maybe like 5 years down, we'll have a more significant presence in domestic. But right now, [ I quote it ] EXIM 98% of our volumes are in EXIM only and we're continuing to plan for that.
The next question is from the line of [ Rama Shah ] from JM Financial Limited.
Only one question from my end. The tax rate was at 6.8% in the first quarter. So how should we factor it in the next couple of years?
Yes, it will stay like this for the next 2 years at least.
Around 6%, 7%.
Yes.
Thank you. Ladies and gentlemen, that was the last question for today. Participants that are missed out due to time constraint can reach out to the management and SGA for Gateway Distriparks Limited or Churchgate Partners for Snowman Logistics Limited for any further information.
With that, we conclude this conference. Thank you for joining us, and you may now disconnect your lines.