Gujarat Pipavav Port Ltd
NSE:GPPL
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
145.7
236.63
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Q1 FY '21 Earnings Conference Call of Gujarat Pipavav Port Limited hosted by Centrum Broking Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Shah from Centrum Broking. Thank you, and over to you, Mr. Shah.
Yes. Thank you, Margaret. On behalf of Centrum Broking, I invite all of you to the Gujarat Pipavav Port Limited's Q1 FY '21 Results Conference Call. We have from the management, Mr. Jakob Sorensen, Managing Director; and Mr. Santosh Puri, CFO of the company. I now request the management to give their opening remarks, post which we can have the Q&A. Thank you. Over to you, sir.
Yes. And of course, I'm sitting here looking to find the presentation. So I just want to make sure I'm looking at the right page? So Santosh, can you step in and take us through?
Okay. Sure, Jakob.
We have to the key highlights of the quarter ended, right, that we have volumes of the container. Is that the one we're walking through here?
Yes.
Yes. So we had a decrease in the volume of 6% versus previous quarter. As you can see in the report, I think the report is publicly available as well as on our website, right?
Yes.
Okay. So what I would say is that the container volumes are slightly down over last quarter. And of course, as we have been discussing and everybody knows, this is the quarter where we are really in to the lockdown period in COVID-19. So it's not surprising. However, if you are comparing with the general numbers for the Indian West Coast and for other costs as well in Gujarat [ then ] I think it's fairly acceptable minor reduction in volume compared to the market. And if you're moving to the Dry Bulk, we are actually going higher, especially driven by coal and coal has been a little bit of a spot business, but we saw -- and maybe our available coal yard was attractive for coal traders who are behind this spike in volume on the coal volume. So that's actually nice to see. We still believe that we are also active and having some good outlook in other commodities, such as fertilizer. So that will come in the current quarter. Liquids, we have seen a small decline in LPG, but what is a blessing in disguise is that are liquid burst has then been available for a number of smaller parcels of non-LPG cargo. And that -- a lot of people took advantage of. So we have also had onshore storage capacity, which has been utilized by customers. So we saw an overall increase of 10% in liquid volumes. The automobile market is definitely not having a good period, and that also reflected in our RoRo performance. We don't see a recovery in this -- in the foreseen future. However, our investment and exposure is also very minimal. We have the marshalling yard which we are looking to see if we have other purpose to use for. So I don't want to spend too much time on the rollout here. Santosh, if you will jump in and comment on the financials?
Sure, Jakob. So on the financial results, overall revenue, we have 2% lower, and it is mainly because of the drop in the container volumes, which Jakob mentioned earlier. The expenses were 3% increase as compared to previous quarter. We have also, I'd like to highlight and I will speak in detail later on, that we have reduced our operating expenses and there has been an increase in the employee benefit expenses. This is mainly because of the annual salary increase as well as we have some reversion in the previous quarter on account of the long-term employee benefit. We continue to maintain our margin at 60%. So a list of a challenging quarter with a lower revenue, we still have maintained our margin and the net profit is lower at 2%. So overall, I would say, this is a satisfactory performance, financial performance in a challenging environment. And I would like to now take you through or maybe Jakob, you can take this slide on the volume. So I'll take it over to Jakob on the operational highlights. So we have the continued volumes, as you mentioned earlier, at 186, 000 TEUs, of which 110,000 were for the ICD. And we also have 622 trains. Now this quarter has been weak. So if you look at the train handled during the period, you have seen a significant increase there. That is mainly because there has been a lot of single stack movements. So overall, the volumes were lower, and therefore, train operator has taken a call to move single-stack trains as well as there have been some movement of empty trains to pick up the export [ bauxite ] as well as the import movements. On the Dry Bulk, we had 0.42 million. I think Jakob touch base on the coal volume, what is -- what this quarter so much spending and there. On the Liquid, we are at 0.21 and I'm happy to see this number. So even with a lower LPG with all the other commodities, which are supported, we are back to 200,000 plus maximum cargo in this quarter. So this is coming after a couple of quarters, so it's very good to see this number [indiscernible]. RoRo, the mutual performance continues. This is on the entire risk post [ annual ] across India, where we have seen a drop in the car exports. And as I mentioned earlier in my call also, this is likely to continue for next few quarters. So we don't see an immediate return of these volumes in the next few quarters at least. I will also quickly give some more details on the last slide, which is the financial numbers like. So to be very specific now, the total operating income at INR 1,590 million is lower by 2% as compared to the previous quarter due to lower container volume, as I mentioned earlier. Total expenses at INR 635 million are higher by 3% as compared to previous quarter. Of this, operating expenses at INR 248 million are lower by 2% due to lower container and lower volume as well as the cost initiatives, which we have been taking over a period of time. So that is helping us now to keep our cost lower in this challenging situation. Employee benefit expenses at INR 163 million are higher by 15% due to the annual salary increment, as I mentioned earlier, long-term benefit expenses, which were lower in the previous quarter. Other expenses at INR 224 million are higher by 2% due to higher interest and maintenance, partially offsetted by lower foreign fuel and administrative expenses. EBITDA at INR 955 million is lower than 5% and margin at 60% is lower by 200 basis points. And this is because of -- there was a one-off favorable items in the last quarter, which we have mentioned also earlier, there is one-off rebate reversal, which was there in the previous quarter. The reported net profit at INR 464 million is lower by 2% as compared to the previous quarter. So this is a very quick overview on the financial numbers for this quarter, and we are happy to take the questions now.
[Operator Instructions] The first question is from the line of Mohit Kumar from IDFC Securities.
Congratulation on a good set of numbers in a very, very tough environment. So my first question is, you did allude to the fact that you don't expect the cargo to come back in next few quarters. But sir, can you appraise some kind of situation whether the skipping a call has decreased compared to Q1 in July and August? And how do you see this cargo panning out in Q2 and Q3?
So Mohit, my comment -- Yes.
No, go ahead. Go ahead, Santosh. Yes.
Okay. So Rohit, my comment specifically of the volumes not coming back to normal was related to our car export volume because it is the overall demand in the European markets has dropped where there is substantial export of cars from India. So that is very limited comment of our RoRo business. And when we look at our container business or for the matter, also our Dry Bulk and Liquid, then we are certainly hopeful to have improved volumes in the next quarter. So again, to be -- I can, of course, I'll speak right probably specific volumes per se, but certainly, we are seeing improvement in overall volumes for the next quarter.
Has the export import ratio has improved materially compared to Q1? What was it is Q1? And what is it right now?
So there has not been a major change in our India export ratio. It remains in the range of 45-55, where -- 45 export and 55 import. And it was almost the same in last quarter.
And my second question pertains to the CapEx, which the Board has approved [ INR 97 million. ] So how much the capacity will increase if you incur this CapEx. What is the kind of time line, let's say, start increasing this CapEx now? What is the kind of timeline you're looking to complete this CapEx? And when you expect this GMB approval to come?
Yes. So what I would say is, first of all, the train upgrade that we are looking to do is a capability upgrade. And at the moment, we are able to handle vessels with up to 18 containers wide. And this plan is calling for containers or container vessels up to 21 rows of container wide. And this means we would be on par with other terminals in the area in terms of the size of vessels that we can handle. And therefore, it's to maintain our competitive position that we do that. If you're looking at our container yard, the capacity is around 1.350 million TEUs, and we plan also to upgrade the yard capacity to something like 1.6 million.In terms of the time line, it is all up to the GMB. We have received a green light for the spending of nearly $100 million in GPPL but it is on the condition that we get the concession extended. We've had continuous discussions with GMB, and we have good and constructive dialogue with them, but we are still awaiting for a green light for the concession to be extended, and it will be, I think, very appropriate for us to get this extension now that we have clearly signaled that we are ready to spend the money and expand, the minute that we get the confirmation.
The next question is from the line of [ Jinten Shaikh from Misha Capital. ]
And coming back to the previous participant’s question. You mentioned the capacity will increase from 1.35 million to 1.6 million TEUs investments. Hello? Hello?
Yes. Yes. So the -- so you're right, that's what the number what Jakob had given. But it will be a gradual development as per the requirement. So the immediate [ average ] what we are looking at is investment in train, which will help us to enhance our capability of handling bigger vessels. So that will be a [ parity. ] And then, of course, as we improve our capacity utilization, then we'll keep on developing on the line side by creating real capacities.
Okay. So I was thinking that already we are utilizing our current capacity below 70% kind of rate. And obviously, all depends on as and when Maritime Board and GMB will approve your extension. But once you get the expansion, what will be the timeline to pick up the initial phase and then the later phase? If you can break it up in terms of period both approval coming from GMB?
Yes. For the placing of the crane, CapEx orders, that would take not very long time, maybe 1 or 2 months. So from the firm commitment from GMB of the concession extension to be signed, then we can get started very fast. And as Santosh said then on the capacity adjustments on the yard. By the way, I'd like to say that, yes, the utilization has been in the 70s, what you say. But it's been very, very good for us to have that yard capacity in the COVID situation. Just need to refer to some of the challenges with congestion in other ports. We've had the benefit of having no such congestions. And also with the linkage with the rail, we've been able to avoid to have any sort of congestion, which is a good thing for the customers. But as soon as we can assess that the need is there to expand the yard, then we have the space and the capabilities and the confirmed CapEx to do so. So I think that's a very strong position. We are basically ready to respond to the needs of the market before it becomes a bottleneck and a challenge to the customers.
So the $100 million you hinted, large part will be in the yard, right? Crane won't take that much of CapEx?
Cranes would be half and yard would be half, I think, something like that.
Sure. And that will contain -- first half will come quicker once the GMB approval include?
Yes. Let me say that I'm hopeful that, that would be before the end of the year.
Okay. Okay.
I think we all hope these days, don't we?
Obviously, sir.
The next question is from the line of Aditya Mongia from Kotak Securities.
The first question which I had was over on the outlook for the container business now I recall that last time around con call happened a few weeks past. The [indiscernible] being shared was of a long new shift recovery. That one would be on the container front. Number since then has been better. So my sense is that in July would have declined over to 10% for the market as a whole. I just sort of hearing your view on whether you would want to think through or recovery now has been faster or in July a one-off month and one should wait and what? whether you would want to think through or recovery now have been faster or did July a one-off month and month should wait and watch?
I think I'll stick to my metaphor for of the long U-shaped recovery, not to be too optimistic, but you see -- I'm looking at not only India, but also on the rest of the world and so on. And you do see somewhere indications of a second wave and this and that. So Santosh was also mentioning earlier here that there is some demand that are lagging on -- in his example, it was automobiles. So it will be true for us to conclude that we now have a sharp U-shaped or V-shaped recovery. It will be taking longer time to recover to what we would like to -- where we would like to be. But I'm taking your point that July was a turning point. And maybe we should extrapolate a little bit on that June, July, August, and then you will probably find it and it's a very long U-shaped recovery.
Okay. Got it. The second question that I had was more on the capacity expansion. So 2 parts to that question. First part is that on the expanded capacity that you're talking about, it could be probably 50% utilized. So maybe next 6 months is a bad time, but do you see meaningful growth happening over a 2-, 3-year period for you to be committing the CapEx right now? And that's the first part of it. The second part of the question is, just on the GMB side of things, apart from -- are there things that are holding us GMB, which -- from making that decision? And then how soon can the decision actually happen? What needs to happen for that decision to be taking place? Cause of this that was holding them back that shipments are not as much for coming from a CapEx perspective?
On the first question, the train investment is to retain our competitive position. As I mentioned, it's depending on what size -- we think that shipping lines will upgrade the size of vessels that they're going to deploy on the Indian West Coast. And we want to be on par with JNPT and other ports in Gujarat in terms of the capability. And with that, I mean, how far can the crane reach, how big ships can we handle. And this will be done with this upgrade here. On the yard side, we are actually in a fantastic situation. Because, as I mentioned, we are evacuating most of our containers by rail. And with the DFC, even though I do believe it's been delayed, but the DFC will be in commission by first quarter 2021. We will actually have a good capacity to be able to evacuate. And therefore, we have a very good position where we can, at all time, adjust our yard capacity to not only accommodate the volumes but also to accommodate the velocity. And I do expect that the rate of evacuation will go up when the DFC starts getting in operation. As to your question about the GMB and what's holding them back. I really think that we are having a number of good discussions with them, and we are giving them compelling business plans for how we want to proceed. But you can say, while the law is quite clear, and we, as a minor port in GPPL, we fall under that legislation, which gives GMB, the authority to extend for 20 years. It's also fair to say that it's not happened before. So the practicality of how GMB should execute that is still something that they are working on. And of course, what is being applied to GPPL would also be applying for others who are applying for their extensions. So I think they're just walking cautiously on doing the right things, but I'm also no doubt we are very competent people at the Gujarat Maritime board. And in today's India, we need, in India, all the means of recovery that we can get. And we are standing as an international company ready and willing to spend money and invest further in India. I think that will send a very, very strong signal to others as well. And therefore, I do hope that GMV is getting our concession extended as soon as they can.
The next question is from the line of Shachin Shah from Emkay Investment Managers.
So first question is on the business side. And as you all are aware, that April and May months were very difficult month for the overall economy because there were a lot of lockdown. I know the port may not have that lockdown, but a lot of your customers and a lot of the logistics challenges. So can we say that the April, May, June whatever volumes that we would have done in this quarter would probably be one of the worst or the lowest quarter from going ahead from them. So understand that Q2, Q3, Q4 for this current financial year in most likely scenario, should be better volumes as compared to the Q1? That was my first thing that I wanted to understand. And the second thing, which is on this CapEx program. So you did mention that the Gujarat Maritime board has been positive constructive discussions with you. But the discussions have been happening for a while now. Can you point out 1 or 2 things what has taken them so long or what is holding them back? What is the real thing that's been going over there, how process, which is not allowing a very quick resolution to this extension or whatever that we are looking forward?
Yes. So Mr. Shah, let me start with the first question. I do hope that you're right. And we have seen here in the months of July, the volumes are increasing. And I also strongly believe that the volumes will be steadily increasing with this mentioned before U-shaped recovery, that will be a long U-shaped recovery. And I have to say that some of the volume that we have been doing, we've been adding a coastal service that has been strongly performing. We also have seen that because of the challenges in some of the other terminals on the West Coast we have gained volume. And now I just want you to check the news, and you've seen that there has been an accident in JNPT within the last 24 hours. And there is no doubt that, that might also give us some volume benefit going forward because that is going to take time for that terminal to recover from that tragic accident. There are luckily, nobody got hurt, but 3 cranes collapsed due to high winds. So these kind of things is also going to be benefiting a port like Pipavav, which is located in a place where we don't have the same type of exposure. Regarding the GMB, I would really like if you ask them the question. But what I'm speculating is that in the past, we may not have been so active in telling GMB of our future plans. In the past, we may have been discussing issues that, in my mind, is behind us. And now, at least in the last 2 or 3 months, and we have a new Vice Chair, and we have a new MD in GMB. It's a lady. And she has so far shown a great interest in understanding what business we are doing and she's due to visit the port also very soon. So I think we have a renewed interest from GMB in understanding people. And in the mere fact that we have performed quite well also relative to other ports in Gujarat I think that has caught GMB's attention. And obviously, that should hopefully help us to get this process done. And so we can see the green light.
Just 1 last follow-up on that. Just 1 follow-up. Because of this BFC and if you do this CapEx, do we have some internal thought process and what kind of market share you would have over end of next 2 years, 3 years, 5 year? Or on the West Coast?
Yes. I think it's very difficult to say because now you're asking me the combination of 2 things or at least 2 things, right, because how is the market itself going to grow? That's difficult to say. I hope India will recover soon after this cohort situation. But what I think is that we will have increased capacity, and we will be good in our position because of the DFC because we are so rail-based already. And we will, for sure, have a head start over Maharashtra in terms of being linked to the DFC because we know that the tracks are very much developed from Ahmedabad up today. And as we connect in [ Shendong ] and other places, North of Ahmedabad, then we will essentially probe in. As I mentioned, Quarter 1 2021. So there should be some good chances here of expanding our market shares. But that depends also on how the market and how the volume will develop.
[Operator Instructions] The next question is from the line of [ Havin Vandi from BNK Securities. ]
For the first one, if you can share with us the breakup of EXIM and NTM transshipment volumes?
So, but I think I'll let you answer this question.
Yes. So we have not been speaking between EXIM and transshipment and Cristal, right? So we have always been giving only total volumes.
And secondly, I just wanted to check, like you mentioned, the number of trains increased vis-à-vis volumes. So do we benefit because of the increased number of trains in Sunday in terms of our overall realizations?
Not really. Because the port, we earn only on the number of boxes handled on the train. So loading and unloading of the boxes on the train. By increasing number of Train, that doesn't help us. So as I mentioned in the beginning, the increase is mainly because of some energy movement of rates as well as a single track training this quarter because of the volume challenges.
But let me quantify here as well to say that this still give us a more reliability in this current situation because what most terminals are struggling with is to get sufficient trucks and with sufficient drivers. And that is still a long-term problem, whereas, obviously, you don't need as many drivers to drive 1 locomotive. So the number of trains that have been operating and so on, I think, is a good testament to what I have mentioned before that the DFC, when the DFC will be commissioned, it is going to give us a good competitive edge.
The next question is from the Nitin Arora of Axis Mutual Fund.
Sorry, and going back to the capital expenditure and what you stated, on the sale side, which I understand of handling more of the container boxes, let's say, an average mark of around about 90 to about across 21 containers. That's more of a CapEx on hiring more higher vessel size. How does that change the overall dynamic in terms of volume I can understand the number of vessel size because incremental the vessel size are increasing and consolidation is happening. Why a INR 700 crore or INR 800 crores CapEx input when on last year or I would say last 40 or 50 quarters or rather, I would say, on a monthly basis, our numbers have never crossed 65,000 or 70,000 on a monthly run rate. And so why putting such a huge CapEx on or you're putting it because you see this monthly number as that get capability to go up. Is there some new line addition that can happen? And second part of it, this CapEx announcement, is it a precedent condition to get your expansion because last time, when you gave your plan to the GMB and obviously, because of the external environment, it didn't happen, therefore cannot guarantee. I understand you must be talking to them. But right now when the concession has to get over by 2028, I don't have -- you're trying to tell the GMB that, okay, look, I'm going to put so much of CapEx. So don't go through an IFR route, and there can be an automatic extension that can come to you on a higher fees or higher royalty rate. So just wanted to understand these 2 aspects based on the announcement, what has happened today.
Yes. Well, as I said, the capability expansion, and that is to be able to handle larger vessels is, obviously, both to take more volume in, but it's also maybe, if you see it from another angle, it could also be seen as a little bit defensive move because if we don't do this, there is a risk that there will be larger vessels in the market coming to the Indian and West Coast, where people will then not look as reliable or even having the capability to handle these ships. So we would not like to exclude ourselves for shipping line's future plans. And therefore, we think this is the right way to make sure that we're still a very attractive place to come and call. Yes. The second part of the question is a bit of financial in terms of return of investment, but it's clear that we are sending a very clear signal to GMB that we are in for the long term, and we want that concession to be extended. And obviously, you're not spending this kind of money if you're just going to sit. And can I say milk the asset for the next 5, 6, 8 years. So we are looking longer than this. And that is a clear signal also for GMB to get the concession extended. And then we will start with this. And I would like to say we will start with this investment. There might be even more investments than if we are looking at a much longer horizon, that's for sure.
And Jakob, just to add to this comment, 2 things which you also have mentioned in the past that we have always been very diligent in our CapEx spend. So we have always been doing CapEx spend as per the requirement. And as Jakob mentioned, that we foresee now, this is the inputs which are coming from a shipping line, there is a likelihood that the vessel size in India are likely to go up. That's why we see this need of investing into better cranes or the higher outreach train. So that's, of course, the trigger for this investment so that we are able to handle all the vessels which are coming to the ports in India. And we can just to also answer your question on -- there is no -- there is no such requirement from GMB on investment for the right of first refusal. So there is no such criteria or condition in the concession agreement. So this is, of course, not related -- the investors not related to any of such conditions.
Just the crane, as you said, the JNPT, because of the weather, we get an issue to some volumes can shift. I was really surprised that cranes at GCI old terminal is not working from last 3 months properly. But still, we don't see too much volume coming to us. I mean versus, let's say, [indiscernible] out at 40,000 a month, they have come to 50,000 there. So as we really lost market share there in the last 2, 3 months, whatever the recovery happened? Because the way other ports have recovered their volumes versus us is quite low. So that's why, wanted to ask you that.
So I think -- I don't know which data points you are referring to, but our [indiscernible], in fact, we are doing better than the market. And if I speak about the ports on the West Coast, so what we presented today, a 6% drop as compared to previous quarter. So we are the only port on the West Coast, which is a single-digit drop. The rest of the ports have a double-digit drop in volumes. So when I look at the West Coast, our areas we show there's an almost 25% drop in volumes on the West coast post. So I'm not quite sure about the data points you're referring to. And that's why we believe that we are doing much stronger in the current challenging situation.
Got it. Second, just last part on the liquid side, can you throw some visibility here in terms of business because that number in between became it volatile but now, again, started ramping up for us. And then again, it went down, I understand because of the lockdown as well. So can you throw some light how we should look this business going forward? Any ramp up you see here?
So, yes. So we are back to this 200,000 plus metric tons of cargo this quarter, which is a positive sign. And the other positive which I've seen in this volume, which is mainly supported by commodities other than LPG. So in the past, we had heavy dependence on LPG, and that was our main commodity, which is handled. So currently also, we'll continue to pursue that growth volume as well. But in this quarter, we have seen good volumes coming from other than LPG, which is mainly based oil and [indiscernible] which we are handled in this quarter. And the inputs what we have, these volumes are likely to continue in the next few quarters at least. So we hope to see this performance to be consistent in the last few quarters, at least. On 2 things. One, as I mentioned about the non LPG volumes to continue, and then we're also working with our partners to have a rail evacuation infrastructure built in, which should be ready in the last quarter of this year. And with that, we also are hoping to have some incremental LPG volumes. So on that background, we are quite positive on the liquid volumes in 2020 and as well as early 2021 as well.
The next question is from the line of Parimal Mithani from Credential Investments.
A good set of number. Just 3 questions for you. What makes management change our view on the company in terms of your showing CapEx plans in terms of it. Is there a change at the parent level or what are the current thing about Indian markets? Second question is the DFC come around, what percentage of volume growth or any ballpark number you can give us -- you see in terms of efficiency wise, in terms of market and throw some light to it? And third is in terms of dividend policy, are you going to maintain that policy or that constant dividend going higher?
Yes. So that was 3 questions, but I can tell you the -- let's start from the question number 3. I think the answer is yes. We want to be consistent on our policy on the dividend. In terms of -- if there's a change of [ heart ] in our parent company merged about India? No, not long term. But I think there has been, in the past, as you are probably also aware, there has not been a very clear a 100% commitment to GPPL, if we go a few years back in history. That is now crystal clear. And you may also be aware that actually, our ownership has gone up in GPPL with a full percentage. So that is also to send a very strong signal that we are long-term committed to India and to GPPL. So that is that is a very clear signal and which may not have been that clear in the past, but it's definitely something that we now say very clearly. And what was the middle question? If you could repeat that?
[indiscernible] what operational efficiencies in terms of volume growth, right?
Yes. I can tell you that if you're looking at DFC, it is double track, it is double stack, it is with higher bearing loads. So that means trains can go twice as fast, and it's also double lengths. So -- plus it will be electrified power, which gives a lower cost running the locomotives rather than diesel. So if you add up all these multiply assets, which is actually inferior capacity injection of 10x for freight carriage. Now what we need to see is what the railways want to do with all this nice extra capacity. But as we all know, what is the biggest problem that companies are complaining about in India, it is the high logistics cost. And railways have done this fantastic investment in the dedicated freight corridor. I don't think they're going to let that particular item. My expectation is that the transportation by rail will go down. And that should be helping India to be more competitive and that should, again, be helping us to grow the volume. And here, I'm talking about growing the cake, not just taking from somebody else, but really expanding the volume, so it remains to be seen. But I think, again, if you're looking at the DFC, it's a real remarkable injection of more capacity. And I can't actually think about something to compare it with because it is really manyfold in terms of the capabilities that the railways will be able to inject here when they get the operation started. And I think also I'd like to add that 1 more time. It is going to be electric, which means much better environmental footprint and lower costs compared to imported diesel. So I hope that answered question number 2.
Just to add to your comments. So what you also expect. So today, if you look at the cargo, which has been moving on road, so also a significant proportion of the cargo going by road. And we expect now with DFC, and hopefully, it will be very, very competitive in terms of the pricing. We expect a significant portion of this growth movement to get transported on well. And that's why we see a good advantage for Pipavav because rail has been our USP, and this will allow us to reach to some newer market as well. And that's why we also expect some increase in volume. It's very difficult at this point of time to really quantify how much in terms of percentage of what we're looking at. But we are quite hopeful that we'll be able to access new market and ensure the volumes will go up.
We'll move to the next question, which is from the line of [ Abishay Koch ] from DSP Mutual Fund.
Sir, given the market share gains that you have seen and also the resilience of the business model with higher rail coefficient. Is there a thought of increasing pricing in the system?
Yes, that would be tempting. But I think at this point in time, we also need to let the market recover I will not exclude that there wouldn't be adjustments in our tariff, but at the same time, and you can see actually other ports in Gujarat has done so. And I think they have done so because they have been under pressure to do something with the revenue. But at the same time, as I said, we're looking at a long U-shape recovery. And I think it's good that customers have their time to recover as well from this big impact that it has. But I wouldn't say that we wouldn't do a little bit.
Okay. And sir, as far as the CapEx commitment is required, the Board approval, does it also require a global approval for this? Or can the board here can independently take this CapEx decision? Or does it need a global Board approval as well?
No, I think it's -- Abhishek, it's a good question. But in this case, we've actually done our homework, and we've already got a green light from the head office. So with this broad approval here now, we are ready to go. We just wonder -- and I hope GMB is listening in here, but I really want GMB to do the right thing and get going with our concession extension because we are ready.
So it's not that post the GMB approval. You don't have to go to your global board and seek approval. Everything is in place from both global and the local board here. Is that the right understanding?
You got it.
Okay. And sir, just adding on to that because when you're talking about this kind of CapEx, you're increasing your capacity by bare minimum by 15% to 20%, and that can only happen by addition of new shipping line. Now that is an event that has not happened with Gujarat Pipavav Port for a fairly long amount of time. So we're just trying to understand around that if you're increasing capacity by that 15%, 20-odd percent, you will need to add new shipping lines to kind of fill up that capacity. And without the help of parent, which is almost contributing to 35%, 40% of your overall volume, that's not possible. So how should one look at this scenario, whenever the extension kind of comes?
Yes, that's a good point. But on the other hand, I think in fact, the fact that we do this move, and we show our commitment, will, in turn, attract more shipping lines. And this, combined with, again, our track record over the last few months of performance, our stability and predictability and the effect of the DFC. I can't mention that enough. All of those things are in our favor. So of course, we are talking to shipping lines. And I think they also like to hear this story, and I'm quite hopeful that the whole question is about this length of the U-shaped recovery. And the moment that we start to see that recovery happening, then I'm not sure we could add some major shipping lines to be added to our coverage. I just want to say we do have actually added [ coastal ] capabilities and also a direct feeder service to [ Jabali ]. So we have added more to our products.
The next question is from the line of Achal Lohade from JM Financial.
I wanted to check in terms of the EXIM growth, can you help us with respect to EXIM growth for the first quarter?
Santosh? EXIM growth?
Yes. So the overall volume, what we have mentioned, there is a decrease of around 6% in our container volumes and that is coming mainly from the EXIM growth, right? So we have actually seen almost a similar drop in our EXIM volumes.
Sorry, if you could help on the Y-o-Y number, sir, would that be possible to give Y-o-Y for EXIM?
So I want be to pull the exact split of the EXIM and Coastal and transshipment. But yes, there has been a drop in our Y-o-Y number as well. So on a total volume basis, there has been a drop of around 16% on the container volumes.
Okay. I'm still a bit lost. You saying 16% drop in volumes in container, Y-o-Y is for EXIM? Or are you talking on...
No, it is total combined volumes.
Yes. But in terms of EXIM growth. I'm not asking for specific numbers for EXIM volume, but just the growth [indiscernible].
So there's no growth, actually, there has been a -- so because of the COVID-19 situation, the volumes have actually dropped. So as far as the EXIM is concerned, so we have almost a similar drop in EXIM. There has been a higher drop in transshipment volumes as compared to the same quarter last year.
Correct. Correct. And with respect to this CapEx, a, does it include -- would you require given you're talking about higher vessel size, would you be in [indiscernible] is that in addition to this? And b, would there be any disruption in terms of the ending as the payer approves [ transshipment ]?
So I think your question was, actually, I do not get the entire question also, you were also breaking in between. But if I got your question right, the second half, you're asking about when you initiate this project, is there any disruption in operations? Am I right?
Yes, the second part, yes.
Perfect. So no, we don't expect any disruption in operations. So the entire project has been planned to ensure that the existing operations continue as is without any loss of services or discontinuing of services. So we don't expect any change on operation because of this project.
Right. And the first part was with respect to the hedging, would you require to spend on this hedging at the terminal [ order ] profit channel as you want to handle the higher bigger basis?
No. In fact, they are using what we have can take these bigger vessels. So we'll continue to do the maintenance dredging, which we generally do every alternate year. So that will continue, but there's no capital dredging requirement.
The next question is from the line of Ajinkya Bhat from Macquarie.
First, 2 questions. First question is that in your annual report, there are multiple references to potential growth opportunity from the Dolera Special Investment Region that is coming up in Gujarat, I think it's about 200 kilometers from our port. So firstly, if you could throw some light on that, what kind of volume growth you are expecting? Or what kind of end market industries that you're expecting to come up there? That's the first question. And second question is just a bookkeeping question. Can you provide us the exact number for your RoRo volumes because in 4Q presentation, it mentioned 3,000 cars or 3,000 units, this 1Q, it mentioned 2,000 units, but it also mentions Q-o-Q decline of 8%. So is it like other 2,600 to 2,400, so it was approximated upwards in last quarter, and now it was approximated downwards this quarter, something like that. If you could just give that exact number, please?
So let me answer the Dolera question first because Dolera is coming up. It's as you say, 200 kilometers northeast near Bazaar. And they are locating themselves or the launching themselves with the smart production. Now there are some plans for batteries for electric cars and other manufacturing that they want to do there. We think that's very interesting. And they are also looking to establish an ICD and we are following that very, very carefully. And why we are quite hopeful that this will add volume to Pipavav is obviously that in the vicinity there's not a lot of alternative ports. So this will, in all fairness, gravitate quite naturally to people at. So -- but we don't develop it, we will just be working with them on the logistics. So it depends how fast that investors and manufacturing and all kind of other things will come up and running. But if you look at a map, it's quite natural gravitation towards pipe. I think Santosh, you better answer the technical question on counting cars.
Sure. For the current quarter, we have done 2,484 cars in specific as compared to 2 709 cars in the last quarter.
Okay. Understood. Sir, on the Dolera, just a follow-up. So based on my understanding, it would be at least 4 or 5 years before any new industries will -- new manufacturing will probably start at Dolera, right? So I just wanted to get that clarified because considering that there are multiple references to be suspect in your annual report, I thought. Do you see it to be like a near-term opportunity in the next couple of years or something?
I think it's fair enough that we may need to be more careful in terms of how many times we mentioned 1 particular thing. We look at many different things. But even before they come into manufacturing and have an output when you are establishing a special economic zone and new industries, there will also be container imports, and there will be establishments. So I think the horizon is not 5 years for us. We will see cargo coming into Dolera earlier than that. But how fast, I mean, this is, again, the difficulty in predicting the future. But you can imagine, of course, when people have to establish manufacturing and so on, there will be import on machinery and other things. So we do believe that we will see volumes faster than 5 years as you indicated.
The next question is from the line of Parash Jain from HSBC.
And my question is more towards how has been the start of this quarter with us to EXIM volume in containers? And more importantly, if you can share lights on performance [ replay ] especially with this heightened noise around geopolitical tension between India and China. And I presume India, China is one of the key routes for [indiscernible]. Have we started to see any impact whatsoever or this line pretty much remains in social media. And in reality, we have not seen any impact yet.
In regards to the second question, we have not seen any physical impact yet. But it is, as you call it, noise, I think it's -- there's a lot of politics in this as well. And then it's also at a time when it will be potentially having a negative impact on India. If we just shut down the China business from 1 day to the other. So we have not seen any actual impact yet, except that we are ready. We have customs under -- in the port, we have a full scanner, et cetera. So we can certainly do inspection of import from China 100%.On the first question, I think I have to let Santosh go back again on numbers.
So Parash, I think your question was more about the EXIM volumes again, right?
Yes. I mean, I'm just trying to understand how it's been the start of this quarter versus last, where we have seen a volume decline? And more importantly, if you can share some thoughts on is like China India side being better than, let's say, India and Middle East or something around that?
So as I mentioned, other, of course, we have seen some decline in the EXIM volume because of the COVID-19 situation. But when I look at the month-on-month. So for us, April was a bit strong because we had some additional opportunities in month of April. And then because of knockdown, the May volumes had gone down. But as we know now in the future quarter, then we are seeing some better volumes. So we don't -- we know whether we should term it as a recovery. But certainly, we are seeing some improvement in the volumes in the coming months now. So that's the expectation on the EXIM volume. As far as the movement between India and China is concerned, of course, we [indiscernible] and touch base on that but to also do in my view. So I don't really see immediate impact because of this. Because it's very difficult to immediately adjust all the supply chain, and we don't really see that happening in the short-term for sure. There has been a lot of discussion of companies moving out of China and then setting a base in other countries, also, of course, India. Right now, we are not really seeing any impact of that as well. So I think it will take some time before we can really conclude whether there's some big change happening of the cargo move from China into India. We also are -- believe that even if it moves out of China in long term, it will be either India or some other Far East countries, which will take share of these volumes. So for us, then we don't see a real impact of these changes. Given a long test but of core.
Next question is from the line of Manish Agarwall from Edelweiss.
I just wanted to understand the rise in our realization. So obviously, we put a price hike last April. But if I look on a quarter-on-quarter basis as well, our prices have kind of increased around 2.5% to 3%. So my first question is regarding growth. Is there some sustainable increase in trend that we are seeing? Or if this is more of a temporary phenomenon?
So on the realization, if you are offering to consumer realization specific when we have our tariff in U.S. dollar. So we have got a benefit of the favorable exchange rate [indiscernible] for us because of the weak quality in this quarter. So almost around 5% is what we have seen and implement in our big exchange rate. Okay. So that's the real change in the contract or the tariffs as such during the quarter.
Okay. So sir, I basically, depending on the movement of exchange rate.
No movement on the exchange rate, also on the cargo mix, which we carry between [indiscernible] postal and the Tianjin cargo.
Definitely, sir. So sir, if you could meet just some broad idea of the entity which is that [indiscernible] realization has with all it upfront, we would have to do maybe a 1% [indiscernible] exchange change or less by how much?
So for container business, whenever we see exchange rate various . So as I mentioned, between the 2 quarters, there was a 5% variation. So that 5% radically flows into our realization because the entire tariff is in dollars. As far as the other business teams are concerned, Bulk and Liquid and RoRo, then is only on the money side, which is a dollar traded direct contracts are in local currency. So I will put it is more or less in line with the variation, what you see in the exchange rate, you should be able to get a very close variation also in our realization.
The next question is from the line of Prateek Kumar from Antics Stockbroking.
Two questions. Firstly, on -- so regarding your cost, during the quarter, you made mention of course in opening remark. But are there specific steps that you're taking light in this particular quarter to conclude the cost permanently like for future periods, there are significant cost cuts which we have taken?
So for us, actually, it's a continuous process. So we have been continuously focusing on our cost. But yes, because we are getting into a difficult situation and taking that into account then there are some additional steps which have been taken. So we have -- certainly, we looked at our existing contract opened, which is those contract for renegotiation and taken some rate cuts on that as well. And that's why you're going to see a reduction in our operating costs. So if you look at our operating cost as compared to the same quarter last year, then you also noticed there is a substantial reduction. Some part of this is volume-driven, but the rest is basically the renegotiations, what we are going to do with our vendors.
Is it possible to quantify the permanent sales by [ 10% or 5%? ]
So there is a mix of variable costs. So very difficult to really quantify. But in general, we have taken almost 8 -- in the range of 8% to 10% on the cost reduction on the various initiatives, not on a quarter basis, but at least for the last over period of at least last 1 year.
Secondly, on -- you mentioned that the competition has taken from price adjustment of the increase. So that means that there is no pressure on realization related to volume mix.
Certainly not. Because even today, when you look at this, even before the price increase taken by the contribution, our prices are lower than the competition as for the tariff comparison is concerned. And that has actually increased the gap has [indiscernible] increase now. So we don't really expect any pressure on realization from the shipping line to us.
The next question is from the line of Rajarshi Maitra from CIMB.
Most of my questions have been answered. Just going back to this concession renewal. So my question is, so are you look -- I mean, if the renewal happens, this -- is it likely on the same term as now? Or are you going to have higher revenue share or firm CapEx commitments from your side, something on those lines?
So -- so this is a good question, actually. But then the commercial terms are not yet available. So it's very -- it's too early. Our focus, of course, is to get -- to able to get the concession extruded first. Having said this, our expectation is we though will expect a significant change in our transition terms. And the reason being is -- so if you look at the way the ports and Rogers operate are a bit different than the terminals which are operating at JLG. So if you look at JNPT, the revenue share is much higher because the port authorities, JNPT takes care of the channel maintenance, hedging, all those big costs money services also provided by agent, whereas in the ports of Gujarat, the entire cost of operation is on the [ Board ] operator. So first of all, we don't really expect a significant change in the commercial terms. And we believe that we Gujarat being industrial fairly state. And both with the longest coastline, both business is a key business for them. We expect the commercial terms will be there should be very competitive. So we don't really expect substantial in there, but we don't have any indication from GMB what those will be so whether there'll be a CapEx commitment or whether there will be change in the commercial, it's too early to say back now.
Thank the next question is from the line of Deepak Krishnan from Goldman Sachs.
Just to continue from the cost perspective, even though on a Y-o-Y basis, revenue is down 10%, but both your operating and other operating costs are down by close to 20-odd percent. So wanted to see if there's any sustainable saving and margins already at 60%, do you see like 100 to 200 basis points margin expansion with the cost initiatives that you've taken? And my second question is about 2 years ago, you had about a $45 million dredging cost. So you expect a similar number to be there for this year, post the COVID, you do it every order tone? So those were my 2 questions.
So on to the cost initiatives, so there are 2 parts to this cost initiative. And in, of course, the implementation of the Indian accounting standard, there a certain part of our operating leases were lease classified [indiscernible] to financial EDS. So that is 1 I'm just doing, that's why there's some impact on the margin because of that. Apart from that, as I mentioned earlier, we have taken a lot of cost initiatives in reducing the cost. And this is on 2 fronts, of course, a reduction through efficiency. So building operational efficiency, there's a continuous process improvement initiatives which have been taken internally. And the second is through partnering with our vendors, and also helping them to build their efficiencies and then do a rate negotiation with them. So all these put together, we have seen a good reduction in our costs and help us to increase the margin from our earlier range of 55% to 57% to 60% now. And we hope to continue with this range in going for as well.
And sir, on the dredging expense, would it be similar to the one that you've seen in '19
So almost in the same range, in the same range, that's right.
Right. And that should be in the next 2, 3 quarters that, that should come into our numbers, right?
Absolutely. That's right.
We'll take 1 last question, which is from the line of Mohit Pandey from Citigroup.
Sir, my first question was related to the CapEx. So currently, what proportion of the industry volumes would be on the larger-sized vessels, which we plan to cite to in the future with CapEx and when that happens?
So -- yes. Yes, I'll take that.
No, go ahead.
Yes. So let me clarify one. So at this point of time, we are able to handle all those sectors which are calling on the logistic coast of India. So there's no challenge as such in handling any Bison what we are looking at in the future, where we expect the shipping line to increase the vessels. And because of that, to be ready for that, we are looking for this investment. So just to answer your question in terms of volumes, what your volumes, which are coming to IPAA or on the West Coast, we are quite capable of handling that.
Okay, sir. Understood. And sir, secondly, possible to quantify currently what proportion of volumes originated from China broadly, if possible to quantify?
So basically, we look at more of the Far East services, it may be China and other Far East countries where we do get import. So roughly I will estimate around 60% to 65% is our forest services. We do also have services to U.S. as well as now the postal service to Middle East connection. But the major part, of course is from Forest. So it is an estimate of around 60% to 65%.
Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to Mr. Ashish Shah for closing comments.
Yes. On behalf of Centrum Broking, we thank all the participants for the call. We also thank the management for giving us the opportunity to host the call. Thank you very much. Sir, any closing remarks on the slide?
No, not really. I think I put it all the interest and questions. There was quite a lot of question this time, and I'm quite pleased with the fact that it has been noted that we have a green light for investing further in the port subject to the concession extension. I think our performance in the last quarter was noted. And what you have also seen is that we've done relatively better than the market. So it's just to be said again, a long new shape recovery means that we are not out of the woods when it comes to COVID. And let's see again here, when international flights and so on will take place in India because, of course, we need to get the business going again, which has a direct impact to our volume recovery. But I wish for all the investors who have been listening in here and asking questions. Please take care of yourself and your families and stay safe. Thank you.
Thank you.
Thank you. On behalf of Centrum Broking Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.