Snowman Logistics Ltd
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Snowman Logistics Ltd
Earnings Call Analysis
Summary
Q1-2025
Gateway Distriparks Limited reported a challenging quarter with mixed performance across segments. Rail business saw a volume decline due to pricing competition, though some market share gains were observed in NCR. The wastepaper volume drop in Kashipur and Ludhiana contributed to weak results, but future volume growth is expected. The CFS segment maintained stable volumes despite an accounting policy change affecting revenues by INR 8.43 crores. For the 5PL business, the company targets above 25% year-on-year growth, driven by new client acquisitions. Double stacking optimization and monetization of CFS land assets are also in focus to enhance future performance.
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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] Participants are also requested to limit themselves to three questions at a time to give others in the queue a chance. And can rejoin the queue thereafter. We will wait for a moment while the question queue assembles.
We take the first question from the line of Bhoomika Nair from DAM Capital.
Sir, 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, there's been a decent growth, whereas when we look at your or your counterparts, volume numbers, it is appearing fairly weak. And it seems that the rail coefficient has kind of declined.
Sir, can you explain what's really happening and 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, Red Sea impact will continue. There's a lot of port congestion at various international ports, vessel schedule has been erratic over the last few months. But slightly, we've seen some improvement over the June, July is also looking slightly low. Do we think -- we see things improving that last quarter was weak in the markets that we were operating.
So it's not that we've actually lost our contract to competition that much. Between Q4 and Q1, we have -- has the same market share that we had. But on a year-on-year basis, we have lost market share in places like Uttarakhand and Ludhiana, which we've mentioned in the last few quarters due to pricing competition. So that's the main thing with low-value commodities like waste paper and scrap, those imports continue to be weak for us. And that hugely 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 same 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 doing. 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 gave in a TV interview. That's the level that we should kind of look at moving ahead as well?
Yes. See, we are not compromising on margin because some volumes are there, which are the contributing little or nothing to the bottom line. So just for the sake of increasing the revenue throughput. We don't want to low down on the EBITDA margin. The EBITDA margin has slipped a little bit because of the low volumes and the double stack that we put on, our double stack percentage has gone down by, say, 2% in this quarter. So that reflects on the EBITDA margin. But -- so, 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 some spot business. Our regular customers are coming back with the higher volumes and the government. So -- there were a lot of factors in Q1, the election being one of the things that during the election period business activity slowed down. And EXIM volumes, specifically slowed down and now with the case of budget and the duties and whatever the policies are.
So I think the EXIM growth will continue. How much? That is still to see and maybe bigger. Make any forward announcements of looking at what is happening everywhere. We will continue to grow, but at what pace, the single digit or double digit, that I think we will be able to say by 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 some comments on TV, but it wasn't really clear if you can just kind of elaborate a little bit out there.
Yes. So we have five locations of CFS. And about Krishnapatnam is already -- we are [indiscernible] because the container business has been stopped by the port of whatever to Krishnapatnam. So part of the land we were as we sold to someone. And we still have a warehouse and the land and sort of infrastructure for I would not say CFS down.
And then we have land in Kochi where we partner [indiscernible], Vizag, Chennai, and Maharashtra. So we are evaluating, first of all, like as if you had to channelize, so like we will evaluate the assets that we have, then the ongoing business at all these locations and someone who is interested in the -- some new players, some from existing players who is interested into getting sign CFS and the land and we deliver it.
So it depends on what valuation we get, our expectation is quite high. So we would 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, any uptick on CFS business because the competition is so intense, and there is hardly anyone who has moved out of this business.
So any value one can prescribe to this whole sale of land?
Value will be hypothetical because I've not the land prices, we have to find out what are the existing land prices. According to us at Maharashtra property 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, memorandums over and for any potential buyer to look at later.
Okay. Sure. I'll come back in the queue. So I have more questions. I'll come back.
Thank you, Bhoomika.
We take the next question from the line of Amit Dixit from ICICI Securities.
Yes. I have a couple of questions. The first one is on volume growth, again, drawing from a bit Bhoomika's 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 growth do we see over the 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 -- which has gone up to [indiscernible] Last quarter, it was INR 540 only. So our volumes in a way we will remain that, because I will -- again, it depends on location that you are present, ICDs are -- we have in NCR to ICD, where we have, in fact, gained a little bit on the overall NCR volumes in spite of the -- but the fact remains that the overall pie has become small in this quarter.
But other locations, we have lost our business to some 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 a guidance whether it will be 10% or 12% or 8%, I mean, we will definitely be looking in double digit, but it was dependent on macros.
Okay, sir. The second question is on Kashipur. If you could give a highlight the kind of volume that we did from there, if we are -- if you can say things, issues on the wastepaper business over there. So what kind of volume is going there and the ramp-up that we expect for the rest of the year?
So, Kashipur, a big decline because of wastepaper volumes going down, what we were consistently doing above 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. 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?
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 at the same time, it doesn't make any difference in the [indiscernible]. So it is a question of netting out the revenue, revenue we booked earlier less of discounts. So and the net revenue has been recorded from discounts. 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 and Ludhiana market, how do you see the volume increase and competitive intensity in this region, if you can put some light on that?
What we came 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 did 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 issue, 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 volumes.
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 there something which was 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 got back and the imbalance between -- within the ports also like Mundra, Pipavav, and JNPT volumes, some were import heavy number export heavy. Once this summer comes back to, say, 40%, which we've done in the past, we even gone up to 45% in the past. It is 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?
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?
Rajguru, speaking. So if you look at the low-value commodity. So we need to see split into import and export. So what we are talking about that this is a definite imports on the low value. So, basically, one is wastepaper that constitutes about 20% of our overall volumes, especially in the markets like Ludhiana and Kashipur, if we split further into the geographical region, then Kashipur wastepaper is close to 80%, then Ludhiana is close to 22%, 25%. So in the overall splitting, at least we can say 20% of the low-value commodities apart from wastepaper it is 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 [indiscernible] has mentioned that we've lost some business due to margin pressures. But at the same time, we are also targeting the business which was lost and some of the new wastepaper and scrap for 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, it's out of the total market volumes. And there has been port congestion also if you look at Colombo, Singapore as well as Port Klang. So right now, the latest view 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 crores of investments with us and we are -- 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% 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 because we have just [indiscernible] ideas that we don't want to continue the CFS business, but that does not mean. But, I don't know, we are in a hurry to just -- I mean, we should get a proper valuation. And until now, we are running a 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 be try what can we do with [indiscernible]. 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 will come and how much will deploy in which, obviously, rail is big business for us, and we continue to explore the possibility of revenue coming in. So that will be one of the -- is we would like to deploy those funds.
Then, I mean our debt situation is very good at right now. I mean we are at our lowest debt, net debt was INR 245 crores compared to it was at one time INR 800 crores or something. And even from last quarter or last year, if you see, I mean, it was more significantly.
The next question is from the line of Anupama from Dattatreya Capital.
Pawan here. I just wanted to understand so 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 rail coefficient of 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.
In 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 that should improve going forward.
[indiscernible] 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 state to a lot of regions where we don't operate, it could be Kanpur, [indiscernible] Indore, and even Rajasthan. There are a lot of markets where we are not present. So we don't count that as an 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 stacking position was 33% this quarter, is it?
Yes.
Okay. And what would be the proportion of MP?
MP varies anywhere from 10% to 20% depending on month-to-month. So we try to fill as much that we don't go under same running. So sometimes we take MP at a spot basis just to cover up the rail haulage costs.
Okay. But I was just more curious, see, this quarter. MP's proportions are significantly more or something went from I mean, I'm just trying to understand why basically what was the overall issue...
No, it's just overall vessel 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 overall.
Okay. And last question, can you just indicate what was the drop in, let's say, wastepaper volumes that you carry?
Yes. So like I mentioned earlier the G&A. So the wastepaper happened Ludhiana and Kashipur majority. So in Kashipur 85% of the wastepaper is import. So there has 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 wastepaper. But as I also mentioned that now we are getting the things of wastepaper in the pipeline. We are able to send back a couple of customers. And now the vessels we have more of it has started arriving there is regular unloading. So we are expecting that as a percentage of wastepaper, again, will improve from some way around.
Longer term, can we get the 10% volume growth on rail?
We'll wait until like next quarter, and this is our future guidance, but that is the target to go have a double-digit growth.
Okay. And what was the EBITDA that was in rail? Sorry, I missed it.
9,400.
Okay. And any CapEx numbers that subject particular quarter?
It's almost INR 1,400 just below that.
I'm asking about CapEx this quarter, sir?
Oh, CapEx, sorry. We'd have to get back on that, actually, but not significant CapEx this quarter. But for the overall here, we still have plan like we've been announcing. So one new terminal is in the [indiscernible], Jaipur land. So total outlay for these three projects could be about INR 200 crores.
Okay. And what was this 1,400, sorry.
That is the CFS TEU or CFS EBITDA per TEU.
The next question is from the line of Sachin Lohade from Nuvama.
Can you help us understand, just to clarify on the Jaipur land acquisition, is it quickly 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 we'll commission by -- in 12 months, can you help us understand what exactly is the land size, land parcel size, what kind of CapEx, what kind of capacity, et cetera?
Yes. That litigation is still going on. We have the notes to accounts also the date is we don't lose schedule for next week. But that will probably take time. We are still proceeding with our plans to make a full slated 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 on it 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 nominal. Can you help us understand a bit more on the same?
It will be in north of India. So it is yet to crystallize, I mean we identified the land. So once we have a deal, and book all the land that we'll tell date and time to inform the location.
Okay. So land is -- 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 place like ICD on its own also that we will hub that at one of our hubs in the north and double-stacked 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 it has grown in the past. I understand it is fluctuating right now. It's [indiscernible] Ludhiana number -- can you give us some sense what the market sizing of these 2 or 3 pockets.
So these are broad estimates, I mean we don't get 100% accurate data But roughly, if you look at NCR, it was about 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 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 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 a bit wider market if we compare to Kashipur. I know the limited ICDs over there only three of us, but some of it is not addressable to Kashipur actually, which comes more closer to the NCR side. So we'll have to its 25,000, not that entire INR 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 moved by rail, right?
These are the ICD volumes for EXIM, so no domestic counted, 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. One more thing with respect to the port volume growth, is it possible to get some sense, what has been the first quarter post port volume growth and rail volume growth in NCR, and then it was they stop giving out the numbers any sense you could provide?
Sorry, we don't have access to that data either.
The next question is from the line of Yash from ithought PMS.
My question is related to Snowman. So the first question is related 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 vertical to distribute, which is the 5PL vertical, if you see, we have grown 29% over last quarter and 10% over last year same quarter. And we have a new client signed up this month, and the revenue will start coming from other net onwards, which should help us reasonably improvement in the revenue numbers. So we will continue to ensure that it is 25% plus growth year-on-year when it comes to for distributed business.
Right. Got it. And the second question was related to margins. Referring to the results release that you are given. Margin across -- the PBT margin across the business segments have fallen, be it warehousing, transport or high sale. I think in 5PL, we have also gone to 10% PBT margins in certain quarters. So if you can help me understand why this margin drop in each of the verticals.
So there are three 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 research and maintenance and some of the accounting corrections.
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, we 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 crores, INR 2.5 crores.
INR 2 crores, INR 2.5 crores. And this is across the business segments, right, not related to any one...
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?
See, we are allowed to acquire 5% of the [indiscernible] acquisition rules. So last year, we had -- and applied by a person. This year, we have acquired a 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 to -- because the business is both continue doing well. So in the longer term, I mean, it is in the interest of GDL, keep on increasing the stake as long as the cash flows support, give you a level to acquire the enough remaining 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 this is because of the capacity constraint. But with the new warehouses coming in this year, what sort of growth are we targeting in the warehousing segment?
So see, when we do even the more distributed business and those contribute revenue in warehousing as well as pass sufficient business. So we don't usually talk warehousing alone. But yes, considering the new facilities, which are going to be functional in next month, Lucknow and after that, Kolkata, and also some of the lease capacities which we are yet to fully utilize, Considering all this, we expect around 10% to 15% growth in warehousing business this year.
The next question is from the line of Vaibhav Shah JM Financial Limited.
So whenever the Jaipur plant, Jaipur ICD gets operational. So what would be our targeted volume maybe in the first 12 to 24 months?
So it takes time to ramp up for the ICD to first 12 months, maybe 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 wastepaper, and then see then 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 boat?
I mean so on 20,000 TEUs, we basically, in one quarter, like in Q1 last year, we did about 8,000, 9,000. But not with Q1, we've done fairly low. We've done about slightly about 6,000 TEUs.
So 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 not month. But last 6 months was 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 go up. But what we're trying to do is target other parts. There is some road improvements happening there or catchment 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 every year.
Okay. And lastly, sir, what was the gross debt. The net was INR 245. What was the gross debt as of this?
310.
The next question is from the line of Pranay Khandelwal from Alpha Invesco.
I think last time the tightening there was some mention that you have signed up on one client. So can you give you more details on that or what kind of in is not the name of thing. So like the scale of the brand or what can we expect from them in ballpark numbers, 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 you contribute, Am I right?
Yes. Some guidance on that, any details can give, if not the name of the client. That's it.
So as we said last time, we are avoiding mentioning the client 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 a quarter.
Okay. INR 15 crores to INR 18 crores per quarter. And so it it's in the ice cream and dairy industry, that will improve our realizations in the warehousing business as we more freezing kind of temperate continues for that.
Right. But the size of warehouse utilization is going to be very small as compared to the size we are at. So against the size of 130,000 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 tight for us.
Okay. So was this client signed in the last quarter or this month itself or the revenue will start showing this quarter for quarter 2...
The revenue just began this week. The revenue just began in this quarter and next quarter onwards full quarter contribute.
Because I think dairy and ice cream revenue as a percentage of total is up this quarter. Is that just a summer impact? Or is there anything else that's?
No, that's purely the summer impact.
Okay. And any guidance on warehousing realizations that currently is around INR 1,500 per month or so?
So warehousing realization has gone up 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 would achieve.
And also on the one-offs that you mentioned this quarter, if we adjust for that, it still does not come to this like margins would still be lower than last quarter itself. So can you give more details on 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, there is -- this will -- yes, 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 with the sort of effect we are seeing like that's why the profits up like.
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 expenses 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 of the five locations CFS all in one go? Or do you think this is going to be a piecemeal affair.
I don't think it will be a piecemeal affair. We have led the undersize location with the proper valuation.
Understood, understood. The second thing that I want to ask you was on the Faridabad 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 make 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 hold on to the train and carry of the work.
But at the same time, we have been meeting the senior officials of Indian Railways. So they have showed us that they are going to expedite the work. And plus, there were due to election also, there was [indiscernible] delay. But now Indian Railways assure 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. Just on the Jaipur asset, maybe I missed it on the call, but of the issues on land that were there, we were talking about two personal scenarios, one having a, first one is ICD, and the second one, kind of intermediate. What is the solution we are going for when we say in 12 months, as you set this up?
We're looking at facility at [indiscernible] that once all our plans are clear and we start construction to revised will publicly announce an...
Okay. So there are no land issues now is what you're trying to say.
Existing installation is still going on, but that doesn't not to our accounts also over there. So that can but we have a backup plan if that doesn't resolve that.
Understood. On the rail EBITDA front, which has fallen by almost INR 500 from INR 9,900 to INR 9,400. I wanted to check if is only an issue limited to the wastepaper, scrap portfolio of yours, which is, whatever, 2%, 5% of everything? Or are there pricing actions being taken outside that bucket also that is impacting?
I'd combination, but 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 do also Q1, the annual increments and costs that get added. So fixed costs are always rising one in Q1, so the first impact of that.
Understood. Any general comment on pricing that you would want to make as do you have seen the model share across ports as per continue to kind of go down. Yes, is the price hike that we have taken or everyone has taken in part on the haulage side, making roadways more competitive? And is there a requirement to kind of rethink on pricing itself because of that?
So a little bit, road does have an advantage with the 10% [indiscernible] per travel that came in. Although we started on -- we had no service to pass it on to our customers, that's when fully implemented now. But maybe openly you can the device in the near future and can get a better price 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 the DFC, they're also getting more riders assuming the quantity of or the quantity of movements that has acquired are the same of cargo. Is that leading to pricing pressure by itself within way the operators. Am I thinking too much right now?
No. In the last 2 years, transit as roughly be the same only. We saw the big change from 2020 to 2022, but since '22, it's been roughly the same time to time. So that's not the reason why pricing was up. But double stacking has become more accessible to other competitors also some people have taken switching out your operation up in the north or they're using some CRD. So some of that has been passed on. But with declining volume in places like Ludhiana, everyone is wanting to pull up their train. So that is no one also run NTE or underpin basically.
Yes. But just on that part, see 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 gone down from a higher of 40%, 44% to 35% in the last quarter and now 33%. What are the factors that are kind of specifically impacting [indiscernible] and how will they -- and what did to the reverse?
See on the factor is one location, which has been penetrated on double stack. And that's why the window in our sector is gaining some track. As soon as Faridabad, which we just mentioned engineering completion. Once, that is a personal view, we will get quite a good share that what we have left because that's an advantage to our competitor. So whether it is 2 months, 3 months, it is not far away. And we are closely watching, and once Faridabad becomes double stack definitely but instead our volumes will go up and we will 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.
Two questions. One is if you could comment on...
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 INR 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 imports, what used to be there, like Mundra imports have gone down, Pipavav imports have gone up. So within that carries on balance, say for a, say earnings perspective, it is in [indiscernible]
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 FY '25 now, is that the right understanding?
DFC has given us a guidance of December 2025. So in the sector is the same that 93% of the total WDFC has completed up to [indiscernible] and the last leg of 100 kilometers, that is still going to be yours time.
The principal player in the sector has said that they'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 uplifts will be able to account to that?
We already have our Viramgam terminal, and we've been doing this for the last 5 years also. So we have this like already projected.
The next question is from the line of Jainam Shah from Equirus Securities Private Limited.
Sir, my question relates to, of course, there has been some percentage change in terms of rail corporation at the ports. But after Western DFC probably 8 to 9 quarters now, have you seen any road line from road to rail shift, of course, [indiscernible] 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 imbalance, the time of the month also, like, for example, in the last 10 days of the month, road is much more in demand rather than the first 20 days of the month. There was a modal shift from rail to road, especially in the first rail exit the DFC started but thereafter, we're only seeing maybe a minus 1% to 2% additional per year kind of growth.
Last, I think the figure was mentioned it's around 27% is on rail. But that also has a lot of factors because it includes bulk, finished wagon, specialty freight wagons, all sorts of merchandise types of rails, it includes the domestic, it includes the MP's. 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?
Maybe very a lot. We won't be able to give a attach.
Okay. So maybe because if you see our major [indiscernible] entire [indiscernible] of now is on the Western DFC, we are coming on the central part of India with near Jaipur ICDs which 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 like what reasons might have thought is not eventually coming up with the road becoming more competitive? [indiscernible]
So for longer distance for 500, 600 kilometers and above weakened realtor benefit on. So while it's say if we assume this 27% figure to be right for the country, we feel that for NCR, Ludhiana, Uttarakhand, about 70%, 80% is already on rail for our [indiscernible] container market. We are talking about bulk. There are a few things like time sensitive cargo, the refrigerated cargo, LCL cargo, which go to multiple hubs. It's still like carry on or even when DFC connect all the rails.
So our strategy still to connect to Northwest corridor or costs double stack. And this is the only proper DFC right now. So when more terminals will come in, they get all the advantages faster trains, heavier trains, and longer trains. So that's our plan.
Got it. Sir, and just last one part. Just assuming that the [indiscernible] cash inflow from the CFS division, by any chance, are you planning for any domestic kind of cargo driven that the growth number for the domestic railway has been growing rapidly.
Yes. 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 the domestics. But right now, our core is EXIM 98% of our volumes are in EXIM or new line where we're continuing to plan for that.
The next question is from the line of Lea 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 is still like this for the next 2 years at yet.
Around 6%, 7%.
Yes.
Thank you. Ladies and gentlemen, that was the last question for today. Participants that have missed out 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.