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Snowman Logistics Ltd
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Ladies and gentlemen, good day, and welcome to the Q2 FY '24 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 the beliefs, opinion and expectation of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.
[Operator Instructions] Please note that the conference is being recorded.
Today on the call, we have Mr. Prem Kishan Dass Gupta, Chairman and Managing Director; Mr. Ishan Gupta, Joint Managing Director; Mr. Samvid Gupta, Joint Managing Director; Mr. Sandeep Shaw, CFO, Gateway Distriparks Limited; Mr. Rajguru Behgal, President, Gateway Distriparks Limited; Mr. Manoj Singh, President, [ CFS ], Gateway Distriparks Limited; Mr. Sunil Nair, CEO and Director, Snowman Logistics Limited; Mr. N. Balakrishna, CFO, Snowman Logistics Limited. We also have with us Mr. [indiscernible], who has been appointed by the Board of Directors as Chief Financial Officer of Gateway Distriparks Limited with effects from the opening of the business of November 29, 2023.
We hope that you have the opportunity to review the financial statement and earnings presentation, which have been made available online.
Ladies and gentlemen, we'll now begin the question-and-answer session. [Operator Instructions] The first question is from the line of [ Yash Tana ] from [ iTot PMS ].
So my question was relating to Snowman. So my question was relating to Snowman on the transportation side. We have seen the revenues grow by 10%. But on the [ PBT ], I think we -- there has been some drop in the margins. So I would like to understand why this has happened. And I'm referring to the results release, the results especially.
And the second one, on the --, right? I mean, quarter-on-quarter, we are seeing some degrowth while we have been doing very well on this side of the business. So for the rest of the year, what is the outlook, what sort of client additions are we targeting? Or what will be the growth from the existing clients for the rest of year and probably next year as well.
This is Sunil. In case of transportation, two -- major reasons why the EBITDA or gross margin is lesser than the previous quarter. One is the season is a little lean. Usually, Q2 and Q3 are down in terms of business. So a lot of fixed costs still gets absorbed during the period. And the second reason, we had deployed [ 50 ] new [ trucks ] by the end of Q1 and beginning of Q2, which took close to a month for deployment. So we have absorbed those costs, the spending cost of those vehicles as well in terms of driver and related costs. So that's the main reason.
When it comes to -- [ distributed ] business. As you know, we have three major clients in this. What we have done, as you can see the growth that we have in terms of the numbers. As compared to last year, we have introduced close to 20 new products to our existing clients.
So there are three ways we are trying to expand this business. One is increasing our basket of supplies through the [ IPL ] services to the existing set of customers. Second is increasing or adding the new locations of these customers. So we have added one market for [indiscernible] business, which is in the Punjab. As compared to last year, we added 20 new products for our customers, which are -- and Tim Hortons . And we have three customers in the pipeline, which we expect anywhere between 3 to 6 months' time for it to materialize and come to our numbers. Thank you.
Right. And on the transportation side, you said that you have deployed 50 new trucks and I think trailers also we have deployed. So what is the strategy going forward in the -- earlier -- I mean, we are doing asset light because we don't have to absorb these costs, right? And now we are putting up upfront investments in this part of the business. So what is the capital allocation strategy in the transformation side of the business?
So transportation will continue to be asset-light only. So as you know, we had 300 vehicles, which were old. We have reduced it to 260 now. What we are doing is we are only investing in vehicles, which are very special for us and where we have an end-to-end solution to our customers. Otherwise, we are going [ and leading ]. So today, we operate around 500 trucks in our business, out of which around 260 are leased.
At any point in time, while the 500 will continue to increase, we will have somewhere around 200, 250 old trucks. We bought these -- trucks to replace the old ones, which were 10-year old, so which -- replacement will continue to be [ older ].
Right. And the 20 trailers that are [ bought ] and presentation also this announces [indiscernible] the Trailer business. So is this something more differentiated that you are trying to offer us? What is this?
Yes. So this is just an extension. What was happening was from ports to the warehouses that [ leg ] was not attended by us so far. So we are exploring that business as well by deploying these trailers. And if we find it attractive, then we will expand on this vertical as well.
Right. And then this would be a CapEx -- investment. Am I right on that?
So being trial, we had invested. But if it works well, then we will also go asset light in this model as well.
The next question is from the line of [indiscernible] from [ Dan Capital ].
Congratulations on a good -- good afternoon, sir. So this quarter, we've seen very strong traction in terms of volumes, both in railways and in the CFS business. So if you could just comment on whether this has got to do with the fact that there was a trade -- war disruption in 1Q, so is there some spillover benefit which has come through in 2Q?
And if you can also talk about commentary and outlook for the second half and how you're seeing the volumes stacking up, et cetera. And also, if you can just comment about the terminals and Kashipur, how it is shaping up? And what is the volume contribution from there?
So we expect a similar trajectory going forward for the second half as well. So this quarter had a little bit of spillover from Q1 after the cyclone. But some of those volumes were also transported by [ road because when bots don't want ] to wait for their cargo to be delivered -- backlog. So some of it came to us [indiscernible], but we expect a similar number going forward.
Kashipur continue to do about [ 3,000 ] per month, but that market is dependent on [ waste paper -- ] and imports. So Q3, normally, they go for shutdowns on the [indiscernible] the shutdown for maintenance. So maybe in Q3, we might see a small dip in imports, but other than that, it's doing well and we'll continue doing as [ per reductions. ]
Okay. And how has the real EBITDA per TEU and CFS EBITDA per you panned out this quarter?
So -- is similar at [ 9,000 CFS ] or a slight decline. That's at about [ INR 1,800 ].
Okay. And recently, when [ Railways ] has announced this busy season surcharge, are we kind of passing that on? Have we started taking price hikes, et cetera, for the same? And if you can just comment about what has been the double stacking and with the agri bit commissioning, has that helped us in any manner or any other qualitative comments in terms of improvement in EBITDA per TEU.
Yes. So the busy season surcharge was levied on 30th September with effect from 1st October. So there might be a slight delay in some contracts where we have to give a notice, but it will be fully passed on to customers. And by November, it will be fully passed on to our customers. And -- doesn't affect us because the terminal is more further at least from our locations where we double [indiscernible] so the same alignment continues for us in Faridabad and Gurgaon. So [indiscernible] and that should be there in Q4, but it's already connected to [indiscernible].
Okay. And if I may just squeeze in another question on terms of new terminals CapEx, et cetera, that we are looking at and also our thoughts on the high-speed rigs.
Yes. So we're still looking at two locations in the [ midterm ], but we haven't finalized the location. We've scouted some land options, but until clarified where they are, we won't be announcing them. The high-speed rates, we have signed up for three more rigs which will start delivery within this month. So by end of March, we should have three more rigs added to our fleet, and this will be the high capacity, high-speed markets.
Next question is from the line of [ Aditya Makharia ] from HDFC.
Congrats on a good set of numbers. I was wondering on the railway side, have we gained the market share from competition?
So it's a similar market share going on in [ MCR ] was still at about [ 17% ] [indiscernible] , we've actually lost a little bit of market share, but that's because now there's a new ICD that's running full-fledged operations. But overall, our volume is still going up. If you look at all terminals, so we're happy with where we are.
And other thing [indiscernible] because it is in both heavy, so we have been [ advertising the spot business because ] it increases [indiscernible] and give you more [indiscernible]
Okay. And just a second question, there were some news articles suggesting that [ Container Corp ] is giving up some amount of land [indiscernible] [ TKD ] because the [ LLS ] charges are going higher. So will that benefit us in a material way?
Not really because [ TPT ] volumes over time have gone down, so they're probably losing less capacity of the yard. So they can give us that surplus line, but it won't make a difference to us.
Okay. And last question, just an update on the DFC. So when will the route at least the Gujarat like be completed? And does that then benefit you even for traffic, which goes down to [indiscernible] .
So regarding [ Western ] DFC [indiscernible] 70% is already commissioned. So we are already using the DFC to the extent of around 800 kilometers. The stretch between [indiscernible]. [ So our trains, which are going towards Mundra and Pipavav ] they're already using this [ corridor ]. The second stretch which was commission was between [ Diwali and Badri ], [indiscernible] And now the remaining stretch between [indiscernible], which is close to 550 kilometers. Out of which, there has been two stretches very small --, which have been commissioned, but there is no point -- a few stretches.
[indiscernible] , entire -- has completed, which is now left around 450 kilometers. So as per [ BCC official stance ], they are saying that they are going to complete it by 31st of March, but we are expecting that it might further get delayed because there is some work, which is yet to be completed between a couple of stretches.
The next question is from the line of Achal Lohade from JM Financial.
Sir, can you help us with the absolute rail and CFS EBITDA because I presume EBITDA per TEU, what you mentioned it includes other income. Is it possible to know the EBITDA without other income, sir?
So other income, only [ INR 2.8 crores. ] So it's hardly any effect this quarter. So broadly, you can reduce a couple of hundred [indiscernible]
Okay. Okay. Got it. The second question I had, is it possible to get some sense in terms of our first half volumes, how much was actually destined for Mundra, Pipavav and JNPT?
About 95% -- about 90% to 95% is for Mundra, Pipavav and only 5% to 10% is for JNPT.
Right. But within Mundra Pipavav, what would that split be?
65, Mundra, 30, Pipavav, 5, JNPT, you can take that as a rough average.
Understood. And has that changed materially over the last 2, 3 years, 4 years?
Mundra's volumes have gone up slightly more than Pipavav. JNPT also was maybe at about 15%, which has now come down for the...
Okay. Understood. Now the second question I had with respect to the volumes. If you look at the volumes, Q-o-Q, the -- have seen a kind of a 14%, 15% kind of a jump. I mean we have grown by about 12%. So is Ludhiana the only factor which is playing out here in terms of the slightly lower than the railways volume growth? Or first of all, is that a right way of looking at the aggregate industry growth number?
So the 14% is for containerized volume that [indiscernible]
[indiscernible] EXIM -- volumes in million tonnes.
It can depend all across India, we're talking about. So there are routes where we don't fly our trains. So we have to look at the market growth and then the market share market -- growth in [ MCR ] was at about 8%, whereas our terminal [indiscernible]. Faridabad saw some decline. So overall, it balances out and that's why our market share hasn't changed, it's still at 17%. The overall volumes for us are at 1% growth, which we expect to see going forward.
Right. And when you said you're kind of looking at maintaining what you have done already, is that an absolute number? Or is that the growth number you kind of hinted at 12% volume growth for the second half?
[ 12%, 4% ] year-on-year, basically H2 versus last year H2.
Okay, okay. Understood. And about this busy season surcharge, what is the extent? And what is the visibility here? Is that only for a few months? Or is it around the year effectively? Is that a haulage price increase [indiscernible] has taken?
They've done it for 9 out of 12 months. So effectively, it's throughout -- the association and industry is taking it up because it increases the cost of logistics for the end customer. And with the shift from road to rail that everyone wants to happen, this is a step in the opposite direction. But for now, it's [ fair to say. ]
Right. And the rationale is to cover the increase in cost? Or I mean, is there any concession what for which they are charging the premium?
The situation hasn't changed in terms of concession, but I think it's just for [indiscernible] to increase their revenue.
Got it. Got it. And can you help us understand in terms of the CapEx, what should we budget for FY '24, '25 and '26?
So next 24 months, we have about INR 300 crores, still the same guidance that we gave, INR 100 crores each for two new locations, balances for completing [ Yapo ] and vital replacement and some equipment replacement.
And what is the expectation on Jaipur? By when do you think it will commission? And what scale up can we look at?
We expecting to be operational in Q1 next year. There were some delays in local permissions due to the election coming up. But Q1, we should be operational. And we're looking at a 4- to 5-year payback overall.
Got it. Got it. Just one more question. Sorry, I'm kind of going back to the [ industry number. ] Is it possible to get some sense in terms of the total size of the market? How much of that already on rail, how much is potentially can come into rail because of [indiscernible]
It's very hard because the data is a bit scattered and unorganized. So if we have to rely on external reports because there's no central mechanism to [indiscernible]
But any guesstimate you would have, [indiscernible] ?
So [indiscernible] will be very gradual, maybe 1%, 2% incremental year-on-year. Then you have to look at the overall macro -- take place on the GDP as well as exports coming back, that should help [indiscernible] factor also. So again, it's hard to put a number on it. What we can see incremental because of DFC on this.
Got it. And if I may ask a couple of more with respect to double stacking, if you can help us understand how -- what was the ratio in 2Q and vis-a-vis last year?
We're at about 36%. And last year, it used to be more, it was at about 43% last year.
And this reduction would be because of the imbalance, is that so?
Yes. And the export side has reduced double stacking happening.
Right, right. Would you be able to tell us the mix? What is the mix of imports and exports in this quarter and last year same quarter?
About 58%, 42% in favor of imports. Last year, it was maybe 52%,48% kind of numbers.
Okay. Understood. And just last question with respect to the pricing. You said that you're going to pass on the entire cost inflation with respect to -- and surcharge. Is that the case even with the others? And what is the absolute increase in the pricing here [ part to you ]?
It's 10%. So our average revenue per TEU is about [ 35,000. ] So [ you think ] depending on the way it mix, the type of container and also deliveries and [indiscernible] [ 2,000 to even 5,000 ] in some cases per container. And yes, it will be fully passed on.
And if others have also done...
Everyone passing it on with different [ dates ].
Next question is from the line of -- Shah from [ Daman Securities ].
The question is for Snowman Logistics. What was the increase in realization for this quarter in the warehousing business Y-o-Y on Y-o-Y basis?
Yes. This is Sunil here. So as I told last quarter, every year in the month of March, April, our contracts get renewed. And we had a price increase between 5% to 6%. But when we take on a company level average because we have added a lot of dry warehouses recently, the average may not show that. But when we look at temperature-controlled yield versus the dry yield, you see that trend of anywhere between 5% to 6%.
Okay. Okay. Thanks for the clarification because that was the next part of my question, because our blended realization look flattish if I look at last 6 or 7 quarters number. So on a like-to-like basis, if we compare only the coal change realization use thing, you said it would be [ better by ] 5% to 6%, right, only for coal [indiscernible] ?
So that should be anywhere around 5% or if we say only [ cold-chain ]ASP, but maybe we will see if we can get back to you with the separate segment -- numbers, [ contractor control versus the dry ].
[indiscernible] So in absolute terms, [indiscernible] increase. The percentage wise, you might see actually is not [indiscernible] revenues and margins in [indiscernible]
Got it. Got it. And sir, if I look at the return on capital [ employed for ] our warehouse business, we have improved marginally, we are maybe around 9% to 10%. So just wanted to understand, is this the deep ROCE for this business, given that we are already at 91% capacity utilization or is there any further scope whether we can get to that 14%, 15% kind of market --, then what would be the levers for that?
So see, ROCE when we calculate today, it is at the company level. Whereas most of our overheads, whether it is [indiscernible] [ or people ] [indiscernible] for almost double the size of the capacity that we have today. So we are looking at it from an [ out-term perspective ]. But if we go at the unit level, the unit level ROCE will be somewhere around 15% to 18%.
For warehousing. And what would be the levers to achieve that 15% ROCE?
At company level, the main thing would be to increase capacity and optimize the overhead as soon as possible and some correction in pricing, which we are going to the extent of 5% year-on-year while our input inflation is anywhere between 3% to 3.5%. So these two things will drive the ROCE in coming years.
Okay. And in the cold-chain warehousing space, what is the industry scenario like? Because during COVID, maybe there was some sort of consolidation happening throughout the industry -- unorganized sector went out of the business. So right now, what is the competition and industry scenario like?
So there is a small amount of investments coming in 1 or 2 warehouses are being invested by regional operators. So that is continuing. From a demand side, we see good demand, particularly the top three segments, which are [ dairy ], [indiscernible] They have -- they are showing quite promising volume growth. So I mean, while there are capacities coming, there is demand also is there. And we are also aligning our investments accordingly.
The next question is from the line of [ Krupashankar ] from [indiscernible] .
My first question is on the rail side of things. Just wanted to get a sense on the underlying market. So given that the commentary of growth in second half is about 12%. Just wanted to understand, given the slowing exports [ as well as some ] have mentioned with respect to key sectors witnessing slowdown on the import side as well. What is driving confidence of a 12% growth in the second half? That would be our first question.
So in Q2, there has been some uptake on the export volumes, particularly in [ NCR ] agent. [indiscernible]. So there has been some good movement of export of auto, which has taken place in the [indiscernible] [ plus ]. There is also some growth in the [ resort exports ], which has led to some growth on the export side. And on the import side, there has been, again, a robust demand of -- because of the robust amount of auto, there has been both growth in scrap polymers and electronic items. So these are the major items which led to growth in Q2.
Right. But going ahead, do you believe that given the growth, which [ is there or weakness ], which is there in [ export sort of thing ], do you see that imbalance getting [ skewed in more in favor of ] imports and that can have a toll on our profitability?
So what we are looking at -- we look at our October numbers there, like as Mr. [indiscernible] mentioned that due to the maintenance and plant shutdown plan in the month of October, November, there will be some downward trend on the [ boat ] side. But we are expecting that in the month of December, things should improve. And with the improvement in imports and as well as exports we are expecting that our volumes on the [ both ] sides should improve. And historically also, we have done good volumes in the month of December that should cater to whatever the downward trend we have seen in the 2 months that should be taken care by the good volumes of December, what we are expecting.
Understood. And with respect to your profitability on the rail side of things, we still are on course to achieve the [ INR 1,000 EBITDA ] per TEU, that is the target, right? Is there any change in that?
No, [indiscernible] the same, but that only come in after Jaipur, Faridabad being [ double site ] and JNPT also being double stack.
Understood. Last one, if I may. Just wanted to get a sense that given the commissioning of [ Dadri to the Rewari ] piece of -- has there been any change with respect to how trade has behaved with -- movement of goods? Meaning, any underlying change within goods were coming to [ Rewari ] and then moving on -- versus right now, now moving from -- a itself?
So this was just the operational cost advantage for [ Concor ]. Now they can directly [indiscernible] from -- instead of [indiscernible]. But in terms of competition with us, [indiscernible] is a different [ catchment ] area, which we don't really compete with. [ It doesn't make a difference to our business ].
The next question is from the line of [ Abhijit Petra ] from [indiscernible] Alpha Investment Management.
Regarding...
[indiscernible] can you please switch to the handset? Your voice is very low.
Yes. I think it should be better now. So regarding the rail volumes and overall volume guidance of [ 12% ], as we can see last year, we had a very weak base in Q3 because of one-off [ tracking ] works with almost 3,500 TEUs, which were lying at the port. So the 12% volume growth guidance that you are sort of giving, it sort of takes that into consideration as well? Or I mean -- look at it?
Yes, there was a slight decline. We're just looking at the whole half because even last year, Q3 volumes went into Q4 then -- so if you just look at [ H2 and H2 than 12% is ] [indiscernible] because if we look at it, Q4 last year was significantly higher than Q3, so [ it even out ].
Got it. Got it. And in terms of [indiscernible] ,just to be sure if I heard it right, you said that you'll get the volume rolling in from Q1 of FY '25, is that right?
So Q1, it has become operational and it will take about 6 months to ramp up volumes over there. So H2 of FY '25 is when we should start seeing softer volume of revenue coming in from [indiscernible]
The next question is from the line of [ Priya ] from Equitas Investment.
Congratulation on good volume numbers. My first question is in regards to [indiscernible] . So what kind of revenue are we looking from [indiscernible] in this quarter?
So overall, we have to look at Kashipur, not as a stand-alone entity, but Kashipur -- business is being done from the Gateway [indiscernible] and the [ ICT ] business is still a more [indiscernible] as we acquired it. But eventually, we have plans to merge it. So we are doing at about 3,000 TEUs per month over the -- an average revenue for -- is about INR 40,000.
Okay. And what -- so we were expecting it to reach around 6,000 TEUs per month. So when do we see this happening?
That is a very long-term guidance that we had given. So we have crossed [ INR 1,000 in 1 month, ] including [indiscernible] to show the market potential and that we can eventually get to in 3 years.
It will take around 3 years to reach INR 6,000?
Yes. I mean, technically, we can increase our volumes right now, but it's at the cost of [indiscernible]. It's already an import having terminal, so we don't want to take further imports. So we'll keep that in mind while growing our volumes.
Okay. And so do we have competition there in consequence just like you said [indiscernible] corporations?
The three terminals there right now, including us and the fourth one is under construction.
Okay. So do you think that the volume -- incremental volume would be easy to [ read ] at the full potential?
Yes. I mean, we should be -- we are on track, and we're already doing more than what we had initially thought within this year itself. So we should see the same trend continuing.
Okay. So by the year end, do we see the [ 3,000 ] mark going upwards or more or less to be consolidated at [indiscernible] ?
Sorry, by year-end, you're asking what [indiscernible]
Do we have a milestone basis target for [indiscernible] that we want to -- forward? Or for the year-end, we are more or less seeing it will be consolidated at [ 3,000 ] per month?
You say [ 3,000 to 3,500 ] monthly average [ will be there and ] in the export situation improves, once that improves, the [ meeting start ] taking on more imports as well and going to [ 4,000, to 5,000 ] range maybe next year.
And in [indiscernible]
[indiscernible] , your voice is not audible. Can you speak -- louder or come closer to the handset? [indiscernible] was is not audible. We will now move to the next question, which is from the line of [ Rohit from Samatva Investment. ]
So my question is on Snowman Logistics. Firstly, I would like to know the [ Amazon Fresh part of ] the business [indiscernible] what are we exactly doing [ for the bit of lead cold chain? ] [indiscernible]
So what we do for them is a fulfillment center, which includes frozen, chilled as well as dry, and it also includes fresh fruits and vegetables where we do sorting [ grading ] and packing for them. So complete end-to-end activities in the fulfillment center. We have four such fulfillment centers operational as of now, [ Deli, Bombay, Pune and Albaad. ]
[ Amazon, ] I was reading somewhere Amazon, [indiscernible]. So how much of [indiscernible] we the only player who is handling it for them? Or like, [ what would you have wallet share ] [indiscernible]
So there are two ways. Amazon does their groceries and fresh [indiscernible] . One is [ hyper local ], where they are tied up with the supermarket change. So there, [ we have no room to play ]. And the second one is the product which moves through the fulfillment center to their spokes and from there the home deliver. So wherever it is through fulfillment center, we are their partners. And as of now, it's only with us.
Got it. Okay. Sir, my second question would be on the transportation part of the business. Could you explain how [indiscernible] because that's a profitable part of the segment. So how are we differentiating ourselves with our competitors [indiscernible]? And what will be the revenues if you can give you that number for now, sir?
Sorry, you said transportation [ or so, sir ]?
[indiscernible], sir. So within [indiscernible] platform to the various fleet owners, right? [indiscernible]
That's not snow, sir. It is no link. [indiscernible] Snow Link is a technology platform where we help various port operators to come on board with us, and we use their trucks to serve our customers.
And what would be the revenues from [indiscernible]?
So the current run rate of revenue is close to INR 50 crores per annum from [ this technology platform. ]
The next question is from the line of Amit Dixit from ICICI Securities.
Yes. I had a couple of questions. The first one is that you indicated earlier that the CapEx for the next 24 months is expected to be [ INR 300-odd croreDato-DXd ] Now given the first half, the CapEx has been much lower at around [ INR 20-odd crores ] and [indiscernible] terminal is also getting completed, so do we expect CapEx to be much higher in H2? If so, what is the number that you would like to guide? That is part A of the question.
Part B, is that if you can split this INR 300 crores into the CapEx for rates and for term loan? Because I guess there are two more terminals you're looking at developing very soon.
Yes. So the two new terminals would be INR 100 crores reached. So if you remove that and the balance, we will spend about INR 40 crores to INR 45 crores on -- so that will come entirely in H2 this year. Then we are going to -- we've already done it in October, about INR 30 crores CapEx on vehicle fleet replacement, which was in [indiscernible] and balance will be for maintenance and small upgradation at our existing terminals.
So H2 should see around [ INR 70 crores that INR 30 crores ] that you have done for this fleet and INR 40-odd crores for [indiscernible]
Yes, plus [ 10, ] maybe you can add.
Okay. So the second question is that some of your peers have indicated that they are going to pass on the benefit -- the cost benefit that you get in double stack in to the end customers. Are we also thinking on the similar lines or our better, let's say, the [indiscernible] connectivity or other value-added services more than suffice for that?
Yes. So we've been double stacking since 2010, '11. And basically, our pricing only we build it in to an overall level of discount that we can go to, but we don't offer a specific discount for double stack. In fact, no one in the market is really doing an offering a specific double stack rate.
[indiscernible] you kind of guarantee if that container will go on the lower [indiscernible] stock? So it's just a blended discount that we end up passing it. And one more thing which you asked in the previous question, just to [indiscernible], we haven't bought them. We've leased them so there's no CapEx from the rig.
The next question is from the line of Sumit Kishore from Axis Capital.
My first question is on depreciation in first half of the year. It seems to be down 8% year-on-year. Is there any specific explanation for that?
[indiscernible]
Sorry to interrupt, can you please come closer to the speaker?
Can you hear me?
Yes, sir, please go ahead.
We have taken it [indiscernible]
Sir, your voice is still not clear.
Basically, we had some rigs which we purchased in 2007. So the life as per the schedule and income taxes over for depreciation after 15 years. So those are no longer being depreciated as they at [ 0 value ]. So that reduction has come in.
This is more like a recurring number.
Sorry, I can't understand.
Yes. So this is the recurring number here on, yes, from this piece, yes. Okay. The second question is around the double stacking. We heard the Concor mentioned on their call that Q2 rates double tax or an increase of almost 60% on a year-on-year basis. So -- and for the first half, double stacking was up more than 30% for them. So just wanted to understand your experience where the volume of cargo carried by Gateway has actually seen a reduction in double stacking. So how do we reconcile the two?
So it's been a reduction for us because on the export side, we're double stacking less, and it's increased for Concur because [indiscernible] and they do about 20,000 containers a month from there. So that is added boost for them.
Okay. So once this Faridabad is double stacked for you, what would be the sort of data in volumes that you will see in terms of double stack rates?
About 10% of our volume comes from [indiscernible] most of that can then be double stack.
Okay. Okay. And finally, if I have to think about your volume growth in Q2 on an organic basis, which is -- is it the right way to look at ex of Kashipur because Kashipur was not in the base last year. So if I exclude the [ 9,000 odds that ] you would have done in Q2 for Kashipur, volume growth would be in low single digits. So is that the right way to look at numbers? And why is it so low as compared to, say, the sector is large, where -- volumes have grown in double digits and even Concur has seen almost 34%, 14% growth.
So -- volume growth year-on-year for this quarter was 3.5% only.
Handling -- report originating volumes, which were up almost 14% to 15%.
Is that including domestic? Or...
Excluding domestic.
Okay. Okay. [indiscernible] , basically, [indiscernible] aided the growth but because of our [indiscernible] and network advantage, we are able to offer better rates at Kashipur and that's why we've seen a volume growth even within Kashipur compared to before we took over other locations like we mentioned, Ludhiana is down, but [indiscernible] is going up and Faridabad slightly down. So we have to look at it overall mix basis because then we can accordingly price to the customers.
Right. And at the beginning of the year, where the impression that we had was that Kashipur is like an inorganic addition. It was not there in previous numbers. So it will help push up growth. The organic growth will get pushed up because of --, but that does not seem to be the case, which is why I asked the question.
Yes. So other existing locations haven't grown as much as [indiscernible].
Got it. So in case of -- coming in next year, next to, what kind of monthly run rate do you expect from [indiscernible] ?
Next year second half, we will probably exit at anywhere around 1,000 to 1,500 -- but long term, we should see 3,000 to 4,000 TEU as of this location.
The next question is from the line of [ Priya Mita from ] Equities Investment.
Question regards to double stacking. Could you help us understand the dynamics of what happens to the realization and your margins when you double -- And you said that we can do double tracking and [indiscernible] So JNPT, I understand it will happen when the [ DFC ] will get complete where [indiscernible] happened and what incremental benefit would we get out of it? That's my first question.
And second question is the rates which we are buying, which we are leasing basically the three rigs, how would it benefit in terms of the realization, like the throughput base again?
So in double stacking, so what happened is that the container which we load onto the upper stack, so we pay only 50% of the haulage to Indian Railways. So -- but that is something that is the advantage of double stacking. And how do we do it in the sense right now, we are doing at [indiscernible] we are expecting that we are going to do it another three months' time [indiscernible] because there is some -- construction and -- which we are expecting.
Then what we do is apart from Mundra and Pipavav volumes, which we double stack from -- we also carry the JNPT volumes through our [indiscernible]. So that is a stretch of around [ 850 ]kilometers from [indiscernible] so we double stack it. From there, we send it single back to JNPT. So that is how, as of now, we are doing double stacking.
And in terms of the kind of rates, the weight capacity you're asking. So right now, we are having rigs which are having a capacity [ of 68 metric tons. ] Lower and upper deck put together, we can load up to -- but the new rigs, which we have ordered on a long-term lease, they can carry as high [ as 81 tonne. ] So that will increase the -- not only the loadability of the rate, but also increase the double-stack capacity of the rigs also because there are heavyweight containers, which like scrap and all so which are already [ 26 and 28 tonnes. ]
So if you load -- [ scrap container is already, ] they cross that particular limit. But once this new rigs are with us, then we will be able to do more -- so that will the advantage we'll be having.
In terms of any numbers, could you help us on how much is -- kind of hypothetical situation, it works at full capacity? How much would [indiscernible]
It's hard to say, it depends on the volume mix, what would -- rely on. But generally, if you see what our existing numbers are the revenue per [indiscernible] is roughly INR 3.5 crores. So we can expect to [indiscernible]
Okay. So how much do you [ use will it add ]
[indiscernible] from [ 4,000 to 5,000 ]
[indiscernible]
This is the capacity that we get added by these three [ claims ] coming in.
The next question is from the line of Aditya Mongia from Kotak Securities.
My first question was more on pricing and margin for the sector. From what I kind of understand, Adani Logistics has been aggressive on pricing for some time -- recent interaction with Concor suggest that [indiscernible] customers. They've also said that their own margins are pretty high. Are you seeing any pricing moves that are made [indiscernible] the margins for the sector? That was my first question.
Sir, general pricing discounts have been happening for some time. And it's an overall marketing depending on the [indiscernible] rates that are being caught by competition, but we haven't offered those type of discounts yet. And in terms of the busy season surcharge, we have acceptance from most of our customers already about 90% is done. So it will be passed on at cost.
Okay. But no such indications coming to you wherein the margins can come under pressure?
Nothing significant to report it.
Understood. The second question that I had was on your comment that [ DSV ] in the company's way of thinking would probably add 1, maybe 2 percentage points of growth, okay? This again, I just wanted to kind of get a sense as to what are the imponderables that you are looking towards when you are coming to this kind of an assessment, what are the problems in shifting from [indiscernible]
So in terms of road to rail, if you look at our specific sector for container only, we have already [indiscernible] reached [indiscernible] When Indian railways as the entire number is at say [ 25%, 30%, ] the accounting [indiscernible] be converted to containers also [ recounting ] small distance also domestic also. So everything coming under that scope is at 25%, 30%. So for our specific sector, the growth will be much lesser in terms of [ shift of rotary because ] a lot of it has already happened.
Understood. The other question that I had was, again, your comment on JNPT, where you basically said that the share of revenues has actually declined over time for you. I would have thought that -- would have -- in improving their shares. So that was one -- I had and post DFC commissioning, would anything change from your perspective as to the share of JNPT in your own numbers?
Yes. So [indiscernible] helps us optimize our cost out of JNPT. Ultimately, it's the end customer decision which port to use. So people in North India have preferred to use the Gujrat over JNPT because of distance, time and cost. So it's not our decision as such. And going forward, when DFC is connected, we do think that from shipping line would prefer calling on 1 port rather than 2 or 3 on the western side. So there could be a shift back to JNPT, but we'll have to see how that plays out. Again, it's not in our hands. It's depending on the shipping line rates.
Understood. And the last question from my side. Your CapEx, even on a 3-year basis is probably more than the [indiscernible], and your leverage is not very high. What is the kind of capital allocation or [ maybe a dividend distribution ] policy that you would want to kind of guide the investor?
Yes. So we'll continue paying the dividends that historically we've paid every year. I mean [indiscernible] rate last year, and we hope to increase it going forward as well. After taking care of all our CapEx and debt repayment requirements, you would have seen we've also increased our [indiscernible] over the last couple of quarters. So that's one avenue that could be done as well.
The next question is from the line of [indiscernible] from -- India.
Yes. [indiscernible] a good growth in volume that we have seen slight [indiscernible]
You're not audible. We can't understand your question.
Is it better now?
Yes, ma'am, please go ahead. Yes So my -- question is -- to EBITDA margins. We've seen good growth in volumes, but there has been a slight EBITDA contraction. So how do we look at it? And for the -- like H2, what kind of EBITDA margin should we look at?
Yes, [ it's been a very ]slight drop at that really depends and keeps varying month-to-month, quarter-to-quarter depending on the mix of volumes. We expect a similar number for second half also until the export situation improves. We don't see an improvement happening.
Okay. The second question is with respect to the two new terminals that we were planning to look out for. So any update on that?
No, we're still finalizing. So once we acquire the land, we'll be disclosing to the public of those locations.
Any specific time line on [indiscernible] should that come across?
No, we don't want to comment on that. We'll only do it once it happens.
Okay. The third question with respect to [indiscernible] stacking. So -- or like is there a delay or what is the situation over that?
So the work is done by railway contractors, not by us. So it's not in our hands exactly. The work is happening, but it's expected to finish in Q4.
Because I think it was expected by October, [ is not ] wrong?
[indiscernible]
The next question is from the line of [ Rishab Somani from Earth India Ventures ].
My question is for Snowman Logistics on the segment and operations. So what kind of growth are we expecting on the top line and the bottom line going forward? And what would be the key drivers [indiscernible]
So as you see, we had started slow distributed business last year. And for last financial year, it was the 9 months business and this year, it is full. And we are expecting anywhere around 15% to 20% growth coming over last year in terms of revenue because of [indiscernible] this business.
And since we are investing in expansion in Kolkata [indiscernible], these facilities will be up only by the end of this year or beginning of next financial year. So therefore...
[indiscernible]
No, that's about [indiscernible] reserve, which is the warehousing business, that the revenue from those facilities will come only next financial year.
Okay. Can you give -- break down the revenue growth in terms of the segment and the margins -- that we're looking to sustain in the future?
So whatever is the trend today, the same percentages of EBITDA or margins will continue from a percentage point of view. And as I said, we are expecting a 20% growth over last year in terms of [ DNA. ]
Across all segments?
Across all segments, yes.
Okay. And so will this mostly be led by [indiscernible] or are we expecting 20% in all of each of them?
No. As I said, it is across all segments. So maybe slightly more, but we are expecting all the segments to [indiscernible]
The next question is from the line of [indiscernible] from [indiscernible]
[indiscernible] again regarding Snowman. So what is the utilization levels of warehouses that we might have opened in the last, let's say, 6 months or the last 2 or 3 quarters, if you could help me with that number?
So we are at about 75% at -- and we are at about 50% in [indiscernible] . That is basically seasonal. So this is a lean season for that region. And typically, it would go up to [ 75%, 80% ] in a month's time. And there is one dry warehouse, which we had leased a few months back to get into a dry business. That is 100% utilized now, it is dedicated to a single client.
This is the [indiscernible], sorry. I missed it.
No, it is at [indiscernible]
Okay. Okay. And the [indiscernible] that we commissioned, I think last quarter was [indiscernible]
No, there is no -- that's a dry warehouse that we have leased. So it's dedicated warehouse for a client. So it's 100% utilized.
Okay. Got it. Got it. And sir, you spoke about a company level [ ROC ] improvement and some other drivers for the same. So I missed that partner, if you could please repeat that. And also on the PR side and the transportation side, right, so these are more accretive businesses. So are we expecting a higher growth from them? Or are we expecting a similar -- because in that sense, if the profitability mix is not changing, how are we expecting the overall [ ROC ] improvement to come in?
So see, there are 3, 4 drivers to this. One is we're going asset light in both warehousing as well as in transportation. This we expect to help us improve our company-level ROCE, which is typically the Snow Link as well as the [indiscernible] where the CapEx deployment is negligible.
And the second thing is the overall pricing correction that we are driving, where we expect price correction to happen to the extent of 5% to 6% every year and against our inflation of 3.5%. And the third thing is overall optimizing our overheads, which are there in terms of people and the technology where the investments have already gone in, and we have geared up for almost double the revenue that we want to achieve.
All right, right. And any number that we are targeting, let's say, in the next 2 years?
[indiscernible]
In the next 1 or 2 years, any number that we're targeting?
So we are working out our next 3-year business plan. So maybe by the next call, we will be able to share some numbers with you.
Thank you very much. Ladies and gentlemen, that was the last question for today. Participants [indiscernible] due to time concern, they can reach out to the management and [ SCA ] for Gateway Distriparks Limited [indiscernible] Snowman Logistics. With that, we conclude this conference. Thank you for joining us, and you may now disconnect your lines.