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Snowman Logistics Ltd
Earnings Call Analysis
Summary
Q3-2024
The company is set to increase its stake in Snowman by 4% this financial year, with the potential of crossing 50% ownership, depending on Gateway's railway business performance and cash flows. On the operations side, the company expects continued double-digit growth in the rail segment. However, the Container Freight Station (CFS) sector anticipates a possible slight decline. For the coming years, capex plans include new terminals with costs ranging from INR 100 crores to INR 200 crores per terminal, and completion of the Jaipur Terminal with up to INR 60 crores. Equipment upgrades are also anticipated. The effective tax rate will be around 17%, with the benefits set to last until at least 2031 or '32.
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Ladies and gentlemen, good day, and welcome to Q3 FY '24 Earnings Conference Call of Gateway Distriparks Limited and Snowman Logistics Limited.
This conference can be contained certain forward-looking statements about the company, which are based on beliefs, opinions and expectation of the company as on 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 this conference is being recorded.
Today on the call, we have Mr. Prem Kishan Dass Gupta -- and Managing Director; Mr. Ishaan Gupta, Joint Managing Director Mr. Samvid Gupta, Joint Managing Director; Mr. Sikander Yadav, CFO, Gateway Distriparks Limited; Mr. Rajguru Behgal, President Rail, Gateway Distriparks Limited; Mr. Sunil Nair, CEO and Director, Snowman Logistics Limited; Mr. N. Balakrishna, CFO, Snowman Logistics Limited.
Now we open the floor for question-and-answer session. [Operator Instructions] The first question is from the line of Achal Lohade from JM Financial.
Sir, can you help us the EBITDA number for rail vertical and the CFS vertical, please?
Yes. So the rail EBITDA -- is almost INR 9,700 and CFS is slightly below INR 1,300.
Can you start with a broad split of this other income, what you are -- I mean it is very small, INR 2 crores actually in this quarter, but it is like it 50-50 allocated between CFS and rail? Because I presume the revenue EBITDA number include other income, right?
Yes. So it includes other income, slightly more towards the rail side. I don't have the exact split right now, but it's primarily all business-related other income. It's not any one-off sale or anything like that. So it's more a side back of some old provisions.
Okay. So if we look at the margins, Q-o-Q and Y-o-Y the compression and obviously, it's also to do with the busy season surcharge. Can you help us understand where are we -- have we passed on fully? Or there is still some pending pass-through, which is yet to be done?
Yes. No. So Q-o-Q, we have improved on the rail side. Even on the -- even Y-o-Y, the rail site margin has actually gone up. CFS has taken a big hit. So their profitability is coming down as competition is increasing.
On the BSS part, we have passed on mostly now to most of our customers. And there was about -- as we passed on to everyone now that was anywhere ranging from 30 to 60 days lag between some customers. So some of that hit has also been taken in this quarter.
Understood. So if I may ask, how do we explain the Q-o-Q improvement in the margins? And how do you see it sustaining going forward? Do you see this is a new range, INR 9,700 plus? Or you think there could be any one-off or any particular mix, which has driven this improvement?
Yes. It's basically a change of mix and increase in double stacking. So this quarter, we did slightly more. But the range will vary anywhere some INR 9,000 to INR 10,000 is what we've been seeing on a good quarter. It can be higher depending on the imbalance and lower double stacking, MT running, et cetera. So the range will still stay quite broad in that sense.
Understood. Now if you could talk about the momentum I see in the press release, you have mentioned about the difficulties on the export front. But if you could help us a bit more understanding on the imports as well as exports? And how about the market share in both the buckets?
Yes, overall, there has been -- growth in Q3. And you can see that is reflected in the -- also. But at the same time, we are increasing our capacity, both on the rail side. We have 33 rails now -- more value because of the financial year. So we anticipate a spur in demand post election later in the year. The way everyone is going in the Indian economy, there has to be a downside. And we -- time it, but we should be ready for it, whatever it happens.
Understood. So how do we look at the growth? That's my last question. I'll follow back in the queue, sir, in both the verticals in terms of volume and the margins. Yes.
Growth depends on various sectors, like the DSS rail has become slightly expensive than it was before. So some of the volumes are shifting to the -- or has shift to the -- but we have been able to sell the balance with some double stacking and all that. But to give a guidance, when it will happen, I mean, it will be very difficult, but we are keeping ourselves ready to structure the growth medium to long term will definitely be done.
And just to add on the short-term side, there will be some issues regarding with this Red Sea movement that's been happening, that there has been a shift also in the export to import imbalance. We're back to 60% imports, 40% export. So we have to wait the -- before giving a proper guidance for next year.
Next question is from the line of Bhoomika Nair from DAM Capital.
Just rail EBITDA per TEU at INR 9,700 for the last couple of quarters have been in the range of about INR 9,000. So there's clearly a very sharp improvement over the last 5, 6 quarters. This is despite probably some bit of the rail surcharge coming through has also the export, import in balance. So can you elaborate in terms of how has -- how much double stacking has improved? And what kind of mix for you is in that we've seen a higher share already to other -- what to say ParidabarMubiana, which is what is driven as you can just throw some more color on this margin profile.
Yes. So -- originating volumes are going up, and that is a direct double-stack service. So that has improved the margins and throughput over there. In Q1 this year, we were at about INR 9,500 EBITDA per TEU. Q2 was less or closer to INR 9,000. So it is fluctuating a bit. But it depends on a lot of factors like the volume mix in balance, different types of customers who give us better margin, that can also vary up and down, some spot business that we pick up, MT running is we managed to reduce by getting something on the return load. So all those factors have contributed this quarter.
Okay. And is there any sense of how has double stacked moved during the current quarter say, versus the last couple of quarters? How is that fiber in terms of an index or a number of TEUs handled or number of weeks or there were metrics that you are comfortable sharing?
Yes. So it's about 42%, and we were about 35 to 37 earlier. Again, it fluctuates a lot quarter-to-quarter, and it depends on the volume mix also. So if it's direct for -- or if it's -- or -- box is being carried on double-stack buyers at all those also make a difference. So here, we had more originating cargo of -- so we got maximum benefit of double stack.
Got it. Got it. The other question is on the Kashipur. So if you can talk about what are the current volumes like, how are the rail versus the -- volumes kind of stacking up? And what is the expectation going forward? And also in terms of the -- what is the status of the same of it being operational, et cetera?
So on the Kashipur terminal, we're still averaging about 3,000 to 3,500. Again, there is an imbalance situation over there where it's almost 2/3 import, 1/3 export. So until exports improve, we don't want to pick up more imports. That's why we're not seeing a rapid growth over there. But long term, we are targeting over 5,000 TEUs per month over there. And Jawor, we are still -- we're working on it.
Now we're looking at an alternative arrangement where we make a road-based CFS and then use -- siding, which is right across our facility. So we have to rethink on our plans over there because it's taking some time. We'll probably have more information available next quarter once we finalize our plans for that facility.
So there the rail approval is get to come through and -- is taking some time. Is that understanding clear?
Rail and some land-related issues as well.
Yes. I mean...
On the Kashi side, you were asking terminal and bio I just wanted to clarify all -- 100% of terminal volumes of Kashipur are guided on our trains only. We're not doing any third-party business out of Kashipur to answer that.
Okay. Sure. Yes. On -- you said there was some land-related issues. If you can just elaborate because the -- very clear -- in terms of feeling there was a note which was given around that as well. So if you can just explain what is this aspect with?
Yes -- the total land -- of which -- over reasons have been aggregated by some of when we have a normal control the land to us the demand to say about the coming that has been questioned, I mean, and we are the government -- clear that issue -- uninteresting that the entire infrastructure of the readout- will be going ahead. And until the time in this month issue is clear, we will be then losing the CRT, which is just across the facility -- itself -- and it is economy of facility.
So we will be in over and on -- other infrastructure is ready. We started that -- but that means that there will be a slight now. How much delay will there be that we are evaluating and we'll be clear in the next couple of months. So the whole operations will be delayed by at least to few months than quarter.
Sure. And if I may just squeeze in on this whole rights issue, how is the outlook in terms of the current quarter or the way ahead? I mean have you settled down? Are we seeing volumes normalizing? Or is this still a challenge in terms of the import/export imbalance and things like that?
Rajguru here. So regarding the Red Sea issue, so the problem started in mid-December. So that effect is -- it started now. Effect is coming in January, but we are experiencing spillover volumes that will happen in February and March. So hopefully, the volumes will start pouring in. And export bookings are also like we are having the trend that they are down and because of the low inventory availability since -- because due to Red Sea mostly the cargo, which is coming from Europe and East Coast of U.S. So that is taking a lot of time. So that has put a stress on the system, and we are seeing low volumes. But definitely, what we are foreseeing is that we should be able to catch up in the month of February and March.
Next question is from the line of Krupashankar NJ from Avendus Spark.
If you can elaborate on what would be your market share in CR, Louisiana and -- region right now?
So in Q3, our market share in NCR has been in the range of 16% to 17%. And in Otracon, our market share was 27%. And at Ludhiana, it was close to 22%. Yes, you are able to hear me?
No, I couldn't hear you. After total lost it.
Okay. Okay. I'll again explain. So in NCR, our market share was in the range of 16% to 17%. And in Utrakand, so our market share stood at 27% because now we are seeing some increase in export volumes there. And -- we are having a market share of around 20% as of now.
Okay. Okay -- challenges, competitive challenges in Rubiana because of a new ICD that is continue to get in -- is it continuing to be worse over there?
So there are multiple factors. So one is that the new ICDs are coming up. There's another that we have also decided to do the business wherein we have decent margins. So we are not doing a business so -- where the margins are less. So we have consciously taken a decision not to do that business.
Right. Right. Now my second question was more relating to the model like volumes going back to road as I was mentioning earlier. So just wanted to understand, is this primarily because of the imbalance led aggressive pricing by road? Or is it just -- are there any other factors relating to this shift in the model side?
So one of the factors we have already explained is that due to this implementation of -- per charge. So there has been some shift from rail to road. But again -- so we need to see that how long it can sustain. So -- but we are hopeful that the volumes will eventually come back.
So -- but sir, in the past, we have seen that all factors being equal, we have heavier import mix has resulted in a -- condition at the port side, due to which road operators were giving a relatively better pricing on the export length leading to a higher imbalance. Now why I'm trying to drive this is, are you anticipating that the imbalance would have a significant impact on the profitability going ahead in the rail side of things?
No. So what we have done is we have been able to source MT from shipping lines, and there is some other business also we have been able to do. So if we look at this quarterly number, so we have been able to reduce our imbalance overall. So that is also one of the reasons like somebody explained that there is a slight improve in the margin. So with the procurement of MT, which we are moving plus a reduction of imbalance.
[Operator Instructions] Next question is from the line of Harsh Shah from Dimensional Securities.
My question is on Snowman Logistics. If I look at the pallets handled volumes that is given in the presentation, it's 11 lakh, 86,000. So if I reduce the half year numbers of last presentation, then the volumes handled for this quarter is somewhere around 3 lakh, [ 57 ] which is quite lower than our previous 2 quarters run rate of 4 lakhs, 14,000. So Q1 was around 4 lakhs, 14,000. Q2 was 4 lakhs, 14,000 again. And Q3 is somewhere around 3 lakhs, 57,000. So just wanted to get a sense on this decline in our pallet handled volume.
This is Sunil Nair -- and this quarter has been a little lower due to the -- Typically, this quarter 3 is on the -- And this is the time when the -- also in an -- in our volume seen for us, and that's the reason that I do that in a less.
Because even if I look at it on Y-o-Y basis, it feels like 3 lakh, 57,000 Q3 -- compare it [ 3 lakh, 57,000 ] so that on most depends on the decline Y-o-Y net [indiscernible]. So just -- is it a temporary phenomena? Or are we seeing a slowdown in the industry, something on it?
Sorry, your voice was breaking, but what I understand is even on Y-o-Y reduction.
That's correct [indiscernible].
You're talking about pallet handled? Or...
Yes, yes, pallet handled.
Pallet handled there is no reduction in last year.
And I check it out. So sequentially, if I look at the revenues, the revenues have remained increased rather 4%, 5% by the volume handled -- client. So is there a -- as in the legacy? Is it direct?
Yes, there is a 5% increase in our average -- the slide when you take a basis as compared to last year.
Got it. And sir, in terms of margins for [indiscernible]
Sorry to interrupt, we're not able to hear you.
[indiscernible]
Is it better now?
Let's try again.
My question was on the margin. Last year, we were around 22% EBIT margins for our warehousing business, which has come down to around 18%, 18.5%. So is it purely because of mix or what was it exactly?
It is purely because of -- intent from because we have added a lot of -- warehouses in dry segment, where the margins are better, but they are on these where -- So it's because of the brand with -- as we are moving towards -- wherever possible. So this will keep more little lower as we add more and more lease -- to our capacity.
Okay. And in the transportation segment, again, the margins are lower -- back to maybe around about 2% -- In last quarter, we had spoken that you had in a few -- for the -- income expenses had not built much of in this quarter. I mean if you see the margins in more financially, 1.5% at EBITDA...
We are not hear you properly.
Is this better now?
Yes, you ask this question, you have better.
So my question is on the transportation segment...
First question on the margin, while [indiscernible].
Yes. My question is with EBIT at the transportation business.
Yes [indiscernible] See, the -- big reason for the reduction of -- business is because we are comparing year-on-year. This year [indiscernible]. So the depreciation are coming in package where last year, there was -- there was no acquisition on that is on year-on-year is grow op margin. We can give a lot on sales plan.
Okay. I think at EBITDA level, the margins are comparable or better?
Yes -- because the -- will be faster in the -- so it is not comparable year-on-year.
Got it. Got it. And last question is on the trading and distribution business for the last 4 quarters, we have been at around INR 35 crores to INR 40 crores range. So just wanted to get an understanding of what kind of growth can we expect going ahead? And I believe we were in decision with your -- clients. So any progress on that front?
Yes. So in -- is distribution business, the major category that we have analyst today is followed by the -- and being -- season is -- the main season. You see an impact in Q3. But as we move forward in Q1, you will see the upward trend. Typically, we have added 20 new products into our 5 years hitting this quarter. And these are something we can start giving business to us by the end of Q1, which is around March, the new addition of -- is a contributing. So we see some of -- the coming quarter.
Next question is from the line of [ Govindlal Gilada ], from -- an individual investor.
Are you able to hear me sir?
Yes, sir.
You're voice is -- so can you please come closer to -- or microphone.
Is it better now? Hello?
I can hear you but -- I can hear [indiscernible].
Okay. I don't know any questions are only request is that your presentation press release, they are almost at the beginning of the call -- are uploaded on BSE. It will be coming in and at least some 15, 20 minutes to upward and -- so by the call begins, we can go through them and take any questions, it is convenient to clarify themselves.
Okay. Taken -- will do that.
Next question is from the line of Abhijit Mitra from Enos Alpha Investment Management.
So just to understand the change in shares across regions. So what we are seeing is a very sharp drop in over the past couple of years, maybe 1, 1.5 years now. I understand part of it is driven by the imbalance, imports would have gone up significantly, which you don't want to capture. But say 15% kind of volume growth is possible by maintaining around 20%, 25% -- Just trying to get your sense on that.
Yes, that is quite possible. But at the same time, we should not ignore the -- ICB -- market and the -- market. So if I run market and -- so there is competition where everyone wants to have their market share. We have cautiously some -- even low margin or minus EBITDA -- we didn't want to go for that. But we do have a strategy where -- I mean, we will definitely -- our market share to what we are doing right now is in the range of 20% to 22%. We definitely could be 5% is achievable and the team is working towards that.
Just to add to it, I mean, our preference is always to focus more on the EBITDA rather than volume. So we won't be increasing volume just because to increase volume. We have to look at profitability first.
And the second thing is this -- panel, which is still not the trade and world is in progress. And once it becomes does not only the originating volumes from -- or can be as can be rooted through Putian. So we think we cannot call the timing, but yes, some -- there that it is going to happen in the near future.
Got it. So of course, barring the intermittent or the near-term impact kind of the disruption which you mentioned you saw in Jan. The next couple of years, what kind of volume growth you have India in the rail business on a direction, if we have to sort of put in a direction as to the guidance?
See, on our part, we are increasing our capacity what we have mentioned by other also call. We can only be ready for the next round of call these will come in. Right now, actually, except for the delays due to normal route by -- from the East Coast, Canada -- from Europe. Once this delayed cycle is through, I mean then every other shipment will be following that will then grow.
To say about 1 or 2 years, the geopolitical situation today is very -- or this uncertain and -- we won't do high impact on the supply chain and on the cost and on the consumption side also. So I will not be able to give you a guidance for the next 2 years, but all we can say is that we are increasing our capacity. And also, we are hoping that things will improve for India, of course, where the growth is projected at 7% of the GDP will definitely be one of the leading -- so weaker product, and we -- be able to give some more guidance at the end of the finishing the next con.
Next question is from the line of [ Uwe ] from Artha India Ventures.
My questions are Snowman Logistics. What is the kind of growth that we are expecting on the top line and bottom line for each of the segments? And what will be the key drivers for the same? Hello?
Yes, yes. Okay. So in terms of warehousing, we are expecting the usual growth of 10% to 12% as we start adding more facilities. We have recently added -- which is a completely leased facilities. And we are looking for a couple of more adoption, while at the same time, we are constructing our own facilities in -- for the time last now, which are in process and very to, we plan to add a couple of more locations in next 12 to 18 months.
So here, the growth primarily depends on the capacity that we create. So far, we are creating capacity by investing, but now we are relatively exploring options of leasing as well. So we are expecting 10% of growth in warehousing segment, while in transportation, our -- initiative, which was -- capacity transit that is more less streamlined, and we are expecting a similar or slightly better growth in the transportation as well. The core distribute it is sand distribution business, we are expecting around 20%, 20% book thereon on a year-on-year basis.
Got it. So as for a couple of calls back a couple of earnings calls as the management at -- capacity 2 lakhs by FY '25. So are we still on that target or on the same part or have you revised the targets?
We are still targeting to have that capacity by the end of this year with a mix of -- only.
Got it. And the facilities that are coming up in Kolkata and Lucknow. Will it be like -- facility or how we have look what kind of makes...
[indiscernible] all facilities. We are on it will under construction I take another 6, 7 months for it could be ready. I think you have 100%.
Got it. And in the Transportation segment, in the previous call, it was mentioned that we have also -- we've added a couple of trailers to cater to the logistics front post warehouses and will explore opportunities were. So what are the plans on that or clarity on that?
So we find it a good project, and we'll be expanding on that as well as we go forward.
Will that be an asset-light model? Or will the trailers be pursued?
The next quarter like we have in transportation now, we have close to 300 old trucks and around 200 -- but we will continue with this mix.
And...
[indiscernible] from Takala, it is not a fully old facility. It is a -- facility. There have investment only, the refrigeration part and the rest will be invested by the partner who is building a facility as far as this citation.
Got it. And in this -- segment in the last -- in the last quarter, you guys had mentioned that you were looking there three key customers in the pipeline. So what is the status there? And we have this started contributing to the revenues? And have you tried monetizing that?
No, not yet. It is taking time as -- but we have added 20 new products to our existing set of customers where by enlisting of product has been done. And in a month or 2, their orders -- they'll start delivering the [indiscernible].
Got it. Just one thing I missed the growth that you had mentioned for the transportation segment, if you could please repeat on that.
transportation segment, I was saying, it will be somewhere around 15% growth that we are looking for as we go forward with a base of all data as well as the -- partner.
Next question is from the line of Bhoomika Nair from DAM Capital.
Sir, on the CFS business, right, in this quarter, we've seen a fairly sharp -- profitability. How should one think about this? Is this something which should kind of sustain going forward? Or does it come back to that INR 1,700, INR 1,800 kind of year kind of -- for profitability?
So this quarter was exceptionally low. So we think it will be somewhere between INR 1,700 also might be possible. But I think realistically, around INR 1,500 per TEU is something will be looking to target in the upcoming quarters, but it's an issue over there in terms of discounting, competition, the ground rent component has basically disappeared. So we are looking at value-added services and things like first mile, last mile to improve our revenue and EBITDA over there.
And Bhoomika, you know -- industry -- are shared to in a large only 10 years. So -- because the directors believe and the competition is going to a level where I mean we are actively looking at monetization of -- lands and receivable business. And we've already been meant one part has already done that we have amortized more than INR 20 crores in this financial year by selling from part of the land location. And there are some extra partisan, which we don't think that in the long run. It is required for CFS business.
And single warehousing just drawing will not make sense looking at the life of land over there in those locations. So our effort is to monetize part of it. And we'll see, I mean, what our margin -- this one is the lowest. But INR 1,500 crore is something that we can look at and make we will try and increase some volumes also. But something of the -- in, like, for instance, a -- bad but impacted the business at a couple locations.
And -- many in the business in Q3, if you look at the whole country, we take out what is shipped by air, let's say, like -- gold and all that, and -- a drastic -- trend in Q3. In the rail business, we have been able to maintain 16% to 17% of our NCR market share. But in -- looking [indiscernible].
Right. Right. And is this across locations? Or is there specific location, let's say, JNPT or Vizag or something like that?
So Vizag saw the big decline because of rights, and we were heavily dependent on that. JNPT, the volumes are there, but the pricing is pretty bad. Chennai, we've increased volumes where again pricing is a bit of an issue. So all across. Krishna Mutum, the port is hardly doing any container vessels now. So there are issues all across.
Okay. Got it. So coming to rail business, I mean, it's happening to see this kind of an improvement in the EBITDA per TEU and ranging around this 9,000 plus level. Now if I -- if one thinks about it, the Kashi volumes have kind of stabilized around the 3,000, 3,500 TEUs per month and therefore has gotten pushed out a certain extent. So how should one look -- I mean, obviously, there will be some interim related challenges to an -- side, but if one was to take more like, say, 1 year out or 6, 9 months, et cetera -- where will the growth really be coming from? Is it really the industry growth shift from road to rail? Or are we really looking at increased market share gains and that will drive the volume growth? So if you in help us know structurally, how should we look at growth in terms of the rail volumes?
See, volume will definitely have some growth because like you must have seen this announcement and the complete -- unit -- cost and -- opened up at Mudlark and at ICD. So this is a development which has happened 2 years ago. So -- and even otherwise, we see traction in- -- We will still continue to remain fraction company. At the same time -- we had some competition from a competitor who want to double stack and some of the volume shifted the -- the costs that diverting them off -- stand. So we are expecting that in our volumes, which are on -- will pick up as a better idea of when this coming that will be completed -- And then finally, we would at GSP is something that we are looking at some sections of -- section have been completed. And so we expect the commissioning of -- in this calendar year. So that will also have a positive impact on the volumes. Rajguru, what is the [indiscernible]?
Yes. So what we are expecting is that within another 2 months' time, we should be able to start double stacking from Faridabad terminal. And we have also identified a couple of new customers. So once the double stack starts. So we will be starting new dedicated trains from Faridabad, towards the port and vice versa, including the Kashipur volume. So that will augment the overall business volume of [indiscernible].
Got it, sir. And in general, are we looking at more rail share going up? Or are we looking at driving those? Or is it going to be more driven by market share expansion at these [indiscernible]?
More on macros and expansion at the terminals. Route to rail shift will be a slow shift maybe something happens on the JNPT side once it gets connected to DFC, some shift there. But other than that in the long run, it's like a 1%, 2% shift per year from route.
Next question is from the line of Achal Lohade from JM Financial.
The question I had was with respect to market growth. Is it possible to get some color for 3Q as well as 9 months for these three pockets NCR, Ludian and Kashipur?
Yes, just 1 second. We'll have to -- sorry, okay -- so the -- market declined by about 20% -- 18% to 20%. The NCR market also -- this is Q-on-Q. NCR market was also down by about 5%, 7%. And Budiana market is slightly up by about 4%, 5%.
And when you say Q-o-Q, you mean 2Q to 3Q or 3Q FY...
Yes, yes, Q2 versus Q3 this year.
Now -- and in similar fashion, if you could tell how the volume change has been for us in these three pockets.
So like our market share is almost flat, actually at this. So we've gone up and down almost the same way.
Understood. Okay. Now the second question I had was Mundra and Pipa has been connected on the FC for last few quarters now. So in terms of the FX, is it fair to say that the bulk of the benefits are already reflected in the current double stacking index stoke the efficiency part? Is that a fair assessment?
No, actually, there's been some crew shortages and all, especially when there's a switch over from DFC to Indian Railways network. So what we were doing at around 30 hours has gone back up to 48 hours for NCR Gujarat. JNPT is at about 80 hours. So there is scope for improvement in terms of speed. And on the weight side, we still haven't got the upgraded tracks on the Indian Railways network, which you can see us go carrying from 68 tonnes to 81 tonnes on a double stack basis. So when that comes in on an end-to-end basis, our overall double stacking can increase by a lot more. So that's something these two benefits will really help us in the long run.
And just to clarify, this 68 to 81 tonnes is more of a rate issue rather than the rail network issue, right? The feeder routes can take this 81 tonne rate, right? Is that a fair...
No. No, not yet. The railways are upgrading the tax. But right now, it's not done. All three of our new rigs, the 81 tonne capacity once we can carry it on those three rates at least. But right now, no route is really fully end-to-end DFC. You have to take some -- somewhere or the other, I don't -- origin or destination. So you can't carry 81 tonnes anywhere.
And you think this can be converted into -- the rail network could be converting to 81 tonne anytime soon or it will take its own sweet time?
It will take some time. There's no clear timeline on it, but it's not a very long-term thing.
Got it. Just another question I had with respect to the stake in Snowman, so can you help us understand what is it now as we speak are holding in Snowman? And what is the thought process here? How do we look at -- are we looking at converting into a -- and hence consolidation? Or we would strong less than 50%?
[indiscernible] increase the estate by 4% in this current financial year. Under -- maximum we can acquire is 5%. So we gain -- 4% common event of before. And then later again in -- so depending upon the cash flows of decrease we see, I mean, are quite good equivalent. We will be looking at crossing 50% and then consolidate -- then it will be classified as upside. So it all depends how the Gateway business railway business goes and cash flow and the payment.
Got it. Can you help us understand what has been the OCF and CapEx for 9 months?
Sorry, the what?
Cash flow from operations and CapEx.
I think these figures -- we'll get back to you on this. Frankly, we don't have the...
No problem. And if you could help us understand with respect to CapEx for FY '24, '25, '26, what broad numbers we can pencil in.
We'll basically -- while we have plans for new terminals, since we don't have a strict time line on them, we'll give it closer to time. But as and when those terminals come up, will be anywhere depending on the size and land prices, INR 100 crores to INR 200 crores per terminal. But we'll see when that comes. Other than that, there is no immediate CapEx as such about from finishing Jaipur.
And what would that be quantum?
Up to INR 50 crore INR 60 crores at most.
INR 50 crores, INR 60 crores each, okay, annually.
No, INR 50 crores, INR 60 crores for Jaipur. And then if it's a new terminal that can range from INR 100 crores to INR 200 crores per terminal.
And also, I think we have to keep on -- we have to keep on upgrading our equipment also. So some of the tenders which are -- where we are getting new incentive shortly to replace the old one. So that CapEx will even the -- and some small CapEx we keep on doing -- area and all that. So secondary contact, you all give you these figures, we didn't have is very low. But we have incurred CapEx during the first 9 months of -- this year. So we [indiscernible].
Got it. Just last question, if I may. Looking at what is happening in terms of the near term, whether it is the macro issues, micro issues in terms of competition. Is it fair to say that in case of rail more of high single-digit, early teens is a fair number to work with for next 2, 3 years in terms of volume?
And for CFS, the INR 50 crores, INR 55 crores EBITDA run rate quarterly -- annually, is that a fair assumption for the next couple of years, assuming normal situation?
So on the rail side, we'll still be looking at double-digit growth, especially after our volumes at Ludhiana and Faridabad have come down. There is scope to again increase on that base as well as Varadan terminal, there is a good pipeline there. So we'll look at double digit only.
On the CFS side, yes, there is a decline. It's hard to say where we'll end up at. But it would be a long, say, what we've done for 9 months right now it's operated similar number for next year is something that will be the -- maybe a slight decline, actually.
Understood. And just one more with respect to tax rate, what is the number we should work with for FY '24, '25, '26?
So -- rate with a package at 30% plus [indiscernible].
So we have the ATI tax benefits, I think we'll basically be paying math and then getting -- credit on it. If active tax rate will be about 17-odd-percent.
And then we will finish day by '27, then we will be able to tie the matter for the next few years also. So -- since by 2031 or '32, we will have a [indiscernible].
Next question is from the line of Pranay Khandelwal from Alpha Invesco.
Can you just update us on any other capacity expansions that we are looking at other than Kolkata and Lakota? And any other new opportunities in the leased cold storage? This is on the Snowman side.
This is Sunil Nair. So -- right now, we will be planning on facility in Mogangoand and one -- or the confirmed one. And by the end of this month or beginning of March -- in our for next year. So we might add a couple of more cities which could be a vast or invested facilities like we have done now on. So we might add a couple of more [indiscernible].
Okay. And also, I missed this part, but can you update us on the new clients for the five PL business? What is the update there?
So what I said earlier is we have not added any new client, but we have added 20 new products for our existing set of clients. So we are looking for adding -- increase remains of the existing set of clients with the new products, which are done at -- to our 5-year sourcing services. These are listed with the clients now, and we expect in a month time -- start.
So are we in conversation not adding any new clients [indiscernible] are there any ongoing cost?
Yes, we are in conversation and we realized that this is a change management for our clients to completely also their sourcing activities. And it takes a little longer time than the usual other services that we offer. While they are aligned with some of them in -- and some want to be change or an engine change of thing. So we have 4 to 5 good hot leads, but they are not yet to enhance on that.
Okay. All right. And can you also tell me the feedback on the CFS business. I believe it was last quarter that we added those assets and tie our hands at that business. What's the feedback from our customers for that? So with that, we are [indiscernible].
Sir, which assets did we add in [indiscernible].
for Snowman itself, we added some figures [indiscernible].
Right. So we have very encouraging feedback. At the same time, overall operations are also managed. And from a -- and commercial side, also we find a train -- We plan to have some more trailers in some own investments, some of the leases in other locations as wherein we can move data from to our facilities. So we'll be planning it in the next financial year.
Ladies and gentlemen, that was the last question for today. Participants who have missed out due to time constraints, they can rechat the management and -- for Gateway Distriparks or -- partners first Snowman Logistics. With that, we conclude the conference. Thank you for joining us, and you may now disconnect your lines.