Snowman Logistics Ltd

NSE:SNOWMAN

Ladies and gentlemen, good day, and welcome to the Q3 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, 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 this conference is being recorded. Today on the call, we have Mr. Prem Kishan Das Gupta, Chairman and Managing Director; Mr. Ishaan Gupta, Joint Managing Director; Mr. Samvid Gupta, Joint Managing Director; Mr. Kartik Sundaram Iyer, CFO, GDL; Mr. Rajguru Behgal, President, Rail, GDL; Mr. Manoj Singh, President, CFS, GDL; Mr. Padamdeep Singh Handa, CEO and Director, Snowman; Mr. N. Balakrishna, CFO, Snowman.

We will now directly begin the question-and-answer session.

[Operator Instructions] First question is from the line of Kaustav Bubna from BMSPL Capital.

Can you hear me?

Yes, please go ahead.

Excellent. Yes. So the company has been talking about the benefit from DFC for many years now. But obviously, the financial benefit is yet to be seen for the company from the DFC. So has the Western DFC become operational in parts? And is the Western DFC already contributing to the financials of Gateway Distriparks. When will the Western DFC become fully operation and what type of TEUs can the company expect in the next 3 years due to the DFC opportunity?

So the DFC started in a different section starting from 2020. So we have seen the benefit of it over the years with faster turnaround time, increase double stacking, network imbalance. So we have consistently improved our EBITDA per TEU and running through the DFC coming in. It's there till Mundra and Pipavav for us but JNPT, the finalized will only come by possibly end of this year, December 2025 is what railways is saying, but it could probably take another few months after that also.

Could you -- so could you speak a little bit about when the whole -- when the full Western line is operational exactly how Gateway is just how this will -- over time, over time, how this will improve our volumes in the container railway business?

So we have a Pan India license. So JNPT getting connected will help us significantly compared to all the other players. There are others with Pan India license also and then JNPT getting double stack will allow us to convert some cargo that's currently going by road to rail and has better margins compared to right now is from single stack to double stack when it will be there. So those are primarily the benefits of the DFC even faster turnaround time right now to JNPT, it will take 72 hours, but post JNPT, it should take about 30 hours, and that will also help us.

Understood. And just 1 more -- 1 last question, if you may. So how did our capacity in the rail division increased for Gateway Distriparks post the merger with Gateway Rail Freight Private Limited and the other company, the East India company. Did it increase our capacities in the rail division for the listed entity, which was compared to what it was pre-merger?

No. So pre-merger, sir, basically the CFS business was separate and the rail business was separate. So it just became 1 entity, it gave us a stronger balance sheet and common management. But in terms of specifically increasing rail capacity, the merger did not have any impact.

[Operator Instructions] Next question is from the line of Prashant Kale from Star Capital.

Congratulations on your good results. I have 1 question. The Eastern dedicated freight corridor has been commissioned already, but we don't have any operations on that freight corridor. Is there any reason why we are not interested in that corridor? And another question is, do we have any plan to establish any facility on that corridor?

So no immediate plans right now for EDFC. One big advantage of WDFC is that it's double start and more of the locations that we service, all the cargo comes to the western port. That being said, over time, when we keep on expanding and looking at new locations, we're not against expanding on that side. So you might see 1 or 2 terminals come within that region as well. But we are more focused on the EXIM trade rather than domestic and Eastern in used a for domestic and bulk as well.

Okay. So the Eastern Dedicated freight corridor don't have much opportunities for EXIM, right?

It does for some locations, but not the ones that we operate out of.

Okay. And sir, the Snowman acquisition and making it a subsidiary has resulted into extra -- exceptional item, which has impacted our EPS. But it's a subsidiary, how did we account it as the income on the income statement as a exceptional item because that has skewed the consolidated result too much. But in practice, there is no income.

Yes. So this was basically we were an associate company. And now after crossing 50%, it comes under subsidiary. So we're just following the accounting standard guidelines that are there. It's a notional gain. It's not a cash item. It's not a taxable item. But according to accounting standards, there is a gain of INR 390 crores basis, the fair value of the equity that's come in. But we've given a separate line item to specifying the amount. So if you remove that, then you can see what the operational EBITDA and operational profit is.

But we don't have to pay any tax on that income, right?

No, sir. It's just like a balance sheet item like a 1 line entry.

Okay. Okay. Okay. So it's appearing in the balance sheet. And to balance it, we need to cover it as the income to balance the asset side?

Yes, we're just following the accounting standard guidelines.

Yes. Okay. Okay. Okay. Understood now. Because you didn't publish the balance sheet. That's why I had a question that where is this adjustment coming from. So it's just for them adjusting on the balance sheet. Okay.

Next question is from the line of from Anirudh A. Damani from Artha India Ventures.

So I had a question about how are you planning to address the challenges led to this net loss in the Snowman Logistics results compared to a profit in the same quarter last year. There's also been a sequential degrowth in revenues.

So we're working closely towards creating that bottom line working towards cutting down on our costs rapidly. And a lot of work has been done in the last couple of months in the same aspect. Also, as this is the time when the contracts are under renewal, we are trying to correct the revenues also so that our subsequent quarters look much better.

I had a follow-on question to that. You also mentioned that the Amazon contract has moved from dedicated warehousing? Is that -- is it a complete like termination of the contract? Or what has changed with the Amazon relationship?

Hi, I'm Ishaan here. So with Amazon, after quick commerce came in, and this was the arm of Amazon, which was Amazon Fresh and Amazon Pantry business. So they have changed their model to compete with quick commerce, and they are going directly from the suppliers to the dark stores. So they don't require these dedicated fulfillment centers anymore. But we foresaw that this might not be a long-term thing. So it was a back-to-back lease when we started. We ended our leases and we recuperated any CapEx that we have done as far as the deal with Amazon. So now on the growth part, we are focusing on Snow Distributes apart from the 3 customers which we have publicly announced, we do have a couple more now, but unfortunately, we can't reveal their names due to confidentiality clauses. And there are a couple of large clients who we are working with to grow Snow Distribute. And as mentioned, the focus is always on the bottom line.

And we have had some costs in this quarter. That's why you see a dip compared to last quarter -- last year same quarter. And those increases in labor and increases in electricity, which we don't foresee that every quarter such a large impact would be there.

Next question is from the line of Achal Lohade from Nuvama Institutional Equities.

Sir, first question, if you could highlight in terms of the market share movement for our markets.

Rajguru this side. So I will start with Delhi NCR market share. So we have been able to maintain our market share to 17% compared to last quarter also, we were 17%. And -- but at Sanehwal, we have been able to ramp up our market share from 24%, which was last quarter to 26.5% closer to 27%. And in Uttarakhand, there has been a sharp increase in market share. So from 23% last quarter, now it is 30%.

And when you say last quarter, you mean 2Q FY '25 or 3Q FY '24, sir?

Q2 '24, '25.

Okay. So it's a quarter-over-quarter, there is an improvement.

Yes.

Understood. And if you could guide us in terms of the market share in 3Q '24 same quarter last year?

Yes. So in Q3 last year, the market share Delhi NCR was 16% and at Ludhiana, it was 21%. And in Uttarakhand, it was 27%.

So essentially, we have improved market share on Y-o-Y as well as Q-o-Q basis?

Yes, correct.

And what has driven this? Because if you could also help us with the EBITDA margins as well for the CFS and Rail?

Yes. So Rail is 9,600, and CFS is about -- just below 1,300. So there has been some different discounts, but at the same time -- some increase in discount but at the same time, our double stacking has improved. So it's kind of offset each other. That's why our EBITDA per TEU is consistent with H1. And also, there's been a shift in the throughput, we've done lesser empties also. So if I'm not show in the overall volume growth, it's only about 2%, but our laden percentage has gone up more than a laden plus empty percentage.

Would you be able to share what is the cargo growth in laden containers?

We don't give the exact split on that, but I think there is a few...

Is it in double digit?

Double digit compared to?

Y-o-Y. The growth is in double digits for the laden cargo? So is it the empties mix, which is changing the realization and the margin profile. That's the question I had.

No, not in double digits. It's a single digit.

Okay. Understood. If you could also highlight how much of the JNPT cargo currently is moved by road? What volume it would be annually?

It's hard for us to say because we're not there with all the markets where JNPT caters to. But for us, our overall volume is only about 5% from JNPT.

Right. No. But I mean given these 3 markets put together, how much volume you think is going to -- going by road to JNPT?

For the ICD, the locations that we have, especially in the north, we'd say about 70%, 80% is on Rail, balance is on road, but it's improving by a few percentage every year.

Okay. And can you help us understand in terms of the market scenario, what is the outlook in terms of the market? And by the way, if you could also talk about these 3 markets, what has been the volume growth in these markets at the aggregate level?

Yes, I'll just take the first 1 and then Rajguru a can give the specifics. Lohade, I mean, we want this consistent trend to go. We've got INR 100 crores EBITDA also again. So we're happy with that considering the global scenarios. But there could be some changes like especially in Red Sea situation if shipping lines start using this route again, then we could see a boost in volumes compared to what we factored in. So we're still not giving out a number for what we expect next quarter or the following year. We'll probably wait another quarter and then see and give our guidance for the future. And then, Rajguru, will just tell you about the specific market growth table.

So if we talk about NCR, so there has been a growth of around 6% to 7%. But if we talk about other markets like Uttarakhand, Kashipur there is a slight degrowth overall because of the waste paper volumes. At Sanehwal, we have been able to retain our market share and over the period of time, we increase. So what we can look at is because of the geopolitical scenario like Samvid mentioned. So there was a shortage of empty container inventory also, which also led to a lower movement of empty containers. Going forward, we are just waiting and watching and how the situation will pan out. But we can see that from January numbers are slightly better than if we look at November, December numbers. But it is very soon to give you complete clarity that how the things will pan out.

Just to clarify the numbers terminal increase were -- our terminal wise increase. But if you look at the overall market, NCR Q3 versus Q3 is 2% growth. Ludhiana is down 20% and Uttarakhand is down 30%.

Ludhiana is down 20% Y-o-Y and Uttarakhand 30%? Is that -- have I understood right?

32%, the overall market has gone down, but still for us, I mean, we've managed to increase our market share in that falling market also.

Right. Just a quick question on this. If we look at the port volume year-to-date, 9 months, they are up about 9%, 10% Y-o-Y. But if you just sum up the leading terminals, we see that there is hardly any change. Can you explain, is there a reversal of the market share for Rail? Is it -- there is an element of calculation changes? Like is the transshipment gone up a lot and which is influencing the port numbers, et cetera?

Yes. So transshipment and empties get counted along with coastal shipping also. So it's not really a comparable thing. So we only look at where our IPD are present and what the market there is because we're also not servicing a good chunk of the country by Rail.

Next question is from the line of Amit Dixit from ICICI Securities.

A couple of questions from my side. The first 1 is on the growth plans that we have, particularly with respect to new [ cities ]. Now as I understand Jaipur is still not crystallized. So over the next at least say, 2 years, what are the kind of options we are considering at this point in time?

We're actively looking at 2, 3 options. So hopefully, we can announce something by next quarter. Jaipur is still going to take time. As we've reported in the past, we'll wait for the land issue to clear up. But there's definitely plan to expand on the Rail linked ITD side with 2 or 3 coming in the next couple of years.

Is it possible to just highlight the regions or you will do it at the later date as and when things come?

No, we've only announced that after we bought our land.

And what exactly [ Rail linked ] Jaipur, I mean, has it moved ahead compared to last time or the situation is just stuck there?

We reported in our accounts. It's a legal process. There's a date of hearing that keeps happening. So nothing significant to report in the progress.

Okay. The second 1 is on double stacking. Is it possible to quantify the double stacking in this quarter? And how does it compare with the last quarter?

It's 40% versus 38% last quarter.

Next question is from the line of Krupashankar NJ from Avendus Spark.

A couple of questions. So on specific end markets, you did say that NCR has grown at about 2%, while the other 2 markets are quite weak. But on the other hand, you are seeing that exports as a whole is picking up in the fourth quarter as well. So can you give some -- throw some light around what are the key areas which is working out? And what is -- what are the key commodities where there has been a substantial weakness?

So like I said, the NCR market growth was 2% wherein our terminals in NCR grew by 6% to 7%. So here, we have seen still stability. But there's a degrowth that has happened in Ludhiana and Uttarakhand is primarily due to 2 factors. Ludhiana, the complete market is heavily dependent on scrap. So that is one of the major reasons that the overall market went down because of the low volumes of scrap and the volumes have not firmed up as of now. And the other markets, such as Uttarakhand, it is heavily dependent on waste paper. So there also, the overall market is down because of the low volumes of waste paper. So these 2 commodities led to degrowth in the overall market in both Ludhiana and Uttarakhand.

Okay. I got it. In the NCR market specifically, just wanted to get a sense -- you have seen some growth or rice exports picking up again. And any trends you have seen in the -- visible in the month of January, which you can highlight in the call, please?

It's a similar trend going on, December to January. So nothing significant to report as such.

Okay. Understood. Understood. On the CFS business, again, just trying to figure out, we are still in process of executing the sale of the CFS business, understanding is correct? Any update over there?

We're evaluating our options. So like we had said in the last call that we'll probably take -- if we don't have any news given in this financial year. So possibly, after the close of financial year, and the next investor call, we can give some better update on it.

Next question is from the line of Vishal Darji from RoboCapital.

My question is on the Snowman Logistics part. On the EBITDA margin front, our margins are just as compared to last year. So they are around 16% currently. And so going forward, what type of margins are we expecting? Like said that we are moving to an asset-light model and the increased share of the distribution business might affect the margins. So what type of trend are we expecting?

See, as our overall business dynamics and the mix has changed in the last few quarters, the EBITDA margin, those will remain close to what we were around 18% to 20% is what we expected to say. But overall, absolute number, EBITDA is going to grow with our expansion in Snow Distribute.

Okay. So sustainable, we can take it at 18% to 20%, right?

Yes. Yes. The reason for that is we are increasing our distribution business, which is low margin but high revenue and the absolute EBITDA will grow. And it supports warehousing and transportation business by increasing stickiness. And those same customers end up using our warehouses and transportation. We don't do distribution business, which doesn't touch warehouses or our transportation.

Okay, got it. And as you're expanding your pallet capacity, what kind of revenue growth are you expecting? Any guidance you would like to give?

We are targeting, say, by end of FY '26, anywhere between INR 800 crores to INR 900 crores of revenue.

Question is from the line of Gaurav Gandhi from GloRetail Capital Management.

Sir, what are the updates on the Red Sea issue? Has it resolved? Or any update regarding that? Any signs of traffic shifting back there?

No. As of now, the Red Sea issue remains the same because even though there's a seize fire announced but it will take time before everything settles down all the shipping lines are still using the route, which is through the Cape of Good Hope rather than the Suez Canal. At the same time, freight rates have gone up significantly, both because of Red Sea and generally, the container flows and trade routes, which are being used by the shipping lines right now and the capacity is utilized. The transit time remains the same and for our end customers, the freight rates are going up even now.

And sir, as and when it will resolve how much volume growth you're expecting...

There's no direct relationship which we can identify between when the situation gets resolved and linking it directly to volume, it will be very difficult to say. But generally speaking, whenever the freight rates go down our container availability goes up, then we expect the export out of India to become more competitive.

The next question is from the line of Aniket Kulkarni from BMSPL Capital.

I wanted to ask why are we more EXIM focused versus domestic focus in the Rail business? And how will the completion of the DFC on the Western side help us if you are more EXIM focused even that we said the Eastern DFC catered more on the domestic side. So what are your thoughts on that?

We tried domestic in the past. But for domestic, you need a more wider network of terminals. We only have 5 rail linked terminals. Domestic most routes are single stack and there's imbalance as well and a slower turnaround time. So we've chosen to focus on EXIM as a strategy at least for the last 10 years has been pretty much 95% plus on EXIM side. We're not against running mix trains. Once we have a more wider network, say, if we have 10 locations, it's easier to triangulate trains and have a better domestic presence. So for that, we need to -- like we said, we have plans for 3 more terminals and even more after that. So we'll wait for that and eventually, the plan is to get into domestic as well.

Yes. And on the question DFC completion. So how will it help us more in the EXIM operations as compared to the domestic ones because you said earlier that the Eastern DFC was more domestic focused right? So what is the difference between the Eastern and the Western DFC and how will it help us more on the EXIM side?

So Western DFC connects to Mundra, Pipavav JNPT, which is where we carry all our cargo. Kandla also, we've recently announced that service. Eastern DFC, we are not connecting to any ports. So if we have to use that, that might be on the domestic side, but we don't have any specific plans for it right now. The Western DFC, basically all the imports and exports going to these 3, 4 ports will help us increase our volumes.

Next question is from the line of Jainam Shah from Equirus Securities.

Sir, my first question is with the acquisition of Snowman. So of course, it has [indiscernible]. Are you going to have any more increase in the stake in the company and we are okay with this 50%. So you're like any more cash flow to be deployed in the Snowman from the grid?

So our plan was to do 50%, and we could acquire 5% under creeping acquisition this year, which we've pretty much exhausted. So no immediate plans to increase our stake further, but we'll have a look whenever we have free cash flows, and we have to decide our overall strategy. This was the first target.

Got it. sir. And on the Gateway Distriparks only. So as we are following the company since last 2, 3 years, and we have been hearing that we'll be adding up new ICD in the Northern or Central region, which will cater to the DFC with no significant movement has done on that part and a significant investment has been done. And even Jaipur is kind of halted as of now. And if we see from a cash flow perspective, we are not doing any major CapEx in terms of investment in ICD. And if we see that using of Ludhiana or Uttarakhand it is degrowing. And of course, DFC has been operational for majority of our cargo, which is like 95% towards Pipavav and this Mundra. And then what kind of thing stopping us to go aggressive in terms of addition of any terminal in any of the region to have better volumes going forward to eventually use the capital better?

So ever since we have announced it, we have evaluated dozens of opportunities. Some of them down brownfield, but mostly greenfield. And the challenge that we are facing is that we are not able to do land acquisition in the correct shape and in the correct location, which meets all our criteria as we wanted. We would rather wait and do the terminal in a good location, such as our Gurgaon facility. And so that is taking time. Even as we speak right now, there are 3 or 4 proposals where we are at the finalization stage. So if we find any problems in the land, it's a big challenge in India, then we drop that proposal. And if the due diligence and everything goes well, then we'll be going ahead.

Got it. Sir, -- to follow on is, are we -- like -- of course, there has been a Gati Shakti master plan which has been there. So any of the terminal which just came into it? And if it is coming, are we participating in that?

Sorry, your voice was not clear. Are you asking with any terminal coming up for acquisition?

No, no, sir, I'm asking that there has been a Gati Shakti master plan in which there will be few terminals, which will be led by, let's say, government of India or something. So are we planning to be part of that because they wanted to have a private participation increase in this particular segment of ICD and railways?

Right. We -- whenever these proposals come, we definitely take a look, but it doesn't fit with our business model usually because all of them are built on government land. And after a certain number of years, usually in this model, the facility, you have to hand over back to the public sector. And also it's a common facility even if you build on whether Gati Shakti or with [ CFS ] DFC land. And in our business model, we believe that we want to run our trains exclusively to our terminals and we are not in it only for the terminal business. We want to do the rail piece further. We don't want to do the terminal where others are earning on the rail.

Got it. And just 1 last thing. By any chance, are we seeing that the competitive intensity, which might be increasing, which might be leading to a lower return ratios from the newer terminal size against what we would have anticipated and which is eventually leading to a delay in the acquisition of the terminal. So is it just the land issues and all or any other things that you would highlight?

The voice is very compromised, I'm not able to hear that last question.

Sorry, pardon.

Mr. Shah, may we please request you to use your handset if you are on speaker.

Yes, I am using handset only. So I'm saying that by any chance, if any of the, let's say, there will be some already kind of ICD in a particular region, and we would be acquiring some land nearby. And then eventually because of the competitive intensity our financials might not be working in terms of the return ratios? Eventually because of that, are we foregoing any of the opportunity to have -- to add any terminal? Or it is just the land aggregation or any land acquisition problem that we are facing for the newer terminals?

No, it is primarily the land aggregation. We have enough funds available both in our treasury and the ability to raise, but that has not been the bottleneck. The land aggregation has been the bottleneck for us.

The next question is from the line of Anirudh A. Damani from Artha India Ventures.

So I had a couple of questions about the capital outlay. So it looks like Kolkata we're going to start with 5,900-odd pallets in this quarter. The total outlay for this project was for 9,000 pallets. Any indication on when that would be completed? And also, what is the total size of capacity we're building at Krishnapatnam?

So in Kolkata, we are completing the first phase of the warehousing. After that, we have another year, 1.5 years when we will reinvest into Phase II in Kolkata. And that will cover up the entire outlay as we have projected. The land and everything else is already there. It is just that we are creating Phase I and then we'll go to Phase II. In terms of Krishnapatnam, we are adding additional -- I mean, additionally, we are adding 5,500 pallets, which will be also getting up and ready by this year-end -- financial year-end.

So just to clarify, the total capacity at Krishnapatnam will be about 11,200 pallets and Kolkata will be 9,000?

Yes. approximately. And Kolkata will be 9,000 plus we already have another warehouse, which will add up and create a total of 15,000.

15,000. And then Kolkata, is that under the model where we acquire the land and we own everything? Or is this the BTS model that we're doing?

It is we have acquired the land and we own everything there, same on Krishnapatnam also.

And just 1 last question. How are we financing this total capital investment of around INR 100 crores, INR 150 crores over the next 12 months?

Yes, it's primarily debt funded, but also some equity portion of about 30%, 35%.

Sorry, you said equity, you would be raising equity?

No, no, like internal accruals.

Internal accruals, okay. Got it.

The next question is from the line of Koundinya Nimmagadda from Jefferies.

Sir, my first question is, how has Jan been? I mean, this quarter, how was the trend like with respect to your volume growth or momentum on ground either on the ICD side or on the port side. If you can throw some color on that, please, if you are seeing any pickup?

Very similar trend going on, more of the same as Q3.

Okay. Do you think the volumes may have bottomed out at this current level? Do you think is a trough? Or do you still see the potential decline from here as well?

It's hard to say on the overall macro volumes, but we have a healthy pipeline in place of our terminals where we see our market share going up going forward.

Understood. Sir, and my second question is on the margin front. So how do you see that trend from here on? Because I think on a Q-o-Q based in your Rail business, there is a marginal decline on per TEU basis. So I mean, what has driven this decline? If you can throw some color, please?

It's more or less the same. If you look at the H1 we were at 9,600. We're still at 9,600. So every quarter can't be the same. It depends on the volume mix, a little bit up and down, number of 20s, 40s overall empty running or in the same running. So there are many factors -- but we've always given this guidance that we'll be roughly in this range, and we expect that to continue going forward as well.

Understood, sir. Sir, my last question is on the CFS divestment part. Any color, any thoughts process? I mean where are we on that?

As we mentioned earlier on the call also, we'll probably be able to give a better update maybe next quarter. So like 3, 4 months down, maybe we can report something.

Next question is from the line of Riya Mehta from Aequitas.

My first question is in regards to that, you said that the markets of Ludhiana and Uttarakhand have been seeing a decline in the scrap and waste paper. So apart from these commodities, what other market revival do we see for these markets to grow?

So basically, if you look at both these markets, so I'll just give you a percentage, like 20% of the scrap volumes are there in the market of Ludhiana. So no better other commodities, whatever percentage they do well, but they won't be able to match up unless and until there is an improvement in scrap volumes. And similarly, it has a huge percentage if we look at the waste paper market in Uttarakhand. So they don't have those kind of volume -- voluminous commodities aren't there, which can substitute those volumes. So we have to wait for their growth to happen till the volumes are stabilized, and again, there is a market growth.

Got it. And what would be the possible reason for NCR growing just at 2%?

So if we look at NCR, it could have been growing further, but because of the empty inventory shortage because -- this because of the Red Sea crisis, there has been erratic arrivals at the port side. And overall, the shipping lines have to supply its empties to other locations also. And they were not able to buy to that extent for the hinterland. So that has also led down not only the movement of empty, but also the export laden boxes.

NCR also has scrap and trading goods, which overall right now is very suppressed.

Just scraps deal, right?

Yes.

Got it. And when you say that FY '27, we are seeing growth of around INR 800 crores to INR 900 crores. Where do we see this growth coming from?

So this is a [indiscernible] Snowman that was updated and that's the revenue that we will see Snowman reaching by the end of FY '27.

Yes, yes. For that on the end, okay.

That mainly from Snow Distribute, which is our IP-owned business and taking into account a couple of facilities, at least that we'll be adding every year, if not more.

And where do you see growth coming for Gateway Distri considering these markets continue to have a sluggish outlook for a couple of quarters at least?

We're consistently growing our market share. Faridabad becoming double stack will give us a boost in that region. We've already seen some improvement in volumes there. And we'll continue to geographically expand also into new locations which will add further into this.

When we see our double stacking has increased by 2% from 38% to 40%. Our margins have not seen that kind of improvement. So could you quantify how much percentage of double stacking increase would lead to how much savings in cost?

It's kind of hard to do that because again, double stacking it depends on the way the routes, the imbalance. So it's not a clear cut formula for every percent of double stacking, we get this much growth savings. Also, we don't share exact double stacking saving in rupee terms publicly.

Right. But directionally, if we have increased the double stacking our margins should have improved. So what possible reason that it has not improved directionally?

Just as I just mentioned, the port split, the volume split, rate slab splits. So those factors make a difference. Also some discounting has increased in certain markets, which we were mentioning. But overall, our plan is to keep the entire volumes growing our market share growing, which will help to distribute our fixed costs over a larger base of volume and on the asset as fast as we can.

Got it. And you were talking about various cost initiatives in Gateway. So what are cost initiatives are we planning to take?

I think, again, that was a Snowman commentary that was given. Padam, can elaborate on this.

That was in Snowman, wherein we are trying to work out on warehouse level unit level labor cost and overall efficiencies of -- those are what we have taken internally.

Got it. And for Gateway, are we seeing any improvement or going back to 10,000 level of EBITDA per ton for rail?

Yes. Hopefully, when JNPT is connected to DFC, then we should be seeing 10,000-plus. Also, we would always say 3 factors. One is Faridabad being double stacked. One is Jaipur coming in. One is JNPT being double stacked. So 1 out of those 3 is done, Jaipur been delayed. Maybe 1 more terminal comes in, that will help us push in this direction.

So how much is Jaipur delayed by?

We don't know when it will come in. We're basically waiting for the legal proceedings to get over.

And it's -- this has started since how long?

This is about a little over a year now.

So once you get the regulatory approval, you would be able to get it, right?

Yes.

And this is stuck with which board?

It's Delhi Adjudicating Authority.

Next question is from the line of Vikram Vilas Suryavanshi from PhillipCapital India Private Limited.

Sorry, in case the question is repeated because there was some disturbance in my line. What was the imbalance share in this quarter?

55%, 45% in favor of the imports.

55%, 45%.

Yes.

And can you repeat what was the EBITDA per TEU in Rail and CFS?

9,600 and 1,250 or 1,270.

9,600 and CFS was?

1,270.

Next question is from the line of Aditya Mongia from Kotak Securities.

And the first question that I had was linked up to the issue of discounts and maybe cuts in pricing. Could you give us a color of where have these discounts been more focused on within the market that you operate? Maybe a general color across the sea markets, how has pricing kind of moved on a Y-o-Y basis?

Sorry, I don't get the second part, but basically, this is Ludhiana that -- which has seen the highest level of discount. And what we're doing is kind of focused on [indiscernible] volumes so that we can at least double stack the cargo and still make a good margin on it.

Are the other markets starting in terms of pricing? Or have there been some pain over there also in, let's say, Delhi markets?

There has been, but not as much as Ludhiana.

Understood. The second question that I had was more to do with the competitors move of setting up a terminal in JNPT. Now I understand that the volumes coming from that perspective for you are limited. But does this lead to kind of limiting your gains from DFC once JNPT gets connected because someone already is setting up a terminal? Does that alter the way you think for JNPT over time?

No, it depends on where your original destination is. So for example, in NCR, like if we have a [indiscernible], like we cater to the Gurgaon, Neemrana, Rewari, this kind of market. So ultimately, it's the catchment area we have to focus on being near the port doesn't have any significant advantage from the ICD side.

Okay. The next question that I had was that I think both of your peers are talking about total logistics solutions, both Adani ports or logistics whether you want to think through it or Con cal. Now do we see through this becoming a trend? And do we need to be investing in this line of work? Or do you think that just doing the end-to-end rail transportation would work fine as a business model over time?

So we've been doing, say, inland end-to-end. We've been providing Rail, road and ICD under 1 entity since the beginning of our operation. There were some people who only were rail operators, some were only terminal operators. So we've had the philosophy, but we're not venturing into the port side or into the forwarding side, anything like that. But the domestic side is there. And then with Snowman also domestic distribution even on the dry side is happening. So we're more into that aspect of end-to-end.

Understood. Maybe just a final question over here. I think you've kind of talked about it, but is there any reversal of trend happening in favor of road because of maybe better connectivity that is starting to hurt rail operators? Are there any instances of customers shifting away from rail that you can think?

We haven't really seen anything on that front.

Next question is from the line of Prashant Kale from Star Capital.

Sir, my question is about further increasing stake in Snowman Logistics. Do we have any plan to acquire these Snowman Logistics and delist it in the future?

Sir, I didn't understand the question.

So now we are holding 51% -- more than 50% of the Snowman Logistics. So do we have any plan to further increase the stake in Snowman Logistics and delist the company in future?

No, we aren't thinking along those lines. So no immediate plans to increase our stake. Our first target was to cross 50% by March, which we've done now. So we'll evaluate after some time.

Okay. So there is no plan to increase it further?

Yes.

The next question is from the line of Achalkumar Lohade from Nuvama Institutional Equities.

If you could help us understand what has been the OCF for 9 months, cash flow from operations? And what is the CapEx number?

In the 9 months, the CapEx has been INR 20 crores, and -- what was your other question again?

Sorry, I'm not able to hear you, sir, clearly. Are you talking about Snowman or are you talking about Gateway Distriparks?

So CapEx figure is INR 20 crores for 9 months. And the OCF, we don't have it handy right now we will just check and get back to you within the next few minutes.

Understood. And what is the CapEx we should work with for current year and next year in the Rail business, Rail plus CFS to any which way. I don't think we'll talk about CapEx, but for the Rail piece?

Repeat it please.

Hello?

Yes, we lost the voice again. Can you just repeat your last question?

Yes. Rail business, what is the CapEx we should build in for FY '25 and '26.

So the 3 new terminals that we're talking about same figure let's say maybe about INR 250 crores, INR 250 crores to INR 300 crores in total when these are developed. Jaipur also when it comes in, there will be another INR 50 crores, INR 60 crores. Other than that, there will be probably CapEx of about INR 30 crores next year, INR 30 crores to INR 40 crores for the next 2 years. This is on warehouse capacity and equipment replacement.

So you mean basically INR 30 crores kind of maintenance CapEx plus greenfield INR 250 crores to INR 300 crores for 3 terminals, plus INR 50 crores, INR 60 crores, if and when Jaipur resolves? Have I understood, right?

Yes.

Got it. And if you could just give us the mix in terms of NCR, Ludhiana and Uttarakhand -- NCR, Punjab and Uttarakhand mix for us?

So we aren't sharing terminal wise actually, terminal-wise numbers we aren't getting into.

Understood. And -- just 1 more question in terms of the pricing scenario. Are you seeing any element of change in terms of pricing scenario in all 3 markets, NCR, Punjab and Uttarakhand?

Like you mentioned with Ludhiana is going through discounting, even the other places, there is discounting, but not to that extent. So no pricing improvement anywhere, but most of our, say, 80% or more of our business is stable pricing. And the operating cash flow is discussed -- INR 250 crores for 9 months.

INR 250 crore OCF for 9 months, right?

Yes.

Wonderful. Sorry, if you could just point out what has been the extent of discounting in the Ludhiana market?

It's commodity specific, weight specific, volume specific. So it's hard to get anything.

Would that be like 10%, 12%, would that be like 4%, 5%? Any range?

Ranging from 5% to 15%.

Ladies and gentlemen, that was the last question for today. Participants that have missed out due to time constraint can reach out to the management and SGA for Gateway Distriparks and Snowman Logistics for any further information.

With that, we conclude this conference. Thank you all for joining us, and you may now disconnect your lines.