Key takeaways of the call

EXIM scenario is not good with economy under strain and that hurt the volume handled.

Originating volumes in Q1FY20 declined by 5.6% to 558942 TEUs [EXIM volume at 491944 TEUs & Domestic volume at 66998 TEUs]. But the overall volume handled in Q1FY20 was down by 1% to 926923 TEUS (EXIM down 1% to 786442 TEUs & Domestic down 1% to 140481 TEUs).

In Q1FY20 the lead distance in EXIM was 712 km and in domestic it was 1366 km.

The market share of the company has come down a bit in EXIM as the company is not taking up low margin volume and low lead volumes. The company lost about 3% market share in EXIM side. But in domestic the company maintained or even managed little increase in market share to domestic 64.8%.

The volume growth guidance of 10-12% for FY20 is dependent on economic growth of the country. If the economy grows around 6.5-7% as projected by the Government the company is confident of achieving it.

SEIS Income: Government not yet given the notification and once that come then the accrual will come. In 18-19 the notification come in Q1 so the company accounted it starting Q1 onwards. But in 17-18 the notification had came in Q3FY2018. No doubt of getting SEIS income it is a question of budget allocation.

MMLP and Distribution logistics are different with former largely focus on container logistics, destuffing and stuffing and despatch and in the latter is focused on warehousing, inventory management and distribution. The company will be starting another four distribution logistics centre in current fiscal to the one it currently has in Chennai and the tender will be out soon to select the business partner. The business model is share of revenue and cost between business partner and Concor. The company will bill and take out its share and give what is due to partner.

Coastal shipping – Currently operates 2 services on west coast and it is well received in the market. The company will be starting service in East coast soon connecting upto Bangladesh. Coastal shipping is expected to contribute Rs 150 crore to top-line in FY20 and in Q1FY20 it contributed about Rs 38 crore. The full coastal shipping service commenced only by end of Q1FY20. The 700 TEU capacity vessel is fully loaded so far its voyages.

Having announced price stability for current fiscal, the company is not to change the price in current fiscal.

The debt is nil/zero as end of May 30, 2019 as the company as repaid the Rs 700 crore of Working capital as end of May 2019.

The company has added Rs 300 crore to the FD. The cash and Cash equivalent as end of June 30, 2019 was about Rs 1000.

In domestic segment the company expects to maintain volume. With DFC more volume will get added. Movement of commodity in bulk in container is where the company is working on and the company is optimistic of picking up volume once the solution, which are currently under trail are implemented. Once these solutions are implemented there will be lot of volume in domestic segment.

The company has operated 758 Double stack trains in Q1FY20 compared to 829 trains operated in Q1FY19. The company has added high capacity wagons (68 tonne carrying capacity) in double stack trains.

There was more empty running during Q1FY20 as the shipping lines are repositioning empties. There is no margin in empty running. However with railways offering discounts in tariff for empties, the empty running cost has come down to Rs 48.9 crore (Exim Rs 28.2 crore; Domestic Rs 20.7 crore) in Q1FY20 from 58.09 crore in Q1FY19.

Road has become more effective with more carrying capacity. Once DFC come in there will be shift in cargo to rail. Road can't compete with rail as it can't pick up all the cargo especially heavy weight volume.

Port wise contribution: JNPT 32.7%; Mundra 32.7%; Pipavav 15.8%; Chennai 5.35%; Vizag 5.82%, Kolkatta 2%. The company enjoyed a market share of 71% in JNPT, 46% in Mundra and 53% in Pipavav.