Container Corporation of India hosted a conference call on Aug 11, 2023. In the conference call the company was represented by V Kalyanarama, CMD. 

Key takeaways of the call

Originating volume in Q1FY24  - Exim was 466970 TEUs and Domestic was   104476 TEUs totaling at about 571446 TEUs.

Month of April 2023 though subdued, traction was witnessed in the month of May 2023. But the Odisha train accident in eastern sector has affected the running goods trains for whole of the month resulting in container imbalance in domestic business. Operations in western sector are also impacted for 15 days due to cyclone etc. Moreover the unseasonal rains across the country have also impacted the operations of container trains during June 2023.   But in Q2FY24 the company sees tailwinds, the demand is good except for certain government decision such as banning of rice exports etc. So the company sees no need to revise the guidance given at the start of the current fiscal.

Disruption in service in both Eastern and Western sector, inability to recover fixed cost with lower sales and LLF cost has impacted the profitability in Q1FY24. The company is expected to recover the bottom-line in balance quarters of current fiscal.    

LLF – When moved to the new LLF regime the company expected a LLF of Rs 450 crore per annum. The company has paid a LLF of Rs 392 crore in FY23.  But the Tughlakabad terminal rates were under discussion and finally concluded during Q1FY24 resulting in additional LLF cost of about Rs 100 crore compared to last year LLF amount. So the additional LLF works out to about Rs 22-23 crore per quarter.  Moreover     Q1FY24 LLF fees of Rs 129.9 crore include dues pertain to last year that roughly works out to about Rs 10 crore.    So normal LLF for FY24 will be Rs 392 crore plus Rs 100 crore totaling to about Rs 492 crore.  Now land rates are fixed for all 26 land parcels. If state government revises the rates it will have impact on LLF. The marginal adjustment will continue to happen this fiscal and next fiscal as well.

Not see any reason to review the guidance given at the start of current fiscal.  Confident of attaining the guidance of 10-12% volume growth for FY24.   

Rice exports ban will impact the throughput both in EXIM as well as domestic.

Realization drop is because of drop in topline disruption in service in western and eastern part of the country.  The LLF increase have also impacted the profitability. The company expected to recover the bottom-line.    

Market share of the company in JNPT was 60%, Mundra was 37% and Pipavav was Rs 45%. Gaining back market share in all the 3 western ports of JNPT, Mundra and Pipavav.  Rail coefficient at JNPT is 17%, Mundra is 24% and Pipavav is 52%.

Not sacrificing margin to provide discounts. The company gives discounts out of the savings such as operation of double stack container trains etc. 

Container manufacturing in India has picked up some pace.  So far procured 1800 containers and expected to  add 5000 new containers (about 400 containers per month rate) in FY24. Added 4 rakes in Q1FY24 and plan to add 24 rakes in whole of FY24 as the supply chain issue were sorted out with IR. 

Planned capex for FY24 is Rs 600 crore (vs. Rs 568 crore in FY23) and that is largely towards Rs 200 crore on wagon acquisition, Rs 200 crore for container purchase, Rs 150 crore for new terminals and balance Rs 50 crore for miscellaneous items.   

The rail freight margin in Q1FY24 has increased to 26.19% from about 25.6% in Q1FY23.   So with lower STO, the fixed cost has hurt the overall profit margin.

Lead distance in Q1FY24 was 804 km as against 777 km in Q4FY23. 

The bulk cement transportation through general container rule in domestic sector that expired on May 21, 2023 was not extended by IR and the company is taking it up with railway board for extension of the same.  The company is not handling bulk cement.