Key takeaways of the call

Originating and Handling volume for 9mFY20 declined by 3.8%yoy and 1.5%yoy respectively.

The immediate term outlook is challenging with on account of both domestic as well as external factors. While domestic economy downturn continues, the recent breakout of Virus in China will hurt the imports volume.

Originating volume for the Q3FY20 stood at 555378 TEUs (down from 610223 TEUS in Q2FY20). Of the Q3FY20 originating volume the EXIM volume was 484816 TEUs (down from 541375 TEUs in Q2FY20) and the domestic volume was at 70562 TEUs (up from 68848 TEUs in Q2FY20).

Handling volume in tonnage terms for 9mFY20 stood at 30.88 million tonnes (EXIM 25.27 mt; domestic 5.61 mt) down from 32.56 mt(EXIM 26.77 mt; domestic 5.76 mt).

The market share of the company for Q3FY20 was around 68% compared to about 73% in last year. The market share is maintained around 68% for the last 3 quarters. The company is not engaging in pricing wars and continue to shun away from negative margin short lead routes. However the company has maintained market share in long lead distance market.

Lead distance for 9mFY20 was 785 kms with EXIM lead distance stand at 721 KM and domestic at 1352 KM.

Rail Freight margin for Q3FY20 was 27.46% and that for 9mFY20 it was 28.19%.

Double stack containers rail operated in Q3FY20 was 602 trains.

On domestic business the company has run some trails as far as transportation of food grains in bulk and there was good interest. Similar thing was also worked out for Cement. So Q4FY20 and FY21 could see rampup in volume of bulk food grains and cement for domestic business. Cement is not in restricted category for container movement. While it is not viable to transport Cement in bags in container due to higher rates, the movement of bulk cement in container is viable due to differential rates. The bulk commodities will be moved through GP Containers and no special containers will be used.

The NCR- Mundra DFC rail connection is expected to be operational by June 2020. When the company ran timetable between NCR and Mundra there was strong interest but with congestion and no time guarantee could not be offered these demand switched back to road. Once DFC comes in and time guaranteed delivery could be offered, the demand will come back to train.

Capex spent till Dec 2019 was about Rs 260 crore and the company expected to spend full planned capex of Rs 1000 crore for FY20 fully in Q4FY20.

Empty running charges for 9mFY20 stood at RS 152. 63 crore of which EXIM was Rs 83.28 crore and Domestic was Rs 69.35 crore.

The company is to commission 7-9 MMLPs in FY20. Due to bad times the company will be closing down some older terminals and open newer terminals.

The domestic margin in Q3FY20 was hit partially by inability to recover full cost on coastal shipping. However excluding coastal the company has maintained its margin. As being a new entrant to coastal shipping the company is offering discounts.

The company will soon launch East Cost service in coastal shipping.

In 9mFY20 the port wise contribution is 32.64% by JNPT; 31.26% Mundra; 15.16% Pipavav; 5.71% Chennai, Vizag 6.86% and Kolkata 2.19%.

The company continues to maintain a market share of 67% of JNPT volume, 45% of Mundara and 51% of Pipapvav rail container traffic.

As of now the company has 40 terminals on IR land and the licensee fee is based on Per TEUs handled.

Opex for Q3FY20 was lower as there is an adjustment of RS 45 crore on account of LLC which was paid excess in Q2FY20 was adjusted in Q3FY20.