Highlights of con call:
Increased volume. Revenue has gone up despite challenges. Growth on account of just volume.
FCL business – up by 35%
LCL volume – up by 7%
EBITDA down because of several reasons. Lower capacity utilization, declining freight rates, challenging shipping environment, prudent accounting policies.
Volatility in freight rates. Worst shipping cycle industry is going through. Increasing FCL business, but margins in FCL is lower than LCL. But GP is absolutely the same.
Will remain market leader in LCL. At the same time, FCL is also growing.
MTO is outgrowing the industry. Breakup - 60 to 70% come from the land side. 30% come from ocean.
Plan is to consolidate position organically and inorganically and building digital platform.
160cr orderbook in project division. In equipment division, utilization went up from 30% to 50%. Revival in 8 sectors when P&E operates. Coal, Crude oil, natural gas, refinery products, fertilizer, Cement, steel, wind, and power. Windmill sector is especially revived. Lots of projects auctioned. Have relations with top players – GE, Suzlon. Signed up to supply equipments to some of them. Will stay for much longer time.
P&E is not capital efficient. Poor ROCE. It’s mainly due to provisions made for the equipments leased out, but not getting money for it before the 180 days cycle. It’s not that they are bad debt. Most of the amount is recovered. But they were recovered after the 180-days cycle with interest. Since the recovery is done after 180-days cycle, provisions have to be made, hence bringing the profit down in this division. Due to asset centric business, working capital requirements, ROCE is not upto the mark.
Asset depreciated up to 70%, by increasing utilization, and better yield, expecting better numbers going forward from this division. It’s a debt-free division.
500cr invested in this division is not making any profit. Not planning to invest anymore in this division. Trying to get more out of the existing assets.
Strategy – Monetize the existing land bought years ago. 100 acres outside Bangalore. Only company to own such land parcel. 40acres of land in Hyderabad. Started construction already. Plan is to build and lease it to MNC’s. Good demand is coming. Land in Nagpur too. Not decided what to do with that.
Demad for grade-A warehouse is rising.
Big restructuring happening because of DPD. A lot of decisions will be made by consignees.
Kolkata CFS that commenced operations last quarter is doing well. Only national player in Kolkata. Breaking even in just 3 months. That’s remarkable in current situation.
Jhajjar Logistics park:
It’s in the first phase of development. It will take 18 to 24 months for construction. In the first phase, only land is acquired. 93acres of land for building warehouses. 29acre land for Rail.
This will be in standalone though land is in subsidiary (which is 100%)
3 modes of revenue planned
- Warehouses – 93acres land acquired. Warehouses for ecom companies, industries.
- Rail – 29acres land acquired.
- ICD – Land needed.
Next step is to apply for approvals. Plans are being made for this park. Will be shared with the stakeholders probably during next con call.
Plan is to scale up multifold. And to become dominant player by 2022. Pre dominant player in Chemicals, pharma, food, auto, engg, fashion, retail. Grown from 1.5 mln sq.feet to 3.5 mln sq.feet.