Container Corporation of India Limited (CONCOR) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Container Corporation of India Limited Q2 FY '21 Earnings Conference Call, hosted by DAM Capital. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Ms. Bhoomika Nair from DAM Capital. Thank you, and over to you, ma'am.

Yes. Good morning, everyone, and I would like to welcome you to the Q2 FY '21 Earnings Call of Container Corporation of India. We have the management today being represented by Mr. V. Kalyana Rama, Chairman and Managing Director. I'd like to hand over the call to Mr. Rama for his initial comments, post which we'll open up the floor for Q&A. Over to you, sir.

Thank you, Bhoomika. So this quarter, we have encouraging operational performance. This, in fact, aided by a major extent by our performance in September. I would be very glad to share with all of you, in September, we did better than last year. That's a very encouraging thing. The demand has picked up. Domestic demand was continuously there. Of course, during the lockdown, due to a problem about the moment. But after that, the demand really picked up. We are doing well in the domestic sector. And from September onwards, even the EXIM sector, the demand started picking up, particularly the exports are very encouraging from India. Imports are also picking up, but not to the same level as of the last year. So with that, there is some shortage of boxes for export in India. Looking at days and to elevate this problem and also taking that as a business opportunity, we started providing boxes for export to Iran. This is a new stream we started. During the quarter, we supplied around 19 boxes of trial shipment and this is picking up. We are also looking at starting some more short services on overseas, such as Middle East and Iraq. So these are the new business opportunities, which we are getting in this tough situations. And all of you know that Bangladesh, we started running trains and that is quite encouraging. Demand is picking up, certain initial keeping problems we are sorting out there. Our CapEx program is intact going on, except that due to some restrictions on imports from China, we stopped importing our containers, which we were otherwise doing. We got around 8,500 out of 12,000 order, rest we canceled. We short-closed our contract. But we are investing netting our rakes. These new rakes are higher capacity rakes, which are DFCCIL compliant. So once DFCCIL becomes operational, we will be able to run them with the higher payloads, a payload of 25 tons on these wagons. Three of such rakes are already inducted, and we may be inducting around 10 crore rakes in this year. As far as management is concerned, we are optimistic that the things will look up in the rest of the year, and we will be able to cover a lot of ground, which otherwise, we were thinking that we may be slipping out. But now things are looking bright. So a revised forecast, what we forecasted in the beginning of the year that we may be around 20% less than what we did last year. But now we are feeling that we make cover some ground and may come up to 10% less than last year or even better those figures, maybe better than 10%, even closer to last year figures, we may be able to perform. And the future outlook is definitely good for logistics. There is no change in the long-term growth story. It's intact. And all the new -- other new businesses, what we started, we are going as per our plans. Of course, a little bit of slowdown happened in the -- again in the COVID pandemic times. But now we, again, put them back on to the tracks we are working on them one by one. And regarding the land license fee, so I think there is a lot of concern before a number of questions only on land license when we been asked to save time, let me share with you. Please listen to me carefully about this. Now today, we are operating 28 terminals on railway land. So the railway land, which is -- were being used by CONCOR, we have to pay the lease charges, which we call them land license fee. As per the rules applicable, as per the surplus of Indian Railways, which are in work today, according to which, the calculation is to be done. So the management is very confident, and we did the calculation. The total liability on that account will be 400 -- to the approximation of INR 450 crore for the whole year. And we are recognizing the liability in our P&L statements and balance sheet at that rate only, that is in Q1 as well as Q2. Of course, we do intimate that there was -- there is a demand notice -- there was a demand notice which was received by us to the tune of INR 1,280 crores from Indian Railways for 13 terminals. This is a good corporate governance practice which your company always follows. So this is a demand notice issued by railways. It is not recognized by us. And then we are very sure, management is very sure that the calculation, which we have adopted and where we are recognizing we'll be able to finalize that with Indian Railways. Because ultimately, the final authority is Indian Railways in this. But no authority can take beyond the decision, which is as per the rules. So this much I can share with you now. So the INR 1,280 crores figure is a good corporate governance practice intimation only. Our recognition of this -- on this fact is INR 450 crores. All of you may please note this. And I request people not to ask more -- further questions on this. So I've very clearly clarified this issue. And again, I repeat, we are very confident that the total liability on this account will be INR 450 crores for the entire year. And we are very sure that we will be able to finalize this with Ministry of Railways without any doubt. Thank you, Bhoomika.

[Operator Instructions] The first question is from the line of Atul Tiwari from Citigroup.

Yes. Sir, Congratulations on very strong performance in the September month and increasing the guidance for the year. That's very encouraging in a tough environment. And sir, again, though you gave clarity on LLF, so I won't ask any question on LLF issue per se. But just any comment we read in the newspapers, that government is now looking to reset the basis for calculation of LLF from 6% of land value to anywhere between 2% to 5%. So would you be able to throw any light on that? Is -- I mean, is it true, not true or is it very speculative?

Atul, no comments. See, these are all media reports. So I think that's why I took time to explain to all of you that as per the present circulars invoked, what will be the liability. So there will be lot of reports in media they keep coming. So we can't discuss them officially.

The next question is from the line of Lavina Quadros from Jefferies.

Congrats on the good set of numbers. Two questions from my end. One is, sir, any one-offs in your other expenses? Which maybe you had some write-back or something on that nature, which has helped results. And secondly, sir, I don't want to ask at all about the absolute LLS, but in terms of time line, do you think that whatever the number is, it gets resolved by this year end? So in terms of timeline.

The timeline is very clear. By the end of the year, this will get resolved because that we have to close our balance sheet at the end of the year. I can't keep on contingent liabilities, unrecognized liabilities on my balance sheet. So it will definitely be resolved by the end of this financial year. But I think I've made very amply clear in my initial remarks.

And...

One-off thing, our DF will answer your question. Is there anything, Manoj, one-off?

No. Nothing happened there except the enhancement by nearly INR 70 crores in LLF, basically last year, there is no other item which is significant enough.

So there is no one-off in this quarter. And the LLF is the same rate what has been taken in Q1 is in Q2. So this is what is for this financial year.

The next question is from the line of Amish Shah from Bank of America.

So the realization per TEU this quarter has been weak Y-o-Y. So is that on the back of a lead distance issue or something else at play?

I do not get you. What is -- you are asking realization?

Sir, the realization per TEU this quarter was slightly weaker on a Y-o-Y basis. So was it on the account of the mix and the lead distance or was it on account of something else?

No, it is because the -- more of empty boxes we are transporting in EXIM sector. The imports are less, and we are transporting more empty boxes into hinterland. On empties we normally charge less; we don't take full margins on empties. So that has actually reduced our realization little bit.

Okay. So it was a mix issue, sir. So generally, you give these numbers of what was the empties and double stacking, et cetera. Can you give those this time too?

Yes, yes. If we -- and the realization is less because the LLF is around INR 70 crores more in this quarter compared to the corresponding period of the last year because of increasing LLF. So last year, LLF was charged on the basis of TEU, and now it is a fixed percentage of the value of the land. And regarding the lead and the double stack, our Director, Mr. Sanjay will share you the numbers.

Double stacks, in fact, we have increased as compared to Q1. This quarter, we have done 673 double stacks whereas last year in the same quarter, we were doing -- we had done 674, only 1 we had more. But as far as lead is concerned, our lead has dropped quite a bit from a 858 -- sorry, from 786 kilometers, it has gone down to 752 kilometers in this financial year for the first half.

Got it, sir. And the lead distance is predominantly on account of inter port movement from JNPT to Mundra? Or what extent the lead distance cut, sir?

We -- actually, we transported because of the problems on the road network, we did do a lot of short distance movement, very short distance, like extension gates we ramped. And we did around 22,000 TEUs in that at Chennai and Mumbai. The distances are something like 20 kilometers. So that actually brought down the lead distance.

Okay. So now as the road is back, so should the lead distances improve...

I think 2 questions per participant, I'm sorry, but I will answer this. The road is not the issue here. Road, there is a problem. But now the extension gates we are not running. Thank you.

[Operator Instructions]. The next question is from the line of Rushabh Sharedalal from Pravin Ratilal Share and Stock Brokers.

Congratulations on a good set of numbers. Just had one question. I understand that the disinvestment part pertains to DIPAM. But all I want to know is that, let's say, if tomorrow, DIPAM comes up, then is anything pending from CONCOR and to conclude the disinvestment part on the part of the company, all that I want to ask.

Very hypothetical question this one. I have no comments on this.

Sorry, sir?

I have no comments on this. This question is -- I think it's very hypothetical.

I mean all I want to know is whether any...

Sorry, partner, sorry, we can't answer this questions. These are beyond the conference calls. Okay?

The next question is from the line of Ankur Periwal from Axis Capital.

Congrats for a decent performance. Can you share the originating volumes for this quarter as well as the empty running losses, which we -- you used to report.

Originating volume for this quarter are: in EXIM, it is [ 472428 ] TEUs, domestic [ 68195 ], total [ 540623 ] TEUs.

Okay. And sir, empty running losses?

Empty running, EXIM it is INR 42.99 crores; domestic INR 46.37 crores; total is INR 89.37 crores.

Sure. And just a follow-up on this.

The is for half year. This is for half year. Empty running is for half year.

Which is where I was wondering, fair enough. So the reason I was just referring to that was you did mention mismatch in export the availability of containers and hence, probably some uptick in the empty running movement. Has this problem solved now?

Empty running has come down because we are building some circuits and we did more a double stacking. So the empty running has come down compared to the corresponding H1 of the last year.

[Foreign Language] overall.

Overall.

The next question is from the line of [ Siddharth Gupta ] from [ A S Stock Broking ].

So congratulations on your posting such excellent results. But, sir, one immediate reaction -- in today's interview on CNBC the Secretary of Economic Affairs spoke about the disinvestment being completed by this year. Do you think that the resolution of the land lease policy would be done before the land lease policy is fixed? And if at all, if the land lease policy amounts to a charge of INR 900 crores, would the balance sheet be in the next quarter we make contingent provisions for the same?

Okay. I think I talked about at length in my remarks, opening remarks. So here are 2 things. The circulars applicable to CONCOR will be the total land licensing fee liability is INR 450 crores. There will be no change in that. Now regarding divestment, whatever statements secretary economic affairs is making that in his capacity, secretary to economic affairs he is talking. So let's take it as the authority talking on that. That will not affect the liability of your company before divestment. If it is divested, the scenario changes. So that we'll come to know once the divestment in the EOI is released by DIPAM, then these things will become clearer in the EOI. So it will be known to everyone. So once the divestment process starts, these things will get clarified. Government as the largest shareholder of the company, which is trying to sell their share, they will come out with the terms and conditions at what terms and conditions they are selling this company.

Is the management planning on making contingent provisions in the next quarter to account for the worst-case scenario of the LLF rates not falling.

There will be -- see, I don't know why you are asking this question after I -- again, clarified now to you that as for -- the liability will be this. So I think I made it very clear, isn't it?

The next question is from the line of Deepika Mundra from JPMorgan.

Sir, firstly just wanted to get a sense of rail coefficient at various spots and as road normalizes, do you expect to sustain the market share gains that rail has made versus road. And sir, second question on the lease liability. Just wanted to know what is the current tenure of the lease liability? And does it get extended?

Lease tenure of the lands?

Yes.

Yes, lease tenure of the lands, you see it varies from terminal to terminal because these terminals on the railway land developed over the period. And they get extended as and when the lease is getting expired. So that is -- many of the places we got sufficient time with us as the lease period. So there is no problem on that account. And we have no worry. And I also can assure all the investors, they need not be any worry on these lease tenures. Regarding the railway share in the ports, they have very good measures taken by railways in consultation with us. That is introduction of timetable trains and also giving a lot of importance to the freight traffic on Indian Railways system. And so the endeavor is to see that whatever the percentage gains we got during this time on the rail mode to maintain that and sustain that increase and see that this traffic continues with the railways.

Got it. Sir. So just to reclarify for the INR 450 crores would be applicable for quite some time, given that you have significant lease tenure left on the lease.

Lease tenure is not an issue at all. The lease liability, which we call land license fee, is INR 450 crores for the whole year.

Okay, sir. Sir, just want to clarify that that INR 450 crores persists still the tenure of the lease liability extend. I mean with the escalation clause, of course?

There will be -- see, this year, INR 450 crores. Next year, we will tell you at the beginning of the year, what will be the lease liability. Okay, Deepika?

The next question is from the line of Achal Lohade from JM Financial.

Sir, can you help us with the rail freight margin for the quarter -- current quarter as well as the last year same quarter?

Yes. Rail freight margin for this current quarter is 29.9%. And last year same period, it was 28.86%. So there is an improvement of 1% in rail freight margin.

Right. And what is the expectation? Because I remember a couple of quarters ago, you had talked about 30 -- 33% kind of for rail freight margin. What is the outlook we should work with, like, how...

Maybe you fix and talk slowly, we are not able to hear you properly.

Okay. What would be the rail freight margin for the full year or for next year, broad indication, sir?

We will be maintaining the rail freight margins. See, whatever we gave last year, we will be definitely maintaining that, or increase or improve on that. As I mentioned, I think now 2, 3 times in these conversations that this is because of secured building and also the better utilization of assets by double stacking and trying to get more in the empty direction -- empty movement directions.

Understood. And with respect to the lease terminal, a, we have, in the past, indicated that whatever we wanted to surrender, we have already surrendered. So is there a possibility that we can -- if required, we can move the cargo to other terminals from these lease terminals? Is there a possibility for any of these terminals?

See that is a -- see, this business reengineering is a continuous process. It is not that today, I decide I will do this. So as the trends are emerging and as the business is emerging, so we will be working on these things. So when we worked out that our 18 terminals we can surrender, and we will move -- we can take all that business to other terminals. As of now, 28 terminals we are operating. And as and when the opportunity comes, we will move the business to our own terminals and try to surrender to reduce that cost. That endeavor will always be there. But as of now, these 28 we are operating. Okay?

Sure, sure. Got it. And just a clarification, sir. Are other operators allowed to access our terminals, the lease terminals or they are not allowed to access...

Everybody can access my terminals at a cost. It is a commercial proposition. Now this access we have given to all the people whoever wants to access our terminals but this access will be at a cost to them at an opportune income to us. We will charge for accessing our terminals that will be negotiable with the particular operators or it is one and same for everyone who will access. But those things we will be notifying time to time. What will be the charges. It's no free access. There is no free lunches to anyone.

And there is no change in the policy with respect to that?

What policy you are asking for? This is a commercial organization, man. Commercial rates will be there.

The next question is from the line of [ James Jin ] from Principal Asset Management.

I had 2 questions. First was on the DFC time line. What are the key announcements that we are looking at in terms of the time line? And the second question will be on the engagement with our port operators. Have we engaged the port operators with regards to the DFC, is there a lot of indication that more volumes are coming our way.

Which operators you are asking? Engagement with?

Sir the port operators, have we engaged with some of the port operators to discuss about the volumes that will come once the DFC is ready.

With other operators? With other railway operators?

No, sir, I think he means port operators.

The port...

Pardon. What he is asking? I'm not able to listen to him properly. See regarding DFC time lines, I can tell you, the expectation is by the end of this financial year, the DFC, western DFC will be operational between Rewari-Palanpur. So the interesting section for us will be from Kathuwas where we got our terminal. We will be operating on DFC from Kathuwas to Mundra and Pipavav ports. The second question, I could not understand what you are asking.

Yes. So the second question is really, have we had discussions with the port operators with regards to the demand that they will provide us once the DFC is ready?

No. See, we got sufficient volumes with us to run trains on DFCs. So we don't require somebody else to come and give us volumes to make trains run on DFC. If that is the doubt because I'm not able to still listen to you that there is absolutely -- we got our own volumes. And you see, even today, we run something like 10, 12 double-stack trains that will, if DFC, if they increase the length of the train as originally planned, which is not very clear as on day, this 12 will become 6 trains. So still, we'll -- we got volumes to do 6 trains in the current scenario, and we are working on some business reengineering that we may increase in longer trains, which are 1.5 kilometers in land, we may be able to run 8, 9 trains on our own. So we don't require any consolidations to run trains on DFC.

The next question is from the line of Shrinidhi Karlekar from HSBC.

Sir, I just want some clarification. If I refer annual report, sir, the land license fees that we paid in the -- that is FY '20 annual year is INR 40 crore, which is kind of lesser than we talk about, which is in the range of INR 140 to INR 150 crore. I just wanted to know why it was so low in last financial year?

That is because of some one-off adjustments we could -- we made because of some receivables were there for us from railways.

Okay. And did it happen, sir, in last quarter of FY '20, like, we were providing at the rate of something like INR 30 crores, INR 40 crores per quarter. And in the last quarter, we kind of adjusted that. Is that the right understanding?

For the FY '19/'20, you are asking?

Yes, sir, FY '19/'20.

Q2 conference of 2021 you are asking FY '19/'20 questions now to me.

Sir, I just wanted to know from an accounts perspective, why it was low because you were raising guidance...

I have already told you, it's one-off adjustment, one-off adjustment.

That was only Q4 figure.

Okay. Fair enough. And sir, second question I want to ask is that I think we had taken some price hike, and it was deferred till October. So I just wanted to know, has that been instituted and communicated to our clients? Like, has that been notified now?

Price hike? No, we deferred the price hike because looking at the situation and -- in the Indian market. And of course, the exporters, importers are at lot of pain. So we decided to extend the thing for further some more time. So we are not increasing our charges. We got sufficient margins that you have seen from the quarter results. In fact, increased our rail freight margins, we increased our operating margins in this quarter. So we are very comfortable with our margins. We don't want to further charge that. So as of now, the price hike has been deferred -- further deferred.

Okay, sir. And sir, last one, if I may. Sir, we talked about diversifying business, like, generating a lot of business from bulk cargo movement? I know you touched upon that it has been a bit impacted because of COVID. But I just wanted to know what are our plans in that part of the business?

They are very much intact. We are working on that. So as I said, there is little slowdown because of COVID, otherwise, all our plans are intact, and we are working, continuous on them.

The next question is from the line of Prateek Kumar from Antique Stock Broking.

My first question is you highlighted this data on market share at different ports, at rail coefficient. Can you just give that data, please?

JNPT 37.3%. Mundra Port 30.6%, Pipavav 10.7%, Vizag...

Sir. Sir, what is the Mundra number you said?

30.6%.

This is port wise CONCOR volumes you are suggesting, right?

Yes, yes, yes.

Yes.

And Vizag 6.5%, Chennai 7%. These are the major contributors to our volumes.

And sir, CONCOR's share at these JNPT, Mundra, Pipavav, the share which you give data?

Yes, JNPT, actually, out of the total rail volume, our share is 66%, Mundra Port, it is 42% and Pipavav it is 45%.

Okay. And sir, rate coefficient data also you gave...

This is for the first half of the financial year, I'm telling you. Rate coefficient, JNPT is 23%, Mundra Port 25.4% and Pipavav 51.5%.

Pipavav is how much?

51.5%.

Okay. So there's a sharp drop in Pipavav, it seems?

Yes, yes. 10%.

Sure. And just, sir, on lead distance, you mentioned on -- as a company as a whole, can you give this EXIM and -- separately, EXIM and domestic?

What do you want?

You mentioned lead distance for the whole company. Can you give it segment size EXIM and domestic for this quarter?

Yes, lead distance -- I have the -- for the half year. For half year, the EXIM lead distance is 681 kilometers. Domestic, it is 1,328 kilometers. Total 752 kilometers.

The next question is from the line of Bhavin Gandhi from B&K Securities.

On we being a PSU. That's all that I wanted to check.

Mr. Gandhi, can you repeat your question, please?

I just wanted to check if that INR 450 crore calculation of ours is contingent on we being a PSU?

It's yes. One way it is, yes, it is not a question of PSU. It's the same owner. So that implies. If ownership changes, they can put new conditions.

Sure. Got it, sir. And second is, sir, the tonnage data in million tons for EXIM and domestic if you can provide.

Million ton for first half of the financial year?

Yes. That would be okay, sir.

Yes, it is -- EXIM, it is 14.7 million tons, domestic it is 3.63 million tons, total 18.33 million tons.

The next question is from the line of Atul Tiwari from Citigroup.

Sir, this INR 450 crore being contingent on CONCOR being a PSU. So does that mean that this demand by Indian Railways is calculating it as per the private parties and you guys are calculating it because you are a PSU. Is that right understanding?

See, it's not a question of PSU or private or anything. It is based on the rules applicable on the land license as per the circulars now invoked. So that -- see, the calculation, what the -- we are getting demand notices is because people are not able to calculate properly, that we are now trying to clarify and settle these things with the Minister of Railways. So we work at the Board level, the demand for us comes from the divisional level. So then the difference happens. So that's -- it's complex now. I have to explain the entire railway working. So take it as it is that we are now working at the ministry level. The demands at the field is at divisions. There are 74 divisions on Indian Railways today. So wherever we are having our depots, those divisions will drive this demand. So there is -- this conclusion is going on, that we will sort out. But otherwise, the liability will be for INR 450 crores.

Okay. So sir, just to -- I mean clarify because this is kind of a crucial issue for the stock price. So this difference of opinion between CONCOR and railway is not dependent on treatment of land lease to a private party versus treatment of land lease to a PSU. It is not that different.

See, first of all, there is no difference of opinions here. It is a question of interpretation by people in the -- working in the offices. So these are all -- there will be so many babus sitting there, somebody will work out and send a notice. So let's leave that at that. The land -- yes, the second thing is there is no difference the land leased as a PSU or somebody else. But the government policy as on date is land is only leased to the -- railway land is leased to only PSUs. It's not leased to private people.

Okay. So is there a set -- okay. So there is -- so there is no separate set of rates for the private party as of today.

Atul, I think I told, now many times I have to tell the same thing. What you are trying to ask me. I said there is no policy today by the government railways to lease land to private people. That is -- I'm answering your question, isn't it.

The next question is from the line of Krupashankar from Spark Capital.

My first question was on the competitive intensity. Can you throw some light on how things have been progressing, at least on the long haul wherein you had earlier indicated that the discount levels were quite high? Can you throw some light on that, sir?

Long hauls, what long hauls you are mentioning?

No, sir, discounting on the long hauls, there was massive discounts, which have been provided.

I do not know what -- long-haul -- discount on long haul. There is no concept of long haul in container trains. Where from you got it? I'm not able to...

No sir, discounts on freight rates -- just discounting on the freight rates part?

You see, container trains, there is a discount on container movement. Container movement is based on haulage charges announced by railways. So there was some discount given at the beginning of this year, 25% on the empty movement and 5% on the loaded movement. That is a discount across the board for all the container movements. That is what you are talking about?

No, sir. On the long lead distance, so there was an indication that there was been the discounting provided. There has been a massive increase in the competition. And also on the short lead, also, there was a rate...

No, no, no. My request to you is don't go by these media reports and frame your questions. There is no discount on the container movement. And there are movements, as I said, only 5% on loaded traffic, 25% on empty. traffic across the board, there's a discount given by Indian Railways.

Right. My second question is on the LLF assessment, which was provided by Indian Railways in June. So just wanted to understand...

I don't want to answer any further questions on LLF. I'm sorry.

No, sir, I'm just -- there's no question on any projection or anything, sir. I just wanted to check that have you surrendered Okhla and Patna terminal after that circular was provided? Just wanted to know that, sir.

Yes. Obviously. After the circular came, the new regime started from first of April, and we surrendered in May, these terminals, 18 terminals. We started surrendering from May onwards. So after that circular came.

Okay. So Okhla is surrendered. That's what I'm talking.

Okhla is...

DCT Okhla has been surrendered?

Okhla is surrendered. We already mentioned that to the information to the stock exchanges. Surrendered.

The next question is from the line of Pulkit Patni from Goldman Sachs.

Yes, sir. Sir, my questions are not on LLF. Sir, my first question is on rail freight margin. We've seen about 100 basis points Q-on-Q jump. Could you highlight what exactly is driving this margin improvement? And how should we look at this margin going forward, given that, clearly, the outlook is looking a lot better for rail freight in general?

Why the rail freight margin improves? I think this we discussed many times, again, I will repeat that. It is because we build circuits. We run double stacks, and we try to optimize on and cut down on our empty running. So our empty running cost has come down again this quarter. So this -- now if you ask me how far we can go. There will be some limit to it. But we keep on working on how fast we can do this. So the rail freight margins, I can -- I remember this from the time I came on this Board and now for 4 years, I'm working as CMD. So in the -- we started, we were -- we used to be around 21.5%. Now we came up to 29.5%. Now whether we can further like this growth trend will go? That, I can't tell you. But definitely, we will be working on. So if DFC comes, we can run more double stacks. We run longer trains, maybe the rail freight margins may further increase. And if we can find the logistics, always the problem is the return loads, whether it is road, whether it's rail, so there will be demand -- more demand for one side, there will be less demand for the other side. So for example, north to south, there will be more demand on loaded traffic. South to north, there is a less demand of loaded traffic. We used to -- we have to reposition containers. So we started coastal and we tried to do some adjustments in that. And so we keep on working on all these things. So if we can find some traffic where we can build another triangular circuit or a quadrilateral circuit and cut down on empty running, further increase for the margin, rail freight margin. There is always a scope. What is the number and what can be the trend? I can't assure you. I can't give you any guess figures on that.

Sure, sir. But from our perspective, at these levels, it's something we should assume can sustain, right?

We are doing conference to give you the outlook of the company. What will be the stock price, I'm not concerned because...

No, sir, I'm asking about margins, sir. I'm not talking about stock price. That is for the market to determine. Anyway, sir, my second question, if you can help me understand the growth prospects. Obviously, there has been some market share gain for rail versus road during the pandemic, but some of it might also be structural and which could continue. Sir, some anecdotes or maybe some qualitative remarks about what kind of cargo might stick? And then what is the medium-term growth? I'm again, not talking about the next 6 months, but say, next 2 to 3 years, what is the kind of growth for the rail container industry overall that we can envisage?

Yes. Good question. See, now you are talking very sensibly, see. When we look at median term, I shared this earlier also, we are working on moving the goods in bulk. It's a sector -- it's a type of movement which yet to pick up in India. And for bulk movement, we are not bringing any specialized equipment. We are trying to move in the same containers by using flexi bags. So that is giving a lot of flexibility in our operations. It will bring in a lot of flexibility. And if you ask me whether we did this movement? Yes, we did this movement. We did this movement in food grains for ITC. We almost did around 2,000 containers. We did 2,000? Yes, 2,000 containers we already did last year. So we are very confident that this movement can happen. This can happen in food grains, happen in cement, can happen in industrial salts. We are working with the oils also. So there is a huge potential for this. So that increases the cargo availability for domestic movement. So this is one very important factor, which can improve, which can increase our share, which can increase the cargo movement by containers as well as for CONCOR also the market share. The second thing is the rail share whatever has increased. I answered to the earlier questions that railways also are in association with CONCOR, we are working on trying to maintain this increase with railways, even after the things get normalized. So there are time tabling of trains. We have now started running around 10 to 11 pairs of timetable trains. Which is -- we did 2 years back. It was very well welcomed by the customers. So now again, when we started, our customers are very happy. So the running times, we are working with railways trying to cut down to giving more of certainty into the operations. So that will further increase with the DFC coming up because dedicated freight corridor is only for freight operations. There will be a lot of certainty. So we can give assured services, time-assured services. So these things will increase the market share of the rail mode as it is. So that will help CONCOR to gain more. And we are now giving -- we are further giving emphasis on providing end-to-end service. So this -- even though we were offering for quite a bit -- quite some time, but we were not very strong, and we do not have the strengths to provide the last mile logistics. Now we started doing that from last quarter, we are giving a lot of emphasis. So that gives a complete solution to our customers. So that will be another initiative which will help. And distribution logistics, there is a break, but we are going ahead with that after these COVID effect now come down. We are now, again, started moving on that front. There's a lot of opportunity in that. And as I mentioned, there is a point-to-point export which we are -- want to help our exporter, the Indian exporter. Second as a business opportunity, we started providing boxes to Iran. We are looking at providing boxes to Middle East, then Dubai and Iraq. We are already giving our boxes to Bangladesh for exports, Nepal. Even we don't mind giving it to the little neighboring countries, if required, nearby countries. So this is another new stream, which we are working. So all these things are positive factors. That's why we -- we are going ahead with our capital expansion program without any pruning down it, we are going ahead with our plans. I think I answered your question?

Yes sir, very helpful.

The next question is from the line of [ Vipul Shah ] from [ Sumangal Investments ].

Can you comment on the competitive intensity vis-à-vis private train operator?

No comments.

Sorry, sir?

No comments.

The next question is from the line of [ Gautam D ] from [indiscernible] [ Investments ].

Sir, I had a question on...

Sir, can you speak closer to the handset, please?

Yes. Sir, I had a question on the dedicated timetable, the fixed timetable that will come in with our DFC. So what impact does it have? Does it commoditize container rail operations, in the sense, that just like a metro, I can choose -- if I miss this one, I can take the next one. So like that, does it commoditize real operations between 2 players? And what impact does it have on the storage demand for ICD and the CFSs? Because there will be more trains traveling. I'm not talking about a short term, but over a 3-year or 5-year period. And also, does it take away power from the freight forwarders? Because some of these shippers can directly access the trains.

See, your questions are little confused. I'm sorry to say this. But I'll tell you, the freight forwarder role is totally different from train runs. So freight forwarder will continue to be there because freight forwarder role is to bring the freight and assist the exporters or the importers in movement of their cargo. So they will be continuous. They will not go out of business. Now storage of ICDs. There is -- the storage are 2 types. One is storage of cargo in warehouses and then stocking into containers. Now container storage is the second one. And if you remember, CONCOR for last, almost 3 years, we are giving 45 days as free storage for containers. So we actually facilitated our customers and we said we don't want any storage charge on storage of containers. That is, in our view, it is not an income stream to look at. So we made our customers very comfortable that they can bring their cargo. But cargo storage we charge, not for container storage. So that will answer your second question that the ICD storage will not be affected as far as CONCOR is concerned. The other thing the -- that running of trains. Yes, it is more like there will be a fixed timetable. There will be a time assured services. So the exporters or importers can work on their cargo profiles and the -- they can plan for their exports, they can plan for their imports, with quite a bit of certainty. They need not go on doing an exigency planning for exports and imports.

Okay. That is helpful. So in such a scenario, the player with the highest number of trains and the ability to keep on buying trains would be better placed? Or is it about getting the best time slot in line with when the ships are coming at the ports?

Quite obvious is definitely CONCOR will get benefited more with that because we got our volume, we've got our strength.

Okay. And third, more basic question was like 25% of the shipping freight into the U.S. is e-commerce right now from China to U.S. And that is why Amazon has gotten into buying ships. So do you see a place for container CONCOR in the domestic e-commerce shipping, though it is a bit slower, but some seller in North can sell in Mumbai because you can help that...

Yes. We are in hinterland logistics. And the e-commerce, where we get associated is in our distribution logistics business. We are starting the distribution logistic centers. So that will -- it can serve even e-commerce players, it can serve agri product players, it can serve industrial product players. So we are entering into that market. And as far as transportation is concerned, it can be transported once the timetable time assured services come, even e-commerce containers can move on rails.

The next question is from the line of Koundinya Nimmagadda from JM Financial.

Sir, my first question is with respect to CapEx, you did speak about containers, some portion of CapEx due to the Chinese restriction. So just wanted to understand what the new number would look like.

We are planning for a spend of around INR 500 crores this year.

Understood. Sir, my second question is, we have got this 5% haulage charges benefits from Indian Railway. So did we pass on the benefit to customers or have we booked the margins on that?

We have not passed it as a straight reduction in our freight charges, but we come out with some good schemes. We have discount schemes, which is helping our customers, who are loyal customers more. So we are getting good volumes because of that.

Understood. Sir, one last question, if I may. Sir, we -- did you speak about the shortage of containers and all. So just wanted to understand how does it impact operationally and also financially the P&L and balance sheet?

No. It will not impact us. See, when there are no containers, we are finding an opportunity. So we are also supporting exporters and finding an opportunity in putting our own boxes and trying to get into an NVOCC market, sending our boxes to Iran, Dubai, Iraq. So and Bangladesh, anyhow we are sending our boxes. So there's a new business opportunity, we could explore in that.

Because you did speak about volumes, sir, but if you top in realizations. That's why the question has come, sir.

Pardon.

You did speak about if margin direction in EXIM rates as to higher empties. So...

Yes. empty repositioning is coming. So that is -- the margins are dropping. See, instead of imports, more of empties are moving from port into hinterland. Earlier, there used to be -- see, India is normally an import excess country. Now we have become export excess country. So we are getting less imports. So we are getting more of repositioning boxes.

So do you see this plan sustaining, sir?

No, this is a temporary phenomenon. I think we will -- see, we are short of time, we will go for any other questions pending from anybody?

Sure, sir. The next question is from the line of Lavina Quadros from Jefferies.

Sir, last one for my end. Just on price hikes, there was supposed to be one taken in October that was being discussed, 3% to 5%. So I just wanted to know if there's any update on that.

I already answered this. I think you are not listening.

Sir, no, no, no, I got logged off from a minute. And on the future outlook of that, if there is any other plan 6 months later?

As of now, there is no guess work on this. As of now, we deferred it. We'll take the last 2 questions.

Sure, sir. We take the last question from the line of Deepika Mundra from JPMorgan.

Just on the rail coefficient, again, you mentioned Mundra Port was 25%. Sir, there is definitely an increase in JNPT, but not at Mundra. Any particular reason for that?

Rail coefficient?

Yes.

So the reason is that in Mundra Port, the overall volumes have seen a growth due to the major reason is transshipment volume. Because it seems there was some coverage to Mundra. Lots of volumes got directed to Mundra Port for transshipment purpose. So that is why if we remove transshipment and their freight -- their position will see an increase as compared to last year.

Okay. Got it, sir. And sir, I missed your guidance, CapEx guidance for the year. If you could just repeat that?

We may come to, earlier, we said 20% less than last year. Now we are giving a fresh guidance of 10% less than last year or even better.

I now hand the conference over to Ms. Bhoomika Nair for closing comments.

Yes, sir. I just want to thank you for taking time out and answering all the queries very patiently and all the participants for being on the call. Wish you the very best, sir.

Thank you. Thank you, Bhoomika.

Thank you. Ladies and gentlemen, on behalf of DAM Capital, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.