Gateway Distriparks Limited (SNOWMAN) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Gateway Distriparks Limited and Snowman Logistics Limited Q1 FY '24 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on this date. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. Today on this call, we have Mr. Prem Kishan Dass Gupta, Chairman and Managing Director; Mr. Ishan Gupta, Joint Managing Director; Mr. Samvid Gupta, Joint Managing Director; Mr. Sandeep Shaw, CFO, Gateway Distriparks Limited; Mr. Rajguru Behgal, President Rail Gateway Distriparks Limited; Mr. Manoj Singh, President, CFS Gateway Distriparks Limited; Mr. Sunil Nair, CEO and Director, Snowman Logistics Limited; Mr. N. Balakrishna, CFO, Snowman Logistics Limited. I now hand the conference over to Mr. Prem Kishan Dass Gupta. Thank you, and over to you, sir.

Thank you. Good afternoon, ladies and gentlemen, and thank you for joining us for our quarterly earnings call for Gateway Distriparks Limited and Snowman Logistics Limited. We hope that you have had the opportunity to review our financial statements and earnings presentation, which have been made available on the [indiscernible] and our website. Overall, Gateway Distriparks performance is satisfactory. The total revenue went up by 8%. The EBITDA went up by 10.67%, and the PAT increased by 9% compared to Q1 2023. This was despite challenges on the train side during the full quarter. Firstly, it was -- there was a derailment of a container train of one of the private container operators, which led to some restrictions on the [indiscernible] side and running of our trains. Thereafter, in the month of June, we had the cyclone in Gujarat, where it affected both the ports Mundra and Pipavav. So both the ports project was on time. And even when the rail movement started, double-track restriction was still there and slowing and gradually it has only come back to normal during the month of July. So we feel that the volumes are there in this quarter and the month of July, we have done well. Both imports and exports have seen upper movement both in the ICD as well as CFS business. CFS business is impacted because of the local large container going to a central parking plaza as per customs instructions, so which has affected all the [indiscernible] their volumes have come down. But management is doing their best to get volumes whatever market share and additional volumes. On the rail side also, we can see growth both in imports and exports. So I'm coming to Snowman Logistics, we are witnessing high growth and -- most of our facilities are running full. We are on an expansion plan. So gradually, we will add up capacity as well as distribution services and also grow [indiscernible] management services and [indiscernible] With this, now I hand back to the moderator to take your question-and-answers. We will be happy to answer your questions. Thank you.

[Operator Instructions] The first question comes from the line of Sumit Kishore from Axis Capital.

My first question is, could you give us a sense of the number of rigs which were double-stacked in Q1 FY '24? And this figure is what as compared to Q4 of FY '23 and the corresponding quarter last year, which is Q1 of FY '23? The second associated question is, what was the impact in terms of volumes that you sort of can roughly give us a sense of because of temporary restrictions on double-stacking as well as the cyclone?

Yes. So we don't share the number of trains of double-stack, but overall, as a volume -- 35% of volumes were guided on the second stack during the quarter, whereas a year ago, this used to be closer to 42%, 44%. So this was the impact of the double-stack restrictions plus the port closures that we earlier mentioned. And the decrease in volume roughly during June was about, say, 5,000, 6,000 TEUs on the rail side, but that will be caught up in the next quarter.

Got it. And basically, what was the contribution of Kashipur in Q2? Did it maintain that 2002 run rate in Q2 -- in Q1?

It's gone up. So it's going as per the projections that we gave earlier. Our market share is between 35% to 40% now in that market.

Okay. So it would have contributed 19,000 TEUs since Q1 as per earlier discussion?

Sorry, no, 19,000...

No, no, I said 9,000 to 10,000 TEUs in Q1 of Fy '24.

Yes, that's correct.

Okay. My second question is, you mentioned -- touched upon in the opening remarks, but how would the experience on the EXIM imbalance which based on macro data, it appears that it got worse in the June quarter. But -- so how has it improved in July? And is that a company with a big pickup in double-stacking or normalized double-stacking now in July?

So imbalance has gone from 60%-40% to about, say, 57%-43%. So it's improved by 2%, 3%. And we are seeing signs of growth in exports going forward. So we expect it to improve further by 2%, 3%.

Got it. Just a bookkeeping question, last one. What is the tax rate that you expect for the full fiscal? I think the first quarter was about 2% of tax rate.

On the tax -- as we mentioned earlier, also, currently, we are booking the current tax, and we are continue -- paying MAT at 17.47%. And we keep on paying that. And whatever FDI benefits we are getting on our all rail business and all that tax, we are accruing as a deferred tax asset. That's why the overall tax expense is very minimal.

Is that likely to be the case for the full fiscal of this year? And in what time would you exhaust your -- would the tax rate continue to be in low single digits? And in what time will you exhaust all your tax credit, over what time frame? After what time frame will your tax rate become normalized?

Yes. We will keep on paying MAT for the current year, and this FDI benefit will be available until -- for us till financial year, '26-'27. And whatever MAT credits, which we are accruing, will base on the current projection, it will get exhausted in financial year '31-'32.

The next question comes from the line of Abhishek Nigam from B&K Securities.

I'm sorry, the audio was not very clear. So maybe repeat, but the restrictions on double-stacking [Technical Difficulty] second quarter also be impacted by those. So that's my first question.

Sorry, your voice got cut in the middle. Could you just repeat your question?

Okay. Sure. So my apologies if this question is a repeat, but the audio was not very clear. My question is, the restriction from double-stacking -- so are they still there and even the second quarter volumes are getting impacted? Or is that an issue of the past now?

The restrictions have gone away. The only change is that the speed now -- maximum speed allowed for double-stack trains is 75 kilometers per hour. But other than that, from a loading point of view, we don't have any problems.

Fair enough. And the second question is how are the rail volumes doing in July? And are you still confident of the 10% volume growth guidance that you gave earlier?

Yes. So volumes are going fine. We are seeing growth in exports. So our growth guidance remains the same that we were getting earlier.

The next question comes from the line of Roshan from B&K Securities.

Yes. So my question is, is Faridabad is still on track for double-stacking in September to October '23?

Yes. So another 2, 3 months is what we're expecting Faridabad to get double-stacked in.

Okay. And do you see any -- for a price hike at industry level in the coming months for rail business?

No, not really. It's probably going to stay stable as is.

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

This is Achal here. Sir, can you help us with the EBITDA for the CFS and the Rail business for the quarter?

So we don't give a direct split, but on a per TEU basis, we can give a guidance that the Rail business is around slightly above 9,000 and the CFS business is at 2,000.

And can you help us with what was it in fourth quarter FY '23, the previous quarter, immediate preceding quarter?

It was about 9,400, 9,500 for Rail and again, 2,000 for CFS. These numbers are including other income.

Understood. So there is slight contraction in rail business, and this is more to do with the restrictions on the double stack. Is that understanding right?

Yes, that's correct and lower volumes in June due to the cyclone. But without other income, actually the Rail segment has seen a growth. If you look at it, we had a higher other income portion in the last quarter.

Okay. Okay. Understood. Second part is this 10% growth guidance, can you please just remind us once again, is this excluding Kashipur or including Kashipur volumes?

Yes. It's including Kashipur. So we had given 10% to 15% depending on the macros.

So basically, the overall growth in the Rail, all the locations like [indiscernible] has done of our numbers in the month of July. And so we don't have separate numbers for each and every ICD because a lot of it movement. So in that case, I mean we don't -- I mean, if you look at Garhi, then we will see Garhi's stand-alone business is [indiscernible] than on the double-stack financial modela and it becomes 1.5x. So it's fair only to give the revenue and EBITDA numbers, which I think takes care of kind of -- and the growth that we have seen is in Garhi business, we had 5% growth in the previous quarter whereas [indiscernible] 3% negative. So overall, I would say it was a flat quarter, but Garhi revenue has increased by 12%. And even the EBITDA is increased.

Right. Sorry, what is the EBITDA -- kind of if we were to look at from a 2- to 3-year perspective, can we look at INR 10,500 per TEU or it would be more of around INR 10,000 per TEU, given that...

It will be more than INR 10,000. And the volume increase will be the biggest contributor in the revenue.

Sorry, your voice is a little weak, sir. Can you please repeat once again?

What I'm saying is...

No, basically, the volume increase in rail will be whether growth will come from, and that's -- this revenue will continue growing on the rail side.

Correct. Okay. Understood. And if you could help us understand the progress on the new terminal specifically Jaipur, where we are, what is the likely commissioning date? And how we see [indiscernible] scale up?

So for Jaipur, we should be operational by Q4. But as mentioned in previous calls that it takes time to ramp up volumes due to shipping line opening it as acceptance point. And once the movement starts the first year will just go in building volumes on a slow level. But we expect from the FY '26 then that we'll see proper volumes coming in and it will contribute to our EBITDA.

Right. And you've mentioned in the press release you're looking at adding terminals, if you could elaborate a bit what sort of CapEx one could look at and the geographies, if you could?

So we're looking at about INR 100 crores per terminal. And we're looking at two immediately, maybe possibly a third as well. But geographically, we won't be able to share right now. Once we purchase the land, we will make it known to the public.

Yes. Basically, I mean, it will be in [indiscernible] which will have a distance at least 750 or 800 kilometers from the ports.

750 to 800 kilometers from the ports. Okay. And this obviously means it will be all greenfield and not really any acquisition sort of event. Is that understanding right?

Yes. Right now, I mean, there are acquisitions, which can be made, but those are not doing well. And the reason they are not doing well is because the location was bad. And -- so immediately, we don't see any acquisition possibility, but we are always looking around having ability -- anything that will come up, we will definitely and [indiscernible] will be good to add.

Understood. And sir, one last question from my end with respect to pricing action by competition. Has there been any pricing action -- any material pricing action in the pockets where we operate in by the competition?

Rajguru this side. So there has been -- yes, so there has been a discount passed on by Concur, but that was only in the area where in we are not present. And if we look at overall because if they have passed around discount on the rail side, then the terminal handling is on the higher side. So overall, we don't see any major impact.

Understood.

So also, there are other operators. You can ask them. We don't want to name the names, but there has been some discounts, which have been thrown by our competition. But we are very confident that because of network of our terminals, because of our service levels, we are able to retain our customers. And going forward also, we'll be able to do that.

The next question comes from the line of Yash Tanna from iThought PMS.

Am I audible?

Yes.

Yes. So my questions are relating to Snowman on the segmental margin. So our warehousing margins seeing a little bit on the lower side in the last few quarters. So are we expecting margins to improve as the utilization of our newer facilities pick up? And if you could give a steady state number on -- for the warehousing? And similarly, I'll just add up to that on the transportation side, it's shown a significant improvement. We are at 7.8%. This PBT margins from the press release -- from the results release. And on the 5-PL side, I think we started out with about 4.6% margins and now we have reached to 10%-odd which is commendable. So where do we see the margins for 5-PL settling? And do we expect further improvement with scale in this segment?

This is Sunil here. So Yash, the margin that we were talking about, the decrease of a couple of percentages that is shown in last two quarters are basically because of the slow distribute, which is contributing more into revenue at a lower margin. The 10% margin that it has a gross margin as we discussed in length last time. The net margin comes to around 3% to 4% in this business and warehouse which is at 13% gross margin this quarter, the contribution of warehousing in absolute term has gone up, but Snow distributor has grown in terms of overall volume. That's why the overall as has slightly come down.

Okay. And on the other vertical side, sir?

So warehouse, we have a 13% gross margin and transportation 8%. The major increase in the overall transportation business is because of the Snow [indiscernible] technology wherein we are outsourcing the trucks, where the margin is close to 12% to 13%. The contribution of these trucks are increasing the overall business. And that's what is helping us to go from 5% to 8% this quarter in transportation. The warehousing margin will sustain anywhere around 15% as we keep adding more and more warehouses. Overall price increase this year has been less than 5% as against typical inflation of 3% to 4%. So we'll continue to maintain margins in all the businesses. And in terms of full distribute, the gross margin will remain at 10% and net margin anywhere around 4%.

Right, right. And on the 5-PL side, do we expect margins to scale up with scale as we expect margins to improve as well?

See, in case of 5-PL, the Snow Distribute, we expect it to be around 10%. We are expecting to scale the business, but our margin point of view, it will remain around 10%.

Right, right. And similarly, the next question was on 5-PL, you have grown tremendously 5-PL trajectory business with improving margin as well. So I just wanted to understand the scalability of this business a bit better. Since we don't require a lot of capital for this business and [indiscernible] are better than the lease the warehousing side as of now. Once this becomes a bigger part of the revenues, our blended ROC should move up, right? Is the understanding correct, firstly? And what ROCEs are we doing in this segment? And if we have a target number for the same?

You're absolutely right. As we have the share of Snow Distribute, which is 5-PL business increasing, it will help us a lot in terms of ROCE. We don't have an estimate on that for the future. But you are right because here, the capital deployment is very different only a working capital for inventory holding. So we -- the overall efforts are to see how Snow Distribute business, 5-PL business can grow. Last time when we discussed, we talked about the IT system, now it is stable. And you can see slight improvement as compared to last quarter, and we expect similar improvement happen every quarter. So on an average, we are expecting this year to add another INR 50 crores from Mundra.

Right. And what are the current return ratios you are doing in the segment?

Sorry, current?

ROCE?

Current ROCE at the overall company level [indiscernible].

Yes. I can't hear you, sir.

I'm saying, for the current ROCE [indiscernible].

Hello?

So we don't calculate ROCE segment-wise, it is at company level only, which is around 8%.

Got it, sir. And just one more question, if I may. We have mentioned that we are going for a INR 200 crore CapEx in the next 2 years, which is almost a 40% addition to our currency CapEx. So the question is mainly related to how confident are we on utilization of these assets once they start commissioning, are we in talks with our clients and that once we start -- invest and start commissioning these assets, the utilization levels of these assets will pick up sooner than it used to maybe 3, 4, 5 years ago?

Yes. So Yash, what we do usually is we -- when we decide the location for a new setup, we do demand estimation and mostly 60% to 70% of our utilization is done by the existing set of customers. So we align our location and size of the warehouse depending on our customer growth plans. So [indiscernible] we expect facility to be in anywhere between 70% to 80% utilized.

Sorry, within what timeframe?

Within 6 months of timeframe.

Okay. All right. That's very helpful. And just a suggestion, sir. If we could keep Snowman's call separate and Gateway call separate, maybe we could focus and ask more questions on both the businesses.

Sure. We'll consider that.

You are free to ask all the questions. You have asked so many questions, and we have replied. If there is anything still left, you can always talk to Sunil. Why I'm saying that because now we see that Snowman [indiscernible] the business innovative and I mean we are actively looking at the future expansion and all the things. And -- so to have a separate conference does not really help. I mean people who are following Gateway Distriparks should also know what is happening Snowman because at the end of the day, we are 42% shareholder in that. So it should be considered as our core activity and we are not in a hurry to close the call, you can come back again in the queue if you have any more questions.

[Operator Instructions] The next question comes on the line of Bhoomika Nair from DAM Capital.

Yes. Sir, just wanted to check on our Kashipur terminal. We were trying to kind of increase the rail share out there. They were already handling 3,000 TEUs per month. So how is the scale up on that aspect? And also how is the scale up from a rail perspective. They were already using the terminal, but transition to our rail, et cetera, how is that kind of moving out? And is the monthly run rate stayed at INR 3,000 or has it gone up?

The monthly rate is somewhere close to 3,000 that is without [indiscernible] can you hear me?

Yes, sir, now it is better.

Okay. Yes. So our volume there is roughly 3,000 and we've touched 3,500 also in a month. So it is going well. Just to clarify, the rail share is 100% with us, we had only done third-party rail just 10 days before the transaction, transition period. So all the movement from Kashipur is on our rails. And we see ramp-up will continue and we'll take it to 4,000 TEU very soon.

Okay. Okay. Got it. Got it. And this seem would be right now double-stacking via the Garhi from a hub-and-spoke perspective, right?

Yes.

Okay. Okay. Just in terms of how is the outlook in terms of volumes that we are seeing in terms of scale up on an overall perspective? Because Kashipur pretty much came towards the end of the year of last year, only in the fourth quarter. So to that extent, with Jaipur coming in, Kashipur kind of scaling up to 4,000, how is the trade kind of behaving and our market share and scale up there with this?

So specific to Kashipur you are asking or overall scale?

Both Kashipur and overall.

Okay. Rajguru will answer this.

Rajguru this side. So for Kashipur as Sandeep was mentioning that we have been able to ramp up volumes, so that is primarily on account of our regular services, and we were able to get hold of business from the [indiscernible] which are near to Kashipur. For example, Rudrapur, sitarganj and Moradabad belt. So we've been able to get not only the import volumes from our competition and from the nearby catchments, but also we have seen some upsurge on the export volumes. So very soon, we will be touching that 4,000 TEU mark, given the kind of pipeline sales pipeline we have and the kind of projections which the current customers have given to us.

Yes. And generally, on other terminals, we are seeing some growth. Exports are starting to pick up slightly. So that 10% to 15% growth number that we're giving is looking on track.

Okay. So...

I'll also share the perspective in terms of our [indiscernible] terminals, where good growth has started happening. So if we look at our Garhi terminal, the quarter volumes are back and the auto refer volumes, then some electric and yarn volumes, so they are contributing in the rise of exports. In many case, gold was always stable because of polymer and auto. But at our Faridabad, the terminal we are doing a lot of buyer console. So there has been some uptick in the export order bookings. So all the cargo, which is bound for U.S. and Europe for Christmas season, that has also started coming in. That is one of the reasons that we have done good volumes in July -- and we are seeing that we will be handling very good and healthy volumes in the Q2, and this trend will continue.

Sir, from that logic, shouldn't the growth be higher than the 10% because there will be a full ramp-up of Kashipur, which was not there earlier? And Garhi is starting to see traction plus Faridabad, not to mention towards the end of the year, maybe not Jaipur, but at least these terminals should kind of start seeing a better growth profile. So to that extent, our growth should be higher than 10%?

Yes. So the imbalance really matters a lot. We can technically handle much more imports, if needed, but that will destroy our margins and create a further empty running and the same running. Also from a rail capacity point of view, we are pushing our limit with 31 trains. So we have three more trains in pipeline, which will be there before the end of the financial year. So that will also help us add the volume. So until that comes and the macro improves to a more balanced situation for export. That's why we're sticking with the 10% to 15% numbers.

Okay. And on Kashipur, how is -- on an overall blended basis, the rail has obviously seen -- you mentioned earlier, has been about INR 9,000-odd EBITDA per TEU. Is this comparable at Kashipur as well?

Yes, it's similar.

The next question comes from the line of [indiscernible] Shah from [indiscernible] Securities Private Limited.

So this question mainly related be to the CapEx guidance for the as we are constructing Jaipur along with we are planning to add 2 or more -- two or three more ICDs in upcoming months, so what kind of CapEx outgo would be there for the Gateway in at least next 2 to 3 years' time?

So we'll have about INR 300 crores CapEx in the next 2 years. This will include two new terminals, upgradation at existing terminals in terms of warehousing capacity and extension of container yard as well as replacement of our vehicles and also balance construction works of Jaipur.

Got it. Got it. And apart from that, as we are adding two more new terminals. So is it safe to assume that those would be commencing the operation probably somewhere in '26 and ramping volume in '27 and overall trajectory would be better post '26 only?

Yes. So I mean, once we finalize it, it'll take about post plant purchase, it will take about 12 months to construct it and then another 12 months to ramp up.

The next question comes from the line of Vipul Kumar Shah from Sumangal Investments.

Sir, would you repeat the export-import mix, please, I missed it?

So it's about 57% imports, 43% exports for the last quarter, but it's going to -- it's -- we're looking at slightly better numbers in the upcoming quarter.

So should we end the year with 60%, 40%, sir?

It's very hard to say. We'll have to see how the macros play out, but hopefully, they're closer to 50%,50% rather than 60%,40%.

The next question comes from the line of Jiten Rushi from Axis Capital.

Sir, can you just highlight on the market share and the NCR reading to early question, you have increased your market share in FY '23. Can you articulate the percentage in terms of market share at Ludhiana and overall NCR and where the market share has gone down and what is your -- have you retained the market to 31% last time. So can you throw some light on that?

Yes. So in NCR, we have been able to retain a market share of 17%, Gurgaon and Faridabad both the volumes put together. And at Sahnewal we are having a market share of -- again we are retaining 30%. In Uttarakhand market. So where we have started maping that also. So our market share has increased from 34% to 38%. So that is where our volumes have risen and we have been able to capture market share.

So basically, more or less, except for Uttarakhand, we have maintained our partner share? That is...

Yes.

And on these new terminals, which you are targeting. Last time you have guided for the region of Northern and Center. We maintain the same guidance for the new terminal location?

Yes.

And sir, final question is on the CapEx incurred so far in FY '24 in first quarter.

For this current quarter, we have incurred a CapEx of INR 10 crore across. And other than that, we have the respond, that is about INR 10.5 crores during the quarter 1.

Sir, for the full year, is it safe assume that we shall be doing a CapEx of around INR 100 crores, INR 20-odd crores?

So it really depends on the new locations upcoming. So we maintain that guidance of INR 300 crores for the next 2 years because Jaipur construction will be coming in. So that will be approximately INR 50 crores between now and March. And then other than that, all the other things I mentioned in the previous question, those will also come.

Sir, so far, how much have you spent in Jaipur.

Yes. Jaipur in the line approximately spend INR 30 crores and then about INR 10 crores has been spent on the initial construction.

And today total investment Jiten is about INR 40 crores.

The next question comes from the line of Kevin Ghandi from CapGrow Capital.

My question was on the indoor logistics. So basically, there was an article that private equity are interested in investing into the housing space. So can we expect some stake sale to Blackstone or other private equities coming in the future [indiscernible] and logistics?

There is a lot of interest in arising on cotinine. So that is the reason why we are, like the other investors, which is here of, we are also excited and we are having our CapEx plans and growth plans. Our cash flow support our growth, so we do turning accruals and a comfortable level of that we can keep going at the pace which we would like. So we will not be looking for any outside investment on this time. And definitely not any stake soon. on a gain.

The next question comes from the line of Harsh Shah from Dimensional Securities.

My question is for Snowman Logistics. During current quarter, we saw quite a sharp increase in our own fleet from 200 to almost 309. So I just wanted to understand are we expecting a very high growth? Or what is the strategy here?

Yes. So we have added 20 trailers in our business or to an -- at the same time, we have added 50 new integrated rails. We will see deposing of old trucks very soon. So before we do that, we not tinners that's the whole strategy. As into earlier, we expect to be somewhere around INR 250 crores, INR crores. And on lease at is around similar numbers as we move forward.

Okay. And on the warehousing side, we have a capacity of around 13,000 pallets and talent. So next 2 to 3 years, what kind of capacity addition are we looking to where you see this intecapacity reaching over next 3 years?

So I can tell you about the next 2 years as our business plan, we would be adding close to 22,000, 25,000 by positions in all meters and similar overall finance positions on a lease basis where we are going to use, which is more focused on the business. So you can expect an addition of close to 550,000.

550,000?

Yes.

And this current -- out of this existing effect, we have 36,000 , how much would be leased?

The fully leased warehouse would be close to around 15,000 to 20,000 maximum.

15,000 to 20,000?

Yes.

And these are totally dry warehouses, right? This 550,000.

Roughly 500 would be or also...

Okay. And for the PL business, sequentially, we have seen a decent bit of growth from INR 30 crores to INR 40 crores. So is it from the same intel before 3 clients, which we had during the last we had any additional clients in this business?

No, at least the same 3 sides, they are organic growth. As you know, one of the plan few months. Last year, where they had started to diners in June with one store today, they have 20-plus stores. So 20 is the iguana. So those organic growth since we have the matapartner, everything comes to -- at the same time, for other 2 clients, we have added some for new products and improve our buying in strategy. So this is -- so there's no new additional at all, but there is 2 as for new products.

Sorry, I didn't get the part was quite muscled about the new additions?

New addition is in terms of new products that we are supplying to a teens to present these customers.

Okay. And are we at a rising new clients or any thing that you can hear an addition of new clients during the current year.

Yes. You will hear some working is as it gets closed, we do.

The next question comes from the line of Yash Tanna from iThought PMS..

Yes. So my question was of this INR 200 crores CapEx, how much of debt are we planning to take and how much will be some internal capital?

So we'll maintain debt equity of net debt EBITDA, sorry, of 1.5. So slowing cash flows are healthy. So we on whatever we can internally and then some incremental that will be.

Okay. So we won't exceed 1.5x...

Yes. Right.

And on -- so you did answer the question on the stake sale. But this quarter, we are staying buying by of around 1.5%. So is there any plan to further increase the stake or in no mine?

Well, we bought out 1.5% last quarter. And depending on the net cash flows, we have dividend pay. We have a once and we are in an weather customers even close can we win on mine I don't look at your question, but we always another.

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

My question was with respect to DSC. What is the progress on that? When do you see can quickly getting connected and once Jengets connected, how does it impact us?

So the latest update on BSE the total 70% of the construction has already been done. And the later you must have had about Barter of 137 kilometers that got operational. And we are already sending our trains via BHC only to Amanda and Tap -- and regarding the stretch on WSC, is yet to be completed as a stretch of around 50 -- 70 kilometers. So that is primarily from Sanan to GMP. So what HDFC is telling us that it should be operational by end of next year. So those are the timelines which they have uploaded on their website. And we have been constantly interacting with the senior officer. That is the timeline they are indicating.

But the all the land acquisition issues, et cetera, all those sorted in your opinion or is that still ambiguous?

So 90% of the land issues have been assorted, but 5% to 10%, there are still some issues, which hopefully, it should be sorted out with the next couple of months.

Understood. And how does it impact us on JNPT gets connected in terms of volume, competition, pricing margins?

So once JNPT is connected through HDFC, the only difference will happen is that some of the volumes will shift from Mundra-Pipavav to JNPT. Right now, almost 90% of our volumes are for Pipavav and Mundra. So basically, some of the shipping lines will start calling more at JNPT. And then some of the customers will start handing over. So what we are anticipating is there might be some 5% to 10% migration. That is what we are anticipating initially, so but then it all depends, we need to wait and watch. At this point of time, it is very difficult to give any numbers that what kind of business will be actually shifting from these ports to JNPT.

Just to add 1 advantage that we'll have, not all CTOs have a pan-India license. So some CTOs can only operate out of Mundra-Pipavav and not JNPT. So there will be lesser competition for that route.

But is it fair to say that our market share at Mundra-Pipavav is much higher than what we have at JNPT at this point in time?

So for our volume, 90% goes to Mundra-Pipavav and 10% to JNPT, but we don't measure the Mundra rail volumes or Pipavav rail volumes because they go to all sorts of locations where we don't have a presence. For example, like Madhya Pradesh, UP, Gujarat, Maharashtra, there are other markets being serviced from other CTOs where we don't compete. So we don't measure the port that way.

Understood. Understood. But would this improve the lead distance and hence margin per TEU?

Yes, slightly. Yes. Plus JNPT right now is single stack with HDFC, it will be double-stack, so that will also improve margins.

Right. And any color, Samvid, on the pricing because right now, we is the same price, right? There is no differential pricing for HDFC.

Yes, the same pricing is expected.

Okay. The second question I had with respect to the lead distance, can you help us with the respect to the lead distance for the rail business as a whole for 1Q?

So we don't -- can we track it because for us, most of our terminals and business is somewhere North only, so roughly 1,200, 1,300 kilometers is a big lead distance.

Sorry, how much, 1,300 kilometers?

Yes. Basically, NCR to Mundra-Pipavav and Kashipur will be slightly more. So it roughly comes to 1,300 only and it doesn't change for us quarter-on-quarter because all our terminals are here only. is doing very last volumes right now.

Got it. Got it. And just last couple of statistical questions. With respect to the rake addition plan, you said 3 will be added by end of this year. But how about next couple of years, have the issues with respect to the west availability resolved or is still -- is there an issue?

No, it's improved a lot in the sense that last year, when we were looking for rakes, then we were told it will take anywhere from 12 to 15 months per a rake delivery. But now they're available at 6 months notice. So we don't see that being a challenge, and we are planning to add 3 every year.

Got it. And just one more question with respect to the interest and depreciation, if you could give some sense for FY '24 and the tax rate?

Tax rate, I think Sandeep explained earlier that we are paying MAT at the rate of 17%, and we are So this will continue go into our projections in the financial year '27. And then the MAT credit will be utilized until '31 or '32. So until then will be having this lower tax rate. And interest and...

Interest cost for this quarter will be INR 10.4 crore and based on our current projection and all, we will continue to pay the cost of INR 10 crore per quarter or based on our capital improvement, it may sound down also and depreciation and amortization right now, whatever INR 23 crore of depreciation for the quarter, it will revise in the same line for the current year till the time new CapEx addition has been will happen in the quarter 4.

The next question comes from the line of Harsh Shah from Jefferies.

Just wanted to clarify on the EBITDA per TEU number which you gave actually your voice was not very clear. So can you just repeat those numbers, please?

Yes. Yes. So for Rail it's approximately INR 9,100 and CFS, it's about INR 2,100.

Okay. And this is including your other income, right?

Yes.

And what would be the same number for the last quarter, 4Q?

So Rail would be about INR 9,400 and CFS, again, similar over INR 2,100.

Ladies and gentlemen, that was the last question for today. Participants that have missed out due to time constraints, they can reach out to the management at SGA. On behalf of Gateway Distriparks Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.