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Concor to focus on warehousing, run freight terminals - 2012-08-20

Despite the sluggish trend in export-import (Exim) trade, Container Corporation of India (Concor) reported more than six per cent growth in the volume of containers handled in the first quarter of current fiscal.The market leader with a share of more than 75 per cent in container train business, Concor is diversifying into private freightterminals and increase focus on warehousing. Anil Kumar Gupta, Managing Director, Concor, spoke to Business Line on the recent performance and other developments.

How was traffic in the first quarter?

Concor witnessed a 6.15 per cent growth in Exim volumes by handling 5.32 lakh twenty feet equivalent unit (TEU) of boxes and the increase was primarily from Mundra port. The domestic container handling was marginally down to 96,346 TEU against110,775 TEU in the same period last year.

What is Concor’s market share in the container train market?

Concor has seen a marginal dip in its share in the export-import segment in April-June quarter against the same period last year — the market share is at 76.3 per cent this year compared to 76.6 per cent in Apr-June quarter last year. Meanwhile, the company has marginally increased its share in the domestic market — it had a share of 74.8 per cent in first quarter against 74.4 per cent in the corresponding period in the previous year. Port wise, Concor’s share dipped to 55 per cent from 60 per cent at JNPT, to 7.9 per cent from 10.9 per cent at Chennai, to 14.2 per cent from 14.3 percent at Pipavav. At Mundra Port our share increased to 17.1 percent from 10.9. In Mundra, Concor handled 66,822 TEUs in first quarter (against 38,917 TEUs handled in Q1 of last fiscal). In our estimation, we are currently handling 55-60 per cent of total rail containers being handled in Mundra port.

What has been the loss of volumes in domestic market after some heavy commodities were almost prohibited for container transportation by a high haulage charge slapped by railways in 2010 December?

Our handling losses during Q1 of this year as compared to Q1 of last fiscal were over 77 per cent in Alumina, 36.5 per cent in iron and steel, 76.5 per cent in pig and sponge iron, and eight per cent in grey cement. However, with the recent relaxations by the Railways on some commodities, like pig and sponge iron, we expect the domestic traffic to improve in current quarter.

You managed to earn operating profits in domestic traffic despite an absolute drop in volumes. How?

Concor reworked operations to reduce movement of empty containers by discovering customers who offer cargoes for both directions.

Is rupee volatility a major concern?

The falling value of the rupee is actually supposed to help exports grow and reduce imports. This should address the basic problem of imbalance which is preventing hinterland penetration of containers. However, to what extent it will help restrict imports is not known. Currently, it is affecting clearances of imports in inland container depots adversely.

What are the capex plans of Concor?

We plan to spend Rs 1,652 crore this year, including Rs 760 crore for land acquisition at important centres. Concor will start construction of logistics parks soon. Over the five year period of 2012-17, the company plans to spend total of Rs 6,000 crore.

What are the next big things to watch out for in the sector?

Concor is building warehousing capacity keeping in mind the roll out of the goods and services tax regime. We are bullish on warehousing and value-added services that can be provided in warehouses. Further, we have permission from the Railways for developing Private Freight Terminals at two locations. This will allow handling of non-containerised commodities at these terminals. The PFT revenues will emerge as another revenue stream. And, the biggest thing to watch out for is the Dedicated Freight Corridor, which is expected to considerably speed up the freight trains.

Source :  Hindu Business Line