Adani Ports and Special Economic Zone Limited (ADANIPORTS) Q2 FY23 Earnings Concall Transcript

Adani Ports and Special Economic Zone Limited (NSE:ADANIPORTS) Q2 FY23 Earnings Concall dated Nov. 01, 2022

Corporate Participants:

Karan Adani — Chief Executive Officer and Whole Time Director

Subrata Tripathy — Chief Executive Officer of Ports of Adani Group

Vikram Jaisinghani — Managing Director and Chief Executive Officer

Charanjit Singh — Head – ESG and Investor Relations

D. Muthukumaran — Chief Financial Officer

Analysts:

Ashish Shah — Centrum Broking Limited — Analyst

Mohit Kumar — DAM Capital — Analyst

Bharanidhar Vijayakumar — Spark Capital Advisors — Analyst

Chetan Shah — Jeet Capital Advisors Private Limited — Analyst

Smitesh Sheth — Raedan Securities — Analyst

Priyankar Biswas — Nomura Holdings, Inc. — Analyst

Parash Jain — HSBC — Analyst

Pulkit Patni — Goldman Sachs Research — Analyst

Mayank Agarwal — Quant Mutual Fund — Analyst

Amit Shah — Bank of America Corp. — Analyst

Nikhil Abhyankar — DAM Capital — Analyst

Pradyumna Choudhary — JM Financial Capital Limited — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Q2 FY ’23 and H1 FY ’23 Earnings Conference Call of Adani Ports and SEZ Limited, hosted by Centrum Broking Limited. [Operator Instructions] Please note that this conference call is being recorded.

I now hand the conference over to Mr. Ashish Shah from Centrum Broking Limited. Thank you and, over to you.

Ashish Shah — Centrum Broking Limited — Analyst

Yeah. Thank you, Yashashvi for introduction. On behalf of Centrum Broking Limited, I welcome everybody to the Adani Ports and SEZ Q2 and H1 FY ’23 Earnings Conference Call. We have from the company management, Mr. Karan Adani, who is the CEO and, Whole Time Director of Adani Ports and SEZ; Mr. Subrata Tripathy who is the CEO of Ports Business; Mr. Vikram Jaisinghani, MD and CEO of Adani Logistics; Mr. D Muthukumaran, CFO AP SEZ; and Mr. Charanjit Singh, Head of Investor Relations and ESG, AP SEZ. Over to you sir for the opening remarks and after that we can have the Q&A.

Karan Adani — Chief Executive Officer and Whole Time Director

Thank you, Ashish. Good evening, everybody. Welcome to the H1 FY ’23 conference call to discuss the operational and financial performance of Adani Ports and SEZ Limited. You will be pleased to know that despite the economic headwinds globally, AP SEZ has delivered its strongest half-yearly performance in the company’s history. Wherein we recorded our highest-ever cargo volume, revenue, and EBITDA. Talking about our cargo volume, AP SEZ handled record 177.5 million metric tons of total cargo in the first half of the year, which is an 17% jump over the preceding six months that is H2 of FY ’22 and on a year-on-year basis the increase is 11%. The average monthly run-rate of April to September 2022 is well-aligned to our full year volume guidance of 350 to 360 million metric ton.

AP SEZ cross the 200 million metric ton of cargo throughput milestone in the initial 212 days of the financial year, which is another record for the company. On the revenue front, we clock the highest-ever half-yearly revenue of INR10,317 crores. Which is a 16% growth year-on-year. This revenue growth is not only supported by the volume increase, but also the improved realization given the renegotiation of contracts at the start of the financial year.

We recorded the highest-ever half-yearly EBITDA of INR6,551 crores, which is a good 21% jump over the corresponding period last year. Our logistics business recorded a year-on-year jump of 470 basis points in EBITDA margin to reach 29%. To grow cargo volumes, at the port we are trying our targeted capacity addition based on the market requirements at our existing ports. In August AP SEZ, a 6 lakh TEU container terminal facility at Gangavaram port which will bring bringing in a new cargo type at this point.

We have also added assets across our logistics business, including two MMLP. Three Agri Logistics sites with a capacity of 0.1 million metric tons. Six trains and 900 trucks for providing the last mile connectivity. The MMLPs inducted into business include one at Taloja in Mumbai and the other one in — at Vapi. The ICD tone at Vapi acquired from Navkar Logistics — Navkar Corporation is one of the largest ICDs of India with a capacity of 0.5 million metric tons. It will be — it has been integrated with Adani Logistics on 1st October. In the last two quarters, AP SEZ has been successful with– We have signed the concession agreement mechanization of around 5 million metric ton Berth at Haldia Port in West Bengal which takes our portfolio — which takes port footprint in India to 13. We have also received an LOI for a greenfield development at Tajpir Port in West Bengal, which we expect to commission in the next five years.

On the logistics side, we have received LOA from Food Corporation of India to build silos across all locations in UP and Bihar, with a total capacity of 0.35 million metric tons which will take our total Agri silo capacity to 1.53 million metric ton. And we have also been shortlisted as the H1 bidder for the Loni ICD in UP from CWC with that we — our MMLP portfolio in India will reach to a total count of 10.

I am pleased to note that the Honorable Supreme Court of India through an order on, 5th September, 2022 to restore AP SEZ’s right to participate in the bidding of major ports, thereby putting to the rest — the wrong decision of certain port authorities on qualifying AP SEZ from the bidding process of major ports. In the last six months, we have carried out three large strategic acquisitions. Two are now 100% computed which is Ocean Sparkle and Gangavaram Port.

Ocean Sparkle is India’s leading third-party marine service provider with over 60% market share and Gangavaram Port is India’s third largest private sector port wherein we have acquired the remaining 58.1% stake from the promoters post the NCLT approval in October. The third transaction which is scheduled for completion within the next few weeks is the Haifa Port Company in Israel. With all — in all organic and inorganic investment progressing well, our credit profile continues to be strong with net debt to EBITDA ratio 3, which is well within our guided range.

In May 2002, I have announced about AP SEZ signing a binding purchase agreement — sorry in mid 20 — In may ’22 I have announced about AP SEZ signing a binding purchase — share purchase agreement for the sale of Myanmar asset. The decision to divest was taken by the AP SEZ board in October 2021 which was communicated to all key stakeholders. In our May communication, we have highlighted that the asset sale will be concluded after the achievements of conditions precedent that are incorporated in the SPA. Given the progress made in the CPs, I’m expecting the divestment process to conclude in the coming few weeks.

Let me now invite Subrata, Vikram, Muthu, and Charanjit for some more color on the operational, ESG, and financial performance. Over to you, Subrata.

Subrata Tripathy — Chief Executive Officer of Ports of Adani Group

Thank you, Karan bhai. Good evening and hello everyone on the call. Let me now give you an overview of the performance at port’s vertical. Talking about cargo volumes, EPS is at clocked record volumes of 177.5 million metric tons in H1 of FY ’23, this volume growth has been contributed by most ports, particularly, Mundra, Krishnapatnam, Dahej, and Kattupalli. Our flagship port Mundra, has reflected an 8% year-on-year growth in cargo volumes. The port has already touched 94 million metric tons of cargo volumes. The port contributed about 46% of the total cargo share of AP SEZ during H1.

From the perspective of East Coast and West Coast parity, the cargo volume share remains unchanged at 61% for ports on the West Coast and 39% for our ports on the Eastern Coastline of India. This year-on-year cargo volume growth on the East Coast was higher at 13% versus 10% on the East Coast. Looking at the cargo basket of H1, the dry cargo share is about 54%, containers contribute about 36% of the total volume, and liquid including crude, gas is about 10%. Crude, gas is about 7.5% of the total volumes.

Talking about containers, AP SEZ handles about 63 million metric tons of container cargo during the first half. The volumes grew by 5% year-on-year. Mundra continues to be India’s largest container handling port with about 3.3 million metric TEUs in H1 of FY ’23, versus 2.96 million metric TEUs by JNPT. Therefore, conciliate consolidating itself as the gateway port as far as exports of India concerns — EXIM cargo of India is concerned. Our flagship port, now handles one-third of the country’s total container cargo volumes. We believe that our focus on improving railway connectivity at Mundra, single window purchase to the shipping lines, integrated supply-chain solutions to end customers, and the partnership model with large shipping lines through JV’s approach is helping us guide this volume growth at Mundra.

Talking about the dry cargo segment, the total cargo handled in the first half is about 97 million metric tons which is a jump of 18% year-on-year. Within this segment, coal grew by 28% year-on-year and agri products had a fundamental growth of about 273% year-on-year. Moving to liquid cargo, AP SEZ handled liquid cargo 17.5 million metric ton which is about almost flat on a year-on-year basis. In the last two to three months, we have signed several contracts with different cargo sites. These include five new container services at Mundra and Hazira with a total cargo potential of about 2 lakh TEUs per annum and four large bulk contracts at Gangavaram and Dhamra ports with a cargo potential of about 10 million metric tons per annum.

We are also looking to get an additional coal volume of about 3 to 3.5 million metric tons as the Krishnapatnam Port given the start and commissioning of the new 800 MW power units Nellore at by APP DCM. I would now thank you and hand over to Vikram to update you on the logistics vertical. Over to you, Vikram.

Vikram Jaisinghani — Managing Director and Chief Executive Officer

Thank you, Subrata. Good evening to everyone on the call. Let me give you, an overview of the performance at the logistics vertical. Adani Logistics witnessed a 24% year-on-year growth in rail volume to 2,22,944 TEUs and, a 43% year-on-year growth in terminal volume to 1,92,039 TEUs. This has been achieved with ramp up of operations at Kila Raipur Logistics Park, decommissioning of Nagpur Multimodal Logistic Parks at the start of the year. And the commissioning of Taloja Multimodal logistic Parks during Q1 this year.

With the acquisition of Tumb MMLP. The total count of operational MMLPs has increased to nine. Furthermore, the logistics parks at Virochannagar and Panipat are currently under development. GPWIS vertical continued its growth trajectory with cargo volume being double to 6.27 million metric ton on Y-o-Y basis. And this new circuit added from mines to power plans to integrated steel plants. The bulk cargo transportation is gaining momentum, that has enabled us to, more than double the cargo versus the corresponding period last year. In H1 FY ’23, Adani Logistics handling 6.27 million metric tons against 3.28 million metric ton in Q1 FY ’22 — in H1 FY ’22.

We added six new rakes during first half and with that we now have 29 GPWIS as rakes in our staple. Besides, orders had been placed for a total of 62 new trains under the GPWIS framework which will be delivered over the course of the next one year. Coming to Adani Agri Logistics. Besides the three agri storage terminals with a total capacity of 0.15 million metric ton commissioned during H1, two more terminals one at Darbhanga and another one at Samastipur are now under construction with commissioning likely in the next financial year.

Additionally, letter of intent from FCI for four silos with a total capacity of 0.35 million metric ton. Which will take the total silo capacity to 1.53 million metric tons. In our warehousing business segment, we continued our journey to emerge as a leading player in Grade A warehousing with focus on the commencement of new projects including strategic acquisitions of warehousing assets.

During H1 FY ’23, another 0.6 million square feet of incremental capacity was commissioned. Thereby taking the total operational warehousing capacity to 1.4 million square feet. Construction has been initiated on 10 million square feet of warehousing capacity across six different locations in Mundra, Nagpur, Moraiya in Ahmedabad, Ranoli in Vadodara, NRC in Mumbai, and Palwal in NRC. We continue to work in line with our vision to become an end-to-end integrated logistics service provider in India by creating logistics infrastructure including Multi Modal Logistic Parks, warehouses, grain silos, and complete rail solutions for container, liquid, grain, bulk, and auto cargo.

I will now hand over to Charanjit to update you on the ESG performance of AP SEZ. Over to you, C.J.

Charanjit Singh — Head – ESG and Investor Relations

Thank you, Vikram and very good evening to everyone on the call. Let me start with our first focus area of carbon neutrality. There we have three action points, first is about the electrification of equipments. By the end of this year, we are likely to complete electrification of most of the cranes. For few other equipments we are already doing pilots for finding commercially viable low-carbon solutions. Our second action point is the sourcing renewable electricity. AP SEZ has now decided for 350 MW of captive renewables capacity. And the work on the project has already started. Third action point is on mangrove forestation participation which is required for sequestration of further emissions — net emissions.

We initiated the mangrove afforestation on another 800 hectares of land. This is in line with other increased target for mangrove plantation from 4,000 to 5,000 hectares. Coming to our second focus area that is of ensuring water supply from non-competing sources at all our ports. We are currently evaluating possible solutions at Hazira, Krishnapatnam and Dhamra ports. Once the solutions are implemented, it will take us to 80% of the AP SEZ’s target of sourcing its entire water supply from non-competing sources.

For the past 12 months we have been regularly engaging with the ESG rating agencies. There has been a constructive results of this exercise with AP SEZ significantly improving its ESG score in 2022. Pleased to highlight our progress on the ESG rating. Recently we received our ESG assessment from S&P and Moody’s. S&P has scored us among the top 10 in a peer group of 300 companies in the transportation and transportation infrastructure sector. While Moody’s has the ranked us first among the transport and logistics emerging market player.

With this let me hand over to Muthu for an update on the financial performance. Over to you, Muthu.

D. Muthukumaran — Chief Financial Officer

Thank you, Charanjit. And then good evening to all of you. I’ll first start off with a quick paragraph on our quarterly performance and then I’ll move to the half-yearly performance for FY ’23. With cargo of 57 million ton we have achieved a 15% growth year-on-year and the revenue of INR5,211 crores it’s a 33% growth and the corresponding growth in EBITDA of INR3,260 crores and finally in terms of our net profit-after-tax which is a 65% jump at INR1,738 crores. And after minority and after OCI, the profit-after-tax is INR1,677 crores.

Our EPS stands at 7.77% so that further quarterly number. Now, I’ll move to half-yearly. In terms of total revenue we have achieved INR10,270 crores which is a growth of again 15% like in the quarter. And this 15% is going to have year-on-year basis and this 15% is despite a decline of INR555 crores. Which is our revenue business segment from SEZ. And this reduction in the SEZ revenue is already factored in our full-year guidance for FY ’23 and the growth is supported by a 25% growth in port revenue and a 32% growth in our logistics revenues.

Company’s consolidated EBITDA for the first half increased by 21% on a year-on-year basis to INR6,551 crores. I’ll now turn to port operation. For the first half, we have seen an increase of revenue by 25% on a year on leap year basis to INR8,967 crores and that EBITDA also increased by 24% on a Y-o-Y basis to INR6,236 crores. Both of these cover the back of 11% increase in the cargo volume for the first half and an improved realization of inefficient improved realization. Overall port margins stood at 70%.

Turning to logistics business. Revenue from this segment is at INR721 crores which is a growth of 32% on a year-on-year basis and it is contributed by all its sub-segment, namely container rail, bulk rail, terminal traffic, and agri logistics. The significant increase that you’ve seen in the EBITDA is actually a result of our all-around effort to diversify into bulk cargo, number one and number two to eliminate loss-making routes and number three to generally improve efficiencies across. EBITDA for this business grew by 57% to INR212 crores and the margin expanded by 470 basis points and the margin — EBITDA margin stood at 29%. In terms of profit-after-tax for the first half year, it is INR2,915 crores and that is a jump of 26% compared to a corresponding period of the last year. And this back is after a pre-tax charge of INR370 crores of noncash mark-to-margin FX loss.

Now in that context let me now move to the next topic which is an update on our FX on our risk management approach. Traditionally, we have been keeping all our bond exposure completely opening against the natural hedge of our future revenue. Our annual revenue have always more than covered the maturities of the bonds of the respective years whenever they mature. Given the recent big exchange rate movement, that we have seen recently, we studied the option which we can use within our existing risk management policies. Following the study, we have embarked on two approaches. The first one is actively hedging especially the near-term one and the second one is designating bond against our future revenue exposure like you’ll see in some of the leading companies in the marketplace.

In this designation exercise, bonds the first designated by mapping and year-marking revenues of immediately ensuing months as of the date of maturity of these bonds and once this designation of revenue is done any forex movement either loss or gain post such designation dates is no longer including in the extraordinary items which is below the EBITDA. But it is included in other comprehensive income, OCI for short in the P&L account which is below the pat.

As you will know, this OCI is not included in the EPS calculation. The net gains or losses which are accumulated in this particular head will be moved to the revenue line as the gains or losses of the revenue in the month when the designated bond mature and the revenues for those months crystallize. As we have commenced this approach now, we have given a lot more detail in the presentation that we have circulated in the form of an annexure and in that annexure we have also included when the recycling will happen by the year and where we have designated the bonds.

With that let me actually move to the next topic which is actually cash flow. Our company has generated very healthy cash flows and with that internally generated cash flow, we have met our enhanced level of capex which is for the first half INR4,015 crores and we have funded acquisition, which is to the tune of INR1,500 crores. We have repaid loans which is again covered full details in the cash-flow statement in the presentation close to INR6,000 crores and we are still left with cash flows in the company. And finally, after all these things, our leverage is three times that of EBITDA.

So, after the cash flow, let me just quickly move to highlight that in terms of rating, we continue to enjoy investment grade rating by all the credit rating agencies. And finally, before I conclude let me point you to page number 28 which is actually the return on capital employed and I wish to bring to your notice that we have improved our return on capital employed across all the ports and across all our business.

So, with that let me actually conclude the section on financials and hand it back to Karen bhai for concluding remarks.

Karan Adani — Chief Executive Officer and Whole Time Director

Thank you, Muthu. So, let me just summarize our performance for the initial six months of FY ’23. AP SEZ recorded the strongest half-yearly performance in the history of the company with a record cargo volume revenue and EBITDA. Our integrated business model with an end-to-end service from port gate to the customer gate is providing to be a material differentiator versus our peers and enabling us to win customers and improve the stickiness.

With India are likely to be the best-performing economy globally in 2022 and ’23, we remain confident on — of AP SEZ’s growth story. We continue to be on track to achieve our full year guidance of 350 to 360 million metric ton of cargo volume and an EBITDA of INR12,200 crores to INR12,600 crores while also working on our organic and inorganic growth band. Let’s focus on sustainable development. AP SEZ is all set to emerge as a global force in the port and integrated transport utility segments. With this we can open the lines for question-and-answer.

Questions and Answers:

Operator

Thank you, very much. [Operator Instructions] We have our first question from the line of Mohit Kumar from DAM Capital. Please go ahead.

Mohit Kumar — DAM Capital — Analyst

Yeah. Good evening, sir, and congratulations on a very, very good quarter, and making some successful acquisitions. Sir, my first question is on the financials. While the cargo has grown by 11% in H1, your pure revenues are growing by 24%. What explains this? Is it due to do with cargo mix in the quarter? Or is some non-port revenues which can explain this jump?

Karan Adani — Chief Executive Officer and Whole Time Director

So, it’s both one is an absolute increase in our pricing which we did at the start of the year and lot of the contracts which got expired over the course of the last six months we were able to get an absolute increase in the pricing over there and the second is also because of the mix in the cargo. These are the main — two main reasons.

Mohit Kumar — DAM Capital — Analyst

Secondly, sir. Has there been any update from the government on the process of Concor divestment has it moved — have you received any input?

Karan Adani — Chief Executive Officer and Whole Time Director

No, we have not received any input.

Mohit Kumar — DAM Capital — Analyst

And lastly on this on the financials again there is a loss on forex in consol and standalone basis there is a huge difference. So, generally the standalone and consol forex losses are used within the numbers this quarter or we have $3 billion, $4 billion in consol while in, $4 billion tons in consol minus standalone it’s, $9 billion. Can you please help us reconcile this number?

Karan Adani — Chief Executive Officer and Whole Time Director

Yeah, sure. See you might recall that our bonds are sitting in actually the holdco whereas our FX-designated income is across EPS result as well as our subsidiaries. So the designated bond exercise that we have done, we have done only in the consolidated so the INR370 crores charge that you actually see which is M-to-M loss is after actually the exercise of designated bonds.

So what you see in the standalone, we haven’t done the designation of bonds in the standalone financials. So the difference between the 9 billion and the 4 billion which INR370 crore that I mentioned is actually in the OCI in-line the consolidated business. The consolidated financial.

Mohit Kumar — DAM Capital — Analyst

Understood, sir. Thank you and best of luck, sir. Thank you.

Operator

Thank you. We have our next question from the line of Atul Tiwari from Citi. Please go ahead. Thank you. We have our next question from the line of Bharanidhar Vijayakumar from Spark Capital. Please go ahead, sir.

Bharanidhar Vijayakumar — Spark Capital Advisors — Analyst

Yes. Good evening. What portion of this $4 billion that is designated bonds?

Charanjit Singh — Head – ESG and Investor Relations

$2.8. Billion dollars round number and other is $3.9 billion outstanding.

Bharanidhar Vijayakumar — Spark Capital Advisors — Analyst

Okay. So the OCI portion of this forex impact of, INR404 crores that we see that’s related to that $2.8 billion affirmative bonds.

Charanjit Singh — Head – ESG and Investor Relations

That’s correct.

Bharanidhar Vijayakumar — Spark Capital Advisors — Analyst

Okay. Okay. If I see the cash flows for the first half there had been INR4,000 crores of capex and about INR1,400 crores of occasion being done, how much would this be for the full year, sir? The full capex and the remaining acquisition for the year how much would have been?

Charanjit Singh — Head – ESG and Investor Relations

Yeah, the full-year guidance on given of INR8,600 crores so we continue to maintain at this point in time of our guidance.

Bharanidhar Vijayakumar — Spark Capital Advisors — Analyst

And so that will be another INR4,000 crores in the second half, so can you highlight in which asset it will happen?

Charanjit Singh — Head – ESG and Investor Relations

It might come in both ports and the business as well as by logistics. So, it’s better to talk about — and we have given actually project-wise capex in our original guidance at the beginning of the year.

Bharanidhar Vijayakumar — Spark Capital Advisors — Analyst

Okay.

Charanjit Singh — Head – ESG and Investor Relations

And it’s more or less the same at this point in time. There is no material change to that.

Bharanidhar Vijayakumar — Spark Capital Advisors — Analyst

Okay. And INR1,400 crores of acquisition is ready to Gangavaram, right?

Charanjit Singh — Head – ESG and Investor Relations

Krishnapatnam

D. Muthukumaran — Chief Financial Officer

The quotient portion is —

Bharanidhar Vijayakumar — Spark Capital Advisors — Analyst

So, any such number that we can achieve in the second half that will really do high support?

Charanjit Singh — Head – ESG and Investor Relations

High support. So, high support funding will happen in the second half and what we gave us the original guidance we are still working towards that in terms of financing pattern and closer to the time when we actually do the financing. We will sort of update the market with very changes to the financing pattern.

Bharanidhar Vijayakumar — Spark Capital Advisors — Analyst

Okay, sir. Thank you and all the best.

Charanjit Singh — Head – ESG and Investor Relations

Thank you.

Operator

Thank you. We have our next question from the line of Chetan Shah from Jeet Capital. Please go ahead.

Chetan Shah — Jeet Capital Advisors Private Limited — Analyst

Hi.

Operator

Chetan Shah, yes, please go ahead.

Chetan Shah — Jeet Capital Advisors Private Limited — Analyst

Yeah, hi. Congratulations. One quick question. You are looking at a current a global economic environment and also the shared activity. We will appreciate your guidance for the second half of current financial year. But if you can give us some sense on FY ’24 in FY ’25, your view on what can be the volume opportunity and how do you see these two financial year looks like from our from a volume point of view that would be very helpful.

Karan Adani — Chief Executive Officer and Whole Time Director

So, as you know that we had come out with our five-year strategic plan and we had come out with 500 million ton of volume handling by FY ’25 I think we are well on track to achieve that guidance and we believe we are quite confident that we will reach that by FY ’25.

Chetan Shah — Jeet Capital Advisors Private Limited — Analyst

Thanks, sir. And just one little broader question. In terms of the opportunity within India as port, you spoke about few missing blocks and there are a couple of things which are completely greenfield projects which we have won recently and we are expanding there. If you can, give us some sense from a decadal point of view, which is the target opportunity which you are neutral you may not want to name it in specific but, just give us some flavor in that sense where are we seeing our sales both within India and the surrounding geographies, will be very very helpful, please.

Charanjit Singh — Head – ESG and Investor Relations

Yeah. So, I think within India we keep looking for opportunities both within major ports as well as any private ports which come up for sale. Within major ports Government of India has read out a very good plan in terms of the whole monetization and as part of GatiShakti scheme and we look forward — I mean we keep evaluating those opportunities and keep plugging in where we don’t have a position.

On the private side, your — there are not much of opportunity which we can talk about right now but we keep evaluating as and when it comes and we look at more from a value accretive deals point of view. In terms of neighboring countries, right now we are there in Myanmar — I mean in Sri Lanka and Asia we are looking at opportunities in Eastern Africa, we are looking at opportunities in Bangladesh and in some of the Southeast Asian countries, predominantly high-growth countries with high consumption or high manufacturing base.

So these are the kind of opportunities we look out for and we actively — we are actively scouting.

Chetan Shah — Jeet Capital Advisors Private Limited — Analyst

Thank you just one follow up last, sorry. Do we have any IRR or a payback in mind in terms of the future growth opportunity or we will be kind of okay to treat little bit if the location is very strategic for us and we don’t mind compromising a little bit in our IRR expectation?

Charanjit Singh — Head – ESG and Investor Relations

So, as you know we have a capital allocation policy which is approved by the board and it clearly stated that all new investments have to be generating a return of IRR of 16% and above and unless it is very strategic but so far all the acquisitions that we’ve done we look at 16% and above.

Chetan Shah — Jeet Capital Advisors Private Limited — Analyst

Thank you so much, sir. Wish you all the best.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Smitesh Sheth from Raedan. Please go ahead.

Smitesh Sheth — Raedan Securities — Analyst

Hello. My question was with regards to the next year’s guidance and it has been answered. Thanks a lot for it, sir.

Operator

Thank you. We have our next question from the line of Priyankar Biswas from Nomura Holdings. Please go ahead.

Priyankar Biswas — Nomura Holdings, Inc. — Analyst

Hi, good evening, sir. Sir, my first question is regarding — can you just highlight certain timelines or something by recording let’s say land sales or monetization from the SEZ angel. So, we are hearing a lot of things like the copper plant and then probably some green hybrids that are — so can you just provide some timelines and expected incomes a floor — expected income flow moving from the next two, three years?

Karan Adani — Chief Executive Officer and Whole Time Director

So, I think all the guidances that we’ve given so far does not take into account any — I mean, large part of those incur and as I — the reason we are not giving those guidance is because it is bulky in nature and the timing of it is very difficult to give but these incomes we expect in the next these land sales to happen over the course of next three to four years that.

Priyankar Biswas — Nomura Holdings, Inc. — Analyst

So, can you provide a quantum, like how much land is available with you, let’s say across all the ports besides Mundra, and potentially how much monetization in a let’s say a blue-sky scenario that we can be looking at?

Karan Adani — Chief Executive Officer and Whole Time Director

Yes. It’s very hard to give you that exact number as you know in Dhamra and in Krishnapatnam we have roughly 6,000 acres of land other than Mundra where we have 40,000 acre. But as I said that these land incomes are bulky in nature they are one time in nature and it’s very hard to give a prediction in terms of how much income we will generate out of it.

But as I said there are lot of these opportunities which we are working on to develop the port-based ecosystem and as and when we are confident or we have some visibility of when the income will come, we will give in our guidance and will give a sufficient time to — for all of you to put in to bake into the model.

Priyankar Biswas — Nomura Holdings, Inc. — Analyst

So, essentially this INR800 crore guidance that you gave so this does not include any of these things right now.

Karan Adani — Chief Executive Officer and Whole Time Director

No, it does not include lands there, no it does not include any land there.

Priyankar Biswas — Nomura Holdings, Inc. — Analyst

Okay. And the last question from my side, See we have been in the logistics business of course, it has improved on ROCE somewhat in this particular first half. So, going forward like or all your businesses you typically target like 16% ROCE types so can you, give us some sense of the trajectory how we will achieve this 16% level and I mean which are going to be the drivers in a big way to derive profitability.

Karan Adani — Chief Executive Officer and Whole Time Director

Yeah, I’ll request Vikram to answer but in detail but just to give you broad headline, The GPWIS rake business where we are expanding aggressively. The agri logistics business and the warehousing business these three business will generate — are the ones which will push the overall logistics business apart from the container but these three businesses will generate ROCE higher of 16% in the coming years and I’ll request VIkram to come to add more on this.

Vikram Jaisinghani — Managing Director and Chief Executive Officer

So, I completely agree with what Karan has said. But only thing is that to clarify the timings of this ROCE which will be obtained will be different for the different verticals that we’re talking about. The first one to hit the block and to see immediately uptick in the ROCE see would be the bulk trains that will be introduced in the last in the next one year because that will be instantaneous revenue, instantaneous gain in EBITDA and then it will be followed up by the ROCE improvements as and when we start putting on the lease and putting the agri warehousing side of projects on the bloc with FCI followed by all the warehouse construction which is right 10 million square feet in construction as and when they start getting put on lease, they will also start delivering the other thing.

So the timing is different but I think in the next two, three years we should look at reaching our target upwards of 8% within 16% which is the ultimate aim and the end result that we have planned in this business model.

Priyankar Biswas — Nomura Holdings, Inc. — Analyst

Thank you so much.

Operator

Thank you. We have a next question from the line of Parash Jain from HSBC. Please go ahead.

Parash Jain — HSBC — Analyst

Thank you and I had two questions. First one for Karan and Karan it looks like from your throughput guidance, it’s quite courageous [Technical Issues]

Operator

Parash, sir, I’m sorry you’re not audible.

Parash Jain — HSBC — Analyst

Sorry, yeah, it’s actually typhoon is hitting Hong Kong, so there are noises, am I better?

Charanjit Singh — Head – ESG and Investor Relations

A little bit better.

Parash Jain — HSBC — Analyst

Sir… Hello.

Charanjit Singh — Head – ESG and Investor Relations

Yeah, little bit better. Okay and we will comply so with respect to your full year volume guidance, I mean it seems quite courageous to put number at this venture, what did see a confidence? Is it your view on India’s ability to continue to import is it your ability to gain market share or is it more like any shortfall can be managed by you inorganic acquisition or do you see any downside risk to the guidance and that’s my first question. Maybe if you can answer that or I’ll tell you the next question from the floor?

Karan Adani — Chief Executive Officer and Whole Time Director

Yeah, sure, Parash. I think our guidance of 350 to 360 this is — we are very confident, we are looking at lot of the data from group companies as well as from from our partners and we expect we do believe that India is in a growth in a very good space economically and we don’t see growth coming down any time soon. I think we expect GDP to grow at around 7% and with that we expect the trade to grow at around 10% to 11%.

I think these are the main reasons why we are very confident and obviously, as manufacturing base in the country is increasing and as the push for manufacturing is happening we are seeing energy consumption, increasing across the board and which in turn obviously helps the trade because India imports most of our energy.

So that is one and then obviously second is we are seeing significant amount of private capex happening and we don’t see a slowdown over there so in which in turn again we do see a lot of trade movement happening the nature of the trade might be changing so this is in our view we will see more growth on the bulk side than on the container side but. I think overall we are very confident of reaching this guidance of 350 to 360.

Parash Jain — HSBC — Analyst

Okay and that’s very-very helpful, Karan. And then my next question to Muthu is on slide that captures the ROCE. When we look at the ROCE of each of the business and the verticals. They have seen a marked improvement but at the consolidate level it seems subdued. So, when we are continued add right includes one of the businesses is not building the return and secondly maybe I could not hear you well could you please explain the rationale of — the rationale behind changing you way to recognize that FX losses from your past back up processes. So on a linked through the P&L versus the new approach. Thank you.

D. Muthukumaran — Chief Financial Officer

Sure. So to your first question, basically we have lot of greenfield projects. Both new projects as well as expansions that are happening in our current site. Which are sitting in CWIP or we carrying cash to fund those expansions that we have already sort of announced over the next two to three years. So, if you back that out in the calculation you will actually get ROCE which is a true picture of delivering projects. And these projects that we’re currently undertaking we’ll also start delivering in the next three to four years so you will see return on capital employed for the company as a whole improving at that point in time.

These are planned capex so therefore they’re tracking our sort of our plan. In terms of FX, basically, see the reason is with this significant movement in the FX rate that are happening in the market. All such movement call for action, right so we went to the drawing board and we said what are the options that we have to actually truly reflect the underlying operating performance of the company. Are there any new of tools that we have to use that is within our current policy but that we are not currently using? So two things that came out one is active hedging, wherein in a rising market like this we have started sort of doing forward.

We will as a company build expertise and build on that active hedging as in growth. But while we have done that. We also studied what other capital-intensive business in the marketplace is doing. The very underlying rationale for doing any bond and then call it a natural hedge it’s because we do have dollar revenue and by nature these revenues will come in future. And liabilities are sitting, demand is sitting in our live balance sheet today.

So under the current accounting standards, we need to provide for mark-to-market losses and that does not actually give the underlying performance. So, therefore, what we have said is to bring in the discipline of saying which bond is designated against which year’s revenue. So, we picked the bonds from the portfolio totaling $2.8 billion and attained revenue against those bonds.

And the moment we do that accounting standard demand that we move profit and loss or profit or loss for the period arising out of M-to-M away from the current extraordinary line item to OCI line item so that is what we have done under the NSD 109. Which is a requirement.

Priyankar Biswas — Nomura Holdings, Inc. — Analyst

Okay.

D. Muthukumaran — Chief Financial Officer

But the fund — the underlying reason is actually to map the revenues against the bond and to demonstrate the discipline of how we have read out the maturity to match our underlying exposure.

Parash Jain — HSBC — Analyst

Okay. Perfect. And then maybe one final question. With respect to disposal of your taking Myanmar, how far have you raised an estimate timeline that will be done?

D. Muthukumaran — Chief Financial Officer

So, Myanmar — one of the conditions to see there’s the completion of the project we haven’t actually completed the project, it is underway and it should get over shortly. I mean, once the project is completed we should be able to close the deal.

Parash Jain — HSBC — Analyst

Okay, so by the end of this fiscal year, right?

D. Muthukumaran — Chief Financial Officer

Yes. Yeah. I mean, maybe before but for sure before the end of this year.

Parash Jain — HSBC — Analyst

Thank you so much and have a lovely evening.

D. Muthukumaran — Chief Financial Officer

Thanks.

Operator

Thank you. We have a next question from the line of Pulkit Patni from Goldman Sachs. Please go ahead.

Pulkit Patni — Goldman Sachs Research — Analyst

Thanks for taking my question, just one question. If you could highlight what the interest cost for the next couple of years we should build in given the the rise in rates. I understand we have bonds but if you could just highlight what is the interest cost we should bake in for the next two years based on the increased rates globally?

Karan Adani — Chief Executive Officer and Whole Time Director

All of bonds and CDs which is in rupee, dollar bonds and rupee bonds have fixed rate. So there is very, very little which is actually the working capital type. And that too is very, very small which is market-driven. And that also actually we still get very competitive rates. So, there is no change in interest rate compared to what you’re seeing today.

And at the company level per annum, we are talking about INR2,300 crores of interest approximity and that stays.

Pulkit Patni — Goldman Sachs Research — Analyst

Okay.

Karan Adani — Chief Executive Officer and Whole Time Director

And only peak, only when we actually deploy both capital on the ground and mix we borrowed and that will leave the absolute amount of interest will changes.

Pulkit Patni — Goldman Sachs Research — Analyst

Okay, that’s helpful. Thank you.

Operator

Thank you. We have our next question from the line of Mayank Agarwal from Quant Mutual. Please go ahead.

Mayank Agarwal — Quant Mutual Fund — Analyst

Sir, I wanted to know about the fact that the gross debt increased by 5% but the net debt has increased by 27%.

Karan Adani — Chief Executive Officer and Whole Time Director

So to which page are you referring to, please?

Mayank Agarwal — Quant Mutual Fund — Analyst

No, sir. I’m calculating on a Y-o-Y basis in September ’21 the gross debt and net debt and in September ’22 the gross debt and net debt so gross debt has increased by 5% in compared Y-o-Y but net debt has increased 27%.

Karan Adani — Chief Executive Officer and Whole Time Director

Maybe we can actually take you through offline. That number doesn’t sound right to me, intuitively. Actually our net debt refinancing has sort of gone down. The reason why our gross debt has gone up, are two-fold, one is we have borrowed marginally more for the new project. But also there is a INR2,000 crores increase in the gross debt on account of M-to-M FX. But we can work offline with you and take you through but that number doesn’t sound right.

Mayank Agarwal — Quant Mutual Fund — Analyst

Okay, sir. I would like some guidance on that.

Karan Adani — Chief Executive Officer and Whole Time Director

Yeah, please, we can do that offline.

Mayank Agarwal — Quant Mutual Fund — Analyst

Yeah.

Operator

Thank you. We have our next question from the line of Amit Shah from Bank of America. Please go ahead.

Amit Shah — Bank of America Corp. — Analyst

Yeah, thanks for the opportunity. My question actually is to Karan. When you spoke about the international inorganic acquisition opportunities, earlier the thinking was to do only greenfield projects in JV mode is that still the thinking? The reason why I asked is that would effectively mean and as a percentage of capital deployed in international is only going to rise gradually is that the way we should think about it still?

Karan Adani — Chief Executive Officer and Whole Time Director

Yeah. So, majority of it is right it will be inorganic greenfield through JV mode similar to what we done in Sri Lanks or so something like that. However, if we do look at that and if we do get attractive opportunities like Israel we would look at it but those are rare. Most of it we would be looking at is JV mode and greenfield development.

Amit Shah — Bank of America Corp. — Analyst

Okay. On Adani Logistic, earlier primarily our growth was coming from handling domestic cargo as opposed to EXIM again just a clarification is that. Still the way and the subset question to that is that how much is SCI warehouses getting converted to silos that you’re doing, a part of the domestic cargo growth within Adani logistics?

Karan Adani — Chief Executive Officer and Whole Time Director

Sure, so let me just clarify over years our Adani Logistics mainly did EXIM and not domestic. 80% of their volume was EXIM 20% was domestic and it continues to be in that sort of that range. In terms of agri logistics as you know that more and more cycles are coming up for bidding. We’ve already got — we won we had the H1 0.35 million metric ton of new silos which are coming up and we expect another 2 million tonnes of FCI silos which will be coming up lot as part of the hub and spoke bidding. So, we expect as we had given in our five year guidance that we look at bringing this business up to almost 3 million tons of storage.

We are well within — we are very confident we will reach that by FY ’25.

Amit Shah — Bank of America Corp. — Analyst

Got it. And my final question is actually on the major ports opportunities that you were talking about. So, is that going to be a substantial part of our business as you think about the volume growth target that you put out for FY ’25? Or is it just a one-off port opportunity that we would look at within major port and we will continue to look at land port models.

Karan Adani — Chief Executive Officer and Whole Time Director

So our FY ’25 target of 500 million ton does not take into account it’s from the existing assets. It does not take into account the any new assets that we will add between now and ’25. In major ports we would look at selectively based on the kind of footprint and strategically where we don’t have a presence those are the places we would look at to help us consolidate in terms of our market share. But it will be very selective in nature.

Amit Shah — Bank of America Corp. — Analyst

Makes sense. Thank you very much, Karan.

Karan Adani — Chief Executive Officer and Whole Time Director

Thank you.

Operator

Thank you. We have our next question from the line of Nikhil Abhyankar from DAM Capital. Please go ahead.

Nikhil Abhyankar — DAM Capital — Analyst

Hello, am I audible, sir?

Karan Adani — Chief Executive Officer and Whole Time Director

Yes, you are.

Nikhil Abhyankar — DAM Capital — Analyst

Thanks for the opportunity, sir. Most of the questions are answered, just I’ve got one bookkeeping question. Can you give the revenue and EBITDA split for Q1 and Q2 FY ’23 for ports and non-ports?

D. Muthukumaran — Chief Financial Officer

Yeah. The total revenue we saw was INR10,270 crores and out of which port revenue was INR8,967 crores. Sorry, you wanted port and this is for the first half and if you wanted actually for INR5,211 crores was the total revenue. Okay, let me just read out. The total revenue, just a second please. Okay, so if you can note down the number of Q1 total revenue is INR5,058 crores and Q2 total revenue was INR5,211 crores.

Nikhil Abhyankar — DAM Capital — Analyst

Okay, okay.

D. Muthukumaran — Chief Financial Officer

Okay and then as far as the port is concerned it’s INR4,510 crores for quarter INR4,458 crore for quarter two.

Nikhil Abhyankar — DAM Capital — Analyst

Okay. And sir…

D. Muthukumaran — Chief Financial Officer

You wanted EBITDA as well?

Nikhil Abhyankar — DAM Capital — Analyst

Yeah.

D. Muthukumaran — Chief Financial Officer

Okay so port EBITDA is INR3,170 crore for first quarter, INR3,066 crore for second quarter and total EBITDA is INR3,290 crore and INR3,260 crore.

Nikhil Abhyankar — DAM Capital — Analyst

Sure. Sir, if you have that in handy can you also give comparable for Q2 FY ’22?

D. Muthukumaran — Chief Financial Officer

Yeah, yeah. I have Q2 FY ’22. If. You want to start from revenue?

Nikhil Abhyankar — DAM Capital — Analyst

Yeah.

D. Muthukumaran — Chief Financial Officer

So, for port revenue INR3,398 crore. Total revenue was INR3,923 crore. Total EBITDA is INR2,483 crore and port EBITDA is INR2,379 crore.

Nikhil Abhyankar — DAM Capital — Analyst

Okay. Got it. Thank you and that’s all from me.

Operator

Thank you. We have our next question from the line of Pradyumna Choudhary from JM Financial Capital Private Limited. Please go ahead.

Pradyumna Choudhary — JM Financial Capital Limited — Analyst

Hi, sir. So, I just wanted to understand most of our volume increase in this quarter has come on an absolute basis a majority of it has come from coal — increases in coal volumes. So you see this as sustainable especially considering that continued growth about mineshaft the gas or pipe with — So this is the first question and and secondly you spoke about. The mix change being one of the reasons why revenue growth has been higher than the volume growth so can you throw a bit more light on this like what kind of cargo has a higher realization and higher maybe higher margin also? These are my two questions.

Charanjit Singh — Head – ESG and Investor Relations

Yeah, thank you first on the cargo volumes you see the — as we have guided the coal has seen a significant growth and you’ve seen that the drive segment has grown from an FY ’22 and H1 FY ’23 from 50% to 54%. This is fueled by a very strong rally in the coal and which is understandable with the high energy consumption which has been at all time high in India.

And also the fact that the growth schemes are looking to sustain, and we believe that the interim requirement of coal will continue to be high in H2. Also the fact that we’ve been able to garner new contracts as far as coastal coal movement is concerned between what is on the rail cum sea route from the landlocked mines in Jharkhand, Odisha, Chattisgarh through our ports in Gangavaram, Dhamra into the receiving ports at Krishnapatnam which makes it a — at both our ports as well as into the other southern power house’s consumption.

We’re also working on the East-West transfers the government is dropping off at a very nascent stage but the growth is going to come primarily from these two EXIM as well as domestic coal. But as far as the other volumes are concerned, container does need to be fairly flat so though there is a little bit of aspiration as to how it is growing we’ve seen that the rally in the festival season has been good. So, we have bought it with the sentiment that the imports will start coming in and especially engineering goods which has been a value over the last years as far as India’s export performance is concerned. We’ll do — we’ll certainly come back and if you look at the country’s choices are getting into as Karan bhai clarified, getting more into Southeast Asia, high consumption and high growth economies and that should sustain the volumes yet, notwithstanding the global slowdown that has happened. So, volume wise coal will be the driver without a doubt.

In fact, the other aspect of coal is also the coking coal. We’ve seen this market share consolidation mostly in our Eastern ports we are looking that the steel plants are on a — the first half has been a little subdued because of the consumption globally. In second half, we’re seeing a growth and we are seeing these signs of recovery on coking coal, especially in the larger plants of Steel Authority of India as well as the Tata Steel both where we are very well-placed in our ports in Dhamra and Gangavaram particularly and in Krishnapatnam as far as Jindal Steel is concerned for the total Toranagallu plant.

So this alignment and the choice of very stronger bonds with the major consumers gives us the confidence that we’ll be able to sustain this dry cargo growth. Your second question on realization of higher cargo, would you like to take that?

Vikram Jaisinghani — Managing Director and Chief Executive Officer

See with respect to the realizations when Karan bhai mentioned about the change in the mix, so it is also the change in the mix between the containers, right? So, if it is exempt versus transshipment there is a different realizations. So in this current year we have seen a very high share with respect to EXIM and that’s the reason the realizations are much better. I hope that answers.

Operator

The line is disconnected. We have our next question from the line of Ashish Shah from Centrum Broking Limited. Please go ahead.

Ashish Shah — Centrum Broking Limited — Analyst

Yeah, thanks. So, there’s just two questions from my side, one if you can update what is the on-ground status as far as the railing jump asset is concerned because we also keep reading a lot of news flow around local contractors etc., so any update will help, sir.

Charanjit Singh — Head – ESG and Investor Relations

We two updates on Vizhinjam. The first on the BGS which the Government of India has finally sanctioned. You are aware that we get the component of close to INR814 crores of BGF the Government of India has finally sanction that are expecting that to come in and so that the project is ongoing. As in the process execution is concerned you will be aware that in the last year we’ve had phenomenal progress and normally post monsoon is when we open up the line. The project is being commissioned both from the land and from the marine side, so we have two places, Kattupalli and Ennore for when we get the quarry stones to do the breakwater they’re all well set.

As of today we have seen every day the quarry stones coming into the two locations. As far as the agitation is concerned we are aware that it is slightly misled. We’re also aware that the Government of Kerala is entirely supportive and that there is a very affirmative action on behalf of the High Court of — Honorable High Court of Kerala which have been very supportive and have given instructions that this agitation should be lifted forfeit. As we speak to you we are to be are expecting that this whole situation to be cleared in another the vote of fortnight and we think the monsoon, monsoon has seeded in just about a fortnight back so we haven’t lost time.

So we feel very confident of the earlier guidance given that this port will be commissioned in the calendar year ’23 and we have taken all the affirmative actions in line. The cranes which are coming in and it is going to be a state-of-the-art, world-class terminal — an automated terminal. So, we went into light. These are small aberrations and I’m sure we will be entirely over with that pretty soon.

Ashish Shah — Centrum Broking Limited — Analyst

All right, sir. Second question on the capex of this year we have for the FY ’23 the reiterated at INR8,600 crore capex but from a slightly medium term from a three year perspective would we be looking at an annual capex of similar range of let’s say INR9,000 crore to INR10,000 crores is that the number of launch of.

Karan Adani — Chief Executive Officer and Whole Time Director

I think the way to look at is ports we’ll continue with will have capex around INR2,000 crore to INR2,500 crore. The logistics business mainly warehousing and agri logistics that we keep scaling up that will continue to have INR4,000 crores of capex. I would say on an average you can take between INR6,000 crore to INR8,000 crore is what we will continue to spend in the coming few years.

Ashish Shah — Centrum Broking Limited — Analyst

Right and this would include assets like Sri Lanka…

Karan Adani — Chief Executive Officer and Whole Time Director

Everything, Everything.

Ashish Shah — Centrum Broking Limited — Analyst

Right, but not Haifa, right? Haifa would be an inorganic commission to which…

Karan Adani — Chief Executive Officer and Whole Time Director

That’s it.

Ashish Shah — Centrum Broking Limited — Analyst

All right. Thanks. So, yeah, I mean that’s it from my side and. So on behalf of Centrum Broking, I would like to thank all the participants for attending this call and thank the management for giving us this opportunity. I would like to hand over to the management for any closing comments. Thank you, sir.

Karan Adani — Chief Executive Officer and Whole Time Director

Thank you, Ashish. Thank you everybody for joining and if there are any questions. Charanjit is there to answer and the team is there to answer. Thank you have a good evening.

Operator

[Operator Closing Remarks]