Adani Ports and Special Economic Zone Limited (NSE: ADANIPORTS) Q4 2025 Earnings Call dated May. 01, 2025
Corporate Participants:
D. Muthukumaran — Chief Financial Officer
Rahul Agarwal — Head, ESG and Investor Relations
Ashwani Gupta — Whole-Time Director and Chief Executive Officer
Divij Taneja — Chief Executive Officer of Adani Logistics
Analysts:
Tushar Pendharkar — Analyst
Alok Deora — Analyst
Nidhi Shah — Analyst
Sumit Kishore — Analyst
Achal Lohade — Analyst
Parash Jain — Analyst
Vishal Biraia — Analyst
Pulkit Patni — Analyst
Koundinya Nimmagadda — Analyst
Aditya Mongia — Analyst
Sanjay Parekh — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Adani Ports and Special Economic Zone Limited Q4 FY ’25 Conference Call hosted by Ventura Securities Limited. [Operator Instructions] There will be an opportunity for you to ask questions after management’s opening remarks. [Operator Instructions]
I would now hand the conference over to Mr. Tushar Pendharkar from Ventura Securities. Thank you. And over to you, sir.
Tushar Pendharkar — Analyst
Thank you. Good afternoon, and very warm welcome to everyone. On behalf of Ventura Securities Limited, I am pleased to welcome you all on the earnings con call of Adani Ports and Special Economic Zone Limited for Q4 FY ’25.
We are happy to have the management of the company with us here today. This meeting is represented by Mr. Ashwani Gupta, Whole-Time Director and CEO; Mr. D. Muthukumaran, CFO; Mr. Divij Taneja, CEO of Adani Logistics; and Mr. Rahul Agarwal, Head of Investor Relations and ESG. We will begin with the opening remarks from the management followed by an interactive Q&A session.
With this, I hand over the call to Mr. Rahul Agarwal. Over to you, sir.
D. Muthukumaran — Chief Financial Officer
Rahul, we can’t hear you.
Rahul Agarwal — Head, ESG and Investor Relations
Hello. Good afternoon, everyone, and thank you for joining the earnings conference call. We will begin this call with opening remarks from Ashwani, and then we will open the floor for Q&A. Over to you, Ashwani.
Ashwani Gupta — Whole-Time Director and Chief Executive Officer
Good afternoon, and thank you for attending the earnings call. I hope we are audible. In case some difficulty, please raise your hand.
During FY ’25, APSEZ delivered stellar performance across all parameters. We posted 16%, 20%, and 37% growth in revenue, EBITDA, and net profit, respectively, and surpassed FY ’25 guidance, including cargo volume if we gross up one-time Gangavaram loss. Domestic ports revenue grew by 12% led by all-time high 27% market share and 73% EBITDA margin. Mundra became the first Indian port to cross 200 million metric ton of cargo in a single year. Our growth continues to be accompanied by strong financial discipline. As at FY ’25 end, our leverage stood at 1.9 times.
During the year, we significantly enhanced our domestic and international footprint. We closed Gopalpur acquisition, commenced operations at Vizhinjam and Colombo ports and our Board has approved acquisition of NQXT in Queensland, Australia. Our second pillar, logistics, continued its hyper growth trajectory with 39% year-on-year jump in revenue led by current portfolio and new services including trucking and international freight network services. These are capital-light services which will further accelerate growth while delivering high capital efficiency.
Our third business pillar, marine business. We acquired Astro Offshore and continue to invest in growing our marine fleet. We own 115 marine vessels that operate in Middle East, Africa and South Asia waters. We expect the marine business to cross INR3,300 crore revenue by FY ’27.
As our business evolves, and thanks to your feedback, we are introducing new reporting lines. As you can see on slide number 44 in our investor presentation, we will now report international ports separately and demonstrate the progress towards the target. We will also introduce separate reporting for marine services which is our third business pillar which includes Ocean Sparkle in India, Astro Offshore and TAHID in overseas.
Trucking and international freight network services will also be reported separately as a part of the logistics vertical. We have outlined our marine strategy on slide number 46 of the investor presentation. We are focusing on diversifying our marine fleet in Middle East, Africa and South Asia. We are focused on profitable operations with high capital efficiency underpinned by Tier 1 customers and long-term contracts and we aim to achieve 3x revenue growth in marine by FY ’27.
As you can see on slide 49 of our investor presentation, we are focusing on trucking and international freight network services. Based on the momentum across the business lines and a great performance in FY ’25, looking forward, FY ’26 is also looking very strong for us. We have guided FY ’26 revenue in the range of INR36,000 crores to INR38,000 crores, EBITDA in the range of INR21,000 crore to INR22,000 crore, and capex between INR11,000 crore to INR12,000 crore.
As a summary, so far, APSEZ has been focusing to be an industry leader, a volume leader, a market share leader, margin leader, then we transformed it into integrated transport utility company driven by multimodal logistics. And hence, as you can see on slide number 41, we are best-in-class ROCE and ROE in the industry which is a premium. As you can see on page number 41, ROCE has reached for APSEZ, and thank you for your feedback, that’s why we are going to have this reporting line also in future, 15% ROE close to 21% which is best-in-class.
Hence, moving forward, whatsoever business we are in, whether domestic ports where we are reaching ROCE of 21%, whether the marine business where we are of ROCE of 13%, 14%, and the new businesses which we are doing now, whatever we are, our — the only indicator is how better we can be on ROCE and ROE.
So with that note, I would like to say thank you, and we will open for the question-and-answer. Thank you.
Operator
Thank you, sir.
Rahul Agarwal — Head, ESG and Investor Relations
Thank you. Go ahead, moderator.
Questions and Answers:
Operator
Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Alok Deora from Motilal Oswal. Please go ahead.
Alok Deora
Hi, good afternoon. So congratulations on pretty good set of numbers. Just had a couple of questions. First is on the EBITDA number has actually come up even higher than what we had estimated as per the revised guidance. So — and while the volumes have been slightly on the lower side, so basically the EBITDA per ton has kind of improved. So just wanted to understand, is this a phenomenon which we will see going through FY ’26 as well? That is question number one.
Question number two is just on the logistics business, what has really happened? Because we have seen a massive jump in the growth in — for the fourth quarter. So is that sustainable or is there any kind of one-off volumes which we could gather there? Yeah.
Ashwani Gupta
Okay. No, thank you. So first, I would like to give the answer and then I will hand over to Muthukumaran and also our Adani Logistics CEO, Divij. See, I think we have been repeating our message now since one year that we are transforming our company into an integrated transport utility company, and we are centering up the pillars which are in the whole ecosystem.
Logistics, we have rail, we have terminals, we have ICDs, we have warehouses, we have agri-logistics, and now we started the trucking. The reason we wanted to start the trucking is any container which comes to ICD is delivered to the customer without our connect. And the trucking is something which is connecting ICD with the customer and the same truck can bring back many other things from the same customer to our own ICD.
Now, when it comes to EBITDA percentage, and once again, if you can see our financials for the quarter four or for the full year, we are shifting our financials from EBITDA percentage of domestic port to the absolute amount of revenue, absolute amount of profit, in mid to long term by having a multimodal transport utility business pillar, ports and within ports domestic and international, logistics, within logistics we have four or five business units, and the marine, which is domestic and international with a combination of fleets, whether it is anchor handler or utility boats and so on and so on.
So that is giving us a strong advantage to grow our top line and bottom line irrespective of only — which is linked to only ports. That is why, as I said in my opening speech, that we have proved us to be a best-in-class in ROCE and ROE, which is just possible because of the combination of the best businesses we have.
Now, I hand over to Muthukumaran and then to Divij to talk about especially all the majors which we explained to you on the logistics, especially getting into the new businesses, how it is helping logistics to grow in multiples.
D. Muthukumaran
Thank you. So first of all, in a way, thank you for that question because if there is one central message that we would like to convey, we would like to keep repeating that this is what it is about. And that is — I mean, why even in our current year’s presentation, there are a number of changes in the format in which we are reporting to you. We are giving you separate business lines to tell you that we are beyond volume.
We are giving you separate ROCE. We are giving you a separate guidance note. And in the guidance, we have actually, if you can notice, taken down the volume as a footnote. Earlier, it used to be a lead indicator. For us, right now, we are actually treating this as an important component. Obviously, volume is going to be the driver of our growth, but not the sole driver of the growth. That is the central message that we want to give.
And the trend that we are trying to talk about for the past couple of quarters got well established in this quarter. And also, it has not been the first time that this is the case. If you see the third quarter, our EBITDA has outgrown our revenue, which has outgrown our volume. So that is point number one.
Point number two, going forward, we are not going to shy away from volume. Volume growth will be there. But what we would like to highlight is the outgrowth that you will see in revenue and, beyond that, even in EBITDA. So that is actually the central point that we want to drive.
And in quarter three also, it was the same case that when we reported the number, you have seen how EBITDA versus volume relationship has broken down and where EBITDA started running ahead. And that is exactly why we have started giving you additional lines of business reporting so that you can appreciate as to where that is coming from. Number one.
Number two. Incidentally, for this year, the sort of price increase has also been there, which is beyond what is budgeted, which has contributed to volume and internally EBITDA growth. So these are the two factors that we have.
And Divij, would you like to comment on sustainability of the volume?
Divij Taneja
Yeah, thanks, Muthu. So just to build on to what Ashwin and Muthu have said, what you are seeing, the numbers increase, is a total integrated play coming into effect. You are seeing us move from custodians to exhibiting control over cargo. At some level, the tech is also starting to kick in. So our view is this is more than sustainable. And with all the four quadrants coming in, right from the freight network to trucking to rail terminal to the warehousing, our customers are now able to speak to us for all services under one roof, backed with the support of the ports. So that’s about it.
Alok Deora
Sure.
D. Muthukumaran
So if I could just supplement that with numbers. It is sustainable. Frankly speaking, it is beyond sustainable. And that is why if you see page number 51. For the first time, we have given guidance on volume of logistics as well. So you asked whether Q4 is sustainable. But what we are talking about is potentially three to four times growth in FY ’25 alone over the FY ’24 number in logistics volume. So do we have visibility of the growth? The answer is yes. Do we have contracts in place? The answer is yes. Will the scalability happen? Actually, we are working towards it. And that is the effort which Divij and team have put. At any point in time, any of you would like to actually see a strategic command center that we have built, you are most welcome.
And then what we would like to also underline is the fact that the phrase that Divij used about, I would like to repeat for impact, control over cargo than actually sort of custody over the cargo. We have launched two business lines last year in logistics. One is a truck management platform and the other is the freight forwarding business. So these are capital-light business. They come with very high return on capital employed, therefore. But more importantly, for the business, it is strategic because we are then able to actually penetrate through multiple lines of business. So therefore, the two questions that you asked, frankly speaking, are very, very vital for the whole call. So thank you very much for asking them right at the beginning.
Alok Deora
Thank you. Yeah, that’s all from my side. Thank you, and all the best, sir.
Ashwani Gupta
Thank you.
Operator
Thank you. We have the next question from Nidhi Shah from ICICI Securities. Please go ahead.
Nidhi Shah
Yes. Thank you so much for giving me the opportunity to ask the question. So we did speak about how logistics is a big portion of the business now. But I still wanted to tap a little bit on the volume just to understand that initial guidance of 450 to 480. How is it that we got a 450 kind of number by the year? And what were the commodities that we sort of transported less of? Was there any particular reason for that? That was the first question.
And the second would be linked to that is that the underlying guidance of, say, 505 to 515 million ton that has been given for FY ’26. What are the key triggers that we are seeing for this volume to come into play?
Ashwani Gupta
Well, thank you. I think, first of all, in the volume, let me say there are two indicators. The first indicator, which is very much on the positive side, is the India global trade, maritime trade grew by 3.5%. APSEZ grew by 5.4%, right? So as we always say that we are always 1.5 to 2 times, right?
Then within this, I am talking about India level, right? Within this, the coal went down by 3%. Iron ore went down by 18%. Crude and POL went up by 3%. Container went up by 12%. This is all India level. Okay? Thermal coal went down by 9.4%. The coking coal grew by 2.2%. And coastal coal was almost flat. So first of all, let’s understand that all India cargo — the main growth pillar for all India cargo was container. Then, if all India grew by 12%, out of which the EXIM growth was 6% and transhipment growth was 61%.
Now, if you look at us, we have grown our market share from 43.8% to 45.5% in container, which gives you the answer that we grew more than the India container trade has grown. So that is a positive side. On the other side, the whole India trade on the coal has declined. We kept our market share almost flat. But the global — because of the trade decline, we had a decline. So this is the second answer.
The third answer to your question is, Gangavaram, we closed the port because of unfortunate incident for 41 days, which approximately costed us close to 6 million metric tons. But once the customer is not coming to our port for 42 days, definitely, it’s not a small business. It’s a big vessel. So they will not come up on 43rd day. So to restart and have the ramp up, we almost lost between 10 million to 11 million metric ton in Gangavaram last year. So these are the three indicators which we wanted to share with you that how you should evaluate us in terms of volume.
Then, let’s come to next year. Now, which will be our growth driver? This will be our growth. So container will remain our growth driver. As we said, we are building up container capacities in Mundra. CT5 is with full throttle in the commissioning stage. And as you can see that, next year, we have given the capex guidance. And if you could see our capex slide number 52 and 53, we have also given a little bit more strategic view and a numerical view on capex. And thank you, this is the feedback which was coming from many analysts on the capex allocation or let me say capital allocation. So, we are going to invest heavily on container terminals, whether it is Mundra or it is Vizhinjam or it is CWIT in Colombo or it is Ennore or it is Kattupalli. Everywhere, we want to keep expanding our capacity on the container. So that is the number one capex driver.
Then, obviously, we are the essential commodity handlers. So whatever comes to our port, we are obliged to take it, right? So we should not underestimate the demand of the coking coal as well as the other coal. And the biggest port which is exposed to it is Dhamra, and that’s why we are investing in Dhamra. The third growth, which is not exactly same as container, is on the liquid, and that’s where we started the Hazira liquid farm and so on.
So to answer to your question, from priority viewpoint, first pillar remains the container, second remains the dry cargo, and the third remains the liquid. That is where we are looking at the guidance which we have given for the volume for next year.
Nidhi Shah
Understood. Lastly, I wanted to ask that the volume guidance that you have given, have you factored in any weakness, especially given the tariff uncertainty in the market? And is there any potential downside to the guidance that you are seeing as things are today?
Ashwani Gupta
See, what we have seen in the past, whether it was COVID or it was Red Sea crisis, because of our positioning of the ports from geography viewpoint, access to the global trade routes, one thing goes up, so other things may come down, but it can be compensated by others. That’s where our risk mitigation by multi-commodity portfolio, multi-customer portfolio and multiple ports portfolio helps us in navigating it. So I would say that things would settle down because trade remains the trade, whether left to right or right to left or top to bottom or bottom to top. I think whatsoever plus and minus comes in, we, as integrated transport utility company, should be able to absorb it when it is translated to revenue, EBITDA impact. And that’s where we are focusing on that the volume remains important, but it is not the most important factor in our top line and bottom line.
Nidhi Shah
Thank you so much. Thank you.
Operator
Thank you. We have the next question from the line of Sumit Kishore from Axis Capital. Please go ahead.
Sumit Kishore
Thanks for taking my questions. My first question is your net debt to EBITDA has come off to 1.9 times as of FY ’25, and your operating cash flow for the fiscal is well ahead of your capex FY ’26, and your operating cash flow is going to grow as well. So your cash position is likely to improve or the net debt to EBITDA is likely to come off. How do you plan to reward shareholders? Maybe if you could articulate your dividend policy or any other modes that you have in mind to reward shareholders over the coming fiscal and also maybe a medium-term picture here.
Ashwani Gupta
Yeah. Well, thank you. I think very good question. Slide number 54 is the capex allocation strategy. And it is driven by ROCE and ROE. So we have added logistics and marine definitely where the returns are going to be what we expect, but also the technology capex and the decarbonization initiatives which we are taking.
But decarbonization initiatives are not cost, but they are for us a profitable initiative. Especially, we are investing now in technology capex, for example, Vizhinjam, but also in the coming future when we are going to have our new terminals, container terminals in Mundra, we will invest in the technology as we have invested either in Vizhinjam or we could see. So investment in world-class technology to our ports to keep the more than sustainable efficiency and effectiveness of our operations because that is what is going to drive our top line and bottom line. So number one, capital allocation remains a most important thing for us because of our heavy cash flow.
The second one, we are rewarding our shareholders, A, by announcing the dividend which Board has recommended at INR7, which is purely driven by what is the mid- to long-term wealth we are creating for our shareholders by investing in the right business at the right time, which has got best-in-class returns. With these two pillars, we will manage and we are managing and we will manage our operating cash flow.
Sumit Kishore
So maybe I would like to follow up with a question out here. Basically, the dividend payout ratio right now is still going to lead to a situation where with your prevailing capex run rate, which probably takes you to your targets of 1,000 ton and the growth that you have planned on the logistic side, your net debt to EBITDA is still likely to come off with this kind of dividend distribution. So is there any plan to ramp up the dividend policy in favor of shareholders?
Also, if I look at your net debt to EBITDA threshold, the upper limit is 2.5, which is still leaving a very big sort of investment over and above the present capex run rate that you would have to do to actually get closer to 2.5. So what do you have in mind because even the acquisition is not going to lead to a major increase in net debt to EBITDA?
D. Muthukumaran
Sumit, thank you very much for the question. We have increased the dividend, to start with. Could we increase more based on your remarks? The answer is possibly yes. But I think the point we are trying to address here is that point, page number 52 tells you how we approach capex, where a domestic port is likely to be organic, which is where we have given guidance of INR12,000 crores. And a couple of others, especially marine and tuck-ins in logistics actually could come through inorganic. So we are expecting that there will be inorganic in the coming years as well. And we are already working on some of them, and you will actually sort of hear from us in times to come.
So we will be in this range of debt equity that we are talking about, which is 2, but we will not breach 2.5 as a policy. So we think we will be somewhere between 2 and 2.5 with this. And then we have always said that, we will take stock couple of years down the line. We have rapidly increased our debt equity ratio. All of 2 years, we have come down from 3 handle to now less than 2. So we will keep an eye on it and we will do what it takes down the line.
But right now, between organic and inorganic, we’ll consume the cash that we are generating. And of course, there is — far down the line, three years down the line, FY ’28, July ’27, we have the first big chunk and the only big chunk of debt repayment coming. So yes, we are keeping an eye on this. And at the moment, we will be focusing on organic and inorganic investment.
Sumit Kishore
Okay. Just a brief question. One of your slides mentions that logistics and international ports are likely to achieve threshold ROCEs in the next three to four years. So particularly in relation to these two businesses, what kind of threshold ROCE is being indicated and what is likely to drive the improvement to those levels for these two businesses?
D. Muthukumaran
So 14% return on equity in rupee terms and you need to adjust for dollars, you need to adjust for the things. So it’s what we actually look for in the threshold return for these businesses. And in terms of actually improvement, we have a plan, port by port, in the case of international port. For example, Colombo, it is driven by volume ramp-up. In the case of Tanzania, it is combination of investment efficiency and ramp-up. And in the case of Haifa, it is actually operating efficiency.
And in logistics, it is going to be driven by substantial volume increase that you can see, for example, in this year guidance that we have given, where the capital employment is disproportionately insignificant and the volume increase is quite significant. So we are — while percentage EBITDA will be what it is, but our total rupee operating leverage will be extremely high in all these business going forward in the coming years.
Ashwani Gupta
One thing, I think we are adding up the international port really this year because Sri Lanka is starting this year, Tanzania started last year, and Australia will come up. But I think so far, our internationalization was limited to Haifa and TAHID, which is a marine company, right? So that’s why I think we had a lot of questions about our internationalization. Let me say, when it comes to port, with the acquisition of Australia, we have given the visibility of 150 million metric ton — let me say to be precise, 148 million metric ton by 2030, which is out of 1 billion, which we are — which we have ambition.
Second, in Haifa, we have taken two main milestones and which we cleared two weeks before. First is, we have put our President to run the operations in Haifa. And number two, we will have our CFO in Haifa to run the business. And then there is a four to five people, a specialized team, whether techno-commercial or engineering, which will be supporting Haifa to improve the efficiency and effectiveness because it is the time when, as you can see the financials, how best quarter four has been for Haifa. And I think this is going to continue the way the country wants to grow after this challenge is over, which they are going through.
The second major achievement, which we have done in Haifa, the long lasting, never ending two years of negotiation with the labor union. We have eight labor unions at the port. We have signed the union agreement till 2036, which is bringing a big efficiency and the productivity improvement in the port. So port by port, now we have a very concrete and structured business plan. But most important, the leadership team, which is inducing the DNA of APSEZ when it comes to creating the margins at the port.
Sumit Kishore
Sure. Thank you for the detailed answer. Does your guidance include NQXT and consolidation for how many months or quarters?
D. Muthukumaran
No, it doesn’t include. We have clarified it [Speech Overlap]
Sumit Kishore
It doesn’t include.
Ashwani Gupta
It doesn’t include.
Sumit Kishore
Oh, sure. Thank you so much. Thank you.
Ashwani Gupta
Thank you.
Operator
Thank you. We have the next question from the line of Achal Lohade from Nuvama. Please go ahead.
Achal Lohade
Thank you for the opportunity, sir. And my question is, with respect to the continual volumes, we are hearing about the government stepping up, actually working very aggressively with respect to Vadhavan port. So obviously, we are talking about three, four years down the line. But how do you see that changing anything for us in terms of competition, pricing, margins, etc.?
Ashwani Gupta
So Vadhavan, I mean, this is at a very initial stage of pre-study. I think it’s going step by step. Obviously, we are doing the study of especially all the tenders which are about to come and we should be applying for. But once again, this is not about one tender or two tenders. This is about ecosystem. And we do believe that with our know-how and expertise to develop and run an ecosystem will give us the competitiveness to get that business. But time will tell. So today, it’s only at the study stage.
D. Muthukumaran
So if I could just supplement on that. See, you’re talking about three to four years. I don’t know where you got that number from. We’ve been building ports in the country. It will be extremely aggressive target to have a three to four year for such kind of a port development even for people like us. So number one.
Number two, you’re also seeing that market — Ashwani spoke about it earlier in the call that’s the lead sort of market increase and leader in the market increase as a segment. So last year, we’ve seen significant growth both in our share and which has helped grow the market itself. So I guess we do not, in short, anticipate any significant dent into our market share if you project the numbers based on realistic project timelines.
Achal Lohade
Understood. Sir, the second question I had, when you’ve talked about the revenue growth for both trucking and marine, how do you see the margins actually out there? Is there any number you want to give us, any direction as to how you see the profit growth for these two businesses?
D. Muthukumaran
Sorry, which two business?
Achal Lohade
For trucking and marine. You’re talking about certain batch growth out there. So I’m just curious, would the profit growth be even higher than that or could be lower than that?
D. Muthukumaran
So we will disclose as the quarter go for each segment, both revenue and EBITDA, you will be able to see it. Approximately, if you want, for the year, we are factoring in a blended 10% margin for all businesses, which is not ports — I mean, the new businesses because it is gestating year and first year of such large volume growth. And then it will actually ramp up in margins in times to come. So that’s broadly where we are in terms of the margin. But we will give quarter by quarter the numbers, so you will get to see that.
Ashwani Gupta
But especially for the marine. So for the marine, it’s not — it’s over gestation now, so it’s scaling up. So if you can see the investor presentation, the margins are very high, very equivalent to what we have been doing in ports. Of course, vessel to vessel, it depends. But if you can see the ROCE, we are talking about 14% to 15%. So this business is at a stage where we can demonstrate by return on capital.
Whereas in logistics and international ports are also at a stage where we will start demonstrating improvement by ROCE. Logistics, where we have separated two business for further reporting are at gestation stage. We will start the business with a margin, which should be in line with the margins which are there in the market or above their net. But please wait, because we want to demonstrate that with numbers.
Achal Lohade
Understood. Sir, just a clarification, the 14%, the threshold return, is it ROCE or ROE — return on capital employed or return on equity you mean?
D. Muthukumaran
ROE.
Achal Lohade
ROE? Understood. And just last question, if I may, sir. Slide 64, we’ve seen a substantial improvement across most of the ports. So like for example, Mundra Q4 FY ’24 was 61%, this quarter is 67%. For Hazira, 62% has become 68%. Krishnapatnam 61%, 67% now. If you could highlight what is driving this, just a bookkeeping question on that.
D. Muthukumaran
Sure, sure. See, it’s an improvement on a very good number actually to start with. I mean, the base itself was very, very high. And then we have improved it even further from there. So I just wanted to actually not miss this point before I respond. So this is number one. And basically, the increase is combination of operating leverage because you’ll know that we are already a high EBITDA business. So any operating leverage actually contributes to the margin increase. And combined with price increase that we have taken in the product, in services rather. So it is these two which has actually helped us improve the margin further.
Achal Lohade
Understood. That’s all from my end, sir. Thank you.
Operator
Thank you. We have the question from the line of Parash Jain from HSBC. Please go ahead.
Parash Jain
Hi, this is Parash here. And thank you for the presentation. And I must say, I mean, this is probably one of the most exhaustive presentation I have seen in this space. So congratulations. I have a couple of questions if I may start with, and I missed the first few minutes. When you talk about your logistic business expansion on the freight side, were you referring to the freight forwarding business? Or was it something else?
Secondly, that now with all of your businesses has shown immense amount of clarity. Can you also touch upon how shall we visualize the land bank that you have accumulated across some of your key ports? How shall we think about the development and monetization opportunities on those land parcels, particularly from Mundra?
And lastly, with respect to your overall logistic offerings, do you see a feeder services connecting probably Vizhinjam to the rest of the East Coast border of Bangladesh as one of the vertical to offer the full array of service to your customers? Thank you.
D. Muthukumaran
So feeder service right now is not in the plan by ourselves, or by through ownership, if that is your question. Okay? So will we encourage a customer who will actually give us that? The answer is yes. Will we look for somebody who could actually do it? The answer is yes. We will support. But at the moment, we are not talking about buying ships for feeder service.
Ashwani Gupta
Yeah, and feeder service is a cost center for us. So unless and until we find a value which will bring the profit, which is what we look for, we have no intention to go for. Because for us, it’s a cost center for someone, which means very thin margins.
D. Muthukumaran
Yeah, but I think there will be people in the market to actually help us do it if — so that is not a problem, but we don’t have to do it by ourselves at the moment. We will see down the line. And your point on land bank, actually I’ll answer and I’ll hand it over to Divij to respond on your other question on logistics of what is straightforward. So as far as the land is concerned, Parash, we have bought all these lands because we don’t have to guess where we need to put all our warehouses and our logistics business because it will be driven by current industrial activity. So we don’t have to lead it. I mean, we don’t have to lead the market. We can follow the market.
So based on the exhaustive research that we have done and decisions of where we would like to put, we have been buying land. We will actually roll out. That’s why you see 12 MMLP going to 20 MMLP over a period of time. Warehouses actually going to a target of 20 million ton. So we have a roadmap of how we will do, so we will start using those in times to come gradually. Like, this year — again, I request Divij to cover, we have opened a couple of large warehouses. So Divij, over to you. If you can please complete this part and then also answer the freight forwarding.
Divij Taneja
Yeah, thanks, Muthu. So with regards — I’ll start with the forwarding part. So it is not just the CIF or FOB forwarding that we’re looking at. We’re also getting into DDP and DDUs, which essentially is a lot larger than traditional forwarding. And it will — in some form, given we are integrated, it will link into a first mile or a last mile, depending on what the case would be.
Back on to what Muthu was referring to in terms of warehousing, again, quadrant one, it sort of integrates into the product offering. And the way we’re looking at it is end-to-end with forwarding, making sure we have control over cargo and the remaining, making sure we can offer everything in house.
D. Muthukumaran
So we’re going to — I mean, we don’t — and there is one that started — sorry, couple of the recent ones. Do you want to talk about which ones that we started?
Divij Taneja
I lost you, Muthu. Say again?
D. Muthukumaran
I was just saying, would you like to just tell them the couple of recent MMLPs that we opened up and where we are on each of them broadly?
Divij Taneja
Yeah. All right. So with regards to the footprint that we have today, we have got 12 MMLPs. And if I look at them with regards to the permissions from customs to operate them as ICDs. So the most recent that you will see will be Virochannagar, followed by Kishanghar, followed by Malur, all expected to get the permissions done in this quarter.
Virochannagar will be our largest ICD, and it is going to be the largest ICD in Asia, spanning over 1,000 acres. And it connects on to a gateway port, that’s Mundra, with about 300 kilometers of rail distance in between them. Kishanghar connects us to the Rajasthan market, and Malur, of course, is down south. So these are the three ICDs that are expected in the coming quarter.
Parash Jain
And just one last question, if I can chip in. With respect to your guidance, what is the base case that management have with respect to ongoing tariff tensions? Is it hinges upon India potentially strike a trade deal with the U.S. or it is independent of that?
D. Muthukumaran
It’s independent of that, Parash, right now.
Parash Jain
Okay, much more limited. Thank you so much, and have a good rest of the day.
Ashwani Gupta
Thank you.
Operator
Thank you. We have the next question from the line of Vishal Biraia from Aviva Life Insurance. Please go ahead.
Vishal Biraia
Hi. I’m from Bandhan Mutual Fund, actually. The question is on international acquisitions. Are there any plans for international expansions anymore?
Ashwani Gupta
Yeah. So yes. Answer is yes. But the condition is, number one, it should be in line with our business strategy, which is from Southeast Asia to India to Middle East to Africa. Number two, it should be an ecosystem and not only something which is only a cost center. Number three, we are given the authority to operate it, which means we must be majority. Number four, at the end, it should have the today’s business, which is profitable and has a potential to grow in the future. So that exhaustive zero to five-year business plan.
So we are, as you would have — as you could see, our cash flow situation. In addition to the very smart capital allocation for the growth in all the three businesses, and inside the three businesses, we have roughly 11, 12 businesses. In addition to that, we need to have the inorganic growth, but inorganic growth as an enabler to bring the performance. So to answer your question, yes, but with the conditions to grow top line and bottom line.
Vishal Biraia
And what would be the kind of scale that you would target? What is the extent? I mean, greenfield also would be on the cards?
Ashwani Gupta
So it depends, right? It depends. We can’t generalize because it’s also a question of what we want to do, but on the other side, what is available, right? And it should be a best match between what we want to do and what is available and what is going to be available. I would say we are focusing on marine because this is where we are getting a very good momentum. We have expertise. We have a good control on that business now after three, four years running the OSL. So I think first priority for us is to invest in marine. Second, we are looking at some ports in Africa and also in Southeast Asia. I can’t disclose more, but that’s where we are targeting today.
Vishal Biraia
Fine. So that will be over and above the INR12,000 crores that you [Indecipherable] capex for, right?
Ashwani Gupta
Yes. Yes.
Vishal Biraia
Okay. Thank you.
Operator
Thank you. We have the question from the line of Pulkit Patni from Goldman Sachs. Please go ahead.
Pulkit Patni
Sir, thank you for taking my question. The first one is already answered, which is on global trade. And you did mention that your guidance is irrespective of what happens in the tariff outcome.
My second question is, last year, one of the big reasons why our guidance on volumes could not be met was coal. Any early signs of whether we have started seeing reversal of that? And how confident are you that coal volumes this year are going to come back for us to be able to meet our volume guidance?
Ashwani Gupta
So no, thank you. First of all, as I said, we are not the one who is controlling the coal volume. It is the trade which is controlling the trade volume. The point is, in FY ’25, the total utilities generation grew up by 5.2%, out of which thermal power 2.8%. But the renewal energy grew by 12.9%, right? So I am pretty sure that same thing will continue with a lot of initiatives in the renewal energy. But our good point is, more and more renewal energy grows, more and more our cargo for solar and wind grows. And that is a container cargo. So for us, if something is getting cut down on the coal, we get the benefit of the container, right?
So moving forward, I would say that energy demand will keep on increasing. But the mix of engineering, the mix of energy may have an evolution, as we have seen in FY ’25. But we are prepared to manage that evolution because we are in renewal, we are also in the thermal.
Pulkit Patni
Okay, sir. So then I’ll probably take one more question. So in light of that, are you also doing any switches of your coal terminals into container terminals, or any plans of doing that over the medium term?
Ashwani Gupta
No, I don’t think we have it. Of course, we have the technology to convert, to use our equipment for our containers, right, as it is done in some of the ports abroad. We have that capability, but we don’t feel today that we should do that because utilization of our ports are extremely good, and I don’t think that we should do it today. And most of it, as you know, is also captive. Whether it is Mundra or we have got long-term contracts with our customer, I don’t think we should do that today. But if it is needed, we have the technology to do that.
Pulkit Patni
Sure, sir. Useful. Thank you so much.
Ashwani Gupta
Thank you.
Operator
Thank you. We have the question from Koundinya Nimmagadda from Jefferies. Please go ahead.
Koundinya Nimmagadda
Yeah. Hi, sir. Thanks for the opportunity, and thank you for the wonderful disclosures in the PPT. Sir, two questions from my end. Firstly, on the logistics business, I mean, we certainly target an improvement in the return ratios out here. So I mean, part of it is also driven by asset-light business, so freight forwarding and trucking. So I’m also trying to understand if there is any option of sweating out the asset. How does the asset turns look like today? And because there are also these new large assets such as your Virochannagar and all stuff already. So just trying to understand it from that perspective.
Rahul Agarwal
Koundinya, could you repeat that, please? It was not very clear. Could you repeat the question again, please?
Koundinya Nimmagadda
So I mean, I was trying to understand from a return ratio perspective for your logistics. One, you’re obviously pursuing asset light businesses like your freight forwarding. But outside that, is there an optionality to sweat the assets better because you have recently invested in large ICDs such as your Virochannagar. So just trying to understand it from that perspective, the contribution towards return ratios.
Rahul Agarwal
Okay. So again, it was a bit — yeah, go ahead.
D. Muthukumaran
We expect the ramp up in each of the ICDs. And we expect, therefore, incremental margins to come from these higher utilizations.
Koundinya Nimmagadda
Sir, how does the asset turns look like today for the portfolio in logistics?
D. Muthukumaran
Sorry, your voice is not very clear. Can you please?
Koundinya Nimmagadda
Sir, I was — let me speak a bit louder. Sir, I was asking, how does the asset turns look like today in logistics?
D. Muthukumaran
Do you have a number off hand, Rahul? We can come back to you separately.
Koundinya Nimmagadda
Sure.
D. Muthukumaran
Yeah, go ahead.
Koundinya Nimmagadda
Yeah. So sir, my second question is on the marine business. So I mean, we are targeting the expenditure [Phonetic]. So I’m just trying to understand the unit economics a bit better and also the customer profile. How does this growth come? If you can provide some color out there, please.
Ashwani Gupta
So, yeah. No, thank you. So in the marine business, of course, we have got multiple customers but they are all mid- to long-term contracts. And this is where we are getting into. But also, most important, when we are acquiring these companies, we are acquiring their operational and the management teams along with it and then integrating them into a one team in Dubai. So this is our strategy.
When it comes to customers, of course, because of the customer sensitivity, we are not able to disclose the customers. But when we talk about the anchor handlers or the rates in oil and gas companies in Middle East, you can count that there are three or four or five big oil and gas companies in Middle East, for example. For example, in North Africa, whether it is Angola, we know exactly who are the global players there. So we are focusing on that and that’s fair.
And within the marine fleet also, maybe we can talk about we have four to five categories of vessels. So it’s not only anchor handler. We have rigs. We have utility boats. So different kinds of vessels which we are putting up in the fleet so that our business mix is good between the oil and gas and the other industries.
Koundinya Nimmagadda
Understood, sir. Sir, lastly, if I may ask one last question. So how should we look at Gopalpur’s realization and profit margins? So this quarter it’s been a bit weak. So just from a medium-term perspective, if you can throw some color.
D. Muthukumaran
I’ll give a short answer. Like any other half a dozen ports that we have done, in times to come, this will also get to — we have a pathway and visibility on how we will get to the sort of our portfolio return from Gopalpur as well.
Koundinya Nimmagadda
Okay, sir. Thank you and all the best.
D. Muthukumaran
Thank you. We are actually at the top of the hour that we have put, allocated. Maybe we could do one or two questions and then we can close. So are there any? I can’t see the queue. I’m outside. Is there any more questions?
Rahul Agarwal
We have a couple more, Muthu.
D. Muthukumaran
Okay, let’s do one or two and then close it.
Operator
We have the next question from the line of Aditya Mongia from Kotak Securities. Please go ahead.
Aditya Mongia
Thank you for the opportunity. The question I had was more on logistics as in the context being you have obviously invested in sizable amount of fixed assets and now you are starting with a certain margin level. Within the individual lines of work in logistics, what kind of improvement in margins can happen from here on over the next two to three years? That will be my first question.
Ashwani Gupta
So I think let’s not talk about EBITDA margin only, right? I mean, this is what we said. When we started Mundra, what was the margin? What was the return on capital employed? 0.1%, 0.2%, [Indecipherable] 1%. Where is Mundra today, right? Our domestic ports have reached 21% of ROCE. So we are focusing — and there was a question before why and how the logistics volume can increase by 39%. This is only possible because we are filling the gap between end-to-end business value chain.
So trucking standalone may not be in terms of EBITDA margin great, but when it comes to return on capital, it is great because we are asset-light. We own the trucks, but we use them. But when we use them, we use our own technology, and as we have started the skill and development center to have our own drivers, we are going to give their drivers our own accommodation, uniforms, discipline. We know that if the drivers are disciplined, definitely our assets will be disciplined. And if our assets are disciplined and we use our technology to drive those assets, we will be sweating the assets. So sweating the assets is the conclusion and not the objective, right? This is what we did in ports and this is what we are doing in logistics.
And because of trucking and now as Divij explained on the freight network services, which is not only freight forwarding, because of our 46% market share with containers, we have a strong relationship with the shipping lines. So once we get into this, we have this 46% of market share with the shipping — mainly because of relationship with shipping lines. We are going to use that trucking and the network services to bring more cargo to us. So it is important to see the trucking margin, which will be more than market because we are controlling the technology and the drivers.
But it is also important to see as APSEZ, we are not only a truck company, we are not only a port cargo million metric ton company, but we are the full end-to-end integrated transport utility company. Hope it answers the question. Thank you.
Aditya Mongia
No, fair. Next question that I had was a similar question on the port side. As in one advantage that I see in Adani is that all expansions are brownfield in nature. In five years, 50% of volumes are on those brownfield expansions. That, coupled with your kind of focus on IT, can port margins kind of exceed 80% levels next five years? I am just trying to get a broad sense as to the extent to which things can become better given this advantage we have versus most of the players who actually have to do greenfield to expand their own capacities.
D. Muthukumaran
We are not giving specific number, Aditya, but yes, directionally, margin is expanding. We have seen the trend already. So that will continue.
Aditya Mongia
So those are my two questions. Thanks a lot for the response.
Operator
Thank you.
Rahul Agarwal
Muthu, [Indecipherable] one last question.
D. Muthukumaran
Okay.
Operator
We have the question from the line of Sanjay Parekh from Sohum Asset Managers Private Limited. Please go ahead.
Sanjay Parekh
Congratulations on great numbers and very good disclosures. It really helps us. Just one question, only one simple question is that local acquisitions has its risk, geopolitical risk, currency risk, and as we see the margins are also lower. So on a longer term, do you think we — our threshold of return should be higher while we invest in them?
D. Muthukumaran
No, we — very good question, Sanjay. Basically, the return expectation that we have is factoring in all the sort of risks that we can foresee. And when we acquire the port, we certainly evaluate them on all these criteria. And despite all these risks, in some particular asset, one risk of the list that you said may be more prominent than other. So we evaluate risk, we bake them in, and then only when we are confident, we go ahead and get into the sort of transaction. So our risk in our eyes stands mitigated because there is a compensatory opportunity, and that’s the driver for us, and that’s the motivation for us to get into that.
Sanjay Parekh
All right. Thank you, and best wishes.
Ashwani Gupta
Thank you.
D. Muthukumaran
Okay. So thanks a lot. I would like to close this. If you have any further queries, please do reach out as usual. We are all available. On the high note of last year’s results and the higher note of our next year’s forecast that we have put out there as a guidance. We would like to sign off with a big thank you for each one of you to have participated yet again on a holiday. So have a good evening and look forward to being in touch. Thanks again. Bye.
Operator
[Operator Closing Remarks]