Container Corporation of India Limited (NSE: CONCOR) Q2 2025 Earnings Call dated Oct. 30, 2024
Corporate Participants:
Sanjay Swarup — Chairman and Managing Director
Mohammad Azhar Shams — Director, Domestic
Harish Chandra — Executive Director, Finance
Analysts:
Bhoomika Nair — Analyst
Amit Dixit — Analyst
Alok Deora — Analyst
Vishy — Analyst
Priyankar Biswas — Analyst
Mukesh Saraf — Analyst
Aditya Mongia — Analyst
Shrinidhi Karlekar — Analyst
Amit Bhinde — Analyst
Koundinya Nimmagadda — Analyst
Sumit Kishore — Analyst
Akshay Ajmera — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Container Corporation of India Limited Q2 FY ’25 Earnings Conference Call hosted by DAM Capital Advisors Limited.
As a reminder, all participant lines will be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes.
[Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. Bhoomika Nair from DAM Capital Advisors Limited. Thank you, and over to you, ma’am.
Bhoomika Nair — Analyst
Yeah. Thanks. Good morning, everyone, and warm welcome to the Q2 FY ’25 earnings call of Container Corporation of India. We have the management today being represented by Mr. Sanjay Swarup, Chairman and Managing Director of CONCOR.
I’ll now hand over the floor to him for his initial remarks, post which we’ll open up the floor for Q&A. Thank you, and over to you, sir.
Sanjay Swarup — Chairman and Managing Director
Yeah. Good morning, everybody. On behalf of CONCOR family, I would like to extend the Diwali greetings to all of you. In the conference call, I’m joined by Mr. Mohammad Azhar Shams, Director, Domestic; Mr. Priya Ranjan Parhi, Director, International Marketing and Operations; Mr. Ajit Kumar Panda, Director, Projects and Services; Mr. Anurag Kapil, Director, Finance; and Mr. Harish Chandra, ED, Finance and Company Secretary of CONCOR.
I would like to give you some highlights. And after that, we can start the question-and-answer session. I’m happy to announce the growth in throughput of 6% for the half — first half of this financial year. It includes EXIM growth of 3.5% and domestic growth of 14.5%. EXIM growth is quite in line with the India’s international trade. In exports for the first half, the international trade of India was totaled $213.22 billion, which is a growth of 1% over corresponding period of last financial year. Import of total — of our country was $350.66 billion, which is a growth of 6% over last financial year.
One more point that I would like to present is that we had increase in EXIM market share for this first half. In Pan-India basis, our EXIM market share grew by 91 basis points. At Mundra Port, our EXIM market share grew by 248 basis points. And Pipavav port, our market share grew by 285 basis points. The good thing is that there is a growth in market share as well as there is a growth in margins also. So without sacrificing margins, we have grown our market share. Rail freight margin grew by 80 basis points year-on-year. Operating margin, excluding exceptional items, grew by 95 basis points year-on-year. The primary reasons for this performance is the customer centricity and operational excellence of team CONCOR.
Operating income growth was 6.58%. Growth in profit after tax was 4.08% for the company. And the double stack rigs also saw a good growth of 11.5%. In this first half, we had 3,083 double-stack trains as compared to 2,766 last year. We have added infrastructure also to give service to our customers. In this first half, we have commissioned two high-speed rigs. And we hope that in the second half, we will be commissioning 10 more rigs. So for this financial year, around 12 high-speed rigs will be commissioned by us. So now our total count of rigs stands at 380. We have procured 5,130 new containers in this first half. So total count stands at now 49,516 containers, which are owned by CONCOR. We are continuously adding more and more containers of tank containers than maybe for 40-feet types also we are going now for — in first time for our domestic customers.
We had earmarked a capex budget of INR610 crores for this financial year. In the first half, we have already achieved INR276.16 crores, and we may be looking at the capex budget very soon, whether we want to upgrade it, seeing the infrastructure requirements of the company. International, as you all know, because of the challenging geopolitical scenario, international supply chains are adversely affected. This has resulted in erratic vessel schedules. There is a congestion at transshipment ports and there’s less availability of slots in vessels for exports. These are the challenging situations being faced by EXIM trade of our country.
Domestic loading was also affected in the second quarter, primarily because we had very good rainfall in North India and Gujarat, which affected our domestic loading. But I’m happy to announce that from this month, it has picked up very nicely, and we are getting very good growth in domestic in Q3. Despite all these challenges, the exports increased. For some commodities, there was handsome increase like for ready-made garments, there was 41% growth; paper products, 31% growth; food items, 28% growth. Similarly, imports also in solar modules, it was 126% growth; wood pulp, it was 20% growth. And I’m happy to inform all of you that CONCOR commenced rail services between Kandla port and hinterland ICDs of North India. This is a new port where we have started the rail services.
And we have posted ever highest PAT of INR371 crores in Q2. This is the highest for any quarter in the history of CONCOR. And this is despite the exceptional items of INR25 crores net of tax that one of the Vivad Se Vishwas scheme claim that we settled as per the directives of Government of India. If we add this INR25 crores, then the PAT will further increase. So as such, INR371 crores is a record for our company, a record PAT in any quarter. We had highest operating turnover, highest total turnover in any first half year and highest PAT also in any first half despite — apart from the highest PAT in a quarter also. And the Board of Directors has declared a dividend of INR3.25 per share, which is 65% of par value. So till now, we have declared a dividend of 105% for the first half of this financial year, which is around total outgo of INR322 crores for our shareholders.
Focus area of the company remain total logistics solution to customers, business solution, including warehousing and FMLM and providing green and sustainable logistics to our customers. At this point, I would like to maintain the guidance that I gave at the start of financial year. That is for EXIM 15%, domestic 25% and total 18% — of course, in EXIM, it will be a bit challenging, but I am quite confident that we will be able to achieve this. The new initiatives, growth drivers for achieving this guidance will be some three, four growth drivers we have identified. First will be the bringing JNPT Nhava Sheva on double stack that is through Varnama. By November end, I’m confident that we’ll be able to start this service, wherein we will give benefit of double stacking to North India customers for Nhava Sheva traffic. And I expect that there will be diversion of business from road to rail. So this will be a big gain for the company.
Second will be the bulk cement and tank containers. I had a meeting recently with CMD of Messrs [Indecipherable] Corporation, which is a sister PSU of CONCOR under Ministry of Railways and he has assured me that by December, he will start giving us tank containers, which will be utilized for bulk cement movement. We are in touch with leading cement manufacturers. They are quite excited about it. And we hope to garner very good business in domestic in the coming months.
Then we have a very good demand for rice exports now and especially of our — at our ICDs at Nagpur, Raipur, Sonipat, etc. And we hope that in the coming months, already actually rice exports have started. After Diwali, the traction is going to pick up. So we will have very good rice exports in the coming months. All these things will add to our top line as well as bottom line. We are also — we have signed and we are still signing agreements of volume-based discounts with shipping lines, long-term agreements, three to five years. This will further cement our relationship with them and increase our business. So besides that, we will get business at new terminals that we have commissioned, and we will have more focus on DPD, direct port delivery movements. So all these five, six growth drivers will further enhance our business, and we are quite confident that we will end up achieving the guidance that I gave at the start of the financial year.
This is all opening statement from my side. Now you can start with questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session [Operator Instructions] The first question is from the line of Amit Dixit from ICICI. Please go ahead.
Amit Dixit
Yeah good morning, everyone. Congratulations for a great performance in spite of all odds. I have a couple of questions, sir. The first one is on LLF. So while we saw some kind of reversal of around INR40 crores in this quarter, just wanted to understand the broad contours of it that how do we see this LLF panning out for rest of the year? And what kind of LLF provisions we should take in our own models? And secondly, why this INR40 crores provision write-back? What exactly is happening over there?
Sanjay Swarup
Okay. Thank you, Amit. As far as LLF is concerned, this INR40 crores actually provision we had made at ICD/Whitefield. But now that the land rates are settled with railways, so we have set off in this quarter. So LLF is settled with Indian Railways. Now there is no further issue. And we are constantly — as I mentioned in my earlier conference calls also, we are constantly evaluating our terminals that wherever we come up with new logistic parts, we surrender the railway terminals so that as to have a saving on LLF without sacrificing our business. So same policy will continue. As far as the payment of LLF is concerned, it is more or less settled with railways. So we need not worry on that front.
Amit Dixit
Any guidance you would like to provide for FY ’25, sir, on LLF?
Sanjay Swarup
That will be in the range of INR350 crores to INR400 crores, not more than that.
Amit Dixit
Okay. The second question is on domestic business. So EXIM, while it has performed pretty well, domestic also, what I see that it has bounced off compared to last quarter. But if I compare on Y-o-Y basis, while our revenue has gone up, EBIT has fallen. So just wanted to understand whether it is due to the rail to the road — competition from road guys or whether it is due to more empty running or — I mean, just wanted to get a little bit more clarity on this.
Sanjay Swarup
See, domestic business has performed quite well. Of course, not as expected. But if you see year-on-year for first half, there is a growth of 14.5% in handling in domestic and 22% growth in originating TEUs in number of containers. Of course, it could have been better. But because of, as I mentioned in my opening address, very good rainfall that we had this year in North India as well as Gujarat because Gujarat and North India are the major originating points for domestic loading. So there was disruption because of rains, and we could not get that much loading. But from this month, October, we are getting very good loading in domestic, and we are quite satisfied with it. So you will see in subsequent weeks, domestic will be doing extremely well.
Amit Dixit
Sir, the more specific question was essentially that revenue has remained flat Y-o-Y, while EBIT has fallen. So just wanted to understand whether there was some one-off cost item or something that was in this quarter that would not recur.
Sanjay Swarup
I would like — I request my Director, Domestic to throw more light on this.
Mohammad Azhar Shams
Hi Azhar. Actually in this respect, whatever you have been underlining, my take is like that for the last three to four months or you may start to say that from start of this financial, we have been losing a bit of market share in the domestic because the competitors and the CTOs have been really very aggressive and have been giving very, very aggressive rate and we were losing the business. In order to arrest that trend, we took a conscious call to let us first regain the volume even at the cost of some reduction in revenue and profitability. And subsequently, we will see what to do.
So now I think that result we have started getting from this month only. And we have tweaked our rates positively also in some stream. So I think whatever negative trend, you see that our volume has increased but revenue has been flat. But from this month and whatever corrective action we took, now the customers are with us and they are ready to accept EBITDA rate increase because of our services. So I think the positive result in revenue, you will see from third quarter onward and October is certainly showing very good green shoots on that.
Amit Dixit
Very clear sir, thank you so much and all the best.
Operator
Thank you very much. The next question is from the line of Bhoomika Nair from DAM Capital Advisors. Please go ahead.
Bhoomika Nair
Yes, sir. First, can you please share the originating volumes for this quarter?
Sanjay Swarup
Yeah, one second. Originating volume of this quarter is — EXIM it is 576, Domestic 1,33,255 TEUs. Total is 6,90,831 TEUs.
Bhoomika Nair
Okay. Okay. So sir, I mean, how are you seeing the trajectory now in October? There was this whole Red Sea and shipping disruption, etc., which had led to heavy volumes kind of moving away from rail. How is that now kind of panning out in the month of October or of late?
Sanjay Swarup
See, October month, as I told you, we have got very good traction in domestic. Domestic, we are seeing very good loading across the country. As far as EXIM is concerned, imports are a bit muted. They’re not — growth is there, but not that much. But from the last one week to 10 days, we are seeing good demand of rice exports. And we have got firm indications. We are in touch with the trade that after Diwali, rice exports is coming in a big way. And imports are also going to increase. Because of the Red Sea disruption, there was, as I told you initially, erratic vessel schedules. Vessel schedules are erratic. They cannot be very, very predictable. So because of that, it was a temporary, you can say, dip in the month of October for the last — for the first 15, 20 days. But now it is going to pick up.
Bhoomika Nair
Okay. Okay. Sir, can we also get the empty running charges for EXIM domestic and also the lead distances for this quarter?
Sanjay Swarup
I have for half year. For EXIM, it is INR63.47 crores. Domestic, it is INR140.89 crores. Total is INR204.36 crores.
Bhoomika Nair
And the lead distances, sir?
Sanjay Swarup
Lead distances for EXIM — for domestic, it is 1,318 kilometers. EXIM, it is 705 kilometers. Total is 803 kilometers.
Bhoomika Nair
Okay. Sir, I mean, I’m sorry, just to circle back on this volume aspect. I know you’ve guided for 15% in EXIM. But if you look at the first half, it’s about sub 4% kind of a growth. So it will mean that in the second half, we’ll have to see that trajectory moving to 20%, 25%. That’s the kind of momentum that we are seeing as of now?
Sanjay Swarup
Yeah as of now, we — frankly speaking, that momentum we are visualizing because there is a very good projection given by trade. And we are — of course, I find it challenging, as I told in my TV interviews also in the morning. Of course, we find it challenging, but we are quite confident based on the various factors like rice exports and double stacking to JNPT. So these things are very, very crucial for trade, and they are well publicized. Trade is very much aware. And so we are quite confident that we will be able to get this target.
Bhoomika Nair
Okay, great sir. I will come back in the question queue. Thank you so much.
Operator
Thank you very much. The next question is from the line of Alok Deora from Motilal. Please go ahead.
Alok Deora
Hello sir. Congratulations on good numbers. Sir, just wanted to understand this LLF, there is this INR40 crores reversal. And you mentioned about INR350 crores sort of a guidance for this year. So we are expecting some further reversals also in coming quarters because the quarterly run rate, I believe, was around INR100 crores per quarter.
Sanjay Swarup
I told INR350 crores to INR400 crores.
Alok Deora
Got it. Right.
Sanjay Swarup
It will be near INR400 crores only.
Alok Deora
Near INR400 crores. Got it. Okay. And then for next year, it would be around 7% higher types kind of number?
Sanjay Swarup
Yeah you are well aware. The formula is that every year, it should increase by 7%. But at the same time, as I mentioned initially that we are constantly evaluating that wherever we set up new logistics parks and that logistic park is able to serve the hinterland for a particular terminal, then we move our business to logistics park and close that terminal, surrender it to railways. So that exercise will continue. Maybe next year, we are able to commission some logistics park and surrender some land. So then it will have a saving of LLF.
Alok Deora
Got it. And sir, on this guidance point again, I mean, you have maintained the guidance, but it’s a pretty challenging environment as the industry’s indicators are pointing out to be. So in that scenario, such a kind of growth in second half, as you yourself mentioned, is challenging. So what is the bare minimum growth you could actually achieve if things did not pan out the way we are expecting, bare minimum growth in the EXIM side?
Sanjay Swarup
See, normally from 1st October, we say that busy season has started in railways language. Busy season has already started. Busy season means more business. So I’m quite optimistic that we will be able to achieve the guidance that I gave in the start of the financial year. And there are various pointers and there are various pointers that I am getting by interaction with trade. So this is — that is why I’m feeling very confident to achieve this guidance. So I will like to adhere to it. And I’m quite confident that we will be able to achieve this guidance. I would not like to speculate on any other number.
Alok Deora
Got it sir. All right, sir, that’s it from my side. Thank you and all the best.
Operator
Thank you very much. The next question is from the line of Vishy [Phonetic] from Ashika. Please go ahead.
Vishy
Hello? Sir, while you are maintaining the guidance level, could you help us quantify what are the initiatives that you think would be contributing to this growth? I mean the growth number is exorbitant like the other participant has also mentioned. But could you help us quantify some numbers for it?
Sanjay Swarup
See, I already told the growth drivers — five, six growth drivers in my opening remarks. Now which growth driver will give me how much number that I’m not able to tell you right now. Maybe separately, one-to-one basis, we can discuss and I can tell you.
Vishy
Right. Sir, my second question is regarding this Vivad Se Vishwas, the contractual expense that we had this quarter. So could you just explain what was this for?
Sanjay Swarup
Actually, this was a dispute between contractor and CONCOR in which the Vivad Se Vishwas scheme is given by Government of India that if arbitration award goes against the company, then this is a medium through which some 65% of that award we can offer to the opposite party. And if they agree, if they accept it, then we settle it and all the future court cases are avoided. There is no court case after that by the party. So it was some such dispute in some contract in which the arbitration award went against the company. And we — this contractor went for Vivad Se Vishwas scheme, and we also worked out how much money is payable. And then 65% of that we offered as per the scheme to the contractor, and he accepted it. So we had to settle it and we made the payment. And net of tax, it was INR25 crores, which hit we had to take in this quarter.
Vishy
All right, thank you so much, sir.
Operator
Thank you very much. [Operator Instructions] The next question is from the line of Priyankar Biswas from BNP. Please go ahead.
Priyankar Biswas
Good morning, sir. So this is Priyankar Biswas from BNP. So my first question is — so what I understand now is that the Western DFC connection to JNPT is not happening before December 2025. So earlier it was March 2025. So in such a case, how would we be able to secure, let’s say, after double-digit growth in EXIM volumes in FY ’25, again, let’s say, a double-digit growth in FY ’26? Because what we are witnessing is a very steady erosion in rail model share in JNPT. So if you can address this point?
Sanjay Swarup
Yeah, it’s a good question. You rightly mentioned that Western DFC connection to JNPT will be in December 2025 as per the indications given by DFC officials. But we are going to give benefit of double stacking to our customers for JNPT. We have set up a terminal at a place called Varnama near Baroda, which is 400 kilometers from JNPT. So for North India customers, we will be running double stack train up to Varnama because it’s a unique terminal, which is connected to Indian railways and as well as DFC.
DFC connectivity is under progress. Last week, I have visited Varnama, I have inspected the site and work is going on in full swing. Of course, it was affected because of the rains. But now work is going on at full speed, and we are confident that by end of — before end of November, the work will be commissioned and this terminal will be connected to DFC. So it will be having connection to DFC as well as railways. So we will run double stack trains from Dadri and Kathua up to Varnama, double stack train on DFC. And from Varnama, we will break it into two single stack trains, and they will go on Indian Railways route up to JNPT for the last 400 kilometers. So — and the reverse will happen for imports. So in this manner, we will be able to have some predictability for our customers, predictable time at JNPT.
And secondly, we will pass on some cost benefits for the containers which are moving on upper deck. So we are confident that we will be able to shift a lot of cargo from road to rail as a result of this exercise. So that is the benefit that I made in the — that is one of the growth drivers that I mentioned in my opening remarks, and we are quite confident to achieve this.
Priyankar Biswas
Sir, just harping again on this. Any particular reason why in JNPT, the rail coefficient is falling? And why — and what is the coefficient right now? Because we have been seeing this trend for some time now. What may be the reason for it?
Sanjay Swarup
See, JNPT rail coefficient at present is around 16% in which the CONCOR share is 58% for the first half of this financial year. The main reason is that a lot of cargo has — for North India, a lot of cargo has shifted to Mundra port, which is giving a benefit of double stacks. And secondly, distance to North India is also less from Mundra port to North India. And JNPT is now serving the hinterland around JNPT for which the road becomes faster and economical. And JNPT is also serving the area of Nagpur, Hyderabad, and even we have started for Bangalore also. One movement we are doing for Visakhapatnam also from JNPT. So all these places, JNPT is serving by rail. But primarily, it is serving short distance traffic, which is more viable by road. So that is the most probable reason of decline in rail coefficient. But with the commissioning of DFC, we hope that rail coefficient at JNPT will rise.
Priyankar Biswas
That’s very clear. And just one question I’m just squeezing in. So I think in 2Q, the railway does not levy a busy season surcharge. But from 3Q onwards, they again start doing it. I think it’s 10%. So would that be impacting our margins on a sequential basis, at least on EXIM, if you can take that?
Sanjay Swarup
See, railway is levying business and surcharge throughout the year now. So they have not done any relaxation for Q2. But there is no cause of worry because whatever tariff increase that we had from November of last year, that we are continuing. We have not revised our rates. So there will not be any effect on margins.
Priyankar Biswas
Okay, thank you sir.
Operator
Thank you very much. The next question is from the line of Mukesh Saraf from Avendus Spark. Please go ahead.
Mukesh Saraf
Yes sir, good morning. The question is around EXIM growth. So if I look at your origination volumes, they’ve grown around 3% this quarter. When I look at, say, the port volume growth at some of the major ports, obviously, JNPT has grown at more than 15%, Mundra at 12% in the second quarter. So just trying to understand this gap is widening between our origination growth and the port volume growth. JNPT, obviously, you had mentioned that rail coefficients have been falling. But in Mundra, what we understand is rail coefficients have been going up as well. So could you kind of throw some light on the gap between the growth numbers for us and at the port level, especially Mundra kind of ports?
Sanjay Swarup
Yeah. As a matter of fact, at Mundra port, the rail coefficient has come down, but our market share has increased. I will give you the numbers, for the first half of financial year, in Mundra Port, last year, rail coefficient was 25.79%. It has become now 23.82%. So there is a downward trend as far as rail coefficient is concerned. But our market share was 36.35%, which has now become 38.83%. Like I told in the opening remarks that our market share has grown by 248 basis points at Mundra Port.
As far as Pipavav port is concerned, there’s a drastic fall in rail coefficient. Last year, it was 64.55%. And this year, the rail coefficient is 57.42%, whereas our market share has increased from 45.04% to 47.89%, which is a growth of 285 basis points. And all this we have achieved without sacrificing our margins. That is the beauty of it. So our margins are intact. Margins have, in fact, increased, and we have increased our market share as well as increased our margins. So that is a testimony of the relationship — excellent relationship that we have with our customers and the operational excellence shown by our team CONCOR.
Mukesh Saraf
Great, sir. Got that. If you could also give the same numbers for some of the other major ports like Chennai, which…
Sanjay Swarup
I don’t have numbers for other ports, but I have for JNPT, Mundra and Pipavav, which I have already shared.
Mukesh Saraf
Sure, sure. Thank you. And my second question is, I think you had mentioned in your opening remarks and in the last quarter as well that you’re getting into these long-term contracts with shipping lines, maybe three to five year kind of contracts. while we don’t want the details in terms of the commercials, but could you throw some light on pricing, etc., how these would work because these are volume-based contracts? And would you have to kind of bid at attractive prices to get those higher volumes? How does this work?
Sanjay Swarup
Yeah, it’s a very good question. Actually, what we are doing is we are having long-term relationship with shipping lines and big shipping lines, we are big as well as small. It is for all. Actually, as you may be knowing since last one or two years, the focus of the company is on providing total logistics solution to our customers. This is one of the focus area of the company. So we have 4 million square feet of warehousing spaces at our 66 terminals across the country. We are building more warehouses. Apart from that, we have become quite strong in FMLM also, first mile, last mile. We are having 130 LNG trucks for FMLM and 200 more we are procuring. One more news I wanted to share with all of you. The first LNG pump in North India of our country is going to be commissioned this month only — sorry, next month in November, mid-November at our MMLP Kathuwas.
So because in North India, we are constrained. We cannot deploy LNG trucks because there is no LNG pump — fuel pump. So that is being commissioned by IOC in our terminal at Kathuwas. So we have had a series of meetings with shipping lines at Mumbai as well as through VC. And we offered our warehouses. We offered our first mile, last mile, and we offer volume-based incentives. So all these things, we gave them as a package. that you use our services. And in turn, it will be a win-win situation for shipping lines as well as for CONCOR. So all these things, they are part of this agreement that we are having with shipping lines.
I visited the headquarter of Maersk, which is the second biggest shipping line in Copenhagen, Denmark. And they were quite excited when I told them about the green logistics, ESG norms being followed by our company and total business solutions. So they have had internal discussions and all of them are coming forward to sign these agreements with us, which are a comprehensive agreements. So ultimately, we are going for giving total service to our customers. And in the process, we will increase our margins also.
Mukesh Saraf
Right. So we should expect these value-added services to go up vis-a-vis say previous contracts to these new contracts that you’re getting?
Sanjay Swarup
Yes, that’s right. We should expect more value-added services, correct.
Mukesh Saraf
Got it, thank you so much.
Operator
Thank you very much. The next question is from the line of Aditya Mongia from Kotak Securities. Please go ahead.
Aditya Mongia
Thank you for the opportunity. I’ll go ahead with my questions. First is actually more of a clarification. This INR40 crore provision that you have kind of reversed and that linked to Whitefield, does it have any impact in the manner that your incremental land license fees will be calculated completely different and not to be linked up to future land license fee number?
Sanjay Swarup
No, no, it will not be linked up to the future. This is a provision we made expecting that this will be the LLF rate. Once we settle it with Indian Railways, then whatever provision, if it is extra, then that has to be written back. That is what we have done. So future, I don’t think it will have any impact.
Aditya Mongia
Understood. Now if I then assume this to be a one-off, it seems that your margins are much lesser than 25% at an EBITDA level. Just wanted to understand when you kind of gave this guidance on the interview, was this including other income that you were saying 25%? Or if it was not, if it was an EBITDA margin level before other income, then how do you bridge the gap from here on? Because today, the margins are more like 23-ish or so if I take away this benefit.
Sanjay Swarup
See as far as our — if you see the operating margin, operating margin is also quite high. It’s a healthy operating margin. We have 33.65% operating margin in this first half of financial year. Rail freight margin was around 28%. And one more thing is exceptional item, Vivad Se Vishwas that is INR25 crores net of tax. So if we take all these things into consideration, I’m quite confident that 25% EBITDA levels can be maintained by the company.
Aditya Mongia
Yes. But this is including other income, just clarifying when you keep this number out or excluding other income?
Sanjay Swarup
Of course, it includes other income also.
Aditya Mongia
Understood. So that clarifies. Just moving on to the other questions. I wanted to get a sense from you that this modal share coefficient issue is impacting assets that already have a DFC there. So it is actually impacting somewhat JNPT, but a lot more Mundra and Pipavav. Should this be something that one should be worrying about? Will it reverse around? What are the drivers of it? Because DFC should be supportive, right, over here. So just trying to get a sense of why would this be happening and how to think for the future?
Sanjay Swarup
I’m not able to understand your question. Can you please reframe it?
Aditya Mongia
Sure. Typically, in Mundra and Pipavav, the model coefficient should have gone up over time because DFC has been connected for some time while it is going down. Could you give us a sense of what is happening leading to the situation?
Sanjay Swarup
Okay. So now the Pipavav port is mostly serving the hinterland near Pipavav. So road becomes very competitive. Rail is not competitive for that short distance movement. For Mundra also, there is a lot of short distance movement. And apart from that, there is a movement for this CFSs around Mundra. There are around 35 to 40 CFSs near Mundra port, where many shipping lines prefer that they de-stock their containers and take the cargo by road. So if they have urgency of containers near the ports. So all these factors also affect the rail coefficient. But of course, our endeavor is that maximum container should come to the hinterland for which we are creating so much assets. We continue talking to the trade and convincing them. And many times, it happens also that they shift their pattern from CFS to the hinterland ICDs. But a lot of decision-making is done by shipping lines.
Aditya Mongia
Understood. Just a couple of questions more from my side. First of all, your other income or your interest income, if I see the cash flows statement, has meaningfully gone up from 1Q to 2Q. Could you give us a sense of what is driving this? And will this number again fall or be sustained at 2Q levels?
Sanjay Swarup
I will request my ED, Finance, Mr. Harish Chandra, he will take this question, please.
Harish Chandra
Just you have rightly said, the other income, we have the income from interest, the dividend, which we get from our subsidiaries, so these kind of returns are rental income. So this varies because the dividend received from the subsidiaries and joint ventures, it depends on receipt of the dividend. And then secondly, we have also received one refund from income tax department. There was also some interest element in that. So that is the reason that the increase in the other income is reflected. And last year, it was INR102 crores, and this is INR130 crores in this quarter. So that’s the reason, mainly the receipt of dividend as well as interest on the refund — income tax refund.
Aditya Mongia
Understood. Maybe a last question from my side. I think as we now better understand JNPT because you’re saying that you will do double stacking and give more predictability and pass on some savings to the customer. Could you give us a sense of how much would be the customer better off now when he makes a decision of choosing road and rail? And what kind of savings would you be passing on to the customer once you have the Varnama terminal ready?
Sanjay Swarup
See, actually, I cannot disclose it at the moment, but I can give you some idea about it. First thing is that when the container goes on upper tack, railway charges 50% of rail haulage. So that will be one of the savings that we will be having for 40-fit containers carrying lightweight cargo. So just to get a — just to give you an idea, when from Dadri to Mundra Port, we were running double stack — when we started double-stack trains, we tweaked our tariff by 8% to 10% for this lightweight cargo. And we had extra 12% to 15% traffic. So maybe Nhava Sheva may be around that number only. But right now, the exact numbers, it is not possible to give it to you.
Aditya Mongia
And is there any other terminal alongside Varnama, which may also come up from a competitor perspective, let’s say, Viramgam for that matter, is that a similar offering of double stacking that is happening till Viramgam and then one goes to JNPT? Or are you the only one benefiting or going to benefit from this?
Sanjay Swarup
Viramgam, it actually is not on that route. Viramgam is a different — it will be taking off towards — it will be from Ahmedabad towards Mundra port. So if you bring the train from North India to Nhava Sheva, Viramgam will not come in between. Viramgam will be a different route from Ahmedabad to Mundra, in between, you will get Viramgam. So as of now, near Varnama, there is no such terminal, which has connectivity to DFC as well as Indian Railways.
Aditya Mongia
Got that, thanks a lot.
Operator
Thank you very much. The next question is from the line of Shrinidhi Karlekar from HSBC. Please go ahead.
Shrinidhi Karlekar
Thank you for the opportunity. Sir, just one clarification. Sir, did you say there was a busy season surcharge even during quarter 2?
Sanjay Swarup
Yes, please.
Shrinidhi Karlekar
Okay. And sir, so in that context, sir, what has driven the sequential improvement in the rail freight margin? Because if I look at the rail freight cost as a percentage of revenue, there has been a sharp sequential improvement. May I ask what has really driven this?
Sanjay Swarup
This is due to the operational excellence of team CONCOR. As I told you, there is a growth in double stacking. There’s an 11.5% growth in double stack in the first half of this financial year. This first half, we have handled 3,083 double stack trains as compared to 2,766 double stack trains last year. So this has contributed in a big way for reducing the empty running, which has affected the — positively affected the rail freight margin. And secondly, the domestic also, we are getting a lot of loaded movement. Now empty movement has come down. In domestic, if you see, there is a 1.5% reduction in empty running, which is a remarkable performance as compared to INR143 crores last financial year, we have incurred empty running cost of INR140.8 crores. So there’s a difference of — a reduction of 1.5%. So all these factors have positively impacted the rail freight margin, and it has improved by 80 basis points year-on-year; from 27.06%, it has gone to 27.85%.
Shrinidhi Karlekar
Right. sir. a lot of the factors that drove this improvement seems to be company-specific. So do you think this very healthy rail freight margin adjusted for the mix changes, you would be able to retain in the second half as well?
Sanjay Swarup
Yeah, of course, we will be able to retain it. And we — I think we will be able to improve upon it because we are bringing JNPT also on double stack now, plus domestic, we are seeing a very good traction. So all these things will positively contribute and rail freight margin will further improve.
Shrinidhi Karlekar
Right. And sir, last one, I think Director Domestic did highlight some changes like increases in domestic business prices. Have you taken any price hikes in the EXIM segment as well in recent months in some nodes?
Sanjay Swarup
No, EXIM, we have not undertaken any price rise because Railways has also not revised the prices. And domestic also, we keep on changing. As such, we have not done any — not across the board increase. And we keep on revisiting because domestic is a dynamic pricing kind of thing. Road, it is a direct competition with road. So we keep on revisiting wherever we have to bring it down, wherever we have to increase. So that is a continuous exercise by domestic division.
Shrinidhi Karlekar
And sir, last one, how has been the first mile, last mile penetration now? And where do you think it’s going up by next year?
Sanjay Swarup
We are — in this financial year, FY ’25, we are targeting 50% of our business that we are giving should be on first mile last mile. So at present on pan-India basis, around 27% to 30% we are able to achieve in the first half of this financial year. And we are continuously working to improve it and achieve the target of 50%. And next financial year, we will set up a target of 80% of our volume should be first mile, last mile, we will be able to give. And we are getting very good margin also on this stream. For the first half of financial year, we have got 35% increase in first mile, last mile as far as revenue terms is concerned.
Shrinidhi Karlekar
Yeah thank you sir. All the best.
Operator
Thank you very much. The next question is from the line of Amit Bhinde from Morgan Stanley. Please go ahead.
Amit Bhinde
Hello sir. I wanted to understand that there was an announcement made in September that there would be some discounts provided on the storage charges, et cetera, to boost the EXIM trade. So what would be the impact — cost impact for us on the EXIM margins or increase in cost, in other words?
Sanjay Swarup
Yeah now I want to clarify, there is no concession on storage charges. It was in media also. The thing is that we are already giving 90 days free storage for empty containers. For empty containers, we are giving — in EXIM, I’m talking. In empty containers, we are giving 90 days free storage at all our terminals. And for loaded containers, we are giving a free storage of 15 days. So that is there for last, I think, one year, we have not changed it. There’s no reduction or there’s no upward movement in that. The thing that we revised was the empty handling charges at our terminal at Dronagiri. At Dronagiri, empty handling charges were in the range of INR6,000 for 20-feet and INR9,000 for 40-feet. So that we have brought down. And the reason was that at present, we have very miniscule empty inventory at our terminal at Dronagiri.
So we are intending that with this reduction in empty handling charges at Dronagiri. At only Dronagiri, we have brought it down. So we will get a lot of business. A lot of empty containers will come. So at present, suppose we are having an earning of zero. So at least we will get some earning. So that — keeping that perspective in mind, we have revised the empty handling charges. And there have been inquiries from shipping lines. And very soon, they will be storing their empty containers at our terminal. So that will be like extra earning for the company. It will not be a loss at all. And as far as empty storage time, I again want to clarify, it is still 90 days free time at all CONCOR terminals. This is there for last one year. There’s no reduction in that.
Amit Bhinde
And how about the 50% reduction in the charge beyond 90 days? Was there already there? Or now that would come, I mean, for beyond 90 days.
Sanjay Swarup
Beyond 90 days, there is a uniform tariff. Then there is no reduction in charge.
Amit Bhinde
Right. So I think the news suggested that there would be a 50% reduction.
Sanjay Swarup
Actually, yes, in media, what was being shown was not in a correct perspective. So it’s good that you have asked this question. So I hope it clarifies. If anybody has any doubt, they can ask more questions. I am ready to clarify.
Amit Bhinde
Right. Sir, the second question that I have is your guidance, as you were mentioning earlier, you mentioned that now the trends would be such that handling and originating would be growing in line itself, and there wouldn’t be disparity. So the guidance holds on both. But here, we see that your domestic has grown at around 15% in handling and at around 22% in originating. So now your guidance for full year, are you giving it on the originating basis or handling basis?
Sanjay Swarup
Handling.
Amit Bhinde
Handling basis. Okay. Sure those are all my questions.
Operator
Thank you very much. The next question is from the line of Koundinya from Jefferies. Please go ahead.
Koundinya Nimmagadda
Yeah hi sir, thanks for the opportunity. Sir, my first question is a bit on the macro side. Can you help understand what is the thought process in extending this busy season surcharge? I mean, because we clearly see that rail coefficient has been falling off across the ports. That’s on the first one. And the second one, can you help us understand what is driving this market share improvement for CONCOR? What are the key reasons, if you can elaborate, please?
Sanjay Swarup
See, for the first question, I am not the best person to answer this question because this was done by Ministry of Railways. But to be fair to them, for the last eight years, they have not increased the rail wallet charges. So 10% increase, I don’t think it was very much unjustified, I should say. But of course, the quantum was very high that immediately it stuck with trade. That was the — that is my reply on the first question. As far as the second question is concerned, this is — increase in market share is due to the customer centricity policy that we have been following for the last one, 1.5 years, plus the operational innovations, operational excellence that has been done by my team, operational team at CONCOR. These are the two reasons, primary reasons for increase in market share with corresponding increase in margin. There’s no drop in margin also.
Koundinya Nimmagadda
Okay. Sir, lastly, if you can also briefly touch base on some of the initiatives because you spoke in one of the con calls that you are offering specific — specific offers to certain corporate groups. Can you provide some update on that, where is it and what is current status?
Sanjay Swarup
See, we are a PSU. So we cannot have one-to-one offer that is valid for one customer and it will not be valid for another customer. What we do is we design our schemes and based on the volume slabs. So whichever customer crosses that slabs, they are eligible to avail of that scheme. We are not designing scheme for a particular customer. We can’t do that because we are a public sector company. So we have been doing it for so many years. like volume discount schemes is — there if you give more volume, you get more discount. If your incremental volume is more, you get more discounts. So there are so many schemes like that, that we are doing it for exports, imports throughout our ICDs as well as domestic. Domestic, we have business associate policy. So if they give more business, they become platinum category, then there is gold category, below that, silver category, bronze category. So it is all the thing about whatever volume you are giving and what is the incremental volume as compared to last year. These are the two basic criteria that gives incentives to our customers.
Koundinya Nimmagadda
Sure sir, thank you very much and wish your team a happy Diwali.
Sanjay Swarup
Thank you very much, same to you and your team.
Operator
Thank you very much. The next question is from the line of Sumit Kishore from Axis Capital. Please go ahead.
Sumit Kishore
Thank you so much for taking my question. In your opening remarks, you mentioned that EXIM volume growth of 3.5% was pretty much in line with India’s international trade growth, export growth of 1%, import growth of 6%. So for the second half, when we are expecting a strong double-digit growth, what sort of macro export-import growth numbers you are thinking about for the country to grow at, which if they don’t materialize, your guidance would be at risk?
Sanjay Swarup
See, I can talk about only CONCOR. Country, I think Honorable Commerce Minister will be the — you can ask this question to him. But as far as my business is concerned, I have already highlighted the growth drivers, and I’m focusing on that. Of course, it is all driven by the policies of Government of India. So we are hopeful to achieve our target, whatever we gave to us at the start of financial year.
Sumit Kishore
Sure. So I think the objective was to basically check if all India export import growth were in a similar range, your growth drivers won’t get impacted as much. You would still manage your double-digit growth because of Varnama and other initiatives that you have outlined.
Sanjay Swarup
I think that is what I meant also.
Sumit Kishore
That’s very clear. The second question is on the double stacking numbers that you have given of 11.5% growth and 3,083 rigs being double stacked. What percentage of your overall rig movement on the DFC now is double stacked? The idea is to understand how much of the potential of double stacking has already been tapped when it comes to, say, Mundra, Pipavav, I know JNPT would still be pending. But this question is more to understand what potential of double stacking has already been tapped by CONCOR?
Sanjay Swarup
See, if you see on DFC, we are giving double stack benefit at Mundra and Pipavav. So I can say that total volume that we are running on DFC, around 70% to 75% is double stacked.
Sumit Kishore
Okay. So pretty much this is a fairly high level of double stacking, which has already been achieved?
Sanjay Swarup
Yes, that’s right.
Sumit Kishore
Thank you sir, those are my questions.
Operator
Thank you very much. The next question is from the line of Akshay Ajmera from Nirzar Securities. Please go ahead.
Sanjay Swarup
I think this conference call is for one hour or more?
Bhoomika Nair
We’ll take this as the last question.
Sanjay Swarup
Okay. Please go ahead.
Akshay Ajmera
Thank you so much for the opportunity. Sir, this question is regarding the news announcement made by our Commerce Minister, Mr. Piyush Goyal in September. And I think this question was already taken up by you, but a part of it, I want to understand more from you. So on that press conference, which was basically to facilitate increase or ease of doing for the exporters of our country. So the intent was to reduce the tariff and provide logistic solutions to them. How do you see this going forward because the intent of the government is to give and pass on benefits to the exporters so that they can export more. At the same time, to reduce the logistic cost.
This has been reiterated by the government and ministers of the government various times that their intention is to reduce the overall logistics cost in this country. So how do you see this pressure coming to you in terms of reducing costs, passing on the cost benefit, like you are talking about double stacking, DFCC and all these things. But how this will improve the margins because I think it can give us some volume. But at the same time, whatever cost is there, you have to pass on to the customer. And in the same meeting, they have also slashed your empty container charges handling charges. This is what we have read from the news article. So if you can clarify about how much impact you had? And what is your thinking on their intentions going forward? Thank you so much.
Sanjay Swarup
Yeah. See, now actually, as far as the empty storage charges, as I clarified earlier, they are 90 days free at all our terminals for the last one year. They were not done after this meeting. And secondly, the handling charges we had reduced only at one terminal, that is Dronagiri. At all other terminals, the handling charges remain the same. We have not reduced it.
Akshay Ajmera
So what would be the potential impact of that? Because 33% of the volume has come from Dronagiri, if I’m not wrong.
Sanjay Swarup
How much percent?
Akshay Ajmera
33% of our volumes.
Sanjay Swarup
No, no. Dronagiri hardly contributes less than 1% of our volume. Yes, it is nothing actually. So at present, the impact is zero. There is no impact at all. And because we are yet to receive empty containers from shipping lines at our Dronagiri terminal, which is near JNPT. So we have not started getting the containers. So impact is zero. So we are expecting in the next 10, 15 days, they will be using this facility, then we will get some revenue because imagine we were not getting any revenue. Now at least we will get some revenue. So it will be a gain for the company. It will not be a loss for the company. Media article was giving some other impression.
So I wanted to clarify it now to all of you that it will be gain for the company that from zero revenue, we are going to get some revenue. Apart from that, for the last one year, we have started a scheme of 25% concession on empty container movement from gateway ports to hinterland ICDs. This was done to promote the exports. But we were offsetting this concession in terms of some charges that we had at terminals, and we are continuing with those charges. So there is no loss of margin on that account. And because of the more empty container movement at our terminals because of these concessions, we were getting exports, additional exports. So it will be additional — it was additional income for the company. That is quite evident in our numbers also. As I told you, we have increased our market share, but we have not sacrificed our margins.
Margins have also increased and market share has also increased. This is because of the policy that company has been following. We don’t believe in sacrificing our margin to gain market share. We believe in giving good service to our customers, so that customer stays with us despite there are some — we may be expensive, but our service that we give to customers is of international standards. So remember, we evacuate the containers from the ports immediately. The dwell time is less than 30 hours, whereas our competitors’ dwell time is 30 days. So there is a huge gap between service levels. So customer is willing to pay more to get good service. So that has been the philosophy of our company, and that will remain for future also.
Operator
Thank you very much. Due to time constraints, that was the last question. I would now like to hand the conference over to Ms. Bhoomika Nair for closing comments. Thank you, and over to you, ma’am.
Bhoomika Nair
Yes. Thank you, everyone, and particularly the management for giving us an opportunity to host the call and wishing you all the very best and a very happy Diwali, sir. Thank you all the participants.
Sanjay Swarup
Thank you very much Bhoomika and to you and your team.
Operator
[Operator Closing Remarks]