Container Corporation of India Limited (CONCOR) Q3 FY23 Earnings Concall Transcript

Container Corporation of India Limited (NSE: CONCOR) Q3 FY23 Earnings Concall dated Jan. 24, 2023

Corporate Participants:

V. Kalyana Rama — Chairman and Managing Director

Manoj Kumar Dubey — Director – Finance

Analysts:

Atul Tiwari — Citigroup — Analyst

Bhoomika Nair — DAM Capital — Analyst

Amit Dixit — Edelweiss — Analyst

Achal Lohade — JM Financial — Analyst

Ashish Shah — Centrum Broking — Analyst

Gazal Gupta — JM Financial — Analyst

Mukesh Saraf — Avendus Spark — Analyst

Vikram Suryavanshi — PhillipCapital — Analyst

Inderjeet Bhatia — HDFC Securities — Analyst

Deepak Krishnan — Macquarie — Analyst

Aditya Mongia — Kotak Securities — Analyst

Pulkit Patni — Goldman Sachs — Analyst

Presentation:

Operator

Good afternoon, ladies and gentlemen, I’m Vidhya, moderator for the conference call today. Welcome to CONCOR Q3 FY ’23 Earnings Conference Call hosted by DAM Capital Advisors Limited. [Operator Instructions]

I would now like to hand over the floor to Ms. Bhoomika Nair from DAM Capital. Thank you. And over to you, ma’am.

Bhoomika Nair — DAM Capital — Analyst

Yeah. Thank you. Good afternoon, everyone. Welcome to the Q3 FY ’23 earnings call of Container Corporation of India. We have the management today being represented by Mr. V. Kalyana Rama, Chairman and Managing Director.

I’ll hand over the floor to him for his initial remarks, post which we’ll open up the floor for Q&A. Over to you, sir.

V. Kalyana Rama — Chairman and Managing Director

Yeah. Thank you, Bhoomika. Good afternoon, everyone. Thank you for being with us for the post results conference call. This quarter, we had both mixed bag with us. It’s a little difficult in EXIM sector. We have the quarter some numbers dropping. Margins, there was a little pressure on margins. In domestic, we did well. And overall, yes, there will be a pressure on margin because domestic margins are definitely not as good as EXIM margins, as we all know because within India, logistics are very competitive logistics comparing with the road.

So the overall margin figures have come down a little bit. But the good thing is domestic growth is continuously there as we’ve seen last year, 30% plus growth. This year, we are seeing the same growth continuing 30% plus. But again the difficulty in this scenario is that we are having our resource constraint. We could — we are not able to add new containers, new rakes because of some geopolitical problems, which restricted us from importing containers from China. So even though we got good demand for domestic containers, we got stuck up at 37,000 containers. So we are running a program to develop container manufacturers under Atmanirbhar Bharat.

As all of you know that we released a lot of container manufacturing orders, 18,000 container orders we released. But as all of us know, any ecosystem to develop [Foreign Speech] out of 18,000, even though the — we’re supposed to get almost as per the schedule even in the tenders we have to get 9,000, but these things are expected. But the demand — on the demand side if I see and how many more containers are required at this moment is something like another 20,000. So 37,000 today we are owning. So we can own now around 60,000 containers and all containers will be full, and they will be — they will be utilized fully well.

So that sort of demand is there. So the overall scenario is very positive. And you look at the macro picture, there is very positive outlook for any Indian logistics companies and particularly for your Company, CONCOR, it has very, very bright future there. In the next four years, five years, we are expecting lot of growth in domestic. And the important part which we all of us here should note, the domestic revenues which used to be 20% of total revenues in the year 2015-2016 and that was traditional 80:20 mix of the total revenue, and today it has come in this quarter to 65:35, and it will further grow. So domestic, now to protect our margins, what we are doing is we are adding the value-added services very aggressively into the domestic market.

FMLMS [Phonetic] is already there, which we are continuously trying to increase our numbers under FMLM. And we are trying to give that including providing FMLM along with the transportation, rail transportation, we are now trying to do the complete business solution, and that we want to bring into the domestic sector. And we are offering this complete business solutions to some of the major industries like government side, FCI, we are providing business solution service. Food industries we are providing business solution service, where it is from business to government, B2G service network. So we are providing a business solution there.

So our endeavor is to increase this. So for that now we are trying to add more resources. We are now trying to add LNG trucks. The issue is under very active consideration. So we will be experimenting with LNG trucks first at our major hub, Kathuwas, and then we will be expanding it to all the new terminals. So all these new things we are bringing in to add because the demand is there in domestic, and also to encourage more and more domestic traffic into containers and to add the value-added services and to make it a complete business solution, which will increase our margins. So that the overall margin pressure will not be too much.

As I mentioned to you last time, as domestic increases, there will be definitely any pressure on margin, which I think this time every analyst is, maybe all of you also calculated and every analyst commenting on that is that overall margin has come down by around 200 basis points to 300 basis points, the reason is that. But in domestic, the bulk cement which we started and we started commercial ramps during this quarter is picking up very well. Till the date, we almost completed 50,000 tons of domestic bulk cement movement.

The market is huge. Because of again, the resource constraint, we are not going aggressive into this. As soon as we will add some more containers, we are working on that to add some good number of containers in the next quarter itself. So as it happens, I will let you all of you know how much we added and how we added. Now to give any details on that will be too premature. So I’m not sharing anything on that with you guys. But once we add, there is a huge demand in bulk cement, and bulk cement is a complete business solution model and we are working on that. As of now FMLM, we are not adding it to that sector, but we will add FMLM into that sector and make a complete business Solution. So this is the domestic scenario.

And the EXIM side, yes, we had started seeing dropping — our share, dropping share in particularly at two ports, one, Mundra Port in imports, we got our share drop, and in Pipavav, the exports side, our share got dropped. So we analyzed and now introduced new schemes in the month of November. And the scheme on the import side is one plus one and on the export side obviously, that export will be followed for imports and the empty repositionings. And all of you know that empty repositioning was scheme of 50% is going and it is giving good results to us.

Now with one plus one scheme which we gave with every one extra import load given by the shipping lines, we are giving them one free transport of empty repositioning from port to hinterland and discounted repositioning terminal to terminal. So this scheme in December has given us very good results. So when I see December month has separated from the quarter. In December, our volumes picked up at all the ports, Mundra, Pipavav, both our share started going up. And I’m expecting this trend will continue because in January also, we are seeing the same traction continuing in the ports. So we are hopeful that the scheme started working, and this scheme entity has even generated a lot of interest among all the — all our customers. So we are hopeful that we will be getting back our share, which — and as all of you know, we will not be going for price war to get any share, we’ll not reduce our margin, that is our principle, and we stand by that.

So without giving away the margins, we are now trying to come back with the VDS scheme, and let me tell you all the VDS schemes are net positive VDS schemes for the Company, for CONCOR. That is how we designed. It is a win-win situation for both the customer and for the Company [Phonetic]. So this in EXIM. Q4, we are expecting that we will be able to get back some of the large share and we will be able to get good numbers in Q4.

On revenue side, as you see, because domestic, we did very well. Overall revenue, we are positive. And the — even PAT side, we are positive. Yes, on the absolute numbers, we are positive, but on the percentage wise margins when we look at it, yes, as I already explained, there is a dip in the percentage margin. Otherwise, the scenario — as I said, macro scenario is very good, very bright future. So I don’t see any problem. And some of the other important interesting parameters which many of you asked, let me give you those numbers, that was that, they are doing very well.

We already crossed 3,000 double-stack trains in this year for the nine months, and this year, we are expecting to cross more than 4,000 trains. It’s a record. We are doing double hub. Swarupganj has really picked up as the second hub. So almost all the JNPT volumes, we are bringing and doing the double-stack. So — and Kathuwas is doing extremely well. So double-stack side, there is a good growth, and as planned, things are moving on.

On the rake traction, because of the geopolitical constraint and the increased demand in the railway sector, we are not getting the wheel and axle. So we now started working on our main two sources and we are establishing supply chains. And we are hopeful that these operations will get established in two months’, three months’ time. It’s not very long gestation supply chain establishment. So with that, we are hopeful we’ll be able to start adding rakes from the first quarter of the next financial year.

So this year, our program of adding around 45 rakes to 48 rakes got really hit, and that is showing us the — and we are under severe constraint to meet all the demand. Even the EXIM, we are losing percentage, but today, the position is that our rakes are not available to meet the demand from the EXIM and from the domestic. And I already told you over the domestic containers. Equipment, same issue. Equipment restacked us, again, because of the geopolitical problems, we are not able to import from China. Indian manufacturers are not able to meet the demand. So we are working out various methods.

It’s premature to share with you at this moment what are the strategies, but as and when we were able to finalize that we get, we will definitely share with you the details of how we did this. So we are working on increasing our handling machines, containers, rakes. And I’m sure in the next quarter itself, we’re able to find solution, so that for the next financial year, we are positioned very well to meet the increased demand, increasing demand and all the expected demand without losing any customer and maintaining the customer satisfaction with our motto of customer value.

Thank you. Yeah, you can start the question-and-answer session.

Questions and Answers:

Operator

Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] The first question comes from Atul Tiwari from Citigroup. Please go ahead with your question.

Atul Tiwari — Citigroup — Analyst

Yeah, sir, thanks a lot. Sir, could you share originating EXIM volumes and domestic volumes?

Manoj Kumar Dubey — Director – Finance

For Q3, the — hello, for Q3, the originating EXIM volume was 465,107 TEUs and domestic volume was 109,479 TEUs, total, 574,586 TEUs.

Atul Tiwari — Citigroup — Analyst

Okay, sir. And sir, it looks like that the decline in the originating volume on the EXIM side was almost like 15% year-on-year, and you did refer to some loss of market share. So what would be current market share on the EXIM side? And can you give some more color on who is gaining market share in the industry? And you did refer to some measures that you have taken without loss of margin. So how does that work? How do you like gain back market share without ceding some margin? So any color on that will be useful?

V. Kalyana Rama — Chairman and Managing Director

Right, Tiwari, I already told you, see the total market share we lost over the last financial year, if I look at the nine months figure is 2.84% [Phonetic]. So in — in million tons, that is in million tons. So the market share in EXIM, we lost around 4%. It was 62.7%, it has come down to 58.3% when I look at all. In this, there are two factors in this, which I repeatedly tell you guys that in JNPT, there is a short lead traffic, which we are not interested.

So if I leave out the short lead traffic, where there are no margins at all, our share increased. Our share increased at JNPT, we have gone up by 3% from 76.3% to 79.75%, that’s 80% what we used to do. Mundra, we lost a lot of volume. We have lost — we have come down from 45. — 45% to 38%. And in Pipavav also, when I put both import, export together, we lost a percentage.

Now in import side, I already explained to you what scheme we have given, we are giving one plus one. After a threshold of import volume for any additional import load shipping land you give me, I will be allowing one empty free transport from port to the hinterland or discounted transport which is terminal to terminal. But when we do the schemes, we do it net positive scheme. You understand what is net positive, I think.

Atul Tiwari — Citigroup — Analyst

Yeah, yeah, sir.

V. Kalyana Rama — Chairman and Managing Director

So when it becomes net positive, there is no loss of [Technical Issues].

Atul Tiwari — Citigroup — Analyst

Okay, sir. Okay, sir, thank you.

V. Kalyana Rama — Chairman and Managing Director

Yes.

Operator

Thank you, sir. The next question comes from Amit Dixit from Edelweiss. Please go ahead with your question.

Amit Dixit — Edelweiss — Analyst

Yeah, hi. Good afternoon, everyone, and thanks for taking my questions. I have a couple of questions. The first one is on the margin trajectory. You mentioned that the domestic revenue would be 35% in the future as we grow further. So can you share with us the margin trajectory? Usually, our margins have been like 23.5%…

V. Kalyana Rama — Chairman and Managing Director

We’re not going to do with any nesting [Phonetic] on margins, yeah. But as and when domestic, domestic margins, we work around 18%, and in EXIM, we work with the margins of almost 26%. So when the domestic volume grows, domestic numbers keep growing, growing, so there will be pressure on the total margin. In absolute numbers, it will increase, but on the percentage wise, if you see the margins, it will be coming down. Our top-line will be growing quicker than our bottom line.

Amit Dixit — Edelweiss — Analyst

Okay, sir, got it. The second question is on the empty running cost, if you can share for this quarter between EXIM and domestic, both?

V. Kalyana Rama — Chairman and Managing Director

Empty running cost.

Amit Dixit — Edelweiss — Analyst

Yes.

V. Kalyana Rama — Chairman and Managing Director

Empty running cost for the quarter you want here. So empty running cost for the quarter three is EXIM, INR36 crores, INR37 crores, domestic, INR97 crores.

Amit Dixit — Edelweiss — Analyst

Okay, sir, thank you so much, and all the best.

Operator

Thank you, sir. The next question comes from Achal Lohade from JM Financial. Please go ahead with your question.

Achal Lohade — JM Financial — Analyst

Thank you for the opportunity. Sir, in terms of the growing cost, can you help us understand there is an increase Q-o-Q, these share monies, any one-off in employee cost or is this a recurring [Technical Issues]?

V. Kalyana Rama — Chairman and Managing Director

The employee cost, whenever there is increase, there is definitely a one-off benefit we pass on to our employees. We increase our employees because now our workforce, we are, I think the best clean and lean Company in the logistics sector where you compare it with anybody. So the employee cost increase is because of basic, they increase that and DA increase, what happens that comes over the — quarter-on-quarter, they will be increasing, so every quarter, there is a DA increase and basic 3% increase is for everyone.

That increase will be there. And last quarter, we have given a good incentive to all our employees. So that incentive also is there in this. So these two things, one-off benefit is the incentive to the employees, the other thing is the regular increase of basic cost.

Achal Lohade — JM Financial — Analyst

Would you be able to quantify how much of the increase as well?

V. Kalyana Rama — Chairman and Managing Director

Yeah, these are too small numbers for the analyst to quantify. It doesn’t get any result impact on the total figures. Employee cost increase, what is the increase you are seeing, you tell me, how much increase you have seen in nine months, what is the increase given to the employees in nine months?

Operator

Hello, sir, sorry for interrupting you, sir, there is background noise from your line. Can you just disconnect the line and come back in the queue, sir.

Achal Lohade — JM Financial — Analyst

Am I audible now?

Operator

Yes, sir.

V. Kalyana Rama — Chairman and Managing Director

Yes, yes.

Achal Lohade — JM Financial — Analyst

Yeah, yeah, it’s 3%. Okay. Sorry…

V. Kalyana Rama — Chairman and Managing Director

[Foreign Speech] If you want to analyze the employee benefit cost, do you know what — how much were absolute numbers the employee benefit cost increased in nine months?

Achal Lohade — JM Financial — Analyst

Understood, sir. Any clarification on the other income, which is at INR113 crores? It’s up 80% Y-o-Y, sir.

Manoj Kumar Dubey — Director – Finance

Yeah, other income we have the income from the deposits on the investment what we get and then the rental incomes and the dividends we get from subsidiaries. So there is always some variation from quarter-to-quarter. So that is the reason some dividends we have got in this quarter and some rental income increases there. From this account, there is a increase in the other income.

V. Kalyana Rama — Chairman and Managing Director

That overall nine months…

Manoj Kumar Dubey — Director – Finance

Definitely. Nine months is not, but…

Achal Lohade — JM Financial — Analyst

Understood. And just a clarification, sir, you said 18% EBIT — 18% margin for domestic and 26% for EXIM. Was that at EBITDA level, EBIT level, sir?

V. Kalyana Rama — Chairman and Managing Director

Yeah. Yes, yes.

Achal Lohade — JM Financial — Analyst

It was at EBIT level, sir?

V. Kalyana Rama — Chairman and Managing Director

EBIT level, EBIT level.

Achal Lohade — JM Financial — Analyst

Got it, sir. Thank you so much. I’ll come back in the queue.

Operator

Thank you, sir. [Operator Instructions] The next question comes from Ashish Shah from Centrum Broking. Please go ahead with your question.

Ashish Shah — Centrum Broking — Analyst

Yeah, thank you. Good afternoon, sir. Sir, my question is on the EBIT margin for the EXIM business. So you did say that in December we have introduced certain schemes and they would be margin accretive or at least they won’t deplete the margin. Then why would the margin in Q3 would be lower than, let’s say, the previous margins? Is it only because of the decline in the volume or there could be some other reasons?

V. Kalyana Rama — Chairman and Managing Director

You’re saying EXIM volume — EXIM margins separately or overall margins?

Ashish Shah — Centrum Broking — Analyst

EXIM margins, sir. When I look at the EXIM EBIT margins for the segment — EXIM margins, sir?

V. Kalyana Rama — Chairman and Managing Director

Overall margins you are talking of, EBIT margin, isn’t it?

Ashish Shah — Centrum Broking — Analyst

EXIM margin, sir, EXIM. Hello?

V. Kalyana Rama — Chairman and Managing Director

EXIM?

Ashish Shah — Centrum Broking — Analyst

Yes, sir, EXIM margin.

V. Kalyana Rama — Chairman and Managing Director

What are your numbers, let me have these numbers what you are talking of?

Ashish Shah — Centrum Broking — Analyst

Sir, in the second quarter, we had EBIT margin of 25.2% for the EXIM segment, in the third quarter, we have 23.3%, in the first quarter, it was 24.4%. So I’m referring to the…

V. Kalyana Rama — Chairman and Managing Director

Say again.

Ashish Shah — Centrum Broking — Analyst

Absolute EBIT is INR295 crore for the third quarter, whereas it was around INR320 crore and INR330 crore for the first and the second quarters?

V. Kalyana Rama — Chairman and Managing Director

So in the EXIM, see, the EBIT margins, the one factor which affected us is the increase in the empty running which happened in this quarter, okay?

Ashish Shah — Centrum Broking — Analyst

Right.

V. Kalyana Rama — Chairman and Managing Director

And there is a drop in volume. So we lost some of the long lead traffic, which we are carrying, and our — and these costs we don’t lose much of traffic because there is not much of competition. So the competition comes only on the West Coast. So West Coast is long lead traffic. So there is a slight dip. So this dip of — you are talking of a dip of INR37 crores.

Ashish Shah — Centrum Broking — Analyst

Right. Right, sir. Got it, sir. Sir, secondly just a little bit on the capex numbers. So how much we would have done for the nine-month period, and what would be the capex target for this year and possibly maybe next year as well?

V. Kalyana Rama — Chairman and Managing Director

Capex, there are constraints, I think I talked lengthy about the constraints what we’re facing. Isn’t it?

Ashish Shah — Centrum Broking — Analyst

Right, sir.

V. Kalyana Rama — Chairman and Managing Director

So with our capex program, a lot of capex we want to spend on containers and rolling stock and handling equipment, and all the three things we are having constraints.

Ashish Shah — Centrum Broking — Analyst

Right.

V. Kalyana Rama — Chairman and Managing Director

So in fact I think two quarters, three quarters back, when I said we are going to spend the capex of almost INR10,000 crores as our program, I think analysts got worried, okay, how this much of capex you’re getting spent, it will be spent. See, the demand available in the market was on the logistics sector. But today, because of the constraints, we’re not able to spend this — the thing on these three things. So whatever capex is being spent, spent on only the — these terminal developments.

Ashish Shah — Centrum Broking — Analyst

Right. Sir, any number you could leave us with for this year and next year?

V. Kalyana Rama — Chairman and Managing Director

Next year, till now, we could spend INR220 crores.

Ashish Shah — Centrum Broking — Analyst

Okay, fine. Sir, last question on the LLF side. So we have been doing roughly INR95 crores, INR96 crores a quarter, where would we be ending ’23 with? It would be around INR400 crores or — because earlier we have probably given a range of INR400 crores, INR450 crores?

V. Kalyana Rama — Chairman and Managing Director

This question I answered many times, there is no change in my answer. It is INR450 crores we take for our balance sheet purpose. There will be…

Ashish Shah — Centrum Broking — Analyst

Okay, for ’23? Yeah.

V. Kalyana Rama — Chairman and Managing Director

Yes, yes, INR450 crores.

Ashish Shah — Centrum Broking — Analyst

Right, sir. Got that.

V. Kalyana Rama — Chairman and Managing Director

There will be adjustments in the last quarter because there were some cancellations which railways will be doing, we will be doing. So you have to do this sort of adjustments in the last quarter. So we always keep that figure, INR450 crores, please take that in your analysis. Because see, the analysis will not change for INR10 crores, INR20 crores. Some of the questions people were asking me for INR10 crores, INR20 crores, whether it increase, decrease? On a PAT when we are projecting a PAT of INR1,200 crores for this year, does it change anything with the INR10 crores, INR20 crores, here and there?

Ashish Shah — Centrum Broking — Analyst

Right, sir, it won’t change, correct. Got that, sir. I just wanted that indicative number of INR450 crores. Fine, sir. Thank you. Thank you.

Operator

Thank you, sir. The next question comes from Gazal Gupta from JM Financial. Please go ahead.

Gazal Gupta — JM Financial — Analyst

Hi, sir, thanks for taking my question. I just have one question on the rail freight expenses. So if I look at it as a percentage of sales, usually in the past, the range has been 54% to 55%, but for this quarter, it is 57% approximately. So just wanted to understand why this increase is there for this particular quarter?

V. Kalyana Rama — Chairman and Managing Director

Railway has withdrawn two discounts, one, 25% of empty movement discount and 5% on loaded movement discount.

Gazal Gupta — JM Financial — Analyst

Okay, okay. That’s all from my end. Thank you.

V. Kalyana Rama — Chairman and Managing Director

Okay.

Operator

Thank you, ma’am. [Operator Instructions] The next question comes from Mukesh Saraf from Avendus Spark. Please go ahead.

Mukesh Saraf — Avendus Spark — Analyst

Yes, sir. Good afternoon, and thank you for the opportunity. My first question is relating to the market share loss that you had mentioned. Could you just give us some sense on the reason for this market share loss? Is it just pricing competition from competitors or is there some other reasons?

V. Kalyana Rama — Chairman and Managing Director

Mainly pricing competition. Yes.

Mukesh Saraf — Avendus Spark — Analyst

Okay.

V. Kalyana Rama — Chairman and Managing Director

Now people are working with almost nil margin basis, so we never do that.

Mukesh Saraf — Avendus Spark — Analyst

Okay. Okay, that’s…

V. Kalyana Rama — Chairman and Managing Director

As I mentioned in December, we started picking up our market share.

Mukesh Saraf — Avendus Spark — Analyst

All right, all right, understood, sir. And secondly, what would be the rail freight margins for us in the quarter?

V. Kalyana Rama — Chairman and Managing Director

Rail freight margin this quarter is 25.3%

Mukesh Saraf — Avendus Spark — Analyst

25.3%, okay. So first half, it was around 26.5%. So there is a decline there?

V. Kalyana Rama — Chairman and Managing Director

Yeah, yeah. Right, there is an empty running cost is increasing because I already mentioned that we got assets, and we are — have to do a lot of jacking up freight and assets to get the demand from customers. Second, railway has withdrawn the discounts given for empty movement and loaded movement, both.

Mukesh Saraf — Avendus Spark — Analyst

Sure, sure. So we will be passing through this…

V. Kalyana Rama — Chairman and Managing Director

Yes, go ahead.

Mukesh Saraf — Avendus Spark — Analyst

Sorry, sir. What I was asking is, we will be passing this through to the end customers which might take some time for it to…

V. Kalyana Rama — Chairman and Managing Director

Yeah, we are doing that. This was withdrawn long back, this is not now. This is withdrawn six months back, right. We are not passing on. See, our pricing is totally market-driven, it’s nothing to do with railway pricing.

Mukesh Saraf — Avendus Spark — Analyst

Okay, okay. Okay. Because previously you had mentioned that it might take some time for the pass-through to get into effect like might take six months to nine months, right, so I was just wondering?

V. Kalyana Rama — Chairman and Managing Director

Yeah. So — see, my pass-through will be market-driven, that’s what I’m telling you.

Mukesh Saraf — Avendus Spark — Analyst

Okay, sure, sure.

V. Kalyana Rama — Chairman and Managing Director

When I say pricing, it’s market-driven. Whenever market can take and I feel that I can increase prices without losing my market share, I’ll do that.

Mukesh Saraf — Avendus Spark — Analyst

Sure, sure, sure. Right, right, right. All right, sir, thanks a lot for this.

V. Kalyana Rama — Chairman and Managing Director

Okay, thank you.

Operator

Thank you, sir. The next question comes from Vikram Suryavanshi from PhillipCapital. Please go ahead.

Vikram Suryavanshi — PhillipCapital — Analyst

Yeah, good afternoon, sir. Some questions were already answered, but just for bookkeeping, can you get lead distance for EXIM and domestic for this quarter?

V. Kalyana Rama — Chairman and Managing Director

The EXIM lead is 676 and domestic is 1,370.

Vikram Suryavanshi — PhillipCapital — Analyst

Okay. And sir, basically — in fact, you mentioned double-stacking trains will cross to more than 4,000 this year. But what was the number for this quarter, third quarter number?

V. Kalyana Rama — Chairman and Managing Director

Third quarter number is 880.

Vikram Suryavanshi — PhillipCapital — Analyst

So with this increase in double-stacking, are we able to get this advantage, we can compensate for pressure on the removal of this discounts and all that and probably maintain the margin with or to what extent we can have further scope for increasing the double-stacking trains, which can really release some pressure on the margin?

V. Kalyana Rama — Chairman and Managing Director

See, last year, we did double-stacking of 3,750 [Phonetic] trains. This year, we’re planning to do double-stacking of 4,000 plus. So the increase in double-stack will not be very high to take care of the margins drop because of the increase in the rail freight by Indian Railways.

Vikram Suryavanshi — PhillipCapital — Analyst

Got it. And since we are seeing very strong growth in our domestic market, and — so how is the development happening for third-party or contract logistics or services what we were planning, so how is that pickup in this kind of business opportunity?

V. Kalyana Rama — Chairman and Managing Director

Which one, contract?

Vikram Suryavanshi — PhillipCapital — Analyst

Our end-to-end logistic services, what we are looking for domestic operation with the partnership and all?

V. Kalyana Rama — Chairman and Managing Director

Yeah, yeah. So we are looking on that. See, all the programs, right, I was talking about movement of bulk in containers, we already started the cement and it is really picking up very well. It’s a very successful solution doing cement in normal [Indecipherable] containers. But we already moved as I mentioned, 50,000 tons till now, but we are not aggressively going on because of our constraints in our assets.

And the DLC, I mean, distribution logistic centers, we are — we are pressuring that and it will definitely come out. We are now almost working on giving at least LOX [Phonetic]. End-to-end, now FMLM services we established. Now we are working on giving the business solution, the complete solution to customers from — for our end-to-end clients.

Vikram Suryavanshi — PhillipCapital — Analyst

Okay, sir, thank you very much, sir.

V. Kalyana Rama — Chairman and Managing Director

Thank you.

Operator

Thank you, sir. The next question comes from Koundinya from JPMorgan. Please go ahead.

Unidentified Participant — — Analyst

Yeah, hi, sir, thanks for the opportunity. Sorry, I got disconnected, briefly, I’m not sure if you’ve already answered this question, apologize if I’m asking it again. Sir, I was just looking at the railway charge, if I look at it on a per sales basis or on per TEU basis, it looks slightly high. Is it all along due to the discontinuation of discounts by railways or is there something just that I should credit into it?

V. Kalyana Rama — Chairman and Managing Director

No, it is because railways have withdrawn the discount. So we have not changed and we have not increased our rates. So railway charges will increase. So our rail freight margins will slightly dip.

Unidentified Participant — — Analyst

Sir, so in that case, is the number that we’re seeing in 3Q a sustainable number or can we see some sort of improvement or something on this?

V. Kalyana Rama — Chairman and Managing Director

Which number?

Unidentified Participant — — Analyst

That 57% of sales or around 19,700 [Phonetic] on per TEU basis. So…

V. Kalyana Rama — Chairman and Managing Director

Which one, [Foreign Speech]? What is that margin you are talking of?

Unidentified Participant — — Analyst

Sir, I’m speaking about the railway charges on per sales, when I look at the number, that’s around 57%…

V. Kalyana Rama — Chairman and Managing Director

I don’t do that analysis. Whatever analysis you do, everything I will not be doing, I do my own analysis. And I have given you the macro figure that the future is good and the EBITDA margins, we will be able to maintain, but with the domestic increase, EBITDA margins will little bit come down, absolute numbers will increase.

Unidentified Participant — — Analyst

Okay, sure, sir. And sir, secondly on the capex front, if I look at it at because this year we couldn’t do much of it. So what is a reasonable…

V. Kalyana Rama — Chairman and Managing Director

I already answered this question, but I think because you got disconnected, for your benefit, let me repeat. See, in capex front, there are four elements. One is rakes, containers, equipment, then IT, land and terminal development. So the land and terminal development in our original program itself, it’s not very much because now — we are now trying to develop a asset-light model because CONCOR in a position now to go over a franchisee model business because of its name and its popularity and the reach we got.

On the equipment side, our containers, rolling stock, there are geopolitical constraints, there are various constraints which are actually creating problems for us in our procurement programs. This year, we could not procure none of them, that capital expense we could not incur. So this year, even though we projected INR650 crores around capex program, we could spend only INR220 crores in nine months. So we are working on easing out these constraints for these three, equipment, equipment, container and rake procurement. We are hopeful that maybe we’ll be able to do something in the next quarter, then only, the capex will pick up.

Unidentified Participant — — Analyst

Sure, sir, got it. Thank you very much.

Operator

Thank you, sir. The next question comes from Inderjeet Bhatia from HDFC Securities. Please go ahead.

Inderjeet Bhatia — HDFC Securities — Analyst

Yeah, hi, sir, thanks a lot for the opportunity. Just one question. Since LLF, the new LLF policy has come out, could you — would you want to share some insights as to what you think CONCOR would do with some of its more profitable terminals? Would you want to go through a bidding kind of a system or want to retain these at existing LLF kind of structures?

V. Kalyana Rama — Chairman and Managing Director

Our business is well set with the existing LLF model. So we’ll not be doing any immediate changes in our LLF models. We will be continuously analyzing our scenarios, and if we feel that any place we can go for bidding, we will do that, otherwise, that is a risky proposition in established business putting it to a bid, somebody can play a spoilsport with us.

Inderjeet Bhatia — HDFC Securities — Analyst

So that means in the base case, INR450 crores and then on top of it, whatever escalation is described in LLF should be the number that we should work with?

V. Kalyana Rama — Chairman and Managing Director

I can’t do a guesswork for you, that is your job.

Inderjeet Bhatia — HDFC Securities — Analyst

No, okay, no worries. Thank you, sir.

Operator

Thank you, sir. The next question comes from Deepak Krishnan from Macquarie. Please go ahead.

Deepak Krishnan — Macquarie — Analyst

Yeah, thank you for the opportunity. Sir, I wanted to understand the rail coefficient at the three ports, JNPT, Mundra and Pipavav?

V. Kalyana Rama — Chairman and Managing Director

Rail coefficient of the total port?

Deepak Krishnan — Macquarie — Analyst

Of the three ports. So 18.2% at JNPT, 26% at Mundra and 70% was the rail share at each of these three ports. Could you give a similar number for Q3?

V. Kalyana Rama — Chairman and Managing Director

The Q3 number is not available with me, I can give you for nine months.

Deepak Krishnan — Macquarie — Analyst

Sure. Nine-month number would also be fine.

V. Kalyana Rama — Chairman and Managing Director

Then our people will reply to you. For nine months, JNPT rail coefficient is 18.13%, Mundra, 25.55% [Phonetic], and PPS — Pipavav is 66%.

Deepak Krishnan — Macquarie — Analyst

Sure, sir. So maybe just a follow-up question on this. So probably we have the DFC lag at least between, say, Rewari and Palanpur operational for the last six months odd. But we’ve not really seen any jump in rail coefficient or rail originating volumes, and as a result, even your originating volumes. Anything that you would want to attribute as to why originating volumes are decreasing when DFC is getting commissioned?

V. Kalyana Rama — Chairman and Managing Director

No, I — I’m not able to correlate the things what you are asking me.

Deepak Krishnan — Macquarie — Analyst

Sir, your EXIM volumes are down 15% originating…

V. Kalyana Rama — Chairman and Managing Director

You want to know, I’ve already given reasons why they’re down.

Deepak Krishnan — Macquarie — Analyst

And rail share is flat…

V. Kalyana Rama — Chairman and Managing Director

[Technical Issues] the whole businesses in India is going through some — the import, export volumes have not grown as we thought of. Isn’t it?

Deepak Krishnan — Macquarie — Analyst

Yes, sir.

V. Kalyana Rama — Chairman and Managing Director

So rail coefficient, if somebody is feeling that DFC comes it will jump just like that, it will not. So the coefficient [Phonetic] development also will take time.

Deepak Krishnan — Macquarie — Analyst

Sure, sir. Sure, sir.

V. Kalyana Rama — Chairman and Managing Director

There is a trend of moving from road to rail in certain sectors where DFC is serving.

Deepak Krishnan — Macquarie — Analyst

Okay.

V. Kalyana Rama — Chairman and Managing Director

That much I can share with you guys.

Deepak Krishnan — Macquarie — Analyst

Sure, sure. Okay, sir, that was my question. Thank you for the opportunity.

V. Kalyana Rama — Chairman and Managing Director

Okay, yeah.

Operator

Thank you, sir. The next question comes from Aditya from Kotak Securities. Please go ahead.

Aditya Mongia — Kotak Securities — Analyst

Yes, sir, good afternoon, everyone, and thank you for the opportunity. Sir, you did share about the Mundra market share for the Company at about 38%. What would be the number for Pipavav, sir, for you, the market share for third quarter?

V. Kalyana Rama — Chairman and Managing Director

I got full nine months figures.

Aditya Mongia — Kotak Securities — Analyst

Sure, sure.

V. Kalyana Rama — Chairman and Managing Director

I don’t maintain these quarter wise figures because that doesn’t matter to me. My total overall nine months figure for Mundra is 39% and for Pipavav, it is 48%. It is…

Aditya Mongia — Kotak Securities — Analyst

You said 28%, right? Okay.

V. Kalyana Rama — Chairman and Managing Director

Yes.

Aditya Mongia — Kotak Securities — Analyst

So, sir, these numbers have declined…

V. Kalyana Rama — Chairman and Managing Director

I have not said 28%. For Mundra, it is 39% and Pipavav, it is 48%.

Aditya Mongia — Kotak Securities — Analyst

48%, okay. So, sir, the second question was that there has been some amount of meaningful decline happening in Pipavav and Mundra, and you were saying that the reversal is happening in December. Can we completely recoup whatever market share we have lost over the last one year? Have we seen that happening in December and January?

V. Kalyana Rama — Chairman and Managing Director

See, in one quarter, entire thing for the three quarters, well, I will do it or not is, I don’t want to do a guesswork on that. But when I see the reversal, that is a good thing for me.

Aditya Mongia — Kotak Securities — Analyst

Understood.

V. Kalyana Rama — Chairman and Managing Director

See, when I can see a reversal without cutting out my margin, that is the best thing I can do and that is the best thing any company can achieve.

Aditya Mongia — Kotak Securities — Analyst

Understood, sir. Sir, the next question that I had was more on these announcements that we are hearing of ICDs coming up near your ICDs, I can recall ICDs…

V. Kalyana Rama — Chairman and Managing Director

They are coming up…

Aditya Mongia — Kotak Securities — Analyst

Coming near your ICDs. So let’s say in Dadri, in Moradabad and in Jaipur or Kanakapura, there are competing terminals coming up. Just wanted to get a sense from you whether that would lead to — are these…

V. Kalyana Rama — Chairman and Managing Director

Look, Aditya, these are very guesswork questions which you people try to give some sort of forecasting. See, what I can share with you, when I took over as CMD in 2016, a long back, okay, there were announcements that there will be 35 MMLPs will be made by some — different government agencies. Now, can you tell me how many MMLPs have come up till now?

Aditya Mongia — Kotak Securities — Analyst

No, it’s not been a great going for them, yeah.

V. Kalyana Rama — Chairman and Managing Director

How many have come up? You follow this sector very closely.

Aditya Mongia — Kotak Securities — Analyst

Wouldn’t want to hazard a guess, sir, but, yeah, but small number. It’s a small number.

V. Kalyana Rama — Chairman and Managing Director

[Speech Overlap] has come up. So these guesswork questions, know, let them come. See, we got our own strategies. So whenever we face competition, we know how to withstand the competition.

Aditya Mongia — Kotak Securities — Analyst

Well, I was just coming to this question, sir, that given the fact that there is a market share decline, is there a rethink on the pricing front or not or will there be a rethink on the pricing front or not?

V. Kalyana Rama — Chairman and Managing Director

Will there be?

Aditya Mongia — Kotak Securities — Analyst

A rethink on the way we price and on certain margins for our services?

V. Kalyana Rama — Chairman and Managing Director

We — you do our pricing. See, it’s not — see, when I’m telling you that I’ll come up with some scheme, one plus one scheme, is it not a pricing scheme? Is it something different? What you call it this?

Aditya Mongia — Kotak Securities — Analyst

This is something [Technical Issues], fair point.

V. Kalyana Rama — Chairman and Managing Director

It’s a pricing scheme. Whenever I do a pricing scheme, I mentioned this, we do net positive pricing schemes. So that I will not tell you how we do it, but that is our speciality. We never lose margins because of any of these pricing schemes.

Aditya Mongia — Kotak Securities — Analyst

Fine, sir. Just a last question from my side. Are ambiguities linked to the land license fee policy from the railways completely cleared now, sir, or are there still some ambiguities that you have to clarify with the railway?

V. Kalyana Rama — Chairman and Managing Director

There’s no ambiguity. From the railway side, the land license policy is now clear, and that is why I answered one of the questions which you must have heard that our figure, LLF for this year is INR450 crores. Whether we are completely putting INR450 crores on our balance sheet or less or a little more, that depends on the final adjustments of the land values by railways, by us, because we depend on revenue that is to give us the land values.

Aditya Mongia — Kotak Securities — Analyst

Yeah. So I’m also assuming that when you’re saying this that on this dichotomy whether to go to 1.6 [Phonetic], I think the rules are very, very clear. Whether you want to go for 1.5 [Phonetic] and bid for it is a separate thing, but there is no ambiguity over there, right?

V. Kalyana Rama — Chairman and Managing Director

There’s no ambiguity. There are certain conditions in that. See, there — then it is our call whether we take that or not. So a settled business where I’m running this Company well giving a PAT of INR1,200 crores for this FY, expected PAT, why should I take a risk if a established business putting on a block. So I will take a call, the management will take a call and with discussion with our Board of Directors, that is what I mentioned.

Aditya Mongia — Kotak Securities — Analyst

Thank you, sir. This was really helpful. Thank you for this. Those are my questions.

V. Kalyana Rama — Chairman and Managing Director

Yeah.

Operator

Thank you, sir. The next question comes from Pulkit Patni from Goldman Sachs. Please go ahead.

Pulkit Patni — Goldman Sachs — Analyst

Sir, thank you. Sir, firstly, originating volumes, I completely missed, it was spoken so fast. If I could have the numbers again, please?

V. Kalyana Rama — Chairman and Managing Director

You send a mail, we will give you.

Pulkit Patni — Goldman Sachs — Analyst

[Foreign Speech], this — please tell this because the mails don’t get answered. It will be helpful, it’s just two numbers I’m asking for?

V. Kalyana Rama — Chairman and Managing Director

You send personal mail to me, if your mails are not getting answered, you write a personal mail.

Pulkit Patni — Goldman Sachs — Analyst

Okay, I’ll do that, sir. Sir, secondly, given that you’ve mentioned that it takes time to develop the ecosystem. Is it fair to assume that next year also our capex is going to be much lesser than the typical run rate that we are envisaging?

V. Kalyana Rama — Chairman and Managing Director

No, no, no. We are going to develop the ecosystem next quarter, we are confident of that.

Pulkit Patni — Goldman Sachs — Analyst

So our capex for FY ’24 that we should be building in should be in the range of?

V. Kalyana Rama — Chairman and Managing Director

For next FY?

Pulkit Patni — Goldman Sachs — Analyst

Yes, sir, next FY.

V. Kalyana Rama — Chairman and Managing Director

Will be good number.

Pulkit Patni — Goldman Sachs — Analyst

Okay, sir. Thank you.

V. Kalyana Rama — Chairman and Managing Director

I’ll not use normally so much in advance any numbers, you know that. So it will be definitely a good number.

Pulkit Patni — Goldman Sachs — Analyst

Okay, sir, thank you.

Operator

Thank you, sir. We have a follow-up question from Achal Lohade from JM Financial. Please go ahead.

Achal Lohade — JM Financial — Analyst

Thank you for the follow-up, sir. If you could help on nine months FY ’23 in terms of JNPT, Mundra, Pipavav, so on and so forth?

V. Kalyana Rama — Chairman and Managing Director

Already given [Foreign Speech]. These numbers, you send a mail.

Achal Lohade — JM Financial — Analyst

All right, sir. And just a clarification on the margins, sir. You said the EBIT margins for domestic segment you kind of target 18%. But if I look at third quarter FY ’23, that margin is closer to 6%. So just thought of understanding how…

V. Kalyana Rama — Chairman and Managing Director

What 6%? Where from you got 6%, I don’t know. We work on EBIT margins of 18% in domestic.

Achal Lohade — JM Financial — Analyst

Sir, INR43 crores on INR719 crores of revenue.

V. Kalyana Rama — Chairman and Managing Director

We’re not debating by our platform. You send your mail and our Finance Director and ED Finance will answer all you queries, okay?

Achal Lohade — JM Financial — Analyst

Sure, sir, will do that. Thank you.

Operator

Thank you, sir. That will be the last question for today.

V. Kalyana Rama — Chairman and Managing Director

Okay, I think now the questions are over, we may close the conference.

Operator

Okay, sir. Thank you, sir. Now I hand over the floor to Ms. Bhoomika Nair from DAM Capital for the closing comments.

Bhoomika Nair — DAM Capital — Analyst

Yes, sir. Thank you very much for giving us an opportunity to host you and also answering all the queries. Thank you to all the participants. And wishing you all the best, sir.

Operator

Thank you, ma’am. Thank you, sir.

V. Kalyana Rama — Chairman and Managing Director

Yeah.

Operator

[Operator Closing Remarks]