Container Corporation of India Limited (CONCOR) Q4 FY23 Earnings Concall Transcript

Container Corporation of India Limited (NSE:CONCOR) Q4 FY23 Earnings Concall dated May. 19, 2023.

Corporate Participants:

Kalyana Rama — Chairman and Managing Director

Unidentified Speaker —

Mohammad Azhar Shams — Director, Domestic

Analysts:

Bhoomika Nair — Analyst

Amit Dixit — ICICI Securities — Analyst

Deepak Krishnan — Macquarie — Analyst

Atul Tiwari — Citigroup — Analyst

Abhishek Ghosh — DSP — Analyst

Ankita Shah — Elara Capital — Analyst

Abhishek Nigam — B&K Securities — Analyst

Unidentified Participant — — Analyst

Achal Lohade — JM Financial — Analyst

Mukesh Saraf — Avendus Spark — Analyst

Vikram Suryavanshi — PhillipCapital — Analyst

Raghavendra Rathore — Dolat Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Container Corporation of India Limited Q4 FY ’23 Earnings Conference Call, hosted by DAM Capital Advisors Limited. [Operator Instructions]. Please note that this conference is being recorded.

I now hand the conference over to Ms. Bhoomika Nair from DAM Capital Advisors. Thank you, and over to you, ma’am.

Bhoomika Nair — Moderator

Yeah, thanks. Good morning, everyone, and a warm welcome to the Container Corporation of India Q4 FY ’23 Earnings Call. We have the management today being represented by Mr. V. Kalyana Rama, Chairman and Managing Director; and his entire senior team.

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

Kalyana Rama — Chairman and Managing Director

Thank you, Bhoomika, and good morning to all of you. Thank you for joining for the conference call and to share our views on our business and the future. Last year, we could achieve around 7% growth in our volumes. Even the EXIM, yes, there is a strain on volumes in EXIM, we are facing So,me headwinds. We are working on them. So, let me share with you some customers are taking some positions because continued uncertainty going about the divestment, but then we found the solutions for that, and we are positively getting the response for that, and we are working on that.

Very interesting thing which happened in the EXIM sector is the direct connection to Dadri from — for the DFC. So, that has enabled us to run the double stack [Technical Issues] from the Dadri to Mundra and Pipavav and the time taken is less than 24 hours, So, a lot of diversion of road cargo to rail, we are expecting in that, even times in cargo, lite cargo. We also, started the movement of reefer containers and double stack from Dadri. That’s a new thing we started. So, with all these developments this year, we will be able to withstand the headwinds from the cargo.

Domestic we are doing very well. This is the third year where we could see a good growth in domestic. On revenue side, we grew by 25%, on the volumes by almost 15%. This year also, we are working out to grow in the same manner, maybe our targets are very high, but there are certain insights in that. The main constraint is the container availability because we stopped importing from China and we are developing [Technical Issues] Bharat. We released 19,000 containers manufacturing in India. But the ecosystem development is still taking time. So, the container manufacturing is not going at the pace which we expect and which we want. So, there is a shortage of domestic container. As of now, we are able to maintain our supply lines. But to grow faster, we require more containers.

So, we are working on different aspects like getting some containers on lease. We are working on that. And also, we are releasing further orders for container manufacturing to make — the interest that were generated in more and more manufacturers. So, there are a lot of effort is going on in this direction. Wheel and axle, there is an issue, availability in India. So, we are working with railways and we are working with other manufacturers for developing these wheel and axle. And to get wheels rolled out from wagon manufacturers. So, that also, we are working on. Of course, these two constraints will be there in the — towards the growth. But we are hopeful that we will be able to overcome these constraints. And with that, the domestic growth, we expect this year to be very good.

In EXIM, the export import scenario is one worrisome factor because the economies in the Western world and the other places are not very encouraging. The commentary is what we are hearing. There is the issue of the recession that also, people are talking of but the domestic side, India is growing. And if the EXIM scenario increases, we will get more growth. And as of now, with existing EXIM volumes, we are trying to get more share. Our share is getting affected that we are working on to recover back that share about where we were. And this double-stack operations and other schemes, which we are coming out like the existing schemes, which are running off 50% discount on MT repositioning from port to interland and one plus one scheme we introduced last year. We are seeing a lot of good tailwinds in that. So, we will be able to get some more schemes coming out with those schemes as the things progress.

So, as of now, I’m not very much worried about the scenario for the next financial year, even though the task is very tough on the EXIM side, but I’m hopeful that my team will be able to come out with new things and we’ll be able to withstand all these pressures, and we will be able to get the growth, which we always start with around 10% to 12% growth for the year. This year also, we are starting our financial year, we started with the same assumptions, and we are working towards that. Rest of things I will answer as we think as the conference progresses. Thank you.

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 Securities.

Amit Dixit — ICICI Securities — Analyst

Yeah, good morning, everyone. Thanks for taking my questions sir. I have two questions. The first one is on capex. In the last con call, you rightly indicated that capex would be back ended, and we have seen capex increasing in Q4. So, if you can just highlight the main areas of capex last year in FY ’23? And how much capex can be expected in FY ’24 and in what areas? That is the first question.

Kalyana Rama — Chairman and Managing Director

Yeah, [Technical Issues] will answer your first question.

Unidentified Speaker —

Yeah, as far as the capex is concerned, we have got investment into going into terminal, the rolling stock that is wagon, procurement of containers. So, we had four new terminals last year and we are hoping to commission another four terminals — another five terminals in FY ’24. Our rolling stock, we are expecting to add anything between 24 to 36 trains in FY ’24. So, that we are expecting a capex of about INR600 crores in FY ’24. This time [Phonetic] we have got INR560 crores last year.

In INR560 crores, the major investment has been made in rolling stock related activities. Although we have not got the rolling stock typically, we are expecting them delivered this year but we have invested in getting new wheels and rolling stock component manufacturing activities and axles. So, the major part that is about INR300 crores we have spent on rolling stock alone.

Kalyana Rama — Chairman and Managing Director

So, this year also, the major portion of the capex expenditure will be on the rolling stock and the handling machinery.

Amit Dixit — ICICI Securities — Analyst

Okay. That’s very clear, sir. The second question is on margins. Now if I look at your margins from Q2, margins have gone one way down, from 25% EBITDA margin, I’m talking about 20.4% in this quarter. And since you have highlighted that actually there is the EXIM — there is a strain on EXIM volume. So, while I’m not asking you to crystal gate and tell us the margins, just wanted to get what kind of EXIM growth are we targeting? And what kind of MT running cost was there in this quarter?

Kalyana Rama — Chairman and Managing Director

See as I mentioned in my comments, I look at — try to achieve the 10% growth in EXIM volume also. As I already mentioned in my inaugural remarks that the EFC running now is going to help us. So, that is where we are putting our cards, and we are trying to work on the positive impact, which it can bring on. So, to start with, we will work with that 10%, but things are not very encouraging in EXIM. EXIM’s actual export import scenario itself is not very good. The Indian exports are under strain like handicrafts are not going, merchandise exports are less, except primary agro exports, other exports are less and there is a lot of empty container inventories building up in India. It’s one way is good that export freight rates have come down, but the export scenario is not good, that is why the empty containers inventory is increasing.

Now coming to — as I said, even though exports may not increase, but the existing EXIM volume, our share has come down. The last year, we lost some percentage share, now we’re working up to regain that share back. So, that is the main trust area this year we are concentrating. So, that will — we will get back our share, so, that will increase our EXIM volumes. And also, we are working on increasing our margins by improving more and more double stack. So, there is a possibility of increasing double stack because [Technical Issues] directly.

And also, domestic, we are trying to bring in to double-stack operation. This is a new thing. So, that — because now we got to hops on DFC, one is [Indecipherable] Palanpur, then one in Dadri and CR. So, between these two halfs, the distances is around 650 kilometers. We are working on bringing even domestic onto double stack. That will also, increase some margins for domestic as well, So, these are all the things we are working on. So, this is a continuous improvement to our as we keep on doing. So, with that, maybe we will be able to maintain our margins.

Amit Dixit — ICICI Securities — Analyst

Okay, great. And the empty running cost in this quarter EXIM and domestic?

Kalyana Rama — Chairman and Managing Director

Empty running — INR94 crores [Foreign Speech] domestic is INR87 crores and EXIM is INR7 crores.

Amit Dixit — ICICI Securities — Analyst

Great, thanks a lot and all the best.

Operator

Thank you. The next question is from the line of Deepak Krishnan from Macquarie. Please go ahead.

Deepak Krishnan — Macquarie — Analyst

Sir, I just wanted to understand, you said you’ve lost market share. So, maybe could you share the overall market share number at the end of the year? And also, port wise where are you in terms of market share in Mundra, [Indecipherable]?

Mohammad Azhar Shams — Director, Domestic

I am Director Domestic, Mohammad Azam Shams. Would you please repeat your question? Do you want to know the port share of CONCOR or what share you are talking about, please.

Deepak Krishnan — Macquarie — Analyst

So, overall share in grain, like you’ve indicated you have lost share. Last quarter, you indicated you were at 58%. So, I want to know in the CPO market, what is CONCOR share? And individually at JNPT port, Mundra port and [Indecipherable] port, what are the market shares? Like last quarter, you had indicated about 79% at JNPT, 38% at Mundra and 48% at [Indecipherable], so a similar number.

Mohammad Azhar Shams — Director, Domestic

Actually, this overall share of CONCOR combined together, if you talk about the whole of this centralized movement taken place…

Deepak Krishnan — Macquarie — Analyst

Only in EXIM, sir.

Kalyana Rama — Chairman and Managing Director

Unfortunately, that is not very available because Director of International Marketing, Sanjay Swarup is not here. So, you send that by e-mail, we will answer you.

Deepak Krishnan — Macquarie — Analyst

Sure sir. So, maybe, then, we just wanted to understand, there has been a substantial jump in other expenses this quarter. Has there been any sort of one-off costs or any factors that has caused because our segmental margins are quite strong, but [Indecipherable].

Mohammad Azhar Shams — Director, Domestic

[Speech Overlap] You are talking about other operating expenses?

Deepak Krishnan — Macquarie — Analyst

Yeah, so, I can just give you the number as well in case that sort of helps you.

Kalyana Rama — Chairman and Managing Director

So, in other operating expenses is not much that we have enhanced, except for the factor in TKD depot, there were some MTD tax issue over there. And in Mulund before, there were some that was made for dispensing with some hazardous containers. These are the two culprits because of that, we have taken some hit in that area. Rest it is as usual.

Deepak Krishnan — Macquarie — Analyst

But if I look at — sir, is just other operating expense and other expenses as well which is closer to about INR103 crores this quarter in stand-alone loss is INR59 crores — about INR59.78 crores the previous quarter. So, Q-on-Q, there’s been a doubling whereas revenues are at similar level.

Kalyana Rama — Chairman and Managing Director

No, in other operating expenses — we have gone down to INR134 crores in administration and other expenses, yes, from INR268 crores to INR312 crores that is INR40 crores that have gone up, right.

Deepak Krishnan — Macquarie — Analyst

Yes, sir.

Kalyana Rama — Chairman and Managing Director

So, this INR40 crores I told you, there are around INR10 crores as we pay it [Indecipherable] for MTD taxes that were — some dispute was going on and under the cost model, we have to pay that.

Apart from that, there is some repair and maintenance we have taken in our depots that INR14 crores and INR15 crores. INR3.74 crores has gone to the [Indecipherable] I have mentioned to you for disposing some hazardous materials. And CISF payment has gone up by INR5 crores in this FY. And there’s something — we are doing in this bulk cement business, where we have booked around INR2 crores. So, that INR25 crores [Indecipherable] of expenses that has gone up. But if you look at other operating expenses, there, we have gone down from INR138 crores to INR184 crores.

Deepak Krishnan — Macquarie — Analyst

Yeah, maybe just one, if I can squeeze in. Could you just share your originating volumes for the quarter?

Unidentified Speaker —

Originating volume?

Deepak Krishnan — Macquarie — Analyst

Yes.

Kalyana Rama — Chairman and Managing Director

[Speech Overlap] It is INR191,879 lakh for FY. And for domestic business, it is INR440,878 crores.

Deepak Krishnan — Macquarie — Analyst

Sure, sir. So could you just repeat the EXIM INR19lakhs?

Kalyana Rama — Chairman and Managing Director

INR1,918,079 lakhs that is EXIM originating volume and domestic INR440,878.

Deepak Krishnan — Macquarie — Analyst

Sure, sir. So those are my questions and thanks for the opportunity.

Operator

Thank you. The next question is from the line of Atul Tiwari from Citigroup. Please go ahead.

Atul Tiwari — Citigroup — Analyst

Yes, sir, thanks a lot. Just wanted to get your view on the margin profile for domestic business. And the context is that is there — obviously, the company has done very well. And on a per TEU basis, even at this level of volume, it is almost similar to EXIM. So, margins have really expanded. So, if the volume ramp up from here, can we potentially look at further expansion in per EBITDA of domestic business? And can it even go higher than EXIM?

Kalyana Rama — Chairman and Managing Director

See, Atul, domestic margin our TEU are trying to improve upon, but they’re always not comparable to EXIM volumes every movement is paid for us because we undertake movement on behalf of the shipping line other customers. In domestic, if there is an empty repositioning, it is at our cost. So, that is where actually we take a hit on our margins. So, our — always our endeavor is to reduce as much empty running as possible. As the business grows at a faster pace — there is always an inherent empty repositioning involved in this. Till we get a better [Indecipherable] build up for the new business we are getting. So, this is — the margin expansion cannot be much faster.

In fact, to improve our margins in domestic, what we are working on is we are adding value-added service. So, value-added services in the form of first mile, last mile deliveries, business support solutions and distribution logistics, which we are — I’m talking over the last four, five years, now — we now to start off as early as possible. That is a total asset-light business. So, with these things, we want to improve our margin for domestic business.

Atul Tiwari — Citigroup — Analyst

Okay, sir. And sir, just a second question on the EXIM originating volume. So, the number that you gave 19,18,000 for this year, if I like look at the history, I mean, we raised a similar number, say, in FY ’15 also, so, almost like seven, eight years and it has been kind of flattish. So, what is the strategy to kind of grow number from here?

Kalyana Rama — Chairman and Managing Director

You can’t take 116 and 123 and say flattish. There was a growth in between. Now it has come down actually. I already told you we lost some market share. There is a lot of competition for us and the uncertainty of divestment, some customers are taking some positions. So, this actually, we lost some volume of EXIM in the last year. We lost our market share. So, we come out with a new scheme in the month of November 1, one plus one scheme. So, after a pressured volume, if anybody offers as one loaded container, we’ll move on empty container free. So, that is one scheme, which has been taken up by all my customers very enthusiastic and the volumes are increasing. We are already continuing our empty repositioning scheme, So, we are now working on coming up with some new schemes.

As I said, reefer containers we put on to double stack. We are going to come out with some scheme with reefer containers. So, these are all the things which we are coming out to withstand the competition and also to overcome the uncertainty problems, which we are having for four years. So, we are working on that.

Atul Tiwari — Citigroup — Analyst

Okay. And sir, finally, very quickly, could you say that domestic originating volume number, again, I missed that, sorry. Domestic originating volume?

Kalyana Rama — Chairman and Managing Director

[Foreign Speech].

Atul Tiwari — Citigroup — Analyst

Okay, sir.

Kalyana Rama — Chairman and Managing Director

Can we go to next question please.

Operator

Yes, sir, thank you. The next question is from the line of Abhishek Ghosh from DSP. Please go ahead.

Abhishek Ghosh — DSP — Analyst

Yeah, hi sir, thanks for the opportunity. Sir, just wanted to — just on the market share loss part of it, just wanted to understand one thing. Is it because of supply addition, terminal addition by competition? Or is it a pricing strategy that has been taken by competition that has led to market share loss?

Kalyana Rama — Chairman and Managing Director

Both are there, both play a factor because the competition, pricing strategy is CONCOR minus. So, there is operating strategy. If I say, my price is X, they will say X minus 3000 and competition is not the other people operating on the rail alone. So, we don’t see that as a very big competition. Competition is road as well. Road network is improving, a lot of expressways are coming up and the things are moving very fast. So, we have to match that. These are the two factors.

Abhishek Ghosh — DSP — Analyst

And sir, since you also, spoke about the market share loss in the last quarter as well, is it fair to assume that the market share loss has now at least got arrested and it will be stable now. Is it fair to assume that?

Kalyana Rama — Chairman and Managing Director

In fact, you can assume positively, if you think positive. That is the essence of life. So, what we are working on to take more market share, stabilize market share.

Abhishek Ghosh — DSP — Analyst

Great. And sir, just one last thing on the domestic part of the business. Is — how has been the traction on the cement part of this thing, if you can just enlighten us with that?

Kalyana Rama — Chairman and Managing Director

We did handle around 3,700 — 3,800 containers last year. — So, last month, in the month of March, we touched 800. So, there is a lot of interest. Now the things are stabilized. So, — but there is [Technical Issues] that is a major issue. So, we are not really pushing it very fast. We require 25,000 more containers, but India container manufacturing industry has yet to pick up. So, we are working in a balance way.

Abhishek Ghosh — DSP — Analyst

Got it, okay. Sir, thank you so much for answering my questions and wish you all the best. Thanks.

Operator

Thank you. The next question is from Ankita Shah from Elara Capital. Please go ahead.

Ankita Shah — Elara Capital — Analyst

Yes, thank you for the opportunity. So sir, my question is on LLF what would be the LLF amount this year, FY ’24?

Kalyana Rama — Chairman and Managing Director

So, you want to know what we paid this year or what you’re expecting to pay this year? Or what are you expecting to pay this year? What is your question.

Ankita Shah — Elara Capital — Analyst

Expecting to pay this year at ’24.

Kalyana Rama — Chairman and Managing Director

So, actually, you can see that on an actual basis, if you recall our con calls in Q1 and Q2, you mentioned very clearly that for the FY ’22, ’23, we were paying on actual basis because by the time we have got all the rates of the [Indecipherable]. Last year, we ended up paying around INR392 crores. So, add 7% on that. So, that comes out to be something around INR430 crores.

Ankita Shah — Elara Capital — Analyst

Okay, and no more adjustments to the number or the land terminals [Speech Overlap].

Kalyana Rama — Chairman and Managing Director

As we disclosed you last year also, that we have already made provisions of around INR70 crores with us. So, by and large, most of the places we have already reconciled the things with Indian Railway. Few parcels are still there, but we have got enough questions with us [Speech Overlap]

Operator

Sir, sorry to interrupt you. You are sounding a bit distance sir. May I request you to come closer to the speaker phone.

Kalyana Rama — Chairman and Managing Director

Okay. So, what I was mentioning that we have got enough cushion with us in provisioning in FY ’22, ’23 — ’21, ’22, so, that provision is already there, and we are in the mode of reconciling things. Most of the things have been done with Indian Railway. And a few cases where if any further payment is required, within provision already exists. So, this applies whatever we are required to pay is on actual basis, that is INR392 crores plus 7%. This is what we are planning to pay. I hope I am clear.

Ankita Shah — Elara Capital — Analyst

Yes, sir absolutely. Sir, secondly on the realization part, so do we see more pressure on the realization for what the EXIM and what about the domestic time. How much should we take that, moving forward?

Mohammad Azhar Shams — Director, Domestic

I think Ankita I answered this question now for two-three guys.

Ankita Shah — Elara Capital — Analyst

Sir, on the realization part, you said you mentioned about the market-share and, and the volumes [Speech Overlap]

Mohammad Azhar Shams — Director, Domestic

Margins also, there is a pressure. So, that is a realization is, is it not. So, margin, there is a pressure on EXIM. We are trying to be trying to get our market share back. So, we will be coming out with schemes. But that pressure on to stand by improving our double-stack operation from Dadri and try to reduce more and more empty running. In domestic, as I said, the secured building, which we do as we add new traffic, there will be more of empty running. Then we will start for more traffic in the reverse direction, and we build the circuit. And also, we are adding value-added services.

Ankita Shah — Elara Capital — Analyst

Got you. Lastly, just if you can share the double stacking of trains that you run.

Kalyana Rama — Chairman and Managing Director

We said that last year, 4,100 double stacks, compared to 3,750 a year before. This year, we are trying to bring domestic into double stacks. So, our aim and my target to my team is that we must cross 5,000 double stack this year.

Ankita Shah — Elara Capital — Analyst

Okay, sir. Thank you.

Kalyana Rama — Chairman and Managing Director

Okay.

Operator

Thank you. The next question is from the line of Abhishek Nigam from B&K Securities, please go ahead.

Abhishek Nigam — B&K Securities — Analyst

Yeah, hi, thanks for the opportunity. Sir, if you can just update us on the five new terminals. Where are they coming up? And will they commence operations in FY ’24 or ’25?

Kalyana Rama — Chairman and Managing Director

Yeah, we are coming up. One is in there is Nagpur [Technical Issues] the Kalinganagar steel cluster that very large still cluster. Then the second one, we have got one on competition on [Indecipherable], then we are building [Technical Issues] which has been notified, but it will be connected to DFC on the other side. Then we are also, planning a terminal on south of Delhi for which land acquisition is under discussion with the Haryana government. Then another terminal we are trying to have in Punjab. So, about five terminals we are planning for FY ’23, ’24.

Abhishek Nigam — B&K Securities — Analyst

Okay. So, ’24, ’25.

Kalyana Rama — Chairman and Managing Director

These are for ’23, ’24.

Abhishek Nigam — B&K Securities — Analyst

So, okay, calendar year ’23, ’24. Fair enough. Fair enough. And just on the DSP, if you can — whatever latest updates, if you have any thoughts on — especially for the final connectivity for JNPT.

Kalyana Rama — Chairman and Managing Director

Yeah, DFCCIL. You add DFCCIL, okay.

Abhishek Nigam — B&K Securities — Analyst

Fair enough. Okay, okay. Thank you.

Operator

Thank you. The next question is from the line of Achal Lohade from JM Financial. Please go ahead.

Unidentified Participant — — Analyst

Yeah, good morning sir and thank you for the opportunity. My first question was, what is the contribution in terms of the volume sourced by our associates or trade partners, which is coming on to our rigs for FY ’23?

Kalyana Rama — Chairman and Managing Director

What is associate trade partner, what is that?

Achal Lohade — JM Financial — Analyst

Associate or trade partners who are sourcing the volumes and are using our rigs for the movements.

Kalyana Rama — Chairman and Managing Director

We call them business associates, for domestic volume, except corporate customers, everything will come through BAs only. So, the volume will be something like 60% is to BAs. So, 60% of domestic volume is through associates. Hello? Hello?

Achal Lohade — JM Financial — Analyst

Can you hear me?

Operator

Yes.

Achal Lohade — JM Financial — Analyst

Sorry, sir, I couldn’t hear in between. You said 50% of the domestic volume is through business associates, right? Have I got the number right.

Kalyana Rama — Chairman and Managing Director

60%.

Achal Lohade — JM Financial — Analyst

60. okay. And how about EXIM, sir?

Kalyana Rama — Chairman and Managing Director

EXIM there is no associate, EXIM they are not booking at the terminal. There is no concept of associate in EXIM. Where from you got this concept?

Achal Lohade — JM Financial — Analyst

No, I’m just asking, sir. Domestic I was aware, So, that’s why I wanted to know the percentage.

Kalyana Rama — Chairman and Managing Director

In EXIM, it is directly the CHAS, the exporters, importers, some in imports, it is entirely through shipping lines. All the imports, shipping lines are our customers. shipping line directly give us the volumes. On export side, now the scenario is shipping lines offer at some places, CHA offer at some places. There are some players that directly customers are offering, it’s a mixed bag.

Achal Lohade — JM Financial — Analyst

Understood. Sir, sorry, I’m hopping on the market share question. Is the market share loss at a particular port terminal? Or is it at a particular pocket, ICD pocket? Can you clarify a little bit on that? Or it’s across the board, sir in the EXIM segment?

Kalyana Rama — Chairman and Managing Director

EXIM segment, major — basically, the competition, which we feel is on the — this Western sector, particularly Mundra and NCR sector that is where the competition is really tough and where we lost some market share, we are working on that.

Achal Lohade — JM Financial — Analyst

Got it. Sir, just the margin guidance with respect to EXIM and domestic for the full year, sir. That’s about it from my end.

Kalyana Rama — Chairman and Managing Director

Margin guidance, as I said here in my opening remarks, we will try to maintain the same margins.

Achal Lohade — JM Financial — Analyst

Of fourth quarter. Have I got it right, sir?

Kalyana Rama — Chairman and Managing Director

What we have seen this financial year.

Achal Lohade — JM Financial — Analyst

Financial year. Okay sir.

Kalyana Rama — Chairman and Managing Director

We don’t work on quarter-on-quarter, no. So, that people try to do it because the long-term investors I got. They don’t bother or quarter-on-quarter performance, they look at for the next five years performance.

Achal Lohade — JM Financial — Analyst

Absolutely, thank you.

Operator

Thank you. The next question is from the line of [Indecipherable] from Nomura. Please go ahead.

Unidentified Participant — — Analyst

Thank you, sir for the opportunity. Sir, my first question is, as you had indicated that the number of double-stacking will increase from 4,100 to around 5,000, so if that happens, to what extent should our EXIM profitability should go up?

Kalyana Rama — Chairman and Managing Director

As I said in many conferences, people are listening to me for the last seven years, I don’t do these guesswork. See, there will be definitely increase in margins. What percentage, how many percentage [Speech Overlap].

Unidentified Participant — — Analyst

Sir, you’re guiding for same margins in EXIM.

Kalyana Rama — Chairman and Managing Director

There are factors we are getting affected by the competition. Some headwinds against us. So, we are working on maintaining the same margin in large streak business, what we got for this finance layer in itself a very tough task and it’s — the margins at this level, logistics business is very tough. I don’t think any other logistics operator are coming up with these margins.

Unidentified Participant — — Analyst

That is true.

Kalyana Rama — Chairman and Managing Director

Thank you for accepting.

Unidentified Participant — — Analyst

So, sir. And one more thing, sir, you have been highlighting about the first mile and last mile to improve the services to your customers. So, at this point, how much of a network like in terms of terminals, do we have this full first mile and last mile coverage.

Kalyana Rama — Chairman and Managing Director

We got now almost all terminals covered under first mile last mile, okay? Growth alSo, is very good in that. So, like last year, we handled almost more than 0.5 million TEUs. So, our target is 50% [Technical Issues] handle, something like we handle originating volumes of 2.2 million to 2.3 million. So, we want to handle almost 1 million, 1.25 million TEUs under our FMLM in this or by the next financial year. That’s our target. We are working on that.

And moreover, to improve the productivity on the FMLM side, what we are trying to do, we ordered 100 LNG trucks. Order is already placed. In fact, if you people followed the Honorable Transport Minister, Shri. Nitin Gadkari, he mentioned in one of his speeches that he inaugurated the first LNG truck from the Pune company. So, that is there where we placed our orders, 100 LNG trucks. So, these LNG trucks we’ll be introducing, and we will be putting our LNG station in our own terminal. We are already tying up with the oil companies. There are oil companies that are also, very much interested. So, once we start with this, when we experience this for two, three months, then we will proliferate this across all our main terminals with LNG transportation. And let me tell you the LNG transport will be at the 50% cost of diesel transport.

Unidentified Participant — — Analyst

So, the running cost would be like 50% lower for the LNG trucks, So, something like that.

Kalyana Rama — Chairman and Managing Director

Yes. So, that is not 50% of the cost. There are other costs. So, the fuel cost in the local transportation is something like you can account it for 42% to 45%. So, you will save at 20%, 25% of money in the local transportation.

Unidentified Participant — — Analyst

Okay. Okay, sir. And sir, just if I may squeeze just one more in. So, your double stacking has risen very sharply like FY ’23 versus FY ’22 but the increase in profitability in EXIM sort of range bound. I mean, is there any other factor that we need to be aware of, like what is like preventing the EXIM margins from going up. I understand it’s one of the highest in the industry, but still.

Kalyana Rama — Chairman and Managing Director

See, the empty running cost railways, you were giving 25% discount on empty in ’21, ’22. Now last year, it is withdrawn. And then there is a 5% reduction in the load run that is reduced, but we have not increased our rates. So, we have absorbed these costs, 25% in the empty, not that and when I say empty, empty container movement as well. And all that 25% cost in domestic as well as in EXIM also, we absorbed and 5% increase in lower runs we absorbed. So, these are all the pressure on the margin.

So, that is where we could maintain our margins only with a little bit of pressure on margins because of our improved double stack, improved operations and faster turnaround of rigs.

Unidentified Participant — — Analyst

Yes sir, that is very clear.

Operator

Thank you. [Operator Instructions] The next question is from the line of Mukesh Saraf from Avendus Spark. Please go ahead.

Mukesh Saraf — Avendus Spark — Analyst

Yes, good afternoon and thank you for the opportunity. My first question is, again, on the market share, but you had commented that road transportation is also getting extremely competitive. Sir, the backdrop of double stacking, DFC, timetable change, we were actually expected the opposite where rail have gotten a lot more competitive. So, just trying to understand what are the reasons that road is also, gaining share over rail or getting [Speech Overlap]

Kalyana Rama — Chairman and Managing Director

Have I said that, that road is gaining share.

Mukesh Saraf — Avendus Spark — Analyst

No. I mean, okay. It is competitive because of which it’s probably impacting your margins or market share?

Kalyana Rama — Chairman and Managing Director

Competition is a word that means road is not giving us. So, as we are improving things, there are improvements in growth also, there are expressways coming up. There is Delhi Mumbai expressway, Honorable Ministry starting up moving in 16 hours from Delhi to Mumbai. Yes. So, when I say competition doesn’t mean that and they are gaining. Now that you should never understand like that. Competition means they are also, equally improving things. So, we have to keep on improving our things to maintain our share as well as our margins.

Mukesh Saraf — Avendus Spark — Analyst

Right. But is it fair to assume road has not lost share, sir? Because in the last two, three years with DFC and double stacking, we assume there will be a movement from road to rail. Is that happening or not?

Kalyana Rama — Chairman and Managing Director

To gain share. Now I see, I don’t maintain the entire All India statistics. So, these figures, we have to see. But how much road has gained, how much rail has gained, we have to see. But definitely, we gained some traffic because of the double stack running, we are doing and the dust DFC connection, Dadri happened this year. So, this year, we are definitely expecting more volumes to come to us when we are seeing the traction. When I tweeted on my handle about the double connection of Dadri directly into Mundra, because we have number of rigs. There’s so, much of interest in that.

Mukesh Saraf — Avendus Spark — Analyst

Okay. Okay. Okay. So, we should assume that probably with more connectivity now, this could be an inflection point, we could gain a lot more share from road going ahead, sir?

Kalyana Rama — Chairman and Managing Director

You’re a bull or a bear tell me, then I will tell what we think.

Mukesh Saraf — Avendus Spark — Analyst

No. But on the ground, you would be better given [Indecipherable].

Kalyana Rama — Chairman and Managing Director

Definitely, we see from Dadri to Mundra now the container is moving within 24 hours.

Mukesh Saraf — Avendus Spark — Analyst

Sure. Sure. Sure.

Kalyana Rama — Chairman and Managing Director

No road can take this 24-hours to Mundra by all expressways. JNPT connection with the dedicated freight corridor, I can’t comment on that. I think if something happens, that we will be definitely compared with the Mumbai Dehli expressway. Mumbai Dehli expressway, somebody is talking of 16 hours, that is for a car. If somebody is driving with non-stop, that is a — so, a truck will take maybe 30 hours if you go with a double driver. So, when there is always a rail — dedicated freight corridor we didn’t ever as to get is these are all the improvements, which are coming in rail sector, they will be competing with the road. So, road is doing compitition. Rail also, has to keep on improving things.

Mukesh Saraf — Avendus Spark — Analyst

Got it. Got it. Got it. And secondly, sir, what is the rail freight margins in this fourth quarter?

Kalyana Rama — Chairman and Managing Director

[Foreign Speech] 26%.

Mukesh Saraf — Avendus Spark — Analyst

And lastly, the lead distances if you could give for both domestic and EXIM.

Kalyana Rama — Chairman and Managing Director

Lead distances are almost same. For the lead distance you want to know for what, for the quarter?

Mukesh Saraf — Avendus Spark — Analyst

Yes, for the quarter, if you can.

Kalyana Rama — Chairman and Managing Director

Quarter it 657 that may do in domestic, 342 EXIM, 1382 domestic.

Mukesh Saraf — Avendus Spark — Analyst

Sure. Alright sir, thank you so much.

Operator

Thank you. [Operator Instructions] The next question is from the line of Vikram Suryavanshi from PhillipCapital.

Vikram Suryavanshi — PhillipCapital — Analyst

My questions are answered. Thanks.

Kalyana Rama — Chairman and Managing Director

Okay, Vikram, thank you.

Operator

Thank you. Next question is from the line of Raghavendra Rathore from Dolat Capital. Please go ahead.

Raghavendra Rathore — Dolat Capital — Analyst

Yes, sir, I just wanted to know that the capex plans that we had at the start of FY ’23 that we would be spending around INR8,000 crores to INR10,000 crores in the next three to four years. I think this year, we won’t be on track due to the domestic ecosystem. So, what is in the medium term, is the plan still on for the capex.

Kalyana Rama — Chairman and Managing Director

The plan is on. We will be spending that money because our plans to acquire 260 rigs, 270 rigs in that we got now 33 rigs. The remaining rigs, we will be acquiring in next three to four years, we are working on the ecosystem. So, there is a 237 rigs leftover. Each rig about INR14 crores to INR15 crores, you calculate, you take down your pen and paper, note down these numbers. We want to increase our domestic containers, our holding of containers over next five years to something like one lakh to two lakhs, depending on the demand. Now each container foot 400,000 calculate yourself. So, plans are there.

So, how we have to develop the ecosystem, that — then the capital expenditure will take. That’s what I said. Is it quarter-on-quarter, our investors are not looking at. Our investors are looking at what in the next five years, we are going to do. In the next five years, our plans are intact. As I mentioned, that INR8,000 crores INR10,000 crores, we will be investing into the rolling stock, into the terminals, into various other things. it is still there, and it is how — it will happen.

Raghavendra Rathore — Dolat Capital — Analyst

And sir, what would be your guidance on the additional benefits of this capex in the medium term on our top line?

Kalyana Rama — Chairman and Managing Director

My guidance for this financial year, we will try to maintain our margins. We will try to grow at 10%, what we always aim at and then we’ll see how things will go. So, there is no guidance I can give you beyond one year. We don’t view that guidance.

Raghavendra Rathore — Dolat Capital — Analyst

And sir, the EBITDA margins sequentially or contracted, is there any one-off? Or what are the reasons behind that?

Kalyana Rama — Chairman and Managing Director

EBITDA margins. That one-off question [Indecipherable] has answered. It’s very less, very small one-off we did. So, there is not much a one-off. The personal margins, and we will be working towards maintaining the same margins as we see for the next current as the previous efforts.

Raghavendra Rathore — Dolat Capital — Analyst

Okay thank you sir.

Operator

Thank you. [Operator Instructions]

Kalyana Rama — Chairman and Managing Director

If there are no further questions, I think Bhoomika can end that. Bhoomika?

Operator

Sir, we have one follow-up question. Can we take that? This is from Achal Lohade from JM Financial.

Achal Lohade — JM Financial — Analyst

Yeah, thank you for the follow up sir. Sorry, I just wanted to know in terms of market share for the full year for domestic and EXIM, if you could specify, sir, I know you said the market share is not available, but just the park contraction, how much is the contraction in the EXIM for full year?

Kalyana Rama — Chairman and Managing Director

You want figures. You want to know the policy and the trends I think I can comment. If you want exact figures, what I suggest you, is that is if you could send mail my secretary will reply to you.

Achal Lohade — JM Financial — Analyst

Sure. Just another statistic with respect to the rail co-efficient and the port mix?

Kalyana Rama — Chairman and Managing Director

Again, you want numbers or you want to know the trend?

Achal Lohade — JM Financial — Analyst

Trend, if you could specify the numbers, I will send the email.

Kalyana Rama — Chairman and Managing Director

In trend, we lost some share. In rail share, we lost some share in the EXIM segment. In domestic, we are doing very well. In EXIM market, we almost command 90% share on the containers, which are moving by rail. But in EXIM segment, we lost share where we are working on to gain back that share.

Achal Lohade — JM Financial — Analyst

I meant rail coefficient at ports or aggregate ports. If it is 22%, it has improved or declined or anything of that.

Kalyana Rama — Chairman and Managing Director

I cannot give you those figures. I told you, you send mail, you get the figures.

Achal Lohade — JM Financial — Analyst

Sure, thank you sir.

Operator

Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference over to Ms. Bhoomika Nair for closing comments. Thank you, and over to you mam.

Bhoomika Nair — Moderator

Yes, I would like to thank everyone, and thank you to the management for giving us the opportunity to host this call. Thank you very much, sir, and wishing you all the very best.

Kalyana Rama — Chairman and Managing Director

Thank you. Thank you Bhoomika.

Operator

[Operator Closing Remarks]