Gateway Distriparks Limited (GDL) Q2 FY23 Earnings Concall Transcript

Gateway Distriparks Limited (NSE: GDL) Q2 2023 Earnings Concall dated Nov. 09, 2022

Corporate Participants:

Prem Kishan Gupta — Chairman And Managing Director

Rajguru Behgal — President ,Rail

Sandeep Shaw — Chief Financial Officer

Ishaan Gupta — Joint Managing Director

Analysts:

Bomikanaya — Dam Capital — Analyst

Achal Lohade — JM Financial — Analyst

Ashish Shah — Centrum Broking — Analyst

Sormani — Phillip Capital India Private Limited — Analyst

Amit Dikshit — ICICI Securities — Analyst

Kushan Karani — Spark Capital — Analyst

Aditi — Kotak Securities — Analyst

Ashish Desai — Samita Capital — Analyst

Atul Tiwari — Citi — Analyst

Aditi Manga — Kota Stories — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Gateway Distal Limited Q2 FY ’23 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participants will be on a listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you read assistance during the conference call, please signal an update or by pressing star and 0 on your touchtone telephone. Please note that this conference is being recorded. Today on the call, we have Mr. Prem Kishanthalkupta, Chairman and Managing Director; Mr. Ashan Gupta, Joint Managing Director; Mr. Sandeep Gupta, Joint Managing Director; Mr. Raj Roberge, President Rail; Mr. Sandeep Shah, Chief Financial Officer; and Mr. Manoj Singh, President CFS I now hand the conference over to Mr. Prem Kisnaskupta. Thank you, and over to you, sir.

Prem Kishan Gupta — Chairman And Managing Director

Thank you. Good evening, ladies and gentlemen. And a warm welcome to all the participants to the post results earnings call of Gateway Distal Limited. We have uploaded our results, press release and presentation on stock exchanges as a last company website. I hope you had an opportunity to go through the same. We are happy to report healthy growth, especially in the ICD rail business. which has been the major growth driver of the company in this quarter. The cash flows in the company are quite healthy, and our net debt stands reduced to INR270 crores at the end of this quarter, after incurring INR30 crores capex from our own cash. According to credit hedge ratings, container rail volumes are expected to grow at a healthy CAGR of 15.6%. With a steady improvement of rail coefficient by fourth to 31% and incremental freight volumes.

The agency believes that the transit assurance under DFC aiming to squeeze the travel period by 40% to 50% for some of the major routes and over 3x growth in the movement of cost effective double scatter container trains by financial year ’25 will accelerate this transition. As you are all aware, in September 2022, we completed the land purchase in Narayan Depot to the order of 30 crores and have already commenced conception of a new rail-linked ICB in that region with a planned capacity of 125,000 TEUs annually. We also signed a share purchase agreement on 31st October 2022 to buy 99.92% of Kashipur Infrastructure and Freight Terminal Private Limited from its shareholders for INR156 crores. The transaction is expected to close by the end of Q3. The process to acquire and liquidating shareholders remaining 0.08% sale has also begun. The 41-acre facility has three real sidings and 17,000 square feet of warehousing space apart from the rail yard and container yard. Currently, the company provides terminal service only, while other rail operators provide train services.

With this planned acquisition, we will provide exclusive rail services to this ICD and the last mile connectivity in addition to the terminal services. thus transforming it into a multi-model logistics farm. The company will be able to increase volumes at this ICD by a considerable amount by leveraging its network of ICDs and providing cost-effective rail services through the hub and spoke model. ICD Kashipur currently handles an average of 3,000 TEUs per month. We are currently experiencing a period of rapid expansion, and we believe that the real trade sector offers a great deal of untapped potential. We will continue to build more multimodal logistics parts in India’s most important manufacturing and commercial centers going forward.

With this, now I hand it back to the more data for the Q&A sessions.

Questions and Answers:

Operator

[Operator Instructions] Thank you. The first question is from the line of Bomikanaya from Dam Capital. Please go ahead.

Bomikanaya — Dam Capital — Analyst

Thank you. Congratulations on a good set of numbers. Sir, just wanted to understand qualitatively, while we appreciate that you shared the volume numbers for both CFS and rail. But at least if qualitatively, if you can comment on how has rail performance been? Because there is an improvement in the margin profile on an overall basis that we are seeing. Any qualitative comments on that? And as we are moving ahead, we are seeing that the port volumes are kind of slowing down, what is the outlook in terms of volumes? That’s question number one. And question two is when we’re taking up these new ICDs at Kashi port, which will get commissioned and start off with us from Q4 onwards and largely scale up into the next year. While obviously, there will be decent volume growth as we consolidate operations and improve services. How will the margin profile be at these ICDs?

Sandeep Shaw — Chief Financial Officer

Yes. Sandeep here. So just on the margins, it’s following a similar trend to what we’ve seen in the past in both segments of real slight improvement is there on the rail side. So we see that going forward. On the volume side, while the car port volumes are down, our market share has gone up slightly market. So we’re up to 17%. We continue being the market leader in Panama. So we expect that trend to continue. And with these new CDs — so Kashipur right now is doing 3,000 TEUs monthly. We expect over a period of time that we should be able to increase this gradually. And the market potential is much higher. We can double it over a period of three to four years. Japaralso, we expect to eventually after construction will take a year and ramp up volumes a year after that. So eventually, we expect to go up to a figure of 4,000, 5,000 TEUs there as well.

Prem Kishan Gupta — Chairman And Managing Director

And Mumita, just to give you some idea, the real margin is to the order of INR9,500 per TEU. And the CFS margin is INR2,200.

Bomikanaya — Dam Capital — Analyst

So that is very helpful, sir. I have more questions since restricted or two. I’ll come back in the line. Thank you.

Operator

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

Achal Lohade — JM Financial — Analyst

Yes. Good after noon and thank you for the opportunity. My question was if you look at the volumes of the CFS business, we see that it’s 2Q FY ’22, the volume seems to have got restated. Can you clarify on that in the 2Q FY ’22 results, it was 92,000, 93,000?

Sandeep Shaw — Chief Financial Officer

Yes. Basically, we changed the reporting method last time to include CFS NPEs also. So last year, we didn’t report CFS MPEs as part of the throughput. So to give a like-to-like comparison, we’ve provided also all the throughput numbers that you see for rail and CFS include both laden and MT.

Achal Lohade — JM Financial — Analyst

And — was it the case earlier for rail where we used to have even MTs as part of the total numbers or —

Sandeep Shaw — Chief Financial Officer

Yes. So rail, we used to report both laden and empty. This is because MT was a revenue earning thing for real whereas on the CFS side, MT wasn’t generating as much revenue, but now we’ve seen some revenue come from there also. And just to keep a standard format across both verticals, we decided to include both laden.

Achal Lohade — JM Financial — Analyst

Got it.

Operator

Thank you. The next question is from the line of Ashish Shah from Centrum Broking. Please go ahead.

Ashish Shah — Centrum Broking — Analyst

Yeah. Thank you. Sir, you did mention that the market size for Kashi or ICD is around 10,000 TEU. If you can dwell a little bit more in terms of who are the typical customers there? What kind of industry exists in this catchment area? And who are the competitors there? And what are the kind of capacities that exist in that area?

Sandeep Shaw — Chief Financial Officer

Ust quick at right now, in the near 50-kilometer radius, there’s only one other terminal or two terminals of Concur, one is very small and barely having any volumes. And the other is the ICD in Moradabad Conor. And about the industry, I’m just passing it on to Rajguru.

Rajguru Behgal — President ,Rail

Hi, Rajguru Behgal. So there is — if we talk about industry dynamics, so there’s a lot of paper products, then import of waste paper — then there is chemicals, home furnishing, handy crops. So all these commodities are there in shipbuild plus the moment we announced this. So there has been a lot of interest shown by many of the shipping lines as well as the customers who had to go down to Moradaba. So there is the ICDs, which are far flat from Kashipur and Moradabad, so they don’t have any option. So once we start our operations not only that we’ll be able to capture the Kashipur catchment volumes but the other ICDs, like Moradabad and all, so we are expecting then that we will be able to capture those volumes also. So if we talk about the other areas, there is a good industrial bank at Haridwar, Dehradun and Lala where all these paper importers and all these home financial chemicals and the base paper factories are there.

Ashish Shah — Centrum Broking — Analyst

Okay. So — but within the immediate vicinity, let’s say, as you said, concas terminals are a little distance away. But within the immediate vicinity, are there any other competing terminals or aside in that sense, will offer an exclusive significant distance advantage

Rajguru Behgal — President ,Rail

There is only one terminal, which is an immediate competition to us.

Ashish Shah — Centrum Broking — Analyst

Okay. Sir, if you can tell me which terminal that is

Sandeep Shaw — Chief Financial Officer

ICD Moradabad is the closest terminal exports, which is about 45 kilometers away. So immediate vicinity, there’s no other ICT

Ashish Shah — Centrum Broking — Analyst

Got that. Also, we have mentioned the revenue from this terminal in our acquisition announcement. If you can give some indication of the margins and profitability of this terminal.

Sandeep Shaw — Chief Financial Officer

So the revenue actually is of the existing Kashipur terminal right now that we’ve given. That’s part of this heavy format that we have to give. — but this revenue is only the figure of the ITD income that’s coming. What’s not being captured here and what’s the value we paid for is the real access that we’ll have — so we’ll have exclusive real access here and no one else will be operating. On the closing, we’ll be able to give some more details about the type of revenue that we’re expecting out of this terminal — but just keeping in mind the rough rail margins that we have at Gary, we expect to add that here as well.

Ashish Shah — Centrum Broking — Analyst

So you could expect a similar rail margin out of this terminal that you otherwise make in the rail business

Sandeep Shaw — Chief Financial Officer

Yes, slightly more actually since the distance is longer from the port. So the further you are away the higher the margin.

Ashish Shah — Centrum Broking — Analyst

Right, sir. Fair enough. I’ll probably ask again after the fourth quarter. Thank you.

Operator

Reminder to the participants, to ask a question you may press star and one. The next question is from the line of from –from Phillip Capital India Private Limited. Please go ahead.

Sormani — Phillip Capital India Private Limited — Analyst

Just wanted to understand since we are adding terminals that is happening quite fast. What will be the rate addition plans going higher and we’ll also look at domestic side of the business and the acquisition of containers. So if you can highlight on that, sir?

Prem Kishan Gupta — Chairman And Managing Director

See, we — right now, we have adequate capacity, and we can accommodate these 3,000 to 5,000 TEUs in addition to the existing volumes that we are doing. But going forward, we have plans to acquire the new rigs of high speed and nice rotability, — that negotiations and the Model are now under discussion. So from next year onwards, we will be adding, say, about three rigs per annum.

Sormani — Phillip Capital India Private Limited — Analyst

Okay. And I think you have already highlighted, but just to reconfirm the Kashipur rail business, we were not part of a third-party rail operator for them. So there was no revenue for us for Kashipur rail operation, which will be added now

Prem Kishan Gupta — Chairman And Managing Director

Yes. There was no real revenue from that. We were not operating from Kashipur.

Sormani — Phillip Capital India Private Limited — Analyst

Got it. Yeah. Thank you, sir

Operator

Thank you. The next question is from the line of Amit Dikshit from ICICI Securities. Please go ahead.

Amit Dikshit — ICICI Securities — Analyst

Good evening, everyone, and thank for the opportunity. Congratulations for a good set of numbers. I have two questions. The first one is essentially an offshoot from the previous participant, you said that you’ll be adding around three rigs per annum. So will the addition will be through your — I mean will it be captive or through lease

Sandeep Shaw — Chief Financial Officer

No, we’ll be doing it all on lease.

Amit Dikshit — ICICI Securities — Analyst

Okay. The second question is more of a strategic kind what I see that you have a couple of opportunities here, Kashipur, Jaipur coming up. Then you highlighted that there is one more opportunity that you’re looking at. So if you can highlight the cashmere of that, then we seem to be on a capex mode now adding new terminals. So I just wanted to understand from a strategic perspective three to four years, what’s kind of terminal network we are looking at? And are we also planning to go to eastern side of the country? I mean, I know our strength lies on DFCs, but is there any thought process to per to try Eastern side. well?

Ishaan Gupta — Joint Managing Director

Hi, Amit, Ishaan here. So after these two terminals, there are a couple of locations, which we have in mind, and we are identifying land parcels right now. So at this point, we won’t be able to comment on the location. But once we finalize with share going ahead, if you look at a long term — medium- to long-term strategy, which we have, we we want to develop terminals around the Northwest corridor primarily, where we use the strength lies where we can use our network — and at a later date, we will be also considering either the Eastern DFC other diagnoses and the quarter corridors which have been planned because those will be very useful for domestic business. Right now, we are only focusing on exits but domestic businesses then make sense once those dedicated record was available. So that is the long-term strategy that we have for the company.

Amit Dikshit — ICICI Securities — Analyst

And could you quantify the — I mean, in terms of terminals, I mean, if I ask you later to say, after three to four years, what kind of — I mean, how many terminals will you have or you are expiring to have

Ishaan Gupta — Joint Managing Director

We don’t have a fixed number in mind. We will see the strategy as it goes, but say, two to three terminals, you can safely assume, more than beyond that, we’ll take a call as and when opportunities coming

Amit Dikshit — ICICI Securities — Analyst

Great. Wonderful and all the best.

Ishaan Gupta — Joint Managing Director

Thank you.

Operator

Thank you. A reminder to all the participants anyone who wishes to ask a question may please press star and one on their touchtone phone. The next question is from the line of — from Spark Capital. Please go ahead.

Kushan Karani — Spark Capital — Analyst

Thank you for the opportunity. Just one question on Kashipur. I wanted to understand that the current set of revenues what has been recorded? Is it because that facility was handled by pollologist solutions in a glycol, — is it fair assume that in the India lycolumes are handing and incremental cash flow areas what was stated. I will be opportunities which can potentially drive volumes? Is that a fair assumption?

Sandeep Shaw — Chief Financial Officer

Sorry, that last bit was a bit muffled. — you said what about the judgment area?

Kushan Karani — Spark Capital — Analyst

So incremental opportunities like paper, etc, would be something which was not at the facility right now? Is it a fair assumption?

Sandeep Shaw — Chief Financial Officer

So some of it was 100. So if I understood correctly, the earlier volumes, the captive volumes of IDL, that’s only part of it, but majority of the volumes are non-IDL. So the additional catchment volume, we’ll be able to get because our service level is better because right now, it’s being handled as a single stack terminal without having it anywhere. So the service level is something like one or twice a week evacuation. What we can do is a daily evacuation from Kaishapur and bring it to our terminal at Gary and then rail it out from that.

Kushan Karani — Spark Capital — Analyst

Understood. And given that the potential will be closer to about 5% to 7% of real volumes on a per annum basis. You can expect that because of the higher lead distance, the realization would go up for the real segment. Can you give us an indicative number as to what would be the realization from a cash to second indoor people vis-a-vis what you’re really on what you say or on a blended basis?

Sandeep Shaw — Chief Financial Officer

On Kashipur revenues and specifically the realization that you will be able to comment only after closing — but generally, yes, the assumption is that the longer the distance are higher the year.

Kushan Karani — Spark Capital — Analyst

Understood. And one last question from my side. We had — when you get the — revising the pricing or rather the discounts on MT containers. We passed with the lag. So every cost aspect wise, we have passed through everything to the customers. Just wanted to check if that has happened?

Sandeep Shaw — Chief Financial Officer

Yes. — the changes in –. It is standard practice. So it is passed on to the customer. Sometimes there’s a lag depending some customers is immediate with sum it up to 30 days, but all increases or decreases in the –.

Kushan Karani — Spark Capital — Analyst

Okay. Thank you. That’s really helpful. Best wishes.

Operator

The next question is from the line of Aditi from Kotak Securities.

Aditi — Kotak Securities — Analyst

Congratulations for a healthy set of numbers. And the question that I had was, firstly, linked to Kashipur. I wanted to get a sense of you having made a INR150 crores kind of investment — for the rail services that you can offer from there at current volume level, what kind of returns would you be finding on this investment, let’s say in the first year?

Sandeep Shaw — Chief Financial Officer

So like we mentioned previously on the call, we’ll get back on detailed numbers after we closed only on like revenue of the real part that we can only comment after closing.

Aditi — Kotak Securities — Analyst

Understood. The point I was trying to kind of get to was that posted acquisition, which is, let’s say, an attractive acquisition on near-term numbers? Or would we require two, three, four years to realize decent returns on this kind of investment that we are doing?

Sandeep Shaw — Chief Financial Officer

It was an attractive from the numbers point of view, also the payback point of view. We’ll be able to share more details in December. But also, there’s a slight premium that’s been paid on account of a running business. It’s a 41-acre ICD that’s generating 3,000 deals per month. So we did pay a price for that, but it’s still well within our investment purview of like a good payback and a good ROI.

Aditi — Kotak Securities — Analyst

Understood– related question–what is the prospects of expanding volumes from? So what is the capacity that you can reach, given the assets that you have bought and Kashipur 3,000 TEUs per month. That is a throughput today?

Sandeep Shaw — Chief Financial Officer

On capacity basis and depending on turnaround time, we can theoretically handle — and we ran lines, we can theoretically handle up to 10,000 TEUs if needed. But we don’t see that number immediately. What we have projected is that within, say, a period of three to four years, we should be able to reach about 6,000 deals out of this location.

Aditi — Kotak Securities — Analyst

Understood–

Sandeep Shaw — Chief Financial Officer

The last one is enough to handle more if needed. And we’ll also be exploring some domestic volumes going ahead. So that also can be take the time.

Aditi — Kotak Securities — Analyst

Yes, just to kind of put it in the right context, what you’re saying is this can become as big a place — can be. While for Jaipur, since it’s a greenfield project, we are assuming INR100 crores capex low here is 1.5x that number. So some premium for running business? Yes.

Sandeep Shaw — Chief Financial Officer

Yes. Yes. And also, this is larger than Jaipur. This is 41 acres, whereas Jaipur is 30 acres.

Aditi — Kotak Securities — Analyst

Understood. That clarify. The second question that I had was more to how to think about the volume growth for the company. Now you said that the sector should grow, let’s say, mid-teens. Given your focus on adding assets, how should one be thinking through from a medium-term perspective, the growth for your company on the rails land?

Sandeep Shaw — Chief Financial Officer

Yes. So we’ve given the guidance of double digits, and this was before announcing Japara [Phonetic] and Kashipur. So we stick to that guidance for the rail business. volumes are flat. But if you look at CFS volumes on a like-to-like basis, when you remove Punjab convey out of the equation, then we are up there also. But see, this is the base year for — so next year onwards, CFS would be flat and double digit for him and adding Kashipur and Jaipur we’re looking at high double digits.

Aditi — Kotak Securities — Analyst

Understood. The other question that I had was more on the network that you are trying to set up and the advantage that may give you only, let’s say, a portfolio of terminals. And you talked Jaipur in some context of it being placed by double stacking can happen. I’m just trying to kind of imagine with three terminals that you add– does the network advantage for you become meaningfully– more meaning, let’s say, sticky customers, higher margins, higher market share? Just trying to think of that.

Sandeep Shaw — Chief Financial Officer

Yes. Network is very important in this industry and not just having a high number of ICDs, but having them in the right locations through your network. So why it helps is that when you firstly hub-and-spoke model, which we use. So we can combine containers from two ICDs and run double fac trains for the longest part of the routes. Even Faridabad, ICD for example, is going to be on double-part next year onwards. So we will have a double hub system. We will have the choice of running from any ICD to any port via any other so we can top up volumes. We can increase double stacking. Our rate requirement goes down compared to other — compared to our competition because, again, of all this hubbing and transit times a better overall asset utilization is better. So there are multiple reasons to network advantage plays out.

Aditi — Kotak Securities — Analyst

Understood. Just a last question from my side. Given the capex that you were thinking through, which is a few hundred crores every year, does the dividend policy of the company, would it change in any manner?

Sandeep Shaw — Chief Financial Officer

No. We will continue paying dividend like how we have been. How we view cash planning is that with our current earnings with the capex, which we have announced, keeping the net debt to EBITDA ratio of between one to 1.2 maximum and paying our dividend. That’s how we are planning everything — in fact, we expect the dividend to go up this year.

Aditi — Kotak Securities — Analyst

Okay. Thanks a lot for the color. Those were my questions.

Operator

Thank you. The next question is from the line of Ashish Desai from Samita Capital. Please go ahead.

Ashish Desai — Samita Capital — Analyst

Can you hear me?

Prem Kishan Gupta — Chairman And Managing Director

Yes, we can hear you.

Ashish Desai — Samita Capital — Analyst

As your margins have increased at around 9,500 TEU in the rail business? As the DFC part comes in and all other efficiencies you have what headroom do we have on this as volume increases?

Sandeep Shaw — Chief Financial Officer

Sorry, could you just start over? We missed the first part.

Ashish Desai — Samita Capital — Analyst

So as your margins have increased at around 9,500 TEU in the real business — so I just wanted to understand what — as the DFC part comes in and other efficiencies you have, what headroom we have on this as volume increases?

Sandeep Shaw — Chief Financial Officer

There is definitely scope for growth here. But yes, so as the DFC comes, then double stacking will increase. And when it goes up all the way to JNPT, that will also help faster turnaround of gas will also help. So just for example, we used to have an average transit time from NCR to the port of about 72 hours. Now as and when DFC sections have opened, we’ve reached up to 48 hours. And during peak Covid when the were no passenger trains, we’ve done it at even 24 hours. So if we can hit the 24 hours number consistently, our margins will definitely improve. And the 25 tonne actual train will come when the DFC is complete. So that will also increase the loadability like I was saying. So that will be how we increase our margins. And as and when we’re adding terminals, that’s also helping out, and there will be a shift from road to rail. So we expect as volumes go up 6 per TEU becomes lower and our margins will improve.

Ashish Desai — Samita Capital — Analyst

So can you —

Operator

Mr. [Phonetic], we are unable to hear you.

Ashish Desai — Samita Capital — Analyst

Can you hear me now?

Operator

Yes, we can. Thank you.

Ashish Desai — Samita Capital — Analyst

Yes. So do we have a target is to–

Sandeep Shaw — Chief Financial Officer

Sorry, we’re uable to understand, but if you’re asking–

Operator

And there’s no response from the line of Mr. Desai. We move to the next question from the line of Atul Tiwari from Citi. Please go ahead.

Atul Tiwari — Citi — Analyst

Yes, sir. Thanks a lot. Sir, my question is on Concord. So I mean, if I remember correctly, you have briefly mentioned in the past that you may also be interested in that acquisition, obviously, probably in a partnership with another partner. So what is the thought process as of now? Because now government seems to have restarted the process. And are you going for it or you are not interested?

Sandeep Shaw — Chief Financial Officer

Yes. No, we won’t be interested in Concord. One is that balance sheet, our balance sheet won’t support such an acquisition. And second, the issue is regarding land licensing fee are still not clear with this new Kadisha coming in. So we don’t know how it will work. In the meantime, we are continuing to expand on our own. And yes, that’s how we will progress.

Atul Tiwari — Citi — Analyst

Okay, sir. Thanks a lot.

Operator

Thank you. Reminder to all the participants, to ask a question, you may please press star and one. The next question is from the line of Aditi Manga from Kota Stories. Please go ahead.

Aditi Manga — Kota Stories — Analyst

Thanks for the opportunity. Maybe one or two questions more from my side. The first one was on capital allocation. And I understand that you are probably doing a good thing by investing in the network — and taking maybe rolling stock on a lease. Is there any downside risk to this strategy in the sense of you not owning rigs, what are the risks associated with this kind of strategy versus, let’s say, a Concord ends up buying all the rolling stock themselves on the balance sheet?

Sandeep Shaw — Chief Financial Officer

So I mean, the lease is slightly at a higher rate compared to owning. So it would be owner too cheap and it would be cheaper to own in the long term. But there’s no risk as such because we are tied with long-term leases of 10 years and we build in clauses regarding upgradation when it happens and we can switch our drains to the newer age — so no risk as such.

Aditi Manga — Kota Stories — Analyst

So service levels broadly get maintained and are not sacrificed through such a strategy in any manner?

Sandeep Shaw — Chief Financial Officer

Sorry, I didn’t get that, first?

Aditi Manga — Kota Stories — Analyst

So service levels are basically broadly maintained, whether it is leasing or buying the asset?

Sandeep Shaw — Chief Financial Officer

Yes.

Aditi Manga — Kota Stories — Analyst

Understood. Just one more question from my side. And this is probably a risk that investors typically point out that Concord has become bigger post DFC and other players would find it more difficult if we are not able to scale up. A, do you agree to that thesis? And B, with your network expanding, is that risk becoming lesser than lesser? Are you becoming more and more projected?

Sandeep Shaw — Chief Financial Officer

So see, Concord has always been there since day one and their market share has been going down consistently, and our market share has now, this quarter, our market share reached a level of 17% in NCR, which is the highest compared to any other CTO and Concord is within NCR has come below 60%. So I don’t see a risk even post DFC, we’ll have access four of our terminals, Gadi, Faridabad, Jaipur, — will all be on the DFC, as will be connected by –. So I don’t see any major change happening in competition with them.

Aditi Manga — Kota Stories — Analyst

And then just one last thing. You kind of mentioned, I think, a mixed kind of rigs and that leading to better. I’m assuming you’re talking about domestic and net combined. I’m just trying to get the sense of whether that mix effect can be a meaningful driver of your profitability incrementally with the new network in place.

Sandeep Shaw — Chief Financial Officer

Yes. By mixed rigs, we’re meaning that basically, if we’re sending something from the North, we can combine on one train at Gariath volumes of Faridabad, –, very volumes, and we can send it to Viramgam and these containers don’t necessarily have to be of one port. They can be of Mundra, Pipava or JNPT because then we’ll bring it to Viramgam and we’ll maximize the distance that we double start this, and from there, then we distribute it locally. So that will improve our service level and the containers don’t have to just wait at the ICD for a port-specific state.

Aditi Manga — Kota Stories — Analyst

And the change in Gapur, the change in equation for the pattern or it’s something that should be on a standalone basis?

Sandeep Shaw — Chief Financial Officer

Gapur will help because Gapur can also act as a hub, and it’s already a double-stack location. So it gives us more flexibility to use the hub and hope to our advantage.

Aditi Manga — Kota Stories — Analyst

Thank you for clarifications. Those are the only questions. Thank you.

Sandeep Shaw — Chief Financial Officer

Thank you.

Operator

Thank you very much, ladies and gentlemen. That was the last question for today. Participants have distorted due to time constraints. They can reach out to the management and SGA team. On behalf of Gateway Distriparks Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.