Gateway Distriparks Ltd. (GDL) Q4 FY22 Earnings Concall Transcript

Gateway Distriparks Ltd. (NSE: GDL) Q4 FY22 Earnings Concall dated Apr. 26, 2022

Corporate Participants:

Prem Kishan Dass Gupta — Chairman & Managing Director

Sumit Kishore — Axis Capital — Analyst

Sachin Bhanushali — Chief Executive Officer

Sandeep Shaw — Chief Financial Officer 

Analysts:

Jay Shah — Navrang Enterprises — Analyst

Abhishek Ghosh — DSP Mutual Fund — Analyst

Bharti Sawant — Mirae Asset — Analyst

Bhoomika Nair — DAM Capital — Analyst

Ashish Shah — Centrum Broking — Analyst

Abhijit Mitra — ICICI Securities — Analyst

Aditya Mongia — Kotak Securities — Analyst

Abhishek N — B&K Securities — Analyst

Harsh Shah — Jefferies — Analyst

Pawan Parakh — Renaissance Portfolio Management — Analyst

Aditya Makharia — HDFC — Analyst 

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Gateway Distriparks Limited Q4 FY22 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 date of this call. These statements are not the guarantees of future performance and involves risks and uncertainties that are difficult to predict.

As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.

Today on the call, we have Mr. Prem Kishan Dass Gupta, Chairman and Managing Director; Mr. Ishaan Gupta, Joint Managing Director; Mr. Samvid Gupta, Joint Managing Director; Mr. Sachin Bhanushali, Chief Executive Officer; Mr. Sandeep Shaw, Chief Financial Officer; and Mr. Manoj Singh, Senior VP, CFS Business.

I now hand the conference over to Mr. Prem Kishan Dass Gupta. Thank you, and over to you, sir.

Prem Kishan Dass Gupta — Chairman & Managing Director

Good evening, ladies and gentlemen, and welcome to the post-results earnings call of Gateway Distriparks Limited.

We have uploaded our results, press release and presentation on stock exchanges, as well as the company website. I hope you’ve had an opportunity to go through the same. The rail logistics business has performed exceptionally well in FY22 due to various factors. Firstly, during the COVID period, the passenger operations on railway network had come down significantly, which resulted in capacity getting available for rail freight transportation. Secondly, the partial completion of the Western DFC route with around 750 kilometers of the 1,100 kilometers operationalized, it has resulted in an improvement in freight train speed, thereby reducing transit time, increase predictability and better asset use. In addition to these factors, we could increase our market share in the NCR region. The situation at Shanghai Port has caused some disruption in supply chain, resulting in some temporary delays, but expected to get back to normal soon.

With this, I will now hand over the floor for questions and answers. Feel free to ask anything, and the entire management is there to answer your questions. Thank you.

Questions and Answers:

Operator

Thank you very much, sir. [Operator Instructions] The first question is from Sumit Kishore from Axis Capital. Please go ahead.

Sumit Kishore — Axis Capital — Analyst

Thanks a lot. You see a strong margin performance in the rail linked ICD business. Is the EBITDA per TEU that we saw in Q4 of INR10,357, is it sustainable above INR10,000 or coming time or there factors specific to the quarter which drove this margin performance? Plus very recently that we’ll use the discounts on charges of container movement, I mean how is that likely to impact your business in coming time? That’s my first question.

Prem Kishan Dass Gupta — Chairman & Managing Director

Yeah, hi, thanks for your interest in the question. First is that on an annualized basis, we look at EBITDA per TEU margin somewhere around INR9,000 plus-minus 5%. So, it is greatly dependent on the import-export mix as well as 20-40 mix as far as our total business is concerned. So, it is not something, which is dependent on a particular quarter. So from a forward-looking guidance point of view, I think we should consider it at the same level as INR9,000. Second is that, as expected, railway has indicated that the discount of 5% — rebate of 5%, which was our level on laden containers and 25% on empty containers and empty wagons is getting withdrawn.

Laden one will get withdrawn with effect from 1st of May and the empty one will get withdrawn from 1st of August. The burden will have to be passed on to the customer because when this — these discounts were given we have passed on the benefit to the customer and that’s why withdrawal would also affect the price. So, we’ll see increase in price to compensate for the rebate amount, more or less equivalent amount. We’ll try for a marginal higher increase because our inflationary pressure also resulted into our costs going up in other element, particularly the fixed cost segment part of it. But we hope that we should be able to pass on the increase in burden on account of rail haulage charges as well as inflation to the customer with effect from 1st of June onwards, if not 1st of May and we’ll be able to maintain our margin at INR9,000 continuing over the next financial year.

Sumit Kishore — Axis Capital — Analyst

Sure. So basically, you managed about INR9485 per TEU in FY22. So, that falls in the — about 5% plus range, right, on — over INR9,000? One more thing I would like to clarify is that in the last quarter, we had an exceptional income of about INR12 crores for the acquisition of land by the Haryana Government at our Garhi Harsaru terminal. So, this plus some interest — plus the interest income, so all that might have added up to — per to you if you have converted everything.

Sachin Bhanushali — Chief Executive Officer

For the last quarter.

Prem Kishan Dass Gupta — Chairman & Managing Director

For the last quarter.

Sumit Kishore — Axis Capital — Analyst

What is the exceptional around interest income?

Prem Kishan Dass Gupta — Chairman & Managing Director

Exceptional means we have —

Sachin Bhanushali — Chief Executive Officer

He is asking about interest, exceptional interest income.

Prem Kishan Dass Gupta — Chairman & Managing Director

No, not exceptional interest, but we have been accumulating cash in the company. So, we have cash in hand. So, based on that, I mean we can see the interest income, whatever, you know, I mean the rates are low, but interest income has been growing all along this year, but also in this Q4.

Sumit Kishore — Axis Capital — Analyst

Sure. Just my second question on the P&L. So, why had depreciation come down quarter-on-quarter? You were explaining the other income going up, I believe, quite a sharp increase. Is there any other items in other income, which is causing that increase other than the other income?

Sandeep Shaw — Chief Financial Officer

This is Sandeep here. Basically, depreciation has gone down as compared to last year — last quarter because — mainly because Punjab Conware which we’re using, we have surrendered and this agreement got closed on 31st January.

Sumit Kishore — Axis Capital — Analyst

Right, okay.

Sandeep Shaw — Chief Financial Officer

Agreement got closed and all that to — whatever depreciation was there that has been accounted for till 31st January only. If you compare with the last quarter, then the precision of will be little bit lesser in this quarter.

Sumit Kishore — Axis Capital — Analyst

So, it will be further down Q-o-Q when the full quarter impact comes in Q1 FY23?

Sandeep Shaw — Chief Financial Officer

In last quarter three, the full year — full-quarter impact was there, because that is — the entire CFS was operational for the entire quarter. But in this quarter, only January month was operational. That’s why the figure is — if you compare quarter four with last — quarter three, then depreciation for this quarter is lesser. Otherwise, from Q1 onwards, it will follow the same whatever is coming on annualized — quarter-to-quarter basis. Whatever we disclosed in quarter four, almost at the same line it will come in Q1 also.

Sumit Kishore — Axis Capital — Analyst

Got it. In other income, is there any other one-off or is it entirely the uptick is because of the treasury income?

Sandeep Shaw — Chief Financial Officer

One-off income — Chairman just mentioned there was INR12 crores of exceptional income which came because of the land equity on one of some of the land parcel by the government. So, that’s where INR12 crores of exceptional income has gone in quarter four.

Sumit Kishore — Axis Capital — Analyst

So, that is part of other income? Okay.

Sandeep Shaw — Chief Financial Officer

Yes, that is clubbed with the other income.

Sumit Kishore — Axis Capital — Analyst

I’ll join the queue. Thank you.

Operator

Thank you. The next question is from the line of Krupashankar NJ from Spark Capital. Please go ahead. Krupashankar, your line is unmuted. Okay. We’ve lost the line from Mr. Krupashankar. We take the next question from the line of Jay Shah from Navrang Enterprises. Please go ahead.

Jay Shah — Navrang Enterprises — Analyst

Hi, am I audible?

Operator

Yes, you are.

Jay Shah — Navrang Enterprises — Analyst

Yes. Congratulations, management, for a great set of numbers. I just wanted to ask that nowadays because the last mile delivery you taking up so much and a lot of these are there transport player also getting into the rail freight business also. So, what advantage does GDL have over the other guys also that are vying for the same business in a way, especially rail freight that the likes of PPI, DPI, even they are getting into rail transport. So what primarily as a company do we have an advantage over them apart from the DFC?

Prem Kishan Dass Gupta — Chairman & Managing Director

Frankly, I’m not understood your question, but I think if you look at the business segment in which we work as far as overall logistics is concerned, we are into international intermodal segment. And there is no — it’s only the 17 intermodal operators which operate in this particular segment. As far as the last mile, I have not heard of any last mile rail transportation play by any other player. But your point is valid that the main differentiator in the international intermodal business is going to come out of dedicated freight corridor advantage, which will have two effects. One is that the asset utilization will improve and secondly, because of reliability of the supply chain, international supply chain, the cost will go down and there’ll be a modal shift from road to rail, particularly operating out of Mundra port CFS’ by road will get converted to a very large extent by — to rail ICDs in Northern India. So, that’s the significant edge that we have over others.

Jay Shah — Navrang Enterprises — Analyst

Okay, got it.

Prem Kishan Dass Gupta — Chairman & Managing Director

But if you could elaborate on the question that you mentioned earlier, I’ll be able to probably address it better.

Jay Shah — Navrang Enterprises — Analyst

Sure. So, basically what I was asking was, is there any way that the business is being split, for example, I was listening to the PPI express con call where they were saying from one end to the other, for example, location A to B, they were also planning to start using the railway network of — the problems with the road and obviously because of the fuel cost. Everyone’s trying to get on to the railway network because they’ve identified the advantages. So, I was wondering to understand that, is there any way they would be eating into our share of business or something like that?

Sachin Bhanushali — Chief Executive Officer

No, Jay. Actually, it will be helpful for us because they will be customers for players like us.

Jay Shah — Navrang Enterprises — Analyst

Okay, got it. And just one more follow-up question. How are you seeing the export side? And what are the major sectors that are using our services for the export segment, like, maybe pharma or is it capital goods or engineering kind of sectors?

Sachin Bhanushali — Chief Executive Officer

So, the way that this business is, it’s not — it doesn’t differentiate between different segments. People are using our services as a general thing to connect to international markets and this is one part of the overall journey. So any cargo, which can be containerized is handled by us. And in terms of the growth which we are seeing on the export side, it’s not limited to ICDs. We are seeing it in our CFS business also. So, as the volumes of the country are going up for export, then automatically the number of containerized exports are going up and a large part of these guys also have imports because their raw materials are imported from abroad. So, it’s not segment specific, it is more dependent on location, your quality of service. And since we have a network which we can provide to them, which is aligned with a dedicated freight corridor, so that gives us a competitive advantage over many others.

Jay Shah — Navrang Enterprises — Analyst

Okay, got it. Thank you. Just one last question I wanted to ask with how is the response by these companies to use the DFCs vis-a-vis what they previously used to use that — the road transport? I mean, are they like willing to give us incremental business from their existing road share?

Sachin Bhanushali — Chief Executive Officer

See, the — for them what matters is the transit time and the frequency of service, which a player can provide. So, by being on the DFC, both on the transit times — we can offer them better transit time, plus we are — again our network, because we have multiple ICDs and they connect to the DFC either directly or via each other. So, we can provide them cut-offs to the vessels for export, for example. When the imported items, then they don’t have to pay detention at the port because we evacuate the containers on time. I hope that answers your question.

Jay Shah — Navrang Enterprises — Analyst

Yes. Okay. Thank you so much. Thank you so much for the answers.

Operator

Thank you. The next question is from Abhishek Ghosh from DSP Mutual Fund. Please go ahead.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Yeah, hi, sir. Thank you so much for the opportunity. Sir, just wanted to understand around — we’ve seen a fair amount of price increase as far as diesel prices are concerned. So, how are road freight rates faring between the rail freight rates? If you can give us some color what’s the — and is that also translating into better modal share as far as the rail part of it is concerned?

Prem Kishan Dass Gupta — Chairman & Managing Director

So, the trucking rates have gone up significantly, in some cases the trucking rates have gone up by 25% on the back of increasing fuel prices. But surprisingly, long distance transportation of containers, particularly lightweight containers, has not been affected by the fuel increase — fuel rate increase at all, which is a little, I would say irony, in the given situation. There has been no change in rail freight for conventional rail product as well as the container transportation except withdrawal of the 5% rebate, which was there on laden rail haulage charges and 25% on empty rail haulage charges. And it — as I mentioned earlier, it will be passed on to the customer. The dynamics now has actually shifted entirely to transit time from pricing — rail versus road pricing. So going forward, I think the intensification of demand on rail — for the rail product will depend on sustainability of the reliable transportation cycle on the back of the DFC. That’s number one.

Number two, over a period of time, the cost of carrying inventory is going to go down significantly because there was a time when the price competition used to take place, the transit time on rate and rail and road used to be more or less similar. Now, the product differentiation is so significant that the possibility of losing a customer from road to — rail to road is probably not there. Going forward, sustainability of dedicated freight corridor-based performance of ensuring connection to the vessel or evacuation of imports in time is going to be of importance. And I think there will be a continuous modal shift. There’ll be a secular trend in modal shift from CFS to ICD, particularly the Mundra port CFS’, which is going to benefit us.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Okay, sir. That’s helpful. And sir, also if you can just broadly talk about how — because if you look at broadly for you, the growth has been almost to the extent of 16% on a Y-o-Y basis on rail volume terms while we don’t see a similar number for the overall EXIM rail movement by the Indian Railways. So, what has been the kind of change in market shares for you, if you can just broadly highlight that?

Sachin Bhanushali — Chief Executive Officer

Yes. So we have been able to improve our market share, both in NCR as well as maintain it in Punjab markets. So NCR, while the overall market has shown an improvement of just about 15% for the ICD business, we have been able to increase our Y-o-Y business by almost about 36%. And in — so we are now closer to 16% as far as our market share in NCR is concerned, 15.35% — 15.85%. As far as Ludhiana market is concerned, Ludhiana market we continue to be at about 35% of the market and the market has grown by 18%, we have grown by 20%.

Abhishek Ghosh — DSP Mutual Fund — Analyst

And sir, this is for what period?

Sachin Bhanushali — Chief Executive Officer

This is for the entire year 2022.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Okay, okay, not specific to the quarter?

Sachin Bhanushali — Chief Executive Officer

No, it is not about quarter. In fact, most of our responses in this conference call are with respect to the year’s performance. Unless you specifically ask about the quarter.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Okay. And sir, just the other thing, in terms of the capital allocation, if you broadly look at the year, your capital — your operating cash flow generation has been very significant and you have brought net debt of about INR300 odd crores today. So just two things over there, if I see your balance sheet, while you have a gross debt in excess of INR500 crores and you have a large amount of cash on your balance sheet, so why not just rebate and have a lower phase of debt? That’s one. And second is, how should one look at the capital allocation strategy from here, given that the balance sheet is much more toned down in terms of debt and there is a significant — of operating cash flow, so how should one look at in as far as the capacity expansion and capex, if you can just broadly talk about these two aspects. Thanks.

Sandeep Shaw — Chief Financial Officer

See, if you look at the debt, it has come down significantly in the last 2 years, 3 years and the cash in the — on the balance sheet, which we have, we have capex plans for that. And we have taken a considerate view of the cash flows that are available to us month over month the cash in hand that we have as of now. And accordingly, we divided over — whether to pay dividend and to invest into capex. We might — going for some more loans and going into the future with — not for the existing facilities where we incur capex on the regular basis but for the new terminals that we have been talking about and we have made some progress on that and so, that cash will be used for that purpose rather than reducing the debt now and couple of months later or a few months later, taking the debt again. So, that is how we — we have a dividend paying policy for more than — since the beginning of the company, more than 25 years, 30 years. So — I mean that we will continue to do so. We will reduce our debts regularly but we will also have new debts for our new expansion and at the same time use our cash. I hope that answers your question.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Yes, sir. But I just wanted to get an understanding in terms of — you mentioned raising more debt to add more terminals. So, what should be a comfortable net debt to EBITDA, which will be comfortable with —

Sachin Bhanushali — Chief Executive Officer

Yeah. Earlier we used to always give an indication of 2-1. But our results have been good, our EBITDA has increased by a lot. So, 1.5-1 net debt to EBITDA is something we are looking at.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Okay, fair enough. Thank you so much. And I have few more questions, I’ll come back in the queue. Thank you so much.

Operator

Thank you. The next question is from Bharti Sawant from Mirae Asset. Please go ahead.

Bharti Sawant — Mirae Asset — Analyst

Yeah, hi. Thank you. Well, congratulations for very good set of numbers. Just wanted to understand —

Prem Kishan Dass Gupta — Chairman & Managing Director

Bharti, you are not audible. Could you be a little closer to your microphone?

Bharti Sawant — Mirae Asset — Analyst

Just — yeah, just hold on. Is this better?

Prem Kishan Dass Gupta — Chairman & Managing Director

Yes, much better.

Bharti Sawant — Mirae Asset — Analyst

Yeah, so one clarification and a couple of questions. So the clarification that I’m seeking is on the Punjab Conware. What is the impact during the quarter? And going forward, what should be the annual positive impact on account of Punjab Conware no longer being our — as in, part of GDL?

Sachin Bhanushali — Chief Executive Officer

Yes, so virtually in Q4, Punjab Conware wasn’t there since our operations till Jan 31st. We had already given our intimation to customers that we won’t be there in the facility and there was no proper plan in place for the new person to take over and still the facility is vacant as of now. So, we did about 5,000 TEUs in January in Punjab Conware, so not much of an impact over there. And going forward, we have shifted a lot of business and we’ve gained market share in the Bombay facility in our own CFS. So where we were initially doing say 8,000 TEUs, 9,000 TEUs at our own facility, we’re now doing anywhere from 14,000 TEUs to 15,000 TEUs. So, it’s not all from Punjab Conware, it’s a mix of both. So, that’s a net positive for us. While volume might appear to be lower, on an EBITDA basis we’ll be better off.

Bharti Sawant — Mirae Asset — Analyst

But Punjab Conware, to my understanding, was a loss-making facility for us. If I’m not wrong, it was closer to INR5 crores a quarter. So, we haven’t seen any positive impact on the EBITDA per TEU for the CFS business. Can you please explain that?

Sachin Bhanushali — Chief Executive Officer

It wasn’t INR5 crores per quarter. That was the fees that went to Punjab Conware. So in the last year, the fees was about INR20 crores because it was based on escalations linked to WPI and since WPI went up our fees also went up. So, it wasn’t making much money towards the last year, but it wasn’t the figure that you are saying.

Bharti Sawant — Mirae Asset — Analyst

But can you — ideally, we should have seen the EBITDA per TEU for CFS business improving, given last entire year we have been upwards of INR2,000 closer to INR2,400 per TEU and our guidance was also closer to INR2,700 to INR2,800 whereas for the quarter we have ended up closer to or less than INR2,000 per TEU despite of this facility going off.

Sachin Bhanushali — Chief Executive Officer

So, there are actually a lot of other corporate expenses related to the merger and all that were accounted for in the CFS business actually. So, that’s why it might be seeming a bit subdued. Also, due to overall budget improvement, there is an increase in employee benefit expense because of higher variable payout. Along with that, there have also been some negotiations by the labor unions over there as their tenure gets up. So, those costs have increased. And fuel cost has also increased which has not been passed on fully right now. So, those are the reasons why it’s not appearing higher. But we still stay on track for improve — we will definitely improve our margins by working out of one facility and you will see that over the next few quarters.

Bharti Sawant — Mirae Asset — Analyst

Okay. Can you just give the exact quantum, if possible on the merger-related cost, which are accounted above EBITDA for the CFS business?

Sachin Bhanushali — Chief Executive Officer

Don’t have that on hand right now, but it’s basically the legal advisor costs, re-listing costs and we had some roadshows, things related to that, which have come into it. So, we can share those details with you later offline.

Bharti Sawant — Mirae Asset — Analyst

Sure, thank you. Next question is to Sachin. I wanted to understand, what is the impact of the global supply chain disruption or shortage of containers to our business, given our quarter-on-quarter EXIM volumes, not for GDL but in general at the macro level for Western DFC has been kind of flattish. So, what kind of impact are we seeing? And in light of that, what would be your guidance for the next financial — as in, for FY23, in terms of volumes for both the businesses?

Sachin Bhanushali — Chief Executive Officer

Okay. So, Bharti, as far as the macro view on the sector is concerned, with the onset of the Ukraine crisis as well as a slowing down of the overall international maritime trade on account of closure of many South China Sea ports, the tonnage has gone down roughly about 10% to 15%. This has also resulted into quite a few vessels missing call on certain ports, including those in India, resulting into a subdued performance of the imports, particularly in the second fortnight of March 2022 continuing in the first fortnight of April 2022 to 2023. But we are already seeing firming up of the imports, so I don’t think it will last long and we should be able to cover up in the rest of the quarter as well as our import performance is concerned.

On the export side, the same is actually resulting into non-availability of bookings since there are no sailings in the port. Though empty containers are available bookings are not being offered by the shipping lines as freely as they ordinarily would. So, there is some kind of glut as far as empty containers or the exports is concerned, which will start picking up the moment the overall, let’s say, drop in tonnage comes back on account of speeding up once Shanghai and other South China Sea ports start operating as well as the blank calls kind of disappear. So from that point of view, I don’t see a major cause of concern, at least as of now.

The — if we look at the pulse of the market as of now, on a quarter basis, we should be able to remain somewhere around 90% to 95% of quarter four, which is normally the case. Quarter four is strong and quarter one is one of the weaker quarters. So, we would look at similar numbers going forward in the current year unless of course situation doesn’t improve and the maritime trade continues to suffer at the hands of slow movement of supply chain, which doesn’t seem to be the case though.

Bharti Sawant — Mirae Asset — Analyst

So, so far, as we start off this financial year, this may not have a significant impact on the overall volumes unless things worsen up. But is the container availability a concern, as in —

Sachin Bhanushali — Chief Executive Officer

No, not at all. Now, there are adequate containers available. Container bookings are not taking place. So, there is an empty inventory which is available in the port town as well as empty inventory which is available in the hinterland, which can sustain an export level of the — to match the demand from the trade. So, container availability is no more an issue. There are some pockets though as far as overall maritime market is concerned. In some of the ports, there is an imbalance but that can be corrected over a period of time by shifting empty containers from one port to the other port, which shipping lines keep on doing often.

Bharti Sawant — Mirae Asset — Analyst

Understood. Next, I wanted to understand on the status of DFC, what is the likelihood of the entire stretch commissioning by June 23, which is the stated guideline? Has the last leg or — as in, the land acquisition-related issues pertaining to the last leg of DFC, that is connectivity to JNPT, has that been resolved?

Sachin Bhanushali — Chief Executive Officer

So, June 2023 doesn’t seem to be a possibility at all. Though there is a little bit of opacity as far as information from official sources is concerned, but on the basis of our reconnaissance done in the market and the pulse that we get from various sources, best case scenario, March 20 — December 2023, which is also very unlikely, but we are hoping that December 2023 or maybe 2024 — FY 2024 should see dedicated freight corridor segment between Palanpur-Makarpura, Makarpura-Nhava Sheva should become operational. There has been no positive information about removal of the obstacle of the non-availability of about 5% of land on the linear project and that’s why there is an uncertainty there.

Bharti Sawant — Mirae Asset — Analyst

Understood. Lastly, on the capex front, can you guide us through what will be the absolute capex for each of these businesses over next two years?

Prem Kishan Dass Gupta — Chairman & Managing Director

Yes. So, we have this in our investor presentation also. We are looking at two terminals, rail linked terminals, at a cost of around INR60 crores each. And then after that we will be also spending on equipment and vehicles along with maintenance capex, and building our warehouses at our existing facility. So total capex, all — both verticals put together will come to about INR200 crores over the next 2 years, 3 years.

Bharti Sawant — Mirae Asset — Analyst

Okay. That’s it from my side. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Bhoomika from DAM Capital. Please go ahead.

Bhoomika Nair — DAM Capital — Analyst

Good evening, sir, and congratulations on a good set of numbers. Sir, you spoke about that on this quarter the INR10,000 plus EBITDA per TEU for rail has been improved mix of volumes towards import-export, 20, 40 feet mix, et-cetera. And given that the withdrawal of the haulage charges will largely be passed on, so that should not be an issue, but what restricts us to see some more expansion from this INR9,000 to say maybe a INR9,500, INR9,700, et cetera, is this mix something which is very difficult to sustain and if you can just talk about that a little more, especially given that rail mode share that you mentioned is only rising now?

Sachin Bhanushali — Chief Executive Officer

Okay. Bhoomika, [Foreign Speech]. But if wishes were horses, pigs would fly. It’s not very easy to improve margins at that level consistently. And as Mr. Gupta mentioned earlier, the quarter four number is also — has got a little bump on account of the extraordinary income which arose out of compulsory acquisition of land — a small parcel of land at Garhi Harsaru by Haryana State Government for the construction of a road project and compensation that we got on account of that. We consistently continue to be currently at the level of about INR9,000 to INR9,500 depending on the quarter and the way we measure it. On a steady-state basis, we expect that we should be able to maintain this by taking an increase in our price to the customer to take care of the increased burden on rail haulage charges with withdrawal of this rebate.

Bhoomika Nair — DAM Capital — Analyst

Got it. So you know, how would have the rail stack improved versus last year? I would think that, that would be the key area of improvement in the margin profile that we’ve seen over the last 12 months, 18 months. So, if you can just give some color on that. And given — and how is Viramgam kind of scaling up because that would act as a key furtherer of improvement in the double-stacking expert?

Sachin Bhanushali — Chief Executive Officer

Okay. So, we continue to be at about 35%, 38%. In the last quarter, we have been a little low, we are about over 35%, but our annual number is 38% as well as double-stack index is concerned. That means out of the total 40-feet containers we were able to carry 38% of our containers on the second stack. It’s also on account of heavyweight — 40-feet containers cannot be carried on the second tier. Our overall savings primarily has helped us in maintaining our margin at the same level. This year has not been significantly different from the previous year as far as number of containers as well as monetary value of the savings on account of double-stack operation. However, the 40-feet component in the overall business has gone up, and that has helped us a little bit during the current year. But primarily, it has been on account of the overall commercial strategy that we have been able to improve our margins as compared to last year, as well as the nominal EBITDA has gone up.

Bhoomika Nair — DAM Capital — Analyst

Understood, sir. And just a Viramgam number, I mean, how is that scaling up in terms of these scale-up because that would also have been terms of so improving the —

Sachin Bhanushali — Chief Executive Officer

Viramgam, our hub-and-spoke operations out of Viramgam has actually paid us very good dividends in terms of savings of rolling stock as well as a reduction in unit haulage cost, particularly for our Nhava Sheva business, our imbalance cost would have been much higher. So just to give you an idea, our under-frame cost last year was about INR7 crores, this year it’s about INR5 crores. It has gone down by INR2 crores. And in addition to that some additional double-stack benefit is — has been available for Nhava Sheva business as well as Pipavav business because we operated out of Viramgam. Viramgam originating business has been a cause of concern.

The reason for that is that shipping lines are not willing to open new locations, particularly on the back of the COVID-related restrictions. And in fact, they are trying to consolidate the business to a fewer number of ICDs than spread them around in multiple ICDs. But we are still onto it, and we expect that this year we will see some watershed in terms of improvement in volumes. So, inflection point probably should occur in 2023 — FY 2023 as far as originating business of Ahmedabad area is concerned.

Bhoomika Nair — DAM Capital — Analyst

Got it, sir, got it. I will come back in the question queue for more questions. Wishing you all the best, sir. Thank you.

Sachin Bhanushali — Chief Executive Officer

Thank you, Bhoomika.

Operator

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

Ashish Shah — Centrum Broking — Analyst

Yes, good evening, sir. Sir, can you just give little more detail about this land acquisition gain we mentioned for the Garhi? So, what was the total quantum and what was the gain we made there?

Sachin Bhanushali — Chief Executive Officer

So, the total area acquired was about 2 acres out of the 90 acres that we have, 90, 9-0. So, it is not a significant piece of land that is gone. And as per the government acquisition policy, I mean they pay X number of times the market — the circle rate. So, our land Garhi was purchased 15 years back. So — I mean the gain that we made in our books was to the order of INR12 crores.

Ashish Shah — Centrum Broking — Analyst

Sure. Okay. Sir, secondly, if you can describe the overall competitive landscape in the Ludhiana market, there at the start of Q4 we were kind of indicating that competitive scenario has kind of increased — levels have increased because of the restart of the Adani terminal. So if you can just talk a little bit more about the volume, market share and pricing pressures there, if at all.

Prem Kishan Dass Gupta — Chairman & Managing Director

Okay. So, Ashish, currently the Ludhiana market is in a steady state. We haven’t seen much dynamics there in terms of competitive pressure, but our anticipation is that quarter one, quarter two of FY 2023 is going to be the period of action. And there would be a possibility of compression of margins there to some extent. But we have taken a price increase last year, so we have been able to bump up our margin per TEU basis as well as overall performance of Ludhiana terminal in the last year. This year it is likely to be under pressure. It’s very difficult to quantify it at this stage because it depends on the aggression of the competition in the market as well as the overall demand because if there is enough demand in the market and if it is more than what all of us can provide to the customers, then the price pressure would not be as severe as it would be if the demand drops. So currently, I would say the situation is a little fluid. For us also, it would need maybe another couple of months experience to comment upon it.

Ashish Shah — Centrum Broking — Analyst

Sure. Sir, lastly just more of a clarification. We have done well in the NCR market. Our growth rate is high. And even in Ludhiana we have done well. But when one looks at the Indian rail data for EXIM loading, that seems to have grown by barely maybe a 2% or so. So, why so much discrepancy? I mean what — if you can just help us with that.

Prem Kishan Dass Gupta — Chairman & Managing Director

Okay. So, the methodology which is used by Indian Railways to arrive at that data is a little skewed. So, they take data of TEUs from — number of TEUs — or the throughput of the sector from us and multiply it by 14, which is not necessarily the average tonnage per container. And the average tonnage per container actually deteriorates further if 40-feet container composition in import and export increases. So, I won’t answer that to be reliable data. So if you look at overall data, the port side business has seen, say, about 4.5% to 5% growth. Empties have grown. Ristow also has grown. Ristow is basically trans-shipment which does not come either into hinterland or CFS. But as far as ICD business is concerned, I think overall ICD business across India has grown roughly were about 8% to 9%. Northern India segment in which we operate our Faridabad and Gurgaon terminal has grown by 15%. I — by mistake I mentioned it 18$ earlier, but it is actually 15%, and we have been able to grow at 32% in that market, which means that we have been able to do very well as far as acquisition of market share in NCR market is concerned.

Ashish Shah — Centrum Broking — Analyst

Got it. And sir, these growth rates you are saying this for Q4 right, or for FY22?

Prem Kishan Dass Gupta — Chairman & Managing Director

No, I’m talking about FY22.

Ashish Shah — Centrum Broking — Analyst

FY22, okay, sir. Thank you. That’s all. Thank you.

Operator

Thank you. The next question is from Abhijit Mitra from ICICI Securities. Please go ahead.

Abhijit Mitra — ICICI Securities — Analyst

Yeah, thanks for taking my question and congrats on a great set of numbers. Just to sort of probe a bit more regarding the NCR market share, actually it’s quite phenomenal when we see that there are almost 15 players including us, as in — who are present with their ICDs in that market. So when you are gaining at 30%, you must be seeing someone losing market share significantly. At the same time, you are quite confident that you’d be able to pass on the rebates, which has been remote by railways to the customers. So, what is sort of giving this confidence? Is there distress in the market or you see some competitors gradually moving out or not being able to sort of play the game in the level which you are playing? So, some clarity on that. And same for Ludhiana, I think while you are maintaining increased competition, but you are at the same time confident that you can pass it on, as in pass the price on to the customers, which I’m believing is also dependent on the fact what your competitors also do, right? So some thoughts on that, yeah.

Prem Kishan Dass Gupta — Chairman & Managing Director

Okay. So Abhijit, normally the way you increase your market share is not necessarily by taking away the entire business from other operators. Most of the time, what happens is that the new customers which are being added, which are shifting either from CFS to ICD business or those who are setting up, let’s say, new capacities in this market, they try you out and you get your market share primarily from that. It is not necessary — it is basically the growth and new business which contributes to your market share easily rather than taking away business from other. Taking away from — business and from others almost always results into a reaction from the customer — reaction from the service provider to match whatever you’re offering both in terms of service as well as in terms of pricing. That’s the first part of it.

Second part of it is that we have followed the commercial philosophy of creating adequate infrastructure as well as capacity on the rolling stock side — movement side so that we are superior in terms of our frequency as well as evacuation of containers or connection of export containers to the vessel — designated vessel. So, it’s basically on-time performance, which is kind of we always work on. This has helped us a lot. This has helped us in both import direction as well as export direction. And we have been able to intensify this with the freight express team which were — which came in, which resulted into a short transit time being guaranteed by Indian Railways to us. And within the cluster of terminals, our assured transit times are the best in class.

Not only that, we have actually been able to provide a performance which is better than assured transit time. So just to give you an idea, 36 hours, 42 hours — 48 hours and 52 hours for Nhava Sheva, Mundra Port and Pipavav port as well as well as Garhi terminal is concerned. But we have been able to maintain 36 hours for Nhava Sheva. We’ve been able to improve the Mundra Port times to — time to as low as 32 hours on an average basis, best ever was 27 hours. And Pipavav, instead of it being 52 hours, we have been able to do it almost always less than 48 hours. So, this creates a good amount of confidence in the minds of customers.

Similarly, another thing which happens is that because of competitive price which is being offered by others, there are many times when customers do test waters by shifting some part of their volume to the competition. But when the service is not as good as the service which is being provided by our, which comprises of the timely evacuation, customs clearance, facilitation as well as storage whenever bonded storage is required to be done at the terminal, so all this put together the offering that we have is definitely superior. That is the reason why I think the customers stick to us. It’s like the test of the pudding is the eating it. And since we — they find our services to be superior to those of others, we’ve not only been able to maintain our share but also increase our share in the market.

Abhijit Mitra — ICICI Securities — Analyst

Okay, great. So, this assured service performance or assured transit time performance that you are getting, because of the scheme which Indian Railways have started — this benefit is going to sort of spread as DFC stabilizes or this benefit is going to stay with you?

Prem Kishan Dass Gupta — Chairman & Managing Director

I think it will intensify further. With the dedicated freight corridor getting commissioned up to Palanpur, almost unofficially it is commissioned up to Palanpur, and with the feeder routes to Mundra port and Pipavav port also getting intensified, I think reliability of operating out of these two ports for Northern India terminals, particularly those who are directly on dedicated freight corridor like us, I think the benefit will intensify going further — going ahead.

Abhijit Mitra — ICICI Securities — Analyst

Okay, great, thanks. That’s all from my side.

Prem Kishan Dass Gupta — Chairman & Managing Director

Thanks, Abhijit.

Operator

Thank you. The next question is from Aditya Mongia from Kotak Securities. Please go ahead.

Aditya Mongia — Kotak Securities — Analyst

Good afternoon, everybody, and congratulations for the good set of numbers. My first question relates to this advantage of transit time and I think there is a very valid claim that you made that you have — you are the fastest to move out of NCR to the port, the transit time is the lowest. Post DFC. Does that competitive advantage change in any manner, whether it gets diluted or remains the same?

Prem Kishan Dass Gupta — Chairman & Managing Director

So from a dedicated freight corridor point of view, the dedicated freight corridor which can help Mundra Port and Pipavav port is already there. Operationally, it is already there. So, there is going to be only improvement as far as transit time on dedicated freight corridor and the rest of the network is concerned. So, I don’t see any reason why it will get diluted for — either for us or it will improve for others and not for us. So going forward, I think the benefit is going to stay, number one. Number two is that those who operate more number of services will be able to offer better services. And I think we are heads and shoulders above others as far as our frequency of services as well as the on-time performance is concerned. And that’s the reason why this benefit, as I mentioned earlier, will not only stay but will further intensify.

Aditya Mongia — Kotak Securities — Analyst

Okay. Again, I just want to kind of clarify a bit on this point more. See, I had gone to, let’s say, another competing terminal and what I got to know was that in terminals beyond that of Concor, a double-stack can — actually goes ahead of the ICD and then comes back as a single-stack inside the ICD. And Concor will have terminals on the ICD and will not see this thing happening —

Sachin Bhanushali — Chief Executive Officer

I have not understood what you said. Sorry.

Aditya Mongia — Kotak Securities — Analyst

So the question that I am going to ask you is that, would it so happen that because Concor’s terminals are on the DFC, the double-stack train comes directly to Concor. In your case it will not be the case and it will go further ahead of the ICD and come back as single stack to your ICD? Is that notion right or wrong?

Sachin Bhanushali — Chief Executive Officer

No, it is wrong.

Prem Kishan Dass Gupta — Chairman & Managing Director

It is not a notion. I think this is something totally wrong.

Aditya Mongia — Kotak Securities — Analyst

Understood.

Prem Kishan Dass Gupta — Chairman & Managing Director

If you go back to be inaugural train which was flagged off by the Honorable Prime Minister, it comprises of two trains, one train from Khatuwas and one train from Garhi Harsaru. And it was a double-stack train which originated from Garhi Harsaru and went all the way up to Mundra Port. And it was a double-stack train — so, double-stack doesn’t become single stack on account of dedicated freight corridor at all. Dedicated freight corridor is an additional capacity over the congested segment between Ateli and Palanpur. It does not affect double-stack operations of any terminal, which is already on double-stack map.

Sachin Bhanushali — Chief Executive Officer

In fact, we’ve been doing double-stack since 2011 out of Garhi.

Aditya Mongia — Kotak Securities — Analyst

Understood. That clarifies. The second question that I had was, see, you’ve gained meaningfully as rail operators from modal shift that we have happened this year. You talked about NCR market growing about 15% and the port volumes growing about 5%. What I’m trying to get a sense of is that this differential that is benefiting you, this modal shift that is happening, let’s say, in FY22, can this growth contribution be even higher next year or should we assume a similar kind of growth coming in from modal shift or incremental modal shift in next year itself also?

Sachin Bhanushali — Chief Executive Officer

Aditya, I think there should be some distinction which would be made between market share and modal shift. We have no mechanism to measure the modal shift. But as far as the market share is concerned, NCR — ICD market has grown by 15%, whereas the overall port markets have grown by, let’s say, 5%. It is about 4.8%, so 5%. So, the reason for this is not modal shift. In all probably the reason for this is that the manufacturing activity in India is actually getting better traction than commodity market and that’s why hinterland locations which are known to be manufacturing locations have seen a better growth as compared to the port side business, which is almost always — comprises of commodities. So there is the first part of it.

The second part of it is our market share growth has been primarily on the back of frequency of service, regularity of service as well as on-time performance. Particularly in export direction, we have been able to scale in the export direction. That has also helped us in reducing our imbalance which results into improvement in our margins, because that comprises our operating cost matrix in such a way that we are able to generate a better per TEU margin. And this is something which is specific only to an operator. It is not a benefit which becomes available to everyone. So it’s a complex play, which has resulted into this.

Going forward, I think the benefit of a dedicated freight corridor, as I mentioned earlier, will intensify, that’s number one. Number two is that modal shift will take place, but it will be gradual and we will see it over a period of, let’s say, next 2 years, 3 years, because getting connected to Nhava Sheva is also going to help us in terms of increase in ICD business because of modal shift. And the third part of it is that our market share will depend on how well, how nimbly we are able to address new market as well as growth market which is coming up, which until now we have demonstrated that we are able to do it better than others. So, we hope that we continue our performance —

Aditya Mongia — Kotak Securities — Analyst

Okay, understood. My next question was more strategic in nature. Some of your peers, let’s say Adani Ports, are able to offer an end-to-end service which starts with ports and ends with the ICT and there was rail and between also. Do you see customers starting to prefer that kind of an end-to-end service? And from that perspective, do you want to do more than what you are doing as a value add for the customer?

Sachin Bhanushali — Chief Executive Officer

So let’s look at it, Aditya, from a customer point of view. Customer is port as well as the route agnostic as long as it does not costing more. So choice of coming through a port primarily is dependent on the price — the overall transportation price, that is A plus B, ocean plus intermodal price that the customer has to pay. So an end-to-end value chain can be considered to be an end to end value chain only if we take into account the ocean side of it as well as the intermodal side of it. I would not be able to comment upon the kind of offers which the competition has been offering in the market.

But I think our numbers, both in terms of volume as well as in terms of margins that we generate and overall profitability of the business is concerned, I think in the past also we demonstrated that we are better off as compared to others and we’ll continue to be maintaining that lead. And we are quite, I would say, sensitive and alive to the fact that other value additions into business may result into competitive pressure. So, we keep our ears to the ground to ensure that we also are ahead of the curve as far as any new innovation in the market is concerned. In fact, we always led the innovation in the market.

Aditya Mongia — Kotak Securities — Analyst

Okay. Sir, the only concern that I have probably with this is there you, let’s say, may be making INR9,000 per TEU on the entire rail linked ICD journey as an EBITDA and someone else who is doing end-to-end may be making 2x of that and then that someone else has a bigger chance of probably offering some discounts.

Sachin Bhanushali — Chief Executive Officer

I would like to know who is 2x who is making —

Aditya Mongia — Kotak Securities — Analyst

No, the one you can do —

Sachin Bhanushali — Chief Executive Officer

In the market who is making 2x margins.

Aditya Mongia — Kotak Securities — Analyst

I’m not saying just in rail, but — yeah —

Sachin Bhanushali — Chief Executive Officer

Aditya, I don’t think it’s the real question.

Aditya Mongia — Kotak Securities — Analyst

Okay. Those were the questions. Thanks a lot for your response and all the very best to you, sir. Thank you.

Operator

Thank you. The next question is from Abhishek N from B&K Securities. Please go ahead.

Abhishek N — B&K Securities — Analyst

Yeah, hi, just two bookkeeping question. So the tax adjustment of INR20 crores odd, that relates to the merger exercise, is it?

Sandeep Shaw — Chief Financial Officer

Yeah, basically, if we see our result and all — hello, can you hear me?

Abhishek N — B&K Securities — Analyst

Yes, I can hear you.

Sandeep Shaw — Chief Financial Officer

If you see the tax adjustment of INR22 crores which is coming in the result we because of the merger and all that, earlier we have made the standalone provision for both the separate entities for Gateway Distriparks Limited and Gateway Rail Freight Limited, and once this merger order we received from the NCLT, then we have given the effect of the sale of the NCLT order. We have filed the combined return of the entity and this INR32 crores adjustment which is coming as a positive for the company as a refund is because of that.

Abhishek N — B&K Securities — Analyst

Okay. So what tax rates should I build in going forward in FY23, FY24?

Sandeep Shaw — Chief Financial Officer

MAT rate, that is 17.47% for the coming years. We will keep on paying MAT because we FTIA right now till FY26, FY27 of — till FY26, FY27 we will keep on paying MAT and whatever MAT rate will be available, that will be used in the subsequent years post FY26, FY27.

Abhishek N — B&K Securities — Analyst

Okay. That’s useful. And employee expenses, I see a fairly big jump from around I think 150 or —

Sandeep Shaw — Chief Financial Officer

As already mentioned in the call, there were some provisions made for the variable pay and other expenses and all that for — in this quarter. But if you see the overall employee expenses for the entire year, last year it was almost INR67 crores and this time it is INR65 crores.

Abhishek N — B&K Securities — Analyst

Okay, so more or less the same run rate?

Sandeep Shaw — Chief Financial Officer

For the year.

Abhishek N — B&K Securities — Analyst

Okay. That’s useful. Thank you so much.

Sandeep Shaw — Chief Financial Officer

Thanks.

Operator

Thank you. The next question is from Harsh Shah from Jefferies. Please go ahead.

Harsh Shah — Jefferies — Analyst

Yeah, hi, my question has been answered. Thank you.

Operator

Thank you. The next question is from Pawan from Renaissance Portfolio Management. Please go ahead.

Pawan Parakh — Renaissance Portfolio Management — Analyst

Hi, sir, I hope I’m audible. Hello?

Sachin Bhanushali — Chief Executive Officer

Yes, you’re quite audible.

Pawan Parakh — Renaissance Portfolio Management — Analyst

Yes sir. So, sir, just one question. So, over a longer period, say, take a 2-year, 3-year view, it appears our industry has got several tailwinds in terms of DFC and signing FDA’s, BLI, et-cetera, et-cetera. So where do you see your this — INR3,30,000 odd TEU volume that you do over the next 2 years, 3 years, 4 years, if you could provide some long-term guidance, vision, that would be helpful. Thank you.

Sachin Bhanushali — Chief Executive Officer

It will be very difficult to answer this question, because it is more like crystal ball gazing and knowing what is going to happen in next 2 years or 3 years. But if we look at, let’s say, purely guidance from — point of view and if we look at GDP growth say around 8% to 9% as it has been predicted and supported by the IMF numbers as well, I think a low double-digit growth is something which is going to be easily achievable. But in addition to that, I think our intensification of both services as well as presence in the market when we come out with two new terminals, which are quite actively I think in the process of closure, so with both these things we should be able to grow at more than the anticipated rate of this sector, which would be, let’s say, lower double-digit. So mid of teens or let’s say higher teens is what I would look at from an overall growth point of view with a condition with the caveat that the GDP growth has to be the main-stay of the intermodal sector as such.

Pawan Parakh — Renaissance Portfolio Management — Analyst

Right. And sir, so I understand there — as you’ve highlighted, there are some one-off costs related to the CFS business. But now, in terms of EBITDA, per TEU do you, this INR2,200, INR2,300 is the number that we should look in terms of EBITDA per TEU for the CFS business going ahead also?

Sandeep Shaw — Chief Financial Officer

Slightly higher than that, so we expect to improve our margins this year now.

Pawan Parakh — Renaissance Portfolio Management — Analyst

Okay. And in terms of volume, sir, what would be the, say, volume growth expectation for the next 2 years, 3 years, 4 years in the CFS business?

Sandeep Shaw — Chief Financial Officer

So volume will go down actually because of Punjab Conware was contributing about IR1 lakh TEUs per year, but it’s not that we lose the entire INR1 lakh, we will gain some of it. So, on a like-to-like basis we will still be growing at anywhere from 3% to 5% in terms of volume. But if you add Conware into it, then you will see a dip, but you won’t see that at the EBITDA level.

Pawan Parakh — Renaissance Portfolio Management — Analyst

Okay. And just one last thing, sir, in case we see a very strong growth over the next 2 years, 3 years, is it that we can further, say, accelerate our expansion plan in terms of, say, rather adding 3 terminals, 4 terminals, then 2 terminals and that sort?

Prem Kishan Dass Gupta — Chairman & Managing Director

So we have two definitely on the radar. But just depending on the macros and where the industry growth is coming, we’ll have to see the locations. But we’re open to expanding into other areas apart from the Northwest Corridor as well. And also I think Sachin mentioned this earlier that capacity at our existing terminals, we have enough land bank to grow. Right now, we’re only — we’ve only developed about 50% of it and out of that 50% we’re using half of it. So just with a little bit of incremental capex, we can handle 4x the volume that we’re currently handling in all our ICD.

Pawan Parakh — Renaissance Portfolio Management — Analyst

Okay. Sir. Thank you so much. All the best.

Operator

Thank you. The next question is from Aditya Makharia from HDFC. Please go ahead.

Aditya Makharia — HDFC — Analyst

Yes, hi. What’s the rail coefficient now at Mundra and Pipavav versus, let’s say, 6 months ago?

Sachin Bhanushali — Chief Executive Officer

Aditya, it’s a very difficult question to answer. So the railway numbers include the CFS volumes as well. There has been an improvement in our Nhava Sheva. Nhava Sheva has gone up from 15% to 17%. Mundra Port continues to be in the lower 30s. At present, I think it is about 33%, 6 months ago also it was about 32%. Pipavav has improved a little bit more than that. Pipavav used to be about 52% and it has regional level of about 57%. I’m not sure about the Pipavav current numbers. I’ll come back to you on that. It is either 55% or 57%.

Aditya Makharia — HDFC — Analyst

Okay. So, this implies that as the DFC stabilize the rail coefficient is going to go up which means that the shift from road is not yet happened in any meaningful way.

Sachin Bhanushali — Chief Executive Officer

Aditya, this is not the indicator which will prove that because this indicator is misleading on account of the CFS business being included in the modal split of rail and road, or the entire CFS business will continue to be by road only. So from a modal shift point of view, the way would — I would look at it is that, ICD business — growth in ICD business vis-a-vis growth in the port business, all ports put together — all the three ports put together is the right way of looking at it. And this year, we have seen that there has been a modal shift. There has definitely been a growth in ICD business more than that port town. I think this trend is going to continue because of dedicated freight corridor. But to answer your question, yes, dedicated freight corridor will help it.

Aditya Makharia — HDFC — Analyst

Okay. Can you quantify anything which you see in 2% share, 3%, I mean just ballpark in your estimate?

Sachin Bhanushali — Chief Executive Officer

No, I don’t think I want to hazard a guess.

Aditya Makharia — HDFC — Analyst

Okay. Second question is the Palanpur-Mehsana line I believe has started and so when does this connect to Ahmedabad? When do you see that happening?

Sachin Bhanushali — Chief Executive Officer

So the next segment of our 129 kilometers which is going to be operational is going to be Mehsana-Baroda — sorry, Palanpur-Baroda. And Palanpur-Mehsana line is become — becoming operational only from trial point of view, but unless the entire 129-kilometer stretch between Palanpur to Makarpura becomes operational, the states will not be open for commercial operations.

Aditya Makharia — HDFC — Analyst

Okay. And when does that happen?

Sachin Bhanushali — Chief Executive Officer

I think by September 2022 we should see that, but the benefit of that doesn’t come to us because Mundra Port and Pipavav Port continue to branch up it either at Pipavav — either at Palanpur or at Viramgam.

Aditya Makharia — HDFC — Analyst

Okay. And it doesn’t —

Sachin Bhanushali — Chief Executive Officer

Aditya, benefit of anything south of Palanpur or south Sanand comes in only when we reach Nhava Sheva. Otherwise, you don’t get that benefit.

Aditya Makharia — HDFC — Analyst

Okay. So, the 36 hours you are doing to JNPT will not be shortened further?

Sachin Bhanushali — Chief Executive Officer

No, not at all. Until we reach Nhava Sheva with dedicated freight corridor right there in Nhava Sheva environment.

Aditya Makharia — HDFC — Analyst

Okay, got it. Anyway, wish you all the best post the merger and I look forward to outperformance on your side.

Sachin Bhanushali — Chief Executive Officer

Thanks, Aditya.

Operator

[Operator Closing Remarks]