Captains Speak     

Published: January 31, 2024
Updated: January 31, 2024

Gateway Distriparks

‘Growth continues amid global turmoil’

Revealing that “Gateway Distriparks, which had a 40.25 per cent equity stake in Snowman Logistics, has during Q1 FY2024 acquired an additional 1.50 per cent stake, raising (the total) to 41.75 per cent, Prem Kishan Gupta, Chairman and Managing Director of Gateway, added that “depending on cash inflow of the company, Gateway may increase its stake in Snowman further, going ahead.”

Addressing a post Q2 FY2024 performance conference call, Mr Gupta maintained that Snowman has been witnessing high growth in volumes. Most of the facilities are full and it is pursuing capacity expansion. The warehousing margin will continue at 15 per cent going forward.

Reviewing the financial performance of Gateway during Q2 FY2024, Mr Gupta said that for the quarter ended September 2023, consolidated net sales (including other operating income) of Gateway Distriparks increased 10.97% to Rs 398.53 crore. Operating profit margin declined from 26.70% to 25.90%, leading to a 7.67% rise in operating profit to Rs 103.23 crore. Profit before tax grew 17.64% to Rs 71.44 crore. Net profit attributable to owners of the company increased 23.60% to Rs 73 crore. Year-to-date (YTD) net sales (including other operating income) increased 9.29% to Rs 768.21 crore. The operating profit margin declined from 26.08% to 25.86%, leading to 8.37% rise in operating profit to Rs 198.63 crore. Profit before tax grew 18.84% to Rs 135.86 crore. Net profit increased 16.56% to Rs 135.95 crore.

JAIPUR TERMINAL

Analysing the results, Mr Gupta commented, “The company has recorded a good performance this quarter, sustaining growth amidst the fluctuations typical of the current economic landscape. The strategic measures we have implemented in our rail network, particularly focusing on container hubbing and double stacking, have been pivotal in managing the prevailing import-export imbalance. In recognition of the long-term prospects of EXIM volumes, we are strategically expanding our assets. Starting this month, we are augmenting our train fleet with an additional three trains. The first train will be delivered this month and the other two over the remainder of the financial year. Furthermore, we have increased our vehicle fleet by 60 to ensure seamless first- and last-mile connectivity for our clients. Our Jaipur container terminal is under construction and we continue to evaluate new locations for expanding our rail network further. While we navigate the complexities of a turbulent global economy, we approach the future with cautious optimism and an unwavering focus on strategic and sustainable growth.”

According to him, the throughput of the rail business in Q1FY24 was up 5% (to 89,939 TEUs) and that of CFS was down 3% (to 89,958 TEUs).

CYCLONE WOES

Train running was impacted in the Q1FY24 quarter by cyclone ‘Biparjoy’ when the rail network and port operations were shut for some time in Gujarat, along with some double stack restrictions imposed temporarily by Indian Railways during the quarter. Double stacking was impacted due to derailment of one train and the subsequent restriction on double stacking. Things normalized only in July 2023. Loading restrictions have gone but speed restrictions (75 km/ hour) remain. The cyclone in June 2023 affected operations of both the Gujarat ports. But in July 2023, rail volumes were good.

Mr Gupta maintained that the “CFS business was impacted by new customs regulations which impacted container volumes at Nhava Sheva. The management is doing its best to bring back volumes.” He added that the “rail business volume growth guidance remains the same at 10- 15% for FY24. The volumes have been catching up and we are starting to see signs of improvement in the export volumes as well. Export volumes have been low in the last few quarters due to low demand in Western Europe and North America, especially for retail products manufactured in India for those markets. Exports to the US and Europe for the Christmas demand are driving the export volumes recovery.”

According to him, the Jaipur ICD will be operational by Q4FY24 but the volume ramp- up will be gradual. The Jaipur ICD is expected to reach proper volumes from FY26 and make a strong contribution to the EBITDA. The company is now adding three trains to its fleet over the next 6 months as the overall EXIM demand continues to grow. On the expansion front, the company is on track to finalize new locations in the hinterland to expand its container terminal network. Its share of double stacking in Q1FY24 was 35% of the total rail volumes versus 42- 44% last year. 5,000-6,000 TEUs of volume was lost in June 2023.

FREIGHT RAMP-UP

“EBITDA/TEUs in Q1FY24 is about Rs 9,100/TEUs (Rs 9,400/TEUs in Q1FY23) for the rail business and Rs 2,100/TEUs (Rs 2,100/TEUs in Q1FY23) for CFS. The Kashipur ICD’s monthly rate is about 3,000 TEUs without empties. In some months, it has touched 3,500 TEUs as well. The rail share is 100% with the company. The ramp-up will continue and we hope to take it to 4,500 TEUs soon. We are able to get volumes from catchment, both imports and exports,” Mr Gupta noted.

Gateway incurred a capex of about Rs 10 crore in Q1FY24, while the aggregate capex for the next 2 years will be in the range of Rs 300 crore.

At DFC, 70% construction has been done. Dadri to Rewadi is operational, while the company is sending trains via DFC only to Mundra and Pipavav. A track length of about 570 km to JNPT will be operational by the end of next year. Some volume might shift to JNPT at about 5-10% migration from Pipavav and Mundra. About 90% of the company’s rail volume is towards Pipavav and Mundra, and 10% to JNPT, Mr Gupta said.