It gives me an immense pleasure to present you our 2015-16 annual report. Through this communication, I want to take the opportunity to drive you through the industry prospects, our positioning in the space and our growth vision.
Expansion and growth come with the simple ability to look beyond what already is and picturing what can be. As a CFS and ICD operator, our growth is largely dependent on container traffic.
Over the past few years, container traffic witnessed a CAGR of 3%. However, during 2015-16, there was a 5% increase in container traffic on a year-on-year basis. The 12 major ports reported an annual growth of 3% in container traffic, while the non-major ports reported 12% annual growth. With improving global scenarios and EXIM trade, combined with planned expansions at major ports like JNPT, India’s containerization volume is expected to double up by 2020. This will be further in sync with the nominal GDP growth and it will be largely driven by the following factors:
1. Setting up port-based export-oriented manufacturing clusters for industries like electronics, apparel, food products, pharmaceuticals, footwear, automotive & auto components and other break-bulk commodities like steel, cement, sugar and rice
2. Availability of rail transit capacity and expansion in the container handling capacity at ports and CFCs and inland waterways
3. Development of multi-modal logistics park
4. Impact of ‘Make in India’ initiatives
5. Implementation of GST
The ladder of success is best climbed by stepping onto the rocks of opportunity. At Navkar, our success has always been measured by our proactive approach to the underlying opportunities. We sensed opportunity in capturing an incremental container traffic post JNPT’s expansion. We sensed opportunity in reaching out to customers in the hinterlands through our efficient road and rail connectivity. We sensed opportunity in proving substantial amount of savings to our customers through our CFSs and ICDs.
As a response, we are tripling our capacities from 3,10,000 TEUs to approximately 10,52,000 TEUs over the next couple of years through the following initiatives:
1. Increasing capacities at Soma thane CFS: This will allow us to address the incremental container traffic resulting from JNPT’s expansion.
2. Setting up an ICD and logistic part at Vapi: The initiative gives us proximity to address a potential market of ~1.2 mn TEUs (20-25% of JNPTs volumes) destined/originating from the industrial clusters in South Gujarat. Being the only ICD in this region offering rail and road connectivity, we will offer cost competitive advantage to our customers.
3. Leasing arrangement with Kribhco Infrastructure Ltd (KRIL):
In order to leverage the rapid growth in container traffic at the non-major ports like Mundra and Hazira, we have taken 40,000 TEU ICD of KRIL on lease to serve North and Middle Gujarat market
Our continued expansion process and proximity to key inland hubs combined with our PFT will help us capture a larger market share. With most part of our expansions nearing completion, the following year will further improve our visibility, revenues as well as profitability.
I would like to acknowledge all our stakeholders, shareholders, investors, bankers, board members, senior executives and our employees for their continued faith and support. We hope our association in the coming years will only get better. Together we all must dream to take our Company to the next level of growth.
Shantilal J Mehta