Have not completely passed on hike in rail fee: CONCOR

In an interview to CNBC-TV18, P Alli Rani, Director-Finance Container Corporation of India spoke about the latest happenings in his company and sector.

"We will definitely try to pass on the price hike. It will be done in phases. We haven’t passed it on completely", she said.Below is the verbatim transcript of P Alli Rani's interview to Surabhi Upadhyay and Mangalam Maloo on CNBC-TV18.Surabhi: Two landmark developments underway as we speak, one is demonetisation. Some brokerages suggesting that maybe that could be disruptive for your business at least in the next one or two quarters and the other is the business realignment with respect to goods and services tax (GST) and a lot of the supply chains are obviously getting changed around. Can you give us some sense of whether there is going to be any immediate volume impact in the next two quarters?A: The current quarter we might see some impact because demonetisation said to have affected their road trailer as well as export industry. So there could be -- we haven't complied the figures yet but there could be an impact that is what I would think.Incidentally, this quarter has been very different for us because we have successfully executed some new steps like double stacking in greater volumes and also assured time for rail traffic. So, these things might have compensated also. So, we hope that maybe this quarter might have had a negative impact because of demonetisation but that could have been confiscated by these two new initiatives by Concor.Surabhi: Net-net Q3 volumes are flat or can you hope for some sort of growth?A: I would say that there could be definitely a slight growth because when we do double stacking, we would definitely see improved volumes. So, that could be growth, maybe not high growth but there could be a lower growth.Mangalam: Two points you spoke about, first one is double stacking. Now, last quarter your double stacking was almost 3-4 percent of the total cargo. You say that you have increased that, can you give us a number how much it is in this quarter and secondly, what happens to your FY17 volume guidance? The last time you told 6-8 percent, does that still stay?A: I will answer your second question first. We haven't taken any decision to revise our outlook for the year. So, let us keep it at that only.However, with regard to double stacking, I am sure there would be at least double numbers so if it had been 3-4 percent, now maybe the percentage of double stack maybe 6-7 percent.Mangalam: When I look at the report, Nomura says that the volume growth spillage or the impact can also spill over to Q4. Do you see that as a possibility, do you think that will happen too?A: We hope that the full impact of our initiative will be seen in Q3 and hopefully the negative effect, if any, of the demonetisation will also hopefully die down by then.Mangalam: Could you give us a status of the empty running of trains this quarter so far?A: No, you will have to wait for compilation at the end of this month. However, I can say that empty running would definitely reduce because of double stacking.Mangalam: Can we see margins of 20 percent in all of FY17 because we saw 18 percent in the first half so far and the previous years we had quite high margins, historically you have been doing 23-25 percent margins as well. So, is 20 percent EBITDA margins a possibility in FY17?A: Quite possible.Mangalam: Capex update on your Kathuwas ICD, Jharsuguda Punjab multi-modal parks, just give us a status check, what exactly is happening there.A: The problems on capex and our projects have been more than satisfactory.Mangalam: Are they on stream, have they come on stream, are they contributing to the company's revenues?A: The project is completed and that itself is a major achievement. Most of these projects are targeting the volumes of whatever GST is expected to bring. It doesn't mean that we are not running trains for Kathuwas, because of the existing of Kathuwas we are doing so much double stacking today. Bookings would start because the industry will now shift to our ICD and that will happen over the maybe next one year, you will see the volumes picking up. However, each one of these facilities are contributing in some other way like double stacking or there could be a terminal, all these things are benefit.Mangalam: The railways has increased land licence fees to Container Corp. Some reports peg it at around Rs 420 per container. Are you looking to pass that on or is the company going to take that hit and perhaps impact the margins?A: We will definitely pass it on. At least try to pass it on.Mangalam: How much have you passed on already?A: No, it will be done phases.Mangalam: Right now you have not passed it on, you are paying that Rs 420.A: Not completely, because there has been some effects, whatever we have taken so far in our book, also the first period is prior to the announcement.