Aiming for 12-12.5% overall growth in FY16: Container Corp

The company is more hopeful for the current year.

“We are establishing 15 multi-modal logistics parts in various parts of the country including some parts on the forthcoming dedicated freight corridor alignment,” Gupta said.

For FY16, the company’s investment target is Rs 1,200 crore. It is also aiming for a 12-12.5 percent overall growth, he said.

Below is the transcript of Anil Gupta's interview with Surabhi Upadhyay on CNBC-TV18.

Q: I want to breakdown this performance in two of your key segments, the ExIm segment and the domestic segment. The sense one gets is that the ExIm segment is doing very well, but the domestic market is still facing sluggishness; if you could run us through?

A: We did very well in ExIm segment and we could have done better. In fact, we thought we were constrained by the resources during a particular part of the year when we lost out on revenue potential. We have to make it up in the current year.

Domestic has not done well, primarily because of sluggish economy and also because of certain problems with the haulage policies of the domestic sector. It was hit very badly by two successive haulage hikes, which had to be affected in mid-December and early March this year.

Q: On the haulage hikes, have you passed on most of those hikes or did you have to take a hit and absorb because your domestic business margins have fallen by almost 500 bps?

A: Yes, in domestic we are not able to pass them on and we took a hit. Even now, we are thinking that we have to do more re-jigging because market is bad. Iron ore is not moving; thousands of trucks are available and they go at very cheap prices because they are not getting anything to move. That created a bit of a demand drop down for domestics.

On the other hand, diesel prices had also been going down. Now, of course, they are on a rising spree, but they were going down. They had gone down in Q2 and Q3 because of which road rates had fallen quite low. So, we had a problem in domestic.

Q: Can you give us a sense of volumes? Did you see any volume growth at all in the domestic business and also volumes for the ExIm part?

A: No, in fact volume-wise, our total year we finished at around 9 percent for international and for domestic, it was down. Volume was 11 percent for international. For domestic, the volume was down by 3.5 percent. Overall, our growth was 8.44 percent in volume.

Q: Let us talk about some of your capex plans going forward. What are you looking at in terms of addition of rakes? Any other capex expenditure that you have planned up right now.

A: We had set-up a goal of investing Rs 6000 crore during the 12th five-year plan period. We have already made quite a substantial headway in form of establishing new facilities. We are establishing 15 multi-modal logistics parts in various parts of the country including some parts on the forthcoming dedicated freight corridor alignment. We are well on our way.

Wagons also we have acquired 17 rakes last year against planned acquisition of 24, because of some technical problems. There is a Z section, which was not available. This year we will be going for around 25 rakes.

New terminals are coming up. Fifteen terminals will be up and running before the end of this fifth five-year plan period. We have also identified many other more locations, which we will be taking up after 2017.

We realised that these are transitory period when the volume growth might affect the plans, but in the infrastructure we have to look at long period and we are planning according to long period requirements.

Q: You gave us the whole five year investment amount, but if you break it up for the current year FY16, how much do you see yourself investing and if we could get an update on the private freight terminal? I believe you have got about 37 acres of land from Haryana government for one of these multi-modal logistics parks that you just referred to?

A: We are already in the construction phase in most of these facilities except this Haryana state government land which we will be getting very soon. For that the things are yet to start. That will also be completed very soon.

So, we have invested around Rs 1,039 crore last year. This year our target is around Rs 1,200 crore and most of these facilities are already on way so contracts are already working, we will need to make payment. We expect Rs 1,200 crore investments in this particular year.

Q: Your investment ballpark figure is Rs 1,200 crore for this year. In terms of volumes, what are the internal targets that you have set for yourself, both on the ExIm business and the far more challenging domestic business? What sort of volume growth are you hoping for?

A: There were some problems, which we were encountering about haulage charges. We are already in talks with relevant authorities because market scenario is bad. Not withstanding that, we have given ourselves a target of around 12 percent growth overall.

Currently, because of uncertainty in domestic, we feel that 9.5-10 percent would be there but once the uncertainty in domestic goes out; there are some service tax related issues which we are also talking to relevant authorities. Once they go out, we will be quite hopeful that around 12-12.5 percent growth will be there.