Shipping lines secured in '12 pushed Q2 growth: Guj Pipavav

Despite a tough macro environment, Gujarat Pipavav managed to deliver fairly strong set of numbers. Prakash Tulsiani, MD of the company says it is because of the shipping lines that the company secured in Q4 of FY12.

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He says the west coast of India, which is the largest part for container business for India, grew only at a miniscule 2 or 3 percent, whereas usually it grows twice the gross domestic product (GDP). "At Pipavav, we grew at 13 percent compared to 2 percent in the market," he says. In terms of bulk business, the company has done well in coal and fertilisers.
Though 70% of the company's topline is dollar denominated, rupee depreciation helped it clock only 2 or 3 percentage points gain. Below is the verbatim transcript of Prakash Tulsiani's interview on CNBC-TV18 Q: In a tough macro environment you have delivered a fairly strong set of earnings on all accounts, broad based growth in your port volumes have given a solid push to earnings, what were the other key growth drivers?
A: The west coast of India, which is the largest part for container business for India, grew only at 2 percent or 3 percent and this is a very small growth. Typically west cost of India for container business would grow twice the gross domestic product (GDP) and this time we have seen just the reverse. At Pipavav, we grew at 13 percent compared to 2 percent in the market. This growth has come on the back of shipping lines we have secured in Q4 of 2012. Their volumes have come up; they are performing at levels after the built-up which they have had and this is the result which we have because of the growth these shipping companies gave us.
In terms of bulk business, we have also done well on coal and fertilizers. These volumes have come in on the back of the policy changes which we saw for a limited period and there was lot of coal which was imported also with good monsoon, we have got fertilisers, shipments coming up. Q: Seventy percent of your topline is dollar denominated and the favourable currency movement too has been a significant tailwind for realisation. So how much of a strong operation performance would you attribute to the currency factor?
A: Exchange gains are limited because the average for the third quarter, our exchange rate would be in the range of 62.5 to 63/USD. So, it's only 2 or 3 percentage points that we gain and not anything significant. It is mainly from the operational performance and operational profit which has seen good growth in Gujarat Pipavav numbers. Q: Your container as well as the bulk cargo volumes increased quite a bit by 30 percent year-on-year. In this a seasonally busy quarter what were the new services that you added and how is upsizing lifting the volumes for you?
A: We had two services which we added in Q4 2012 and then we added one more service in Q3 2013 but that effect was only for a month or so. So, there were new services and there were certain services which were upsized. So, this brought additional volumes to Pipavav. This is on the back of a value proposition which we have and that is the connectivity; the operational efficiency, closeness to Nhava Sheva has ensured that the volumes flow into Pipavav and that has brought in the growth of 13 percent which we have seen in Q3. Q: The rail and inland container, deeper volumes too have jumped, 40 percent year-on-year- what role is this playing in the earnings and how do you see this momentum shaping up in the second half of the year?
A: If you look at the global market because that is what we should look at because this is an export-import (exim) trade and in the export-import trade we have seen that US is buying much more than what they were doing in the recent past. So, US is growing and they are buying lot more out of India. However, Europe looks to be stagnant. So, if I to look at these two trade; US is doing better than that of Europe and the Far East trade is remaining at the same number. So, that is why we see in India the growth of approximately 2 percent only on the west coast in terms of container volumes.