Gateway Distriparks in the market to buy three new ICD terminals as part of expansion plans: Prem Kishan Gupta

Edited excerpts: 

India has witnessed a fall in exports in FY24 over FY23. What is Gateway’s outlook on exports? When do you see exports picking up again?

Indian exports fell significantly in the January-March quarter and typically the April-June quarter is also weak for exports, so we will have to wait till the second half of the year to see accurately how exports perform. While we have seen a slight improvement in exports in the current quarter, we will have to see if the growth momentum sustains. And if you look at the global market, whether it is the US or UK or Europe, they have all slowed down.

Secondly, exporters need to figure out ways to be more competitive because freight rates have risen significantly due to the ongoing conflict around the Red Sea.

What are the targets in terms of revenues and margins that Gateway Distriparks is looking to achieve in 2024-25?

We are targeting double-digit growth of around 10-12 percent in our top line and margin growth of around 2-3 percentage points from our current levels of 25-26 percent levels.

We are maintaining the EBITDA (earnings before interest, taxes, depreciation and amortisation) margin in the rail business. On the CFS business, I think it has plateaued out. And I don't think we'll be going down from here, and margins will maintain. We are not looking to chase volume growth at the cost of our margins.

Gateway had picked up market share from CONCOR (Container Corporation of India) last year. Can you share more on how much market share you have gained from while the busy season charge was on? 

In NCR (National Capital Region), we still maintain our 16-17 percent market share though the overall pie has decreased, but we have been able to maintain our market share, and we hope to increase from here.

Our Faridabad ICD (inland container depot) is lagging behind, otherwise we would have been much higher. CONCOR has started double stacking at its Dadri ICD which has led to a loss of market share for us from Faridabad.

[Double stacking is having two layers of containers on goods trains transporting them between seaports and ICDs. Many ICDs have dedicated railway sidings.]

But we hope to start double stacking operations from our Faridabad ICD soon and that will lead to market share gains.

Going forward, we are aiming to handle 20 percent of containerised cargo traffic from the NCR.

Last year the government had pegged total logistics costs in India at 7.8-8.9 percent as a proportion of GDP. How accurate in your opinion is the government’s estimate?

A number of infrastructure developments like the operationalisation of the Eastern Dedicated Freight Corridor and faster rail cargo operations has helped reduce the logistics cost in India over the last few years from the earlier 14 percent to around a single digit now. When the Western Dedicated Freight Corridor is fully operational, logistics cost in India will fall even more.

How much investment can we see from the company in the coming few years?

We are in the market to acquire two-three more ICDs in the next two year and will look to spend around Rs 300 crore-400 crore for the same. We will either acquire land and construct the ICDs or acquire them. Our plan is to focus more on our ICD business.

Our new ICD in Jaipur has been delayed and we expect that to be operational by 2025-26.

We are encouraged by the steps taken by the state governments of Rajasthan and Haryana to make it easier for companies to set up ICDs.

Our CFS business has bottomed out, and there's no scope for any further investment, except for, you know, some small capex and maintenance and repair.

Given that you are one of the oldest players in the CFS space in India, do you think that this industry will slowly, in the next five to 10 years, fizzle out as more port operators set up their own in-house container processing stations?

I don't think the industry will cease to exist or fizzle out. The profitability that we have seen in CFS business earlier, or even some years back, will not be there. But the industry will find stability and the infrastructure already exists in India, the warehouses are there, the equipment is there, the yard is there. It is meant for container storage or cargo storage. So that will continue, because ultimately, the government needs to support industry for it to thrive in India again.

Even at our facilities around the Krishnapatnam Port, we are looking to sell our CFS and around 48 acres of land, because the new port operator has stopped container handling outside the port, so there is no business over there. So far we have sold off 14 acres and two warehouses, and we will be stopping the CFS operations.

[Gateway Distriparks had acquired about 48 acres land at the Krishnapatnam Port near Nellore in Andhra Pradesh for setting up CFS and warehouses in 2015.]

The development of Vadhavan Port is expected to start from the end of 2024. What sort of investments do you expect will come from the CFS industry around Vadhavan Port?

I don't think there will be many players who will be going there. At least we are not going there, because the port will look to handle most of its container traffic internally.