An aggressive and well-coordinated road-to-rail freight conversion effort combined with an economic rebound directed more volume to Container Corporation of India (Concor), boosting the state-owned rail giant’s first-quarter earnings by double digits.
Concor officials during a press briefing cited double-stack train service expansion, to 479 runs from 164 runs in the January-to-March period, and a surge in imports as key factors for the first-quarter performance. Container volumes at India’s major or public ports grew 6.3 percent year over year in the first fiscal quarter to 2.25 million TEU, a growth trend that continued in July as traffic rose 5 percent year over year to 752,000 TEU. India's GDP growth will accelerate slightly this fiscal year to 7.3 percent, according to IHS Markit forecasts, which expects improving domestic demand and recovering commodity prices will drive import growth. India's GDP grew just shy of 7 percent in the first fiscal quarter.
Concor’s net profit during jumped 36.4 percent year over year in the April to June period to Rs. 243.38 crore ($38.2 million) from Rs. 178.48 crore a year earlier, on revenue that was up 11.2 percent to Rs. 1,550.44 from Rs. 1,394.35 in the same three months of 2016, according to a company filing with the Bombay Stock Exchange.
That is a solid start to fiscal 2017 to 2018 for India’s largest intermodal company after it suffered a 12 percent dip in net profit and a 5 percent fall in revenue in the last fiscal year.
An analysis of the results shows first-quarter operating income from Concor's core international business increased 5 percent year over year to Rs. 1,131.5 crore, whereas income from domestic operations totaled Rs. 325.21 crore, a 32.5 percent gain over April to June 2016.
As a result of that strong growth, Concor’s market share climbed to 76.3 percent from 72.5 percent in the last quarter of fiscal 2016 to 2017, according to the statement.
Officials also said Jawaharlal Nehru Port Trust’s (JNPT) direct port delivery (DPD) program, which is already creating major growth challenges for rival logistics providers. has had no impact on volumes handled at Concor’s Dronagiri inland terminal located close to the public harbor.
“We are able to maintain our volume levels and in fact, we started handling DPD containers in our CFS [container freight station] and in the last quarter, we also did some trains [for DPD volumes] and there will be a lot of emphasis in the coming days,” they said.
Officials said though it is too early to tell what the Goods and Services Tax (GST) means for the intermodal logistics industry, rail volumes are expected to grow in the coming months as the government ramps up efforts to shift more loads away from trucks that are clogging port roadways.
The company is said to control around 84 percent of rail cargo through JNPT, and at the ports of Mundra and Pipavav, its share is slightly more than 50 percent. It is in the process of adding more services connecting the two private ports to the Jakhwada Inland Container Depot, near Ahmedabad in Gujarat State.
To meet expected growth, Concor is looking to spend about Rs. 1,000 crore during the year on capacity expansion. The company currently operates 68 inland locations and another four sites through tie-ups with other service providers.