Mumbai: Container Corporation of India (Concor) and Maersk are setting up India's largest inland container depot (ICD) with a 1-million TEU capacity at Dadri near New Delhi.
The project will be managed by Star Track Terminals, a 51:49 joint venture between Maersk and Concor. This is a part of Concor's strategy to lock in the freight container traffic of Maersk.
In line with Concor's strategy of capturing its freight traffic through joint arrangement, the company plans to make a joint bid as a minority partner with Maersk for a third container terminal at Nhava Sheva, Jawaharlal Nehru Port Trust. This terminal is expected to come up in three years.
The company recently commenced its regular container train service between Tughlakabad ICD near Delhi and Mundra International Container Terminal in Gujarat in the quarter. Concor will be able to pass on its freight cost, given the strong demand for Exim container logistics business in India; the company plans to hike freight charges from November 2003.
According to Enam Securities "the company has a robust business model and dominates container handling and logistics business in India with a wide network across the country."
However, its relationship with Indian Railways remains a major concern. Higher rail freight expenses and lower-than-expected revenue in the domestic market impacted Concor's operating performance in the second quarter.
While revenue grew by 11 per cent year on year (YoY), earnings before depreciation, interest, taxes and amortization (EBDITA) declined 6 per cent YoY as rail freight expenses grew at a higher 18 per cent YoY due to higher freight paid to the railways (which was hiked twice - in November 2002 by 6 per cent per annum and 2-3 per cent in June-July 2003).
Indian Railways normally effects a hike in freight rates from 1 July. However, the timing of the hike has become unpredictable in the last year.
Concor's earnings too declined 8 per cent YoY owing to higher topline which grew at a slower 11 per cent YoY despite the Exim business. "The second quarter numbers are below our expectations, as revenue did not keep pace with rising rail freight expenses," says Enam Securities.