Ladies and gentlemen, good day and welcome to the Q2 FY 2023 and H1 FY 2023 earnings conference call of Adani Ports and SEZ Limited, hosted by Centrum Broking Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference call is being recorded. I now hand the conference over to Mr. Ashish Shah from Centrum Broking Limited. Thank you, and over to you.
Yeah. Thank you, Yashashri, for the introduction. On behalf of Centrum Broking Limited, I welcome everybody to the Adani Ports and SEZ Q2 and H1 FY 2023 earnings conference call. We have from the company management, Mr. Karan Adani, who's the CEO and Whole Time Director of Adani Ports and SEZ. Mr. Subrat Tripathy, he's the CEO of Ports Business. Mr. Vikram Jaisinghani, MD and CEO of Adani Logistics. Mr. D. Muthukumaran, CFO, APSEZ, and Mr. Charanjit Singh, Head of Investor Relations and ESG, APSEZ. Over to you, sir, for the opening remarks, and after that we can have the Q&A.
Thank you, Ashish. Good evening, everybody. Welcome to the H1 FY 2023 conference call to discuss the operational and financial performance of Adani Ports and Special Economic Zone Limited. You will be pleased to know that despite the economic headwinds globally, APSEZ has delivered its strongest half-yearly performance in the company's history, wherein we recorded our highest ever cargo volume, revenue and EBITDA. Talking about our cargo volumes, APSEZ handled record 177.5 million metric tons of total cargo in the first half of the year, which is a 17% jump over the preceding six months, that is H2 of FY 2022. On a year-on-year basis, the increase is 11%.
The average monthly run rate of April to September 2022 is well aligned to our full year volume guidance of 350-360 million metric tons. APSEZ crossed the 200 million metric tons of cargo throughput milestone in the initial 212 days of the financial year, which is another record for the company. On the revenue front, we clocked the highest ever half-yearly revenue of INR 10,317 crores , which is a 16% growth year-on-year. This revenue growth is not only supported by the volume increase, but also the improved realization given the renegotiation of contracts at the start of the financial year. We recorded the highest ever half-yearly EBITDA of INR 6,551 crores, which is a good 21% jump over the corresponding period last year.
Our logistics business recorded a year-on-year jump of 470 basis points in EBITDA margin to reach 29%. To grow cargo volumes at the port, we are driving our targeted capacity addition based on the market requirements at our existing ports. In August, APSEZ commissioned a 6 lakh TEU container terminal facility at Gangavaram Port, which will bring in a new cargo type at this port. We have also added assets across our logistics business, including 2 MMLPs, three agri logistics sites with a capacity of 0.1 million metric ton, six trains and 900 trucks for providing the last mile connectivity. The MMLPs inducted into business include one at Taloja in Mumbai and the other one at Vapi.
The ICD Tumb at Vapi, acquired from Navkar Logistics, Navkar Corporation, is one of the largest ICDs of India with a capacity of 0.5 million metric ton. It has been integrated with Adani Logistics on 1st October . In the last two quarters, APSEZ has been successful with various bids. We have signed a concession agreement for mechanization of around 5 million metric ton berths at Haldia Port in West Bengal, which takes our port footprint in India to 13. We have also received an LOI for a greenfield development at Tajpur Port in West Bengal, which we expect to commission in the next five years.
On the logistics side, we have received a LOA from Food Corporation of India to build silos across four locations in UP and Bihar with a total capacity of 0.35 million metric tons, which will take our total agri silo capacity to 1.53 million metric tons. We have also been shortlisted as the H1 bidder for the Loni ICD in UP from CONCOR. With that, our MMLP portfolio in India will reach to a total count of 10.
I am pleased to note that the Honorable Supreme Court of India, through an order on 5th September 2022, restored APSEZ's right to participate in the bidding of major ports, thereby putting to rest the wrong decision of certain port authorities on disqualifying APSEZ from the bidding process of major ports. In the last six months, we have carried out three large strategic acquisitions. Two are now 100% concluded, which is Ocean Sparkle and Gangavaram Port. Ocean Sparkle is India's leading third-party marine service provider with over 60% market share. Gangavaram Port is India's third-largest private sector port, wherein we have acquired the remaining 58.1% stake from the promoters post the NCLT approval in October. The third transaction, which is scheduled for completion within the next few weeks, is the Haifa Port Company in Israel.
With all organic and inorganic investment progressing well, our credit profile continues to be strong with net debt to EBITDA ratio at three, which is well within our guided range. In May 2020, I have announced about APSEZ signing a binding purchase agreement.
2022
In May 2022, I have announced about APSEZ signing a binding share purchase agreement for the sale of Myanmar assets. The decision to divest was taken by the APSEZ board in October 2021, which was communicated to all key stakeholders. In our May communication, we have highlighted that the asset sale will be concluded after the satisfaction of the conditions precedent that are incorporated in the SPA. Given the progress made in the CPs, I am expecting the divestment process to conclude in the coming few weeks. Let me now invite Subrat, Vikram, Muthu, and Charanjit for some more color on the operational, ESG, and financial performance. Over to you, Subrat.
Thank you, Karan Adani. Good evening, and hello everyone on the call. Let me now give you an overview of the performance at the ports vertical. Talking about cargo volumes, APSEZ clocked record volumes of 177.5 million metric tons in H1 of FY 2023. This volume growth has been contributed by most ports, particularly Mundra, Krishnapatnam, Dahej, and Kattupalli. Our flagship port, Mundra, has reflected an 8% year-on-year growth in cargo volumes. The port has already touched 94 million metric tons of cargo volumes. The port contributed about 46% of the total cargo share of APSEZ during H1. From the perspective of East Coast and West Coast parity, the cargo volume share remains unchanged at 61% for ports on the West Coast and 39% for our ports on the eastern coastline of India.
This year-on-year cargo volume growth on the East Coast was higher at 13% versus 10% on the East Coast. Looking at the cargo basket of H1, the dry cargo share is about 54%. Containers contribute about 36% of the total volume, and liquids, including crude, gas, is about 10%. Crude gas is about 7.5% of the total volumes. Talking about containers, APSEZ handled about 63 million metric tons of container cargo during the first half. The volumes grew by 5% year-on-year. Mundra continues to be India's largest container handling port with about 3.3 million metric TEUs in H1 of FY 2023 versus 2.96 million metric TEUs by JNPT, therefore consolidating itself as the gateway port as far as exports of India are concerned, EXIM cargo of India is concerned.
Our flagship port now handles 1/3 of the country's total container cargo volumes. We believe that our focus on improving railway connectivity at Mundra, single window service to the shipping lines, integrated supply chain solutions to end customers, and a partnership model with large shipping lines through JVs approach is helping us drive this volume growth at Mundra. Talking about the dry cargo segment, the total cargo handled in the first half is about 97 million metric tons, which is a jump of 18% year-on-year. Within this segment, coal grew by 28% year-on-year, and agri products had a phenomenal growth of about 273% year-on-year. Moving to liquid cargo, APSEZ handled liquid cargo 17.5 million metric tons, which is about almost flat on a year-on-year basis.
In the last two-three months, we have signed several contracts for different cargo types. These include five new container services at Mundra and Hazira, with a total cargo potential of about 2 lakh TEUs per annum and four large bulk contracts at Gangavaram and Dhamra ports with a cargo potential of about 10 million metric tons per annum. We are also looking to get an additional coal volume of about 3-3.5 million metric tons at the Krishnapatnam Port, given the start and commissioning of the new 800-megawatt power units at Nellore by APPDCL. I would now thank you and hand over to Vikram to update you on the logistics vertical. Over to you, Vikram.
Thank you, Subrat. Good evening to everyone on the call. Let me give you an overview of the performance at the logistics vertical. Adani Logistics witnessed a 24% year-on-year growth in rail volume to 2,22,944 TEUs, and a 43% year-on-year growth in terminal volume to 1,92,039 TEUs.
This has been achieved with ramp-up of operations at Kila Raipur Logistics Parks, the commissioning of Nagpur Multi-modal Logistics Park at the start of the year, and the commissioning of Taloja Multi-modal Logistics Park during Q1 this year. With the acquisition of Tumb MMLP, the total count of operational MMLPs has increased to nine. Furthermore, the logistics parks at Virochannagar and Panipat are currently under development. GPWIS vertical continued its growth trajectory with cargo volume being doubled to 6.27 million metric ton on year-over-year basis. With new circuits added from mines to power plants to integrated steel plants, the bulk cargo transportation is gaining momentum. That has enabled us to more than double the cargo versus the corresponding period last year.
In H1 FY 2023, Adani Logistics handled 6.27 million metric tons against 3.28 million metric tons in H1 FY 2022. We added six new rigs during first half, and with that, we now have 29 GPWIS rigs in our stable. Besides, orders have been placed for a total of 62 new trains under the GPWIS framework, which will be due delivered over the course of the next one year. Coming to Adani Agri Logistics, besides the three agri-storage terminals with a total capacity of 0.15 million metric tons commissioned during H1, two more terminals, one at Darbhanga and another one at Samastipur are now under construction, with commissioning likely in the next financial year.
Additionally, letter of intent received from FCI for 4 silos with a total capacity of 0.35 million metric ton, which will take the total silo capacity to 1.53 million metric ton. In our warehousing business segment, we continued our journey to emerge as a leading player in grade A warehousing, with focus on the commencement of new projects, including strategic acquisitions of warehousing assets. During H1 FY 2023, another 0.6 million sq ft of incremental capacity was commissioned, thereby taking the total operational warehousing capacity to 1.4 million sq ft. Construction has been initiated on 10 million sq ft of warehousing capacity across six different locations in Mundra, Nagpur, Moraiya in Ahmedabad, Ranoli in Vadodara, NCR in Mumbai and Palwal in NCR.
We continue to work in line with our vision to become an end-to-end integrated logistics service provider in India by creating logistics infrastructure, including multi-modal logistics parks, warehouses, grain silos and complete rail solutions for container, liquid, grain, bulk and auto cargo. I will now hand over to Charanjit to update you on the ESG performance of APSEZ. Over to you, Charanjit.
Thank you, Vikram, and very good evening to everyone on the call. Let me start with our first focus area of carbon neutrality. Here we have three action points. First is about the electrification of equipments. By the end of this year, we are likely to complete electrification of most of the cranes. For a few other equipments, we are already doing pilots for finding commercially viable low carbon solutions. Our second action point is of sourcing renewable electricity. APSEZ has now decided for 350 megawatts of captive renewable capacity, and the work on the project has already started. Third action point is on mangrove forestation, which is required for sequestration of the emissions, net emissions. We initiated the mangrove afforestation on another 800 hectares of land.
This is in line with our increased target for mangrove plantation from 4,000 to 5,000 hectares. Coming to our second focus area, that is of ensuring water supply from non-competing sources at all our ports. We are currently evaluating possible solutions at Hazira, Krishnapatnam and Dhamra ports. Once the solutions are implemented, it will take us to 80% of APSEZ's target of sourcing its entire water supply from non-competing sources. For the past 12 months, we have been regularly engaging with the ESG rating agencies. There has been a constructive result of this exercise, with APSEZ significantly improving its ESG score in 2022. Pleased to highlight our progress on the ESG ratings. Recently we received our ESG assessment from S&P and Moody's.
S&P has scored us among the top 10 in a peer group of 300 companies in the transportation and transportation infrastructure sector, while Moody's has ranked us first among the transport and logistics emerging market players. With this, let me hand over to Muthu for an update on the financial performance. Over to you, Muthu.
Thank you, Charanjit, and good evening to all of you. I'll first start off with a quick paragraph on our quarterly performance, and then I'll move to the half-yearly performance for FY 2023. With cargo of 87 million tons, we have achieved a 15% growth year-on-year. A revenue of INR 5,211 crores is a 33% growth. A corresponding growth in EBITDA of, you know, INR 3,260 crores. Finally, in terms of our net profit after tax is a 65% jump at INR 1,738 crores. After minority and after OCI, the profit after tax is INR 1,677 crores. Our EPS stands at 7.77. That's for the quarterly number. Now I'll move to half-yearly.
You know, in terms of total revenue, we have achieved INR 10,270 crores, which is a growth of again 15% like in the quarter. You know, this 15% is on a year-on-year basis. This 15% is despite a decline of INR 565 crores, which is our revenue business segment from SEZ. This reduction in the SEZ revenue is already factored in our full year guidance for FY 2023. The growth is supported by a 25% growth in port revenues and a 32% growth in our logistics revenues. Company's consolidated EBITDA for the first half increased by 21% on a year-on-year basis to INR 6,551 crores. I'll now turn to port operations.
For the first half, we have seen an increase of revenue by 25% on a year-on-year basis to INR 8,967 crores. EBITDA also increased by 24% on a YOY basis to INR 6,236 crores. Both of these are on the back of 11% increase in the cargo volume for the first half and an improved realization, a significantly improved realization. Overall port margins stood at 70%. Turning to logistics business, revenues from this segment is at INR 721 crores, which is a growth of 32% on a year-on-year basis. It is contributed by all its subsegments, namely container rail, bulk rail, terminal traffics, and agri logistics.
The significant increase that you see in the EBITDA is actually a result of our all around efforts to diversify into bulk cargo, number one, and number two, to eliminate loss-making routes, and number three, to generally improve efficiencies across. EBITDA for this business grew by 57% to INR 212 crores, and the margin expanded by 470 basis points, and the EBITDA margin stood at 29%. In terms of profit after tax for the first half year, it is INR 2,915 crores, and that is a jump of 26% compared to a corresponding period of the last year. This PAT is after a pre-tax charge of INR 370 crores of non-cash mark-to-market FX loss.
Now, in that context, let me now move to the next topic, which is an update on our FX and our risk management approach. Traditionally, we have been keeping all our bond exposure completely open against the natural hedge of our future revenues. Our annual revenues have always more than covered the maturities of the bonds of the respective year whenever they mature. Given the recent big exchange rate movements that we have seen recently, we studied the options which we can use within our existing risk management policies. Following this study, we have embarked on two approaches. The first one is actively hedging, especially the near-term ones. The second one is designating bonds against our future revenue exposure, like you see in some of the leading companies in the marketplace.
In this designation exercise, bonds are first designated by mapping and earmarking revenues of immediately ensuing months as of the date of maturity of these bonds. Once this designation of revenue is done, any Forex movements, either loss or gain, post such designation date, is no longer included in the extraordinary items which is below the EBITDA, but is included in other comprehensive income, OCI for short, in the P&L account, which is below the PAT. As you will know, this OCI is not included in the EPS calculation. The net gains or losses which are accumulated in this particular head will be moved to the revenue line as the gains or losses of the revenue in the months when the designated bonds mature and the revenues for those months crystallize.
As we have commenced this approach now, we have given a lot more detail in the presentation that we have circulated in the form of an annexure. In that annexure, we have also included when the recycling will happen by the year and where we have designated the bonds. With that, let me actually move to the next topic, which is actually cash flows. Company has generated very healthy cash flows. With that internally generated cash flows, we have met our enhanced level of CapEx, which is for the first half of INR 4,015 crores. We have funded acquisition, which is to the tune of INR 1,500 crore. We have repaid loans, which is again covered full details in the cash flow statement in the presentation, close to INR 6,000 crores. We are still left with cash flows in the company.
Finally, after all these things, our leverage is three times that of EBITDA. After the cash flow, let me just quickly move to highlight that in terms of ratings, we continue to enjoy investment rating, investment grade rating by all credit rating agencies. Finally, before I conclude, let me point you to page number 28, which is actually the return on capital employed. I wish to bring to your notice that we have improved our return on capital employed across all the ports and across all our business. With that, let me actually conclude this section on financials and hand it back to Karan Adani for concluding remarks.
Thank you, Muthu. Let me just summarize our performance for the initial six months of FY 2023. APSEZ recorded the strongest half-yearly performance in the history of the company with a record cargo volume revenue and EBITDA. Our integrated business model with an end-to-end service from port gate to the customer gate is proving to be a material differentiator versus our peers and enabling us to win customers and improve their stickiness. With India likely to be the best performing economy globally in 2022 and 2023, we remain confident of APSEZ growth story.
We continue to be on track to achieve our full year guidance of 350-360 million metric tons of cargo volume and an EBITDA of INR 12,200-12,600 crores, while also working on our organic and inorganic growth plans. With focus on sustainable development, APSEZ is all set to emerge as a global force in the port and integrated transport utility segment. With this, we can open the lines for question and answer.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Mohit Kumar from DAM Capital. Please go ahead.
Yeah. Good evening, sir, and congratulations on a very, very good quarter and making some successful acquisition. My first question is on the financials. While the cargo has grown by 11% in H1, your port revenues have grown by 24%. What explains this? Is this to do with cargo mix in the quarter or is some non-port revenues which can explain this jump?
It's both. One is an absolute increase in our pricing, which we did at the start of the year. A lot of the contracts which got expired over the course of the last six months, we were able to get an absolute increase in the pricing over there. The second is also because of the mix in the cargo. These are the two main reasons.
Secondly, sir, has there been any update from the government on the process of CONCOR divestment? Has it moved? Have you received any input?
No, we have not received any input.
Lastly on this, sir, on the financials again. There's a loss on forex in consolidated and standalone basis. There is a huge difference. Generally the standalone and consolidated forex losses used to be similar numbers. This quarter we have INR 9 billion, INR 3-4 billion in consolidated, while in consolidated INR 4 billion, while in standalone it's INR 9 billion. Can you please help us reconcile this number?
Yeah, sure. See, you might recall that all our bonds are sitting in actually the hold co. Whereas our FX designated income is across APSEZ as well as the subsidiaries. The designated bond exercise that we have done, we have done only in the consolidated. The INR 370 crores charge that you actually see, which is MTM loss, is after actually the exercise of designated bonds. What you see in the standalone, I you know, we haven't done the designation of bonds in the standalone financials. The difference between the INR 9 billion and the INR 4 billion, which is INR 370 crores that I mentioned, is actually in the OCI line in the consolidated business, the consolidated financials.
Understood, sir. Thank you and best of luck, sir. Thank you.
Thank you. We have our next question from the line of Atul Tiwari from Citi. Please go ahead.
Thanks. My question has been answered.
Thank you. We have our next question from the line of Barani Vijayakumar from Spark Capital. Please go ahead, sir.
Yes, good evening. What portion of this $4 billion debt is designated bonds?
$2.8 billion, round number, and out of the $3.9 billion outstanding.
Okay. The OCI portion of this Forex impact of INR 404 crores that we see, that's related to the $2.8 billion designated bonds?
That's correct.
If I see the cash flows for the first half, there's been a INR 4,000 crore of CapEx and about INR 1,400 crore of acquisition being done. How much would this be for the full year, sir? The full CapEx and the remaining acquisition for the year, how much would it be in that?
The full year guidance on CapEx we have given is INR 8,600 crores. We continue to maintain at this point in time our guidance.
that will be another INR 4,000 crores in the second half. Can you highlight in which assets it would happen?
It'll happen in both ports as a business as well as logistics. It's spread across both. We have given actually project-wise.
Yes, sir.
CapEx in our original guidance at the beginning of the year. It's more or less the same at this point in time. There is no material change to that.
Okay. The INR 1,400 crores acquisition is related to Gangavaram, right? And Ocean Sparkle.
No, it's Ocean Sparkle.
Any such number that we can expect in the second half, that'll be related to Haifa Port?
Haifa Port funding will happen in the second half. What we gave as original guidance, we are still working towards that in terms of financing pattern. Closer to the time when we actually do the financing, we will sort of update the market with any changes to the financing pattern.
Okay, sir. Thank you and all the best.
Thank you.
Thank you. We have our next question from the line of Chetan Shah from Jeet Capital. Please go ahead.
Hello.
Mr. Chetan Shah? Yes, please go ahead.
Yeah. Hi. Congratulations. Just one quick question. You are looking at a current global economic environment and also the trade activity. We do appreciate your guidance for the second half of current financial year. If you can give us some sense on FY 2024 and FY 2025, your view on what can be the volume opportunity and how do you see these two financial years looks like from a volume point of view. That'll be very helpful. Thank you.
Yeah. I, as you know that, we had come out with our five-year strategy plan, and we had come out with 500 million tons of volume handling by FY 2025. I think we are well on track to achieve that guidance and we believe we are quite confident that we will reach that by FY 2025.
Yeah. Thanks, sir. Just one little broader question. In terms of the opportunity within India as a port, you spoke about a few missing blocks and there are a couple of things which are completely greenfield project which we have won recently and we are expanding there. If you can give us some sense from a decadal point of view, which is the target opportunity which you are looking. You may not want to name it specifically, but just give us some flavor in that sense, where are we seeing ourselves both within India and our surrounding geography. Will be very, very helpful, please.
Yeah. I think within India we keep looking for opportunities both within major ports as well as any private ports which come up for sale. Within major ports, the Government of India has laid out a very good plan in terms of the whole monetization and as part of Gati Shakti scheme. I mean, we keep evaluating those opportunities and, you know, keep plugging in where we don't have a position. On the private side, you know, there are not much of opportunity which we can talk about right now, but we keep evaluating as and when it comes. We look at more from a value accretive deals point of view.
In terms of neighboring countries, right now we are there in Myanmar, I mean, in Sri Lanka and Israel. We are looking at opportunities in eastern Africa. We are looking at opportunities in Bangladesh and in some of the Southeast Asian countries. Predominantly high growth countries with high consumption or high manufacturing base. These are the kind of opportunities we look out for and we are actively scouting.
Thank you. Just one last follow-up. Sorry. Do we have any IRR or a payback in mind in terms of the future growth opportunity or we'll be kind of okay to take little bit if the location is very strategic for us and we don't mind compromising little bit in our IRR expectation?
As you know, we have a capital allocation policy which is approved by the board, and it clearly states that all new investments have to be generating a return of IRR of 16% and above, unless it is very strategic. So far, all the acquisitions that we have done, we look at 16% and above.
Thank you so much. I wish you all the best.
Thank you. Reminder to participants to press star and one to ask a question. We have our next question from the line of Smitesh Sheth from Raedan. Please go ahead.
Hello. My question was with regard to the next year's guidance, and it has been duly answered. Thanks a lot for it, sir.
Thank you. We have our next question from the line of Priyankar Biswas from Nomura Holdings. Please go ahead.
Good evening, sir. My first question is regarding can you just highlight certain timelines or something regarding, let's say, land sales or monetization from the SEZ angle. We are hearing a lot of things like a copper plant, then probably some green hybrids set up. Can you just provide some timelines and expected income flows maybe for the next 2-3 years?
I think all the guidances that we have given so far does not take into account any, I mean, large part of those income. The reason we are not giving those guidance is because it is bulky in nature and the timing of it is very difficult to give. These incomes we expect in the next, you know, these land sales to happen over the course of next three-four years' time.
Can you provide a quantum, like how much land is available with you, let's say, across all the ports, besides Mundra, and potentially how much monetization in a, let's say, blue sky scenario that we can be looking at?
It's very hard to give you that exact number. As you know, in Dhamra and in Krishnapatnam, we have roughly 6,000 acres of land other than Mundra where we have 40,000 acres. As I said, these land incomes are bulky in nature. They are one-time in nature and it's very hard to give a prediction in terms of how much income we will generate out of it. As I said, there are a lot of these opportunities which we are working on to develop the port-based ecosystem.
As and when we are confident or we have some visibility of when the income will come, we will give in our guidance and we'll give a sufficient time for all of you to put in to bake into the model.
Essentially this INR 800 crores, the guidance that you give, so this does not include any of these things right now?
No, it does not include land sales. No, it does not include any land sales.
The last question from my side. See, we have been the logistics business, of course, it has improved on the ROCE somewhat in this particular first half. Going forward, like, for all your businesses you typically target like 16% ROCE. Can you give us some sense of the trajectory how we will achieve these 16% levels? I mean, which are going to be the drivers in a big way to derive profitability?
I'll request Vikram to answer, but in detail. Just to give you a broad headline, the GPWIS rate business where we are expanding it aggressively, the agri logistics business and the warehousing business. These three businesses are the ones which will push the overall logistics business apart from the container. These three businesses will generate a ROCE higher of 16% in the coming years. I'll request Vikram to add more on to this.
I completely agree with what Karan said. But the only thing is that to clarify the timings of this ROCE which will be obtained will be different for the different verticals that we're talking about. The first one to hit the block and to see immediately uptick in the ROCE would be the bulk trains that will be introduced in the next one year. Because that will be instantaneous revenue, instantaneous gain in EBITDA. Then it will be followed up by the ROCE improvements as and when we start putting on the lease and putting the agri logistics warehousing silo projects on the block with FCI, followed by all the warehouse construction, which is right now 10 million sq ft in construction.
As and when they start getting put on lease, they will also start delivering the ROCE. The timing is different, but I think in the next 2-3 years, we should look at you know reaching our target upward of 8% to even 16%, which is the ultimate aim and the end result that we have planned in this business model.
Thank you so much.
Thank you. We have our next question from the line of Parash Jain from HSBC. Please go ahead.
Yes. Thank you. I have three questions. First one for Karan. Karan, looking across to our full year, throughput guidance, it seems quite courageous given the type of weather we are seeing.
Can't hear you.
Sorry, you're not audible.
Sorry, actually a typo is hitting Hong Kong, so the noise. Am I better?
Little bit.
Little bit better.
Hello.
Yeah, little bit better.
I'll try to be very concise. With respect to your full year volume guidance, I mean, it seems quite courageous to put a number at this juncture. What gives you your confidence? Is it your view on India's ability to continue to import? Is it your ability to gain market share? Or is it more like any shortfall can be managed by inorganic acquisition? Or do you see any downside risk to those guidance? That's my first question. Maybe you can answer that, and I'll probably have next question for Muthu.
Yeah, sure. First, I think our guidance of 350-360. This is, you know, we are very confident. We are looking at a lot of the data from group companies as well as from our partners. We expect we do believe that India is in a growth in a very good space economically, and we don't see growth coming down anytime soon. I think we expect GDP to grow at around 7%. With that, we expect trade to grow at around 10%-11%. I think these are the main reasons why we are very confident.
Obviously, as manufacturing base in the country is increasing and as the push for manufacturing is happening, we are seeing energy consumption increasing across the board and which in turn obviously helps the trade because India imports most of our energy. That is one. Obviously, second is, we are seeing significant amount of private CapEx happening, and we don't see a slowdown over there. In which in turn, again, we do see a lot of you know, a lot of trade movement happening. The nature of the trade might keep changing. This year, in our view, we will see more growth on the bulk side than on the container side. I think overall we are very confident of reaching this guidance of 350-360.
Okay. That's very, very helpful, Karan. Maybe my next question to Muthu. Maybe on the slide that captures the ROCE, when we look at the ROCE of each of the businesses or verticals, they've seen a marked improvement. At a consolidated level, it seems subdued. Is your consolidated ROI includes some of the businesses which are not yielding the return? Secondly, maybe I could not hear you well. Could you explain the rationale behind changing your way to recognize the FX losses from your past practice of this funneling through the P&L versus the new approach? Thank you.
Sure. To your first question, basically we have a lot of greenfield projects, both new projects as well as expansions that are happening in our current site, which are sitting in CWIP, or we are carrying cash to fund those expansions that we have already sort of announced over the next two to three years. You know, if you back that out in the calculation, you will actually get a ROCE, which is a true picture of delivering projects. You know, these projects that we are currently undertaking will also start delivering you know in the next three to four years. You will see return on capital employed for a company as a whole improving at that point in time.
These are planned CapEx, so therefore, you know, they are tracking our, you know, sort of, our plans. In terms of FX, basically, the reason is, you know, with these significant movements in the FX rate that are happening in the market, all such movement call for actions, right? We went to the drawing board and we said, "What are the options that we have to actually truly reflect the underlying operating performance of the company? Are there any new, you know, sort of tools that we have to use that is within our current policy but that we are not currently using?" Two things that came out.
One is active hedging, wherein you know, in a rising market like this, you know, we have started you know, sort of doing forwards. We will, as a company, build expertise and you know, build on that active hedging as the time go. While we have done that, we also studied what other capital intensive businesses in the marketplace was doing. The very underlying rationale for doing any bonds, you know, and then call it a natural hedge is because we do have dollar revenues. By nature these revenues will come in future. You know, liabilities are sitting, the bonds are sitting in our balance sheet today. Under the current accounting standard, we need to provide for mark-to-market losses, and that does not actually give the underlying performance.
Therefore, what we have said is to bring in the discipline of saying which bond is designated against which year's revenue. We picked the bond from the portfolio totaling $2.8 billion and assigned revenues against those bonds. The moment we do that, accounting standard demands that we move profit and loss for the period arising out of MTM away from the current extraordinary line item to OCI line item. That is what we have done under the Ind AS 109, which is a requirement.
Okay.
The underlying reason is actually to map the revenues against the bond and to demonstrate the discipline of how we have, you know, spread out the maturity to match our underlying exposure.
Okay, perfect. Maybe one final question. With respect to disposal of your stake in Myanmar, how far have you revised timeline when that will be done?
Myanmar, one of the conditions precedent is completion of the project. We haven't actually completed the project. It is underway. You know, it should get over shortly. I mean, once the project is completed, we should be able to close the deal.
Okay. By the end of this fiscal year, likely?
Yes. Yeah. I mean, maybe before, but for sure before the end of fiscal.
Awesome. Thank you so much, and have a lovely week.
Thanks.
Thank you. We have our next question from the line of Pulkit Patni from Goldman Sachs. Please go ahead.
Thanks for taking my question. Just one question. If you could highlight what the interest cost for the next couple of years we should build in, given the rise in rates. I understand we have bonds, but if you could just highlight what is the interest cost we should bake in for the next two years based on the increased rates globally.
We all have bonds and in CDs which are in rupees. Dollar bonds and rupee bonds are fixed rates. There is very, very little which is actually the working capital type, and that too is very, very small, which is market-driven. That also actually, you know, we still get very competitive rates. You know, there is no change in the interest rate, you know, compared to what you're seeing today. At the company level per annum, we are talking about INR 2,300 crores of interest approximately in that space.
Okay.
Only when we actually deploy more capital on the ground, and if we borrow, then actually the absolute amount of interest will change.
Okay, that's helpful. Thank you.
Thank you. We have our next question from the line of Mayank Agarwal from Trust Mutual. Please go ahead.
Sir, I wanted to know about the fact that the gross debt increased by 5%, but the net debt has increased by 27%.
Sorry, which page are you referring to, please?
No, sir. I'm calculating on a YOY basis. In September 2021, the gross debt and net debt, and in September 2022, the gross debt and net debt. Gross debt has increased by 5% compared YOY, but net debt has increased 27%.
Maybe we can actually take you through offline. That number doesn't sound right to me intuitively. Actually, our net debt, if anything, has sort of gone down. The reason why our gross debt has gone up are twofold. One is we have borrowed marginally more for the new projects, but also there is a INR 2,000 crores increase in the gross debt on account of you know, interim effects. We can work offline with you and take you through. That number doesn't sound right.
Okay. I would like some guidance on that.
Yeah, please. We can do that offline.
Yeah.
Thank you.
Mm-hmm.
We have our next question from the line of Amish Shah from Bank of America. Please go ahead.
Yeah, thanks for the opportunity. My question actually is to Karan. You know, when you spoke about the international inorganic acquisition opportunity, earlier the thinking was to do only greenfield projects in JV mode. Is that still the thinking? You know, the reason why I ask is that that would effectively mean, you know, the percentage of capital deployed in international is only going to rise gradually. Is that the way we should think about it still?
Majority of it is right. It will be inorganic greenfield through JV mode similar to what we have done in Sri Lanka or you know something like that. However, if we do get attractive opportunities like Israel, we would look at it, but those are rare. Most of it we would be looking at is JV mode and greenfield development.
Okay. On Adani Logistics, you know, earlier, primarily our growth was coming from handling domestic cargo as opposed to EXIM. Again, just a clarification, is that still the way and a subset question to that is that how much is the FCI warehouses getting converted to silos that you're doing a part of the domestic cargo growth within Adani Logistics?
Let me just clarify over here. Our Adani Logistics mainly did exim and not domestic. 80% of their volume was exim and 20% was domestic, and it continues to be in that sort of that range.
In terms of agri logistics, as you know that more and more silos are coming up for bidding. We are the H1 for 0.35 million metric tons of new silos which are coming up. We expect another 2 million tons of FCI silos, which will be coming up as part of the hub-and-spoke bidding. We expect, you know, as we have given in our five-year guidance that we look at bringing this business up to almost 3 million tons of storage. We are very confident we would reach that by FY 2025.
Got it. My final question is actually on the major ports opportunities that you were talking about. Is that going to be a substantial part of our business as you think about you know the volume growth targets that you've put out for FY 2025? Is it just one-off port opportunities that you would look at within major ports and will you continue to look at landlord port models?
No. Our FY 2025 target of 500 million tons is from the existing assets. It does not take into account any new assets that we will add between now and 2025. In major ports, we would look at selectively based on the kind of footprint and strategically where we don't have a presence. Those are the places we would look at to help us consolidate in terms of our market share. It will be very selective in nature.
Makes sense. Thank you very much, Karan.
Thank you.
Thank you. We have our next question from the line of Nikhil Abhyankar from DAM Capital. Please go ahead.
Hello, am I audible, sir?
Yes, you are.
Thanks for the opportunity. Most of the questions are answered. Just, I've got one bookkeeping question. Can you give the revenue and EBITDA split for Q1 and Q2 FY 2023 for ports and non-ports?
The total revenue we saw was INR 10,270 crores, and out of which the port revenue was INR 8,957 crores.
Q1 and Q2. Okay.
Sorry. You wanted. This is for the first half. If you wanted actually for INR 5,211 was the total revenue. Okay, let me just read out. Just a second, please. Okay. If you can note down the number. Q1 total revenue is INR 5,058, and Q2 total revenue is INR 5,211.
Okay.
Okay. As far as the port is concerned, it's INR 4,510 for quarter one and INR 4,458 for quarter two.
It's INR 458. Okay.
Sir.
Oh, you want EBITDA as well?
Yeah.
Port EBITDA is INR 3,170 for first quarter, INR 3,066 for second quarter, and total EBITDA is INR 3,290 and INR 3,260.
If you have it in handy, can you also give a comparable for Q2 FY 2022?
Yeah, yeah. I have Q2 FY 20 22 is. You want to start from revenue?
Yeah.
Port revenue is INR 3,398. Total revenue is INR 3,923. Total EBITDA is INR 2,483, and port EBITDA is INR 2,379.
Okay. Perfect. Thanks a lot. That's all from me.
Thank you. We have our next question from the line of Pradyumna Choudhary from JM Financial Capital Private Limited. Please go ahead.
Hi, sir. Just wanted to understand, like, most of our volume increase in this quarter has come on an absolute basis, a majority of it has come from coal, increase in coal volumes. Do you see this as sustainable, especially considering that container growth was quite soft, 3%-5%, I believe. This is the first question. Secondly, you spoke about the mix change being one of the reasons why revenue growth has been higher than the volume growth. Can you throw a bit more light on this? Like, what kind of cargo has a higher realization and higher, maybe higher margin also? These are my two questions.
Yeah. Thank you. First on the cargo volumes. See, as we have guided, the coal has seen a significant growth, and you've seen that the dry segment has grown from FY 20 22 to H1 in FY 2023, from 50% to 54%. This is fueled by a very strong rally in the coal, which is understandable with the high energy consumption, which has been at an all-time high in India. And also the fact that the growth we are looking to sustain it. We believe that the import requirement of coal will continue to be high in H2.
Also, the fact that we've been able to garner new contracts as far as coastal coal movement is concerned between what is on the rail-cum-sea route from the landlocked mines in Jharkhand, Odisha, Chhattisgarh to our ports in Gangavaram, Dhamra into the receiving ports at Krishnapatnam, which makes it a, you know, at both our ports as well as into the other southern powerhouses consumption. We're also working on the east-west transfer the government is talking of. That's at a very nascent stage. The growth is going to come primarily from these two: import as well as domestic coal.
As far as the other volumes are concerned, container does look to be fairly flat, though there is a little bit of aspiration as to how it is growing. We've seen that the rally in the festival season has been good, so we are buoyed with the sentiment that the imports will start coming in, and especially engineering goods, which has been a rally over the last two years as far as India's export performance is concerned, will certainly come back. If you look at the country's choices, we're getting into, as Karan has clarified, getting more into Southeast Asia, high consumption and high growth economies. That should sustain the volumes. Yet notwithstanding the global slowdown that has happened. Volume-wise, coal will be the driver without a doubt. In fact, the other aspect of coal is also the coking coal.
We're seeing this market share consolidation mostly in our eastern ports. We are looking that the steel plants are, you know, the first half has been a little subdued because of the consumption globally. The second half is seeing a growth, and we are seeing these signs of recovery on coking coal, especially in the larger plants of Steel Authority of India as well as Tata Steel, both where we are very well-placed in our ports in Dhamra and Gangavaram particularly, and in Krishnapatnam as far as Jindal Steel is concerned for the Toranagallu plant. This alignment and this choice of very strong bonds with the major consumers gives us the confidence that we'll be able to sustain this dry cargo growth. Your second question on realization of higher cargoes. You would like to take that?
See, with respect to the realizations, when Karanbhai mentioned about the change in the mix, it is also the change in the mix between the containers. Right. If it is exempt versus transshipment, there is a different realizations. In this current year, we have seen a very high share with respect to the exempt. That's the reason the realizations are much better. I hope that answers.
Line is disconnected. We have our next question from the line of Ashish Shah from Centrum Broking Limited. Please go ahead.
Yeah, thanks. There's just two questions from my side. One, if you can update what is the on-ground status as far as the Vizhinjam asset is concerned, because we also keep reading a lot of news flow around local protests, et cetera. Any update will help, sir.
Two updates on Vizhinjam. First, on the VGF, which the Government of India has finally sanctioned. You are aware that we got a component of close to INR 814 crores of VGF. The Government of India has finally sanctioned that. We are expecting that to come in and, so that the project is ongoing. As far as the project execution is concerned, you're aware that in the last year, we've had phenomenal progress. Normally, post-monsoon is when we open up the line. The project is being commissioned both from the land and from the marine side. We have two places, Ottappathi and Kollam, from where we get the quarry stones to do the breakwater. They're all well set. As of today, we have seen every day the quarry stones coming into the two locations.
As far as the agitation is concerned, we are aware that it is slightly misled. We're also aware that the Government of Kerala is entirely supportive, and that there is a very affirmative action on behalf of the High Court of the Honorable High Court of Kerala, which have been very supportive and have given instructions that this agitation should be lifted forthwith. As we speak to you, we are expecting that this whole situation to be cleared in another about a fortnight. Since the monsoon has receded, it's just about a fortnight back, so we haven't lost time. We've been very confident of the earlier guidance given that this port will be commissioned in the calendar year 2023, and we have taken all the affirmative actions in line.
The cranes which are coming in, and it is going to be a state-of-the-art world-class terminal, a automated terminal. We're well into line. These are small aberrations, and I'm sure we will be entirely over with that very soon.
Right, sir. Second question on the CapEx. This year for the FY 2023, we've reiterated INR 1,600 crores CapEx. From a slightly medium-term from a three-year perspective, would we be looking at an annual CapEx of similar range of let's say INR 9,000-10,000 crores? Is that the number one should plug in?
I think the way to look at is ports will continue will have CapEx around INR 2,000-2,500 crores. The logistics business, mainly warehousing and agri logistics, as we keep scaling up, that will continue to have INR 4,000 crores of CapEx. I would say on average, you can take between INR 6,000-8,000 crores is what we will continue to spend in the coming few years.
Right. This would include assets like Sri Lanka, et cetera.
Everything.
Right. Not Haifa, right? Haifa would be an inorganic addition to this.
That's it.
Right. Yeah, I mean, that's it from my side. On behalf of Centrum Broking, I would like to thank all the participants for attending this call and thank the management for giving us this opportunity. Would like to hand over to the management for any closing comments. Thank you, sir.
Thank you. Thank you, everybody, for joining. If there are any questions, Charanjit is there to answer, and the team is there to answer. Thank you. Have a good evening.
Thank you. On behalf of Centrum Broking Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect your lines.