Ladies and gentlemen, good day and welcome to the Adani Ports and SEZ Limited Q3 FY 2023 earnings conference call hosted by DAM Capital. 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mohit Kumar from DAM Capital. Thank you, and over to you, sir.
Thank you, Faiza. On behalf of DAM Capital, we welcome you all to the Q3 FY 2023 earnings call, Adani Ports and SEZ. We have with us from the management, Mr. Karan Adani, CEO and Whole Time Director, APSEZ, Mr. Subrat Tripathy, CEO, Ports Business, Mr. Vikram Singh, MD and CEO, Adani Logistics, Mr. D. Muthukumaran, CFO, APSEZ, Mr. Charanjit Singh, Head of Investor Relations and ESG, APSEZ. Before we start the call, I request you to please restrict your questions to quarterly results or only strategic and business-related questions, and request participants to reserve their group-related questions to a separate interaction with the group team. Now, I'll invite Mr. Karan Adani for opening remarks on the quarterly results, followed by Q&A. Over to you, sir.
Thank you. Good evening, everybody. Welcome to the nine months FY 2023 conference call to discuss the operational and financial performance of Adani Ports and Special Economic Zone Limited. I will keep my remarks brief. We can have enough time for Q&A. You will be pleased to note that APSEZ has reported a robust set of numbers for the concluded quarter and strongest ever nine-month performance in its history. I can now state with confidence that we are on track to achieve our full year revenue and EBITDA guidance provided at the start of the year. We are likely to close the year at the upper end of the guided revenue and EBITDA range.
Talking about Q3 numbers, total revenue from operations increased by 18% year-on-year to INR 4,786 crores, while EBITDA increased by 15% year-on-year to INR 3,011 crores. Of the total revenue from operations of INR 4,786 crores, port business contributed INR 3,936 crores, logistics business contributed INR 490 crores, and the balance INR 360 crores is from SEZ and O&M business. Of the total EBITDA of INR 3,011 crores, port business contributed INR 2,737 crores, logistics business contributed INR 142 crores, and the remaining INR 132 crores is from SEZ and O&M business. The port revenue per ton has increased by INR 58 year-on-year, which is a growth of 13%.
Of this, INR 15 per ton is due to depreciation of rupee against dollar, and the remaining INR 43 per ton is due to increase in share of high-paying customers and a higher volume growth outside the JV terminals. Just to give you an example, in Mundra, the volume of JV partners has declined 9% year-on-year, while the non-JV container volume has increased by 11%. As you can see, overall Mundra port volume, container volume has remained flat, but because of this, our average realization at Mundra has increased by 25% year-on-year. Our port EBITDA margins continues to be at 70%. Logistics revenue has increased by INR 190 crores year-on-year, which is a good 64% jump. This is in line with the business growth trajectory that we have been targeting.
Logistics EBITDA has grown by 80% year-on-year and the margins expanded by 400 basis points to 29.3%. We expect to see a similar growth in the logistics business in the coming quarter too. As of March 2023, we are expecting our net debt at INR 44,000 crores, which takes into account payment for Haifa Port, Tumb ICD, Indian Oiltanking Ltd, and the ongoing CapEx in line with the guidance at the beginning of the year. Finally, on FY 2024 guidance, we are expecting FY 2024 EBITDA to be in the range of INR 14,000 crores-INR 15,000 crores, while the CapEx is likely to be in the range of INR 4,000 crores-INR 4,500 crores. The cash surplus generated during the year would be used to repay and prepay loans of INR 5,000 crores.
This will result in our net debt to EBITDA ratios of around 2.5x. Let me conclude by saying that our business fundamentals remain strong, we are well-positioned to continue our growth trajectory. While being able to also deleverage APSEZ's balance sheet. With this, I'll just open the lines for Q&A.
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 yourselves 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. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the question queue. The first question is from the line of Sumit Kishore from Axis Capital. Please go ahead.
Good evening. My compliments on a strong PNL performance. My first question is on your CapEx guidance for FY 2024 of INR 40 billion-INR 45 billion, which appears lower than our expectation based on interactions with you. What is the makeup of this CapEx across seaports and logistics? Has this number seen a reduction versus earlier guidance?
Roughly, the port, CapEx would be in the range of INR 3,500 crores-INR 3,800 crores, and the balance would be from the logistics business. This is not a reduction, due to growth. I think it is just that a lot of our, projects which were coming, which we had started this year, they are coming.
Maturing.
They are maturing, and that's where we are in the tail end of completion of these projects. That's where the CapEx is coming lower.
I sense was that in logistics there would continue to be momentum in CapEx. Will that pick up in FY 2025 then, given your, you know, sizable growth aspiration in logistics?
logistics, it will depend purely on the kind of growth that we are seeing. If we do see our utilizations increasing in FY 2024, then we would look at expanding on that front in FY 2025.
Sure. My second question is around your EBITDA guidance. you know, for FY 2024, which implies around mid-teen growth on a year-on-year basis. based on the reported numbers for port volume growth, you know, FY 2023, you know, seems to be likely to end say around 340-
Sorry, your voice is breaking. We can't hear you clearly.
The line for the current participant has got disconnected.
Okay.
Shall I move on to the next question?
Yeah, sure.
The next question is from the line of Love Sharma from Lombard Odier. Please go ahead.
Hello. Okay. Hi. Hi to Karan Adani and the management for the call. Just one quick follow-up, I think, on the targets you mentioned about the net debt and the leverage going forward FY 2024. Could you just indicate what kind of debt reduction are you targeting? Any specific loans or bonds you have earmarked for prepay, et cetera? The second would be, you know, how should we think about as, you know, you are getting more comfortable with leverage where it's currently sitting at let's say 2.5x-3x. Do we expect some dividends to be taken out at some point in feasible manners in the business?
On your first question, as we have mentioned, that we are looking to pay and prepay INR 5,000 crores. We don't have. At this point of time, we can't tell you exactly which bonds or which liability we will be paying down. On a gross basis, you will see a reduction of INR 5,000 crores on our debt. On your second question on the dividend, we have a stated policy on the dividend payback and payback to the shareholders. I think we will, we would look at following that policy. If there's any modification on the dividend that we would look at, we would obviously look at the amendment in the policy.
Right now we are looking at we would look to follow the policy, what we have laid out in the capital allocation.
Sure. Sorry, Karan, so can you just remind what would be the current policy at the as a percentage of net income or something?
Yeah. It is 20%-25% of our PAT is the current policy.
Okay. Okay, just one last question for me. The Haifa Port, you mentioned that that will be accounted, the payment would be accounted for in this quarter, in Q4. Is it the entire payment which will be paid right now, or there will be some other staggered payments through next year?
No. Our entire payment has been done. We have already taken over Haifa Port.
Understood. Thank you very much. Yeah.
Thank you. The next question is from the line of Eric Liu from Nomura. Please go ahead.
Thanks, management. I have two questions. I think first question is about your current progress and the timeline for the Myanmar divestment plan. I think given that this still be a kind of a yes/no.
Mr. Liu, sorry to interrupt you. The audio is unclear from your line. Please use the handset mode.
Hello, can you hear me clearly?
Yes, sir.
Much better.
Okay, cool. Okay. First question is about any progress update and the timeline about the Myanmar divestment because this is also another ESG concern for the investor.
Myanmar divestment, we are just waiting for certain CPs, which are government approvals. Once those approvals are through, we should be able to complete the transaction.
Do we have an indicated timeline regarding this approval and transaction?
It would be either this quarter or next quarter, max by next quarter. Ideally, we are pushing for this quarter. Max it would go to next quarter if for whatever reasons we are not able to get the approvals in agreed timelines.
Got it. Second question, I think, just want to verify some number. I think, between slide 29 and slide 30, when you're talking about the reported cost, thanks for your debt maturity profile, your reported cost there is talking about around INR 455 billion. Your debt maturity profile, I think all of that is INR 432, INR 431 billion. What drives the difference? Are they coming from letter of credit or other stuff that kind of difference?
If I understand your question correct, I could pick up that, the total outstanding debt is, INR 45 billion. What was your next question? What was the question rather?
Yeah. Next question, I think on slide 30 you provide a detailed debt maturity profile, but the total debt adding up together is INR 431, INR 432 billion something. This INR 20 billion, what are this-
That's the short-term loan.
Short-term loan. Is it working capital or?
That's correct. Working capital.
Got it. Thank you. My questions are done.
Thank you. The next question is from the line of Ashish Shah from Centrum Broking. Please go ahead.
Yeah. Thank you for the opportunity. My question is again, continuation to the first question on CapEx. If you could, you did indicate that for the port business we are looking at INR 3,500 crore-INR 3,800 crore of CapEx. Any, any detail you could share in terms of which assets we are looking to expand and, what about our plans in, you know, Sri Lanka or, you know, any of the newer assets. Are we looking to slow down those, you know, those CapEx?
No, we are not looking to slow down. Basically, whatever projects we have started this year, we are just looking at completion of those projects. We firmly believe that we have enough capacity with all the projects that we have started this year. With their completion, we are very confident that that capacity would be enough to take us for the next two years' growth. None of our projects are stopping. It's just the projects which are coming up towards the end tail of the of completion, at least in some of the projects in India.
Okay.
The details we can provide at a later stage.
Sure. The second question is on the logistics side. We have a broader, medium-term target of tripling our presence in terms of rails, rakes and, you know, 60 million square feet of warehousing. How are we looking at those targets? Are we looking at those targets in the same time frame or probably an extended time frame?
On the container side, we are looking to first, whatever we have expanded and with whatever we have constructed this year, we are looking to get them up and running, and that's where the focus is. On the rail side, as and when the orders come, we would look at expanding. Those guidance do not change. On the just to give you an idea in terms of rail, next year we have almost 100 trains which are already placed under order, which would be coming online over the course of next year.
None of our growth targets change. It's just a matter of right now what we are looking at is, you know, whatever we have started, we want to get them up and running and sweat those assets.
All right. Sure. I'll come back in the queue. Thank you.
Thank you. The next question is from the line of Abhiram Nitin from Deutsche Bank. Please go ahead.
Congratulations on a good set of results. I have two questions. One, the first question was on, have there been any intercompany loans made post the quarter after December 2022 to outside the Adani Ports group? The second question is, broadly, in case you're reducing CapEx, as you mentioned with logistics business going down, where do you see margins for the same in FY 2024? Is the growth in EBITDA tied to the expansion in the logistics business that you carried out this year, or is that primarily from the port side?
First, let me answer your first question. Let me categorically say there is no ICD, there is no loans, no advances given to any group companies, at even after the quarter. I just want to categorically say that. We have a very strong covenant around any of those, any of the loans and advances that are for a group company. These are covenants which have been tied up in which we have given in our bond documents. Let me just categorically say that there is no ICD which has been given. Forget this quarter, last quarter, any point of time in the last two years, two to three years, nothing has been done. On the second question, our growth is...
I mean, our margins and our growth is not tied up to the CapEx. I think, whatever we have done this year, we, our, you know, the capacities which are coming up this year, they will take the logistics business forward at least for the next two years. We look, and with the mix changing, obviously between the container and the bulk volume in the logistics business, that will also help in improving their margin. We do believe that there is possibilities of increasing the margin in the logistics business than what we have done this year.
Perfect, sir. Thank you very much for your answers.
Thank you. The next question is from the line of Priyankar Biswas from Nomura Financial Advisory. Please go ahead.
Thank you for the opportunity. My first question is regarding your CapEx guidance. At the upper end it is INR 45 billion. Is it just only organic CapEx, or does it include some potential for acquisition as well within this?
No, it is only organic CapEx.
The reason why I ask this question is, like for instance, if there is some good asset like Container Corporation, let's say for a strategic divestment it comes up. Do we have a plan in place to essentially raise funds to possibly, because you had earlier expressed interest to probably go for this asset whenever it comes up?
Yeah. Let me just say that when we look at from an overall perspective, I think our priority is to deleverage. As guided, we would like to bring our leverage we would target to bring our leverage down to 2.5x on net debt to EBITDA. That said, Concor is a strategic asset. If we are able to find a way to do the acquisition without increasing our leverage of 2.5x, we would look at it, but otherwise we would, as I said, that's how we would look at it. Our priority and our first order of preference is to deleverage to 2.5x net debt to EBITDA.
Thank you, sir. That's a very clear answer. Just one bookkeeping question. Need a clarity on that. Like, if I see the waterfall that is in page, that is in, slide, 29. It seems that there is a debt repayment that you have done of around, close to INR 6,000 crores. But when I see the gross debt between March 2022 and December 2022, it is broadly the same. Can you explain this difference? Because this is something I'm not able to reconcile.
Gross debt INR 45,000 crores and this INR 45,000 crores, we have paid INR 6,000 crores.
just give us
Just give-
Me?
yeah. Hi. Priyank. Actually, this is Muthukumar.
Mm-hmm.
About INR 2,500 crores of gross addition has come from MTM in December 2022.
Okay.
The balance is actually the, you know, net cash that we were carrying in March that we have now paid out.
Pardon me. Still the net cash difference, so that where it is reflecting in the net debt. Ideally, this figure, the net debt figure has gone up by, I think, close to INR 7,500 odd crores, I'm not able to reconcile that. I mean, even with a INR 6,000 crore repayment.
Okay. Can we revert to you with little more details, you know, in a granular form? Basically, the point is on the one side we have paid the loan that we had as of March, but we have borrowed more on account of acquisitions on OSL and buyer's credit of INR 1,200. Impact of MTM is INR 2,500. I get your point. We'll come back to you.
Okay. I suggest if I can squeeze in just one last. Earlier you had given an FY 2023 volume guidance of roughly 350-360 billion tons. Can you give us the similar volume guidance for FY 2024? What is the FY 2025 target? Like, we had a 500 million ton earlier.
Yeah. FY 2024 guidance, we will give it to you at end of March. Let February and March go by. We are very confident on the EBITDA guidance that we have given you.
Okay. This 500 million ton target remains for FY 2025 or do you see...
Yes.
-a slippage of let's say one or two years?
No, I think we will achieve that 500 million tons.
Okay. That's all from my side. Thank you, sir.
Thank you. The next question is from the line of Asmeeta Sidhu from MetLife Investment Management. Please go ahead.
Hi. Good evening, everyone. Thank You so much for taking my question. I just have a couple of questions. The first one would essentially be, could we just sort of get an idea of the INR 315 crore Forex impact to PAT, because it is quite significantly larger from the last year. Could you just clarify with us what this impact actually is?
Hi. This is basically we have a $4 billion debt book. In that $4 billion debt book, the movement of rate between September 30th and 31st December is actually recorded in two places. $2.7 billion is actually our designated bonds. All FX movement on that is in the OCI. On the balance, $1.3 billion, we have actually recorded it in above the line, which is in the NPM that you see.
We don't hedge because we.
You know, just to remind, we don't hedge any of our FX exposure, basically because we have dollar revenues or dollar-denominated revenues that come from our container business. That is even year by year more than any maturing amount. Even as the total book is more than our revenues. Sorry, revenues is more than the liability. We don't hedge. There is a natural hedge.
Okay. No, that's great. Thank you very much. My second question, I think just comes a little bit more on sort of acquisition. You mentioned earlier that you don't have sort of any target for acquisitions built into guidance this year. Could we assume any sort of acquisitions that are in your view besides Concor? Are there any that you are looking at? I do remember seeing in the news about the defaulting port Karaikal. Is that still sort of within your scope of acquisition or is that maybe being put aside at this point?
No. Our Karaikal Port, we are already an H1 bidder, and our guidance bakes into that because that is already an acquisition which has been approved by the COC. We do expect that port to come in. There is, but our guidance takes that into account.
Just to confirm, the CapEx guidance does include the potential transaction for this port?
Yes. That's right.
All right. Okay. Just, last comment from me. For the earlier question mentioning about, debt management will revert on a detailed debt, granular information. Could I also be given that sort of information?
Yes. We will send across.
All right. Thank you very much, and thank you all for answering my questions.
Thank you.
Thank you. The next question is from the line of Sherry Chen from GaoTeng Global Asset Management. Please go ahead.
Good evening. Thanks for taking my question. My first question is that for the maturities in this coming year, wondering what company's plan, as we noted that I think majority of them are onshore debentures?
As the majority of them are? Can you please repeat that part?
Noted a majority of them are onshore, debentures.
Yeah, yeah. Actually we have totally, I'm telling you in rupees now, in crores. INR 8,500 crores approximately of in rupee debenture. They actually in next year we have INR 1,600 crores out of that coming as maturity. In the next year there is another INR 400 crores of other short-term loans and loans that come up for maturity. Totally INR 2,200 crores. There is no other maturity, whether onshore or offshore, in the next year. It is only in the following year we have, you know, the first dollar bond coming up for, you know, sort of payment in FY 2025.
Yes, that's clear. Wondering what, company's plan for, this maturity?
Yeah. Yeah. As far as, you know, the coming year's maturity is concerned, we'll pay that. We've shown the cash flows that will be generated by the company from operations, starting from EBITDA to CapEx. We are generating net cash of INR 5,000 crores.
We'll use that to prepay the maturing debt as well as we will target to prepay some of the other debts. Totally, we'll pay INR 5,000 crore of debt in the next year. The following year, we have same amount of money coming from operations. You know, even if we don't do anything else, we'll be able to prepay that year's maturity from the cash flows as well.
Sure. That's clear. Thank you. My next question is that does company at this moment have any plan to doing some tender offer considering current bond price under pressure?
Sorry, a tender offer?
Equity.
No, we don't have...
Uh.
Bond.
We don't have any plans right now.
Okay. Thank you. The last one is about the acquisition on the Haifa Port. Noted that in the announcement, you said that this transaction has been concluded. Could you elaborate a bit that whether all the related debt financing has been done and whether you have consolidated already the financials coming from this new port? Thank you.
Yes. as you know, we have already concluded, in January 10th, we have taken over officially, the Haifa Port. The amount has been paid to the government. The quarter four will be the first quarter where Haifa Port balance sheet will get consolidated into APSEZ. I'll request Muthu to talk about the debt for the financing of the Haifa Port.
So far in Haifa, there are actually multiple components of financing. The total acquisition cost was $1.2 billion. We have actually taken $300 odd million of local debt, which is non-recourse. We have $475 million of dollar debt, which is actually a mezzanine financing that APSEZ has guaranteed. The balance two components, 70% from us and 30% from our partners, which is $230 million and $110 million of equity. These four actually added up to the total purchase consideration that we had to pay.
Thanks for sharing. That's very clear. Thanks.
Thank you. The next question is from the line of Himanshu Porwal from Seaport Global. Please go ahead.
Hi. Thank you for taking time for the presentation, and congratulations on strong results. I have a couple of questions. First on the liquidity side, can you provide like what is your total liquidity, including your cash balances as well as any revolving facilities? The revolving facilities, what is the unutilized portion, if at all?
We have INR 3,000 crores approximately of cash balance as of today as we speak, which is actually sitting in the FD. We have about net of INR 2,500 crores, INR 2,200 crores of, you know, commercial paper limits that we can actually borrow.
Which are not utilized.
Which are not utilized.
Okay. That's not utilized. All right. Thank you very much. My second question, I mean, it's a bit naive, but just for clarification, do you have any portion of your offshore assets and how much of that will be contributing to your overall EBITDA levels from the offshore portfolio?
Can you just repeat that question? It was not very clear.
What is the portion of your offshore assets, if at all, and how much does it contribute to the consolidated EBITDA?
Right now, none of the offshore assets are operational. As I said, Haifa Port will get consolidated in Q4, which is the operational asset. Otherwise, none of the assets are operational, so they don't contribute into EBITDA.
How much will this Haifa Port like likely contribute as a percentage, if you can say so?
I'm trying to recollect from memory. We actually made a detailed presentation in last October, I think. Next year, if I remember right, it was $48 million or something. $40 something. $40 odd million is the expected contribution. We gave a year by year in that presentation.
For next year, not for, not for the next Q4, for next year.
For full year.
Full year.
Okay. Year as a whole, $48 million EBITDA. Yeah. Okay.
Yeah.
Lovely. Thank you very much.
Thank you. The next question is from the line of Imtiaz from Barclays. Please go ahead.
Thank you very much for the opportunity to ask you some questions. Can I before I ask my questions, can I just clarify something that you had earlier said? If I might have misunderstood you, I recall you saying that your first U.S. dollar bond maturity is in 2025. I thought you had a 2024 maturity too. Is that right?
I meant FY 2025, which is actually July 24. First quarter of financial year 2025.
Okay. Okay. That's what I thought. Thank you very much for clarifying that. If I can just ask you two questions on my own. The first one, of your reported debt as of September, I think it was around $420 odd billion. How much of debt is secured debt?
22 per-
Twenty-two.
22% of it is secured debt.
Has that, has that changed materially, now in terms of percentage? If you can just give us some guidance.
No, it hasn't changed, materially. I mean, it has not changed at all, in the percentage terms.
Okay. My second question is, could you just tell us how much of your, of your assets, in terms of value, how much of, how much of those assets have been pledged or are encumbered? The percentage of total.
Sorry, just one second.
Thank you.
from the 22%, that has been secured, which are basically the INR 8,000 crore of NCD, those are, there the asset has been pledged, which is roughly 12,000-
1.25.
1.25 times of that.
We needed an FACR of 1.25 times. Like I mentioned, in first quarter, we will pay off INR 1,600 out of which, you know, so then FACR will. I mean, the total assets that we need to give for cover will come down.
Sorry, can you just repeat that? I didn't understand that. You have, of your total debt, 22% is secure. What is the $80 billion number that you mentioned?
We have total NCDs of INR 8,500 crores. That is the only secured loan that we have in the books.
Okay.
On the INR 8,500 crores, we needed to give an FACR of 1.25 times.
I see. I see.
We will pay off INR 1,600 crores out of that in the next financial year.
That's it. Okay. Yeah. No, that explains it. Thank you very much. That's all from me.
Thank you. The next question is from the line of Luke Chua from Pictet. Please go ahead.
Hi. Good afternoon. Good evening. Thank you very much for the good performance and presentation. I'll be very quick. Could I also get updated on the page 29 and page 30, the reconciliation of the debt numbers that you mentioned earlier? The cash flows, the December 2022 numbers on page 29 and page 30.
Hi. Sorry to interject. Your voice is a bit blurred. Can you please ask again? We couldn't hear you clearly.
Oh, sorry. Okay. I just wanted to just make sure I can get the updated numbers on slide 29 and 30, because the debt numbers in 29 and 30 are not lining up.
Yeah, sure. Mm-hmm.
Can I just clarify something before I ask one more question? You said to one of the other investors that you cannot, you're not in any tender for bonds. Are you allowed to buy back your own dollar bond in the open market, and to what extent can you do that? As the interest are, there's nothing due imminently. You've got INR 5,000 crores budgeted or estimated in the coming FY. That's, you know, the total debt due is mainly in rupees in FY 2023-2024. Why wouldn't you buy back debt at a lower dollar cost? The real question is. The final question is, do you have new or anything that is recent in terms of related party debt?
Let me go in the reverse order. Related party, Mr. Karan Adani clarified that there have been no related party transaction in terms of debt.
Okay. Thank you.
Outside APSEZ. All related party transaction is APSEZ subsidiary, wholly owned subsidiary or JV. There is no financial or loan transaction above APSEZ. Number one.
Thank you.
Number two, to your question on, you know, how do we actually buy back. Our bond document does not provide for buyback except towards the maturity. However, you know, if at all we do any buyback, we will actually do it under the loan management team that you actually see in the marketplace. Like any other bond issuer, if at all we wanted to actually do some, tender or market buyback, we could do that. As we said, there is no current plan, and we have not guided exactly which particular bonds or rupee that we will repay out of that INR 5,000 crores. That we will deal with specifics as we go forward.
Right now our guidance is that we want to reduce the total debt in the balance sheet of the company. We will actually work with the market to come up with the best possible outcome, which is, you know, sort of good for both us and them. Our main objective is that we are generating cash. We want to use that money to repay the debt after meeting all the growth CapEx.
Understood. No, thank you. You wait for your friendly brokers to come up with proposals on that one.
Yeah, sure. To your first question, actually, I would like to answer two parts. The first one is what you asked just now. You wanted us to re-clarify the difference between page number 29 and page number 30 in the deck. If I can use INR crores, if you don't mind. In page number 29, December 2022, we are showing a total gross debt of INR 45,534 crores, whereas the table that we have put in page number 30 adds up to INR 43,164 crores. This INR 43,164 is the long-term dated debt. The rest is short-term undated debt. That's how actually it stacks up. That is the first part. Is that clear?
Yes. Thank you.
Okay. The second part, I think there was a question earlier on how come we have same INR 45,000 odd crores as of March as well as December, and still we are showing INR 6,000 crores of repayment. You know, let me actually explain that to you. We had a total debt of INR 45,453 crore in March 2022, we have actually repaid INR 6,000 crores. Therefore, our gross debt would have come down to INR 39,000, and this INR 6,000 was actually repaid from the cash flows of the company. We had cash balance in March 2022, we used that INR 13,000 crores that we had both for CapEx as well as for debt repayment.
Our number came down to INR 39,000 crores. In the last quarter and the previous quarter, we borrowed INR 2,300 crores short-term loan, which is again the difference that we spoke about between page number 29 and 30. We also added buyer's credit of INR 1,200 crores, and there is a non-cash mark-to-market addition in the gross debt of INR 2,500 crores. If you add these three numbers up, it is tally to the INR. We are back to actually INR 45,000 crores of gross debt.
Okay. Just to sum up on behalf of all the other fellow investors, you repay... When you say a loan repayment, it's long-term, and so you had a short-term plus a buyer's credit and the other one. These brought the number on slide, the left-hand side of slide 29 to what it is. Correct? Just to simplify your explanation. I mean, I'm sure I can contact you for extra
That's.
Yeah. Essentially short-term debt increased.
That's correct. Our gross debt increased
Correct. Okay. You repaid long-term of roughly INR 6,000 crores and you increased by close to INR 9,000 crores.
No. Increased same INR 6,000 crores incidentally.
I'm sorry, my line was a bit bad. Sorry again. What was that?
We started first April, which is 31st March 2022, with INR 45,000 odd crores of debt.
Correct.
we repaid INR 6,000 crores, so our gross debt came to thirty-nine-.
I see. Okay.
Yeah.
Okay.
We borrowed, but for INR 2,500 crores we borrowed everything, and INR 2,500 crores is the MTM accounting impact. We are back to same INR 45,000 crores of gross debt.
Understood. Thank you very much. Nothing from me. Thank you.
Thank you.
The next question is from the line of Aditya Mongia from Kotak Securities. Please go ahead.
Thank you for the opportunity, congratulations on a very strong set of numbers. To Karan, congratulations for becoming member, part of the Maharashtra EFC. The first question that I had was linked with the leverage guidance for FY 2024 and the contained spending that it reflects. I wanted to get a sense of what is the thinking behind the change over here. Is it more a medium-term target from here on that 2.5x would be? Is it a one-year phenomenon as things stand at this point of time?
No. Our philosophy remains the same, which is actually, you know, the two points that we wanted to emphasize by making that number out as a guidance is, number one, we have very strong operation that generates cash, and we guided that EBITDA for the next year will be INR 15,000 crore, and it will generate enough cash. The second point that we want to say is that, you know, we will have cash balance to the extent we foresee CapEx requirement. If we see in the medium term there is no need for that cash, we will use that to repay the debt with the same cash that we generated from the business. Our idea is to generate cash and use it for growth, and whatever is left, we will repay the debt. That's the message we wanted to communicate.
The math added to 2.5x leverage.
Again, just clarifying, from what I heard on the call, all potential spendings will be seen in context of whether one can conform to 2.5x leverage for FY 2024. My simple question is this a one-year statement that you are making, or is this a medium-term statement that from there on, for the next two, three years, all spending decisions will be done in context of maintaining a certain 2.5x leverage?
We are not actually committing to 2.5 for the medium term. What we are telling you is what we can see as we sit in the dashboard right now. We, as you can imagine, we will be dynamic. If there are growth opportunities in the following year, we will pursue them. Otherwise, we'll continue to deleverage, and it can even go down even below 2.5. We'll have to be, you know, doing what the market offers at that point in time.
Understood. That clarifies. The second question that I had was, that your guidance for FY 2024 on EBITDA versus FY 2023, if I take the midpoints is almost high teens kind of growth that you are envisaging. I'm just trying to.
Yes.
Get a sense of, on organic basis, can volume growth for you and on a, on a comparable organic portwide basis, can 10% come in from that point, quantum and the remaining coming in from other parts of logistics and organic? Just trying to get a sense of what kind of organic port growth can actually happen and any downside risk that you may see happening.
Basically, I mean, I would like to mention and reiterate that we will give specifics of the budget, you know, at a later point in time. We are giving now in aggregate. I wanted to put this in context. If you see our nine-month number, our actual EBITDA growth is 22% from April to December. The EBITDA that the company has achieved. Like you said, the guidance of INR 15,000 is actually mid-teens or rather high teens. I mean, like 17.5% growth. It's well within what we have already achieved. You know, this is right now, you know, all organic growth that we could stack up and do a bottom-up and come to this range of our expectation of EBITDA.
Keeping in mind that there's 200.
This also reflects, you know, an anticipated marginal slowdown in the economy or a lower growth. Let's put it this way. You know, FY 2023 did see a very good growth. In our base case, we are assuming that growth will be slightly lower in FY 2024.
Understood. Those were the questions from my side. Thank you a lot for your response.
Thank you. The next question is from the line of Achal Lohade from JM Financial Institutional Securities. Please go ahead.
Good evening. Thank you for the opportunity. Just had couple of questions pertaining to the quarter. If you look at QoQ, the volume drops seems to be very large, 13% drop in terms of volume. In terms of revenue also there is a drop. If you could elaborate a bit in terms of key ports like Dhamra, Krishnapatnam, Gangavaram have seen a sharp decline in revenue and the volumes. If you could elaborate a bit as to what has played out and how you're looking at for the fourth quarter.
Some of these are the externalities with respect to the high duties which the government introduced in between the year. There were duties which are introduced on iron ore, steel exports and also imports. Meat was completely banned. Rice again was banned. Fertilizers, sugars also suffered certain duties. As a result of which, certain volumes, certain commodity volumes to specific ports was impacted. Otherwise, if you look into our realizations, our realizations largely have either remained in the plus positive territory or mostly stable. I think Karan Adani, when he started, he did mention about the improvement in realization at some of the ports where you can have a look at the Gangavaram port, at Krishnapatnam, at Tumb, at Mundra specifically. This phenomenon is not very specific to us.
It is more of a macro driven by the government, action.
Understood. Just a clarification. Karan had talked about Mundra Port, where non-JV volumes have seen a substantial improvement while the JV volumes had declined. Can you elaborate a bit what has driven that and how do you see it evolving?
For us, if you look from our business perspective, the realizations for non-JV volumes was much higher, significantly higher in comparison to the JV partners. If there is anything which is very specific phenomenon related to them, we have managed, we have still managed, you can say balanced it out, particularly even at Mundra Port in terms of growing the non-JV volumes. In return we have managed to improve our realizations. There could be very specific events to the partner, but these are short-term lived. But these have enabled us, or you can say triggered us to look for ventures outside the JV.
Got it. Just a clarification. If you could help us with the transshipment volume, at the company level in Mundra Port for the quarter or nine months, whatever you could.
On a YOY basis it is relatively lower, but at nine months basis, the TP is 83% versus nine-month basis. Sorry.
20% roughly.
20%.
20% roughly is the TP. It's a little less.
On that end transshipment we use right now?
Yeah, correct. Transshipment is less than 20%.
So for-
This is at Mundra Port you're talking about, right?
Yeah, yeah. For APSEZ level, we are talking of a volume of 1,350 overall.
Okay.
This is very helpful, sir. Thank you.
Yeah, 13, 15,000 TEUs, basically.
1.3 million TEUs.
Thank you so much.
Thank you. The next question is from the line of Parash Jain from HSBC Hong Kong. Please go ahead.
Hi. Thank you. Hi, Karan. Lot of questions have been answered partially, but the line was a bit patchy, so if I can just very quickly clarify some of them. In your FY 2024 EBITDA guidance, does it include maiden contribution from Haifa? That's my first question.
Yes, it does include, contribution from Haifa Port.
Lovely. With respect to net debt to EBITDA, guidance that you have offered, like, ending up at about 2.5 times by end of FY 2024, does it give us a impression that following that year, your probably CapEx run rate would double, organically or you would scout to grow inorganically because we'll be comfortable with that level? We think that medium term probably 2 times the new 3 times or you think that 2.5 times the new 3, if at all.
I think organically we would be comfortable at 2.5x. Actually, it might come a little lower also because our EBITDA, as our EBITDA keeps growing, as capacity addition would not be in line with the growth of the EBITDA because a lot of capacity has been added, which will take us for the next on a medium-term basis, which will take care of the growth for the medium-term basis. We feel comfortable that on the port side, what CapEx we are going through and as a company, 2.4x-2.5x should be good enough to take care of the organic growth.
One thing that we in the past used to comment on, and we have seen that, the pledging has come down at the promoter level. Is there any tangible or a timeline where you think that that will unwind, or this is something that you're not able to comment at this stage?
Parag, the pledge has gone down. There was a payment made yesterday. It has come down below the levels which we have seen observed in December. It will further go down from these levels.
Yeah. What I was more keen on that is there any timeline that you are looking at that over the next 12 months.
Yeah.
probably would see.
That's right. In the current financial year it'll go down towards zero.
Okay. Lovely. One final question-
Sorry. Let me Sorry. Parash, by financial year, I meant the next financial year.
FY 2024. Yeah, I understood that.
Yeah. Yeah.
One final question which I think Karan addressed this repetitively but just for my clarification purpose. We were running a higher amount of cash at the end of last fiscal year, and in the annual report there was a sentence underneath, I think, balance sheet where subsequent amount of loan was given to the intercorporate, but which was guaranteed by a related party, which is perhaps legally is not a related party, but how should we think about those kind of transactions from here on? Do you think that any of such intercorporate loans guaranteed by related party also will disappear?
Parash, as mentioned earlier also, and as clarified by Karan Adani also on the call that, we are very clear that there are no related party loans which were given in the past two to three years. Coming to that, it's a treasury operation. We do seek security from the company which is borrowing, and as a result of which, if they have come up with a security mechanism which gives the comfort, that was executed. This is one-off phenomenon with respect to the security. You could see the volume of loans which have been given and how they'll get given and get rotated. It is very clear that it is one-off sort of thing, which is because of certain payable by a particular company, nothing beyond that.
We shall not expect those transactions going forward. Is that your thing?
They have not been there in the past, if you see the last two, three years also. That one-off transaction is not a reflection of the treasury operations which we have been carrying.
Okay. Thank you so much for clarification, and have a good day.
Thank you. The next question is from the line of Matthew Zheng from PIMCO. Please go ahead.
Hi, thanks for the opportunity. I just have two questions. First of all is, can you remind us, after the acquisition of Haifa Port is closed, is there any other acquisitions that you have committed to but are not fully settled, and what would be the amount of it?
We have a port. Through bankruptcy court, we have taken Karaikal Port, which the committee of creditors have approved our bid. We have come out H1, and the amount is INR 1,500 crores over there for acquisition of that port. That has been baked into our guidance for the next year as well.
That's included already in the current guidance?
Yes. That's it.
Got it. The second question is, are you restricted by any covenant to raise secured debt? I mean, how much is the maximum amount of assets that you can pledge to raise secured debt in case of needs?
What's the covenant on?
Sorry, can you repeat the question, please, Matthew?
Yeah, yeah. I just wanted to understand a bit better of the, you know, flexibility in terms of raising secured debts. I understand that you just mentioned, right, that currently around 22% of the debts are secured. Just in case you need additional secured debts, what's the maximum amount of assets that you can pledge to raise secured debt without breaching any covenants?
We actually have assets sitting in multiple subsidiaries. Our entire gross capital employed is technically available for security if we want to give, which is as per the last balance sheet, INR 46,000 crores.
INR 43 crores.
INR 46,000 crores, which is INR 460 billion.
50... The, the line was breaking up a little bit. Can you repeat the number again?
Yeah. It's the gross PPE, which is in the balance sheet. Return on value is close to INR 46,000 crores, plus any CapEx that we will do in the near term. Currently it is INR 46,000 crores, which is INR 460 billion rupees.
Got it. Got it. Understood. That's great. Thank you very much.
Thank you. The next question is from the line of Justin Ong from Threadneedle AMC. Please go ahead.
Yeah. Hi. My first question about intercorporate deposits and loans have been answered. My second one is just on Myanmar again. I didn't catch it. You were mentioning about certain approvals that are still forthcoming. Can you explain a bit more about where this approval coming from?
We need statutory approval, as you can imagine, from any transaction perspective from the authorities. We are working on them from the perspective of the buyer.
I see. The statutory body is in Myanmar or in India?
Myanmar.
Okay. I see.
We don't need any approval from India for this.
All right.
Thank you. The next question is from the line of Nikhil Abhyankar from DAM Capital. Please go ahead.
Hello. Thanks for the opportunity, sir. I've got just one question. Can you just give us an idea as to, an update on the concession renewal policy that GMB is working on? Will the policy be finalized in the near term?
GMB is engaged with the stakeholders, primarily with Pipavav Port and with other stakeholders as well. We are expecting them to come out with the guidance very shortly now, preferably within about three to six months' time now.
Between three to six months. Okay, sir. That's all from my side.
Thank you. The next question is from the line of Christina Yang from GIC. Please go ahead.
Hello. Hi. Thank you for the presentation. Just a follow-up on the leverage numbers and also the treatment of Haifa, 'cause you mentioned that it will be consolidated from Q4, right? On the debt part, 'cause I think you mentioned there's two part. One is non-recourse, and then the second portion that is guaranteed by APSEZ. For the debt number then, which number are you consolidating into your?
We consolidate-
We consolidate the whole thing.
Okay.
The whole thing.
You consolidate the whole debt. The one including non-recourse as well.
Yes.
What's the number again? Can you remind me? Sorry.
$1.2 billion is the total transaction value, out of which $230 and $110, which is together $340 million, is the total equity that has gone in. The balance will be consolidated as a debt. From accounting perspective, the whole thing is a debt.
Okay. Got it.
I must also point out. Sorry. I must also point out that in the same breath, actually the company is carrying a cash of close to $600 million. Today, you know, it's generated more, so close to $700 million. While $840 million will be consolidated as a debt, there will also be a cash balance in the company.
Right. Okay. We'll net off that cash, right?
Yes.
Which is $700 million.
Yes. Yes. The net debt will go up only by this amount.
Okay. Got it. I have one question on I guess just your conversations with rating agencies so far, given that I think S&P changed their outlook to negative yesterday. What's your, you know, I guess, discussions with the company and so far, is there any, like, action required, any kind of, like, documents that you need to provide to them and any kind of, like, metrics that you need to maintain to maintain your investment grade rating? Thank you.
We have been in very detailed engagement, and we have shared a lot of information with the credit rating agency. Basically, you know, there is, you know, no particular condition that has been put or a metric that has been communicated to us, you know, for us to maintain fundamentally because of all the, you know, cash flow and the leverage points that we keep emphasizing on this call as well. Our balance sheet is strong and getting stronger. Therefore, there isn't anything outstanding in terms of action points with the credit rating agencies, but I'm sure the engagement will continue with them.
Okay. Thank you.
Thank you. The next question is from the line of Christopher Guttilla from MFS Investment Management . Please go ahead.
Hi. Thank you for taking my question. Just clarification, I know Dave Os asked his questions and you replied, My line wasn't great. Can you reply what's the difference between the figure on slide 29 and that on slide 30 in terms of total debt, please?
You know, actually there are repeated questions. What we will do is we will supplement with a separate sheet just on this following this call sometime later today or tomorrow India time. You know, so that all of you have the same level of information, and we'll try to actually give a little more detail and color on this. That said, let me actually tell you. The gross debt as on 31st December is INR 45,000 crores odd , which is in page number 29. Page number 30 details only the long-term debts. Page 30 excludes short-term debt because there is no date for repayment of those. Because there are no dates, we have excluded them. That is why there is a net INR 2,000 crores odd , which is actually short-term debt.
Okay. Thank you.
Okay.
Thank you. The next question is from the line of Ajay Sharma from Maybank. Please go ahead.
Yeah. Hi. I wanted to check on your plan for 500 million tons basically by FY 2025. If you could provide some granularity on that basically because right now you're only around 350, 340, right? Where is the additional cargo gonna come from?
We have a lot of assets which will come online by FY 2025. We have our Vizag port which is under construction which will come online. We would have our Sri Lankan Colombo port terminal which will come online by that time. These are... And an additional container terminal in Mundra. All of these new assets will add to the volumes to the existing volumes. I think we are very confident that we would be able to reach 500 million metric ton by FY 2025.
Okay. Quickly on your CapEx, right? If I see in terms of the breakup you had given earlier on the logistics CapEx and ports CapEx, right? I see the in terms of revenue to CapEx ratio for logistics seems to be rather low. I'm just wondering how do you kind of justify that, and is that gonna pick up in future or what?
Right now we don't expect major CapEx on the logistics side on the container ICDs because we've done a lot of development this year. We do expect CapEx on the agri logistics and the rail front to continue as per our earlier guidance. Once our utilization on container ICDs improve, we will look at expanding those capacities.
Okay. Thank you.
Thank you. The next question is from the line of Varun from JP Morgan. Please go ahead.
Hi. Good afternoon, evening. Thanks a lot for taking the question. Most of them have been answered, so just a couple of them are more of housekeeping ones. One, can you just guide me the JV level debt that would be, you know, not reflected in the debt right now, but which is guaranteed at the JV level? That's the first question. Second question is, you know, just principally if you can, you know, give some guidance to better understand. If I look at your cash flow statement, which typically happens in the semi-annual.
In the investing cash flows, there's always a very large, you know, inflow/outflow that happen for, loans and Inter-Corporate Deposits. Typically it's, in multiples of the cash that you have on the balance sheet. I know it's a crossed out number, but whom exactly does it go to and how does it come back? If you can give some guidance on that as well.
We'll answer the second one. Till that time, we will gather the first one.
I think this question came earlier also, and what we explained is that these are treasury operations. Given the cash with the company, treasury works to drive a return on that cash. These are more intra-corporate deposits and other investments which the treasury make. Very short-term, well-secured, and that has been our ongoing operation, giving very good returns to us. I hope that has answered your question.
Does that go to your customers, Adani's customers and suppliers, who require short-term financing?
It's not only limited to anybody in the market who can give us sufficient security, wants a short-term, and we are confident in terms of the security of the principal, plus the terms of the return or the interest remains, is completely negotiated with the borrower.
Can I ask, like, what % of your cash portion is typically utilized at any given point in time for these, corporate deposits?
Yeah. Hi. Actually, if you look as of 31st December or actually going forward, we are not going to have any of these because we have used up all our cash either to pay down our debt or in our CapEx. The buildup of cash happened in anticipation and lack of clarity on some of the large acquisitions as well as the CapEx plan at that point in time. Now there is no need for us to do the cash buildup and therefore, in fact, we are specifically guiding that next year we'll pay down the debt with the cash.
Okay. The JV-level loans, I think it was around INR 900 crores. Is that largely unchanged?
No. JV levels, we have three JVs. We have AICTPL, which is a JV with MSC. There we have a $300 million bond, a 20-year bond. We have Dhamra LNG, which is a JV with Total. There we have a $600 million ECB. We have Adani CMA, which is a container terminal in Mundra, again, a 50/50 JV with CMA CGM. There we have INR 1,500 crores of debt.
Okay. All right. Thanks so much. All the best.
Just want to clarify, none of these debts have been guaranteed by APSEZ.
They appear more as contingent. Is that right?
This bond issuance of AICTPL is completely 20 years non-recourse bond subscribed by various bondholders.
Yeah.
CMA loan, Adani CMA loan is non-recourse loan on the books of the JV. Dhamra's $600 million ECB is co-guaranteed, so $300 million by Total and $300 million by Adani.
Which when we do the takeout at some point in time in future, this guarantee will follow.
Follow.
Right now it is under construction, so it is there.
Got you. Thank you so much.
Yeah.
Thank you. The next question is from the line of Rijul Sawhney from Sameeksha Capital. Please go ahead.
Hello. Sir, am I audible?
Please we can hear you.
Yeah. thank you for the opportunity. Just on a longer term guidance question, given logistic exposure. Where can a blended revenue mix look at, let's say, three years or five years down the line for ports and logistics per se, and even warehousing, if you could include?
I think it would be around 70-30. 70% ports and 30% logistics.
You expect the margins to sustain at these levels for both the businesses, right?
Yes. For ports, 70% and 70% and above, and for logistics it would be.
It will increase from the current level, as you have seen, increasing in the last two, three years. From 17%-18%, these are currently at 29%.
Right.
Based on the types of assets which is commissioned, this will continue to increase over the coming years.
Okay. Just one slight last question. Given a slightly lower CapEx guidance for the coming years, given we are hedged for the at least for the next two years for growth guidance, post that, would that again be a scenario where the CapEx would come in and only then growth would drive that? Would that something be like?
No, I think, what we are saying is that, I think for the next few years, I think, the CapEx, this would be a sort of a consistent CapEx of INR 3,500-INR 3,800, for ports to sustain the growth and to reach our guidance of 500 million tons by 2025.
Okay, sir. On the highest sustainable asset terms for both the businesses on net fixed assets per se?
Sir, you are not audible.
Hello. What I'm asking is the asset terms, the maximum achievable asset terms for ports and logistics individually, if you can.
See, today we have a total capacity in the ports of 550 million, and we are adding more capacity. We are adding Vizag, we are adding Sri Lanka, so we have room. Actually, you know, there will be sustenance CapEx as well as actually mechanizations as well as, you know, asset specific, like container, like liquid. Product specific CapEx could be there. We have enough room. It will depend on the, you know, sort of mix of growth in the market.
Okay, sir. Thank you. That's all from my side.
Thank you. The next question is from the line of Amit Jain from Samsung Asset Management. Please go ahead.
Yeah, hi. Thanks for taking my question. Just a clarification again on the debt side. You know, on the waterfall itself, right, that we can understand. You said about $35 billion is short-term loans and buyer's credit. Is your working capital sort of more or less doubling in the nine months? Sort of can you sort of even sort of explain what's happening on the waterfall in the presentation that you're going to put up again, the revised one?
Yeah. We will give you little more specifics and, you know, sharper, you know, sort of, waterfall. Fundamentally, we use short-term debt for both working capital as well as for all the, you know, sort of, CapEx requirement. If you see all our current debt in the balance sheet is long term, which is $4 billion of bond and INR 8,500 crores of NCD that I spoke about. Our objective is to tenor out this debt through two things. Number one, as and when assets start commissioning, we will actually do the takeout. Number two, you know, as and when there is an opportunity, we will actually do long tenor bonds.
These are two ways in which we will actually tenor out over a long period of time. You know, the current use of short-term to long-term, as you can see, short-term is very, very small. You know, I mean, 5%-7%, and the long-term is still the dominant part of our total borrowings.
Sorry to interrupt you, Mr. Jain.
Hi, sir.
The audio is breaking from your line. Please repeat your question.
Yeah. Hi.
Mr. Jain, the audio is-
Hello.
unclear from your line, sir.
Yeah. Can you hear me?
Yes.
Yeah. Hi. Yeah, so just a clearer waterfall would be helpful because I understand the $35 billion of inflows that you're getting from, the three sources you spoke about. I'm just not clear on where the utilization has been. That will be very helpful if you can sort of update that. Thanks.
Will do. Will do.
Thank you. That's all from my side.
Thank you. The next question is from the line of Aditya Monga from Kotak Securities. Please go ahead.
Yeah, thanks for the follow-up opportunity. I just had one clarification to get from you. In the 9 million bridge that you talk of cash flows, there is an other component that is supported to the extent of INR 1,175 crores. Could you give us a sense of what are the key components inside this line item?
Sorry, which page you're talking about, Aditya?
I think it's slide 29.
Okay.
Where in the build-up bridge of INR 9 in cash flows.
I'll say this is multiple small items which we have clubbed them as others. No specific major item, but multiple items whether buyer credit or some other loan being added. This is what we have added to get one number two.
Okay. Just a clarification again. What is happening?
Tax.
Sorry, can you hear me?
The tax, any sort of, deposits. All those things get added into this. Advance, mobilization advance or something of that nature.
Okay, understood. Just a clarification. At Mundra or Dhamra, are we seeing any amount of market share losses that are happening, let's say in Dhamra to Paradip Port, or is it just the macro that is there impacting near-term months for that?
I think it's mainly the macro. I overall, we are not seeing any major shift in the market share either both of the places.
Fine. Just again, the final question from my side. Is Haldia anywhere figuring in your FY 2024 estimates of CapEx, or is it only Haifa, which is the inorganic part that you have started on?
For Haldia, we have almost two and a half years to commission. We have CapEx in this, I mean, in the coming year, but it is, it's very minimal because we have sufficient time to commission this terminal.
understood. On logistics, this two weeks EBITDA that has happened on a YoY basis, is this all organic month-on-month, or is there any consolidation happening of ICT that is maybe one and that's kind of boosting numbers?
It's a, it's a mix of both.
Having Tumb is also being added during the year, but there is a good share of organic growth, which has been an ongoing phenomenon. You could have seen that in the past quarters and the journey continues.
Yeah. Bulk of this contribution has come from organic. Tumb has happened only for last quarter, that is this quarter. If you see the trend, the trend has been continuing Q1, Q2, Q3 with the same increase that you are seeing now.
understood. Again, sorry, but just again, kind of reconfirming. The Karaikal Port CapEx of INR 1,500 crore is part of the INR 4,000 crore-INR 4,500 crore guidance. Is that correct?
Yes. That's right. It is included.
Got that. Thank you for those clarifications. Those are my questions.
Thank you. The next question is from the line of Eric Liu from Nomura. Please go ahead.
Thanks, management. Actually I just have 1 follow-up question. It's regarding the Adani International Container Terminal, the joint venture of the MSC. There's a news talking about the mutual termination between the MSC, Maersk alliance will come in January 2025. This joint venture for I think 70% of the volumes coming from MSC. Do we have a breakdown, let's say, this 70% of the volume, which how much coming from MSC and how much coming from the Maersk? Going forward, how do you see the volume with after this termination of the alliance?
In AICTPL, majority of the volume comes. It's an MSC volume. The Maersk volume goes to another terminal. It's just a spillover which comes into this volume. We don't see any disruption in the volumes of AICTPL as well as in the disruption of Mundra Port volumes because of this alliance breaking off.
How's the utilization rate at the moment? Is it like around 90 something compared to previously at the time of issuance it was talking about 60-70?
In AICTPL?
Yes, correct.
Just give us one. Utilization is roughly 70% at AICTPL.
70%. Okay, got it. Thank you. Thanks a lot.
Thank you. The next question is from the line of Bharani Vijayakumar from Spark Capital. Please go ahead.
Yeah, good evening, gentlemen. I have one question. On the gross debt, which is at around INR 45,000 crores at present, after the Haifa acquisition by the end of FY 2023, how much is this going to go up to?
The gross debt will go up in the consolidated accounts by $840 million.
$40 million.
840. That's correct. 840. Like he said, there's also cash. There is also cash in the company. Net debt will be much smaller, but gross debt will be $840 million.
Okay. gross debt will go up by roughly about, INR 6,500 crores odd .
That's right.
That would be about INR 52,000 crores odd by the end of the year in the consolidated books gross debt. You're telling from that INR 52,000 crores odd , it will come down by INR 5,000 by end of FY 2024.
Correct.
Yeah. You will also see the numbers for 31st March. What you're now doing is 31st December. You know, like, you know, Karan Adani said at the beginning, we expect net debt by 31st March of rupees 43,000 crores-44,000 crores.
31st March 2023 you mean?
Correct. Correct. From there you have to start to calculate the INR 5,000 crores that we will pay for the next year.
Okay. That will bring down the net debt to about INR 37,000 crores by end of FY 2024.
That's right.
That's right.
Okay. Okay. Thank you, gentlemen. That was my question. Good night.
Thank you. The next question is from the line of Rijul Sawhney from Sameeksha Capital. Please go ahead.
Hi, sir. I just wanted to know on the Haifa Port again, would the margins for that be lower or higher than the other ports?
Yeah. The margins are lower than APSEZ. Roughly the margins are 25%-30% over there.
Right. Just on the land sales, would that be still on track, what's the guidance from Q2?
In our guidance we don't account for any land sales in our guidance. All our guidance are without land sales.
Right. Right. That's all from my side. Thanks.
Thank you. The next question is from the line of Matthew Zheng from PIMCO. Please go ahead.
Hi. I just wanted to clarify on the point that you just mentioned before. You just said that the entire PPE on your balance sheets up to 4,000 odd crores can be pledged for secured loan if necessary. But I also noticed there's a negative pledge in your U.S. dollar bond terms. Can you perhaps explain a little bit more on how you can pledge these PPEs without breaching the negative pledge, please?
Yeah. See, our U.S. bond covenant is that if we give security to any other bonds, then we have to give a pari-passu debt security to the current bondholders as well. If it is a non-bond, then we actually have the security to be offered to anybody else. You know, of course, we'll have to be disciplined about our total leverage. I just answered the question on the basis of theoretically what is the room available from the security side. We also have to calculate what is the room available from the leverage side.
You're saying if it's not a bonds, then you can provide security. Let's say it's a bank loan or private placement kind of debts, you can provide security without breaching the negative pledge.
That's correct.
Right. You just mentioned there is a regulatory restriction as well. Can you give a bit more color on that as well, please?
We mentioned what? Regulatory what?
Regulatory, cap on the amount of asset that you can pledge. Did I hear that correctly?
No, I didn't mention any regulatory. I was only saying that the entire asset technically is available for us to offer as a security from offering security perspective on the asset side perspective, but we also have to, you know, sort of calculate from liability perspective, how much liability can we totally borrow within our leverage.
Okay. Got it. Got it. Understood. Thank you.
Thank you. The next question is from the line of Apoorva Bahadur from MetLife Investment Management. Please go ahead.
Hi. Thank you again for allowing me to follow up. I just wanted to re-clarify on the question regarding AICTPL . My line was a bit choppy, but you mentioned that there will be no volume disruption from the termination of MSC contract.
Yes.
Could you please repeat why?
Yes. AICTPL is a joint venture between APSEZ and MSC, and 70% of the volume of AICTPL is MSC volume. Maersk volume does not come in this terminal. It's predominantly the volume goes to another terminal in Mundra Port. Only some of the spillover cargo of Maersk as and when there is congestion, comes into this terminal. That's why we don't expect and we don't foresee any disruption due to the 2M for both AICTPL as well as for Mundra Port.
All right. If I got that correctly, so you're saying that only the spillover will be coming into this terminal?
Only spillover is coming right now, which is less than 2-3% of the total volume of that terminal.
All right. Basically, once the contract is terminated, then the other volumes will be sufficient to meet
Yes.
the volume requirements. All right. Okay, perfect. Thank you very much.
Thank you. The next question is from the line of Jignesh Karia from Macquarie Asset Management. Please go ahead.
Hi. Can you hear me? I just want to kind of go back to something we talked about a long time ago. Last year, I think the guidance for CapEx overall was, you know, about INR 90 billion, right? Much higher. I understand that there's enough projects to drive growth for the next two years. I guess, is it purely that so these projects are not as expensive as we saw, that's why we are able to cut CapEx or, you know, there are some things that are being pushed back?
No. These are all the, I mean, next year, all the projects that we have started this year would be coming to a closure in next year. That's where we are at the tail end of the cash flows for, from a CapEx point of view. The capacities that we are adding, which will get added next year with those CapEx, will be sufficient to take not just next year's growth, but the following year growth as well.
Could I assume basically that, you know, you're completing the projects faster or cheaper and that's why you are able to...
Yes.
reduce CapEx?
Yes, that's right.
I see. Okay. Thank you.
Thank you. The next question is from the line of Douglas from J.P. Morgan Asset Management. Please go ahead.
Hi. Thank you, management. I just want to circle back to.
Sorry. Can you speak up? We can't hear you.
Hello?
Sorry. Just a second, Douglas. The audio is unclear from your line, sir. Please use the handset mode.
Is it better now?
Yes.
Yes, it's much better.
Right. What is the maximum amount of cash on balance sheet used for ICP in any given point of time? Thank you.
Did I hear you correct? What's the maximum cash that we have carried in this year?
No. I guess, this question was previously asked, but I don't catch the answer quite clearly. What is the maximum amount of cash on balance sheet that is used for ICD in any given point of time? Thank you.
We, as Muthu explained it earlier, there is no specific number here. It is dependent upon in the last two years we have been building the cash reserve for certain acquisitions, which enabled us to, for the treasury team to do those deposits or corporate deposits. This is not an ongoing phenomenon. Given the CapEx, what we have taken in this year and the acquisitions, we don't have any cash or we don't have that much of a cash to do this ICD. This is not an ongoing phenomenon. This was more of for a short period of time, given the cash build-up which has... There is no specific RPT in that, just to be very clear on that. This Mr....
Adani also mentioned it, that sort of intercorporate deposits which we are talking of, these are not to the related parties by any nature.
Right. Yeah. It's quite clear that it's not a related party. I just want to understand what is the maximum amount of cash that is used for ICD in any given point of time in the past few years. Thank you.
So, I think trying, we'll, on the risk of repeating what I said a few minutes back, we don't. There's no specific number. It is primarily was a treasury operations looking forward, and in the current situation, whatever the cash what we were having, we have put into the business in terms of the CapEx and the acquisitions what we have carried out. You will not see that level of transactions or ICDs going forward. Does that answer you? Whatever the cash which we have in the books, you can see the value and where it is currently deployed in the balance sheet, which was issued as of 30th September and the earlier one as of 31st March also.
Thank you, management. It's very clear. Thank you.
Thank you. The next question is from the line of Justin Ong from Threadneedle AMC. Please go ahead.
Hi. Management, I just have a follow-up again about Myanmar. I know that you mentioned that there's an additional approval forthcoming from a statutory board in Myanmar. One concern is that last week the U.S., U.K., Australia reached, I think previously they held out on sanctions. They have actually announced a new restriction, targeting some of the SOEs in Myanmar. Also as I understand, there's also a third extension of the state of emergency. In this context, is there any scope for much longer delay approval than expected? I know you're mentioning potentially next quarter to get the approval, but the problem is this Myanmar is actually a real sticking point in MSCI assessment of your ESG profile.
No, 100% agree with you, and we are cognizant of the fact that it is a sticky point in our ratings, ESG ratings. I think we took a call. Looking at the overall situation, we had taken a call one year back that we have to exit, and we've been working, you know, aggressively in terms of to find a buyer and to get all the approvals so that whenever we do an exit, we do an exit properly as well. Because the worst thing we can do is we leave an asset behind which is again used for some other, you know, which could be used for human right violation purpose. That's where, you know, we just...
We are cognizant of the fact that, you know, it is taking a little time than expected. We just want to do it in a correct way so that it goes, it goes to the right buyer and it is not used for, you know, any other purpose.
Okay. Yeah. Thank you.
Thank you. The next question is from the line of Matthew Zheng from PIMCO. Please go ahead.
Hi. Thanks. I just wanted to follow up on a previous question, somebody asked. Regarding these ICDs and, that you have, you know, lent out over the past few years, have they ever experienced any stress, or difficulties in terms of getting money back?
We got the question, Matthew. Let me answer, and if it is incomplete, please do follow it up with the question or complete it. There is no write-off. The entire money has come back along with the full interest, and treasury money is completely intact, and it did come back in full, number 1. Number 2, because there are repeated, you know, sort of questions on this, I do want to actually go back to the principles of why it was there in the first place. There was a cash build-up in the company. Our operations threw up a lot of cash, and it was built for both acquisition as well as the CapEx. You saw last year CapEx panning out. It was just uncertain at that point in time, but it is now being used up for CapEx.
In addition, at this point in time, there is no clear visibility on the Concor, which was also actually a point of, you know, sort of potential use at that point in time. There was a cash build-up. Today there is no cash build-up. Actually, to demonstrate that point, we are now talking about paying down debt with the cash that is generated. You won't see the ICD going forward.
Got it. Got it. Thanks. Just a follow-up on this. What would be the minimum amount of cash that you would be comfortable with on the balance sheet?
For the size of our operation, in addition to known cash that is required, we normally carry, you know, sufficient cash for next... I mean, this is a group's policy. We try to carry cash that is required for 1 year's upcoming maturity, plus all known CapEx that we want to use for the next 6 months. Lastly, for a kind of operation that we have, we will have, you know, $100 million-$200 million of cash that we want to carry in the balance sheet to meet the operating requirements of the company, because it's a pretty large balance sheet. As you can see, it is close to INR 80,000 crore balance sheet. We will carry some cash to meet the operating requirements.
Got it. Thank you.
Thank you. Ladies and gentlemen, we'll take that as the last question. I now hand the conference over to the management for closing comments.
Thank you very much for taking out the time to attend this call. We will come and join back with you after the Q4 results. I hope most of your questions or all your questions have been answered for the now.
Thank you. Ladies and gentlemen, on behalf of DAM Capital, that concludes this conference. Thank you for joining us, and you may now disconnect.