Ladies and gentlemen, good day and welcome to the Adani Ports and Special Economic Zone Limited Q4FY25 conference call hosted by Ventura Securities Limited. As a reminder, all participant lines will be listen-only mode. There will be an opportunity for you to ask questions after management's opening remarks. Should you need assistance during this conference, please signal the operator by pressing star and then zero on your touchscreen phone. Please note that this conference is being recorded. I would now hand the conference over to Mr. Tushar Pendharkar from Ventura Securities. Thank you. And over to you, sir.
Thank you.
Good afternoon and very warm welcome to everyone. On behalf of Ventura Securities Limited, I am pleased to welcome you all on the Earnings Phone Call of Adani Ports and Special Economic Zone Limited for Q4 FY 2025. We are happy to have the management of the company with us here today. It is represented by Mr. Ashwani Gupta, Whole Time Director and CEO, Mr. D. Muthukumaran, CFO, Mr. Divij Taneja, CEO of Adani Logistics, and Mr. Rahul Agarwal, Head of Investor Relations and ESG. We will begin with the opening remarks from the management followed by an interactive Q and A session. With this I hand over the call to Mr. Rahul Agarwal. Over to you sir.
Rahul, we can't hear you. Hello.
Good afternoon everyone and thank you for joining the Earnings Conference Call. We will begin this call with opening remarks from Ashwani and then we will open the floor for Q& A. Over to you, Ashwani.
Good afternoon and thank you for attending the earnings call. I hope we are audible. In case of some difficulty, please raise your hand. During FY 2025 APSEZ delivered stellar performance across all parameters. We posted 16%, 20%, and 37% growth in revenue, EBITDA, and net profit respectively, and surpassed FY 2025 guidance including cargo volume. If we gross up the one-time Gangavaram loss, domestic ports revenue grew by 12% led by all-time high 27% market share and 73% EBITDA margin. Mundra became the first Indian port to cross 200 million metric ton of cargo in a single year.
Our growth continues to be accompanied by strong financial discipline as at FY 2025 our leverage stood at 1.9x during the year. We significantly enhanced our domestic and international footprint. We closed Gopalpur acquisition, commenced operations at Vizhinjam and Colombo ports, and our board has approved acquisition of NQXT in Queensland, Australia. Our second pillar Logistics continued its hyper growth trajectory with 39% year-on-year jump in revenue led by current portfolio and new services including trucking and international freight network services. These are capital-light services which will further accelerate growth while delivering high capital efficiency. Our third business pillar, Marine Business. We acquired Astro Offshore and continue to invest in growing our marine fleet. We own 115 marine vessels that operate in Middle East, Africa, and South Asia waters. We expect the marine business to cross INR 3,300 crore revenue by FY 2027.
As our business evolves and thanks to your feedback we are introducing new reporting lines. As you can see on slide number 44 in our investor presentation, we will now report international ports separately and demonstrate the progress towards the target. We will also introduce separate reporting for marine services, which is our third business pillar, which includes Ocean Sparkle in India, ASTRO Offshore, and TAHID in overseas trucking and international freight network services will also be reported separately as a part of the logistics vertical. We have outlined our marine strategy on slide number 46 of the investor presentation. We are focusing on diversifying our marine fleet in Middle East, Africa, and South Asia. We are focused on profitable operations with high capital efficiency underpinned by Tier one customers and long term contracts, and we aim to achieve 3x revenue growth in marine by FY 2027.
As you can see on slide 49 of our investor presentation, we are focusing on trucking and international freight network services based on the momentum across the business line and a great performance in FY 2025. Looking forward, FY 2026 is also looking very strong for us. We have guided FY 2026 revenue in the range of INR 36,000-38,000 crore, EBITDA in the range of INR 21,000-22,000 crore and capex between INR 11,000.
10,000 crore-INR 12,000 crore.
As a summary so far APSEZ has been focusing to be an industry leader, a volume leader, a market share leader, margin leader. Then we transformed it into integrated transport utility company driven by multimodal logistics and hence as you can see on slide number 41 we are best in class, ROCE and ROE in the industry which is a premium and as you can see on page number 41 ROCE has reached for APSEZ and thank you for your feedback. That's why we are going to have this reporting line also in future 15% ROE close to 21% which is best in class. Hence moving forward whatever business we are in, whether domestic ports where we are reaching ROCE of 21%, whether the marine business where we are of ROCE of 13, 14% and the new businesses which we are doing now whatever we are.
Our only indicator is how better we can be on ROCE and ROE. So with that note I would like to say thank you and we will open for the question and answer. Thank you.
Thank you, sir.
Thank you.
Go ahead, Margarita.
Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star and one on your telephone keypad and wait for your name to be announced. If you would like to withdraw your request, you may do so by pressing star and one again. The first question is from the line of Alok Deora from Motilal Oswal. Please go ahead.
Hi, good afternoon. Congratulations on a pretty good set of numbers. I just had a couple of questions. First is on the, you know, the EBITDA number has actually come up even higher than what we had estimated as per the revised guidance. While, you know, the volumes have been slightly on the lower side, basically the EBITDA per ton has kind of improved. I just wanted to understand, is this a phenomenon which we will see going through FY 2026 as well? That is question number one. Question number two is just on the logistics business. What has really happened because we have seen a massive jump in the growth in the fourth quarter. Is that sustainable or is there any kind of one-off volumes which we could gather there?
Yeah, okay. No, thank you. First I would like to give the answer and then I will hand over to Muthukumaran and also our Adani Logistics CEO Divij. I think we have been repeating our message now since one year that we are transforming our company into an integrated transport utility company. We are strengthening up the pillars which are in the whole ecosystem. Logistics. We have rail, we have terminals, we have ICDs, we have warehouses, we have agri logistics. Now we started the trucking. The reason we wanted to start the trucking is any container which comes to ICD is delivered to the customer without our connect. The trucking is something which is connecting ICD with the customer. The same truck can bring back many other things from the same customer to our own ICD.
Now when it comes to EBITDA percentage and once again if you can see our financials for the quarter four or for the full year, we are shifting our financials from EBITDA percentage of domestic port to the absolute amount of revenue, absolute amount of profit in mid to long term by having a multimodal transport utility business. Pillars, ports and within ports, domestic and international logistics. Within logistics we have four or five business units and the Marine which is domestic and international with a combination of fleets, whether it is anchor handler or utility boats and so on and so on. That is giving us a strong advantage to grow our top line and bottom line irrespective of only.
Which is.
Linked to only port. That's why, as I said in my opening speech, that we have proved us to be as best in class in ROCE and ROE which is just possible because of combination of the best businesses we have. Now I hand over to Muthukumaran and then to Divij to talk about especially all the majors which we explained to you on the logistics, especially getting into the new businesses, how it is helping logistics to grow in multiples.
Thank you. First of all, in a way thank you for that question because if there is one central message that we would like to convey, we would like to keep repeating that this is what it is about. I mean, why even in our current year's presentation there are a number of changes in the format in which we are reporting to you. We are giving you separate business lines to tell you that we are beyond volume. We are giving you separate ROCE. We are giving you a separate guidance note. In the guidance we have actually, if you can notice, taken down the volume as a footnote. Earlier it used to be a lead indicator for us. Right now we are actually treating this as an important component.
Obviously volume is going to be the driver of our growth, but not the sole driver of the growth. That is the central message that we want to give. The trend that we are trying to talk about for the past couple of quarters got well established in this quarter. It has not been the.
First time that this is the case.
If you see the third quarter, our EBITDA has outgrown our revenue, which has outgrown our volume. That is point number one. Point number two, going forward we are not going to shy away from volume growth. Volume growth will be there. What we would like to highlight is the outgrowth that you will see in revenue and beyond that even in EBITDA. That is actually the central point that we want to drive. In quarter three also it was the same case that when we reported the number, you've seen how EBITDA versus volume relationship has broken down and where EBITDA started running ahead. That is exactly why we have started giving you additional lines of business reporting so that you can appreciate as to where that is coming from, number one.
Number two, incidentally, for this year the price increase has also been there, which is beyond what is budgeted, which has contributed to volume and internal EBITDA growth. These are the two factors that we have. Divij, would you like to comment on sustainability of the volume?
Yeah, thanks Muthu. Just to build onto what Ashwani and Muthu have said, what you are seeing the numbers increase is a total integrated play coming into effect. You're seeing us move from custodians to exhibiting countries control over cargo. At some level the tech is also starting to kick in. Our view is this is more than sustainable. With all the four quadrants coming in right, from the freight network to trucking to rail terminal to the warehousing, our customers are now able to speak to us for all services under one roof backed with the support of the ports. That's about it.
Sure,
just supplement that with numbers. You know, it is sustainable. Frankly speaking, it is beyond sustainable. That is why if you see page number 51, for the first time we have given guidance on volume of logistics as well. You know, you asked whether Q4 is sustainable, but what we are talking about is potentially 3-4 times growth in FY 2025 alone over the FY 2024 number in logistics volume. Do we have visibility of the growth? The answer is yes. Do we have contracts in place? The answer is yes. Will the scalability happen? Actually, we are working towards it. That is the effort which division team have put. At any point in time, any of you would like to actually see a Strategic Command Center that we have built, you are most welcome.
What we would like to also underline is the fact that the phrase that Divij used about, I would like to repeat for impact, control over cargo than actually sort of custody over the cargo. We have launched two business lines last year in logistics. One is a truck management platform and the other is the freight forwarding business. These are capitalized businesses. They come with very high return on capital employed, therefore. More importantly for the business, it is strategic because we have been able to actually penetrate through multiple lines of business. Therefore, you know, the two questions that you asked, frankly speaking, are very, very vital for the whole call. Thank you very much for asking them right at the beginning.
Thank you. Yeah, that's all from my side. Thank you and all the best, sir.
Thank you.
Thank you. We have the next question from Nidhi Shah from ICICI Securities. Please go ahead.
Yes, thank you so much for giving me the opportunity to ask the question. We did speak about how logistics is a big portion of the business now. I still wanted to harp a little bit on the volume just to understand that, you know, our initial guidance of 450-480, how is it that, you know, we got a 450 kind of number by the year end and what were the commodities that, you know, we sort of transported less of? Was there any particular reason for that? That is the first question. The second would be linked to that, that the underlying guidance of, say, 505-515 million that has been given for FY 2026.
What are the key triggers that we are seeing for this volume to come into play?
Thank you. I think first of all in the volume, let me say there are two indicators. The first indicator which is very much on the positive side is the India global trade. Maritime trade grew by 3.5%. APSEZ grew by 5.4%. As we always say that we are always 1.5-2 times, right? Then within this, I'm talking about India level, right? Within this the coal went down by 3%. Iron ore went down by 18%. Crude and POL went up by 3%. Container went up by 12%. This is all India level. Thermal coal went down by 9.4%. The coking coal grew by 2.2% and coastal coal was almost flat. First of all let's understand that all India cargo, the main growth pillar for all India cargo was controlled container.
If all India grew by 12% out of which the EXIM growth was 6% and transshipment growth was 61%. Now if you look at us, we have grown our market share from 43.8% to 45.5% in container. Which gives you the answer that we grew more than the India container trade has grown. That is a positive side. On the other side, the whole India trade on the coal has declined. We kept our market share almost flat. Because of the global trade decline, we had a decline. This is the second answer. The third answer to your question is Gangavaram. We closed the port because of an unfortunate incident for 41 days which approximately cost us close to 6 million metric ton.
You know, once the customer is not coming to our port for 42 days, definitely, you know, it's not a small business, it's a big vessel. They will not come up on the 43rd day. To restart and have the ramp up, we almost lost between INR 10 million-INR 11 million back return in Gangavaram last year. These are the three indicators which we wanted to share with you that show how you should evaluate us in terms of volume. Let's come to next year now, which will be our growth driver. This will be our growth, so container will remain our growth driver. As we said, we are building up container facility, container capacities in Mundra. CT5 is with full throttle in the commissioning stage.
As you can see, next year we have given the CapEx guidance, and if you could see our CapEx slide number 52 and 53, we have also given a little bit more strategic view and a numerical view on CapEx. Thank you. This is the feedback which was coming from many analysts on the CapEx allocation, or let me say capital allocation. We are going to invest heavily on container terminals. Whether it is Mundra or it is Vizhinjam or it is CWIT in Colombo or it is Ennore or it is Kattupalli, you know, everywhere we want to keep expanding our capacity on the container. That's the number one CapEx driver. Obviously, you know, we are the essential commodity handlers, so whatever comes to our port we are obliged to take it, right?
We should not underestimate the demand of the coking coal as well as the other coal. The biggest port which is exposed to it is Dhamra, and that is why we are investing in Dhamra. The third growth, which is not exactly same as container, is on the liquid, and that is where we started the Hazira liquid farm and so on. To answer your question, from priority viewpoint, fourth pillar remains the container, second remains the dry cargo, and the third remains the liquid. That is where we are looking at the guidance which we have given for the volume for next year.
Lastly, I wanted to ask that the volume guidance that you have given, have you factored in any weakness especially given the tariff uncertainty in the market, and is there any potential downside to the guidance that you are seeing as things are today?
See what we have seen in the past, whether it was COVID or it was Red Sea crisis, because of our positioning of the ports from geography viewpoint.
Access to the global trade routes, one.
Thing goes up so other things may come down but it can be compensated by other. That's where our risk mitigation by multicommodity portfolio, multi customer portfolio and multiple ports portfolio helps us in navigating it. I would say that things would settle down because trade remains the trade whether left to right or right to left or top to bottom or bottom to top, I think whatever. Plus and minus comes in. We as integrated transport utility company should be able to absorb it when it is translated to revenue EBITDA impact and that's where we are focusing on that. The volume remains important but it is not the most important factor in our top line and bottom line.
Thank you so much. Thank you.
Thank you. We have the next question from the line of Sumit Kishore from Axis Capital. Please go ahead.
Thanks for taking my questions. My first question is net debt to EBITDA has come off to 1.9 times as of FY 2025 and your operating cash flow for the fiscal is well ahead of your CapEx FY 2026 and your operating cash flow is going to grow as well. Your cash position is likely to improve or the net debt to EBITDA is likely to come off. How do you plan to reward shareholders? Maybe if you could articulate your dividend policy or any other modes that you have in mind to reward shareholders over the coming fiscal and also maybe a medium term picture here.
Yeah, thank you. I think very good question. Slide number 54 is the CapEx allocation strategy and it is driven by and ROE. We have added logistics and marine. Definitely where the returns are. Returns are going to be what we expect.
But also the technology CapEx and the decarbonization initiatives which we are taking. Decarbonization initiatives are not cost but they are for us profitable initiatives. Especially we are investing now on technology CapEx for example Vizhinjam but also in the coming future when we are going to have our new terminals, container terminals in Mundra, we will invest in the technology as we have invested either in Vizhinjam or we could see investment in world-class technology to our course to keep the more than sustainable efficiency and effectiveness of our operations because that is what is going to drive our top line and bottom line. Number one, capital allocation remains a most important thing for us because of our heavy cash flow.
The second one, we are rewarding our shareholders by announcing the dividend which board has recommended at INR 7, which is purely driven by what is the mid to long term wealth we are creating for our shareholders by investing in the right business at the right time which has got best-in-class returns. With these two pillars we will manage and we are managing and we will manage our operating cash flow.
Maybe I would like to follow.
Up with a question out here. Basically the dividend payout ratio right now is still going to lead to a situation where with your prevailing CapEx run rate which probably takes you to your targets of thousand and done. And the growth that you have planned on the logistics side, your net debt to EBITDA is still likely to come off with this kind of dividend distribution. Is there any plan to ramp up the dividend policy in favor of shareholders? Also if I look at your net debt to EBITDA threshold, the upper limit is two point five, which is still leaving a very big sort of investment over and above the present CapEx run rate that you would have to do to actually get closer to two point five. What do you have in mind?
Because even then acquisition is not going to lead to a major increase in net debt to EBITDA.
Thank you very much for the question. You know we have increased the dividend to start with. Could we increase more based on your marks? The answer is possibly yes. I think the point we are trying to address here is that point page number 52 tells you how we approach CapEx, where you know, a domestic port is likely to be organic, which is where we have given guidance of INR 12,000 crore and you know, a couple of other, especially marine and you know, and tuck-ins in logistics actually could come through inorganic. You know, we are expecting that there will be inorganic in the coming years as well. We are already working on some of them. You will actually sort of hear from us in times to come.
You know, we will be in this range of debt equity that we are talking about, which is two, but we will not breach two and a half as a policy. We think we'll be somewhere between two and two point five with this. We have always said that, you know, we'll take stock a couple of years down the line. We have rapidly increased our debt equity ratio in all of two years. We have come down from three handle to now less than two. We will keep an eye on it and we will do what it takes down the line. Right now between organic and inorganic, we consume the cash that we are generating. Of course, there is far down the line, three years down the line.
FY 2028, July 27, we have the first big chunk and the only big chunk of debt repayment coming. Yes, we are keeping an eye on this and at the moment we will be focusing on organic and inorganic investment.
Okay, just a brief question. One of your slides mentions that logistics and international ports are likely to achieve threshold ROCEs in the next three to four years. So particularly in relation to, you know, these two businesses, what kind of threshold ROCE is being indicated and what is likely to drive you know the improvement to those levels for these two businesses.
14% return on equity in INR terms and you need to adjust for dollars, you need to adjust for the thing. It is what we actually look for in the threshold return for these businesses. In terms of actual improvement, we have a plan port by port. In the case of international port, for example Colombo, it is driven by volume ramp up. In the case of Tanzania, it is a combination of investment efficiency and ramp up. In the case of Haifa, it is actually operating efficiency. In logistics, it is going to be driven by substantial volume increase. That you can see, for example, in this year guidance that we have given where the capital employment is disproportionately insignificant and the volume increase is quite significant.
We are, while percentage EBITDA will be what it is, but our total INR operating leverage will be extremely high in all these business going forward in the coming years.
One thing I think, you know, we are adding up the international port really this year because Sri Lanka is starting this year, Tanzania started last year, and Australia will come up. I think so far our internationalization was limited to Haifa and TAHID, which is a marine company, right? That is why I think we had a lot of questions about our internationalization. Let me say when it comes to port, with the acquisition of Australia, we have given the visibility of 150 million metric tons of, let me say, to be precise, 148 million metric ton by 2030.
Which is, you know, out of one.
Billion, which we are, which we have ambition. Second, in Haifa, you know, we have taken two main milestones and which we cleared two weeks before. First is we have put our President to run the operations in Haifa. Number two, we will have our CFO in Haifa to run the business. Then there is four to five people, a specialized team, whether techno, commercial, or engineering, which will be supporting Haifa to improve the efficiency and effectiveness. Because it is the time when, as you can see the financials, how best quarter four has been for Haifa. I think this is going to continue the way the country wants to grow after this challenge is over, which they are going through. The second major achievement which we have done in Haifa, the long-lasting, never-ending two years of negotiation with the labor union.
We have eight labor unions at the port. We have signed the union agreement till 2036, which is bringing a big efficiency and the productivity improvement in the port. Port by port now we have a very concrete and structured business plan. Most important, the leadership team which is inducing the DNA of APSEZ when it comes to creating the margins and at the port?
Sure.
Thank you for the detailed answer. Does your guidance include NQXT and consolidation for how many months or quarters?
No, it doesn't include. We have clarified.
It doesn't include.
It doesn't include. Yeah,
for sure.
Thank you so much. Thank you.
Thank you. We have the next question from the line of Achal Lohade from Nuvama. Please go ahead.
Yeah, thank you for the opportunity, sir. My question is, you know, with respect to the container volumes, you know, we are hearing about, you know, the government stepping up, actually working very aggressively with respect to Wadhuan port. Obviously, we are talking about three-four years down the line. How do you see that changing anything for us in terms of competition, pricing, margins, etc.?
I mean, this is at a very initial stage of pre study. I think it's going step by step. Obviously, you know, we are doing the study of especially all the tenders which are about to come and we should be applying for. Once again, this is not about one tender or two tender. This is about ecosystem.
We do believe that with our know-how and expertise to develop and run an ecosystem will give us the competitiveness to get that business. Time will tell. Today it's only at the study stage.
If I could just supplement on that. See, you're talking about three to four years. I don't know where you got that number from. We've been building ports in the country. It would be an extremely aggressive target to have a three- to four-year timeline for such kind of a port development, even for people like us. Number one. Number two, you're also seeing that market. Ashwani spoke about it earlier in the call, that the lead sort of market increase and leader in the market increase as a segment. Last year we have seen significant growth both in our share, which has helped grow the market itself. I guess we do not, in short, anticipate any significant dent into our market share if you predict the numbers based on realistic project timelines.
Understood sir. The second question I had, you know, while you've talked about the revenue growth for both trucking and marine, how do you see the margins actually out there? You know, is there any number you want to give us, any direction as to how you see the profit growth for these two businesses?
Which two businesses?
For Trucking and Marine? Because you're talking about certain batch growth out there. I'm just curious, you know, would the profit growth be even higher than that or could it be lower than that?
You know, we will disclose as the quarter go for each segment, both revenue and EBITDA, you will be able to see it. Approximately, if you want, for the year we are factoring in a blended 10% margin for all businesses, which is not ports, the new businesses, because it is gestating year and first year of such large volume growth and then it will actually ramp up in margins in times to come. That is broadly where we are in terms of the margin. We will give quarter by quarter the numbers. You will get to see that.
Especially for the marine. For the marine, it's not, you know, it's over gestation now, so it's scaling up. If you can see the investor presentation, the margins are very high, very equivalent to what we have been doing in ports. Of course, vessel to vessel, it depends. If you can see the ROCE, we are talking about 14-15%. This business is at a stage where we can demonstrate by return on capital. Whereas in logistics and international port are also at a stage where we will start demonstrating improvement by ROCE. Logistics, where we have separated two business for further reporting, are at gestation stage. We will start the business with a margin which should be in line with the margins which are there in the market or above their net.
Please wait because we want to demonstrate that with numbers.
Understood, sir, just a clarification. The 14%, the threshold return, is it ROCE or ROE? Return on capital employed or return on equity? You ROE, understood. This last question if I may sir, you know, slide 64. You know, we've seen a substantial improvement across most of the ports. Like for example Mundra Q4, FY2024 was 61. This quarter is 67. For Hazira, 62 has become 68. Krishnapatnam 61, 67. Now if you could highlight what is driving this, you know, just a bookkeeping question on that.
Sure, sure. See, it is an improvement on a very good number actually to start with. I mean, the base itself was very, very high. I mean, we have improved it even further from there. I just wanted to actually not miss this point before I respond. This is number one. You know, basically the increase is a combination of operating leverage because you know that we already are a high EBITDA business. Any operating leverage actually contributes to the margin increase, combined with the price increase that we have taken in the product, in services rather, so it is these two which have actually helped us improve the margin further.
Understood. That's all from my answer.
Thank you.
Thank you. We have the question from the line of Parash Jain from HSBC. Please go ahead.
Hi, this is Parash here and thank you for the presentation and I must say, I mean this is probably one of the most exhaustive presentations I've seen in this space. Congratulations. I have a couple of questions if I may start with. I missed the first few minutes. When you talk about your logistics business expansion on the freight side, were you referring to the freight forwarding business or was it something else? Secondly, now with all of your businesses, you have shown immense amount of clarity. Can you also touch upon how shall we visualize the land bank that you have accumulated across some of your key ports? How shall we think about the development and monetization opportunities on those land parcels, particularly from Mundra?
Lastly, with respect to your overall logistics offerings, do you see feeder services connecting probably within them to the rest of the east coast port or Bangladesh as one of the verticals to offer the full array of services to your customers? Thank you.
Feeder service right now is not in the plan by ourselves, by through ownership, if that is your question. Okay, will we encourage a customer who will actually give us that? The answer is yes. Will we look for somebody who could actually do it? The answer is yes, we'll support. At the moment we are not talking about buying ships for feeder service.
Yeah, and feeder service is a cost center for us. Unless until we find a value which will bring, you know, the profit which is what we look for, we have no intention to go for because for us it's a cost center for someone, which means very thin, thin margins. Yeah,
I think there will be.
People in the market to actually help us do it. If so, that is not a problem. We do not have to do it by ourselves at the moment. We will see down the line. Your point on land bank, actually I will answer, and I will hand it over to Divij to respond on your other question on logistics of what is straightforward.
As far as the land is.
Concerned, Paris, we have bought all this land because we do not have to guess where we need to put all our warehouses and our logistics business because it will be driven by current industrial activity. We do not have to lead it. I mean, we do not have to lead the market. We can follow the market. Based on the exhaustive research that we have done and decisions of where we would like to put, we have been buying land we will actually roll out. That is why you see 12 MMLP going to 20 MMLP over a period of time. Warehouses actually going to a target of 20 million tonnes. We have a roadmap of how we will do so. We will start using those in times to come gradually, like, you know, this year again I request Divij to cover. We have opened a couple of large warehouses.
Divij, over to you if you can please complete this part and then also answer the freight forwarding.
Yeah, thanks Muthu. With regards, I'll start with the forwarding part. It is not just the CIF or FOB forwarding that we're looking at. We're also getting into DDP and DDUs, which essentially is a lot larger than traditional forwarding. It will, in some form, given we are integrated, link into a first mile or a last mile depending on what the case would be. Back onto what Muthu was referring to in terms of warehousing. Again, quadrant one, it sort of integrates into the product offering, and the way we are looking at it is end to end with forwarding, making sure we have control over cargo and the remaining, making sure we can offer everything in house.
Sorry, couple of the recent ones. Do you want to talk about the which the ones that we started?
I lost him. To say again, I was just saying.
Would you like to just tell them the couple of recent MMLPs that we opened up and where we are on each of them broadly?
Yeah.
All right. So with regards to the footprint that we have today, we have got 12 MMLPs and if I look at them with regards to the permissions from customs to operate them as ICDs. The most recent that you will see will be Virochanagar, followed by Kishangarh, followed by Mallur. All expected to get the permissions done in this quarter. Virochanagar will be our largest ICD and it is going to be the largest ICD in Asia spanning over 1,000 acres and it connects onto a gateway port, that's Mundra, with about 300 km of rail distance in between them. Kishangarh connects us to Rajasthan market and Mallur of course is down south. These are the three ICDs that are expected in the coming quarter.
One last question, if I can chip in with respect to your guidance, what is the base case that management have with respect to ongoing tariff sanctions? Is it hinders upon India potentially strike a trade deal with the U.S. or is it independent of that?
It's independent of that for us right now.
Okay. Much more limited. Thank you so much and have a good rest of the day.
Thank you.
Thank you. We have the next question from the line of Vishal Biraia from Aviva Life Insurance. Please go ahead.
Hi, I'm from Bandhan Mutual Fund .
Financially the question is on international acquisitions. Are there any plans for international expansions anymore?
Yeah, so yes, answer is yes, but the condition is, number one, it should be in line with our business strategy which is from Southeast Asia to India.
To Middle East to Africa.
Number two, it should be an ecosystem and not only something which is only a cost center. Number three, we are given the authority to operate it, which means we must be majority. Number four, at the end it should have today's business which is profitable and has a potential to grow in the future. That exhaustive zero to five year business plan. As you could see, our cash flow situation, in addition to the very smart capital allocation for the growth in all the three businesses, and inside the three businesses we have roughly 11-12 businesses. In addition to that, we need to have the inorganic growth, but inorganic growth as an enabler to bring the performance. To answer to your question, yes.
With the conditions to grow top.
Line and bottom line.
What will be the kind of.
Scale that you would target? What is the extent? I mean Greenfield also would be on the cards.
You know, it depends, right? It depends. We can't generalize because it's also a question of what we want to do. On the other side, what is available, right? It should be a best match between what we want to do and what is available and what is going to be available. I would say we are focusing on marine because this is where, you know, we are getting a very good momentum. We have expertise, we have a good control on that business now after three, four years running the OSL. I think first priority for us is to invest in marine. Second, we are looking at some ports in Africa and also in Southeast Asia. I can't disclose more, but that's where we are targeting today.
Fine. That will be over and above the INR 12,000 crore that you were among the CapEx for, right?
Yes. Yes.
Okay, thank you.
Thank you. We have the question from the line of Pulkit Patni from Goldman Sachs. Please go ahead.
Sir. Thank you for taking my question. The first one is already answered which is on global trade and you did mention that your guidance is irrespective of what happens in the tariff outcome. My second question is last year one of the big reasons why our guidance on volumes could not be met was coal. Any early signs of whether we've started seeing reversal of that and how confident are you that coal volumes this year are going to come back for us to be able to meet our volume guidance?
No, thank you. First of all, as I said, we are not the one who is controlling the coal volume. It is the trade which is controlling the trade volume. You know, the point is in FY 2025 the total utility generation grew up by 5.2% out of which thermal power 2.8% but the renewable energy grew by 12.9%. Right. I am pretty sure that same thing will continue with a lot of initiatives in the renewable energy. Our good point is more and more renewable energy grows, more and more our cargo for solar and wind grows and that is a container cargo. For us, if something is getting cut down on the coal, we get the benefit on the container. Right. Moving forward, I would say that energy demand will keep on increasing.
The mix of engineering, mix of energy may have an evolution as we have seen in FY 25. We are prepared to manage that evolution because we are in renewal. We are also in the thermal.
Okay, sir, then I'll probably take one more question.
In light of that, are you?
Also, doing any switches of your coal terminals into container terminals or any plans of doing that over the medium term?
No, I don't think we have it. Of course we have the technology to convert to use our equipment for our containers. Right. As it is done in some of the ports abroad, we have that capability, but we don't feel today that we should do that because utilization of our ports is extremely good. I don't think that we should do it today. Most of it, as you know, is also captive. Whether it is Mundra or we have got long-term contracts with our customer. I don't think we should do that today. If it is needed, we have the technology to do that.
Sure.
Thank you so much.
Thank you.
Thank you. We have the question from Gondunya Nimagada from Jefferies. Please go ahead.
Yeah. Hi sir, thanks for the opportunity and.
Thank you for the wonderful disclosures in the ppt.
Two questions come in. Firstly, on the logistics business, I mean we certainly target an incremental or a.
Country shows out here.
I mean part of it is.
Also driven by asset-light business, New York and trucking.
I'm also trying to understand if there is any option of optional truck.
Sweating out the asset.
How does the effect terms look like today? Because you have also these new large ICDs such as your Virochanagar. Just trying to understand it from that perspective.
Could you repeat that please?
It was not very clear. Could you repeat the question again please?
I mean, I was trying to understand from a return ratio perspective for your logistics, one is obviously pursuing asset.
Line businesses like your freight forwarding, but.
Outside that, is there an optionality to?
Sweat the assets better.
Because you have recently invested in large.
ICDs such as your.
Just trying to understand it from.
That perspective, the contribution towards certain ratios.
Okay, so again, it was a bit.
Yeah, go ahead. We expect the ramp up in each of the ICDs and we expect therefore incremental margins to come from these higher utilization.
How does the assertions look like today for the portfolio? I mean, logistics?
Sorry, your voice is very clear.
Can you please?
I was.
Let me speak a bit louder, sir. I was asking how does the assertions look like today in logistics?
We have the number of hand raffles. We can come back to you, sir. Yeah, go ahead. Good.
Yeah.
My second question is on the marine business. I mean we are targeting the expanded. I'm just trying to understand the unit economics a bit better and also the customer profile.
How does this growth come?
If you can provide some color out there, please. Yeah, no, thank you. In the marine business, of course we have got multiple customers, but they are all mid to long term contracts. This is where we are getting into. Also, most important, when we are acquiring these companies, we are acquiring their operational and management teams along with it and then integrating them into one team in Dubai. This is our strategy when it comes to customers. Of course, because of the customer sensitivity, we are not able to disclose the customers. When we talk about the anchor handlers or the rigs in oil and gas companies in Middle East, you can count there are three or four or five big oil and gas companies in Middle East.
For example, in North Africa, where that is Angola, we know exactly who are the global players there. We are focusing on that. That's where within the marine fleet also, maybe we can talk about, we have four to five categories of vessels. It's not only anchor handler, we have rigs, we have utility boats, so different kind of vessels which we are putting up in the fleet so that our business mix is good between the oil and gas.
The other industries.
Understood, sir. Lastly, if I may ask one last question.
How should we look at Gopalpur's realization? Profit margins for this quarter have been a bit weak. Just some perspective, if you can provide some color.
I'll give a short answer. You know, like any other half a dozen ports that we have done, in times to come this will also get to. We have a pathway and visibility on how we will get to the, you know, sort of our portfolio return from.
Okay, sir, thank you and all the rest.
Thank you.
We are actually at the top of the hour that we have allocated. Maybe we could do one or two questions and then we can close. Are there any? I cannot see the queue. I am outside. Is there any more questions?
We have a couple more.
Okay, let's do one or two and then close it.
We have the next question from the line of Aditya Mongia from Kotak Securities. Please go ahead.
Thank you for the opportunity.
The question I had was more on.
Logistics as in the context being you have obviously invested in sizable amount of fixed assets. Now you're starting with a certain margin level within the individual lines of work in logistics.
What kind of improvement in margins can happen from here on over the next?
Two to three years? That will be a first quarter.
I think let's not talk about EBITDA margin only, right? I mean this is what we said, you know when we started Mundra. What was the margin? What was the return on Capital Employed? 0.1%, 0.2%, 3.1%. Where is Mundra today?
Right.
Our domestic ports have reached 21% of ROCE. We are focusing. You know there was a question before why and how the logistics volume can increase by 39%. This is only possible because we are filling the gap between end to end business value chain. Trucking standalone may not be in terms of EBITDA margin grade. When it comes to return on capital it is great. We are asset light. We own the truck but we use them. When we use them, we use our own technology. As we have started the skill and development center to have our own drivers, we are going to give their drivers our own accommodation, uniforms, discipline. We know that if the drivers are disciplined, definitely our assets will be disciplined.
If our assets are disciplined and we use our technology to drive those assets, we will be sweating the assets. Sweating the assets is the conclusion and not the objective.
Right?
This is what we did in port and this is what we are doing in logistics because of trucking. Now as Divij explained on the freight network services, which is not only freight forwarding, because our 46% market share with container, we have a strong relationship with the shipping line. Once we get into this, we have this 46% of market share mainly because of relationship with shipping lines. We are going to use that trucking and the network services to bring more cargo to us. It is important to see the trucking margin, which will be more than market because we are controlling the technology and the driver.
It is also important to see as APSEZ, we are not only a truck company, we are not only a port cargo million metric ton company, but we are the full end-to-end integrated transport utility company. Hope it answers the question. Thank you.
This next question that I had was.
A similar question on the port side.
As in one advantage that I see.
In Adani, is that all links to expansions are brownfield in nature, and in five years, 50% of volumes are on those brownfield expansions. That, coupled with your kind of focus.
On Nike, can port margins kind of.
Exceed 80% levels next five years?
I'm just trying to get a broad.
Sense as to the extent to which things can become better given such advantage we have versus most of the players who actually have to do Greenfield to expand their own capacity.
We are not giving specific number, Azithya, but yes, directionally, you know, margin is expanding, that we have seen the trend already. That will continue.
Those are my two questions. Thanks a lot for responses.
Thank you.
One last question.
We have the question from the line of Sanjay Parikh from Soham Hassan Managers Private Limited. Please go ahead.
Patience on great numbers and very good disclosures. It really helps us. Just one question, only one simple question is that global acquisitions has its risk, geopolitical risk, currency risk. As we see the margins are also lower.
On a longer term, do you.
Think our threshold of return should be higher while we invest in them?
No.
Very good question, Sanjay. Basically the return expectation that we have is factoring in all the sort of risks that we can foresee. When we acquire the port, we certainly evaluate them on all these criteria. Despite all these risks, in some particular assets, one risk of the list that you said may be more prominent than others. We evaluate risk, we bake them in, and then only when we are confident we go ahead and get into the sort of transaction. Our risk in our eyes stands mitigated because there is a compensation opportunity and that is the driver for us. That is a motivation for us to get into that.
Thank you and best wishes.
Thank you. Okay, so thanks a lot. Would like to close this. If you have any further queries, please do reach out. As usual, we're all available on the high note of last year's results and a higher note of our next year's forecast that we have put out there as a guidance. We would like to sign off with a big thank you for each one of you to have participated yet again on a holiday. Have a good evening and look forward to being in touch. Thanks again.
Bye.
Thank you. On behalf of Ventura Securities, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.