Q4 20/21

May 4, 2021

Good evening, everybody. This is Tina from Quotis Security. We welcome here today the management of ATSCZ for a call on full year results. So, we have with us Mr. Karan Adani, CEO and Hold Time Director. Without much delay, I'll hand over the floor to Mr. Karan. Over to you, Mr. Karan, now for the call. Good evening, ladies and gentlemen. Welcome to the conference call to discuss quarter 4 and FY 2021 operational and financial performance of Adani Ford and SEZ Limited. Let me start by giving you an overview. FY 2021 was a year of transformation and consolidation for APSCZ. We have demonstrated our strength once again with the capability to withstand COVID like disruption. All our ports were operating normally as port operations were classified as an essential service. During this period, we not only maintained business continuity, but also kept the supply chain running and stood by our customers to prove as a bankable service provider at all times, ensuring stronger customer relationship and stickiness in cargo, thus gaining the confidence of our customer. This also allowed us an opportunity to revisit our cost and restructure them. We focused on moving from fixed cost to variable cost wherever possible, renegotiated operational contracts by reengineering, reducing built in escalation, redeployed manpower and machine. We have also relied on technology for digitalization and improved resource utilization to achieve cost optimization. This had an immediate impact and the EBITDA margins improved by This EBITDA margin expansion will further continue as we look to expand margins by another 200 basis points to 2 50 basis points due to an increase in volume in the next few years. The uncertainty and volatility during the period presented us with a transformational opportunity to grow inorganically and complete 4 large acquisitions. We expanded our footprint in Maharashtra by acquiring DE Port. We also acquired Krishnapatnam Port and are in the process of acquiring Gangavaram Port in Ashtopatesh, the 2nd and third largest miner port in India. In Logistics, we have set up a new vertical of rail tracks business with the acquisition of Darbuja Rail Corporation. Coming to the key highlights of operational performance in FY 2021. APSEZ handled Cargo volumes of 247,000,000 metric tons, a growth of 11% as against a 5% decline registered by all India ports. Our strategy to achieve East Coast West Coast parity, handle all types of cargo and diversify cargo mix, ensured continuous gain in market share in India. In FY 2021, on a year on year basis, APSCZ's overall market share in all India cargo volumes increased by 400 basis points to 25%. Similarly, market share in all India container segment also increased by 500 basis points to 41%. Our cargo continues to be diversified with drybulk constituting 44%, container 43% and liquid cargo including crude constituting 13% of total cargo. You may refer to our operational and financial highlights presentation for port and cargo segment wise breakout. Coming to the recently completed acquisition of Krishnapartnam Port, the port is now fully integrated into APSJ's portfolio both in terms of operations and financial. We have demonstrated the success of our operating process, which helps APSEZ to benchmark each activity to APSEZ standard and resulted EBITDA margin improving from 55% to 71%. The port in H2 FY21, 120,000,000 tonnes of cargo. APSEZ also acquired 100% stake in Digiport for a total consideration of INR 705 crores through the insolvency and bankruptcy proceeding of NCFT. Nagi Port currently has a capacity of 8,000,000 metric and is capable of handling pulse and liquid cargo. In April 2021, Adani Logistics Limited announced a strategic commercial partnership with e commerce major Flipkart to strengthen its supply chain infrastructure. As part of this partnership, Adani Logistics Limited will construct a massive 534,000 square feet of fulfillment center by leveraging state of the art technology in its upcoming logistics hub in Mumbai. The center will have capacity to house 10,000,000 units of sellers' inventory at any point and will be operational by Q3 of 2022. The center will support market access to several thousands of sellers, MSMEs And we'll enhance local employment for the region and create 2,500 direct jobs and thousands of indirect jobs. Just to mention that this is just the start of the partnership and we will coming years, we will look at expanding these partnerships into many more similar types of warehouses across India. We have been able to scale up and diversify our railway rowing stock business. The recent changes in the general purpose drag and scheme investment Our Indian Railways has allowed serving our customers not just from ports, but also from the mines. During the year, we were able to add contracts to operate 16 new rigs, transportation of coal and cooking coal. APSEZ has successfully backed a 3 year maintenance dredging contract from Deemedayal Port Trust through an open tender offer. This is one of the largest dredging contracts awarded by a major port in India and was earlier being done by one of the big port international dredging contractors. Contract is worth INR 350 crores. Let me now take you through cargo volume performance segment 1st. Coming to container business, in FY 2021, APACZ handled a total container volume of 7,200,000 TEUs, a growth of 16%. This was led by Mundra, which grew by 18%, Hazira, which grew by 8% and enroll which grew by 53%. Mundra Port continues to handle highest container volume in India and is now the premier container terminal. In FY 2021, it handled 5,660,000 TEUs, which is nearly 1,000,000 TEU more than GNPT, its nearest competition. This is on account of our strategy of partnering with large ship liners of the world through our JVs and continuous gaining of market share through better connectivity in the hinterland. During the period, 10 new container services were added at Mundra, Hazira and Kathupalli, which will contribute around 800,000 use of container volume on an annualized basis. Coming to dry bulk, in FY 2021, Total dry bulk volume of cargo handled was 110,000,000 metric tons, a growth of 9%. Within this segment, fertilizer grew by 35% and Agri Products grew by 67%. During FY 2021, we have signed several new contracts at Ghamra Port to handle various cargoes including gypsum, iron ore and manganese. Tamra Port will handle an incremental volume of 11,000,000 metric ton on account of these contracts. Coming to liquids, in FY 2021, APSEZ handled Liquid cargo, including crude, of 32,000,000 metric tons, a growth of 2%. As part of our cargo diversification, We added LPG and LNG Cargo into our portfolio. This was the 1st full year of operation for gas business helped by APSEZ. In FY 2021, APSEZ handled 810,000 metric tonnes of LPG and 1,750,000 metric tonnes of LNG during the year. The volume in this segment will continue to grow to cater to the addressable market segment, which is set for growth as a result of government's favorable policy on the gas based economy. Coming to logistics business, Adani Logistics is continuing with its strategy of expanding logistics footprint across India, building multimodal logistics for warehousing, rail and distribution network to be the leading integrated logistics service provider in India. As you are aware, Adani Logistics currently operates 61 rigs on the Indian railway network and includes container, Auto, Green and Pulp Rakes under the general purpose wagons scheme. EPWIS is on a growth trajectory and handled 4,400,000 metric tonnes in FY 2021 versus 2,700,000 metric tonnes in FY 2020, a growth of 61%. We will continue to add new rigs next year under GPWS to handle increased volume of bulk commodities for its customers in the power and mining sector. On auto logistics, ALS is growing its handling and transportation of automotive on North South Circuit and is operating 2 EFTU takes from Part D to Bankroll. ELL has emerged as a successful bidder and received letter of award from AFC CIL for the development of freight terminals with exclusive station connectivity across 8 locations. The 8 locations are New Palgarh, New Sanjali, New Datari, New Chawaper, New Pimsen, New Golwar, New Gothenka And new full era on Western DFC and Eastern DFC. Once developed, these terminals on Western DFC We'll have direct DST corridor connectivity and will help in faster and efficient cargo movement, leveraging the advantage of double stack container break movement. Currently, ALL has 5 logistics parks and 2 logistics parks under development at Nagpur and Mundra. ALL has already signed MoU with B Medical System for leasing of a newly developed warehouse of 56,000 Square Feet at Mundra Logistics, sir. Coming to the operations of Adani Agri Logistics, it is related to achieve COD of Tatiya project with 50,000 metric tonne storage capacity in quarter 1 of FY 2022. Currently, AALL has priced silos units under various stages of development. Before discussing financial numbers, let me give you a brief on the latest acquisition and situation in Myanmar. In March 2021, we announced Our intent to acquire 89.6 percent stake in Gangavaram Port in 2 tranches. We have received Approval from the Competition Commission of India for acquisition of the majority stake in Gangavuram Port in April 2021 and completed the 1st tranche of acquiring 31.5 percent stake from Warburg Pickles and expect to complete the 2nd tranche of acquiring 58.1 percent from the existing promoters by quarter 4 of FY 2022. We expect a cargo volume of 10,000,000 metric ton in quarter 4 FY 2022 from this port. Simultaneously, we had announced acquiring 100% stake in SRCPIA. As it is related party transaction, necessary steps have been initiated as enumerated in our related party transaction policy and expect this to be completed in Q3 of FY 2022. In April 2021, we have also announced the acquisition of GALEN's 25% stake in Krishnapatnam Port from the outgoing promoter at a value of INR 2,800 crores. With this, APCL will become a wholly owned subsidiary We expect this transaction to be completed in Q1 of FY 2022. In April 21, we have also been able to take another milestone step in our international journey by pouring into the container terminal in Colombo Port. This provides APSEZ to offer 1 more gateway to shipping lines and other potential port customers across South Asian Water benefiting both India and Sri Lanka. All these acquisitions are part of our strategy to increase our hinterland reach and to achieve East Coast, West Coast parity and bring customers to our Port K. As you are aware, all these acquisitions are value accretive to our shareholders from day 1. Coming to Myanmar, 1st and foremost, we would like to say that we completely condemn the violence which has happened In the country, the blatant violation of human rights. Coming to our project, as you are all aware, That we entered in Myanmar in May 2019. We had got all the approvals through Democratically elected government over there, which is Myanmar Investment Committee. As part of the deal, we had entered in to a land lease agreement with Myanmar Economic Corporation, which we had disclosed to all the stakeholders, including the government over there, including the stock market over here and all the analysts as well as investors. With the recent violence in Myanmar and the military coup, there is uncertainty and post That United States has also imposed sanctions on certain individuals as well as entities. One of the entities under which the sanction has been given is Myanmar Economic Corporation. We just want to reiterate that before our last financial transaction with MEC has been in 2020 And post the coup as well as post the sanctions, we do not have any transactions and we do not plan to have any transactions, financial transaction. However, given that we have 0 tolerance policies on sanctions and to make sure that there is no Contrevention of the U. S. And other sanctions, we are approaching OFAC proactively. We have retained a U. S.-based counsel, Morrison Forrester, who specialize in sanctions and OFAC related matters. And we will update all the stakeholders once we have a clear view from OFAC. In a scenario wherein Myanmar is classified as a sanctioned country under OFAC or if OFAC opines that we have violated the current sanction. The company has plans to abandon the project And we'll write down the investment in the project in full. The write down will not materially impact the balance sheet as it is equivalent to About 1.3% of the total asset of APSEZ. Just to reiterate that so far we have invested Approximately USD130 1,000,000 and by the time the Phase 1, which will be completed, which is in June of 2021. The total investment would be around $180,000,000 to $190,000,000 Coming to the key financial numbers, coming to the financial results of FY 2021, happy to share that even during these arduous times, We could achieve all our guidance in terms of cargo volume, revenue, EBITDA, EBITDA margin and free cash flow, While total operating revenue grew by 6% from INR 11,873 crores in FY 2020 to INR 12,000 INR 5.50 crores in FY 2021. Port revenues increased by 12% from INR 9,613 crores to INR 10,739 crores due to an 11% increase in clavo volume. APSCZ during FY 2021 earned ForEx revenue of USD474,000,000 compared to USD 4 30,000,000 in FY 2020 on increase of 10%, which is on account of higher container volume, which grew by 16%. Interest charged in FY 2021 was higher at INR 2,255 crores compared to INR INR1813 crores in FY 2020 due to additional debt of USD750 1,000,000 raised for acquisition of APCL and other CapEx requirement. However, the average cost of borrowing has come down from 6.9% to 6.7% due to new issuance and refinancing of US500 $1,000,000 at a lower coupon of 3.1% compared to 3.95%. During the year, we have been able to reduce the trade receivables from INR 2,589 crores to INR 2,386 crores, resulting in a reduction of DSO from 82 days to 69 days. Receivables from Adani Power And Adani Enterprise has been steadily coming down every year and currently stands at INR305 crores and INR66 crores, respectively, an aggregate reduction of 37% on a year on year basis. During FY 2021, the company has generated INR 5,800 crores of free cash from operations after adjusting for working capital changes, CapEx and net interest cost. This is against INR 3,942 crores generated in FY 2020. Our net debt to EBITDA has come back to the expected range of 3x to 3.5x on March 21 and stands at 3.3 times. All our credit ratios are within the expected range and are a testimony to the disciplined capital management policy of the company. Coming to the guidance of FY 2022, Based on our internal estimates, we project cargo volume for FY 2022 to be in the range of 310,000,000 to 320,000,000 metric tonne, which includes 10,000,000 metric tonne for Gangavaram port in quarter 4 of FY 2022 Consolidated revenue to be in the range of INR 16000 crores to INR 16800 crores to generate a revenue between INR 1400 crores INR 1500 crores SEZ and port led development income to be around INR 600 crores Port EBITDA margins to improve by 100 basis points and be between 71% to 71.5%. CapEx for the period to be in the range of INR 3,100 to INR 3,500 crores. This includes CapEx for Logistics business of INR 800 to INR 1000 crores. With all this, we expect our free cash flow to be in the range of INR 5,500 crores to INR 6,000 crores and result in a net debt to EBITDA of between 0.3 to 0.3.5 times. The Board has recommended a dividend of 20% of PAG for the year, which is as per the dividend distribution and shareholder return policy. To conclude, FY 2021 has been a transformational year for APSEZ. Some of the key decisions we took this year have set the foundation for the coming decade. The recent acquisition and focus on increasing the hinterland reach of our existing ports will enable further consolidation and improve our market share. With the initiatives taken in the logistics business, it is set to grow at a phenomenal rate in the years ahead, Just setting the path in the right direction to take APSEZ from a port company to a transport utility company, delivering full logistics solution to our customers. We will continue to focus on cost optimization to improve our margins, practice prudent capital management policy to maintain our investment rate rating use cash frugally and responsibility to ensure adequate liquidity. With all this, APSEZ is well on its course to become a truly integrated transport and logistics utility and achieved 500,000,000 metric tonne of cargo throughput and ROCE to be in excess of 20% in FY 2025. With this, we can open the lines for question and answer. Thank you very much. We will now begin the question and answer session. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Atum Tiwari from Citigroup. Please go ahead. Yes, sir. Thanks a lot and congratulations on yet another strong set of numbers. So just one question on Digipore, now that it is part of the portfolio. How should we think about its volume buildup Over next 1 or 2 years. And what kind of, say, EBITDA or EBITDA per ton we can look forward to? And We did see your press release talking about INR 10,000 crores of CapEx at Digi to position it as an alternative with JNPT. So could you throw some light on that aspect as well? Yes. Thanks, Atul. So I think right now For the coming 1 or 2 years on a short term basis, Digi has a capacity of 8,000,000 tonnes. And No, we've just started the work in terms of cleaning up and to augment the current capacity. I think for the next 2 years, I can say that The expected volume would be for the 1st year around $3,000,000 to $4,000,000 and then the next year would be around $6,000,000 to 7,000,000 The margins would be right now to be in the range of 50% to 60% EBITDA margin. But I think as we start this year as well as start the project, I think the project will take At least 2.5 to 3 years to complete to increase the capacity from 8,000,000 to 20,000,000 tons. And the idea is to diversify the portfolio over there. So to handle liquid, there's a good potential of liquid business, container And bulk business as well. And the other big part of the CapEx, which will also be which We'll go and diggies also the connectivity, so the railway line, which will connect the port to the main interline. But on a short term basis, I would say that this year we are targeting around 3,500,000 to 4,000,000 And next year would be around 6,000,000 to 6,500,000 tonnes. And this will be primarily bulk cargo, 3000000 to 6000000 tonne over next 1, 2,000,000 tonne over next 1, 2 years or it's container also? Sorry, can you repeat that? So my question was on the mix of this Cargo at Digipore, this 3,600,000 tonne over next 1 or 2 years. This is container or bulk? What kind of product would It's predominantly bulk and liquid right now. A container today, there is no container Facility over there. So we are working in terms of to convert 1 of the existing parts into container, which will take at least 24 months. But on a near term basis, this volume is predominantly only bulk and liquid. Okay. Thanks. Thanks a lot. Thank you. The next question It will be from the line of Pulkit Patni from Goldman Sachs. Please go ahead. Thanks a lot for taking my questions. I have 2 bookkeeping questions. Firstly, on this guidance of margins to be an improvement of 150 basis points. Now I understand that the port margins also include the margins which come from the rail assets which are associated with those ports. And you will be splitting those assets out into a separate subsidiary. So when we look at the guidance, is this guidance Ex of that or does it include those rail assets? And if you were to split that out, then how should we look at margins for the port business, Excluding the rail subsidiaries associated with those assets? That would be my first question. Sure. So the margins on the rail assets are in the same range. It's around 69% to 70%. So, which is same as the normal port operation margin. So, regardless of whether we pulled we restructure Then the port margins will not change in our guidance, does not change that. Got it, Karan. No, the reason I was asking, for example, Sarguja has a margin of 87 But you're saying that the other real assets are in the 69% to 70% margin range? Yes. The other real assets are in the range of 70% because they are under a different A team of Indian Railways. Okay, understood. Thanks for that. My second question is on Harbour Services. While we had Volume growth, Harbour Services revenue declined. Now I understand this is because it did not include Krishna Patnam. How should we look at Harbour Services revenue and margin For the next year, 2 years in terms of IR modeling. Give us one minute. This has Predominantly happened because of upsizing of ships. So because the volume increases, but we have handled more Larger shift. So if you would see that shift counts have come down compared to the volume what we did last year. I think the way to look at it is it is not to be linked with the volume, but rather to be linked with Number of ships and the size of the ships. Okay. Got it. That makes sense. Thank you so much. Thank you. The next question is from the line of Mohit Kumar from Dam Capital. Please go ahead. Good evening. Congratulations on a remarkable performance in a very challenging year. So my two questions, sir. What is the kind of Organic growth you're building in. My question is, except excluding KPCL kind of cargo we are looking at? And what is the broad outlook on cargo wise volumes in the sense container while container looks good? I think there is a concern on the bulk side and Full side given the COVID? That's my first question. Okay. Maybe you can complete. I'll answer all of them then. Secondly, sir, what is the status of DFC connection? I believe there's a line which is still to be completely electrified. And I think there is also a doubling work which is still going on. So when do you expect this line to commercialize and And DFC to start contributing to our volumes. And what is the current real coefficient? And do we expect and what is the kind of What is the kind of improvement do you expect? Let me answer your second one first. So Sorry. So on DFC, we expect as per the latest schedule, we expect DFC to be connected by October of this year to Mundra. Today, our current rail coefficient in Mundra is around 32 And as we as DFC comes into play, I think this coefficient will Keep increasing, but I think it will increase gradually because there will be a shift of road to rail, which will happen with the Better operational efficiency. I think our view is that there is Another 4% to 5% growth that we can do on the rail coefficient. But So apart from the volume growth, we expect the rail coefficient to be around 30 6% to 38% of our total volume in Mundra. Just coming to guidance, We are assuming that the country's GDP will be growing at around 11% And India trade will be growing around 9% to 10%. So that's how we have looked at We have looked at our from a top down perspective. If I remove Krishnapatnam, The growth the number that we are looking at is around 200 and Sorry, just give me one second. Without KPCL, it would Be around 280,000,000 tonnes is what we would expect. The broad If I may, the broad diversification would be remaining the same. So container would be around 41% of our basket. Bulk will be around 44% and liquid crude and gas would take up Remaining part of our portfolio. The reason why we our bulk is increasing or we are Meaning stable is because KPCL last year was only half year projection that we have taken in. This year we are taking Full year volume and as you know in KPCS almost 80% of the volume is tied up on a long term basis and it's predominantly bulk volume. And the second is the 10,000,000 tonne that we will be adding in Gangawaram in quarter 4. Again, Gangawaram is a bulk Bulk port and not and they don't handle any containers. So these are the two reasons. And then obviously, the natural growth that we are seeing in Dhamra with the Expansion coming to an end and the natural increase that we will see in Hamra port because of the hinterland growth over there. Sir, one more question, if I may squeeze in. So have you taken any tariff hike in April? And what would be that number? Yes. So anything in the range of 2.5% to 3% on a per ton basis, that continues. A lot of those contracts have been executed and some of them are in the midst of execution, but 2.5% to 3% on a per ton basis. Thank you, sir. Best of luck. Thank you. Thank you. The next question is from the line of Ashish Shah from Centrum Broking. Please go ahead. Yes. Good evening, Karan. First question is on the Sri Lanka investment that we spoke about. So If you can just briefly highlight what is the kind of investment that we are looking at time frames. And just one question that I had is with respect to Well, Shimande investment and the Bijinjiam project, which is under construction. So my thought was that when we were looking at Bijinjiam, The rationale was that we'd probably try to take out a lot of transshipment cargo from Colombo into with India. Now how does the SINOKA investment Tired with this particular asset. So I can just close it back. Sure. So the The Sri Lanka investment, we are investing in Colombo. It's a West Coast terminal. It is Under a joint venture where we have 2 partners where APSCZ is holding 51%, John Keyes is Holding 39 percent 38% and then SLPA that is Sri Lankan Port Authority is holding the balance part. The total project cost is in the range of $300,000,000 to $350,000,000 And our part would be around €150,000,000 to €170,000,000 is what our commitment would be. It would be done in 2 phases. Phase 1, eventually with both phases completed, the terminal will have a capacity of 3,500,000 TEUs. And it will be done in 2 phases of almost 1,500,000 and then further. The way we look at between Sri Lanka and Visindyam is actually a complementary Rather than as a competition because we would be then be able to control price on both ends And especially on the transshipment side where we do expect that there is a lot of price war which happens, We do believe that having control on both sides, we will be able to, 1, a, control the price and 2nd, also the natural growth which is happening in Colombo apart from the Indian cargo, Indian subcontinent cargo is quite a lot. So to cater to that growth, we do believe that there is enough room for both to continue and both to flourish, both the ports to flourish. Sure. Just on the same thing, what is the time frame for this investment to be made? When do we start? And what's the kind of target that you look at initially when you commence that on you? Yes. So we've just signed the boot agreement, and it gives us 6 months From 1st May to finish the financial closure and then we start the construction. The construction is anything between 24 to 36 months. And as I said, the initial first Phase capacity is 1,500,000 TEU. And we would be looking at to at least on the 1st year to have at least 50% to 60% of capacity tied up. Sure. On Myanmar, So we said that we invested about $130,000,000 Would we continue investing through the period where we decide what to do or We can say we are restricted to that response. And are there any penalties for getting out of the contract? I mean, when we say that we Abundant the investment, but would it have any contractual penalties to be honored if we could do that? So, no, there are no contractual penalties if we do not honor and we can exit out because this will fall under political force measure Under the clause of political force measure. Yes, today also we are continuing to invest because As I said that we expect the terminal to be closed to be completed Phase 1 to be completed by June. We have approximately 350 people working at site As on date, as we talk. And I think it's a matter of we are very confident that We will not fall under the sanction. But as a measure of good order, we are taking this route to be extra cautious. And but the project continues. We are going with the assumption that the project continues with the current course of action. Sure. Thanks. I'll come back from there. Thank you. The next question is from the line of Priyankar Deswas from Nomura. Please go ahead. Yes. Good evening, Tarun. So my first question is regarding your volumes, volume guidance level. So what I observed is that is the second half of FY 2021, which includes Krishna Ma'am, the company has done something like 149,000,000 tonnes of volumes. So if we go even by that run rate, We should be ideally be reaching 300,000,000 tonnes even without any major growth. And on top of that, if you put 10,000,000 tonnes from Jangavaram, that is where your guidance levels are. So are we saying that There may not be additional growth or is it more conservative guidance you are giving at this point of time? That's the first question. Yes. So as I said that last year, we as a country, we had a degrowth. So when we look at the group when I talk about 11% growth, We have to keep in mind that we are coming out of degrowth. We are coming from a year of degrowth. So in essence, if you compare it with FY 2019, the growth would be approximately 4% to 5% on a country level. The reason we have given this guidance of 150 I mean, sorry, 310 to 320 is Predominantly because there is uncertainty even today. But looking at what How we see situations evolving, we are very confident. As of now, we are very confident that we can achieve this volume. Maybe in October, half year, looking at how the how the 6 months have gone, we can revise that estimate. But right now, Right now, this is what we are confident of. Arun, if I heard it correctly, you said that Excluding this Krishnapatnam, the volume is 280,000,000 tonnes, right? I mean Yes, that's right. But we have already done something like that for half year of this FY 2021. So shouldn't we be seeing some sort of growth from there? Sorry, can you say that question again with KP sales? So I am saying from Krishnapatnam. I think in this year, you had roughly 20,000,000 tonnes, right, from Krishnapatnam this year. That is for the half year. So ideally, even if we have the same amount of volumes without any growth, So we can be possibly be doing 40,000,000 terms for Krishnapatnam for the whole year in FY 2022 even without any growth. But when you repeat when you said about the guidance to a question from another participant, you said Ex of Krishnapatnam, the volume will probably be around 280. So ideally, this Krishnapatnam should be adding at least 20,000,000 that's extra. So somehow this number doesn't tie up. So that's what I was trying to clarify. Hello? Hello, sir? Sorry. So if we look at even the existing quarter, right, excluding KPCS, Yes. We've done 63,000,000 tonnes, right, in quarter 4. And even if I take that growth, I mean, even if you take Q3 also, Q3, we have done 66, and in Q4, we have done 63. So on existing portfolio, we have taken without KPCR. If I take that, it would be anything between 250 to 260 is what The current translate would be. What we are talking is 260, another 20,000,000 tonne. That is 280. Incremental. Okay. Yes. And then we have KPCL on top of that. And then Gangavaram as well. Yes, yes. Karan, the final question from my side. So this is Regarding Myanmar. So what I see from the media, especially like ABC News, they seem to have made quite an Extensive reporting on this, maybe probably making an issue out of this. And they refer to U. S. General Right, commissioner tax filing report, etcetera, like that. But what we observe is that there are other Indian companies including our IT measure mentioned as well. So what is it that ATSEZ has been particularly been singled out for? It's something Can you throw some color on that, that Dow Jones took such an action? Yes. So I think two things. One is, if you see the ABC report, it has predominantly come out of Australia and that's because they're trying to malign the group with the And now that the Australia project is full swing and we don't have any other aspect to attack the group, that's why they are looking Trying to find and trying to connect kind of baseless things from one to another. And that's how if you see the report also which has come out, it has come out from the NGOs from Australia. And even on the Dow Jones side, We believe that and we are very clear on this that they have only taken one side of the story. They have not taken And they have not taken our holistic approach and they have not taken into account a lot of other things that No, the group and the company is planning to do. Just to give you example, we have a commitment to be carbon neutral by 2025. And no other port company globally has given that kind of commitment. And when we look at these things, we do believe that We have been wronged by Dow Jones on this thing. But that's okay. We are going to be engaging with them proactively and We will rectify the situation in next 12 months. But this has predominantly come out of Australia and vested interest groups who are trying to find something or the other on the group to make sure that No. They keep the Australia project on board. So it's more about Carmichael project To getting back on the Carmichael project rather than specifically Myanmar. So trying to hit the profile. Yes, that's right. Okay. That's very clear. Thank you, Peder. Thank you. The next question is from the line of Paras Jain from HSBC. Please go ahead. Yes. Thank you. Hey, Karan. Hope you and all of our colleagues and friends are doing great. And just thank you for all the philanthropy that you and your group are undertaking. I have few questions and I don't know how many I can ask, but feel free to ignore whatever you don't think I can respond to. My first Question is more on when we talk about your next year's volume guidance. I'm just wondering that The recent wave, did it have a knock on effect on your growth forecast that you would have thought 6 weeks back. My second question is when we talk about CapEx numbers, excluding logistic business, can you help us visualize what kind of Capacity metric ton kind of, I'll be penciling in against whatever INR 2,300 INR 2,400 Crore of CapEx. My third question is with Sri Lanka terminal on track. Is it fair to assume that Next logical step for the group would be to solve the connectivity bottleneck, I. If the feeder connectivity is one of the bottlenecks for the coastal cargo in India, Is there an opportunity or is there a prospect where the group can look into invest into the feeder network or get into a long term charter To solve that problem for your customers. And lastly, just on the Dow Jones Recent commentary on the group. You have partially explained that, but How do you think it will pan out? And where do you think that They misinterpreted it or you need to do more to resolve that issue and get back on track? Thank you. Thanks, Piyush. So looking at the second wave, No. Based on that, it's that we have given a guidance. Our guidance is keeping that in mind, not just second wave, but even second and third wave. And that's where but our assumption is that there won't be a nationwide lockdown, but there could be many lockdowns which could happen, and that's how We are looking at the volume of 310 to 320. But if things If things improve, then in October, obviously, we can revise this guidance. And we are seeing a little bit of Effect of it in the month of April also, if you see on a month on month basis, we had a little bit of Reduction, and that's predominantly because of the current wave which is happening. To answer your second question on the CapEx number on the ports, with this CapEx, we would be adding approximately 60,000,000 tons of new capacity. This is predominantly in Dhamra, In Digi, in Krishnapatnam And towards the completion of Resinium Port. So these are the places where the majority of the CapEx is going in terms of the expansion of the Expansion. To answer your third question on Sri Lanka, no, we will not be getting into shipping business I was doing, but we would what we will be doing is work with some of the feeding lines or The line for the management is disconnected. Kindly stay on line till I reconnect them. Ladies and gentlemen, we have the management line reconnected to the call. Look and whether we would be investing into feeders, answer is no. What we would be doing though is if we do believe that this becomes a bottleneck, We have enough relationships with the shipping lines and we can work out sort of a strategic alliance To give priority to some of the shipping lines to create that network to make sure that all our port capacity is being augmented. Okay. To answer your 4th question on the Dow Jones, I think where they have First, let me answer what better we need to do. I think we what we need to do is explain our position better. I will admit that maybe we have not done a great job in terms of explaining it to them. And that is One area which we do believe that we can do better and explain to them. I think the knock on effect, We don't personally see that this will continue because as I mentioned, Piyush, that we are going to be engaging with them in the coming No, in the coming few weeks. And we do believe that in and we are very confident that this decision will be Changed in the coming in their next review, which will be in 12 months' time. Perfect. Thank you so much, Karan, and have a wonderful day. Yes. Thank you. Thank you. The next question is from the line of Subur Singhal from Philip Capital. Please go ahead. Yes. Hi, good evening guys. Thanks for taking my question. So the current my question was just on the logistics So firstly, just to understand, the new track management services company, APMS here that we are forming, That will be a part of the ATSCZ business. Am I right about that? No, it will be part of ATSCZ, not Adani Logistics. Not Aurang Logistics. So when we are giving the guidance for Aurang Logistics revenue to be in the range of RMB 1400 to Basically around 14,000,000 to 14,000,000,000,000,000 So this does not include the revenue numbers for the jackals? No, it does not include anything from track management. What it includes is the Agribusiness, the AALL business, the rate movement under the GPWS team, The container movement that we do and the ICD business and the warehousing business. And the warehousing business. So I think that is the exact profile of the business right now as well. So we are looking at 57% growth, which is completely organic. There is no element of acquisition in that, right? No, no, no acquisition. This is only purely organ. Surely all done. So could you just throw some light as to, I mean, why is it that we are expecting such a bit jump into August 6th revenue next year? And if I were to let's just ask you to basically give us a slightly longer term kind of horizon, what is the kind of growth rate that we could expect In years beyond that, not a quantitative number, but let's say just a kind of a broad range that we could be looking at beyond SAKR to D2 as well. Yes, sure. So I think let me answer why we are seeing a 50 3% of the growth that we are looking at this year. If you would see on the let me start with GPWS. On the GPWS, as you know, we have we are doubling our volume this year based on the contracts that we have signed in the previous year. And we are adding another 16 rigs. So there will be automatically 100% growth in that business. On the container side, we do expect our market share to increase to almost 13% from the current 11% on the Pan India basis. And we are starting some of the new locations. We are starting our Business. So like Nagpur, we will be starting in the second half. We are starting in Bangalore as well. I mean, Bangalore, we are ramping up. So some of the new locations which had started last year, we are ramping up and that's the reason why we expect volumes to increase and the revenue to increase. The third is on the AALL. We expect by end of this financial year at least 3 new sites to be operationalized. The first site is will be operationalized in Q1. And then correspondingly, we expect by end of this Financial year, total 3 sites will be operational. So that will also add revenue and volume to the business. And the last is on the warehousing. On the warehousing front, we have commissioned this year, we last year, we have completed almost 150,000 square feet of warehousing, which are completely sold out. So that is an additional revenue which will be coming. So all of this To combine that's the kind of growth that we are looking at. And my second part about the longer term And go take a look at full year results. Yes. So I think longer term is very I mean, as I told you that we are very bullish on this part of the business. Longer term, it's Very hard to give guidance in terms of because there are a lot of moving parts even because if Concorde acquisition does realize then it's a very different ballgame that we are talking about. But I can tell you that we are very, very bullish On warehousing business, our target is 30,000,000 square feet of warehousing to be done in next 5 years. On GPWS, we want to expand this business quite rapidly, and we don't see Too many bottlenecks in expanding that because not a lot of infrastructure is required. And on the container side, if Concorde comes It's a very different ballgame, but if Concorde doesn't come in doesn't materialize and we have a different game plan which alternate game plan which we are working on. But eventually, we do expect our goal is this business to be approximately 20% to 25% of APSEZ's balance sheet in the coming 5 years. Right. Sure. Just last question if I could squeeze in. In terms of the SEZ revenue that we are looking up around INR 600 crores next year, Is it going to be predominantly, Munther again or would we expect some contribution coming from maybe 6% of Hamdha itself? No, this is, Mondi itself. These are some of the contracts that we are in the verge of signing. Sure. Great. Thanks for taking my questions and I wish you all the best. Thank you. Thank you. The next question is from the line of Amit Shah from Bank of America Securities. Please go ahead. Yes. Good evening and thanks for the opportunity, Karan. Most of my questions are answered, but I have a few questions from a long term perspective. So under the first one is that under for Guja Rail, it's mentioned that the plan is to take PPP Projects for railways. I just wanted to understand what kind of railway projects could this be? Meaning, will they complement our existing ports And their connectivity or could this be the futuristic DFC projects that are planned on PPP model as well? So that's the first question. The second, I just wanted to again understand this Colombo container terminal not cannibalizing with Wissingam. So Put it differently, the first phase of Colombo and Visigam put together will be about 2,700,000 TEU. So just for understanding, is it possible to give what could be the utilization of this combined capacity of 2.7 Once the first phase of both of these is operational. And the final question is, there is a plan to develop a pretty large port called Vadavan in Maharashtra. This is a futuristic thing, but just wanted to understand is, is our Digi port plan large enough to compete with Vadwan port or It will be much smaller in comparison to what was? Thanks, Param. Thanks. So I think let me answer your first question That is on the PPP projects on railway. I think these are on both sides. These are on DFC as well as some of the critical Strategic connectivities which could help in swinging customers, some of the key customers from competing ports to our ports. And so these are not or it could also be giving an edge To move some of the volumes which are moving by rail to move them into coastal route. So these are some of the projects that we are looking at. And these are backed by freights that we are confident that could be moved by us or could be transferred by us. On the Colombo container terminal and including with Visindjal, I think we do expect both As it's put together, we would be running in the 1st year, we would be running at 60% to 60 5% capacity utilization. The way we look at it is eventually one of Shipping line will take a bet in Visigem and the other one would look at Colombo. So I think that's how we look at it Because in Colombo, there are if you see, there are 4 large shipping lines which operate that is Maersk, CMA, MSE and Costco. So today other than Maersk, the other 3 players do not have any sort of home base Where home based terminal. So we do believe that we have a good chance with both these terminals. We would be able to rope into 2 players into our terminal. Coming to Wazawan, In my view, Wazawan is a futuristic development. We don't know when it is going to happen. But regardless of that, I think Digi Digi is going to be a full fledged multiproduct and multiproduct port. So we are not looking at just container, but we do see there is a huge potential for liquid, bulk, LNG and container. So I think that's how we look at. We would be focusing more on diversification and creating a 2 multi product port for the state of Maharashtra, which today all said and done, it's not there. So we are very confident that regardless of Adavan, We would be able to compete and we would be able to grow Ziggy quite significantly. Got it. Karan, just a couple of quick follow ups to each of these questions. So since you said that under Railways, It could be DFC and some of the port connectivity projects. So the port connectivity projects, I'm assuming, has a potential of adding to the Revenues within a couple of years or 3 year time frame. DFC projects are obviously going to be much longer. Without getting into specifics, do you see there are opportunities for acquisitions to be made for rail assets that connect to the port? That's so that was first. No, there are no so let me just answer that. Today, there is no acquisition opportunity because there is no player out private player out there who is owning railway assets. It's all Indian railways who own the assets. Okay. So all the projects will be like Greenfield, whichever you plan to get in. Okay. And from a Colombo perspective, Colombo and Visigam perspective, given that both of these will be transshipment ports, So assuming that the tariffs there will be lower and therefore margins should be around the 60% range As compared to 70 plus that we do at other post. Is that a fair assumption? Yes, you are right. It would be in the range of 60% to 65%. Okay. All right. Very clear. Thank you, Garan. Thank you. The next question is from the line of Girish Achypaliya from Morgan Stanley. Please go ahead. Thanks, Karun, for the opportunity. I had a few questions. The first one was on the terminals. I probably Missed a little bit on that. You said that there are 8 terminals that you're planning to build on the DFC. So would this be completing directly with head on with And what could be the CapEx plan of this expansion in capacity? That's first. The second one was just around Gangavaran. How are you planning to pay them? Because we've just said that 3,604. So is it an all cash deal or partly by shares and any decision has been taken on that? The third one was on Flipkart. How big is this as an annualized opportunity? I mean in terms of is it take or pay if you can provide any color here? And are you already in negotiation with other similar contracts? And 4th one was just on Rail Track. On capital employed, in your current 5 year projections, what kind of balance sheet or capital employed are you forecasting for the rail track You'll be adding in the next 5 years. Let me just answer the first two ones. So on the 8 terminals, yes, these are when we look at these bidding these terminals out on DFC, these are The terminals which where we see Concorde doing the maximum volume. And This is a part of to at least get an opportunity to position ourselves close to Concur and to be able to have at least a facility around that. So most of the terminals that you see are where we see the maximum volume potential. The CapEx over there, Phase 1 is approximately 100 crores to INR 150 crores per terminal is what we are looking at. And then once the volume ramps up, we would be Plowing that back into the asset to keep growing the asset. But that's the initial CapEx that we are looking at. On Gangavaram, we are still working with the promoters Yes. We'll see how we will be doing the deal. We are if as you know that the government of AP also has a stake in Gangaram Port, approximately 10.4%. We are in talks with government of Andhra Pradesh if UAP Thus decide to sell its stake on a cash deal, then we would be looking at merger Of Ganga Goram Port with APSEZ. And so the existing promoter that is Raju will be getting shares of APSEZ. If the merger if UAP does not decide to sell its stake, then Yes. We would be going back to the drawing board to see what is the most tax efficient way of doing the transaction. But Yesterday, we are open I mean, we have kept all our options looking at both either a cash or the stop date on Rambhavaram. I'm sorry, your 3rd question was on Flipkart opportunity. Yes. So Flipkart, it's a sorry, on Flipkart, as you know, it is what we have a contract is a 15 year take or pay contract Over there. And the annual revenue that we expect over there is around INR 15 crores to INR 16 crores to start with day 1 and within escalation build in of 3.5% every year. And we look at there is a huge opportunity to do similar things. And as I said that we would be Looking at this year, we are working on transactions with we would be closing with another e commerce players as well as Industrial peers and this year our target is to sign similar contracts worth almost 2,000,000 square feet. And the idea is that in next 5 years to take it up to 30,000,000 square feet in terms of the total capacity. But most of all of these contracts, What we do is on take for take for take for. Sorry, this will be on Nagpur, a multimodal park that you are already working on or this will be Anywhere in the country? No, these are all over India. So this will be in Ahmedabad, in Mundra, in Chennai, Bangalore, Hyderabad, Mumbai, Calcutta, NCR. So it's predominantly it would be these are the places where 90% of the warehousing happens. Okay. And last one was just on capital employed for rate, right, if you have any color right now For a long term perspective. You're asking for going forward new CapEx in Rail Track or Yes, yes. The capital employed that can happen in Rail Track new projects that you bid for, What kind of because we've identified ports and logistics and RealTrack is also a 3rd vertical. So just want to understand how will Cash flows be deployed in these 3 verticals, Suriyat, will it become a bigger vertical than logistics as well or will it be At a certain level of balance sheet only. No, I think we look at it more strategically. I think we are not capping it that it will depending on the opportunity, we would be looking at developing Some of these assets. Just to give you example, like in SRCPL, we would be investing another INR 1,000 crores in in the coming 5 years to expand that capacity. Same way, we depending on the opportunity arising, We are working on the rail track business for getting the rail connectivity into Kathupalli. We are working on getting connectivity at Digi and in Hazira. So I think even just 3 or these three ports Put together, we would be looking at a CapEx outlay of around approximately INR 3,000 crores Just for these 3 projects other than SRCPL and other projects under the PPP. But I think the idea is We would look at the volume potential and the kind of returns that we can generate. And I mean, we are very confident that some of these Assets, some of these lines can generate in excess of 18% IRR. Thank you so much. Thank you. The next question is from the line of Vinu Gopal Garay from Bernstein. Please go ahead. Hi, thanks a lot for the opportunity. Just a few couple of questions, Karan. Firstly, on the Kartupali, this means just want to check, there's usually a fairly large volatility in terms of margins. If I were to just look at Q4, there's There is substantial decline on a Q on Q basis. So could you just explain the driver for that? And also, Adani Logistics, you mentioned About moving away from these low margin contracts, is there any pricing pressure going on in logistics because we still see margin sequentially being lower? Could we just also highlight on this? So this is my first question. Let me on the logistics, you're seeing margins being lower predominantly because of utilization Being lower. But I think as we keep growing and our The volumes keep increasing. We would see these margins coming back. On Kathakali, just give me one second on Kathakali. So on Kathupalli, The see what we've had is container has dropped on Year on year basis. And on a yes, even on quarter on quarter basis, our volume has been down by 11% on the container, Whereas, what has picked up is our liquid business. So that's why you would have seen the margin changing over that percentage. But I think on a yearly basis, I think we would be going forward above 60%. And also, We had a one time R and M expense in quarter 4. That's the reason for the abbreviation. Okay. Sawan, secondly, I just wanted to check on this Colombo Visigam sort of link, you mentioned that eventually You could capture both side of the flows, so you should probably be able to also better manage the pricing part of it. So could we just elaborate this a bit more? More importantly, given that from a time frame perspective, I think within done this could still take time for you to commission, right? So how different are the commissioning timelines for this? And also From a synergy point of view, how does this the transshipment flow work for you? Yes. I think If you see on the transshipment side, the alternative for Colombo is Vicenza. And now having position on both sides, as I said that 3 shipping lines are looking for a home base in this region, and we can't ignore this region Because it's an established center, both Colombo as well as and when Visindyam comes in, including Visindyam. So we look at both as an extension of each other. And that's why we Attention of each other. And that's why we do believe that having control on both We will be able to maintain the pricing rather than getting into the price war. Just to give you example, if West Coast terminal was developed by Not Adani. Then there would be a price war between Visindjam and the 3rd party. But now with us being there on both sides, we will be able to control Pricing across the board. That's what I meant to say. And Mizanjiam, we expect Phase 1 To be completed in by March 23 is what we expect. And Colombo would be coming around the same time. So maybe 5, 6 months here and there, but it would be around the same time. Okay, got it. Karni, can I ask one, 2 last questions actually? One is, on the Slowdown perspective, I think April you did mention that there were sort of early signs in terms of impact. But given that COVID has intensified further, I'm sure that from a forward call's perspective, you have an idea of how things are shaping up, Right, especially more so in the near term because there is always a lag impact, right? So what are the areas that you're actually seeing if If at all any incremental slowdown or is it like it doesn't matter that the volume front bulk or container or whatever is still going to be fine Even at this level of COVID intensity. And the reason I'm asking is because your overall GDP growth that you work with is 11% which is Doesn't really factor in the COVID impact. So near term is probably I'm more focused on it, as I'm sure, is to what is the extent of impact? Yes. So far, we are not seeing any impact in terms of bookings or production levels or PLF levels at the power plant Or in the steel plants. Actually, we are seeing a growth in these sectors. I think what you will see is Due to the 2nd wave, you will see certain pockets where there would be a disruption on the logistics side because of lockdown. But I think now Country is well geared up when we went through the 1st lockdown. Both the company as well as country is geared up in terms of we know what to do If a lockdown happens in certain parts of the country. So I think those uncertainties are not there. I think what And we are not seeing on a near term basis any reduction in terms of canceling or cancellation of bookings or anything like that. I think it's just we are a little cautious in terms of how do we see on a more on a medium term basis. That's it. Sure. Thanks a lot, Karam. Actually, I have one, 2 more questions. I think it could be a lot, so I'll probably take that offline. Thanks. No worries. No worries. Thank you. Due to the time constraint, we'll be taking the last question for today, which will be from the line of Pratik Kumar from Amtech Stock Broking. Please go ahead. Yes. Good evening, Karan. I have three questions. Firstly, Does the volume guidance include the Myanmar volumes, which you earlier expecting for FY 2022? Yes. There is a volume of 100,000 TEUs in that. So approximately 1,400,000. 1,400,000 tonnes. 100,000 TEU is 1,400,000 TEU. Okay. So only 1,400,000 TEU. Okay. Secondly, so now with the revised CapEx of INR 31,000,000 to INR 35,000 crores. So this will be like this includes a much larger CapEx on logistics. So this will be like More similar range we can expect for future years as well on this range of CapEx because we are very aggressively putting warehousing and logistics. So That CapEx will remain at 1,000 crores and overall number? Yes. Logistics would be I mean, Right now, I'm going with the assumption that Concorde is not happening. So that's why I'm giving you a range of I mean, I'm giving you guidance of 1,000 crores Every year. But if that's if Concorde does happen, then we have to relook at these numbers because then, it would be creating capacity unnecessary for us. So but right now, we with the assumption that Concur is not happening, yes, INR 1,000 crores is the right number. And the total number for 3,100 to 35 100, this will be a total number as well. I mean, we reduced this number to around 2,000 crores for 20 1. So Yes, I think I would not say that you take 3,100 for 3,100 to 3,500 on a long term. It's just that This year, we have certain capacities which we had kept on hold last year, which are coming in. But I think on Once those capacities come in, on an average, INR 2,500 crores is a good number on the port side. Okay. And just one last question, this issue of 1 crore shares to Warburg Pincus, is it reflected in FY 'twenty one close balance sheet? No. It has the transaction has happened in April. So it has not been reflected in the balance sheet. Thank you. That's it from my side and all the best. Thank you. I would now like to hand the conference over to Ms. Tina Wilmami for closing comments. Thank you, Karan, for your time, and thank you, participants, for participating in the call. Thank you. And the IR team is available if anybody has any questions that we would like to answer. Thank you, everybody. Thank you. On behalf