Morning, everyone, and thank you for joining Q2 FY 2025 earnings call of Gujarat Pipavav Port Ltd. My name is Manish Agnihotri, and with me I have Girish Aggarwal, Managing Director and CFO, Santosh Breed. So maybe we'll take this call forward as Girish will have his opening remarks, and then we'll open the floor for Q&A. Thank you. Over to you, Girish.
Thank you, Manish. I hope I'm audible. Good morning, everyone. Let me quickly give my opening remarks. The revenue for the quarter was lower by 10%, largely due to lower container and bulk volume. Our EBITDA consequently was lower by 12%, and EBIT was lower by 15%. GPPL Board has approved an interim dividend of INR 4 per share. The quarterly financial performance largely was lower due to impact on the container volumes due to Red Sea, as well as lower imports of fertilizers because of the delayed tenders by the government. At a half-year level, the first half of the financial year revenue was higher overall by 1%. EBITDA was higher by 10%, and EBIT was higher by 13%. In terms of outlook, we now have started to see green shoots in our container volumes with reduction in skip calls and deployment of additional vessels by the shipping lines.
This is also seen in our quarterly volume trend, which has improved almost by 9% from 165,000 TEUs in the previous quarter to 180,000 TEUs in this quarter, and we expect the trend to continue. The imports of fertilizers post the opening of government tenders has also started in this quarter, as well as the liquid volume, which will continue to show a run rate of 300,000 metric tons plus. Our annual volume expectations are maintained between 1.3-1.4 million metric tons. Ro-Ro volumes continue to be strong, and expect annual volume in the range of 150,000-175,000 cars. I'll pause here and request for your questions.
Right, thanks. So can I request everyone to keep yourself on mute, and only when you have questions you can unmute yourself? We'll start with Mohit Kumar. Mohit, please.
Yeah, hi. Hi. Good morning, sir. Thanks for the opportunity. The one question on my side, there's this huge difference between standalone and consolidated profit numbers. I think it's something to do with tax. Can you please explain that line item?
Sure, Mohit. So the impact what you see is on the deferred tax, and this is in line with the new regulation which has come in, where the indexation on the investment has been taken off. So earlier, the deferred tax calculation was based on the original investment and was indexed to calculate the value as per the current value, and then, of course, the capital gain was calculated. However, with the indexation benefit going away, now the calculation is based on the original investment vis-à-vis the value of the current investment, and that's why there's an increase in the overall capital gain tax, which has been recorded now as a deferred tax in the books. Having said this, this is more of a book entry. There's no cash flow impact of this, and accordingly, it has been disclosed on the published result with the appropriate notes.
Understood, sir. My second question is on the proposed liquid berth. As I was reading the annual report, it looks like there's still some statutory and regulatory approvals that are still pending. Can you please update on the same?
Yes. So we await our overall regulatory approvals. Currently, we are in the process of receiving the Environment Clearance. Once the Environment Clearance is granted, is when we will get started.
When do you expect it, sir? Any timelines?
No. So I mean, there's no point at this point in time to give any timelines. On the environment clearance, the process is ongoing by both the local government authority as well as then the Ministry of Environment and Forest.
Is it fair to assume that by December 2025, this would be up and running?
I would argue at this point in time, it will be anywhere between December 2025 and March 2026.
My last question is also on the concession renewal. Have you heard anything from the government?
No, no, we haven't heard anything from the government, but again, I mean, we would like to just maintain what we said last time. We have not seen any red flags. We continue to engage with the relevant stakeholders, and at an appropriate time, I'm sure the government will come back with its decision.
Understood, sir. Thank you. Thank you, sir. Best of luck. Thank you.
Thank you. Thank you. And Deepak, please go ahead with your question. Deepak Maurya?
Yeah, hi. Good morning, everyone. Thank you for your initial comments and then sharing this presentation today. So my questions.
Deepak, sorry. Can I please request the others to go on mute? Please go ahead, Deepak.
Yeah, sorry for that. Okay. So my question, first question was about the continuous shipping outlook. We did see that sequentially the volumes have improved, but then part of this is likely to do with seasonality, where in second quarter typically tends to be a little stronger. Could you help us understand what kind of improvement are you seeing with respect to the shipping lines calls at your port? How has this improved versus the previous quarter? You did allude to it in your initial remarks, but if you could provide some more color in terms of what kind of strength you're seeing with respect to these services coming back, and at the same time, the amount of volumes which these services or these port calls are bringing back.
So we've spoken about the reduction of our volumes in relation to the transshipment volume because of the withdrawal of one of the services by Maersk, and that continues. However, quarter on quarter, we're clearly seeing the same services doing better, but not because of seasonality, because of the fact that their skip calls have reduced. We have seen both Maersk as well as OOCL, COSCO Group services showing an uptick. If you look at the overall numbers, just to give a quarter-on-quarter comparison, the overall import laden, which had declined, which shows a decline year- on- year, but on a quarter-on-quarter basis, the import laden volume has improved, which really tells us, from our perspective, is the number of vessel calls have improved, the skip calls have reduced, and hence, it's not merely seasonality. It's specific to the fact that we've seen more vessel calls on our port.
Okay, that helps. And if I may also ask about the EBITDA margin or indirectly about the operating costs in a way, right? We see that the margins declined 2.4 percentage points quarter on quarter, and this is despite the fact that seasonally container volumes were up. I mean, sequentially container volumes were up, but overall revenues are down 8%, but operating costs have declined only marginally or lagging behind the revenue decline which we've seen quarter- on- quarter. And any color on what has driven this slower decline in OpEx versus revenues?
Yeah, so Deepak, so there are, of course, some one-offs in our cost for some maintenance work which has been carried out on our operating cranes, and that has resulted into some incremental cost during the quarter. But as I said, these are one-offs. These are not something which will happen every quarter, and that's why you see a decline in the margins.
Is it possible to quantify, excluding these one-offs, what would have been the uplift to the margin?
It should have been 200 basis points up.
Okay, 200 basis points increase in margin other than the maintenance cost. Okay, that is understood. And if you could also, as you normally do, right, give some color or some ranges about the realization for the different cargo categories, that helps us understand the trajectory of tariffs.
Yeah. So on the realization, the container realization is in the range of around INR 8,000-INR 8,700 per TEU. Bulk and liquid continues to be the same range, INR 450-INR 700 for both the business streams.
Okay. And within this bulk and liquid category, you said INR 450-INR 700 , quite a wide range. Which one is on the higher side, liquid?
Fertilizer. Fertilizer on the higher side, actually.
Fertilizer is on the higher side. Okay. And my typical question on coal volumes, what is the any decision has been made?
Now we're still working on that. We're just out of the monsoon season, so we'll take some more time to come back to you in terms of what we will do from an operational perspective on coal.
Okay. Those were my questions. I'll probably fall back into and join back. Thank you.
Thank you.
Thank you.
Thank you, Deepak. Mr. Bhavesh Patel, please go ahead.
Thank you for the opportunity, and I wanted to understand about our capacity expansion plan and, if at all, any movement on the MOUs that we signed almost for close to INR 3,000 crore along with the government of Gujarat for the port development.
Yes, Bhavesh . So essentially on the MOUs, there's clearly movement on one part of it, which is the liquid jetty, which we're aware of. As I said earlier, we are awaiting regulatory approvals, which includes Environment Clearance. Once that is granted, we would see work to get started. We expect, again, the closure between December and March, December 2025 and March 2026 of the liquid jetty. In terms of the other MOUs, specifically to the capacity expansion, it's, of course, subject to the policy document stroke concession extension. So once that is granted, we will move fully forward on that. The other MOUs in terms of skill development, etc., is already moved forward. We've had workshops with Gujarat Maritime University, and we're doing significant work Maersk Training in terms of improving and building skill in Gujarat Maritime University on the maritime leadership capabilities.
That's helpful and good to know. Thank you. The second part is typically our second half is better than first half, right? I mean, that's fair to assume considering the monsoon months and all.
Yeah, that's a fair assumption, Bhavesh.
Okay. Okay. Good to know. And once again, thanks for the dividend declaration as well as continuity on the strategic part. Looking forward and wishing all of us the best wishes for the upcoming growth. Thank you.
Thank you, Bhavesh.
Thank you.
Thank you. Mohit Kumar, please go ahead.
Hi. Thanks for the opportunity, once again. The only question I have is that, is there the offshore wind development does help us in any way? I believe that the Pipavav Port, they may not be looking at Pipavav Port closely to cater to the offshore wind.
Yes. I mean, while it is some time away, but it could potentially be a positive impact to Pipavav Port. For sure, we could be the port of choice for the offshore base as an offshore base.
Understood. This is too early to talk about any potential revenue, is it?
Absolutely. Too early to talk about.
Understood. Thank you, sir. Thank you.
Thank you. Aditya, please go ahead. Aditya Mongia.
Yeah, thank you for the opportunity. Just firstly, a bookkeeping question. Could you give us a sense why the 1Q and 2Q implied realization numbers are very different? I think there seems to be a 10% Q and Q data. Could you give us more color on why this is happening?
So, Aditya, actually, you're referring to container realization, and this is driven by the mix, the cargo mix. So if you see the last year, we had transshipment volumes, and these were, again, come with very low realization, as you have mentioned in the earlier call as well. Apart from that, we also mentioned about the coastal volumes, which also comes with much lower realization than the EXIM. So whenever we see these changes in the mix, then you see that changes in the realization as well.
Sure. Anything to call out on the Q and Q basis as well as in 1Q, if I see the implied realization, as in assuming some tonnage number and everything, I think there's a meaningful decline. So just trying to get a sense whether there's something happening Q and Q, was there any one-off in the first quarter in terms of income?
You're comparing with on a quarter-on-quarter basis, is it the preceding quarter?
Yeah, 1Q to 2Q. Yeah.
No, so we have not seen any decline in our realizations, Aditya, so the realizations have been maintained.
Sure. Secondly, since transshipment makes numbers messy, what would be your sense of the EXIM growth that has happened for you versus the market you operate in for the quarter?
We don't really split and speak about each of these cargo mix and the numbers. But yes, just to give an indication, we have seen some good improvement in our EXIM volumes, which Girish also touched base in his opening remarks. The green shoots, what we are referring to with the skip call going down, that is actually driving the EXIM volumes up.
If you put it in other manner, as in whatever issues were there from a skip call perspective, if they were to be completely taken out, this 180,000 TEU number would become what according to you? And over what time frame should that happen?
I think speculative, Aditya. I mean, we don't expect the entire skip calls to go out. So I mean, I don't think so. That is something that we even look at at this point in time. So my sense is from a projection perspective, a future projection perspective, we expect similar trends to continue. We would still see slight growth on this over the next two quarters of what we have done this quarter. And then we'll see. Again, I mean, the Red Sea situation is dynamic. We are seeing worsening Middle East, potentially worsening Middle East situation. So I mean, these are things that we will see as they come along. But as we stand today, I firmly believe that 165,000 was the bottom in terms of container volume, and the improvement that we've seen this quarter will further slightly improve as we go forward.
Maybe just a last question from my side. As in whatever is already evacuated via rail, how much of it is double-stacked, and what is the potential to further improve that metric from here?
We don't have a number, but I can certainly say there's substantial number of rakes that are moving out of Pipavav are double-stacked. Yes, of course, there is a good scope of further improvement because now DFC has been operational, the entire line can handle double-stack. That's how even trade and railways are working on handling more double-stacked trains.
Just a quick question on this one. Sorry, if there was a remark from your side, please go ahead.
No, no, please go ahead.
See, as in the leading rail operator has been talking about the modal share going down in both Mundra and Pipavav. Specifically for Pipavav, what would you kind of attribute as the reasons to why something completely reverse is happening versus what one would have thought post-DFC?
Sorry, I didn't understand your question, Aditya.
Sure. So the expectation was, well, with the advent of DFC, you will see cargo going from road or coming from road moving to rail. But it seems that the reverse of that is happening if one kind of hears out the comments of CONCOR. Any specific reason why there is this kind of an effect happening?
From our perspective, in general, if you look at the cargo mix, rail versus road for us, it's been steady and similar. So we haven't really seen a big change or any impact from that perspective, but we have to also accept the fact that for certain types of cargo mix, certain type of distances, road is always favored over rail. We have also talked about the fact that the cost of rail transportation is still higher than road in many cases, and that is something that the government has to look at very recently, maybe about a year back. There was a congestion surcharge applied on container movement by railways. So those are aspects that one has to think about. I mean, we cannot deny the fact that the road network is also improving as is DFC improved.
Plus, the other element, which is a positive element for us, is the local cargo, which is in and around Gujarat, is more a road transportation, and that has improved, so we are seeing that as an improvement, so even if our road versus rail slightly deteriorates towards road, that is more local cargo coming to us, and hence that's more positive for the port, as I see it.
Completely understood, and thanks for the color. Those were my questions. Thank you.
Thank you, Aditya. Mr. Parimal Mithani, please go ahead with your question.
Good morning, and thanks for the opportunity, sir. So I just wanted to know, over the next three to four years, how do you see in terms of your liquid Ro-Ro and container volume? If you can give a rough guideline, it will be helpful to us.
Yeah. From a container perspective, we have talked about it. Just on liquid, again, we will be at capacity between 1.3 and 1.4 looking at our cargo mix, and we believe this financial year we will be at capacity anywhere between 1.3 and 1.4 million metric tons. In terms of Ro-Ro, I spoke about, we expect the annual car volumes to be in the region of anywhere between 150,000 to 175,000 cars.
Okay.
Just to add, Mr. Parimal, the new liquid jetty that is being planned is going to add another 3.2 million metric tons to the capacity. So certainly, we are focusing on and growing in this particular business stream.
Okay. Thank you.
Thank you, Mr. Mithani. Ms. Nidisha, please go ahead with your question.
Thank you so much for taking my question. I hope I'm audible.
Yes.
So basically, I wanted to ask mainly on the Ro-Ro volumes. As we know clearly that Q2 volumes are better for most other products, we're seeing a different kind of trend in Ro-Ro. Is that related to some other market forces, or is that just how Q1 played out that it was better than Q4, and now we're seeing a slight decline this quarter? Could you just give some color on how the volumes at Ro-Ro typically develop at the port?
Yeah. I mean, I think the only thing I can say just on quarter- on- quarter is we had a highest parcel loading of about 6,000 Ro-Ro units in one vessel. This is the highest parcel size that has ever been loaded out of India, any port in India. And because of this large parcel size, while we were expecting, I mean, that was a volume for the month of September, but the vessel sailed in October, so the volume tipped into October. And there's nothing else to read into this volume. We are seeing strong growth in our Ro-Ro volumes, and we'll continue to see that in this quarter. And this volume will be in addition to the normal run rate of the quarter in the October-November-December quarter.
All right. Thank you so much.
Thank you. Deepak Maurya, please go ahead.
Hi. Sorry, I was on mute. I heard a guidance range for volumes for the liquid and the Ro-Ro side. Did you also guide about the bulk and the container side? Did I miss that?
No. No, we didn't give specific guidance for both of these business lines.
Okay. Okay. Thank you. That was one clarification which I needed. Thank you.
Okay. Thank you. I don't see any other hands raised. Anybody has any last questions? Doesn't seem to be the case. So thank you for joining the call.
Yes. Thank you so much. Appreciate you all taking time. I think in general, we are seeing some positive now momentum, and I believe in the coming two quarters for this financial year, we'll clearly see better volumes than what we've seen this quarter. As I spoke about, we're seeing green shoots in the container volume as well. So I look forward to speaking with you again after the next quarter results. Thank you so much.
Thank you and have a good day.
Thank you.