The Hindu Business Line : Concor: Miles ahead on multi-modal track

This is one race in which the proverbial hare has no chance whatsoever since the tortoise, in this case Concor (Container Corporation of India Ltd), has metamorphosed into a tiger. Moreover, the new players, no less than 13 of them in the business of multi-modal transport by rail, have a lot of catching up to do as Concor has had a 20-year head start over them.

Taking on long lease land at prized locations, Concor has built up an impressive string of 58 terminals with the one at Tughlakabad and a new one at Dadri, hub for the Northern sector. Between these two, it handles almost a quarter of its nearly two million TEUs every year, of which about 80 per centare Exim-oriented.

In terms of traffic handled, next in order are Dhandarikalan (Ludhiana), Dronagiri Node, (Navi Mumbai) Sabarmati (Ahmedabad), Whitefield (Bangalore) and Madras Harbour etc. Expecting to cross the two million mark for the total number of TEUs handled for the financial year ending on March 31, 2007, Concor is poised to retain its position as a dominant player.

Sensing its potential, the stock market pushed its price for a Rs 10 share from a low of Rs 800 on March 31 last year, just when the new licensing policy admitting more players into the lucrative field of multi-modal transport by rail was announced by the Railway Minister, Mr Lalu Prasad, to a record level of Rs 2,200 in November this year.

New-found enthusiasm

Reflecting the enthusiasm of the market, financial analysts have not been lagging behind either, in their perceptions of Concor stock as a good investment proposition. Calling it the `Ace of Spades', SSKI India has termed Concor an out-performer, and estimated its annual earnings growth rate around 25 per cent. With a current ownership of 8,322 wagons and 2,000 more on order, Concor is well-placed to meet the challenge of newcomers who are yet to even get their first rake in service.

Over the years, Concor has acquired high-capacity, low-height, flat wagons at an average cost of about Rs 10 lakh, for which the new players have to now shell out as much Rs 25 lakhon account of limited capacity for manufacture and the need to import the special smaller wheels. Moreover, at almost 1.75 times the indigenous cost, added to which there is an 18-24 month delay in getting the prototypes cleared by the Research Design & Standards Organisation, imports may be very costly.

Concor signs MoUs

The recently issued MCA (Model Concession Agreement) by the Rail Ministry, which is yet to be signed by most of the new players, makes no distinction between Concor and others. However, Concor has gone ahead and signed MOUs with as many as eight players for a strategic partnership to carry containers on Concor rakes, from Concor's ICDs, ensuring Concor hets good earnings for quite some time to come.

Concor had signed a JV with Maersk, a reputed international player in Containers business, for setting up a new terminal at JNPT at a cost of Rs 900 crore. Commissioned in June, it is expected to handle nearly a million TEUs in the first year, and scale up to 1.4 million TEUs when fully operational in two-three years. Similarly, it has grabbed a 15 per cent share in a JV with the Dubai Ports International for setting up an international container transshipment terminal at Cochin, enabling Concor to be a part of this growth area.

In fact, JNPT's productivity has dramatically improved with the elimination of double-handling as containers now go directly from ship to the waiting rakes instead of having to wait in the container yard.

Off the well-trodden path, Concor has decided now to go in for a cold chain logistics service to transport perishable goods. The first of a planned chain of about 15 cold storage facilities is likely to come up at Rai, near the Haryana-Delhi border, at a cost of Rs 100 croreearly next year.

A 12,000-tonne facility, it will not be the common kind for storing potatoes. A strict regime of controlled atmosphere, where oxygen levels are kept at 1 or 2 per centwith nitrogen as the main environment and regular carbon dioxide scrubbing, will keep fruits from ageing. The wholly-owned subsidiary, known as Fresh and Healthy Enterprises Company Ltd, could end up earning Concor Rs 1,500 crore annually within the next few years, enabling it to retain pride of place in the PSU pantheon.

(The author is a former Member of the Railway Board. He can be contacted at acharya@bol.net.in)

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