Sector Update | March 2015
Logistics
Transformational times!
Harshad Borawake
(HarshadBorwake@MotilalOswal.com); +91 22 3982 5432

Logistics | Transformational times!
Index
Transformational times! | Growth enablers visible; opportunities galore
CTOs to get DFC boost; organized player market share to increase
Page No.
Summary………………………………………………………………………………………………………………………………………..
Story in charts………………….……………………………………………………………………………………………………………
Indian Logistics sector poised for accelerated growth………………………………………………………………
a. India’s GDP growth is reviving; Logistics industry grows at 1.5-2x GDP growth
b. Infrastructural bottlenecks being addressed (not just growth; efficiency too)
i. Ports and evacuation infrastructure
ii. Dedicated rail freight corridors
iii. Toll / octroi / inter-state tax mechanisms through GST
c. Rapid growth of e-commerce
d. Other initiatives like 'Make in India'
3
6-7
8-17
Opportunities across the spectrum……………………………………………………………………………………………
a. Logistics encompasses a wide array of services
i. Transportation – Air, Surface (Rail, Road), Internal Waterways, Sea
ii. Storage – Warehousing, Logistics Parks, ICDs, Cold Chains
iii. Distribution – Courier Service, E-tail Deliveries
iv. Integrated/Allied Services – Freight Forwarding, 3PL
b. Opportunities galore; we attempt to identify some
i. Increasing containerization, EXIM growth, DFCs -
Container train operators, ports to benefit
ii. GST, E-commerce, increasing onrganized sector share -
Providers of supply chain management/3PL, cold chains to benenfit
18-35
Companies covered and our key stock picks……………………...….………………………………………………………
Company section…………………………………………………………………………………………………………………………….
Container Train Operators
1. Conta i ner Corpora ti on
2. Ga tewa y Di s tri pa rks
36-38
39-105
40
54
68
74
87
92
97
98
99
100
101
102
103
104
105
106
111
112
114
Multimodal Logistics Service Providers
3. Bl ue Da rt
4. Ga ti
5. Al l ca rgo Logi s ti cs
6. Tra ns port Corpora ti on of Indi a
Unlisted Players
7. Ocea n Spa rkl e
8. JM Ba xi & Co.
9. Conti nenta l Wa rehous i ng
10. Sta r Agri Logi s ti cs
11. Shree Shubha m Logi s ti cs
12.TVS Logi s ti cs
13. Sa fex
14. Ma hi ndra Logi s ti cs Ltd
15. SSN Logi s ti cs Pvt. Ltd.(Del hi very)
Annexure 1: Dedicted Freight Corridor………………………………….………………………………………………………………………………………
Annexure 2: Delhi – Mumbai Industrial Corridor (DMIC)……………………………………………………………………………………………….
Annexure 3: Indian Railways Financial and Operational Summary…………………………………………….…………………………………..
Annexure 4: Key global and domestic logistics trade statistics………………………………………..…………………………………………….
March 2015
2
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through disclosures made at the end of the Research Report.

Logistics | Transformational times!
March 2015
3

Logistics | Transformational times!
Logistics
Growth enablers visible; opportunities galore
CTOs to get DFC boost; organized player market share to increase
n
n
n
India’s Logistics sector is poised for accelerated growth, led by GDP revival,
infrastructure ramp-up (railways/roads/ports), e-commerce penetration, impending
GST implementation, and other initiatives like “Make in India”.
We see opportunities across the spectrum – transportation, storage, distribution, and
integrated/allied services. With dedicated rail freight corridors, container train
operators (CTOs) should receive a boost. GST implementation and e-commerce
promises to alter the landscape for warehousing and 3PL services.
We initiate coverage on Container Corporation (CCRI IN; target price INR1,777, 17%
upside, Buy) and Gateway Distriparks (GDPL IN; target price INR535, 30% upside, Buy)
— key beneficiaries of dedicated rail freight corridors and economic revival, with a Buy
rating. We also cover Blue Dart, Gati, Allcargo Logistics and TCI (Not Rated), that
further benefit from GST and e-commerce.
Poised for accelerated growth led by multiple drivers
n
n
n
Growth of the Logistics business is directly correlated with economic activity.
Empirical evidence suggests that the Indian Logistics industry grows at 1.5-2x
the GDP.
With the Indian economy on a revival path, we believe India’s Logistics sector is
poised for accelerated growth. Infrastructural bottlenecks that have stifled
growth of the sector and have promoted inefficiency are being addressed.
Building of the dedicated rail freight corridors, for instance, will help promote
more efficient haulage of containerized cargo by rail. Logistics requirement for
e-commerce will grow as exponentially as e-commerce.
Opportunities across the spectrum
n
n
n
n
We see opportunities across the logistics spectrum – transportation, storage,
distribution, and integrated/allied services.
While economic growth itself presents a case for improved business prospects,
there are multiple developments and trends for logistics enterprises to ride on.
For CTOs, (a) Increasing containerization, (b) EXIM growth, and (c) dedicated rail
freight corridors are key volume growth triggers.
Implementation of GST will be a game-changing event for businesses in general
and organized logistics players. It would provide a boost to warehousing, supply
chain management and 3PL business.
Specialized needs of the burgeoning e-commerce and cold chain industry will
spawn a range of opportunities for niche organized logistics players.
In this report, we initiate coverage on two large CTOs – Container Corporation
and Gateway Distriparks with a Buy rating. While sharp ad-hoc haulage charge
increase is a concern, we expect 12-15% CTO volume ramp-up, with CCRI
continuing with its leading market share and GDPL benefiting due to its low
base.
4
Companies covered and our key stock picks
n
March 2015

Logistics | Transformational times!
n
n
Among the other listed entities we have profiled are express cargo/3PL
operators like Blue Dart, Gati, TCI and multi-modal operator Allcargo Logistics.
In the unlisted space, we include (1) port service providers JM Baxi & Co, and
Ocean Sparkle, (2) CFS players Continental Warehousing, Star Agri Logistics and
Shree Shubham Logistics; (3) auto logistics players TVS Logistics and Mahindra
Logistics; (4) express/3PL player Safexpress and (5) e-tail logistics player
Delhivery.
Exhibit 1: Summary of business presence of key logistics players
Company
Concor
Gateway Distriparks
TCI
Blue Dart
Gati
Allcargo
Aegis Logistics
Snowman Logistics
TVS Logistics Services
Safexpress Pvt. Ltd
Mahindra Logistics
Delhivery
Continental Warehousing
Star AgriWarehousing
Shree Shubham Logistics
Ocean Sparkle
J.M. Baxi
Road
Transportation
Air
Rail
Water
Ware-
housing
Storage
CFS/ICD Cold Chain
Bulk
Liquid
Valued Added Logistic Services
Express Supply
Multi-
Port
Cargo Chain/3PL modal Handling
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
Source: Company, MOSL
Exhibit 2: Business-wise revenue share of listed logistic players
MTO
TCI -
AllCargo
Blue Dart -
Gati
Gateway -
Concor -
5 -
56
76.0
70
29
Rail
CFS
57
85
90
-
4
3
-
6.3 -
3.2
-
Express
Road
E-Commerce
Seaways / Cold Chain
36
-
6
-
18
15
14.5
0
-
Other
-
5
8
10
--
2
Source: Company, MOSL
March 2015
5

Logistics | Transformational times!
Story in charts
Exhibit 3: Logistics sector grows at 1.5-2x* of GDP growth Exhibit 4: Road transportation, despite being inefficient
rate
mode has highest goods traffic share in India
Logistic Companies* sales growth (% YoY)
24.4
18.6
15.5
9.1
9.0
9.2
8.4
11.3
8.1
8.1
12.8
7.4
8.2
6.0
GDP Growth (% YoY)
GDP (% YoY)
Imports (% YoY) - RHS
12
9
6
3
0
Exports (% YoY) - RHS
38
26
14
2
-10
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY92
FY97
FY02
FY07
FY12
FY17E
Source: KPMG
* 2 year average growth; Listed companies include Concor, Gateway,
AllCargo, TCI, Blue Dart, Sical and Gati Source: CMIE, Industry, MOSL
Exhibit 5: Underinvestment in railways increased road sector Exhibit 6: Expect transport mode imbalance situation to
(relatively inefficient transport mode) share to 60% v/s 30- improve with GST implementation and expected capex on
46% share in other regions in India’s freight transport
transport infrastructure (USD b)
Rail
1%
8%
60%
30%
31%
India
48%
23%
China
US
Road
1%
46%
Water
1%
14%
37%
46%
10%
Europe
Source: KPMG, MOSL
319
173
69
76 29
2007-12
116
126
77
2012-17
Air
1%
43%
522
183
183
155
2017-22
Rail
Road
Other
Transport investment
1,186
778
273
252
252
2022-27
385
2027-32
417
385
Source: NTDPC, MOSL
Exhibit 7: GST reform to boost warehousing demand, expect Exhibit 8: Expect India’s major port container volume to be 2x
9% CAGR, implying addition of 520million square feet
by FY20 led by EXIM growth and increased containerization
Million
square feet
Manufacturing
Consumption
Exim*
Total
1,440
918
211
76
631
2014
2015
2016
2017
2018
386
115
939
Million
TEUs
16
14
12
10
8
6
FY10
FY12
FY14
FY16E
FY18E
FY20E
Source: IPA, Industry, MOSL
8
10% CAGR
15% CAGR
20% CAGR
16
14
13.6
2019
*Covered and uncovered portion of ICD/CFS considered
Source: Knight Frank, MOSL
March 2015
6

Logistics | Transformational times!
Story in charts
Exhibit 9: E-commerce market growth pegged at 25-30% Exhibit 10: Organized player share in cold chain logistics
CAGR over the next few years
estimated to grow at >20% CAGR through 2017 (INRb)
Projected E-Commerce market size (USDb)
Organized
Unorganized
125
60
13
Current Size
(IAMAI)
CY20
(Flipkart)
CY20
(Google India)
CY25
(Zinnov)
11
2012
70
140
220
28
2017
Source: MOSL
Source: Industry, MOSL
Exhibit 11: Business-wise revenue share of listed logistic players
MTO
TCI -
AllCargo
Blue Dart -
Gati
Gateway -
Concor -
5 -
56
76.0
70
29
Rail
CFS
57
85
90
-
4
3
-
6.3 -
3.2
-
Express
Road
E-Commerce
Seaways / Cold Chain
36
-
6
-
18
15
14.5
0
-
Other
-
5
8
10
--
2
Source: Company, MOSL
Exhibit 12: Expect Concor to maintain largest market share in Exhibit 13: Gateway’s RoE’s to improve, however long
Rail Container movement in India (%)
gestation investment to keep Concor’s RoE subdued
Concor
4
1
5
2
12
3
17
5
20
5
Gateway
18
6
15
8
Others
14
7
9
8
9
8
12
8
RoE (%)
40
30
Concor
Gateway Distriparks
95
94
85
78
75
76
77
79
83
82
80
20
10
0
FY07
FY09
FY11
FY13
FY15E
FY17E
FY07
FY09
FY11
FY13
FY15E
FY17E
Source: Company, MOSL
Source: Company, MOSL
March 2015
7

Logistics | Transformational times!
Exhibit 14: Global peer comparison
Company
Country
Concor
India
Gateway Distriparks
India
Gati
India
Blue Dart
India
Allcargo
India
Transport Corp
India
Median
Average
Rail Transportation Service Providers
Union Pacific Corp
US
Central Japan Railway
Japan
East Japan Railway
Japan
Daqin Railway
China
Kansas City Southern
US
West Japan Railway
Japan
Guangshen Railway
China
All America Latina Logistica Brazil
Globaltrans
Cyprus
Median
Average
Large Cap Integrated Logistics Players
United Parcel Service
US
Canadian National Railway Canada
Fedex Corp
US
CSX Corp
US
Norfolk Southern Corp
US
Canadian Pacific Railway
Canada
Kuehne & Nagel Intl
Switzerland
Brambles Ltd
Australia
C.H. Robinson Worldwide
US
Yamato Holdings Co
Japan
Expeditors Intl Wash
US
Hyundai Glovis
South Korea
Old Dominian Freight Line
US
Median
Average
Integrated Logistics Players
TNT Express Nv
Netherlands
Oesterreichische Post Ag
Austria
Panalpina
Switzerland
Sinotrans Limited
China
Singapore Post
Singapore
Kamigumi Co
Japan
Sinotrans Air Transport
China
Seino Holdings Co
Japan
Forward Air Corp
US
Hitachi Transport System
Japan
Kintetsu World Express
Japan
Sankyu Inc
Japan
Uti Worldwide Inc
US
Aramex Pjsc
UAE
Mainfreight Ltd
New Zealand
Roadrunner Transportation US
Senko Co Ltd
Japan
Freightways Ltd
New Zealand
Yusen Logistics Co Ltd
Japan
Gd Express Carrier Bhd
Malaysia
Median
Average
M Cap
USD M
4,631
711
339
2,679
672
320
FY15E
49.2
16.9
4.9
67.9
16.8
11.6
EPS
P/E (x)
EV/EBITDA (x)
RoE (%)
FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E
62.2 70.6 30.3 23.9 21.1 20.1 15.7 13.7
13.3 15.2 15.5
19.2 23.7 24.3 21.3 17.3 14.1 12.5 10.4
15.7 16.9 19.6
6.7
9.9 52.0 37.7 25.6 17.7 13.5
9.9
7.6 10.1 13.1
85.5 103.9 103.8 82.5 67.9 74.4 57.0 47.6
22.2 26.8 26.8
23.6 28.2 19.8 14.1 11.8
9.4
8.2
7.6
10.7 13.3 14.3
15.0 18.9 22.8 17.6 14.0 11.4
9.3
7.8
22.1 23.4 24.8
27.3 22.6 19.2 15.9 13.0 10.1 14.5 16.0 17.5
42.2 32.9 26.3 24.5 19.4 16.2 15.3 17.6 19.0
17.7
16.2
19.5
8.8
21.0
19.8
26.4
16.6
10.4
17.7
17.4
19.5
20.2
19.3
15.6
15.8
21.8
25.8
20.9
21.5
28.4
22.3
15.2
21.2
20.9
20.6
18.1
18.8
26.9
13.0
27.2
19.5
18.9
21.1
22.2
18.0
21.4
14.5
n.a.
13.7
18.4
15.7
12.9
18.7
30.3
77.5
18.8
22.5
15.5
14.8
17.3
8.5
18.4
17.7
23.4
10.2
7.9
15.5
14.9
17.5
17.9
15.8
13.9
14.2
18.4
23.5
19.0
19.5
26.0
20.2
12.9
18.4
18.4
18.3
15.1
18.3
19.9
11.3
24.2
18.6
16.4
17.7
18.8
15.1
16.8
13.3
53.8
12.5
16.1
13.7
10.3
17.0
16.9
51.7
16.8
19.9
13.8
14.2
16.7
n.a.
16.2
16.7
n.a.
10.1
6.4
14.2
13.5
15.7
16.3
13.6
12.5
13.1
15.4
22.7
17.3
18.2
24.0
18.5
11.9
15.7
15.7
16.5
13.8
19.1
16.6
n.a.
21.1
18.2
n.a.
16.2
16.2
13.8
14.7
12.6
26.7
n.a.
14.3
12.8
9.5
15.5
14.5
38.8
15.5
17.3
9.6
8.9
9.0
5.8
11.8
8.1
8.3
3.7
5.3
8.3
7.8
10.2
12.4
7.5
8.2
8.6
13.2
15.4
10.4
13.2
9.9
11.6
11.0
9.9
10.4
10.9
6.3
9.3
12.9
8.6
19.6
8.4
22.6
6.2
10.0
6.8
9.4
6.8
21.4
8.5
11.4
9.5
9.2
11.7
6.5
41.8
9.4
12.3
8.7
8.7
8.8
5.7
10.6
7.8
7.7
3.2
4.7
7.8
7.3
9.5
11.5
6.5
7.6
8.1
11.8
14.5
9.6
12.2
9.5
10.7
9.4
8.7
9.5
10.0
5.5
9.1
10.3
7.8
17.6
8.2
25.0
5.7
8.7
6.3
8.1
6.5
10.1
7.4
10.1
8.5
8.3
10.8
6.1
33.4
8.4
10.7
8.0
8.7
8.6
n.a.
9.4
7.6
n.a.
2.9
4.1
8.0
7.1
8.9
10.7
5.9
7.0
7.6
10.7
14.0
8.9
11.7
9.3
9.9
8.6
7.5
8.9
9.3
4.7
9.0
8.6
n.a.
16.3
8.0
n.a.
5.4
7.7
6.1
7.1
6.3
8.2
n.a.
9.0
8.2
7.8
10.0
5.6
26.6
8.0
9.1
26.6
14.4
9.1
18.4
15.2
8.2
4.2
4.6
7.4
9.1
12.0
28.5
13.8
9.4
17.3
15.3
8.8
4.2
6.6
8.9
9.4
12.5
30.6
12.7
9.1
n.a.
15.6
8.8
n.a.
9.4
11.8
11.8
14.0
73.3
25.6
18.2
19.6
17.8
57.4
32.6
22.6
53.3
7.7
24.8
16.8
19.8
22.6
26.4
8.9
20.0
24.1
n.a.
20.7
5.2
n.a.
4.7
17.7
7.6
10.5
8.5
7.9
n.a.
19.4
11.3
11.4
26.4
6.5
29.3
11.3
14.1
102,626
37,678
32,597
23,914
12,557
10,956
4,492
1,031
906
6.6
7.5
8.4
1,369 1,491 1,554
513.5 578.2 601.9
1.2
1.2
n.a.
5.4
6.2
7.0
346.4 385.9 409.3
0.2
0.2
n.a.
0.3
0.5
0.5
0.5
0.6
0.8
90,813
5.2
5.7
6.4
54,942
4.2
4.8
5.2
49,067
9.0 11.0 12.7
33,362
2.2
2.4
2.7
33,265
6.8
7.6
8.2
31,090
10.9 12.9 15.4
17,325
5.5
6.1
6.3
13,602
0.4
0.5
0.5
10,767
3.4
3.8
4.0
10,015
97.9 107.2 115.8
9,139
2.1
2.4
2.6
7,682 14,935 17,618 19,167
6,660
3.6
4.2
4.9
128.9 249.0
24.3 25.7
15.9 18.1
18.3 19.1
16.4 16.9
31.8 38.8
27.7 31.0
23.0 22.7
46.7 49.5
7.3
7.6
22.3 24.1
18.5 18.3
19.2 19.4
22.3 22.7
22.6 24.3
6.4
21.8
16.7
10.6
23.7
5.3
14.6
3.8
15.3
6.5
8.0
8.5
-8.8
15.5
18.4
10.6
10.1
25.1
3.1
26.0
10.6
12.1
8.9
21.6
20.5
11.3
20.9
5.2
14.8
4.4
14.8
7.4
9.8
8.6
4.3
17.0
18.9
10.9
11.5
25.7
5.8
27.5
11.4
13.5
3,275
3,296
3,258
3,164
3,045
2,646
2,728
2,378
1,613
1,655
1,594
1,485
1,328
1,327
1,181
966
814
714
535
507
0.3
0.4
0.4
2.4
2.5
2.4
5.0
6.8
8.1
0.3
0.4
n.a.
0.1
0.1
0.1
59.9 62.7 64.3
1.0
1.2
n.a.
65.8 78.3 85.3
2.4
2.8
3.3
99.6 118.6 130.1
250.1 319.8 364.0
38.0 41.5 43.8
-0.3
0.2
0.5
0.2
0.3
n.a.
0.9
1.0
1.1
1.6
1.9
2.0
57.5 72.2 77.6
0.3
0.4
0.4
50.6 90.5 105.9
0.0
0.0
0.0
31.8
40.1
52.3
* CMP in Local Currency; MOSL estimates for Concor and Gateway
Source: Bloomberg Consensus Estimates on Feb 26, 2015, MOSL
March 2015
8

Logistics | Transformational times!
Poised for accelerated growth
Infra development, demand growth to drive volumes for logistics players
n
Growth of the Logistics business is directly correlated with economic activity. Empirical
evidence suggests that the Indian Logistics industry grows at 1.5-2x the GDP.
With the Indian economy on a revival path, we believe India’s Logistics sector is poised
for accelerated growth. Infrastructural bottlenecks that have stifled growth of the
sector and have promoted inefficiency are being addressed.
n
n
Building of the dedicated rail freight corridors, for instance, will help promote the
more efficient haulage of containerized cargo by rail. Logistics requirement for e-
commerce will grow as exponentially as e-commerce.
India logistics sector growth trending @1.5-2x GDP
India logistics sector growth
trending towards 2x GDP as
the economy picks up
Growth of the Logistics business is directly correlated with economic activity and
empirical evidence suggests that the Logistics industry grows at 1.5-2x the GDP
growth of a nation.
Indian Logistics is estimated to have grow at a healthy ~15% in the last five years.
However, growth in sub-sectors varies, with the lowest being in basic trucking
operations and highest in supply chain and e-tailing logistics.
In overall goods movement, bulk commodities contribute majorly (60-80%) in
volume terms. Logistics movement is guided by the location of manufacturers,
consumers and EXIM flow. Growth drivers for Logistics players covered in this report
include sectors like Auto Components, Textiles, Organized Retail, Pharmaceuticals,
Electronics, Cement and E-commerce (emerging).
Exhibit 15: India’s export-import volumes grew at 2x of the Exhibit 16: Listed logistics companies sales growth ahead of
GDP growth rate in the last decade
India’s GDP growth rate (%)
Exports (% YoY)
35
30
Imports (% YoY)
33
31
26
17
6
24
25
8
26
9
25
9
21
9
13
8
17
19
15
8
20
8
20
7 85
8
FY14
FY08
FY09
FY10
FY11
FY12
FY13
FY14
20
9.1
15.5
9.0
9.2
8.4
11.3
8.1
8.1
GDP (% YoY)
Logistic Companies* sales growth (% YoY)
24.4
18.6
12.8
7.4
8.2
6.0
GDP Growth (% YoY)
17
76 8
10
13
5
14
6
FY02
FY04
FY06
FY08
FY10
FY12
Source: CMIE, Industry, MOSL * 2-year average growth; Listed companies include Concor, Gateway,
AllCargo, TCI, Blue Dart, Sical and Gati Source: CMIE, Industry, MOSL
Domestic economy’s revival to augur well for sector
Post the change of government at the Center, the investment cycle appears to be
restarting, with increasing confidence at the consumer and investor level.
Investments in Manufacturing and Infrastructure, coupled with growth in the
sectors mentioned above will have a direct bearing on Logistics sector growth. Some
March 2015
9

Logistics | Transformational times!
of the enabling initiatives could be to form a National Integrated Logistics policy that
will focus and ensure cohesive growth of infrastructure.
Our interactions with the industry players indicate that with GDP inching towards 7-
9% range, Logistic sector growth should move towards 20% and beyond.
Exhibit 17: India’s EXIM trade shows high correlation to GDP growth; expected GDP revival to boost EXIM trade again
GDP (% YoY)
12
9
6
3
0
Exports (% YoY) - RHS
Imports (% YoY) - RHS
38
26
14
2
-10
Source: CMIE, MOSL
Infrastructural bottlenecks stifled growth
Logistics by definition is the management of goods flow between the points of origin and
consumption to meet customers or corporations’ requirements. Hence, it becomes critical
that all components of the value chain should be available at the right time and place, in
desired condition and pertinently at right cost to efficiently complete the goods flow chain.
India logistics cost higher at
~13% of GDP due to
inefficiencies
Some studies estimate the share of India’s logistics spend in GDP at ~13% (versus 7-
8% in developed countries), implying overall size of USD180-220b (direct costs +
wastages led by inefficiencies). While the actual number (% share) could vary to
some extent, the comparison with other countries clearly shows the inefficiencies in
Indian logistics sector.
Exhibit 18: Logistics spend in India at ~13% - one of the highest in the world
20%
15%
10%
5%
0%
*Figure share in China as manufacturing contributes to >30% of its GDP v/s ~15% in India
Source: Armstrong & Associates, MOSL
Infrastructural bottlenecks across modes (rail, road, waterways) have stifled growth
of the sector and have promoted inefficiency. Capacity constraints and inefficiencies
March 2015
10

Logistics | Transformational times!
can be noted from the high transit time in rail as key train routes operate at >110%
utilization, thus leading to an average speed of ~25km/hr. Road sector is fraught
with inadequate and low quality highway availability, thereby limiting the trucks’
size and impacting economics.
Exhibit 19: Comparing India’s logistics efficiency with global averages
Logistics Efficiency Indicators
Road Transportation
Average truck speed (in kmph)
Four lane road length (in kms)
National highway length (in kms)
Average distance travelled by a truck /day (km)
Air Transportation
Airport charges (in USD)
Airport waiting time –Exports (in hours)
Airport waiting time –Imports (in hours)
Ports & Sea Transportation
Turnaround time at ports (in hours)
Annual container handling capacity (TEUs)
Containers handled per ship, per hour (max)
Throughput density (maximum, TEUs/hectare)
Warehousing
Average inventory days
Others
3PL share of logistics
Logistics cost as percent of country’s GDP
India
30 – 40
~8,000
~80,000
250-300
471
50
182
84
10.5m
15
45,000
33
Global
60 –80 (incl. China)
34,000 (China)
1,900,000
600-800
265
12
24
7 (Hong Kong & Singapore)
150m (China)
25-30
170,000-220,000 TEUs / hectare
24 (China)
• US: 57%
• Japan: 80%
• Europe: 40%
7-8% (developed countries)
Source: KPMG, MOSL
16-18%
13%
Exhibit 20: Comparing India’s logistics dynamics with US and China
India
GDP composition
Industry
Agriculture and allied services
Services
Logistics cost as a % of GDP
Transportation cost as % of GDP
Warehousing cost as % of GDP
Other logistics costs as % of GDP
Major industries driving the logistics sector
18%
17%
65%
13.0%
8%
4%
1%
Auto components, Textiles,
Pharma, Cement and E-
commerce (emerging)
Inadequate road networks
Losses during transportation
9.9 m
4.3m TEU (43% share) - JNPT
4.8m.
1,173
64,000
14,750
China
47%
10%
43%
18% (v/s 21% in 1997)
9%
6%
2%
Metals, Cement, Textile,
Electronics
High toll charges
Shortage of trained
manpower
139.7m
31.7m. TEU (23% share) -
Shanghai
4m.
7,018
66,239
59,331
USA
20%
1%
79%
8.5% (v/s 16% in 1980's)
5%
3%
0%
Food and Beverages. E-
commerce
High employee costs
Major challenges
Total containers handled at ports (TEUs)
Containers handled by busiest ports
Road network (m km)
Weight of goods moved annually per km of
road
Rail network (km)
Weight of goods moved annually per km. of
rail line
42.9m
7.9m. TEU (18% share) Los
Angeles
6.5m.
1,727
228,513
8,293
Source: Knight Frank, Industry, MOSL
March 2015
11

Logistics | Transformational times!
India has to do a lot of
catching up in logistics
service levels
Additionally, Indian logistics flow is unbalanced, as major portions of the goods
transported are only on select few routes. The freight share is skewed towards
western India, which connects the sea ports in Mumbai and Gujarat to the Northern
hinterland.
Exhibit 21: India’s freight traffic is concentrated on limited routes
Source: McKinsey & Company, MOSL
Exhibit 22: India has a long way to go in logistics service level versus regional peers
Logistics industry – development level
Hong Kong
Singapore
n
Poor facilities and
South Korea
n
Excellent infrastructure
n
Sophisticated
infrastructure
n
Low IT penetration
n
Industry partners
Taiwan
Malaysia
Philippines
China
Thailand
India
capabilities and
technology
n
Easier to attract quality
limited
labour
n
Supply chain partners
n
Processes and
Vietnam
Indonesia
Cambodia
Laos
Low
n
Traditional channels
n
Moderate infrastructure
n
Medium IT penetration
Infrastructure that
support collaboration
with no integration
High
Source: Industry, MOSL
March 2015
12

Logistics | Transformational times!
Key issues constraining the sector
We analyze the key issues that have stifled the Indian Logistics sector growth and
resulted in inefficiencies, leading to cost increases.
Exhibit 23: Key issues constraining the sector
Source: KPMG, McKinsey, MOSL
1
Inadequate
infrastructure;
sub-optimal
port scale
Inadequate infrastructure, sub-optimal port scale:
Despite being a more
economical mode of goods transport, railways in India has lost market share in
freight movement to roads in the last few decades due to huge under-investments,
leading to capacity constraints. Compared to other countries, India’s rail share in
goods transport is 31% versus ~60% in 1980’s and 48% in 1990’s. Indian Railways,
uses freight earnings to cross-subsidize the losses in its passenger service
operations, thereby resulting in higher tariff for freight operations.
Exhibit 24: Rail share (efficient mode) in freight traffic has
been overtaken by road (inefficient mode for long distance Exhibit 25: Share of railways in India’s logistics sector is low,
transit) due to capacity constraints
roads, despite being inefficient, carry more freight traffic
Freight traffic share (%)
100
80
60
40
20
0
FY51
FY71
FY81
FY91
FY00
FY05
FY12
India
31%
60%
30%
48%
23%
China
US
Railway
Road
1%
8%
Rail
Road
1%
46%
Water
1%
14%
37%
46%
10%
Europe
Air
1%
43%
Source: NTDPC, MOSL
Source: KPMG, MOSL
March 2015
13

Logistics | Transformational times!
Exhibit 26: Rail is the preferred mode of transport beyond 500km
8.0
6.0
4.0
2.0
0.0
200
300
Road
Preferred
400
500
600
700
Rail
Preferred
800
900
1000
1100
Rail / Waterways
Preferred
Road
Rail
Waterways
Source: KPMG, McKinsey, MOSL
Exhibit 28: Indian Railways: Passenger fares significantly
Exhibit 27: Indian Railways: Freight revenues used to cross- lower, freight rates significantly higher thans China and
subsidize passenger losses
Russia
Cost (Paise / km)
Recovery (%)
125
100
75
50
25
0
Revenues (Paise / km)
6.70
200
160
120
80
40
0
India
Passenger Service
Freight Service
Source: Indian Railways, MOSL
China
Russia
India
China
Russia
1.00
2.70
1.00
0.58
0.75
cents/passenger-km
cents/tonne-km
Source: Indian Railways, MOSL
Sub-optimal port scale:
All major ports in India are facing capacity constraints
both on the front-end and back-end, and operations remain highly inefficient.
This has led to the strong emergence of minor ports, mainly on the west coast to
cater to the increasing traffic growth.
Exhibit 29: India’s largest port (JNPT) is at meaningfully lower scale compared to global majors (m TEUs)
36.6
32.6
23.3 22.4
17.7 17.4
15.5 15.3 13.6
13.0 11.6
10.4 10.0
9.9
9.3
8.6
8.0
7.6
6.2
6.2
4.3
Several ports listed between Los Angles and JNPT not shown in the exhibit
Source: Ministry of Shipping, MOSL
March 2015
14

Logistics | Transformational times!
Exhibit 30: Four of the largest Indian container ports operating at ~100% utilization levels
5,000
4,000
3,000
2,000
1,000
-
FY14 Volume ('000 TEU)
Capacity Utilization (%) - RHS
125%
100%
75%
50%
25%
0%
2
Lack of last
mile
connectivity
Source: IPA, Company, Industy, MOSL
Lack of last mile connectivity:
Lack of coordination in infrastructure development
leads to interconnectivity issues among different modes of transport. This leads to
delays and unreliability in services, which increases cost, reduces competitiveness,
and discourages investments.
Exhibit 31: India has one of the largest road networks in the world, but quality of roads is
very poor given the lower share of large national highways
Type
National Highways
State Highways
Other Roads
Total
Length (km)
92,851
142,687
4,649,462
4,885,000
% share
2
3
95
100
Source: Ministry of Roads FY14, MOSL
3
Administrative
delays
Administrative delays:
A country’s competitiveness is judged by the ease of doing
business, and logistics play a vital role in the same. Despite being a relatively low
cost country, logistics cost in India tends to be higher due to administrative delays
led by paper work (resulting in huge inventory investments and wastages) and
complex tax structure.
Exhibit 32: India ranks below the relatively developed countries in logistics performance index
Indicator
Bangladesh
Docs for export
6.0
Docs for import
8.0
Ability to track
2.6
Quality of services
2.4
Customs efficiency
2.3
Infrastructure
2.5
Time to enforce a contract*
1,442
Time to get electricity *
142
Time to export*
25.0
Time to import*
34.0
Logistics performance index
2.7
*Days
India Sri Lanka Pakistan
9.0
6.0
8.0
11.0
6.0
8.0
3.1
2.7
2.6
3.1
2.8
2.8
2.8
2.6
2.9
2.9
2.5
2.7
1,420
1,318
976
67
132
206
16.0
20.0
21.0
20.0
19.0
18.0
3.1
2.8
2.8
China Hong Kong Cambodia Indonesia Malaysia Singapore Thailand Vietnam
8.0
4.0
9.0
4.0
5.0
4.0
5.0
6.0
5.0
4.0
10.0
7.0
6.0
4.0
5.0
8.0
3.5
4.1
2.8
3.1
3.5
4.1
3.2
3.2
3.5
4.1
2.5
2.9
3.5
4.1
3.0
2.7
3.3
4.0
2.3
2.5
3.5
4.1
3.0
2.7
3.6
4.1
2.2
2.5
3.4
4.2
3.1
2.7
406
360
401
498
425
150
440
400
145
41
183
108
46
36
35
115
21.0
5.0
22.0
17.0
11.0
5.0
14.0
21.0
24.0
5.0
26.0
23.0
8.0
4.0
13.0
21.0
3.5
4.1
2.6
2.9
3.5
4.1
3.2
3.0
Source: APL, MOSL
4
Low
penetration
of new
technology
Low penetration of new technology
in supply chain process is resulting in damage
of goods. India has least warehouse capacity with modern facilities, and given the
fragmented industry state (large share with unorganized players), investment in IT
infrastructure is almost absent at required scale.
March 2015
15

Logistics | Transformational times!
Infrastructural bottlenecks being addressed (not just growth;
efficiency too)
Significant investment
required to iron out
infrastructural bottlenecks
Indian government and private players, having identified the issues, are working on
various initiatives on infrastructure as well as policy front. Investment in logistics
helps not only support its growing demand but also boosts growth in other
upstream and downstream economic activities.
Building of the dedicated rail freight corridors, for instance, will help promote the
more efficient haulage of containerized cargo by rail. GST implementation will bring
in ease of inter-state goods movement across India. There is no e-tail without
delivery – delivery at the doorstep is a pre-requisite. Logistics requirement for e-
commerce will grow as exponentially as e-commerce.
A recent study by the National Transport Development Policy Committee (NTDPC)
indicates an annual investment requirement of USD570b by 2032 versus the current
level of USD100b. It proposes to increase the investment commitment in railways as
a percentage of GDP from the last two-decade average of 0.4% to 0.8% in 2012-17
and further increase it to 1.1/1.2% by 2030.
Exhibit 33: Proposed investment in transport infrastructure: Higher allocation for logistics will help railways to increase the
share in goods transportation (USD b)
USD Billion
Rail
Road
Other
Transport investment
Other
35%
Rail
32%
1,186
417
Rail
Other 16%
40%
Road
44%
319
173
69
29 76
2007-12
116
126
77
2012-17
Road
32%
778
522
183
183
155
2017-22
273
252
252
2022-27
385
385
2027-32
Source: NTDPC, Company, MOSL
March 2015
16

Logistics | Transformational times!
Exhibit 34: Desired scenario of infrastructure in India
PIPELINES
l
Presence of National Pipeline Grid
l
Pipeline are multi-commodity and
multi-user
MULTIMODAL FREIGHT CORRIDORS
l
Dedicated networks of rail and road routes
l
Provision for high-speed cargo movement with high
tonnage capacities
ROADS
l
Provision for last-mile
connectivity to terminals
l
Linkage of national and state
highways
PORTS
l
Presence of coastal terminals at 200km
intervals
l
Sufficient capacity to handle domestic
cargo
LOGISTICS PARKS IN REMOTE
AREAS
l
Multimodal parks serving
inaccessible areas
ECONOMIC/TRADE ZONES
l
Free trade warehousing zones
l
Assembly and light manufacturing
services
VESSELS
l
Sufficient number of vessels to
handle bulk and container cargo
MULTIMODAL LOGISTICS PARKS
l
Identify zones for multimodal hubs at inter-
section between rail-road, rail-port and road-air
Source: KPMG, MOSL
March 2015
17

Logistics | Transformational times!
Opportunities across the spectrum
Drivers: GST, Containerization, E-Commerce, ‘Make in India’
Multiple sub-sectors offer
huge investment
opportunities
n
We see opportunities across the logistics spectrum – transportation, storage,
distribution, and integrated/allied services.
While economic growth itself presents a case for improved business prospects, there
are multiple developments and trends for logistics enterprises to ride on. For CTOs,
(a) increasing containerization, (b) EXIM growth, and (c) dedicated rail freight corridors
are key volume growth triggers.
n
n
Implementation of GST will be a game-changing event for businesses in general and
organized logistics players. It will provide a boost to warehousing, supply chain
management and 3PL business.
n
Specialized needs of the burgeoning e-commerce and cold chain industry will spawn a
range of opportunities for niche organized logistics players.
While the logistics activity can be broadly classified into inbound and outbound
category, its value chain involves transportation (rail, road, air, waterways),
warehousing (CFS, ICD) and value added services.
Exhibit 35: Structure of Indian Logistics market
Indian Logistics Market
Road Freight
Express Logistics
Container Logistics
Liquid Logistics
CTO
ICD / CFS
MTO
Source: Industry
A logistics company’s service offerings range from a simple point-to-point transit to
complex multimodal logistics that include supply chain and third party logistics
management.
n
Evolution of Logistics in India:
Logistics is no more viewed as the cost center but
forms a vital part of the product delivery value chain for a company. Changed
perception about the industry and value delivered is driving the outsourcing
business towards logistics players.
n
Organized player share still very small:
Despite being the oldest industry, it
continues to remain largely unorganized primarily due to complex tax structure
and lack of world-scale infrastructure. Organized players’ share in certain
categories (road transport) is <1%, while higher share is in the complex 2PL
categories, where scale and back-end IT infrastructure investments are required.
n
Margins vary widely in sub-categories:
Business dynamics of each sub-category
varies widely and so does the margin profile. The margin profile would range
from 3-5% in point-to-point transit to 20-30% in supply chain management.
March 2015
18

Logistics | Transformational times!
Exhibit 36: Snapshot of Logistics Sector services
• Warehousing related to inland
distribution whether inbound or
outbound
• LTL transshipment centers
Transportation + Warehousing:
• Courier (express), e-commerce
• Cold chain; Freight forwarding
• Packaging; Consulting
Services bundled around rail
transportation and warehousing:
• Dedicated rail container services
• Stuffing/de-stuffing
• Consolidation
•
•
•
•
Freight forwarding
Freight consolidation
NVOCC
Customs clearance
Road
• Trucking and related services like
fleet management, network
optimization, route planning etc,
Rail
• Railway cargo transportation
• Container Train Operators
• Rail-side Container Depots
• Inland Container Depots
• Multimodal warehouses
Water
• Coastal shipping and inland water
transportation
• International EXIM shipping
• Container Freight Stations
• Inland Container Depots
• Port based warehousing and
storage
Air
• Air cargo and passenger
operations on domestic and
international routes
• Air cargo transshipment
warehouse near airports1
• Express and courier services
• Freight forwarding
• Customs clearance
Transportation
Warehousing
Range of services
Value added services
Source: Industry, MOSL
Exhibit 37: Country-wise logistics cost composition – India spends higher amount on
inventory and losses (%)
Transportation
31
25
9
35
India
49
50
Warehosing
18
24
9
Inventories
Others (incl. Losses)
10
15
25
China
US
Source: KPMG, MOSL
March 2015
19

Logistics | Transformational times!
Exhibit 38: Summary of business presence of key logistics players
Company
Concor
Gateway Distriparks
TCI
Blue Dart
Gati
Allcargo
Aegis Logistics
Snowman Logistics
TVS Logistics Services
Safexpress Pvt. Ltd
Mahindra Logistics
Delhivery
Continental Warehousing
Star AgriWarehousing
Shree Shubham Logistics
Ocean Sparkle
J.M. Baxi
Road
Transportation
Air
Rail
Water
Ware-
housing
Storage
CFS/
Cold
ICD
Chain
Bulk
Liquid
Valued Added Logistic Services
Express Supply
Multi-
Port
Cargo Chain/3PL modal Handling
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
Rs
þ
þ
þ
þ
þ
þ
Source: Company, MOSL
While economic growth itself presents a case for improved business prospects,
there are multiple developments and trends for logistics enterprises to ride on,
namely, increasing containerization, implementation of GST, ‘Make in India’
campaign and burgeoning e-commerce sector.
CTOs to benefit from several triggers
CTO’s will be direct
beneficiaries of multiple
growth drivers and enabling
infrastructure projects
The key triggers for container train operators’ volume growth would increasing
containerization, EXIM growth and dedicated rail freight corridors.
Exhibit 39: Key triggers for CTO growth
Increasing
containerization
Exim growth
Dedicated rail
freight corridors
Source: KPMG, McKinsey, MOSL
March 2015
20

Logistics | Transformational times!
1. Increasing containerization
Increasing
containerization
Containerization is a system of inter-modal freight transport using inter-modal
containers (also called shipping containers and ISO containers) made of weathering
steel. The containers have standardized dimensions measured in terms of twenty-
foot equivalent units (TEUs).
Containerization – a background
Of the total global trade, 90% is through sea, of which ~50% volume is break-bulk
(cargo which can be containerized). In India, ~50% of the break-bulk cargo is
containerized, as against the global average of 75-80%.
Exhibit 40: India containerization level v/s other regions - significant scope to grow India’s
containerized volumes
70%
48%
54%
71%
73%
India - FY09
India - Current
US
Europe
China
*Containerization is calculated as containerized volumes as a % of break-bulk volumes
Source: Industry, MOSL
Containerization in India began in 1966 and Indian Railways commenced rail
operation between Mumbai and Ahmedabad in 1968. However, big jump in
container operations was after formation of Container Corporation in 1988.
Introduction of containers reduced the goods transfer handling steps from seven to
two, thereby significantly reducing chances of damage.
Some of the key benefits of containerization are:
n
Safety of goods with lower risk of transit damage and pilferage
n
Smoother integration between various modes of transportation (ship, rail and
road)
n
Savings in costs through lower packaging, distribution costs
n
Ability to track movement
Containerization in India
Container volume in India is expected to be 2x by 2020, driven by EXIM trade and an
increase in containerization from the current 55% to >65% (versus developed
countries’ average of 70%). The containerization growth will be driven by:
1. Growth in the typical containerized cargo like electronics, textiles, food
products, pharmaceuticals, machinery and paper, and other break-bulk
commodities like steel, cement, sugar and rice.
2. Availability of rail transit capacity post DFCs commissioning, expansion in the
container handling capacity at ports, CFCs, ICDs and inland waterways.
3. Multi-modal logistics park development.
March 2015
21

Logistics | Transformational times!
4. Rail freight regulator to ensure no ad-hocism in the haulage charge changes.
Exhibit 41: Container volumes at major ports could double by FY20 (m TEUs)
10% CAGR
16
14
11
9
6
FY10
FY12
FY14
FY16E
FY18E
FY20E
8
15% CAGR
20% CAGR
15.6
14
13.6
Source: IPA, Industry, MOSL
Exhibit 42: Increasing share of container traffic in India at major ports (%)
POL
14.8
17.6
13.3
3.4
17.7
33.2
2009
Iron Ore
16.9
18.0
12.8
3.2
17.9
31.2
2010
Fertilizer
17.0
20.0
12.8
15.3
31.4
2011
3.5
Coal
18.1
21.4
14.1
3.6
10.8
32.0
2012
Container
Other Cargo
20.2
22.0
15.9
5.22.7
34.1
2013
19.9
20.6
18.9
4.4 2.5
33.7
2014
Source: IPA, Industry, MOSL
Exhibit 43: India’s container handling capacity is expected to reach 33mmt by 2020
Source: Marine Container Services, MOSL
March 2015
22

Logistics | Transformational times!
Exhibit 44: Estimated destination-wise break-up of container cargo in EXIM trade
Source: Drewry, MOSL
2. Exim growth to drive CTO volumes
EXIM growth
EXIM business accounts for >75% of CTO operators and is also a higher profitability
business (higher volume, higher asset turn leading to higher RoCE) compared to
domestic cargo movement.
n
EBIT margins in the EXIM segment are high at 21-25%, compared with 9-12% in
the domestic segment.
n
The key reasons for this divergence are: (1) EXIM segment enjoys higher
terminal handling revenue due to customs and clearance, (2) EXIM trade has
more balanced up and down loads, leading to lower empties cost, and (3)
turnaround time for the domestic segment is high.
n
The north-western part of India accounts for >60% of EXIM trade, with JNPT
alone handling ~42% of the container port traffic.
n
Traffic handling capacity of major ports has posted a CAGR of 13.4% from
504.7m tons in FY07 to 947m tons in FY12. During this period, most major ports
operated at a capacity of over 90%.
Exhibit 45: Domestic container volume growth has high correlation to EXIM growth
30
20
10
0
-10
FY96
FY98
FY00
FY02
FY04
FY06
FY08
FY10
FY12
FY14
Container Volume growth (%)
EXIM volume growth (%)
Source: IPA, MOSL
March 2015
23

Logistics | Transformational times!
Exhibit 46: Major products exported through containers in Exhibit 47: Major products imported through containers in
India (2013, in % share)
India (2013, in % share)
Containerized
Exports
Textiles
11%
Chemicals
11%
Fabric/Yarn
10%
Steel
Products
Reefer food
9%
products
8%
Source: UNCOMTRADE database, Drewry Maritime Research, MOSL
Containerized
Imports
Electrical &
electronic
goods
17%
Others
41%
Machinery/
spares
16%
Others
51%
Steel
Food
products Products
8%
6%
Chemicals
12%
Source: UNCOMTRADE database, Drewry Maritime Research, MOSL
Exhibit 48: CTOs operating in India
Name
Adani Logistics
Concor
CRRS*
CWC
ETA Star Group
Gateway Rail Freight
Hind Terminals
India Infra.
SICAL Logistics
Boxtrans (India)**
TransRail Logistics
Arshiya Rail Infra.
KRIL
Inlogistics
Total
Group
Adani
IR#
DPW
PSU
Dubai
GDL
MSC
APL
-
JM Baxi & Co.
-
-
-
NOL, Singapore
Rakes
6
269
7
11
21
14
9
7
12
2
20
8
15
401
4
6
95
100
-
-
0
5
-
100
100
0
Rail
Terminals
2
63
1
Exim
(%)
82
100
100
Domestic
Locations
(%)
Gurgaon /Kishangarh
18
Pan India
-
-
Other Activities
Ports, Container terminals, CTO, CFS
Multi modal operator
Ports, Container terminal
Warehousing, CFS
Shipping and port services
1
2
1
80
Ludhiana / Mumbai /
CFS, CTO
Faridabad
Shipping/ Freight Forwarding
Container shipping, infra
CFS, container terminal
Container terminal, CFS,
Trucking
Khurja
Fertilizers
Source: Industry, MOSL
March 2015
24

Logistics | Transformational times!
Dynamics of CTO business
The key success factors for CTOs include (a) port side infrastructure and reach to key
trade locations, (b) satisfactory service levels to shipping companies, and (c) multi-
modal delivery service capabilities.
Liberalization of CTO industry in India
n
The domestic CTO industry was first liberalized in 1988, when Indian Railways
carved out its CTO operations, leading to the creation of Container Corporation
of India (CCRI).
n
CCRI was established with the objective of facilitating primarily EXIM container
movement and providing other logistics services like one-window customs
clearing and ICD/CFS facilities. To execute these services effectively, Indian
Railways provided land at strategic locations where trade originates.
n
In January 2006, private sector companies were permitted to enter the industry
to attract a greater share of container traffic for Indian Railways and to
introduce competition in rail freight services. Indian Railways remains the sole
owner of the rail network and the sole haulage service provider in India.
n
Since 2006, ~15 new players (13 private and two state-owned) have entered the
industry, though only 1-2 players were able to achieve meaningful scale.
Exhibit 49: Analyzing the CTO value chain
Source: KPMG, MOSL
March 2015
25

Logistics | Transformational times!
3. Dedicated rail freight corridors
We expect CTOs to benefit significantly from the completion of planned dedicated
freight corridors connecting Delhi to Mumbai in West India and Kolkata in East India.
Also, DMIC (Delhi-Mumbai Industrial Corridor) will boost integration and
development of India’s manufacturing sector and logistics efficiency.
Dedicated freight corridor (expected to complete in 2018/2019, given the scale of
the project should expect some delays) will improve the four key factors in train
operations
(a) Double stacking:
Containers can be double-stacked on full route, currently
available from Gujarat ports
(b) Speed:
Would increase from current average 25km/hr to >60km/hr
(c) Load carrying capacity:
Axle load to increase from 25MT to 32.5MT,
enhancing track loading capacity from 8.67MT/mtr to 12MT/mtr
(d) Length of trains:
To increase from current 700 to 1,500m (but unlikely on
the full stretch of the corridor)
Train frequency between key ports and ICD destination is expected to increase
significantly. JNPT to Vadodara train’s frequency could increase from 9 to 49, and
Ahmedabad to Marwar train’s frequency could increase from 15 to 72.
CTOs would benefit from higher asset utilization, cost savings, and time savings,
leading to higher volumes and profitability.
Exhibit 50: Indicative map of DFC’s route*
Dedicated rail
freight
corridors
CTO’s to witness quantum
jump in operations post
DFC
*~80% route is parallel to the existing rail track
Source: PTI, PMO, MOSL
March 2015
26

Logistics | Transformational times!
Expert Speak: Adesh Sharma, Managing Director; DFCCIL
DFC will be game changer for Indian Logistics
n
Dedicated Freight Corridor (DFC) is being developed under Dedicated Freight Corridor
Corporation of India Limited (DFCCIL).
It promises to be a ‘game changer’ for improving the competitiveness of Indian
manufacturing. DFC plans to run freight trains in India on time tables.
Travel time for goods transportation between Mumbai – Delhi would decline from 60
hours currently to just 18 hours.
In addition, there will be multiplier effects by setting up various Industrial Corridors
through the route length.
n
n
n
Key highlights of the DFC program
n
DFC promises to be a ‘game changer’ for improving the competitiveness of
Indian manufacturing. The share of Indian Railways in freight traffic has declined
to just 36% (v/s ~70% in several other countries) and the Dedicated Freight
Corridor Corporation of India (DFCC) intends to improve the ratio to 50% over
the next few years.
n
One of the key advantages of DFC is that freight trains in India could be run on
time tables similar to passenger trains currently; the frequency can be
theoretically increased to one train in 10 minutes. As a result, travel time for
goods transportation between Mumbai and Delhi would decline from 60 hours
currently to just 18 hours. Setting up of various industrial corridors along the
route length would result in a multiplier effect.
n
Despite being a greenfield network, freight charges in the system will not
increase. DFCC’s operating ratio would be just 45% against the Indian Railways’
98%. Also, DFCC’s maintenance and operational costs would be just 33% of
Indian Railways’ current costs primarily driven by ‘Faster-Longer-Heavier’ trains,
which would significantly increase operational efficiency.
n
Post the western and eastern DFCs, four new freight corridors are being
planned: Delhi-Chennai (2,173km; USD22b), Mumbai-Kolkata (2,000km;
USD21b), Kharagpur-Vijayawada (1,100km; USD12b), Chennai-Goa (890km;
USD10b). The surveys have been recently completed and suggest an IRR of
18%+ for several of these networks.
Project cost and timelines
n
The intent is to complete the project by December 2018, and there is strong
confidence that deadlines would be met. The western and eastern (till Khurja)
DFCs would be completed by December 2018. The Khurja-Ludhiana section
would be completed by December 2019.
n
Total project cost for the western and eastern DFCs is estimated at ~INR820b, of
which construction cost (including civil, tracks, electrical, signaling) would be
INR560b. Contracts worth INR260b have been awarded (including ~INR90b to
L&T consortium, INR50b to GMR consortium, and INR33b to Tata Projects-led
consortium). The balance contracts of INR300b are targeted to be awarded by
March 2016, which entails a strong pipeline of project awards for equipment
suppliers.
March 2015
27

Logistics | Transformational times!
GST to usher consolidation and growth for organized players
GST - The ultimate
legislature for domestic
logistic service business
Goods and Services Tax (GST) would (i) amalgamate a large number of Central and
State taxes into a single tax, (ii) mitigate cascading or double taxation in a major
way, and (iii) pave the way for a common national market. From the consumer point
of view, the biggest advantage would be in terms of reduction in the overall tax
burden on goods, which is currently estimated at 25%-30%. Introduction of GST
would also make our products competitive in the domestic and international
markets. Studies show that this would instantly spur economic growth. Last but not
the least, this tax, because of its transparent character, would be easier to
administer. Source: CBEC
Implementation of a common nation-wide GST will be a game-changing event for
businesses in general. The current indirect tax structure in India (mix of state and
central government taxes) is akin to countries within the same country — inter-state
goods movement is governed by state level tax structures, whereby operational and
logistics efficiency takes a backseat.
Manufacturers have to maintain warehouses (cost share in logistics vary between
15-35%) in each state for economical (taxation structure) reasons, leading to
wastage of infrastructure, manpower and increasing costs. The proposed GST will
result in a unified market across India and manufacturers shifting to the hub and
spoke model for goods delivery — goods delivery decision will be driven by logistics
and operational efficiencies.
Share of organized players, particularly in the road transport segment is very
minimal. GST coupled with gradual shift towards higher share of supply chain
management business will benefit organized players to increase their market share.
Implications of GST
n
Government and corporate sector to benefit alike:
Corporate sector would
benefit from simplification of the tax structure, uniformity of treatment across
states, much wider applicability of input tax credit, lower compliance cost of
litigation due to elimination of multiple categories and resultant disputes over
definition (most notably the distinction between goods and services). For the
government, both Centre and States, they will benefit from higher tax
collection.
n
Supply chain management to get a boost:
Currently, significant amount of time
is lost at the numerous check points at the state borders resulting in increase of
cost as well as travel time. Apart from taxation, these long lead times to supply
goods have also forced manufacturers to keep large number of warehouses.
Elimination of checkpoint time will result in manufacturers realigning their
distribution strategy to make it more logistically efficient and many will
outsource the activity to logistics companies (similar to developed countries) to
focus on the core business.
n
Organized sector to get a boost, partly at the cost of unorganized:
In the
current tax structure, tax credit is not available for all taxes post manufacturing.
March 2015
28

Logistics | Transformational times!
Availability of tax credit under GST will increase engagement of organized
players as the manufacturer and purchaser will get the tax credit benefit.
Incentives to stay outside the tax system will reduce, thereby minimizing the
economic advantage of unorganized players.
GST to promote hub-and-spoke model
The warehousing business, in particular will witness significant metamorphosis –
from small warehouses spread across the country to large, global-size warehouses
concentrated in a few hubs. Industry reports estimate 9% CAGR in warehousing area
in India in the next five years to 1,440msf (addition of 520msf).
Exhibit 51: GST is expected to reorganize warehousing clusters, giving rise to the hub and spoke model, and lead to higher
outsourcing and thereby benefit logistics companies
Source: KPMG, MOSL
Exhibit 52: Warehousing demand in India expected to grow at 9% CAGR, implying addition
of 520msf of addition (msf)
Manufacturing
Consumption
Exim*
Total
1,440
9% CAGR
918
211
76
631
2014
2015
2016
2017
2018
386
115
939
8% CAGR
9% CAGR
13% CAGR
2019
Source: Knight Frank, MOSL
*Covered and uncovered portion of ICD/CFS considered
March 2015
29

Logistics | Transformational times!
(Please refer to our update
on E-Commerce dated
November 5, 2014)
E-Commerce has emerged as fastest growing vertical for logistics
players
E-commerce has emerged as a fast growing segment for logistics players with last
mile delivery capability. Given the nascence of e-commerce in India and dominance
of cash-on-delivery (COD), many online players set up their own logistics
infrastructure. Third-party logistics providers (3PLs) have matured to the delivery
mechanisms for e-commerce, and as e-commerce players attune to focusing on
their core business, growth in delivering products bought online should be
disproportionate for 3PLs.
Existing 3PL logistics players like Blue Dart, Gati, DTDC (DotZot), TCI have ramped up
their capabilities to serve this segment while several new specialized players like
Delhivery, E-Com Express have also come up.
Click here
Logistics cost in the total e-commerce merchandise value is estimated at ~10%.
Exhibit 53: Indian e-commerce market is extremely small as Exhibit 54: Various industry sources peg extremely high
compare with other countries
growth rates over the next few years
E-Commerce Market Size (USDb)
260
295
Projected E-Commerce market size (USDb)
125
60
13
India
US
China
13
Current Size
(IAMAI)
CY20
(Flipkart)
CY20
(Google India)
CY25
(Zinnov)
70
*E-tailing market size is estimated at USD4b
Source: Industry, MOSL *Google India predicts e-tailing market size at USD45b by CY20
Source: Industry, MOSL
Logistics critical for e-commerce success
While e-tailing does not require the opening of physical stores to capture consumer
demand, it needs an effective website through which customers can access product
information and place orders. Once the order is placed, it passes through another
set of stakeholders who bring the ordered product to the customer’s doorstep.
Most e-tailers view themselves as supply chain and technology integrators who
manage a complex web of stakeholders.
Given the geographical complexity, suboptimal infrastructure and regulatory
variations across the country, logistics in India has always been challenging. It has
also been more of a B2B service; the B2C logistics ecosystem (requires customer
interaction, cash handling – COD ~60% of all deliveries, and returns handling) is still
a new and underdeveloped capability for 3PLs.
Up to 90% of goods ordered online in India are moved by air, which pushes up
delivery costs by around half, according to several online retailers and logistics
March 2015
30

Logistics | Transformational times!
companies. Road and rail transport networks remain woefully underdeveloped and
entangled in graft and bureaucracy.
Doing it on their own
E-tailing growth in Tier2/3
cities open up vast growth
opportunity for third party
logistics players
Some of the more established e-tailers have invested in setting up their own
delivery networks, as: [1] this enables them to have a ‘tangible’ customer
interaction through which they can get feedback and tailor services accordingly, and
[2] most 3PLs are still in the process of developing efficient and comprehensive
logistics networks.
n
Flipkart created a separate brand for its logistics arm in April 2013 and has so far
used eKart only for in-house deliveries. In February 2014, it opened eKart
Logistics Services for other e-tail ventures too.
n
Amazon too is pumping up capacities at Amazon Logistics. This is in addition to
existing partnerships with 3PLs like GATI, Blue Dart and FedEx Corp. Amazon
also started a pilot project with India Post to test the system and use the
channel to collect COD payments as well. This could help it reach deep into
India's hinterland. India Post has over 150,000 post offices in India, of which
89% are in rural areas.
n
In 2012, Jabong helped design the process for JaVAS, a logistics solution similar
to Amazon fulfillment services so that other e-commerce players can outsource
their logistics to Jabong on a contract basis.
India has ~21,000 pin codes and most 3PL players are able to reach 8,000-10,000 pin
codes at best. India Post, with its formidable network across urban and rural India
and its already established mechanism to handle money orders, can harness this
opportunity in a big way.
As per research by TechnoPak, case studies of the US Postal Service (US) and
Deutsche Post (Germany) demonstrate that these organizations have attempted to
remain relevant in the changing times by tapping into and benefiting from the
growth of e-tailing in their respective countries. Both the organizations are
significant in delivering parcels to e-tailing customers.
Exhibit 55: Share of revenues from e-commerce is significant for US and German postal
services
E-Commerce revenue share
Other revenues
59%
85%
41%
15%
US Postal Services, US
Deutsche Post , Germany
Source: Industry, MOSL
March 2015
31

Logistics | Transformational times!
EXPERT SPEAK: Mr Sanjiv Kathuria, Director & CEO, DotZot
Simply put, growth in logistics will be as exponential as e-commerce
n
Launched in mid-2013, DotZoT is the first pan India delivery network, focused
exclusively on the e-commerce/e-retail space. It is backed by DTDC's size, scale and
reach, and covers 8,000 plus pin codes and 2,300 cities across India.
n
DotZot aims to bridge the gap faced in logistics infrastructure by providing superior
logistics solutions to e-tailers, who are increasingly looking to enhance customer
shopping experience. DotZot ensures constant visibility of shipments and real-time
flow of information. It offers superior value and reliability to e-retailers.
Massive opportunity
There is no e-tail without delivery. Delivery at the doorstep is a pre-requisite.
Logistics requirement for e-commerce will grow as exponentially as e-commerce.
Sizing the market today:
The current market size of e-tail in India is estimated at
USD3b. If the average shipment value is of INR2,000, that puts the number of
shipments per year at 90m. E-tailers cater to ~50% of the shipment deliveries on
their own. 90m annual e-commerce-driven shipments as explained above imply
0.3m deliveries per day only for e-commerce parcels even today. That implies
~0.15m daily shipments of 4.5m annual shipments through 3PLs (assuming 50% is
catered to by the platform owners themselves). This pegs the overall cost of
delivering the e-commerce parcels at INR8b-9b, out of which the revenue
opportunity for 3PLs in e-commerce delivery alone is INR4b-5b.
Why growth should surpass growth in e-commerce:
Traditionally, documents have
comprised 75-80% of the volumes for the courier market in India. E-commerce
deliveries are changing this scenario, as every shipment to be delivered in
ecommerce is a parcel. 1m+ per day of ~1kg per parcel implies huge tonnage for the
market from e-commerce alone. Platform owners like Flipkart and Amazon are likely
focusing on the bigger cities, where density is high. However, increasingly the
growth opportunity in e-tailing is tilting towards smaller cities and tier-III/IV towns.
This implies that the play for even 3PLs is massive. The USD3b market is likely to
grow multi-fold, and daily shipments from e-commerce alone should easily reach
1m in a few years.
Greater share for 3PLs over time
Cost of delivery for e-commerce companies is huge at 8-10%. This is centered on
brand-building and giving customers an excellent delivery experience. However, as
profitability assumes greater importance, there will be greater propensity to
outsource functions like logistics to specialist players. They may not phase it out
entirely, given the investments in the platform, but may start pruning their
networks. They may restrict themselves to select cities with the highest density.
Also, managing day-to-day aspects of the logistics business at higher scale may be a
problem – take for example, managing attrition across thousands of delivery boys
needed to deliver 1m+ parcels every day.
March 2015
32

Logistics | Transformational times!
Why separate focus on e-commerce
An increasing number of e-tailers are shifting to the marketplace model. Parcels are
being picked up from sellers located all over. This requires a different piece of
technology and control on the pick-up process.
Once the parcel reaches the destination, there is a requirement for a parcel network
for residences – earlier only documents got majorly delivered at residences. COD
adds to the complexity, making logistics a quasi cash management service. For
DotZot, the COD remittance cycle post delivery is down from 15-20 days a year ago
to less than 7.
Secondly, the return-to-origin percentage is also in double-digits; parcels have to be
delivered back to the originating merchants. E-commerce also demands reverse
pick-up of exchange and returned shipments in large numbers, and that is also a
change that logistics companies have adapted to.
DotZot’s advantage lies in pre-established DTDC network that it can use The pre-
requisite for rolling out any delivery service is setting up a network. It is also the
biggest cost and takes several years to have a pan-country network. DotZot comes
with an established network and the largest pan-India network outside of India Post,
through DTDC. DotZot will ride on that network rather than duplicating the network.
This not only makes the business viable right from the beginning it also allows
DotZot to offer a country-wide delivery service from day-1.
The costs incurred in setting up of shipment network are significant. Also, many of
such networks that exist in the smaller cities may end up becoming cost centers,
where deliveries of products happen from higher tier cities, and the reverse traffic is
virtually non-existent. However, that is not a significant concern for DotZot, given
DTDC’s already established network that it can ride on.
Cold chain has emerged a niche logistics growth area for
organized players
Cold chain logistics and
warehousing is a nascent
sector in India and offers
huge opportunity for
organized players
India is amongst the least cold chain adoption countries, implying huge potential.
Organized players have a huge growth opportunity in this space given the 6-7%
share in the cold chain warehousing segment and 15-20% share in temperature
controlled transportation.
Cold chain logistics also known as temperature controlled logistics (TCL) business
includes (a) warehousing services to store at temperatures ranging from -25ºC to
+20ºC and distribution through temperature controlled containerized trucks and
cargo trains.
Existing cold chain warehousing capacity in India is estimated at 30m tonnes and
7-8,000 reefer vehicles, with majority of the facilities in UP (41%) and West Bengal
(33%) followed by Punjab (6%), Gujarat and Bihar. 75% of the warehousing capacity
is used by potatoes, ~2% for meat/seafood and the rest is for multipurpose
products.
March 2015
33

Logistics | Transformational times!
Expect high growth:
Indian cold chain logistics industry size is estimated at
~INR150b with an expected growth rate of 15-20% in the medium term to reach
~INR250b by FY18. Key growth enablers include demand growth and aptly aided by
government incentives for investments.
Some of the key product categories transported through this route include dairy,
poultry/meat/seafood, ready-to-eat, chocolates, pharmaceuticals, industrial
products, and fruits and vegetables.
Key players in the cold chain warehousing business include Snowman Logistics, Dev
Bhumi Cold Chain, Fresh &Healthy Enterprise (CONCOR), RK Foodland, Brattle
Foods, Brahmanand Himghar, and Gubba Cold Storage, among others.
Key players in cold chain transportation include Coldex, Gati Kausar, Kelvin Logistics,
Crystal Logistics, Coldstar Logistics, Schedulers Logistics and XPS Cold Chain among
others.
Exhibit 56: Organized player share in cold chain logistics estimated to grow at >20% CAGR
through 2017 (INR b)
Organized
Unorganized
220
140
11
2012
28
2017
Source: Industry, MOSL
March 2015
34

Logistics | Transformational times!
(Please refer to our update
on Make in India dated
September 27, 2014)
‘Make in India’ initiative to boost manufacturing sector and
augurs well for Logistics
The Indian government recently launched the “Make in India” campaign to facilitate
investment, foster innovation, protect intellectual property and build best-in-class
manufacturing infrastructure in India. This campaign aims to make a sea change in
the government’s attitude to reposition itself as a true business partner and not as a
permit issuing authority. It pervades different sectors and will lead to significant
investments and growth in the domestic manufacturing sector. Though it is too early
to quantify any benefit, it is imperative that it will give a meaningful boost to the
Logistics sector, given the scale of the initiative.
Click here
Exhibit 57: Rising trade imbalance necessitates the boost for domestic manufacturing (USD b)
Exports
360
180
-
(180)
(360)
(540)
FY92
FY94
FY96
FY98
FY00
FY02
FY04
FY06
FY08
FY10
FY12
FY14
Imports
Trade Balance
Source: CMIE, MOSL
Exhibit 58: Some of the key exporting sectors from India are growing at a healthy rate
In USDb
160
120
80
40
0
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
Source: GoI, CMIE, MOSL
*Sectors depicted above contributes ~60% on non-POL commodity exports from India
Sector:
Textiles:
Electronics:
Transport:
Machinery:
Engg goods:
Pharma:
Last 10 yr CAGR
9%
10%
16%
27%
19%
19%
16%
Ready garments:
March 2015
35

Logistics | Transformational times!
Companies covered and our key stock picks
Buy Container Corporation, Gateway Distriparks
n
In this report, we initiate coverage on two large CTOs – Container Corporation and
Gateway Distriparks with a Buy rating. While sharp ad-hoc haulage charge increase is
a concern, we expect 12-15% CTO volume ramp-up, with CCRI continuing with its
leading market share and GDPL benefiting due to its low base.
n
Among the other listed entities we have profiled are express cargo/3PL operators like
Blue Dart, Gati, TCI and multi-modal operator Allcargo Logistics.
In the unlisted space, we include (1) port service providers JM Baxi & Co, and Ocean
Sparkle, (2) CFS players Continental Warehousing, Star Agri Logistics and Shree
Shubham Logistics; (3) auto logistics players TVS Logistics and Mahindra Logistics; (4)
express/3PL player Safexpress and (5) e-tail logistics player Delhivery.
n
CTO’s well placed to benefit from economic revival, initiate coverage on
Gateway Distriparks and Concor
Of the total container volume carried by the Indian Railways ~60% flows through
western corridor (JNPT/Gujarat to North India). Various industry estimates and
implied growth led by likely GDP trajectory indicates doubling of the container
volumes by 2019/20.
Exhibit 59: Modeling 15% railway container traffic growth through FY20
Source: Company, MOSL
March 2015
36

Logistics | Transformational times!
Gateway Distriparks (MCap: USD735m, TP: INR535, 30% Upside, Buy)
n
n
n
Gateway Distriparks is the largest private container train operator with end-to-
end service offerings and also offers exposure to steady profit CFS and high
growth cold chain businesses.
Key triggers include economic revival, DFC completion and increasing
containerization, while private ownership gives it the nimble footedness to gain
market share in rail business.
The stock trades at 17x FY17E EPS of INR24/sh, with an implied dividend yield of
~3%. We initiate coverage with a Buy, based on DCF-based (WACC: 11%, TGR:
4%) fair value of INR526/sh (includes INR45/sh for Snowman, post 20%
discount). Initiate coverage with a
Buy
rating.
Container Corporation (MCap: USD5b, TP: INR1,777, 19% upside, Buy)
n
n
n
n
Container Corporation of India Ltd (CCRI) is a leading (76% market share) rail
freight transporter and is investing to transform into a multimodal logistic
player.
Key triggers include economic revival, DFC completion and early monetization of
the MMLP investment.
The stock trades at 22.5x FY17E EPS of INR71 and has a dividend yield of ~1%.
We value CCRI on DCF basis (WACC: 12%, TGR: 4%) at INR1,693. Initiate
coverage with a
Buy
rating.
Exhibit 60: Summary of Business presence of key logistics players
Company
Concor
Gateway Distriparks
TCI
Blue Dart
Gati
Allcargo
Aegis Logistics
Snowman Logistics
TVS Logistics Services
Safexpress Pvt. Ltd
Mahindra Logistics
Delhivery
Continental Warehousing
Star AgriWarehousing
Shree Shubham Logistics
Ocean Sparkle
J.M. Baxi
Road
Transportation
Air
Rail
Water
Ware-
housing
Storage
CFS/ICD Cold Chain
Bulk
Liquid
Valued Added Logistic Services
Express Supply
Multi-
Port
Cargo Chain/3PL modal Handling
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
þ
Source: Company, MOSL
Key risks
Delay in economic uptick:
Our logistics sector growth expectations are driven by the
likely revival in the GDP led by initiatives post the government change at the Center.
March 2015
37

Logistics | Transformational times!
Any delays in the DFC completion, GST Bill approval could elongate the period for
our target growth.
Specific risks to logistics sub-sectors:
Lower than expected GDP growth will impact
all the logistics players, while some of the specific risks in the niche segments
include (i) CTOs profitability can be impacted by continued imbalance in EXIM
volumes leading to higher empties, (ii) slowdown in e-commerce could impact
players like Blue Dart and Gati, and (iii) sharp increase in energy costs (electricity,
diesel) could impact cold chain players’ profitability.
Sharp revision of haulage rates by railways:
Historically, railway haulage rates
(charge paid by CTOs to Indian railway) change had been ad-hoc. While CTOs have
been able to pass it on to consumers, any such sharp increase in future could limit
the ability of CTOs to pass on the increase to consumers and impact their
profitability.
Exhibit 61: Railways has historically increased the haulage share on ad-hoc basis (INR/TEU)
INR/TEU
Distance
(Kms)
1-Jul-09
1-Jan-10
1-Jan-11
1-Dec-12
1-Feb-13
1-Apr-13
5-Dec-14
15-Dec-14
1-Mar-15
Growth %
Train Haulage Charges (500-550km)
>10T
> 20T
> 26T
Upto
and
and
and
10T upto 20T upto 26T upto 30T
5,874 8,060 8,872
5,968 8,060 8,872
5,984 8,060 8,872
5,569 7,347 8,375 9,325
5,970 7,877 8,978 9,997
5,970 7,470 8,978 9,997
7,500 9,428 11,369 12,678
6,690 8,776 10,572 11,785
7,500 9,428 11,369 12,678
Empty Empty
(single
Flat
>30T
deck) Wagons
3,819 3,525
3,880 3,581
3,890 3,591
4,776 4,409
5,120 4,727
4,471 4,127
14,048 5,625 5,250
12,784 5,241 4,876
14,048 5,625 5,250
Train Haulage Charges (1000 - 1050km)
>10T
> 20T
> 26T
Upto
and
and
and
10T upto 20T upto 26T upto 30T
10,049 13,965 15,515
10,826 13,965 15,515
11,099 14,280 15,981
10,158 13,554 15,515 17,329
10,890 14,530 16,633 18,577
10,890 13,753 16,633 18,577
13,726 17,408 21,112 23,612
12,781 16,190 19,619 21,934
13,726 17,408 21,112 23,612
Empty Empty
(single
Flat
>30T
deck) Wagons
6,532 6,030
7,037 6,496
7,215 6,660
8,810 8,133
9,445 8,718
8,205 7,574
26,226 10,295 9,609
23,866 9,599 8,931
26,226 10,295 9,609
Train Haulage Charges (500-550km)
>10T
> 20T
> 26T
Upto
and
and
and
10T upto 20T upto 26T upto 30T >30T
Empty Empty
(single
Flat
deck) Wagons
2%
0%
23%
7%
-13%
26%
-7%
7%
2%
0%
23%
7%
-13%
27%
-7%
8%
Train Haulage Charges (1000 - 1050km)
>10T
> 20T
> 26T
Upto
and
and
and
10T upto 20T upto 26T upto 30T >30T
8%
3%
22%
7%
-5%
27%
-7%
8%
0%
2%
9%
7%
0%
27%
-7%
8%
Empty Empty
(single
Flat
deck) Wagons
1-Jul-09
1-Jan-10
1-Jan-11
1-Dec-12
1-Feb-13
1-Apr-13
5-Dec-14
15-Dec-14
1-Mar-15
7%
0%
26%
-11%
12%
2%
0%
23%
7%
-5%
26%
-7%
7%
0%
0%
4%
7%
0%
27%
-7%
8%
0%
0%
5%
7%
0%
27%
-7%
8%
-9%
10%
7%
0%
26%
-7%
7%
0%
8%
8%
3%
3%
3%
8%
22%
22%
7%
7%
7%
0%
-13%
-13%
27%
25%
27%
-7%
-9%
-7%
-7%
8%
10%
7%
8%
Source: Indian Railways, MOSL
March 2015
38

Logistics | Transformational times!
Companies
BSE Sensex: 29,449
S&P CNX: 8,938
March 2015
Companies
Container Corporation
Gateway Distriparks
Blue Dart
Gati
Allcargo Logistics
Transport Corp. of India
40
54
68
74
87
92
97
98
99
100
101
102
103
104
105
Unlisted players
Ocean Sparkle
JM Baxi & Co.
Continental Warehousing
Star Agri Logistics
Shree Shubham Logistics
TVS Logistics
Safex
Mahindra Logistics Ltd
SSN Logistics (Delhivery)
March 2015
39

Container Corporation
Initiating Coverage | Sector: Logistics
Container Corporation
BSE Sensex
29,449
S&P CNX
8,938
CMP: INR1,488
TP: INR1,777 (+19%)
Buy
Market l eader, p re-emptive c apex to be nefit i n l ong
term
Large option value with likely freight shift from road to rail
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val. INRm/Vol‘000
Free float (%)
CCRI IN
195.0
1,650/750
5/3/48
290.2
4.7
156/127
38.2
n
n
n
Container C orp o f I ndia L td ( CCRI) is a l eading rail f reight t ransporter that i s
graduating to be a multimodal logistic player. It is set to benefit from GDP/EXIM
revival and DFCs completion that will accelerate containerization.
Despite private players entry in 2006, it has a leading market share (76%) that can
be a ttributed t o i ts s cale a nd v antage l ocations. Long t erm g rowth a cceleration
could come from its pre-emptive capex on multimodal parks.
We i nitiate coverage with a B uy, with a n DCF based fair value of INR1,777/sh,
implying 19% upside.
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
Sales
EBITDA
NP
EPS (INR)
EPS Gr. (%)
BV/Sh (INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
58.9
13.0
9.6
49.2
1.0
13.3
17.5
30.3
3.8
73.6
16.3
12.1
62.2
26.4
15.2
20.0
23.9
3.4
82.9
18.2
13.8
70.6
13.6
15.5
20.4
21.1
3.1
388.0 431.8 481.6
Key beneficiary of DFCs and economic revival
n
CCRI’s businesses will benefit from (a) DFCs completion and increasing
containerization (last 12-year CAGR at 9% v/s 6% in overall EXIM at major
ports), (b) India’s expected GDP revival, (c) improving logistics infrastructure
and (d) GST implementation.
n
DFCs (full commissioning likely by 2019) will increase the rail freight capacity
and profitability of CTOs through double stacking and lower transit time.
n
India’s expected GDP revival will translate into higher EXIM trade, while
infrastructure improvement and GST implementation will improve the share
of organized logistics service providers over the medium term.
Dominant player, pre-emptive investments for long term growth
n
CCRI is an undisputed leader in rail transport (76% market share) led by
favorable depot locations (legacy benefit), scale (10x in size of next biggest
competitor) led by continuous core business capex focus.
n
CCRI is spending INR60b to develop 15 MMLPs (Multi Modal Logistics Parks)
along with upcoming DFCs, potentially upgrading the company to a full scale
multimodal logistics service provider.
Expect FY14-17E volume CAGR at 12% and EBITDA CAGR at 18%
n
While the expected economic recovery will benefit logistics sector, we
believe CCRI’s growth will be higher given its scale and likely
disproportionate benefit from investments in MMLPs.
n
We expect CCRI’s volume to post 12% CAGR and EBITDA 18% CAGR aided by
margin improvement as the double stacking share increases.
Valuation and view
n
We value CCRI on DFC-based (WACC 11.7%, TGR 5%) to arrive at a fair value
of INR1,777/sh implying 19% upside.
n
The stock trades at 21x FY17E EPS of INR71 and has a dividend yield of ~1%.
Initiate coverage with a
Buy
rating.
Shareholding pattern (%)
As on
Dec-14 Sep-14 Dec-13
Promoter
61.8
61.8
63.1
DII
7.8
6.7
4.9
FII
25.0
25.9
29.0
Others
5.4
5.6
3.1
FII Includes depository receipts
Stock Performance (1-year)
1,700
1,450
1,200
950
700
Container Corpn.
Sensex - Rebased
March 2015
40

Container Corporation
Dominant player, pre-emptive investments for long term
growth
n
n
CCRI i s a n u ndisputed leader i n ra il t ransport (76% ma rket s hare) l ed b y f avorable
depot locations (legacy benefit), scale (10x in size of the next biggest competitor) led
by continuous core business capex focus.
Company is spending INR60b to develop 15 MMLPs (Multimodal Logistics Parks) along
with upcoming DFCs, thus potentially upgrading it to a full scale multimodal logistics
service provider.
Early mover advantage and focused capex ensured high market share
n
n
n
n
CCRI, being the first container train operation (incorporated in 1988), received
railway’s surplus lands at strategic locations on a long term lease. Despite
private players entry, CCRI’s continual core capex focus ensured its leadership
position in the sector.
The key bargaining chip with container train operators apart from service
quality, in our view, is the wide network availability (rakes, number of locations
etc). CCRI, with 63 locations and 275 rakes, is well positioned to maintain its
volume share.
Post private CTOs entry, CCRI lost the market share for few years as private
CTOs entered new territories or the ones neglected by it. However, having lost
some market share, CCRI swiftly stepped up efforts through (a) tariff
rationalization (bulk discounts, rebates etc) and (b) strategic JVs to provide
seamless logistics solutions.
Private CTOs were not able to maintain the momentum given the slowdown in
EXIM business, lower RoCE, delays in ICD development (land acquisition issues)
coupled with steep hike in haulage rates (~29% in December 2012 and February
2013) by Railways.
Exhibit 1: CCRI regained market share in recent years and maintains it at >75%
Concor share (%)
5
7
15
22
Private CTOs share (%)
25
27
25
24
95
94
85
78
75
73
75
76
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
Source: Company, MOSL
Pre-emptive capex to develop MMLPs
CCRI’s ~80% revenue accrues from rail container operations, and in its efforts to
provide value-added services, is focusing on developing MMLPs. CCRI is building 15
new multimodal logistics parks (MMLP) along the upcoming DFCs to augment its
already large network of 63 CFS and ICDs.
March 2015
41

Container Corporation
It plans to spend ~INR60b (~50% on MMLPs and private container terminals) over
the FY13-17 period that includes land acquisition, terminal development and
purchase of equipments. The MMLPs will be set up over the next two to three years
and will be fully operational along with the completion of dedicated freight
corridors.
MMLPs can be defined as transport hubs that provide integrated logistics facilities
like warehousing, cold storage, handling, customs examination etc by mechanized
handling and intelligent inventory management to handle bulk, break bulk and
containerized traffic in a cost effective manner.
Exhibit 2: CCRI revenue breakup ( %): MMLPs ex pected t o r educe dependence o n freight
operations
Rail Freight
21
4
Road Freight
21
4
Warehousing and Handling
21
4
21
3
75
75
76
76
FY11
FY12
FY13
FY14
Source: Company, MOSL
While the acquired land (acreage) for MMLPs will be large, development will be in
phases and will also house dedicated warehouses for some individual
companies/industries. CCRI has started operations at Khatuwas and plans to start
operations in the next one to two years at around six locations.
Exhibit 3: Planned MMLPs across India
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Location
Nagaulapalli
Khatuwas
Sriperumbudur (Road Based)
Pantnagar (JVC with SIIDCUL)
Vallarpadam (Road based)
Vishakapatnam
Naya Raipur
Nagpur
Jharsuguda
Haridwar
Swarupganj
Vadodara
Kila Raipur
Parjang
Duburi
State
Telangana
Rajasthan
Tamil Nadu
Uttarakhand
Kerala
Andhra Pradesh
Chattisgarh
Maharashtra
Odisha
Uttarakhand
Rajasthan
Gujarat
Punjab
Odisha
Odisha
Area (Acres)
80
280
50
40
20
100
100
107
30
35
400
130
150
50
50
Status
Working as DCT & PFT in 17 acres
Working as Double Stacking Hub, 20 acres developed
Commissioning by Dec, 2014
Commissioning by Mar, 2015
Commissioning by Jun, 2015
Working as road based CFS – Ph I; developing 10 acres
Commissioning by Dec, 2015
Commissioning by Dec, 2015
Commissioning by Dec, 2015
Approached BHEL for land transfer
Land Acquisition – Sec 6 notification
Majority land acquired, construction started
JVC with CONWARE acquiring land
Land being identified by ASRL & IDCO
Land being identified by ASRL & IDCO
Source: Company, MOSL
March 2015
42

Container Corporation
Expect volume growth and margin recovery
n
n
While t he expected economic r ecovery w ill b enefit l ogistics s ector, we expect C CRI’s
growth t o b e h igher, given i ts s cale a nd l ikely d isproportionate b enefit f rom
investments in MMLPs.
We estimate CCRI to post 14% volume CAGR and 16% EBITDA CAGR aided by margin
improvement as double stacking share increases.
EXIM growth and containerization to boost volume growth
Driven by EXIM and containerization growth, we model EXIM volume at 14% CAGR
over FY14-17E and domestic volume CAGR at 12%, leading to overall volume CAGR
of 14% as EXIM is expected to continue to contribute ~83% of total volumes.
Exhibit 4: Model 14% volume CAGR over FY14-17E
Volumes (million TEUs)
EXIM
Domestic
2.9
0.5
2.4
Total
3.2
0.6
3.6
0.6
4.0
0.7
2.4
0.5
1.9
FY10
2.6
0.5
2.0
2.6
0.5
2.1
2.6
0.4
2.2
2.6
2.9
3.3
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
Source: Company, MOSL
Exhibit 5: Expect EBITDA t o post 18% CAGR l ed by volume growth and improvement i n
profitability
EBITDA (INR b)
Exim
Domestic
Total EBITDA
17
10
1
9
FY10
9
FY11
11
1
10
11
1
11
1
10
12
1
10
14
2
12
15
17
2
19
3
FY12
FY13
FY14
FY15E
FY16E
FY17E
Source: Company, MOSL
March 2015
43

Container Corporation
Exhibit 6: Western Corridor of India contributed to 76% of CCRI’s FY13 volumes
Volume (TEUs)
37 39 40 41 39
14 14 16 15 13 8 9 10 11 11 12 14 13 12 13
15 12 14 15 12
5 6 7 6 5
5 5 6 7 6 4 5 6 5 3
As a % of total
Western
North Western
North Central
Northern
Central
Eastern
Southern
South Cetral
Source: Company, MOSL
Exhibit 7: While EBITDA CAGR is healthy at 16%, PAT CAGR will be depressed due to higher
depreciation rate under new Companies Act 2013
FY12
EBITDA
Depreciation
Other Income
Interest
PBT
Tax
PAT
10.2
1.6
3.1
0.1
11.7
3.0
14.7
FY13
10.5
1.8
3.3
0.0
12.0
2.7
14.7
FY14
10.8
1.9
3.7
0.0
12.5
3.0
15.6
FY15E
13.0
4.0
3.7
0.0
12.7
3.1
15.7
FY16E
16.3
4.5
4.2
0.0
16.0
3.8
19.8
FY17E
18.3
4.9
4.9
0.0
18.2
4.4
13%
13%
FY14-17
CAGR (%)
19%
37%
10%
22.6
13%
Source: Company, MOSL
CCRI is a debt free company (net cash at INR29b as of September 2014) with healthy
cash flows. Currently, it has embarked on an INR60b capex to be spent over the next
few years, primarily on MMLPs. Though the logistics parks take time to develop
fully, investment needs to be done upfront. Hence, the capex intensity will remain
high and revenue will be back-ended, resulting in lower return ratios in the interim
period.
Exhibit 8: Capex intensity to remain high…
Capex (INRb)
10.3 10.1
9.8
Exhibit 9: ...resulting in lower FCF versus historical trend
FCF (INRb)
4.3
4.8
3.3
3.9
3.2
3.2
1.5
5.5
4.3
5.2
5.9
4.6
3.2
2.2
3.1
3.1
2.3
5.3
1.2
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Source: Company, MOSL
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Source: Company, MOSL
March 2015
44

Container Corporation
Exhibit 10: Also, re turn ra tios t o re main u nder p ressure l ed by c apex t owards l ong
gestation MMLPs
57.0
55.0
46.0
42.2
RoE (%)
42.4
RoCE (%)
39.1
33.4
14.5
25.3
22.6
28.7
13.3
33.2
15.2
35.0
15.5
19.4
19.0
16.5
15.8
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
Source: Company, MOSL
Exhibit 11: CCRI’s g ross block will increase rapidly in next few years led by INR60b capex
plan primarily on MMLPs
Gross Block (INRb) - RHS
26%
20%
13%
7%
0%
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14 FY15E
Source: Company, MOSL
3 Yr Gross Block CAGR (%)
100
75
50
25
0
March 2015
45

Container Corporation
Valuation and view
Initiate coverage with Buy, target price of INR1,777
n
n
n
n
n
n
CCRI i s a d irect p lay o n t he u pcoming l arge ra il i nfrastructure ( DFCs), re vival in
economic growth and higher containerization.
Key factors to watch out are (a) EXIM growth trend, (b) expansion of p ort c apacities
(JNPT in the near term) and (b) completion of DFCs.
Key r isks include ( a) lo wer-than-expected G DP growth, ( b) s harp increase in h aulage
rates, (c) delay in DFCs completion and (d) any increase in export-import imbalance.
Given the debt free balance sheet, we expect the dividend payout (currently at 25%)
to increase in the next few years as it nears the end of its ongoing large capex cycle,
which is funded fully through equity.
We v alue C CRI on DFC-based ( WACC 1 1.7%, TG R 5% ) to ar rive at a f air v alue o f
INR1,777/sh implying 19% upside.
The stock trades a t 21x FY 17E EPS of INR71 and has a dividend yield of ~1%. Initiate
coverage with a Buy rating.
Exhibit 12: Concor DCF Valuation Summary - We value Concor at INR1,777
Source: MOSL
March 2015
46

Container Corporation
Exhibit 13: Concor – Key Assumptions
Y/E March
Volumes - TEU
EXIM
Domestic
Total
Volumes YoY Chg (%)
EXIM
Domestic
Total
Realization (INR/TEU)
EXIM
Domestic
Total
EBITDA (INR/TEU)
EXIM
Domestic
Total
FY10
1,882
539
2,421
FY11
2,019
544
2,562
FY12
2,136
468
2,604
FY13
2,152
434
2,586
FY14
2,361
507
2,869
FY15E
2,645
558
3,203
FY16E
2,936
625
3,561
FY17E
3,288
719
4,007
1.5%
18.9%
4.9%
7.2%
0.9%
5.8%
5.8%
-13.9%
1.6%
0.8%
-7.4%
-0.7%
9.7%
17.0%
10.9%
12.0%
10.0%
11.6%
11.0%
12.0%
11.2%
12.0%
15.0%
12.5%
15,399
14,977
15,408
14,820
15,387
15,218
15,293
16,983
15,746
16,449
19,975
17,191
16,473
22,344
17,808
17,050
23,126
18,401
19,181
26,016
20,670
19,181
26,016
20,690
4,565
2,692
4,148
4,633
2,154
4,107
4,605
2,203
4,173
4,552
2,898
4,274
4,394
2,863
4,123
4,518
3,122
4,275
5,083
5,083
3,512
3,512
4,807
4,801
Source: Company, MOSL
March 2015
47

Container Corporation
Company description
n
n
n
n
Container Corporation (CCRI), a Navratna company from July 2014, was
incorporated in 1988 and started operation in November 1989 by taking over
seven ICDs from Indian Railways. CCRI is a public sector company with the
government’s holding of 61.8%.
Over the years, it has grown the operations to 63 ICDs which include 13 export-
import depots, 15 exclusive domestic depots and 35 terminals (operates as
domestic and international terminals). To support its operation, CCRI owns 275
rakes, 12,251 wagons and ~21,000 containers.
Given the high inter-dependence of shipping lines and freight aggregators, CCRI
has formed several JVs with its customers (GDL/Allcargo), port operators (APM/
DPI), road haulers (TCI), air cargo (HALCON/GVK) and shipping lines (Maersk) to
aid its business. CCRI is investing to set up multi-modal logistics parks along the
upcoming DFCs.
Company earns its revenue from container rail transport (EXIM and domestic),
port terminal operations and warehousing.
Exhibit 14: CCRI increased its owned containers by 7% CAGR in the last 10 years
CCRI owned containers (TEUs)
18,680
12,812 13,517 13,576
15,754 15,579 16,109
20,984
11,745
10,771 10,874
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
Source: Company, MOSL
Exhibit 15: CCRI’s high speed wagons increased at 13% CAGR since FY04
High Speed Wagons (BLC/BLL)
9,816
8,421
1,699
6,722
8,117
8,837
9,309
9,631
10,413 10,754
1,699
Other wagons
Total
11,770 12,111
1,357
1,357
7,582
6,012
2,976
2,841
3,171
FY04
4,606
FY05
7,762
2,650
5,112
FY06
8,577
2,650
10,988
10,194 10,666
1,357
1,357 1,357
5,927
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
Source: Company, MOSL
March 2015
48

Container Corporation
Exhibit 16: CCRI has several JVs and certain subsidiaries to exploit synergies
JV/Subsidiary Name
JV's at Dadri CFS/ICD
1
Star Track Terminals
2
Albatross Inland Ports
3
CMA-CGM Logistics Park (Dadri)
4
Hind CONCOR Terminals (Dadri) *
5
Allcargo Logistics Park
JV's at Port Terminals
6
Gateway Terminals India
7
India Gateway Terminal
Other Diversified JV's
8
TCI-CONCOR Multimodal Solutions
Concor
Stake (%)
49%
49%
49%
49%
49%
26%
15%
49%
Operating Area
Details
CFS at Dadri, U.P.
CFS at Dadri, U.P.
CFS at Dadri, U.P.
CFS at Dadri, U.P.
CFS at Dadri, U.P.
3rd berth at JN Port, Mumbai
Container Terminals at Cochin
JV with APM Terminals India Pvt. Ltd.
(formerly known as Maersk India Pvt. Ltd.)
JV with Transworld group of Companies
JV with Ameya Logistics Pvt. Ltd.
JV with Hind Terminals Pvt. Ltd.
JV with Allcargo Global Logistics Ltd.
JV with APM Terminals Mauritius Ltd.
JV with Dubai Port International
To establish logistics freight terminals JV with TCI
and provide integrated logistics
services across the country.
For operations of existing rail/road
container terminal at Garhi Harsaru,
Gurgaon (Haryana)
Management and operation of rail
container terminal at Birgunj
An air cargo complex & ICD at Ozar
airport, Nasik.
JV with Gateway Rail Freight Ltd.
9
Container Gateway
49%
10
Himalayan Terminals
11
HALCON
Subsidiaries
12
Fresh & Healthy Enterprises
13
CONCOR Air
14
SIDCUL CONCOR Infra Company
40%
50%
JV with Nepalese Enterprises & Transworld
group of companies
A business arrangement with Hindustan
Aeronautics Ltd.
100%
100%
74%
15
Punjab Logistics Infrastructure
51%
*Voluntary winding up under process
Cold chain logistics
Run cargo terminal at Mumbai Airport
To develop logistics parks at
JV with SIIDCUL (State Infrastructure &
Pantnagar and Haridwar.
Industrial Development Corporation of
Uttrakhand).
Develop MMLP at Kila Raipur
JV with Punjab State Container &
Warehousing Corporation Limited
(CONWARE).
Source: Company, MOSL
March 2015
49

Container Corporation
Exhibit 17: CCRI’s current terminal network
CENTRAL
Maharashtra
Chhattishgarh
MP
EASTERN
West Bengal
Bihar
Odisha
Jharkhand
Chhattishgarh
Assam
NORTHERN
Delhi
UP
Haryana
Punjab
Rajasthan
Himachal Pradesh
NORTH CENTRAL
UP
Total
5
3
1
1
9
4
1
2
1
1
16
3
1
4
4
4
1
6
4
2- Tughlakabad (Delhi)
3- Babarpur (Panipat)
4- Dhandharikalan (Ludhiana)
10- Moradabad
11- Sonepat, 12- Rewari,
13- Ballabhgarh
14- Dhappar
15- Kanakpura (Jaipur),
16- Bhagat ki Kothi (Jodhpur)
17- Baddi#
18-Dadri (Greater Noida) ,
19- Agra, 20- Kanpur,
21- Madho Singh (Mirazpur)
22- Malanpur (Gwalior)
23- Ravtha Road (Kota)
5- Khodiyar (Ahemdabad), 6-
Chhanni(Vadodara)
7- Milavattan (Tuticorin), 8- Irugur
(Coimbatore), 9- Tiruppur, 10-
Harbour of Madras (Chennai)
24- Vadodara, 25- Gandhidham,
26- Ankleshwar
27- Tondiarpet (Chennai),
28- Kudal Nagar (Madurai)
29- Whitefield (Bangalore)
30- Cochin
31- Sanathnagar (Hyderabad),
32- Vishakhapatnam,
33- Desur (Belgam)
11- Pithampur (Indore), 12-
Ratlam
13- New Mulund (Mumbai)
12- Nagulapally (Hyderabad), 13-
Guntur
10- Sabarmati (Ahemdabad)
5- Majerhat (Kolkata),
6 - Haldia
7- Balasore
8- Tatanagar (Jamshedpur)
9- Amingaon
5- Okhla (Delhi)
1- Shalimar (Kolkata),
2 - Durgapur
3- Fatuha (Patna)
4- Rourkela
Only EXIM
1- Daulatabad (Aurangabad)
EXIM + Domestic
1- Nagpur, 2- Bhusawal
3- Raipur
4- Mandideep (Bhopal)
Only Domestic
6- Phillaur (Ludhiana),7- Suranassi
8- Khemli (Udaipur), 9- Kathuwas
Uttarakhand
M.P.
Rajasthan
NORTH WESTERN
Gujarat, Diu
SOUTHERN
Tamilnadu
1
1
6
6
9
7
11-Salem Market
Karnataka
Kerala
SOUTH CENTRAL
Andhra Pradesh /
Telangana
Karnataka
WESTERN
MP
Maharashtra
Goa
Total Terminals
1
1
5
4
1
7
2
5
34- Chinchwad (Pune),
35- Dronagiri Node (Mumbai)
35
14- Turbhe (Mumbai), 15- Miraj
63
13
15
Source: Company, MOSL
March 2015
50

Container Corporation
Exhibit 18: CCRI’s terminal network
Source: Company, MOSL
March 2015
51

Container Corporation
Financials & valuations (Consolidated)
Consolidated - Income Statement
Y/E March
Total Income from Operations
Change (%)
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
PBT bef. EO Exp.
EO Items
PBT after EO Exp.
Current Tax
Deferred Tax
Tax Rate (%)
Less: Mionrity Interest
Reported PAT
Adjusted PAT
Change (%)
Margin (%)
FY10
37,306
8.1
27,711
74.3
9,595
25.7
1,388
8,208
39
1,812
9,980
0
9,980
2,033
171
22.1
0
7,776
7,776
-0.2
20.8
FY11
38,992
4.5
28,836
74.0
10,156
26.0
1,489
8,667
49
1,971
10,589
0
10,589
1,647
179
17.2
0
8,764
8,764
12.7
22.5
FY12
41,009
5.2
30,776
75.0
10,232
25.0
1,621
8,611
54
3,135
11,692
0
11,692
2,884
152
26.0
0
8,657
8,657
-1.2
21.1
FY13
44,450
8.4
33,953
76.4
10,497
23.6
1,763
8,734
32
3,326
12,027
0
12,027
2,406
315
22.6
0
9,306
9,306
7.5
20.9
FY14
51,085
14.9
40,303
78.9
10,782
21.1
1,934
8,849
12
3,699
12,536
0
12,536
2,732
290
24.1
15
9,499
9,499
2.1
18.6
FY15E
58,933
15.4
45,926
77.9
13,007
22.1
4,034
8,973
10
3,693
12,656
0
12,656
3,052
0
24.1
15
9,589
9,589
1.0
16.3
FY16E
73,598
24.9
57,337
77.9
16,261
22.1
4,451
11,810
10
4,167
15,967
0
15,967
3,832
0
24.0
15
12,120
12,120
26.4
16.5
FY17E
82,409
12.0
64,197
77.9
18,212
22.1
4,932
13,280
10
4,868
18,139
0
18,139
4,353
0
24.0
15
13,771
13,771
13.6
16.7
Consolidated - Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Minority Interest
Deferred Liabilities
Total Loans
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Other Current Liabilities
Provisions
Net Current Assets
Deferred Tax assets
Misc Expenditure
Appl. of Funds
E: MOSL Estimates
March 2015
FY10
1,300
41,670
42,970
0
2,242
424
45,636
30,703
8,344
22,359
2,064
1,922
25,534
158
197
19,925
5,254
6,377
3,001
1,913
1,463
19,157
133
1
45,636
FY11
1,300
48,088
49,388
0
2,428
471
52,286
33,683
9,722
23,961
1,069
1,956
30,705
125
296
22,961
7,323
5,545
1,173
2,828
1,544
25,161
140
0
52,286
FY12
1,300
54,252
55,552
0
2,616
581
58,749
35,856
11,268
24,588
1,041
2,447
37,009
367
303
27,576
8,764
6,515
1,222
3,513
1,780
30,494
178
0
58,749
FY13
1,300
60,905
62,205
0
2,964
385
65,553
40,780
12,946
27,834
1,884
3,690
38,930
554
285
29,460
8,632
7,006
1,683
3,325
1,997
31,925
221
0
65,553
FY14
1,950
66,948
68,898
275
3,244
0
72,416
45,565
14,844
30,721
2,415
6,767
40,352
171
478
26,984
12,719
8,032
1,793
4,622
1,617
32,320
194
0
72,416
FY15E
1,950
73,705
75,654
275
3,244
0
79,173
55,292
18,878
36,414
2,438
6,767
43,071
377
484
29,363
12,846
9,710
2,013
4,715
2,982
33,361
194
0
79,173
(INR Million)
FY16E
1,950
82,245
84,194
275
3,244
0
87,713
63,389
23,329
40,061
4,590
6,767
48,263
471
605
34,212
12,974
12,161
2,513
5,888
3,760
36,102
194
0
87,713
FY17E
1,950
91,948
93,897
275
3,244
0
97,416
71,731
28,261
43,470
6,299
6,767
54,377
528
677
40,068
13,104
13,690
2,814
6,593
4,283
40,687
194
0
97,416
52

Container Corporation
Financials & valuations (Consolidated)
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
FCF per share
Return Ratios (%)
RoE
RoCE
Working Capital Ratios
Fixed Asset Turnover (x)
Asset Turnover (x)
Growth (%)
Sales
EBITDA
PAT
Leverage Ratio (x)
Current Ratio
Debt/Equity
FY10
59.8
70.5
330.6
14.0
27.3
FY11
67.4
78.9
380.0
15.5
26.8
FY12
66.6
79.1
427.4
16.5
28.8
FY13
71.6
85.2
478.6
17.5
28.5
FY14
48.7
58.6
353.4
12.3
29.5
30.5
25.4
4.2
5.2
24.4
0.8
6.3
14.5
19.1
1
0.7
14.9
2.7
2.1
5.0
0.0
FY15E
49.2
69.9
388.0
12.4
29.5
30.3
21.3
3.8
4.4
20.1
0.8
7.9
13.3
17.5
1
0.7
15.4
20.6
1.0
4.4
0.0
FY16E
62.2
85.0
431.8
15.7
29.5
23.9
17.5
3.4
3.5
15.7
1.1
22.0
15.2
20.0
1
0.8
24.9
25.0
26.4
4.0
0.0
FY17E
70.6
95.9
481.6
17.8
29.5
21.1
15.5
3.1
3.0
13.7
1.2
26.1
15.5
20.4
1
0.8
12.0
12.0
13.6
4.0
0.0
0.9
24.8
19.4
24.7
1
0.8
8.1
3.5
-0.2
4.0
0.0
1.0
29.6
19.0
22.8
1
0.7
4.5
5.8
12.7
5.5
0.0
1.1
42.0
16.5
22.2
1
0.7
5.2
0.8
-1.2
5.7
0.0
1.2
25.0
15.8
20.3
1
0.7
8.4
2.6
7.5
5.6
0.0
Consolidated - Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(inc)/dec in FA
(Pur)/Sale of Investments
Others
CF from Investments
(Inc)/Dec in Debt
Interest Paid
Dividend Paid
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
FY10
9,975
1,388
-1,447
-3,680
92
6,328
3
6,331
-3,112
-241
1,489
-1,864
-63
-38
-2,129
-2,230
2,236
17,689
19,925
FY11
10,589
1,489
-1,477
-2,225
-1,460
6,916
17
6,933
-3,081
-34
1,565
-1,550
49
-46
-2,349
-2,346
3,036
19,925
22,961
FY12
11,692
1,621
-2,539
-2,000
-1,066
7,708
14
7,722
-2,267
-500
1,939
-828
110
-48
-2,342
-2,279
4,615
22,961
27,576
FY13
12,027
1,763
-2,977
-2,142
425
9,095
8
9,104
-5,858
-1,245
2,681
-4,422
-196
-33
-2,568
-2,798
1,884
27,576
29,460
FY14
12,536
1,934
-3,101
-2,478
-2,324
6,567
-1
6,566
-5,344
-3,075
2,816
-5,603
-385
-13
-3,042
-3,439
-2,475
29,460
26,984
FY15E
12,656
4,034
-3,683
-3,052
1,338
11,294
0
11,294
-9,750
0
3,693
-6,057
0
-10
-2,833
-2,857
2,379
26,984
29,363
FY16E
15,967
4,451
-4,157
-3,832
2,108
14,537
0
14,537
-10,250
0
4,167
-6,083
0
-10
-3,580
-3,605
4,849
29,363
34,212
FY17E
18,139
4,932
-4,858
-4,353
1,270
15,130
0
15,130
-10,050
0
4,868
-5,182
0
-10
-4,068
-4,093
5,855
34,212
40,068
March 2015
53

Gateway Distriparks
Initiating Coverage | Sector: Logistics
Gateway Distriparks
BSE Sensex
29,449
S&P CNX
8,938
CMP: INR410
TP: INR535 (+29%)
Buy
Focused logistics play, multiple triggers ahead
Profitability boost led by GDP revival, DFC completion, containerization
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val. INRm/Vol‘000
Free float (%)
n
GDPL IN
108.6
459/133
6/5/147
44.5
0.7
103/391
67.1
n
n
Gateway D istriparks ( GDPL), an inter-modal logistics player (rail, r oad, CFS and
cold c hain t hrough S nowman) with connectivity from key ports to demand
centers, i s w ell p oised t o benefit f rom India’s GDP revival a nd western DFC
(dedicated freight corridor) commissioning.
We estimate overall EBITDA (adjusted for Snowman) CAGR through FY17E at 25%,
driven by rail (26% CAGR) and CFS (20% CAGR).
We i nitiate c overage w ith a B uy, b ased o n S OTP-based fair v alue o f INR535/sh
(INR493/sh for core business and INR42/sh for Snowman, post 25% discount).
Key beneficiary of DFCs and economic revival
n
Financial Snapshot (INR Billion)
Y/E Mar
2015E 2016E 2017E
Net Sales
11.0 11.9 14.0
EBITDA
3.3
3.7
4.4
Adj PAT
EPS (INR)
Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
1.8
16.9
34.8
15.7
17.4
24.3
3.7
2.1
19.2
14.0
16.9
20.3
21.3
3.5
2.6
23.7
23.5
19.6
23.6
17.3
3.3
n
n
GDPL’s businesses will benefit from (a) DFCs completion and increasing
containerization (last 12-year CAGR at 9% growth versus 6% in overall EXIM
trade at major ports), (b) India’s GDP revival, (c) improving logistics
infrastructure and (d) GST implementation.
DFCs (full commissioning likely by 2019) will increase the rail freight capacity
and profitability of CTOs through double stacking and lower transit time.
India’s GDP revival will translate into higher EXIM trade, while infrastructure
improvement and GST implementation will improve the share of organized
logistics service providers over the medium term.
Gateway Rail is the second-largest port-linked rail freight service operator in
India with 21 rakes and 235+ truck trailers for the last mile connectivity.
We expect GDPL’s CTO volume/margin to expand led by EXIM growth,
increased containerization and DFCs start (double stacking, high speed and
wagon capacity). Also expect market share gains led by service quality.
While the current ICD capacity can handle 4x volume increase with minimal
capex, we model 16% volume CAGR, leading to 26% EBITDA CAGR through
FY17. We do not model the new planned ICD capacity at Ahmedabad, Jaipur
and Nagpur in our estimates.
While CFS business is very competitive, we expect GDPL’s utilization to
remain high due to port proximity and higher share of local consumption at
its locations — Mumbai, Chennai, Vizag and Kochi.
For FY14-17E, we model 13% volume CAGR driven by 19% in subsidiary CFS
and 10% in Mumbai CFS leading to 20% overall EBITDA CAGR through FY17.
We value GGDPL on SOTP-based fair value of INR535/sh (INR493/sh for core
business on DCF basis, WACC: 11.4%, TGR: 5% and INR42/sh for Snowman
stake post 25% discount).
The stock trades at 17.3x FY17E EPS of INR23.7 and has a dividend (payout
65%) yield of 2-3%. Initiate coverage with a Buy rating.
54
110.4 117.2 125.6
Rail business to see multifold growth, adequate land bank for 4x growth
n
n
Shareholding pattern (%)
As on
Dec-14 Sep-14 Dec-13
Promoter
32.9
36.7
42.0
DII
25.7
25.3
15.9
FII
29.5
25.3
28.7
Others
12.0
12.7
13.5
FII Includes depository receipts
Stock Performance (1-year)
500
400
300
200
100
Gateway Distr.
Sensex - Rebased
n
Steady growth in CFS business, capacity addition to boost earnings
n
n
Valuation and view
n
n
March 2015

Gateway Distriparks
Rail business could see multifold growth
Minimal capex required for fourfold capacity increase
n
Gateway Ra il i s t he s econd-largest p ort-linked ra il f reight s ervice o perator i n I ndia
with 21 rakes and 235+ truck trailers for the last mile connectivity.
We e xpect G DPL’s C TO v olume/margin t o e xpand l ed b y E XIM growth, i ncreased
containerization a nd D FCs s tart ( double s tacking, h igh s peed a nd w agon c apacity).
Also expect market share gains led by service quality.
n
n
While the current ICD capacity can handle 4x volume increase with minimal capex, we
model 1 6% v olume C AGR, l eading t o 2 6% E BITDA C AGR t hrough F Y17. W e d o n ot
model t he n ew p lanned I CD c apacity a t Ahmedabad, J aipur a nd N agpur i n o ur
estimates.
Strategic ICD location to ensure volume growth
n
n
n
GDPL’s rail operations are carried out through three inland container depots
(ICDs) located at Gurgaon, Ludhiana and Faridabad (key demand centers for
imports in India and export hubs).
Western corridor (Mumbai/Gujarat to Delhi) accounts for the highest share of
India’s container traffic and Gateway Rail is well poised to benefit from growth
in this region.
Company plans to add new ICD locations at Ahmedabad (acquired land), Jaipur
and Nagpur (central locations in India).
Exhibit 1: Gateway Rail’s strategically located ICDs to benefit from EXIM growth
Source: Company, MOSL
March 2015
55

Gateway Distriparks
Adequate land bank to aid fourfold capacity increase
n
n
n
n
n
Gateway Rail has adequate ICD land bank which can take care of fourfold
volume increase with minimal capex.
Recently it announced it will buy additional 11 acres in Garhi Harsaru to meet
the growing demand for warehousing facilities as customers are looking for
logistics solutions (supply chain management), than just plain vanilla services.
It handles ~0.2m teu volumes at its ICDs, against 0.5m teu of capacity. As a rule
of thumb, capacity expansion is needed once utilization reaches 60-65%.
Based on the current land bank, it can expand the handling capacity to 1m TEU
at a capex of INR3.5b.
On the rake front, it currently has 21 and plans to lease additional two rakes in
the near term. Company will assess the buy versus lease decision, though is
unlikely to buy any new wagons before the new 100 tonnes can be used.
Model FY14-17E CAGR at 16% in volume and 26% in EBITDA
n
n
n
n
n
For FY14-17E, we model 16% volume CAGR driven by Faridabad ramp-up and
capacity expansion at Garhi and Ludhiana.
Gateway Rail’s profitability has seen remarkable improvements over the years
led by higher utilization and increasing double stacking volumes (currently
double stacking ratio at 63% as possible only on Gujarat to Delhi route and not
yet available from JNPT).
Double stacking has helped to save INR120m in 1HFY15, implying annual
potential savings of INR250m. As of now, the railway axle load capacity limits
the extent of double stacking, though post DFCs, double stacking can be fully
utilized through the route.
Private ownership gives Gateway the operational as well as financial flexibility to
improve service quality in terms of hassle free experience for the customer. We
expect Gateway to gain market share primarily due to its better service quality.
We estimate an EBITDA improvement from ~INR6,500/teu in 9MFY15 to
~INR7,000/teu by FY17E, resulting in 32% EBITDA CAGR over FY14-17E.
Exhibit 2: We m odel 1 7% v olume C AGR over FY 14-17E l ed b y Faridabad ra mp-up a nd
capacity expansion at Garhi and Ludhiana
Rail throughput ('000 TEUs)
337
234
180
112
131
253
212
290
FY10
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
Source: Company, MOSL
March 2015
56

Gateway Distriparks
Exhibit 3: Expect 32% EBITDA C AGR over FY 14-17E led b y v olume g rowth a nd l ikely
improvement in profitability
Rail EBITDA (INRm)
EBITDA (INR/teu)
6,524
4,819
2,687
3,333
3,971
3,510
1,023
1,649
6,700
1,942
7,000
2,356
302
FY10
438
FY11
717
FY12
820
FY13
FY14
FY15E
FY16E
FY17E
Source:
Exhibit 4: Gateway Rail – key assumptions
Source: Company, MOSL
March 2015
57

Gateway Distriparks
Steady growth in CFS business
Strategic l ocation to k eep uti lization hi gh, c apacity a ddition to bo ost
earnings
n
While C FS b usiness is very c ompetitive, w e ex pect GDPL’s u tilization t o r emain h igh
due t o p ort p roximity a nd h igher s hare o f l ocal c onsumption a t i ts l ocations —
Mumbai, Chennai, Vizag and Kochi.
n
n
We model 13% volume CAGR driven by 19% in subsidiary CFS and 10% in Mumbai CFS .
We ex pect 2 0% E BITDA C AGR i n FY 14-17E d riven b y 1 3% v olume C AGR a nd 2%
realization CAGR.
Location advantage to compensate for competitive pressures
n
n
n
n
n
With limited entry barriers, many new players have entered the CFS business.
However, service quality and proximity to port plays (Gateway’s CFS are within
17km of ports) are vital for higher utilization.
GDPL is one of the biggest CFS players in India with current port-based capacity
of 0.6m teu. Its CFS locations, similar to its rail division, are strategic at Mumbai
(two locations), Chennai (two), Vizag and Kochi, which account for 83% of major
ports’ container volumes.
Competition is the highest in Mumbai and Chennai locations with >25 CFS
players operating in each location.
CFS comes in handy at a location which has (a) higher share of local
consumption and (b) distance traveled is <500km, leading to a higher share of
road movement.
Given India’s V-shaped geography towards the southern tip, maximum distances
to be travelled are lesser, thus further boosting road transport’s share and in
turn demand for CFS. ~80% of the container traffic in Chennai is consumed
locally, while in Mumbai the local consumption share is lower at ~50%.
Exhibit 5: GDPL’s CFS are within short distance from nearest ports
Location
Mumbai
Mumbai (Punjab Conware)
Chennai
Chennai (Chandra)
Vizag
Kochi
Total
Capacity
360,000
90,000
50,000
70,000
50,000
620,000
Port
JNPT
Chennai
Ennore
Vizag
Kochi
Distance from Port
10.3
15
15 from Chennai and 17 from Ennore
10
1
Source: Company, MOSL
Model FY14-17E CAGR at 13% in volume and 20% in EBITDA
n
n
n
We expect GDPL’s CFS business to report ~13% volume CAGR led by improving
utilization at Mumbai and the ramp-up at Chennai and Kochi.
Mumbai’s volume ramp-up will be driven by increasing EXIM growth and from
the upcoming 0.8-1m teu expansion at JNPT by DP World.
Chennai (Chandra) CFS’ volume growth will be driven by Kattupalli Port and
Ennore Port in the near term, which have proximity to Chandra CFS.
March 2015
58

Gateway Distriparks
n
n
Vizag CFS is near its full utilization and management is working on various
options to expand/shift the location to accommodate higher volumes.
We model 20% EBITDA CAGR led by volume growth and ongoing tariff
restructuring.
Exhibit 6: We m odel consolidated C FS v olume C AGR a t 1 3% i n F Y14-17E d riven b y 1 8%
CAGR for subsidiary CFS
In '000 TEU
Mumbai
Chennai
Vizag
Kochi
Total
495
24
63
133
445
304
-
24
64
215
333
29 -
74
334
-
37
78
219
343
1
43
76
223
340
51
74
209
6
396
16
61
94
63
118
19
230
226
245
275
FY10
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
Source: Company, MOSL
Exhibit 7: Expect CFS EBITDA to report 20% CAGR through FY17E led by higher volume and
improved profitability
CFS EBITDA (INRm)
4,949
4,120
3,273
3,408
3,436
3,732
3,885
4,033
CFS EBITDA (INR/teu)
1,654
995
FY10
1,136
1,412
1,168
1,480
1,731
1,994
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
Source: Company, MOSL
March 2015
59

Gateway Distriparks
Exhibit 8: CFS business – key assumptions
Source: Company, MOSL
March 2015
60

Gateway Distriparks
Company description
Incorporated in 1994, Gateway Distriparks (GDPL) is the logistics facilitator with
presence in three synergistic verticals – Container Freight Stations (CFS), Inland
Container Depots (ICD) with rail movement of containers to major ports, and cold
chain storage logistics.
GDPL operates five container freight stations, two in Mumbai and one each in
Chennai, Vizag and Kochi with a total capacity of over 600,000 teu. Services
provided by the CFS include bonded and transit warehousing, customs clearance,
transportation and storage, reefer services and other customized solutions.
Its rail subsidiary Gateway Rail Ltd provides multi-modal logistics services through its
rail linked ICDs.
It operates four ICDs located at Gurgaon (Garhi-Harsaru), Ludhiana (Punjab),
Mumbai and Faridabad (Asaoti, Haryana). These ICDs are linked through rail
network to western India ports of Mumbai in Maharashtra, Mundra and Pipavav in
Gujarat. Gateway Rail owns 21 rakes and 235+ road trailers for the last mile
connectivity.
Its recently-spun subsidiary (through an IPO, current GDPL stake at 40.4%) Snowman
Logistics is a cold chain logistics service provider. It operates through 30 reefer
vehicles with 23 temperature controlled warehouses across 14 locations in India,
including Serampore (near Kolkata), Taloja (near Mumbai), Palwal (near Delhi),
Mevalurkuppam (near Chennai) and Bengaluru.
Exhibit 9: GDPL’s group structure
Promoters/
Associates/
Directors
37 %
46
%
Institu-
tions
Retail
14 %
3%
Others
Gateway
Distriparks Ltd.
CFS, Dronagiri
(Navi Mumbai)
100%
Gateway East
India Pvt. Ltd.
CFS, Vizag
(Subsidiary)
Punjab Conware CFS
(Navi Mumbai- O&M)
100%
98%
Gateway Rail Freight
Ltd.
Rail SPV (Subsidiary)
Rail-ICDs - Garhi
Harsaru, Ludhiana &
Faridabad
60%
Gateway
Distriparks
(Kerala) Ltd.
CFS, Kochi
(JV -Subsidiary)
40 %
Snowman Logistics Ltd.
Cold Chain Logistics
Business
(Joint Venture -Subsidiary)
Gateway
Distriparks (South)
Pvt. Ltd.
CFS, Chennai
(Subsidiary)
Source: Company, MOSL
March 2015
61

Gateway Distriparks
Exhibit 10: GDPL’s asset summary
Sl.
No.
1
2
3
4
5
6
Navi Mumbai (Near JNPT/Uran)
Punjab Conware (Near JNPT)
Chennai (Bet. Chennai & Ennore)
Chennai (Near Ennore/Kattupalli)
Vizag
Kochi (Vallarpadam)
Kochi (Kalamasserry)
7
8
9
10
Garhi Harsaru (Near Gurgaon)
Kalamboli (Navi Mumbai)
Sanehwal (Near Ludhiana)
Asaoti (Faridabad)
Location
CFS/
Rail ICD
CFS
CFS
CFS
CFS
CFS
CFS
CFS
Rail ICD
Rail ICD
Rail ICD
Rail ICD
60-year Lease
15-year O & M
WEF 1 Feb 2007
Freehold
Freehold
30-year Lease
30-year Lease
Freehold
Freehold
Alliance
Freehold
Freehold
20.0
10.5
20.0
6.5
20.0
90.0
17.0
60.0
66.0
372
70,000
36,000
75,000
24,000
Land Bank
250,000
20,000
220,000
240,000
15,000
1,000
4,000
5,000
7,000
4,000
3,000
1,000
Title
Area
(Acres)
35.0
27.0
Developed Area (Sq. Mt)
Yard
100,000
65,000
Warehouse
40,000
50,000
1,100,000
130,000
Source: Company, MOSL
Exhibit 11: Gateway Rail connects Mumbai and Gujarat ports
to t he h interlands i n N orth India w ith i ts I CDs a t G urgaon, Exhibit 12: GDPL’s D FCs a re l ocated a t M umbai, C hennai,
Ludhiana and Faridabad
Vizag and Kochi
Source: Company, MOSL
Source: Company, MOSL
March 2015
62

Gateway Distriparks
Exhibit 13: GDPL’s C FS v olume p osted 7% C AGR in t he l ast
eight years (in ‘000 teu)
Mumbai
400
300
201
200
67
100
-
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
Source: Company, MOSL
10
FY06
17
FY07
37
224
Chennai
331
324
Vizag
304
Kochi
333
334
Total
343
340
131
180
112
Exhibit 14: Gateway Ra il v olumes c locked 4 6% C AGR i n t he
last eight years (in ‘000 teu)
234
212
FY08
FY09
FY10
FY11
FY12
FY13
FY14
Source: Company, MOSL
Exhibit 15: GDPL r evenue p osted 1 7% CAGR i n t he l ast f ive Exhibit 16: Though C FS re venue w as l argely stable, its s hare
years driven by rail operations (INR m)
in overall revenues fell, led by higher contribution of rail (%)
12,000
CFS
Rail
Cold chain
8,217
8,000
4,553
4,000
5,263
6,045
Total
9,551
10,138
14.2
30.3
12.8
43.9
CFS
Rail
12.9
40.8
Cold chain
7.5
54.8
11.9
15.1
56.3
55.9
55.5
43.3
46.3
37.8
FY12
31.8
FY13
28.9
FY14
-
FY09
FY10
FY11
FY12
FY13
FY14
Source: Company, MOSL
FY09
FY10
FY11
Source: Company, MOSL
March 2015
63

Gateway Distriparks
Valuation and view
n
n
n
n
n
n
n
n
GDPL is a direct play on India’s EXIM growth and beneficiary of increasing
containerization which will be boosted by DFCs completion.
Management’s focus on reinvesting in the core business along with upgrading to
value-added services has ensured continual margin improvement.
Blackstone has 48-49% stake in Gateway Rail. As per the agreement, it has given
notice to Gateway’s management for a mandatory IPO.
Key events to watch out are (a) EXIM growth, (b) DFCs completion timelines and
(c) GST implementation.
Key risks include (a) delay in JNPT expansion, (b) delay in DFCs completion and
(c) intense competition in CFS and rail segment.
We estimate overall EBITDA (adjusted for Snowman) CAGR in FY14-17E at 27%,
driven by rail (32% CAGR) and CFS (20% CAGR).
We value Gateway Distriparks on SOTP-based fair value of INR535/sh
(INR493/sh for core business on DCF basis, WACC: 11.4%, TGR: 5% and INR42/sh
for Snowman, post 25% discount).
The stock trades at 17.5x FY17E EPS of INR23.7 and has a dividend yield of 2-3%.
Initiate coverage with a Buy rating.
Exhibit 17: Expect EBITDA to post 27% CAGR in FY14-17, adjusted for Snowman (INR m)
4,351
3,274
2,498
1,260
1,648
2,464
2,587
3,672
FY10
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
Source: Company, MOSL
Exhibit 18: Expect RoE and RoCE to move towards 20-25% and above
25
20
15
10
5
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
RoE
RoCE
Source: Company, MOSL
March 2015
64

Gateway Distriparks
Exhibit 19: Gateway Distriparks DCF Valuation Summary
Source: MOSL
March 2015
65

Gateway Distriparks
Financials and valuation
Consolidated - Income Statement
Y/E March
Total Income from Operations
Change (%)
Operating Expenses
% of Sales
Personnel Expenses
% of Sales
Other Expenses
% of Sales
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
PBT bef. EO Exp.
PBT
Tax Rate (%)
Add: Profit in Associate Company
Less: Mionrity Interest
Reported PAT
Adjusted PAT
Change (%)
Consolidated - Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Minority Interest
Deferred Liabilities
Total Loans
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Goodwill on Consolidation
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Other Current Liabilities
Provisions
Net Current Assets
Deferred Tax assets
Appl. of Funds
E: MOSL Estimates
FY10
5,166
14.3
3,029
58.6
227
4.4
650
12.6
3,906
75.6
1,260
24.4
455
805
206
125
724
724
-11.0
0.0
12
791
791
-0.6
FY11
6,025
16.6
3,395
56.3
293
4.9
690
11.4
4,377
72.7
1,648
27.3
502
1,145
199
95
1,041
1,041
4.2
0.0
30
968
968
22.3
FY12
8,215
36.3
4,544
55.3
385
4.7
788
9.6
5,717
69.6
2,498
30.4
628
1,870
149
144
1,865
1,865
27.3
0.0
36
1,320
1,320
36.5
FY13
9,541
16.1
5,745
60.2
464
4.9
867
9.1
7,077
74.2
2,464
25.8
699
1,766
187
155
1,734
1,734
21.5
0.0
93
1,267
1,267
-4.0
FY14
10,128
6.2
6,029
59.5
484
4.8
1,028
10.2
7,541
74.5
2,587
25.5
801
1,786
294
171
1,662
1,662
11.4
0.0
114
1,358
1,358
7.2
FY15E
10,975
8.4
6,256
57.0
532
4.8
913
8.3
7,700
70.2
3,274
29.8
894
2,380
232
122
2,270
2,270
17.9
56
33
1,887
1,831
34.8
(INR Million)
FY16E
FY17E
11,901
14,044
8.4
18.0
6,783
8,005
57.0
57.0
585
644
4.9
4.6
860
1,045
7.2
7.4
8,228
9,694
69.1
69.0
3,672
4,351
30.9
31.0
860
952
2,812
3,399
203
184
134
173
2,743
3,387
2,743
3,387
23.2
23.2
30
35
19
24
2,117
2,612
2,087
2,578
14.0
23.5
(INR Million)
FY16E
FY17E
1,086
1,086
8,685
9,594
12,729
13,638
1,257
1,257
1,016
1,016
2,041
1,841
17,043
17,753
18,161
19,151
5,759
6,711
12,402
12,440
553
553
652
762
340
340
3,483
4,221
1,334
1,575
743
988
1,406
1,659
1,363
1,540
370
436
580
685
413
419
2,120
2,681
976
976
17,043
17,753
FY10
1,079
5,564
6,643
625
528
2,099
9,895
9,633
1,851
7,783
403
517
150
2,003
682
795
527
1,306
888
131
287
697
340
9,895
FY11
1,080
5,799
9,837
610
613
1,327
12,387
11,124
2,103
9,021
310
380
130
3,004
624
1,377
1,003
932
286
212
434
2,072
473
12,387
FY12
1,083
6,395
10,436
663
602
1,270
12,971
11,993
2,703
9,290
310
565
0
3,320
664
1,600
1,056
976
244
274
458
2,344
462
12,971
FY13
1,085
6,802
10,845
806
1,012
2,520
15,183
14,585
3,391
11,194
511
565
1
2,852
964
927
961
863
274
505
84
1,989
924
15,183
FY14
1,086
7,280
11,324
1,257
1,016
3,241
16,839
16,033
4,005
12,028
553
760
340
3,481
1,136
1,149
1,196
1,300
339
494
467
2,181
976
16,839
FY15E
1,086
7,947
11,991
1,257
1,016
2,241
16,505
17,391
4,900
12,491
553
322
340
3,111
1,230
584
1,296
1,289
346
535
408
1,822
976
16,505
March 2015
66

Gateway Distriparks
Financials and valuation
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
Return Ratios (%)
RoE
RoCE
Working Cap. Turnover (Days)
Leverage Ratio (x)
Debt/Equity
Consolidated - Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(inc)/dec in FA
(Pur)/Sale of Investments
Others
CF from Investments
Issue of Shares
(Inc)/Dec in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
FY10
7.3
11.6
61.6
3.5
55.8
FY11
9.0
13.6
91.1
6.0
78.1
FY12
12.2
18.0
96.4
6.0
57.2
FY13
11.7
18.1
100.0
7.0
69.6
FY14
12.5
19.9
104.3
7.0
65.5
32.8
20.6
3.9
4.6
18.0
1.7
12.3
14.0
37
0.3
FY15E
16.9
25.1
110.4
9.6
64.7
24.3
16.3
3.7
4.2
14.1
2.3
15.7
17.4
41
0.2
FY16E
19.2
27.1
117.2
10.8
65.1
21.3
15.1
3.5
3.9
12.5
2.6
16.9
20.3
42
0.2
FY17E
23.7
32.5
125.6
13.4
65.2
17.3
12.6
3.3
3.2
10.4
3.3
19.6
23.6
44
0.1
0.9
12.3
10.9
-7
0.3
1.5
11.7
12.5
42
0.1
1.5
13.0
17.6
33
0.1
1.7
11.9
15.3
41
0.2
FY10
724
455
163
-164
396
1,574
54
1,628
-1,009
85
41
-883
36
61
-200
-375
-64
-543
202
593
795
FY11
1,041
505
115
-230
-1,169
262
73
335
-1,631
23
636
-971
0
-947
-185
-629
2,980
1,219
582
795
1,377
FY12
1,865
628
29
-436
-84
2,001
71
2,073
-1,116
147
60
-909
28
-79
-135
-648
-107
-940
223
1,377
1,600
FY13
1,734
699
46
-285
-264
1,930
3
1,933
-2,383
0
-77
-2,460
22
1,240
-148
-1,084
-176
-146
-673
1,600
927
FY14
1,662
801
179
-405
-133
2,105
-7
2,098
-1,964
-340
519
-1,785
10
675
-269
-434
-74
-92
222
927
1,149
FY15E
2,270
894
110
-406
-206
2,663
0
2,663
-920
0
122
-798
0
-1,000
-232
-1,220
23
-2,430
-565
1,149
584
(INR Million)
FY16E
FY17E
2,743
3,387
860
952
70
11
-637
-786
-139
-317
2,897
3,248
0
0
2,897
3,248
-1,100
-1,100
0
0
134
173
-966
-927
0
0
-200
-200
-203
-184
-1,379
-1,703
11
10
-1,771
-2,077
159
244
584
743
743
988
March 2015
67

March 2015
Update | Sector: Logistics
Blue Dart Express
BSE Sensex
29,449
S&P CNX
8,938
CMP: INR7,053
Not Rated
Market leader with commanding premium
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val. INRm/Vol‘000
Free float (%)
Riding on high-growth e-commerce potential
BDE IN
23.8
7850/3070
3/40/72
167.6
2.7
42/9
25.0
n
n
n
Blue D art Express (BDE) i s I ndia's l argest p ackage d istribution c ompany, w ith a
presence in over 33,739 locations and 220 c ountries worldwide. Its market share
in organized Air Express is 52% and in organized Surface Express at 14.5%.
Blue Dart Aviation is I ndia's f irst and only scheduled cargo airline — acquiring a
new licence to operate a cargo airline is a significant entry barrier.
BDE’s g rowth d rivers i nclude ( a) h igh g rowth e-commerce (currently ~ 10% o f
revenue), (b) GST implementation and (c) higher GDP trajectory.
Leader in organized Air Express business; margins ahead of competitors
n
Financial Snapshot (INR b)
Y/E Mar
2013 2014 2015
Sales
EBITDA
NP
EPS (INR)
EPS Gr (%)
BV/Sh (INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
21.7
2.7
1.9
80.3
19.4
1.7
1.2
50.9
21.3
2.1
1.5
63.9
25.5
21.8
32.7
22.0
n
Shareholding pattern (%)
As on
Dec-14 Sep-14 Dec-13
Promoter
75.0
75.0
75.0
DII
5.7
5.9
7.1
FII
7.9
7.6
6.5
Others
11.4
11.5
11.4
FII Includes depository receipts
Stock Performance (1-year)
9,300
7,300
5,300
3,300
1,300
Blue Dart Exp.
Sensex - Rebased
n
55.3 -36.5
29.2
41.4
25.4
18.8
28.3
26.1
277.7 270.6 321.1
n
Indian air cargo business has ~500 operators, of which ~75 operate on a pan
India basis. However, a large market share is only with few large players like
BDE, Aramex, First Flight, DTDC, Overnight Express, Safex and GATI.
BDE is the market leader with 52% share and is able to command 25-30%
premium compared to competitors due to (a) is the sole player with a
licence to operate scheduled cargo planes and (b) ability to provide timely
services, against competitors dependence on commercial airlines.
The Air Express industry is likely to witness 12.5% CAGR over FY14-16, and
we believe that BDE would be a key beneficiary, being the market leader.
BDE is well placed to significantly benefit from the growing e-commerce
business in India, particularly in sub-2kg packages.
E-commerce players’ in-house logistics capabilities are limited to large
cities, and for Tier2/3 cities, they depend on 3PL players like BDE.
E-tailing is expected to be a huge volume driver, given underlying growth:
Ø
Knight Frank India predicts 64% annual growth through 2019 to
INR840b in e-tailing versus 11% growth in traditional retailing.
Ø
5% penetration of online retailing in India (versus ~10% in the US, 6% in
China and 10% in Korea) would mean an opportunity size of USD50b in
the next 10 years.
BDE gets competitive advantage from the global reach and practices of its
parent, DHL (75% stake), world’s largest logistics player with USD72b
revenue. DHL is dominant in its home market (Europe, 41% share) and in
Asia Pacific (40% share).
BDE has strengthened its ground express capabilities with current 20%
revenue contribution and 14.5% market share in the organized space.
We expect 15-20% growth in the Surface Express business, against 8-10%
growth in the Air Express segment, led by an improvement in road
infrastructure and a gradual shift in favor of organized players from
unorganized ones.
E-commerce boom to drive long term growth
n
87.9 138.5 110.3
n
Strong parentage, strengthening surface capabilities
n
n
n
Atul Mehra
(Atul.Mehra@MotilalOswal.com); +91 22 3982 5417

Blue Dart Express
Company description
n
n
n
n
Blue Dart Express (BDE) is India's largest package distribution company, with a
presence in over 33,739 locations domestically and 220 countries worldwide. It
has a market share of 49% in the organized air express business and 13% in the
organized surface express business. Express delivery services are used for
various products, including documents like letters, applications, cheque books,
credit cards, trade papers and non-documents like electronic products, machine
spare parts, trade samples, equipments and e-commerce parcels.
BDE began operations in 1983 as the first domestic and international onboard
courier service provider in India. In 1987, it tied up with Fed-Ex, giving it a strong
foothold in international markets. In 2005, BDE parted ways with Fed-Ex and
partnered with DHL, which bought out the original promoters and acquired 81%
stake in the company.
BDE's parent, DHL Express, is a division of Deutsche Post DHL and is the world's
largest logistics company. DHL is the global market leader in sea and air mail. It
has its headquarters in Bonn, Germany, employs 467,088 people and is present
in over 220 countries and territories worldwide. Deutsche Post DHL reported a
revenue of ~USD72b in 2012. The current Managing Director of BDE is Mr Anil
Khanna, who has over 32 years of experience, more than 20 years of which are
with BDE.
Air Express contributes ~80% of BDE's revenue. Surface Express is a relatively
new business for the company and currently contributes ~20%. Institutional
clients account for 94% of BDE's revenue, with the balance 6% from retail
clients.
Buyer profile
Exhibit 1: Revenue composition (%)
Mode of transport
Surface
Express,
20%
Retail,
6%
Air
Express,
80%
Insti-
tutional,
94%
Promoters and management
n
n
BDE's parent, DHL Express is a division of Deutsche Post DHL, and is the world's
largest logistics company. DHL is the global market leader in sea and air mail. It
has its headquarters in Bonn, Germany, employs 467,088 people, and is present
in over 220 countries and territories worldwide. Deutsche Post DHL reported
revenue of ~USD72b in 2012.
The current Managing Director of BDE is
Mr Anil Khanna,
who has over 32 years
of experience, more than 20 years of which are with BDE.
March 2015
69

Blue Dart Express
Story in charts
Exhibit 2: Market leader in Air Express industry
Others, 25
%
Blue
Dart, 49%
20,400
23,400
26,500
29,900
Exhibit 3: Organized Air Express market growth trend
18.7%
Organized Air Express Sector Size (INR m)
14.7%
13.2%
12.8%
12.4%
33,600
First
Flight, 12%
Fedex, 14%
FY11
FY12
FY13
FY14
FY15E
Source: Company, MOSL
Source: Company, MOSL
Exhibit 4: Market share in Surface Express industry
Others,
32%
Gati,
26%
Exhibit 5: Organized Surface Express market growth trend
Organized Surface Express Sector Size (INR m)
YoY Growth
19.6%
28,700
34,200
19.2%
18.7%
19.0%
48,300
40,600
24,000
18.7%
Blue Dart,
13%
Safex,
27%
FY11
FY12
FY13
FY14
FY15E
Source: Company, MOSL
Source: Company, MOSL
Exhibit 6: Global logistic companies’ revenue (USD b)
71.8
54.1
45.0
Exhibit 7: DHL - market leader in Europe
TNT, 1
4%
Fed-Ex,
10%
United
Parcel
Service
(UPS), 23%
Deutsche
Post (DHL),
41%
Deutsche Post (DHL) nited Parcel Service(UPS)
U
Fed-Ex
Source: Company, MOSL
Source: Company, MOSL
March 2015
70

Blue Dart Express
Story in charts
Exhibit 8: DHL - market leader in Asia Pacific
Exhibit 9: Express industry market share in US
TNT,
1%
Deutsche
Post (DHL),
40%
EMS,
14%
Deutsche
Post (DHL),
16%
United
Parcel
Service
(UPS), 30%
Fed-Ex,
21%
Fed-Ex,
50%
United
Parcel
Service
(UPS), 10%
Source: Company, MOSL
Source: Company, MOSL
Exhibit 10: BDE’s revenue breakup
Exhibit 11: BDE’s buyer profile
Retail,
6%
Surface
Express,
20%
Air Express,
80%
Insti-
tutional,
94%
Source: Company, MOSL
Source: Company, MOSL
Exhibit 12: Online retail penetration abysmally low in India (%)
10.0
6.0
10.0
0.3
India
China
Korea
US
Source: Company, MOSL
March 2015
71

Blue Dart Express
Financials and valuations (Consolidated)
Income Statement
Y/E March
Service Charges & Op. Inc.
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income - Rec.
PBT after EO Exp.
Current Tax
Deferred Tax
Tax Rate (%)
Reported PAT
PAT Adj for EO items
Change (%)
Margin (%)
Net Profit
CY08
9,767
8,509
87.1
1,258
12.9
168
1,090
5
109
1,194
398
19
34.9
778
778
9.2
8.0
780
CY09
9,075
8,032
88.5
1,043
11.5
179
864
6
77
936
317
9
34.8
610
610
-21.5
6.7
612
CY10
11,499
9,952
86.5
1,547
13.5
194
1,353
0
54
1,407
465
-4
32.7
947
947
55.2
8.2
947
CY11
14,954
13,155
88.0
1,799
12.0
218
1,581
0
217
1,798
570
1
31.7
1,228
1,228
29.7
8.2
1,242
FY13 (15M)
21,717
19,029
87.6
2,688
12.4
347
2,341
0
400
2,741
868
-34
30.4
1,907
1,907
55.3
8.8
1,933
(INR Million)
FY14
19,383
17,642
91.0
1,741
9.0
273
1,468
0
377
1,845
608
27
34.4
1,210
1,210
-36.5
6.2
1,226
Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Preference Capital
Net Worth
Minority Interest
Deferred Liabilities
Total Loans
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Other Current Liabilities
Provisions
Net Current Assets
Appl. of Funds
E: MOSL Estimates
CY08
238
3,710
0
3,947
0
178
0
4,126
2,877
1,135
1,742
89
711
2,566
22
1,154
487
902
982
491
356
135
1,584
4,126
CY09
238
4,294
0
4,531
0
185
0
4,717
3,024
1,300
1,725
171
1,052
2,849
20
1,259
260
1,309
1,079
763
216
100
1,770
4,717
CY10
238
5,213
0
5,451
0
181
0
5,632
3,275
1,438
1,837
267
969
3,892
22
1,533
354
1,984
1,334
968
250
116
2,559
5,632
CY11
238
6,400
0
6,637
0
182
0
6,819
3,952
1,621
2,332
29
739
5,340
26
1,890
401
3,023
1,620
538
1,023
59
3,720
6,819
FY13 (15M)
238
6,362
0
6,599
0
148
0
6,747
3,967
1,761
2,206
123
228
7,951
24
2,272
2,417
3,239
3,760
729
1,007
2,025
4,190
6,747
FY14
238
6,192
0
6,430
0
175
0
6,604
4,238
1,957
2,281
85
243
6,794
27
2,667
1,064
3,035
2,798
1,074
1,171
553
3,996
6,604
March 2015
72

Blue Dart Express
Financials and valuations (Consolidated)
Ratios
Y/E March
Basic (INR) *
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x) *
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
Return Ratios (%)
RoE
RoCE
Working Capital Ratios
Asset Turnover (x)
Inventory (Days)
Debtor (Days)
Leverage Ratio (x)
Current Ratio
Debt/Equity
CY08
32.7
39.8
166.1
1.0
3.6
215.5
177.3
42.5
17.1
132.9
0.0
CY09
25.7
33.2
190.7
1.0
4.5
274.7
212.3
37.0
18.4
160.4
0.0
CY10
39.8
48.0
229.4
1.0
2.9
177.0
146.9
30.7
14.5
108.1
0.0
CY11
51.7
60.8
279.3
2.0
4.5
136.5
115.9
25.2
11.2
93.0
0.0
FY13 (15M)
80.3
94.9
277.7
70.9
103.4
87.9
74.3
25.4
7.6
61.4
1.0
FY14
50.9
62.4
270.6
49.9
115.3
138.5
113.0
26.1
8.6
95.6
0.7
21.8
33.6
14.4
22.2
19.0
28.2
20.5
29.8
29.2
41.4
18.8
28.3
2.4
0.8
43
1.9
0.8
51
2.0
0.7
49
2.2
0.6
46
3.2
0.4
38
2.9
0.5
50
2.6
0.0
2.6
0.0
2.9
0.0
3.3
0.0
2.1
0.0
2.4
0.0
Cash Flow Statement
Y/E March
NP / (Loss) Before Tax and EO Items
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(inc)/dec in FA
(Pur)/Sale of Investments
Others
CF from Investments
(Inc)/Dec in Debt
Interest Paid
Dividend Paid
CF from Fin. Activity
Inc/Dec of Cash
Add: Beginning Balance
Closing Balance
CY08
1,194
168
-22
427
-305
608
-54
555
-316
-18
-15
-349
-4
-5
-24
-33
173
314
487
CY09
936
179
-11
307
-363
434
-52
382
-285
0
-291
-575
-4
-6
-24
-34
-227
487
260
CY10
1,407
194
-8
480
-741
372
5
377
-379
-9,852
9,976
-255
-4
0
-24
-28
94
260
354
CY11
1,798
218
-153
598
-128
1,137
-67
1,070
-518
-10,648
10,172
-994
-3
0
-24
-27
50
351
401
FY13 (15M)
2,741
347
-280
882
-167
1,760
65
1,825
-418
-21,889
22,552
246
-7
0
-48
-55
2,016
400
2,417
(INR Million)
FY14
1,845
273
-283
612
94
1,317
-116
1,201
-272
-19,613
20,270
385
5
0
-2,943
-2,938
-1,352
2,417
1,064
March 2015
73

Gati Ltd
March 2015
Update | Sector: Logistics
Gati
BSE Sensex
29,449
S&P CNX
8,938
CMP: INR240
Not Rated
MNC practices + high growth e-tail and cold chain play
Banking on execution, well placed to benefit from multiple triggers
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val. INRm/Vol‘000
Free float (%)
Financial Snapshot (INR b)
Y/E Mar
2012 2013
Sales
11.9 12.7
EBITDA
NP
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
0.8
0.4
4.8
47.6
11.7
17.7
0.0
0.0
0.8
0.1
1.0
90.9
1.5
6.9
0.0
0.0
n
GTIC IN
87.3
341/61
-7/53/241
20.9
0.3
346/2020
58.6
n
n
Gati Ltd ( GATI) is well p oised t o g row i n i ts c ore multimodal logistics b usiness
through the Gati-KWE joint v enture and benefit f rom i ts i nvestments i n h igh
growth/high margin e-commerce logistics and cold chain businesses.
GATI Promoters’ willingness to sacrifice full control has aided GATI to not only get
into h igh g rowth p hase but also a ble t o a dopt b est g lobal p ractices which a re
critical for a new age complex business model.
Management guidance implies >20% revenue CAGR and ~40% EBITDA CAGR over
FY14-18E. Clarity on FCCB issue will remove a big overhang on the stock. The stock
trades at 25.6x FY17E EPS. Not rated.
Expect economic revival to boost Gati-KWE revenue and margins
2014
11.2
0.8
0.2
2.7
88.6
3.0
5.8
89.4
2.7
n
n
n
n
192.5 -78.2 156.4
Gati-KWE (70:30), express logistics subsidiary contributes 85% to sales and
90% of EBITDA. Expect accelerated growth led by (1) likely economic revival,
(2) market share gain from unorganized players with GST implementation
and (3) increasing share of high margin supply chain management business.
Gati-KWE has an all-India reach with almost 100% India coverage and
leadership position in pharma, apparel, FMCG and auto sectors.
JV with KWE offered GATI capital infusion and insights into global practices
and processes. KWE also owns 5% in GATI directly.
Management expects e-commerce business to record 100% annual growth
in the next 2-3 years led by (1) fast growing e-tailing business with higher
internet penetration, (2) mainly from Tier 2/3 cities and (3) more so in >5kg
categories. We believe this is in-line with the growth witnessed by other e-
tailing logistics companies.
Company plans to strengthen its delivery capability from current 30,000
(15,000 a year ago) to >40,000 deliveries per day by end-FY15.
GATI’s e-commerce division is well poised to benefit by leveraging KWE’s
network (16,500 pin codes, 667 of 671 districts), tie-ups with all large e-
commerce players and service offerings like cash on delivery (COD), packing,
reverse logistics, e-fulfillment, with >500 bikers.
E-commerce logistics to witness hyper growth
Shareholding pattern (%)
As on
Dec-14 Sep-14 Dec-13
Promoter
41.4
38.1
33.9
DII
0.2
0.2
0.2
FII
8.6
8.1
0.1
Others
49.8
53.6
65.8
FII Includes depository receipts
Stock Performance (1-year)
380
300
220
140
60
Gati
Sensex - Rebased
n
n
Cold chain expansion on track to capture opportunity
n
n
GATI plans to set up 10 large cold chain warehouses and expand its fleet size
from 200 to 375. Gati is targeting revenue of INR2.2b by 2017 and expects
the business model shift from pure transportation to integrated services will
EBITDA margin from current 10-13% to beyond 20%.
GATI’s cold chain division, Gati Kausar, offers transport services in
healthcare, meat and poultry, bio-pharma, frozen and fresh produce, dairy
products, organized retail and quick service restaurants sectors.
74
March 2014

Gati Ltd
n
GATI is investing INR2.2b in the business, which includes INR1.5b capital
infusion (equity and non-convertible debentures) by Mandala Capital for a
30% stake.
Valuation and View
n
Management guidance implies >20% revenue CAGR and ~40% EBITDA CAGR
over FY14-18E. Clarity on FCCB issue will remove a big overhang on the
stock. The stock trades at 25.6x FY17E EPS.
Not rated.
March 2014
75

Gati Ltd
GDP growth, GST to boost to Gati-KWE volumes
Lower fuel cost, better pricing to improve margins
n
Gati-KWE ( 70:30), e xpress l ogistics su bsidiary c ontributes 85% t o sa les a nd 90% o f
EBITDA. Expect accelerated growth led by (1) likely economic revival, (2) market share
gain f rom u norganized p layers w ith G ST i mplementation a nd ( 3) i ncreasing s hare o f
high margin supply chain management business.
n
Gati-KWE h as an al l-India re ach w ith a lmost 1 00% I ndia c overage a nd l eadership
position in pharma, apparel, FMCG and auto sectors.
JV w ith K WE o ffered G ATI capital i nfusion a nd i nsights i nto g lobal p ractices a nd
processes. KWE also owns 5% in GATI directly.
n
Gati-KWE is backbone of GATI’s current profitability
Gati-KWE contributes to 85% of GATI’s overall revenue and 90% of EBITDA. Gati-
KWE has ~16% market share in the organized express cargo business in India, with
key competitors like Safexpress, XPS of TCI, Spoton and AFL FedEx.
It operates through a fleet of 4,500 vehicles and has a warehousing capacity of
2.6msqft. Gati-KWE delivers 6.5m packages every month and through various
services like express surface cargo, premium air cargo, rail transport solutions,
supply chain management and warehousing services on a pan-India basis.
Its strong surface capabilities are seen from ~79% contribution from the road mode
followed by 11% in air and 8% in rail. Higher economic activity driven by GDP growth
and “Make in India” initiative are expected to accelerate the growth rate for this
segment.
We model Gati-KWE revenue to post 15% CAGR through FY18E and expect margins
to expand from the current level of 11% to 13%, leading to EBITDA CAGR of 21%.
Exhibit 2: Expect h igher s hare o f s upply c hain s olutions t o
increase margins from current 11% to 13%
18
15
12
9
8
1.3
0.9
0.8
9MFY14
FY15E
FY16E
FY17E
FY18E
13
9.8
10.7
Gati-KWE EBITDA (INRb)
11.0
11.0
EBITDA Margin (%)
13.0
12.0
2.3
1.9
1.5
Exhibit 1: Model revenue to clock 15% CAGR (INR b)
FY13
9MFY14
FY15E
FY16E
FY17E
FY18E
FY13
Source: Company, MOSL
Source: Company, MOSL
Margin expansion is expected from (a) improving synergies with KWE, (b) Project
Udaan. Gati has engaged IBM to identify cost saving opportunities (margin
expansion) and has termed this initiative as “project Udaan”. It was launched in
FY13 to
focus on improving efficiency in services, optimize workforce
productivity and maximize ales.
March 2014
76

Gati Ltd
KWE provides exposure to global practices
On Feb 13, 2012, GATI entered into a joint venture with KWE (listed on Tokyo Stock
Exchange), a leading global logistic service provider under the name ‘Gati-Kintetsu
Express’ (Gati-KWE). KWE operates through more than 330 locations in 203 cities in
31 countries. In India, KWE also separately operates its freight forwarding business.
Under the JV agreement, GATI holds 70% and 30% is held by KWE, with an
investment of INR2.7b. Also, a large part of Gati’s Express Distribution and Supply
Chain (EDSC) business was transferred to the JV through a business transfer
agreement. As per the agreement, KWE can increase its stake in the JV to 49% from
the third to fifth year of JV’s formation.
The JV with KWE offered GATI capital infusion and also global practices and
processes, and aided to improve its quality of operations. GATI and KWE’s teams
also have annual exchange programs to learn the best practices. KWE owns 5% in
GATI directly.
Exhibit 3: GATI revenue b reak-up – Gati-KWE JV c ontributes Exhibit 4: High g rowth i ndustries c ontribute t o ma jority o f
to 70% of total revenue (% of total)
Gati-KWE revenue (%)
Kausar
3
E-commerce
4
International
5
Industry - Wise
15%
31%
14%
Pharma
IT Hardware
Auto Ancillary
Engineering
Textiles
FMCG
Others
GATI-KWE
70
Fuel Station
13
Shipping
Other 2
3
6%
8%
13%
13%
Source: Company, MOSL
Source: Company, MOSL
Exhibit 5: Multimodal c apabilities w ith s urface mo de having Exhibit 6: Balanced s hare o f re venue a cross t he c ountry,
the largest share
reflecting pan India capabilities of Gati-KWE
Modes of Transport
11%
8%
2%
Surface
Rail
Air
Others
Geography
South
West
31%
24%
East
North
79%
10%
35%
Source: Company, MOSL
Source: Company, MOSL
March 2014
77

Gati Ltd
E-commerce logistics to witness hyper growth
GATI gears up to capture the opportunity
n
n
n
Management expects e-commerce business to record 100% annual growth in the next
2-3 years led by (1) fast growing e-tailing business, (2) mainly from Tier 2/3 cities and
(3) more so in >5kg categories. We believe this is in-line with the growth witnessed by
other e-tailing logistics companies.
Company plans to strengthen its delivery capability from current 30,000 (15,000 a year
ago) to >40,000 deliveries per day by end-FY15.
GATI’s e -commerce d ivision is w ell p oised t o b enefit b y l everaging K WE’s n etwork
(16,500 pin codes, 667 o f 671 d istricts), tie-ups with all large e-commerce players and
service o fferings l ike c ash o n d elivery ( COD), p acking, r everse l ogistics, e -fulfillment,
with >500 bikers.
E-tailing logistics growing at rapid pace in India
E-commerce business is still in the nascent stage in India and the current low
internet penetration offers tremendous growth potential. Various industry
estimates forecast e-commerce growth at >50% through 2020.
We believe that while the e-commerce opportunity is huge, it is critical that the e-
commerce companies’ (Flipkart, Amazon, Snapdeal etc) business models graduate to
a self-sustaining/self-funding model for a long term longetivity.
As per industry estimates, e-commerce logistics cost is ~10% of the merchandise
value sold through the e-commerce route.
GATI has an early mover advantage in e-tailing logistics
GATI has been nimble footed in terms of resource allocation, technology adoption
and ramping up capabilities (increase per day delivery capability from 15,000 to
30,000) to capture this opportunity. As on 3QFY15, Gati covered 5,300 pin codes
directly and 10,000 pin codes at a premium and served COD at 13,000 pin codes.
Rapid expansion is also evident from the fact that Gati has increased its headcount
by 28% in the 9MFY15.
The early mover advantage has placed GATI among the top five e-logistics players in
India. Competitors include Blue Dart, Aramex, Ecomexpress etc. In less than three
years, GATI is looking to earn >INR1.3b annualized revenue from this business, with
medium term outlook of 100% annual growth. EBITDA margin is expected to move
towards ~15% in the medium term.
Its range of services include cash on delivery, packing, reverse logistics and e-
fulfillment. GATI’s current e-logistics capability is to deliver 30,000 shipments per
day through its synergies with Gati-KWE and last mile 500 bikers.
It plans to expand in the near term to 1,000 bikers, 90 e-logistics centers and 19
EFCs (currently e-fulfillment centers – capex of ~INR20m per center). Its current
three e-fulfilment centres are located at Delhi, Mumbai and Hyderabad, while
another three planned EFC’s will be at Delhi, Ahmedabad and Jaipur.
March 2014
78

Gati Ltd
Exhibit 7: E-tailing deliveries per day – Plan to ramp-up delivery capacity to 40,000 per day
by end FY15
30,000 to 40,000
Jul-13
Sep-13
Nov-13
Jan-14
Mar-14
May-14
Jul-14
Sep-14… …Mar-15
Source: Company, MOSL
GATI - beneficiary of e-tailing business model
E-tailing in India is an evolving business and is gradually shifting towards >2kg items
like white goods, furniture etc. GATI, given its surface transport capabilities at
almost 15,000 pin codes, will be a beneficiary of e-tailing growth in tier 2/3 cities
and increasing share of >2kg merchandise. Its current market share in >5kg
merchandise is estimated at 50% and in >10kg is estimated at 75-80%.
GATI services almost all e-tailers in India like Flipkart, Amazon, Myntra, Snapdeal etc
and also includes television-based sellers.
E-commerce logistics include distribution and also various value-added services such
as cash on delivery, e-packaging, e-pick, e-fulfillment centers and returns to the
origin (RTO).
March 2014
79

Gati Ltd
Cold chain expansion on track to capture opportunities
n
n
n
GATI is i nvesting I NR2.2b i n t he b usiness, w hich i ncludes I NR1.5b c apital infusion
(equity and non-convertible debentures) by Mandala Capital for a 30% stake.
GATI plans to set up 10 large cold chain warehouses and expand its fleet size from 200
to 375. Gati is targeting revenue of INR2.2b by 2017 and expects the business model
shift from pure transportation to integrated services will EBITDA margin from current
10-13% to beyond 20%.
GATI’s c old c hain d ivision, G ati K ausar, o ffers t ransport s ervices in healthcare, m eat
and& p oultry, b io-pharma, frozen a nd& f resh p roduce, d airy p roducts, o rganizsed
retail and quick service restaurants sectors.
Compelling opportunity in cold chain business
Indian cold chain logistics industry’s size is estimated at ~INR150b, with an expected
growth rate of 15% to 20% in the medium term to reach ~INR250b by FY18.
Organized players have a huge growth opportunity in this space, given the 6-7%
share in the cold chain warehousing segment, and 15-20% share in the temperature
controlled transportation.
Background: Cold chain l ogistics also k nown a s T emperature Controlled Logistics ( TCL)
business includes (a) warehousing services to store at temperatures ranging from -25ºC
to +20ºC and distribution through temperature controlled containerized trucks and cargo
trains.
Some o f t he k ey p roduct categories t ransported t hrough t his ro ute i nclude d airy,
poultry/meat/seafood, ready-to-eat, chocolates, medicines, industrial products and fruit
and vegetables.
Existing c old c hain w arehousing c apacity i n I ndia i s es timated a t 3 0m t ones a nd r eefer
vehicles of ~7,000-8,000, with majority of the facilities in Uttar Pradesh (41%) and West
Bengal (33%), followed by Punjab (6%), Gujarat and Bihar.
75% of the warehousing capacity is used by potatoes, ~2% for meat/seafood and the rest
is for multi-purpose products.
Gati Kausar investments to improve margins
Gati Kausar is one of the larger players in the temperature controlled vehicle
segment. However, EBITDA margin in reefer transportation is low at ~12-13% due to
competition. But in cold chain warehouses, EBITDA margin is significantly higher as
the high capex acts as an entry barrier. Hence, EBITDA margin is expected to
improve from the current 12% to over 20%, once the warehouses are set up by Gati
Kausar.
Gati Kausar is investing INR2.2b in the business, including INR1.5b capital infusion
(equity and non-convertible debentures) by Mandala Capital for a 30% stake.
Mandala Capital has an option to exit the business through the IPO route during the
five to six-year period of post investment.
It plans to set up 10 large cold chain warehouses (initially at Ghaziabad and
Gurgaon) and expand its fleet size from 200 to 375. These warehouses will be of
March 2014
80

Gati Ltd
varying capacity; smaller one will have a pallet capacity of 3,500 and the bigger ones
5,000 pallets.
Management targets a revenue of INR2.2b by 2017. Upgradation from pure
transportation to integrated services is expected to improve the EBITDA margin
from current 10-13% to beyond 20%.
Gati Kausar will have a debt-equity ratio of 1:2.5, which will reduce by 2020 to 1:1,
and these warehouses will have a discounted payback period of around six years.
Company, across the value chain, provides consolidation, packaging, fulfilment, cash
on delivery, return to origin and the Last Mile services. The Last Mile delivery
contributes the most significant amount, currently ~75-80% of GATI’s revenue from
e-commerce.
Government support makes economics better
In FY12, the government had granted infrastructure status to the cold chain industry
in India to curb post harvest losses.
Further, it also allowed investment related deduction for computation of income tax
up to 150% along with 5% concession on import duty, service tax exemption, excise
duty exemption on several items of cold storage equipment.
March 2014
81

Gati Ltd
Company description
Gati, established in 1989, a pioneer in express distribution services in India, is one of
the largest multimodal logistics company in the country. It covers almost 100% of
India with presence in 667 of 671 districts. It operates through a fleet of 4,500
transport vehicles and 200 reefer trucks. Gati has a strong market presence in the
Asia Pacific region and Saarc countries, with offices in China, Singapore, Hong Kong,
Thailand and Nepal.
Its key business segments (consolidated basis) include express distribution, which
includes Gati-KWE (JV with Japan-based Kintetsu World Express), Gati Kausar (cold
chain), e-commerce business and international freight forwarding business. It has
hived off the loss-making shipping division. The standalone Gati entity consists of e-
commerce, freight forwarding and fuel stations.
Gati operates through four large zonal offices, 16 hubs and 62 warehousing centers
and also has a call center in Nagpur.
Exhibit 8: Gati – key timelines
Year
1989-95
Key Milestones
- Introduced door to door service
- Introduced cash on delivery
- Expansion to SAARC
- Received ISO Certification
- Introduction of 24*7 customer convenient centre
- Launch of Mechatronic Warehouses
- Introduction of own Customized ERP GEMS
- Launched India-centric distribution solutions and forayed into Asia Pacific region
- Gati Millennium Express: First cargo train of Gati
- Ventured in Cold Chain Logistics
- Joint Venture with KWE Japan (divested 30% stake to KWE)
- Ventured into E Commerce Logistics
- Project Udaan: Business transformation exercise with IBM
- Expansion of Cold Chain Vertical through warehouses
- Creating Vision 2020
- Establishing e-Fulfillment centers for e-Commerce clients
Source: Company, MOSL
1996-00
2001-06
2007-14
Management
Mr Mahendra Agarwal - Founder & CEO:
n
Mr Agarwal is the driving force behind Gati’s journey into a major integrated
logistics service provider and is a recipient of several awards.
n
He holds an Engineering Degree from Bangalore University and a Masters in
Business Administration from Austin, USA.
n
Mr Agarwal is also the founder member of SCLG India (member, international
board of advisors for SCLG Global), Managing Committee Member of Express
Industry Council of India, elected member of CII Southern Region Council,
member of CII Institute of Logistics Advisory Council & FICCI's Civil Aviation
Committee. In Singapore, he is a Board member of Singapore Indian Chamber
of Commerce & Industry (SICCI).
March 2014
82

Gati Ltd
Mr Sanjeev Kumar Jain - Director (Finance)
n
Mr Jain, with over 25 years of experience, has varied industry expertise with
business verticals like telecom, logistics and fertilizers.
n
Prior to Gati, Mr Jain worked as the CFO at AFL-FedEx Express Ltd, and at Tata
Communication Ltd for over 10 years. He has played key roles in the M&A
activities for the organization.
n
Mr Jain is a Masters in Commerce and is also a Fellow Member of the Institute
of Chartered Accountants of India. He has an extensive knowledge in the field of
accounting, Audit, M&A and business restructuring and transformation. He is
also well versed with company law, taxation and regulation.
Mr Bablu Tewari - Chief Operating Officer, E-commerce and International Business
n
He joined Gati in 1995 as an Executive Trainee and has over 20 years of
experience in the express distribution business and has proven his prowess in
Business Operations, Sales, Customer Relationship Management and Branch
Administration.
n
In the last two years as COO, he created a new vertical called Gati E-Connect and
significantly augmented e-commerce business’ delivery capacity, amplified to
tier 3 cities and remote locations, improved workforce collaboration and
automated processes.
n
Mr Tewari holds a bachelor’s degree in Commerce from Calcutta University and
is trained in Customer Relationship Management from the Indian Institute of
Management, Lucknow.
Exhibit 9: Gati – corporate structure
Gati Limited
(Consolidated)
Partly Owned S ubsidiaries
Wholly Owned
Subsidiaries
GATI - KWE
(70%)
Gati Limited (standalone)
Gati Kausar
Chain)
(Cold
Surface Express
E- Commerce
Gati i Import Export
(Trading)
Air Express
Freight Forwarding
Zen Cargo M overs (CHA)
Parcel Train
Fuel Stations
Gati Asia Pacific Pte Ltd
(Singapore)
Supply Chain
Subsidiary
Service Offering
Source: Company, MOSL
March 2014
83

Gati Ltd
Valuation and View
Key Risks: FCCB Dilution
On December 12, 2001 Gati had issued USD22.18m 22.18 zero coupon unsecured
foreign currency convertible bonds (FCCB) of USD1,000 each. The conversion price
was fixed at INR38.51/sh. As per the terms, the bonds are convertible from
December 12, 2012 to November 13, 2016. Unless previously converted, the bonds
will be redeemed at 132.8% of the principle amount on December 12, 2016 (implied
YTM of 5.76% per annum).
However, on Gati’s application to RBI (Reserve Bank of India) for seeking the
permission to part repurchase the FCCB’s, RBI informed that it was not eligible to
borrow under the automatic rout and the borrowing to be treated as a foreign debt.
RBI also levied a fee of INR29.6m on Gati. RBI’s decision is challenged by Gati in
Andhra Pradesh High Court and the matter is sub-juduce. In the meantime the
bondholders have served notice to Gati for conversion and as the matter is sub-
judice no further action has been taken on the issue.
Valuation and View
n
n
n
n
Gati Ltd (GATI) is well poised to grow in its core multimodal logistics business
through the Gati-KWE joint venture and benefit from its investments in high
growth/high margin e-commerce logistics and cold chain businesses.
GATI Promoters’ willingness to sacrifice full control has aided GATI to not only
get into high growth phase but also able to adopt best global practices which are
critical for a new age complex business model.
Gati’s focus to high growth e-commerce and cold chain logistics will provide the
significant revenue and profit growth, while domestic economic improvement
and GST implementation will accelerate Gati-KWE growth.
Management guidance implies >20% revenue CAGR and ~40% EBITDA CAGR
over FY14-18E. Clarity on FCCB issue will remove a big overhang on the stock.
The stock trades at 25.6x FY17E EPS.
Not rated.
March 2014
84

Gati Ltd
Financials and valuation (Consolidated)
Income Statement
Y/E March
Total Income from Operations
Change (%)
Operating Expenses
Personnel Expenses
Other Expenses
Total Expenditure
EBITDA
Margin (%)
Depreciation
EBIT
Interest Cost
Other Income
PBT bef. EO Exp.
EO Items
PBT after EO Exp.
Current Tax
Tax Rate (%)
Reported PAT
Adjusted PAT
Change (%)
Margin (%)
FY08
7,168
26.2
4,185
757
1,741
6,683
486
6.8
186
300
134
264
430
-151
279
82
29.2
198
198
-7.8
2.8
FY09
7,904
10.3
4,815
857
1,732
7,404
500
6.3
264
236
384
140
-7
-169
-176
11
-6.0
-187
-187
-194.4
-2.4
FY10
9,261
17.2
5,530
915
2,015
8,460
801
8.7
272
529
478
108
160
0
160
65
40.8
95
95
-150.8
1.0
FY11
12,030
29.9
7,027
1,130
2,949
11,105
925
7.7
255
670
516
83
237
0
237
96
40.6
141
141
48.5
1.2
FY12
11,874
-1.3
7,340
1,136
2,613
11,089
785
6.6
369
415
619
1,017
813
-145
668
252
37.8
415
415
194.5
3.5
FY13
12,730
7.2
8,042
1,236
2,635
11,914
816
6.4
248
568
437
166
298
-71
227
60
26.3
167
91
-78.2
0.7
FY14
11,166
-12.3
6,750
1,027
2,548
10,325
841
7.5
221
620
325
106
402
0
402
119
29.5
283
234
158.3
2.1
Consolidated - Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Minority Interest
Deferred Liabilities
Total Loans
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Goodwill on Consolidation
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Other Current Liabilities
Provisions
Net Current Assets
Misc Expenditure
Appl. of Funds
E: MOSL Estimates
March 2014
FY08
169
2,805
2,974
18
75
2,362
5,429
3,244
685
2,558
160
630
204
2,796
35
1,212
164
1,385
922
188
348
386
1,874
3
5,429
FY09
170
2,532
2,702
0
74
4,768
7,543
5,372
916
4,457
201
360
204
3,023
70
1,213
214
1,526
703
258
218
227
2,320
3
7,543
FY10
170
2,726
2,896
0
96
4,541
7,533
5,268
1,090
4,178
207
355
202
3,532
127
1,497
192
1,716
943
325
262
356
2,588
3
7,533
FY11
172
2,800
2,972
0
104
4,469
7,545
5,429
1,328
4,100
0
365
202
5,085
121
1,903
319
2,742
2,207
714
942
551
2,878
0
7,545
FY12
173
3,950
4,123
537
101
4,617
9,378
5,426
1,564
3,862
101
157
202
6,630
108
1,890
1,401
3,231
1,573
670
219
684
5,057
0
9,378
FY13
173
7,697
7,870
1,154
107
4,770
13,901
5,641
1,770
3,872
4,469
245
202
6,817
118
2,203
466
4,030
1,703
663
446
594
5,114
0
13,901
FY14
175
7,554
7,728
1,173
61
4,802
13,764
5,716
1,922
3,794
4,469
387
548
6,576
119
2,414
308
3,734
2,009
732
437
840
4,567
0
13,764
85

Gati Ltd
Financials
and valuation
Ratios
Y/E March
Basic (INR)
EPS (without dilution)
Fully Diluted EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E (without dilution)
FY08
2.3
4.5
35.1
0.8
40.1
FY09
-2.2
0.9
31.8
0.0
0.0
FY10
1.1
4.3
34.0
0.4
41.9
FY11
1.6
1.2
4.6
34.6
0.5
35.5
FY12
4.8
3.4
9.1
47.6
1.1
26.7
FY13
1.0
0.7
3.9
90.9
0.6
46.7
FY14
2.7
1.9
5.2
88.6
1.8
68.9
89.4
124.9
46.0
2.7
2.3
30.2
0.8
0.8
3.0
5.8
2
40
3.3
2
0.6
P/E (with dilution)
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
FCF per share
Return Ratios (%)
RoE
RoCE
Fixed Asset Turnover (x)
Creditor (Days)
Leverage Ratio (x)
Current Ratio
Interest Cover Ratio
Debt/Equity
0.3
-17.8
8.4
12.6
2
16
3.0
2
0.8
0.0
-20.4
-6.6
5.9
1
20
4.3
1
1.8
0.2
7.3
3.4
8.6
2
21
3.7
1
1.6
0.2
5.2
4.8
10.1
2
37
2.3
1
1.5
0.5
-14.6
11.7
17.7
2
33
4.2
1
1.1
0.3
-7.6
1.5
6.9
2
30
4.0
1
0.6
Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(inc)/dec in FA
(Pur)/Sale of Investments
Others
CF from Investments
Issue of Shares
(Inc)/Dec in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
FY08
430
186
113
-67
-973
-312
30
-282
-1,226
2
19
-1,205
0
460
-134
-68
910
1,168
-318
482
164
FY09
-7
264
366
-11
-352
259
17
276
-2,004
0
90
-1,914
0
2,406
-380
-79
-259
1,688
50
164
214
FY10
160
272
443
-43
-351
480
39
519
100
2
61
163
1
-226
-478
0
0
-703
-22
214
192
FY11
237
254
498
-100
-159
730
20
751
-308
0
37
-270
37
170
-521
-39
0
-353
127
192
319
FY12
776
370
582
193
-2,118
-198
-1,130
-1,328
64
892
-52
905
1
0
-619
-50
2,173
1,505
1,082
319
1,401
FY13
303
248
359
-51
-1,095
-236
-24
-259
-398
0
213
-184
0
71
-437
-125
0
-491
-935
1,401
466
FY14
402
221
242
-92
-444
328
-19
309
-238
0
82
-156
24
100
-325
-110
0
-311
-158
466
308
March 2014
86

March 2015
Update | Sector: Logistics
Allcargo Logistics
BSE Sensex
29,449
S&P CNX
8,938
CMP: INR331
Not Rated
Leading global LCL consolidator
Strong balance sheet, expands capacities across businesses
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val. INRm/Vol‘000
Free float (%)
n
AGLL IN
126.1
358/133
-2/26/77
41.7
0.7
30/105
30.1
n
n
Allcargo Logistics ( AGLL) is a le ading m ultinational lo gistics c ompany
headquarterd in India, with synergistic businesses ranging from LCL (Less-Than-
Container-Load) c onsolidation, C FS a nd P roject & Engineering s olutions,
including coastal Shipping.
Its international network pans over 200+ offices in 90+ countries, covering over
4,000 port pairs, thus giving it a global scale.
AGLL’s growth drivers include (a) growth in global trade, (b) growth in container
trade in India, (c) revival in capex cycle in India, (d) domestic GDP growth and (e)
GST implementation.
Global leader in LCL freight forwarding
Financial Snapshot (INR Million)
Y/E Mar
2012 2013 2014
Net Sales
42.8 39.3 48.6
EBITDA
Adj PAT
EPS (INR)
Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
5.2
2.8
21.9
71.9
21.3
22.8
-
-
3.6
1.7
13.5
4.0
1.5
11.8
n
n
n
-38.4 -12.0
11.0
12.2
-
-
8.8
10.1
27.9
2.3
114.4 125.8 142.3
AGLL’s MTO (Multimodal Transport Operations) business contributes 85%
of its revenue.
It is a global leader in LCL (Less-than-Container-Load) consolidation, with a
presence in 90+ countries through 200+ owned offices and covering over
4,000 port pairs. Company operates in all major countries through its 100%
subsidiary, Eculine.
AGLL’s growth strategy includes (a) expand in high growth markets like Far
East and China and (b) tactical acquisitions/buyout of local
partners/strategic alliances where Eculine does not have a significant
presence.
Leading CFS operator in India
n
Shareholding pattern (%)
As on
Dec-14 Sep-14 Dec-13
Promoter
69.9
69.9
72.1
DII
0.0
0.0
0.2
FII
6.2
13.0
11.9
Others
23.9
17.1
15.9
FII Includes depository receipts
Stock Performance (1-year)
n
AGLL has a pan-India presence in CFS business, with its CFSs at JNPT,
Chennai and Mundra and an overall land bank of over 200 acres.
These ports have proximity to industrial hubs which carry majority of the
container volume. The undeveloped land bank available with the company
can be used to increase capacity as container volume picks up in India.
Strong balance sheet, well placed to capture growth opportunities
n
n
With a net debt-equity of 0.26x, AGLL is well placed to implement its
strategy of tactical acquisitions and capacity growth.
Global presence offers its scale for LCL business, while domestic economic
growth and EXIM growth augurs well for its CFS business. Infrastructure
projects revival will drive utilization for company’s Project and Engineering
Solutions business.
Valuation and View
n
The stock trades at 27.9x FY14A EPS of INR27.4. Not rated.
Harshad Borawake
(HarshadBorawake@MotilalOswal.com); +91 22 3982 5432

Allcargo Logistics
Company description
Incorporated in 1993 by promoter Mr S K Shetty, Allcargo Logistics (a part of
Avvashya Group) started operations as cargo handler at Mumbai port. Allcargo is a
leading company providing integrated logistics solutions. Its key business divisions
are global Multimodal Transport Operations (NVOCC, LCL and FCL), domestic
CFS/ICD operations, Project and Engineering Solutions (Project Logistics &
Equipment Hiring Solutions), Ship Owning and Chartering along with 3PL and
warehousing services.
It has a strong domestic and international network of 200 offices, agents and
franchisees in 90 countries, covering more than 4,000 port pairs.
Exhibit 1: Allcargo’s key business divisions
Source: Company, MOSL
Key management
Mr S hashi Ki ran S hetty, Chairman & Ma naging D irector:
Mr Shashi Kiran Shetty
founded Allcargo Ltd in 1993. Previously, he had 15 years of experience with
Intermodal Transport and Trading Systems Pvt Ltd, Mumbai and Forbes Gokak, a
Tata Group company. He was a board member of Mumbai Port Trust and also was
the co-Chairman of the Transport and Logistics Committee of The Indian Merchant
Chambers. He was the Vice President of the Association of Multimodal Transport
Operators of India.
March 2015
88

Allcargo Logistics
Exhibit 2: MTO operations contribute >85% of Allcargo’s business (INR b)
MTO
6.0
4.0
2.0
0.0
FY12
*Coastal shipping included in P&E division
FY13
FY14
Source: Company, MOSL
4
CFS
Project & Engg. Solutions
Total
3
3
Exhibit 3: Allcargo is present across major container ports of India
Source: Company, MOSL
March 2015
89

Allcargo Logistics
Financials and valuation
Consolidated - Income Statement
Y/E March
Total Income from Operations
Change (%)
Operational Cost
Personnel Expenses
Other Expenses
Total Expenditure
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
PBT
Tax
Tax Rate (%)
PAT
Less: Mionrity Interest
Reported PAT
Change (%)
Margin (%)
CY08
23,141
43.4
15,883
3,305
1,786
20,974
2,167
9.4
447
1,720
249
106
1,578
362
22.9
1,216
139
1,077
40.7
4.7
CY09
20,609
-10.9
12,991
3,466
1,995
18,452
2,158
10.5
545
1,613
232
286
1,667
260
15.6
1,407
108
1,300
20.7
6.3
CY10
28,633
38.9
18,734
3,973
3,210
25,916
2,717
9.5
550
2,167
195
266
2,239
480
21.4
1,759
100
1,659
27.7
5.8
FY12
42,804
49.5
28,645
6,095
2,824
37,564
5,240
12.2
1,337
3,903
644
452
3,710
734
19.8
2,977
132
2,845
71.5
6.6
FY13
39,263
-8.3
27,194
5,634
2,835
35,663
3,600
9.2
1,474
2,127
453
662
2,335
512
21.9
1,823
126
1,697
-40.3
4.3
FY14
48,594
23.8
34,281
7,276
3,078
44,635
3,959
8.1
1,755
2,205
609
365
1,960
416
21.2
1,544
51
1,493
-12.0
3.1
Consolidated - Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Minority Interest
Deferred Liabilities
Total Loans
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Goodwill on Consolidation
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Other Current Liabilities
Provisions
Net Current Assets
Deferred Tax assets
Misc Expenditure
Appl. of Funds
March 2015
CY08
224
5,873
6,097
115
205
3,440
9,857
5,072
1,460
3,612
2,013
741
828
5,673
20
2,975
1,012
1,667
3,091
1,764
1,190
138
2,583
78
3
9,857
CY09
250
9,561
9,811
135
284
2,044
12,274
6,813
2,053
4,761
2,428
750
1,668
5,463
27
2,354
916
2,166
2,900
1,409
1,405
87
2,563
105
0
12,274
CY10
261
11,551
11,812
263
519
3,778
16,371
10,429
2,338
8,091
3,391
560
1,319
7,273
70
2,528
1,430
3,245
4,397
2,564
1,289
543
2,876
111
23
16,371
FY12
260
14,638
14,899
311
924
7,653
23,788
16,358
3,801
12,557
4,580
854
1,071
9,369
125
3,576
1,341
4,327
4,815
3,338
1,094
383
4,555
171
0
23,788
(INR Million)
FY13
252
15,604
15,857
433
1,172
7,267
24,728
18,850
5,163
13,687
4,602
139
1,859
9,641
111
3,825
1,382
4,324
5,429
3,536
1,275
619
4,212
228
0
24,728
FY14
252
17,679
17,931
463
1,284
9,921
29,599
20,869
7,094
13,775
8,710
77
1,902
11,834
114
5,715
1,647
4,358
6,938
4,709
1,627
602
4,897
238
0
29,599
90

Allcargo Logistics
Financials and valuation
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
Return Ratios (%)
RoE
RoCE
Working Capital Ratios
Asset Turnover (x)
Leverage Ratio (x)
Debt/Equity
CY08
9.6
13.6
54.5
0.5
6.1
CY09
10.4
14.8
78.6
1.0
11.2
CY10
12.7
16.9
90.5
3.0
27.6
FY12
21.9
32.1
114.4
1.5
8.0
FY13
13.5
25.2
125.8
1.5
13.0
FY14
11.8
25.8
142.3
1.5
14.8
27.9
12.8
2.3
1.0
12.6
0.5
8.8
10.1
1.6
0.6
0.2
19.9
23.6
2.3
0.6
0.3
16.3
17.8
1.7
0.2
0.9
15.3
17.7
1.7
0.3
0.5
21.3
22.8
1.8
0.5
0.5
11.0
12.2
1.6
0.5
Consolidated - Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(inc)/dec in FA
(Pur)/Sale of Investments
Others
CF from Investments
Issue of Shares
(Inc)/Dec in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
CY08
1,609
447
219
-312
-1,069
894
-18
876
-1,742
-745
-138
-2,625
297
2,177
-249
-67
-28
2,130
381
631
1,012
CY09
1,695
545
193
-424
10
2,019
-158
1,860
-1,707
-636
41
-2,302
1,120
-386
-232
-118
-38
346
-96
1,012
916
CY10
2,239
550
117
-653
-376
1,877
88
1,966
-4,425
380
232
-3,813
1,047
1,707
-195
-103
-96
2,361
513
916
1,430
FY12
3,710
1,337
551
-930
-1,353
3,315
153
3,468
-5,991
1,014
-414
-5,391
0
3,009
-556
-530
-90
1,834
-89
1,430
1,341
(INR Million)
FY13
2,335
1,474
370
-634
-22
3,522
-278
3,244
-1,896
52
88
-1,757
0
-563
-538
-74
-271
-1,446
41
1,341
1,382
FY14
1,960
1,755
532
-373
-414
3,461
-353
3,107
-1,290
-237
-2,665
-4,192
0
1,959
-586
-222
198
1,350
265
1,382
1,647
March 2015
91

March 2015
Update | Sector: Logistics
Transport Corporation of India
BSE Sensex
29,449
S&P CNX
8,938
CMP: INR268
Not Rated
Express Cargo, Supply Chain business to drive growth
DFCs/diamond quadrilateral, GST seen as key triggers
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val. INRm/Vol‘000
Free float (%)
TRPC IN
73.0
299/92
3/21/130
19.5
0.3
43/216
30.9
Transport Corporation of India Ltd (TRPC), established in 1958, is a leading multimodal
logistics p layers w ith s ervices ra nging f rom b asic t ransportation t o high-end s upply
chain management. It operates 1,300 owned vehicles and 7,500+ managed vehicle fleet
to t ransport 2 5% by v alue o f I ndia’s G DP. I ts o perations cover a lmost 100% o f t he
Indian economy, with 17,000 domestic and overseas locations. Key business divisions
are Freight Transport, Express Cargo Services, Supply Chain Solutions and Seaways.
Similar to other logistics companies, we believe TRPC will be a key beneficiary of
(a) economic growth, (b) DFCs/diamond quadrilateral and (c) GST.
Financial Snapshot (INR Million)
Y/E Mar
2012
2013
2014
Net Sales
EBITDA
Adj PAT
EPS (INR)
Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
19.5
1.6
0.6
8.2
8.6
52.0
16.9
17.9
-
-
21.3
1.8
0.7
9.5
16.6
60.0
17.1
18.0
-
-
22.3
1.7
0.7
9.8
2.8
67.3
15.4
16.3
27.3
4.0
Freight Transport: GDP r evival t o b enefit, b ut c ompetition to k eep
margins low
n
n
n
Freight division contributes to 37% in revenue 11% in EBITDA for TRPC. Being
highly unorganized with low entry barrier, it is a low margin business (3-5%)
with low growth.
Company is focused on moving away from this basic business which is
reflected in reduction in revenue contribution from 52% in FY09 to 36% in
FY14, with a target to reduce it further to 25%.
Revenue drivers include GDP growth and JV with Concor, while margin
triggers include lower diesel price and infrastructure sector spending that
could revive the high-margin large cargo movement.
Shareholding pattern (%)
As on
Dec-14 Sep-14 Dec-13
Promoter
69.1
69.1
69.4
DII
0.8
1.2
0.1
FII
2.3
1.9
4.9
Others
27.9
27.9
25.7
FII Includes depository receipts
Stock Performance (1-year)
300
250
200
150
100
Transport Corp.
Sensex - Rebased
Express Cargo Services: margins better, growth high; large scale gives
competitive and cost advantage
n
n
n
n
Express cargo services division contributes 30% in revenue and 29% in
EBITDA, with expected growth of 10-15% and higher margins than freight.
TRPC’s scale and multimodal capability through tie-ups in domestic and
international locations provides competitive advantage and higher margins.
While air cargo contributes to 10%, key goods handled include electronics,
pharmaceuticals, white goods and silk sarees among others.
While e-tailing volume contribution is lower, it could be a key volume driver
in future, given its underlying growth.
Supply Chain Solutions: nascent, complex, technology intensive but high
margin
n
n
Supply chain solutions business (3PL) is still at a nascent stage in India, with
growth rates of 20-30% and contributes 5% of TRPC’s revenue.
Players with investment in technology, deeper understanding of various
businesses, skilled manpower can witness high entry barriers and margins in
92
March 2015

TCI
n
this segment.
Automobile sector contributes to 75% of this business followed by ~10% by
FMCG and also cold chain. GST will be the key trigger for this business.
Shipping: steady contributor, high entry barriers
n
n
TRPC operates ships and also lucrative services to Andaman and Nicobar and
neighbouring countries.
While there is scope to increase utilization levels on the current route,
company plans to diversify on the west coast routes of India.
Exhibit 1: TRPC’s revenue clocked 13% C AGR in t he l ast five years, driven b y Supply
Chain Solutions CAGR at 31%
Freight Division
XPS Division
Supply Chain Solutions
19
13
0
2
3
7
FY08
14
0 1
2
3
7
FY09
15
1
3
4
7
FY10
1
1
5
5
8
FY11
1
Seaways Division
20
1 0
6
5
8
FY12
22
1
7
6
8
FY13
Others
Total
23
1 0
1
7
6
8
FY14
1
Source: Company, MOSL
Exhibit 2: Increasing revenue share of high-margin Express Cargo, Supply Chain divisions
Freight Division
2
5
15
26
53
2
6
15
26
51
FY09
XPS Division
3
4
19
25
48
FY10
Supply Chain Solutions
2
4
26
25
44
FY11
0
5
30
25
40
FY12
Seaways Division
0
5
32
26
37
FY13
Others
0
5
31
27
37
FY14
FY08
Source: Company, MOSL
March 2015
93

TCI
Exhibit 3: TRPC’s EBITDA margin trend - Supply Chain b usiness h as the h ighest ma rgins
among the largest business segments (%)
Total
11.8
7.7
7.4
3.8
FY08
12.2
8.3
8.0
4.2
FY09
Freight Division
11.8
9.0
7.6
4.6
FY10
XPS Division
11.6
8.8
7.8
4.8
FY11
12.4
8.8
8.3
4.0
FY12
Supply Chain Solutions
12.7
8.2
8.3
2.9
FY13
10.9
8.0
7.7
1.8
FY14
Source: Company, MOSL
Exhibit 4: Snapshot of TRPC’s key businesses
Freight Division
Industry Scenario
Industry Growth
% of Total Revenue (FY 14-15 H1)
TRPC EBITDA Margin
TRPC Growth Pattern
RoCE (5-yr Average)
RoCE (10-yr Average)
Mature, Fragmented, Low
barriers to entry, low cost
5-8%
36% (392 cr.)
3-5%
0-5%
13.3%
17.0%
XPS Division
Growth, niche, high
entry barriers, cost
efficiency
8-12%
30% (320 cr.)
8-10%
8-12%
43.6%
39.8%
Supply Chain Solutions
Division
Nascent, knowledge-based,
very high barriers, single
window
20-30%
28% (307 cr.)
10-12%
20-30%
24.6%
22.9%
Seaways Division
Growth, high entry
barriers, low cost
10-15%
5% (53 cr.)
11-15%
10-15%
14.7%
18.2%
Source: Indutry, , Company, MOSL
Management profile
Mr S M D atta – Chairman:
Mr Datta has more than 51 years of experience in the
engineering and technology sector. Previously he served as the Chairman of
Hindustan Lever and all Unilever group companies in India and Nepal during 1990-
1996. Mr Datta holds the following positions: Director on the Boards of Castrol
India, Philips Electronics India, IL&FS Investment Manager, BOC India, Zodiac
Clothing Company. A Chartered Engineer, he is also associated with various
management and research institutes both in India and abroad.
Mr D P Agarwal - Vice C hairman a nd Ma naging D irector:
Mr Agarwal is the Vice-
Chairman and Managing Director of TRPC. He has been associated with the
transport industry for more than 43 years. Mr Agarwal holds the Directorships of
Bhoruka Power Corporation and Jai Bharat Maruti Ltd. He is also associated with the
various chambers of commerce, including CII, Ficci and Phdcci.
March 2015
94

TCI
Financials and valuation
Consolidated - Income Statement
Y/E March
Total Income from Operations
Change (%)
Operating Expenses
% of Sales
Personnel Expenses
% of Sales
Other Expenses
% of Sales
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
PBT bef. EO Exp.
PBT after EO Exp.
Current Tax
Deferred Tax
Tax Rate (%)
Reported PAT
Adjusted PAT
Change (%)
Margin (%)
FY08
12,428
14.6
9,708
78.1
681
5.5
1,170
9.4
11,559
93.0
869
7.0
233
636
197
58
497
497
149
19
33.7
330
330
7.8
2.7
FY09
13,513
8.7
10,665
78.9
697
5.2
1,170
8.7
12,531
92.7
982
7.3
297
685
279
105
511
511
179
-1
34.8
333
333
1.0
2.5
FY10
15,215
12.6
12,240
80.4
835
5.5
1,017
6.7
14,092
92.6
1,123
7.4
296
827
219
44
652
652
226
9
36.0
417
417
25.3
2.7
FY11
18,513
21.7
15,088
81.5
929
5.0
1,093
5.9
17,109
92.4
1,403
7.6
353
1,050
283
51
818
818
255
16
33.1
547
547
31.2
3.0
FY12
19,538
5.5
12,902
66.0
1,015
5.2
4,042
20.7
17,959
91.9
1,578
8.1
416
1,163
364
57
856
856
257
5
30.6
595
595
8.8
3.0
FY13
21,305
9.0
17,456
81.9
1,121
5.3
976
4.6
19,552
91.8
1,753
8.2
464
1,289
352
73
1,011
1,011
318
-3
31.2
695
695
16.8
3.3
(INR Million)
FY14
22,265
4.5
18,334
82.3
1,172
5.3
1,063
4.8
20,569
92.4
1,696
7.6
468
1,227
327
92
992
992
258
17
27.7
716
716
3.0
3.2
Consolidated - Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Minority Interest
Deferred Liabilities
Total Loans
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Other Current Liabilities
Provisions
Net Current Assets
Appl. of Funds
E: MOSL Estimates
FY08
145
2,605
2,750
0
291
2,439
5,479
4,170
1,133
3,037
53
81
2,847
10
1,959
245
634
543
254
109
180
2,305
5,479
FY09
145
2,861
3,006
17
293
2,499
5,815
4,666
1,370
3,296
119
33
3,200
10
2,133
285
772
839
366
107
365
2,361
5,815
FY10
145
3,204
3,349
47
303
2,849
6,548
4,930
1,574
3,355
154
41
4,159
11
2,637
383
1,128
1,171
635
125
412
2,988
6,548
FY11
145
3,107
3,252
30
319
3,147
6,748
5,284
1,825
3,459
67
15
4,375
14
3,208
183
970
1,178
726
139
314
3,197
6,748
FY12
145
3,637
3,783
29
317
3,410
7,538
6,223
2,064
4,159
78
17
4,480
20
3,365
307
788
1,198
874
97
227
3,282
7,538
FY13
146
4,224
4,370
11
315
3,544
8,240
6,515
2,342
4,174
51
80
5,344
22
3,951
460
911
1,410
883
109
419
3,934
8,240
(INR Million)
FY14
146
4,764
4,910
31
332
3,355
8,628
6,931
2,616
4,315
183
80
5,429
17
3,800
428
1,184
1,381
773
194
414
4,048
8,628
March 2015
95

TCI
Financials and valuation
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Return Ratios (%)
RoE
RoCE
Working Capital Ratios
Asset Turnover (x)
Inventory (Days)
Debtor (Days)
Creditor (Days)
Working Cap. Turnover (Days)
Leverage Ratio (x)
Current Ratio
Interest Cover Ratio
Debt/Equity
FY08
4.5
7.8
37.9
0.6
15.4
FY09
4.6
8.7
41.5
1.0
23.4
FY10
5.8
9.8
46.2
0.9
17.4
FY11
7.5
12.4
44.8
1.0
14.7
FY12
8.2
13.9
52.0
1.1
15.4
FY13
9.5
15.9
60.0
1.5
18.8
FY14
9.8
16.2
67.3
1.8
21.9
27.3
16.5
4.0
1.0
13.2
14.2
15.0
2.3
0.3
58
10
60
5.2
3
0.9
11.6
14.8
2.3
0.3
58
13
56
3.8
2
0.8
13.1
14.9
2.3
0.3
63
19
62
3.6
4
0.9
16.6
17.5
2.7
0.3
63
18
59
3.7
4
1.0
16.9
17.9
2.6
0.4
63
25
56
3.7
3
0.9
17.1
18.0
2.6
0.4
68
18
60
3.8
4
0.8
15.4
16.3
2.6
0.3
62
15
59
3.9
4
0.7
Consolidated - Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(inc)/dec in FA
Others
CF from Investments
Issue of Shares
(Inc)/Dec in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
FY08
432
208
168
-403
-421
-15
2
-13
-430
65
-467
517
105
0
-44
-7
571
91
154
245
FY09
551
299
243
-502
-21
570
-11
559
-626
78
-501
0
60
0
-70
-8
-18
40
245
285
FY10
681
296
192
-419
-372
378
-5
373
-394
-155
-556
2
350
0
-62
-11
280
97
285
383
FY11
818
353
256
-557
-392
478
24
502
-858
468
-396
4
298
0
-69
-538
-305
-200
383
183
FY12
855
416
339
-271
-68
1,270
-23
1,247
-1,106
140
-967
12
263
-350
-69
-11
-155
125
183
307
(INR Million)
FY13
1,011
464
299
-264
-462
1,047
-3
1,044
-441
-104
-608
10
134
-336
-79
-13
-284
153
307
460
FY14
993
468
288
-280
146
1,615
-38
1,577
-741
-235
-976
8
-189
-311
-119
-20
-633
-32
460
428
March 2015
96

Logistics | Unlisted Players
Ocean Sparkle
COMPANY DESCRIPTION
PRODUCTS AND SERVICES
Company Profile
Port Operations and Management Solutions
n
Established in 1995, Ocean Sparkle Ltd (OSL Group) is
n
The company has invested in harbor crafts like Tug Boats,
engaged in providing comprehensive port operations and
Pilot Boats, Mooring Boats etc. It owns and operates ~100
management services.
of harbor crafts, which includes more than 70 Tug boats of
n
It is also involved in coastal transportation on the East
varying capacities ranging from 30t to 70t Bollard Pull. It
Coast through its fleet of barges and tugboats for
also has a fleet of 10 harbor tugs under its management.
lighterage operations. The company is based in
n
As a part of port O&M solutions, it also offers pilotage
Hyderabad, Telangana.
services, control tower operations, mooring services,
maintenance of navigational aids and buoys, oil spill
Key JV’s
n
Sea Sparkle Harbour Service (56:44 JV of OSL and PSAM)
Ship to Ship Operations/FPSO/SBM Operations
for operations at Ennore port
n
Ocean Sparkle carries out double banking operations for
n
Sealion Sparkle Port and Terminal Services (Dahej) Ltd
liquid and dry cargo in Indian and International waters.
(49:51 JV of OSL and PSAM) for operations at Petronet
n
It also carries out tandem mooring operations at FPSOs by
LNG Limited’s jetty at Dahej,
provisioning pull back tugs, line handling boats, mooring
n
100% subsidiary Sparkle Port Services Ltd for operations
gang, and loading masters/mooring master.
at Petronet LNG Limited’s jetty at Kochi.
n
Other entities in OSL group include Sparkle Overseas Pte
Dredging
Limited (100% OSL stake) formed for overseas business
n
Ocean Sparkle has invested in a fleet of dredgers and
and one JV for undertaking large-scale dredging projects,
barges and has the capability to cater to capital and
Sai Sparkle Dredging and Infra structure Developers Pvt.
maintenance dredging. It can provide end-to-end dredging
Ltd.
services, including disposal of dredged material.
Key Management
n
Mr P Jairaj Kumar, Chairman & MD
n
Mr Sanjeev Dhawan, Joint Managing Director
n
Mr A K Sawhney
n
Mr R Virender Prasad
Key Clients
n
Reliance Port and Terminals Limited, Jawaharlal Nehru
Port Trust, Dahej Harbour and Infrastructure Limited,
Cochin Port Trust, Kandla Port Trust, Gujarat Pipavav Port
Limited, Mumbai Port Trust
KEY CHARTS
Geographical presence
KEY FINANCIALS AND INVESTORS
Key Financials (INR M)
2014
Total Income
PAT
2,890
400
2013
3,770
590
March 2015
97

Logistics | Unlisted Players
J.M. Baxi & Co
COMPANY DESCRIPTION
PRODUCTS AND SERVICES
Company Profile
Shipping Agency
n
Established in 1916, J.M. Baxi & Co. is engaged in
n
J.M. Baxi handles over 6,000 vessels including tankers,
providing shipping support services. Its services include
carriers, bulk cargo vessels, container vessels, dredgers,
shipping agency, agency for cruise and visiting naval ships,
offshore & onshore rigs, etc. per annum at various Indian
container transport management, port development and
ports.
terminal management, project logistics division,
n
It also handles all types of cruise and visiting Naval ships at
engineering, equipment and training division, tanker
any port in India. Services include handling of passengers,
operations, warehousing and freight station, chartering
crew, naval personnel both for embarking and
brokers, stevedoring and bulk cargo operations,
disembarking operations. It maintains close liaison with
manpower recruitment and ship management, support
port authorities, related government agencies, tourist
services for the oil and gas industry, support services for
bureaus, passenger handling companies, as well as, the
dredging operations and international freight forwarding.
Indian Navy.
It is based in Mumbai, Maharashtra.
Port Development & Terminal Management
n
Since 1998, Company has been managing its own jetty at
Key Management
Rozi (Jamnagar) which is equipped with conveyors and
§
Mr Krishna B Kotak, Chairman
bagging plants, ideally suited for loading and unloading of
bulk cargoes.
KEY CHARTS
n
It also set up the first container terminal at Visakhapatnam
Geographical presence
port, operational since June 2003.
Bulk Cargo Operations
n
It offers turnkey services which includes receiving the
cargo, documentation, stevedoring, lighterage activities,
warehousing, etc.
n
JM Baxi has stevedoring licenses at most major and minor
ports, which enables it to handle diverse cargoes such as
dry and liquid, bulk & break bulk, containerized, heavy lift
and over dimensional .
Clearing and Freight Forwarding
n
As licensed Custom House Agents(CHA) at most Indian
ports, J. M. Baxi & Co. provides efficient clearing and
freight forwarding services. Freight forwarding services
include custom clearance, compliance with import/export
regulations, comprehensive multi
‑modal point
-to- point
services comprising land, rail, air and sea transport and
warehousing. It has tie-ups with foreign partners as well to
provide International freight forwarding services.
Project Logistics
n
JM Baxi provides specialized professional transportation
services for a wide range of project equipments including
over dimensional cargoes and delicate equipments on a
turnkey and door–to–door basis.
Other services
n
Includes handling tanker operations, crew & ship
management, providing support services for Dredging
operations and oil & gas industry.
March 2015
98

Logistics | Unlisted Players
Continental Warehousing Corp
(Nhava Sheva) (CWCNSL)
COMPANY DESCRIPTION
Company Profile
n
Established
in 1997, Continental Warehousing
Corporation, flagship company of the NDR group,
provides services like warehouse management, inventory
management, manpower, import container handling,
export container handling, accounting, insurance,
transportation and distribution. The company also
provides comprehensive, value-added cargo and
container management solutions to its clients. It is based
in Navi Mumbai, Maharashtra.
n
CWCNSL also operates CFSs in Chennai (Madhavaram and
Redhills), and Tuticorin (Tamil Nadu). The combined
container handling capacity of the group exceeds 300,000
twenty-foot-equivalents (TEUs) per annum. Additionally,
CWCNSL recently set up an inland container depot (ICD)
at Indore (Madhya Pradesh), with a container handling
capacity of 30,000 TEU per annum. CWCNSL also has jetty
operations in Jamnagar (Gujarat).
Key Management
n
Mr Dara Jalnawalla - Director at CWCNSL
n
Mr. N. Amrutesh Reddy - Executive Director at CWCNSL
n
Mr. N Adikesavulu Reddy - Chairman of NDR Group
PRODUCTS AND SERVICES
Container Freight Stations
CWCNSL operates three CFS at Nhava Sheva, Chennai and
Tuticorin
CFS in Nhava Sheva, Mumbai
n
Set up on a total area of 36 acres, with container handling
capacity of 1.50 lakh TEUs per annum. It has a bonded
warehouse of 1.2 lakh sq. ft., export warehouse of 1.15
lakh sq. ft and import/LCL warehouse of 1.4 lakh sq. ft
CFS in Madhavaram, Chennai
n
Set up on a total area of 10 acres, with container handling
capacity of 25,000 TEUs per annum. It has a bonded
warehouse of 2.5 lakh sq. ft., import/export warehouse of
27,500 sq. ft and customs bonded & general warehouse
CFS in Meelavittan, Tuticorin
n
Set up on a total area of 7 acres, it has an enclosed
warehouse of 45,000 sq. ft and facility to handle import
FCL/LCL and exports
Warehousing Solutions
n
Apart from the warehousing solutions provided at the
CFSes, CWCNSL offers an integrated warehousing solution
across India through Kaveri Warehousing, a subsidiary of
NDR group, providing services like warehouse
management, inventory management, manpower,
accounting, MIS, transportation and distribution
KEY CHARTS
Geographical presence
KEY FINANCIALS AND INVESTORS
n
The Continental group - Key Financials (INR Mn)
2014
2013
6,680
363.5
6,980
445.6
Sales
PAT
March 2015
99

Logistics | Unlisted Players
Star AgriWarehousing and Collateral Management
COMPANY DESCRIPTION
PRODUCTS AND SERVICES
Company Profile
Warehousing
n
Founded in 2006, Star AgriWarehousing and Collateral
n
StarAgri provides state-of-the-art temperature controlled
Management Ltd. is engaged in providing harvesting
storage through an integrated and modern pan-India
solutions. It offers post-harvest management solutions
warehousing network of 800+ warehouses across 16
services, warehousing and storage services, collateral
Indian states and over 1.5 million tonnes of warehousing
management services, logistics management services,
capacity.
procurement management services and private Mandi
n
It also provides value added services like weighing, testing
solution services. The firm also exports agriculture
and certification
products. It is based in Mumbai, Maharashtra.
Collateral Management
n
StarAgri, with the help of India’s leading financial
Key Highlights
institutions and banks, currently holds commodities worth
n
INR 250 crore investment by Temasek Holdings
INR 75 billion across 200 collateral management locations.
n
Acquired 1.38% stake in NCDEX, one of the Asia’s largest
n
It reduces operating risk by ensuring safekeeping of
agri-commodity exchange
commodities held as collateral with stringent inspection,
n
Started first international office through wholly owned
verification, monitoring and control measures for secure
subsidiary in Singapore "Star Agri Services (Pte) Ltd"
traceability across the supply chain.
n
Presence in 250+ locations, 16 states
Procurement
n
Warehousing capacity through warehouses and silos
n
StarAgri facilitates integration with farmers for secure and
around 1.5 million MT
reliable raw material supply to enable customers to source
the right quality and quantity at the right price and time.
Key Management
n
It has state-of-the-art quality and testing laboratories –
n
Suresh Goyal – Chairman and Managing Director
StarLabs which provides a distinct measure to create a
n
Dr. Y.S.P Thorat –Non Executive Vice-Chairman
process driven transparency in the area of rural
n
Dr. Y.K. Alagh - Nominee Director
procurement.
n
Amit Mundawala - Executive Director
Logistics & Value Added Services
n
Amit Khandelwal - Executive Director
n
It provides end-to-end transportation solutions from
n
Girish Nadkarni - Nominee Director
sourcing the agri-produce to reaching the client’s factory
n
Amith Agarwal - Executive Director
or distribution network.
n
StarAgri offers value added services in the areas of rural
retailing through ‘StarAgri Bazaar’, agri-insurance, logistics
and bulk procurement
KEY CHARTS
The StarAgri Value Chain
n
Farmers Traders & Buyers Food Companies Retailers
Consumers
March 2015
100

Logistics | Unlisted Players
Shree Shubham Logistics
COMPANY DESCRIPTION
PRODUCTS AND SERVICES
Company Profile
Storage and Preservation
n
Founded in 2007, Shree Shubham Logistics Ltd.(SSL), a
n
SSL manage and operate a total of 149 warehouses
subsidiary of Kalpataru Power Transmission Ltd., offers
(owned/hired/PPP) across the states of Rajasthan, Gujarat,
storage and preservation, weighing facilities through
Madhya Pradesh and Maharashtra, with a total storage
electronic weighbridges, testing and certification,
capacity of around 9.39 million sq. ft
fumigation
and
pest
management,
collateral
n
Its agri-logistics parks are scientifically designed and
management for commodity funding, commodity
equipped with modern infrastructure conforming to WDRA
procurement and disposal of agricultural produce
standards at a minimum
services. It is based in Mumbai, Maharashtra.
n
Shareholding Pattern – KPTL (85%), Bafna Family (15%).
Testing and Certification
n
SSL has set up its own central Analysis and Certification
Key Management
Laboratory (ACL) to provide testing and certification
n
Dr. Prakashi Bakshi
-
Managing Director
services for several parameters for various agri-
n
Mr. Aditya Bafna - Executive Director
commodities and non-agricultural commodities.
n
Mr. Shubhendra Kumar Bafna - Executive Director
n
Dr. B.B. Pattanaik - Chairman & Non-Executive
Independent Director
Collateral Management& Funding Facilitation
n
SSL works with various banks and financial institutions and
enables various market participants to source funding
from these banks and financial institutions
n
It has state-of-the-art quality and testing laboratories –
StarLabs which provides a distinct measure to create a
process driven transparency in the area of rural
procurement.
Commodity Procurement, Processing & Trading
n
SSL assists private entities dealing in agri-commodities to
procure physical stocks, including in large volumes and
with uniformity in quality, from mandis, auction sites,
farmers, and traders & aggregators, based on the prices
range, quality and grades specified by its clients.
n
It also has dedicated spaces in its warehouses for cleaning,
de-stoning, grading, sorting and decorticating of agri-
commodities.
KEY CHARTS
Geographical presence
KEY FINANCIALS AND INVESTORS
Key Financials (INR Mn)
2014
Total Income
EBITDA
PAT
Equity Paid up#
3,779.8
580.70
236.6
626.8
2013
2,432.1
290.09
154.0
580.0
3078.4
2012
2,039.5
228.27
20.8
580.0
2135.0
Total Debt
3456.9
# Included Preference share Capital
March 2015
101

Logistics | Unlisted Players
TVS Logistics Services Ltd
COMPANY DESCRIPTION
Company Profile
n
Set up in 1995, TVS Logistics Services Ltd.(TVS LSL), a
subsidiary of TV Sundram Iyengar and Sons Ltd., offers
transportation solutions including inbound and outbound
logistics and milk run collections, warehouse
management solutions in plant, spare parts warehouse,
freight management solutions, asset based management
solutions and materials management solutions. It is based
in Chennai, Tamil Nadu.
Key Management
n
Suresh Krishna - Chairman
n
R.Dinesh - Managing Director
n
Tarun Khanna - Director
n
Gopal Srinivasan - Director
n
Ravichandran - Executive Director
PRODUCTS AND SERVICES
Transportation Solutions
n
TVS LSL’s service offering in transportation includes plan
for each part (PFEP) milk runs, line haul, re-delivery,
customized vehicles and solutions, GPS tracking solution
for all trucks, etc.
Warehouse Management Solutions
n
TVS LSL offers customized solutions to meet client’s
business needs and optimize their inventory and assets.
n
The company has 31 warehouses all across India with
modern infrastructure – automation, modern racking,
barcode scanning, in house Warehouse Management
Solutions suite ‘Msys’, etc.
Freight Management Solutions
n
With over 160 offices across the globe, TVS LSL offers
global integration solutions like air freight, ocean freight,
special equipment handling, custom clearances,
customized surface transport, etc. It’s value added services
include quality inspection, effective container cube
utilization, robust packaging, etc.
n
TVS LSL also has approvals from the concerned authorities
IATA, MTO, and is a member of major industry bodies like
ACAAI, FFFAI, MMA, FIATA, CII, AMTOI, etc.
Asset Based Management Solutions
n
TVS LSL has ventured into a new value added service
offering - Material Handling Solutions for engineering and
automobile majors, where all the material handling
solutions required in the plant are provided with
manpower to operate and maintain the equipment.
KEY HIGHILIGHTS
n
n
n
n
n
Over 16 years of rich experience in managing warehouse
operations
Strength of over 7000 strong head counts
Fleet volume exceeding 800 nos. in supporting Material
Handling Solutions
Daily average of 650 trips to support Milk run activities
for OEMs
Around 950 vehicles plying on road, with the option of
GPS tracking facility, to meet the Line haul activities.
March 2015
102

Logistics | Unlisted Players
Safexpress Pvt. Ltd
COMPANY DESCRIPTION
PRODUCTS AND SERVICES
Company Profile
Express Distribution
n
Set up in 1997, Safexpress Pvt. Ltd. is engaged in
n
Safexpress ensures time-definite deliveries through their
providing supply chain services including express
robust ‘hub and spoke’ mode with a fleet of 4,000 vehicles,
distribution, third party logistics (3PL) and consulting. It
which is intended to minimize the distance travelled. This
also provides value-added logistics services for 8 different
offering enables 'just in time' and lean supply chain
business verticals ranging from apparel and lifestyle,
requirements of the customers.
healthcare, hi-tech, publishing to automotive, engineering
n
SafeAir is their specialized air service that complements
and electrical hardware, fast moving consumer goods
the surface logistics in offering optimal multimodal
(FMCG) and consumer electronics and institutional. It is
solutions and faster deliveries through 20 state-of-the-art
based in New Delhi.
air hubs.
3PL & Inventory Management
Key Management
n
Safexpress provides warehousing solutions to clients, right
n
Mr. Pawan Kumar Jain – Chairman & Managing Director
from identification of strategic locations, designing the
n
SR Sharda - Executive Director
rack layout and deciding optimal stocking levels.
n
It also has a state-of-the-art warehouse management
KEY CHARTS
system that monitors and controls all critical warehouse
Geographical presence
processes. Its value added services offering includes
kitting, packaging, ERP systems, etc.
Supply Chain Consulting
n
Company offers consulting solutions in distributions
requirement planning, labour resource planning,
warehousing layout and design, statutory documentation
support, supply chain optimization and after-market
distribution design.
Customized Solutions and Reverse Logistics
n
Safexpress provides customized solutions including
warehousing solutions, express surface and air or even
multi-modal distribution, date and time-definite delivery,
security and anonymity of consignment, cash-on-delivery,
technology support, documentation assistance, in-transit
inventory tracking, deferred deliveries, status reporting
and customizing it as per client’s logistics requirements.
n
Safexpress offers reverse logistics solution and has a
REVLOG system in place which is a unique online platform
for downstream dealers / partners through which all stake
holders, requesters, approvers, pick up associates,
receivers get a transparent view of the entire 'Returns
Process'.
n
It also provides industry specific solutions catering to
Apparels, Automotive, E-commerce, Healthcare, etc.
March 2015
103

Logistics | Unlisted Players
Mahindra Logistics Ltd
COMPANY DESCRIPTION
PRODUCTS AND SERVICES
Company Profile
Supply Chain Management
§
Set up in 2000, Mahindra Logistics Ltd (MLL), a subsidiary
n
MLL’s transport solutions include primary, secondary and
of Mahindra group, is engaged in providing supply chain
tertiary transportation, domestic long haul transportation
and people logistics solutions. It offers multimodal
by road and rail, last mile delivery, reverse logistics, value-
transportation, warehousing, international logistics, fleet
added services like network design and optimization,
management centers, inbound and outbound logistics,
freight optimization, specialized vehicle designs, cross
inter-plant movements and other value-added services. It
docking, customized packaging etc.
is based in Mumbai, Maharashtra.
n
Company also offers multi-user warehousing, customized
warehousing, in-plant stores etc.
Key Highilights
n
MLL also offers international logistics by being a member
n
More than 13 offices, and over 88 operating locations
of the World Cargo Alliance (WCA) family of Logistic
across the country
Networks, a non-exclusive, privately-owned and managed
n
We deploy over 25,000 vehicles a month, across
forwarder network, with access to 4,466 agents
transportation operations
worldwide.
n
Our operational space is over 5 million square feet for
warehousing
People Transport Solutions
n
We manage logistics for over 1,000,000 finished vehicles
n
Company provides customized solutions for people
per annum
transport in corporates, deploying more than 5,500
n
Currently we are managing in-plant logistics at 26
vehicles every day and serving 200 corporate clients.
different manufacturing plants
n
We serve more than 200 large customers today
Key Management
n
Mr Pirojshaw Sarkari – CEO
n
Nikhil Nayak - Chief Financial Officer
KEY CHARTS
Supply Chain Management
KEY FINANCIALS
Key Financials (INR Mn)
2014
Total Income
EBITDA
PAT
Equity Paid up
Total Debt
17,503.4
512.9
366.4
590.6
15.8
2013
15,320.2
364.6
244.4
577.0
7.8
2012
13,865.1
249.9
108.1
577.0
56.8
March 2015
104

Logistics | Unlisted Players
SSN Logistics Pvt. Ltd.(Delhivery)
COMPANY DESCRIPTION
PRODUCTS AND SERVICES
Company Profile
Fulfilment and Logistics
n
Set up in 2011, SSN Logistics Pvt Ltd (Delhivery) is
n
Delhivery owns and operates fulfilment centers across
engaged in providing logistics solutions to e-commerce
India, with a presence in over 150 cities
portals
n
The network is backed by in-house fulfilment and
n
Its services include last-mile delivery, warehousing,
transportation management systems, customer analytics,
reverse logistics, flexible payment collection and
geo-coding and route optimization so that products reach
processing, vendor-to-warehouse and direct vendor-to-
the consumers within 12-48 hours, a key feature of e-
consumer delivery
commerce deliveries
n
It is based in Gurgaon, Haryana
Commerce Services
Key Highilights
n
Delhivery provides a unified view of customer data, right
from engagement to order management, fulfilment and
Cities
175+
shipping
Clients
800+
n
It also offers business and reporting tools which provide
Sellers
25000
real-time and periodic update of business performance
Products handled/day
90000
metrics.
Processing capacity/day
2,50,000
n
Also, Delhivery Data Services can be used to design
marketing campaigns, recommendations engines and plan
Team size
5000
and manage merchandizing, transportation and customer
service
Key Management
n
Mr Sahil Barua, CEO & Co-founder
Omni-Channel
n
Mr Mohit Tandon, CSO & Co-founder
n
Delhivery’s omni-channel suite helps retailers to all
n
Mr Suraj Saharan, COO & Co-founder
channels – in-store, website, social media, mobile and
n
Mr Bhavesh Manglani, COO & Co-founder
voice - to create a seamless consumer experience
n
Mr Kapil Bharati, CTO & Co-founder
n
It further helps in managing store fronts, marketplace
integration, distribute orders, catalogues, payments and
analytics from a single location
KEY CHARTS
Geographical presence
March 2015
105

Logistics | Transformational times!
Annexure 1: Dedicted Freight Corridor
n
Planned D FCs c onnecting D elhi t o M umbai i n W est I ndia ( Container t raffic) a nd
Kolkatta i n East I ndia ( Coal a nd s teel t raffic) w ill significantly ea se t he r ail f reight
carrying capacity and turnaround time.
n
Full c ommissioning i s e xpected b y 2 019. In t he i nterim, s ome s ections w ould b e
commissioned thus easing pressure on rail routes to some extent.
While D FCs w ill r educe l ogistics b ottlenecks a cross t he v alue c hain, i t w ill d irectly
benefit the rail freight operators like CCRI and GDPL, who could expect a volume jump
and margin expansion through double stacking and reduced empties.
n
Need for dedicated freight corridors
A dedicated freight corridor is planned to:
n
Decongest the rail network by providing dedicated rail line for growing freight
traffic (16% of the railway route/km carries 52% of passengers and 58% of
freight traffic).
n
Win back the freight market share from road segment (down to 30% from
~90%/60%/45% in 1951/1981/1991).
n
Reduce (and guarantee) freight transit time, boost overall industrial
development along the route and provide the much-needed infrastructure for
EXIM trade.
n
The shift of freight share from rail to road was driven by high growth and limited
railway capacity additions. Indian rail network’s growth has been dismal since
the last five decades as the route/km has increased by only 20% from
~54,000km to ~65,000km.
n
Other announced freight corridors include:
1.
East-West Corridor (Kolkata-Mumbai) ~1,976kms.
2.
North-South Corridor (Delhi-Chennai) ~2,173kms.
3.
East Coast Corridor (Kharagpur-Vijaywada) ~1,100kms.
4.
Southern Corridor (Chennai-Goa) ~899kms.
Exhibit 1: Indian Railways line capacity utilization
Mumbai - Chennai
Howrah - Chennai
Delhi - Chennai via Jhansi,
Nagpur - Ballarshah
Delhi - Guwahati via Sitapur,
Gorakhpur-Barauni - Katihar
Delhi - Mumbai
Mumbai - Howrah
Delhi - Howrah
0
1
3
2
3
2
2
5
7
8
9
15
4
2
5
13
4
10
7
9
5
13
5
11
19
17
30
5
5
17
2
25
8
28
13
5
1
42
41
45
33
5
2
26
Less than 80%
80% - 100%
100% - 120%
120% - 150%
More than 150%
Number of Sections
*Railway Year Book 2010-11
Source: NTDPC, MOSL
March 2015
106

Logistics | Transformational times!
Exhibit 2: Indian rail route capacity addition significantly lagged freight growth
Railway route km
600
500
400
300
200
100
-
FY81
FY01
FY05
FY07
FY09
FY11
FY13
India Freight traffic (mmt)
Source: Indian Railways, MOSL
Current timelines imply full commissioning by 2019
n
n
n
n
n
n
n
n
DFCs are being constructed through the Dedicated Freight Corridor Corporation
of India (DFCCIL, incorporated in October 2006), which is a special purpose
vehicle (SPV) under the administrative control of Ministry of Railways. DFCCIL’s
scope of operation includes planning and development, funds mobilization,
construction, maintenance and operation of DFCs.
DFCs route:
DFCs envisage connecting Delhi with Mumbai in Western India and
Kolkatta in Eastern India. These two routes currently contribute to ~55% of
Indian Railway’s freight revenue, and the route utilization on these two lines is
115-150% (refer Exhibit 1). The planned routes are:
1. 1,839km Eastern DFC from Ludhiana in Punjab to Dankuni in West Bengal
2. 1,499km Western DFC from Jawaharlal Nehru Port Trust in Mumbai to Dadri
near Delhi
Capex and funding:
The estimated capex (debt-equity – 2:1, excluding PPP) on
DFCs (excluding Sonnagar-Dankuni section, which is to be implemented through
public private partnership) is ~INR800b (Eastern DFC INR267b and Western DFC
INR467b). Land cost is estimated at INR81b. Majority of the project costs are
funded by Japan International Cooperation Agency (JICA) (~77% of Western DFC
cost) and World Bank (~45% of Eastern DFC).
Timelines:
Western Corridor is expected to be completed by 2018, while the
Eastern Corridor is expected to be completed by 2019.
Current status:
Two major hindrances for any large project — land acquisition
and environmental clearance — are in place with 96% land acquisition.
Revenue model:
It will be operated on a no-profit, no-loss basis. DFCs will earn
revenue from the Indian Railways by charging a track access charge. This charge
will have a fixed (payable irrespective of traffic volume) and variable
component, which will depend on traffic volume in terms of gross tonne/km.
Short distance traffic would continue to ply on existing tracks, while DFCs will be
primarily used for long distance traffic.
Allied i nfrastructure w ith D FCs:
Along the DFCs, Multimodal Logistics
Parks/Freight terminals and theme parks too are being developed.
Unique f eatures:
The project is expected to be a game changer for India’s
logistics sector.
Ø
It will significantly reduce the transit time — each freight train trip will be
able to carry 3x the current load — reducing per unit transportation cost.
107
March 2015

Logistics | Transformational times!
The average speed of freight trains will increase from current 25km/hr to
>70km/hr.
Ø
The axle load in DFC will increase from 25MT to 32.5MT, thereby enhancing
the track loading capacity from 8.67MT/mtr to 12MT/mtr.
Ø
Rail technology will be upgraded with the help of heavy hauled freight train
capacity of 15,000 MT and length of 1,500 meters.
n
The train frequency between key ports and ICD destination is expected to
increase significantly. JNPT to Vadodara train’s frequency could increase from 9
to 49/day or Ahmedabad to Marwar train’s frequency could increase from 15 to
72/day.
Ø
Exhibit 3: Indicative map of DFC’s route
*~80% route is parallel to the existing rail track
Source: PTI, PMO, MOSL
Exhibit 4: Dec 2014 status of Eastern DFC
Exhibit 5: Dec 2014 status of Western DFC
Source: DFCCIL, MOSL
Source: DFCCIL, MOSL
March 2015
108

Logistics | Transformational times!
Exhibit 6: Status of key sub-sections in dedicated freight corridors
Western Corridor Route
Phase III
Phase I
Dadri - Rewari
Rewari - Phulera - Ajmer -
Marwar - Palanpur -
Mehesana - Vadodara
Length
(km)
140
920
Year
2013-2018
2011-2017
Funding
Status
FY15 target
JICA + IR
JICA + IR Civil works on 625km Rewari -
Iqbalgarh started (INR67b
contract awarded to L&T Soiitz
JV)
JICA + IR Civil and track package at
bidding stage
Award of civil contract for
Iqbalgarh - Vadodara (305km)
Award of electrical and signalling
contract for Rewari – Vadodara
section (930 km)
Phase II
Total
Eastern Corridor
Phase III-APL3
Vadodara - Surat - Valsad
- Vasai Road - JNPT
430
1,490
2012-2018
Phase I-APL1
Ludhiana - Ambala -
Saharanpur - Meerut -
Khurja
Khurja -Tundla - Bhaupur
- Kanpur
397
2014-2019 World Bank Appointed AECOM Asia as
consultant
2011-2017 World Bank Civil works on343km Bhaupur - Award of systems contract for
Khurja started (INR33b
khurja - Kanpur (343 km)
contract awarded to Tata -
Aldesa, Spain JV)
2013-2018 World Bank
Award of civil contract for
Kanpur - Mughalsarai section
(390 km)
2010-2016
GoI
Expect to run trial runs after
clearing few bottlenecks
2014-2019
PPP
Will be implemented PPP
model
Source: DFCCIL, Industry, MOSL
343
Phase II-APL2
Kanpur - Allahabad -
Mughal Sarai
390
Phase Ia ( Funding Mughal Sarai - Sonnagar
by MoR)
Phase IV (Funding Sonnagar - Gomoh -
through PPP)
Andal - Dankuni
Total
* Track-laying is also part of civil works
125
550
1,805
Exhibit 7: Key design features of DFC route and infrastructure
Source: DFCCIL, MOSL
March 2015
109

Logistics | Transformational times!
Exhibit 8: Western Dedicated Freight Corridor Land Acquisition Status
Area (in Hectares)
Rewari
Mahendragarh
Alwar
Sikar
Nagaur
Jaipur
Ajmer
Pali
Sirohi
Banaskantha
Patan
Mahesana
Gandhinagar
Ahmedabad
Kheda
Anand
Vadodara
Total Phase 1
Vadodara
Bharuch
Surat
Navsari
Valsad
Thane
Raigarh
Total Phase 2
Grand Total
(Kms)
34
46
2
79
5
98
98
196
65
64
11
64
30
35
27
44
32
930
22
53
60
37
72
138
45
427
1,357
Total
141
93
6
328
6
461
366
524
137
150
22
189
181
280
164
275
284
3,607
134
330
248
65
91
368
74
1,310
4,917
20A
141
93
6
328
6
461
366
524
137
150
22
189
181
280
164
275
284
3,607
134
330
248
65
91
368
74
1,310
4,917
20E
141
93
6
328
6
461
366
524
137
150
22
165
181
268
164
275
284
3,571
134
330
248
65
91
368
74
1,310
4,881
20F
141
93
6
328
6
461
366
524
137
150
19
165
117
268
163
274
284
3,502
134
327
238
50
69
364
74
1,256
4,758
As a %
of total
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
86%
87%
65%
96%
99%
100%
100%
97%
100%
99%
96%
77%
76%
99%
100%
96%
97%
Compensation (INR M) Land Taken
Award
Disbursed over (Ha.)
1,530
820
30
370
0
310
920
330
390
640
40
850
310
1,150
100
980
3,070
11,840
35
120
455
33
28
490
5
1,166
13,006
1,390
820
20
340
0
300
760
330
350
230
30
470
130
650
60
690
3,020
9,590
34
101
3318
28
203
158
3
3,845
13,435
As a %
of total
129
91%
92
99%
5
83%
307
94%
6
100%
446
97%
300
82%
516
98%
124
91%
54
36%
0%
0%
49
27%
152
54%
103
63%
194
71%
280
99%
2,757
76%
133
99%
274
83%
177
71%
42
65%
516
567%
117
32%
0
0%
1,259
96%
4,016
82%
Source: DFCCIL, MOSL
Exhibit 9: Eastern Dedicated Freight Corridor Land Acquisition Status
Length
Area (in Hectares)
As a % Compensation (INR M)
(Km.)
Total
20A
20E
20F
of total
Award Disbursed
APL- 1 Khurja - Bhaupur Section (UP)
343
1,320
1,320
1,320
1,315
100%
5,700
5,200
APL- 2 Bhaupur - Mughalsarai (UP)
393
1,400
1,400
1,400
1,373
98%
4,250
3,430
Punjab
88
251
251
251
251
100%
8,620
7,660
Haryana
72
78
78
78
78
100%
390
310
Uttar Pradesh
288
436
353
338
338
78%
2,170
1,310
APL- 3 Ludhiana - Khurja Section
447
766
682
667
667
87%
11,180
9,270
Uttar Pradesh
26
51
51
46
42
82%
290
190
Bihar
93
268
268
263
259
97%
2,080
1,580
Mughalsarai – Sonnagar
118
319
319
309
301
94%
2,370
1,770
Bihar
139
202
202
171
121
60%
580
0
Jharkhand
196
373
184
138
138
37%
1,160
0
West Bengal
203
427
427
306
127
30%
690
0
Sonnagar- Dhankuni
538
1,002
813
614
386
39%
2,420
0
Total of EDFC
1,839
4,807
4,534
4,310
4,041
84%
25,930
19,670
20A – Declaration to acquire land for public purpose; Empowers to enter for survey, is a cut-off date for compensation determination,
20E – Declaration of acquisition; The land shall be vested absolutely in the Central Government free from all encumbrances.
20F – Determination of amount payable as compensation; Competent authority shall make an award under this section.
Source: DFCCIL, MOSL
March 2015
110

Logistics | Transformational times!
Annexure 2: Delhi – Mumbai Industrial Corridor (DMIC)
Government of India is developing Delhi – Mumbai Industrial Corridor (DMIC) along
the planned DFC. It plans to develop 9 mega industrial regions, each of 20,000
hectares on 150-200kms, on either side of DFC railway line.
Key project goals (Source: DMIC website) include (a) Double employment potential
in 7 years, (b) Triple industrial output in 9 years and (c) Quadruple exports from the
region in 8-9 years.
Key stakeholders in the project include GoI (49%), Japan Bank for International
Cooperation (26%), HUDCO (19.0%), IIFCL (4.1%) and LIC (1%).
DMIC will be aligned with DFC at nine junction stations in addition to the end
terminals at Tughlakabad and Dadri in Delhi and JNPT in Navi Mumbai.
Exhibit 11: Large existing Industrial belts are within the DMIC
areas
Exhibit 10: DMIC Project Summary
Source: DMICDC, MOSL
Source: DMICDC, MOSL
Exhibit 12: DFC will provide connectivity at nine intermediate Exhibit 13: DMIC c overs t he m ajor p orts i n W est C oast o f
junction stations
India
Source: DMICDC, MOSL
March 2015
Source: DMICDC, MOSL
111

Logistics | Transformational times!
Annexure 3 : Indian R ailways F inancial and O perational
Summary
Exhibit 14: Indian Railways continues to operate on very thin profitability (INR b)
(INR b)
Goods traffic
Passenger traffic
Other coaching
Sundry earnings
Traffic earnings
Less: working expenses
Net miscellaneous receipts
Net railway revenue
Payments to general revenues
Excess/shortfall
FY02
248
112
9
9
379
363
8
23
23
10
FY03
265
126
10
11
411
380
8
38
27
11
FY04
276
133
9
10
428
395
11
45
34
11
FY05
308
141
10
12
470
428
7
53
32
21
FY06
363
151
12
18
544
453
9
101
39
62
FY07
417
172
17
17
624
490
8
145
42
102
FY08
474
198
18
26
716
545
11
183
49
134
FY09
534
219
20
25
798
718
12
92
47
45
FY10
585
235
22
29
871
829
15
55
55
FY11
628
258
25
34
945
895
13
63
49
FY12
695
282
27
36
1,042
987
13
68
57
FY13
853
313
31
43
1,239
1,116
15
136
53
FY14
940
375
37
53
1,404
1,273
25
158
78
0
14
11
83
79
Source: Indian Railways, CMIE, MOSL
Exhibit 15: Freight revenues contribute to ~65% OF Railway’s gross revenues (INR b)
Passenger
66%
61%
53%
449
360
42
125
25
274
11
230
82
133
31 105
FY91 FY01 FY04
490
45
305
141
FY05
563
57
355
151
FY06
60%
57%
967
1,062
Freight
64%
Other
62%
Gross revenue receipts
63%
63%
63%
63%
Freight revenue share (%)
64%
63%
64%
66%
65%
1,442
127
940
375
FY14
61%
1,262
114
27
10
5
3
1
3
1
3
3
6 16
8
1
0
0
1
FY51 FY61 FY71 FY81
892
817
733
103
103
648
89
80
835
71
65
677
607
569
517
464
411
282
257
313
234
219
198
172
FY07
FY08
FY09
FY10
FY11
FY12
FY13
Source: Indian Railways, CMIE, MOSL
Exhibit 16: Passenger service losses are cross subsidized by revenues from tariff (INR b)
225
260
190
139
62
60
64
71
200
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
Source: Indian Railways, CMIE, MOSL
March 2015
112

Logistics | Transformational times!
Exhibit 17: FY14 R ailway Freight Vo lume ( 1,054 m illion t onnes) – Container t raffic
contributes to only 4% of the total volumes
Iron Ores, 12%
Only 4% Share of
Container Service
Cement, 10%
Coal, 48%
Mineral Oils, 4%
Foodgrains, 5%
Fertilisers, 4%
Iron & Steel, 5%
Other, 7%
Domestic
EXIM
Contr., 1%
Contr., 3%
Source: Indian Railways, CMIE, MOSL
Exhibit 18: Container traffic contributes to only 4% of Railway’s freight revenues (%)
Iron Ores, 10%
Cement, 9%
Coal, 43%
Mineral Oils, 6%
Foodgrains, 8%
Fertilisers, 5%
Iron &
Steel, 8%
EXIM
Domestic
Contr., 3% Contr., 1%
Only 4% Share
of Container
Service
Other, 7%
Source: Indian Railways, CMIE, MOSL
March 2015
113

Logistics | Transformational times!
Annexure 4: Key global a nd domestic logistic trade
statistics
Exhibit 19: India rank's 13th in the world with 2% share in merchandise trade
Source: UN, MOSL
Exhibit 20: International s eaborne t rade ( volume l oaded) g rew a t 7 % C AGR i n t he l ast
decade with Container growth highest at 15% CAGR (b tones)
Container
Other dry cargo
7.1
2.4
7.7
2.7
1.8
Five major Bulks
8.0
2.7
2.0
8.2
2.7
2.1
7.9
2.6
2.1
Oil & Gas
8.4
2.8
2.3
Total
9.2
8.8
2.8
2.5
2.8
2.7
9.5
2.8
2.9
6.0
3.7
3.3
4.0
4.8
2.2
1.7
2.1
1.3
1.8
1.9
2.3
1.5
2.2
2.1
2.2
2.0
2.1
1.1
2.1
2.0
2.0
1.0
1.9
0.6
0.9
1.3
1.5
1.0
1.4
1.4
1.1
1.3
1.2
1.2
1.1
0.8
1.1
1.0
0.6
0.4
0.2
0.2
0.1
1980 1985 1990 1995 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: UNCTAD, MOSL
Exhibit 21: Indian p ort v olumes grew a t ~ 8% i n t he l ast Exhibit 22: Commodity-wise % s hare in port volumes - Share
decade (m tones)
of Container has grown from 15% in FY04 to ~22% now
Major Ports
Non-Major Ports
Total
POL
16
15
14
2
17
Iron Ore
17
14
14
3
20
16
15
14
3
19
Fertilizer
18
16
13
3
17
16
18
13
3
18
Coal
15
18
13
3
18
17
18
13
3
18
31
Container
17
20
13
4
15
31
18
21
14
4
11
32
Other Cargo
20
22
16
3
5
34
20
21
19
2
4
34
973
914 934
850 885
569
146
649
185
726 744
206 213
417
289 315 354 388
466
121
522
138
519 531 561 570 560 546 556
384 424 464
345
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
Source: IPA, MOSL
35
33
34
33
32
33
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
Source: IPA, MOSL
March 2015
114

Logistics | Transformational times!
Exhibit 23: India export composition
Export
Chemicals ,
10%
Leather, 2%
Minerals,
2%
Agriculture,
14%
Petroleum,
20%
Engg goods,
20%
Electronic
goods, 2%
Textiles ,
5%
Readymade
garments,
5%
Other mfg ,
18%
Other
commodities,
Exhibit 24: India import composition (%)
Engg goods
Chemicals
17%
8%
Leather
0%
Minerals
7%
Agriculture
4%
Electronic
goods
7% Textiles
(excl.rmg)
1%
Readymade
garments
0%
Other mfg
16%
Other
3%
Source: CMIE, MOSL
Petroleum
37%
commodities
4%
Source: CMIE, MOSL
Exhibit 26: Container v olume s hare ( %) - While JNPT h as t he
Exhibit 25:
Domestic c ontainer volume g rowth – Witnessed 1 0%
highest C ontainer v olume s hare, p rivate G ujarat p orts a re
volume CAGR in the last 10 years
also sizable
JNPT
Kolkata
Oth. Major
Total
Chennai
Cochin
GPPV
VO CPT
Vizag
Adani
Adani, 17%
GPPV, 7%
JNPT, 42%
12
9
6
3
0
10.1
9.2 9.9 9.8
7.6 8.1
2
2
2
1
6.7
1
5.5
4.7
1
3.9 4.2
Oth. Major,
4%
Vizag, 2%
Cochin, 3%
Kolkata, 5%
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
Source: IPA, MOSL
VO CPT, 5%
Chennai,
15%
Source: IPA, MOSL
Exhibit 27: Indian Ra ilway’s t otal freight g rew a t 6 .6% C AGR Exhibit 28: FY14 R ailway F reight B reakdown ( %) - Container
in the last 10 years (b tones)
volumes contribute to only ~4% of railway’s total freight
Coal
Foodgrain
Containers
1.2
0.9
0.6
0.3
0.0
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
Source: Indian Railways, MOSL
Other, 7%
0.6 0.6
0.7
0.8 0.8
Iron & Steel
Fertilisers
Other goods
Cement
POL
Total
Iron Ores,
12%
Cement,
10%
Mineral
Oils, 4%
Foodgrains,
Fertilisers,
5%
Iron & Steel,
5%
4%
1.1
1.0 1.0
0.9 0.9
Coal, 48%
0.7
Domestic
EXIM
Contr., 3% Contr., 1%
Source: Indian Railways, MOSL
March 2015
115

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