Container Corp. of India Ltd., the state-controlled freight-train operator, plans to spend as much as 30 billion rupees ($670 million) over five years mainly on terminals to expand its network and ease bottlenecks.
“If we are able to provide these facilities, then trade will grow at a much faster rate,” Managing Director Anil K. Gupta, 53, said in an interview yesterday in New Delhi, where the company is based. Plans include the construction of 25 more rail-container terminals and the addition of 20 to 25 trains annually, he said.
Nationwide rail-container traffic has the “potential” to be 50 percent higher if there is improved facilities, Gupta said, as companies including Bridgestone Corp. and Daimler AG build new plants in India, drawn by local demand. Container Corp. has also formed port ventures with partners such as A.P. Moeller- Maersk A/S and DP World Ltd. to tap rising sea-cargo traffic in Asia’s third-largest economy.
“The biggest advantage Container Corp. has compared with others is the infrastructure they are creating,” said Nirmal Shah, an analyst at Alchemy Share & Stock Brokers Ltd. in Mumbai, who has an “accumulate” rating on the stock. “It will take a minimum of 10 years to replicate.”
Container Corp.’s rail operations, which use state-owned Indian Railways’ tracks, predominately focus on hauling shipping containers usually used on vessels. The company has 59 rail- container terminals across the country and owns 220 rakes, or trains fitted with 45 wagons able to carry two containers each.
Container Traffic
Container Corp. and other rail companies, such as Gateway Distriparks Ltd.’s Gateway Rail Freight Ltd. and Adani Logistics Ltd., part of the Ahmedabad-based Adani Group., hauled about 3 million standard containers in India in the year ended March. Traffic could have been as much as 4.5 million twenty-foot equivalent units had the proper infrastructure been in place, Gupta said.
Expansion will allow Container Corp., which gets about 78 percent of sales from moving export and import cargo, to boost services such as storage and to improve its handling, Gupta said.
“It is not a question of the availability of cargo but the kind of services that are required,” Gupta said. The company will use internal cash reserves to pay for growth, he said.
Container Corp., which is 63 percent owned by the government, fell 1.9 percent to 1,290 rupees at 9:03 a.m. in Mumbai trading today. The company has dropped 1.6 percent this year, compared with a 3.3 percent decline for the Bombay Stock Exchange Sensitive Index, or Sensex.
Rail Network
The company’s expansion comes as India boosts spending on railways to support growth. The government wants to add 1,000 kilometers of track a year, compared with an annual average of 180 kilometers in the past six decades, Rail Minister Mamata Banerjee said in her budget on Feb. 24.
India’s overall logistics market, including transportation and warehousing, is expected to reach $120.4 billion in 2014 from $75.19 billion in 2009, driven by growth in manufacturing and agriculture, Frost & Sullivan said in January.
Container Corp. has 14 ventures including an air-freight business and a container-terminal operator with Maersk at Nhava Sheva port near Mumbai on the west coast. The company’s second port terminal venture, in Cochin, southern Kerala state, will likely start operations next month, Gupta said. Container Corp. has a 15 percent stake in the business, which is also part-owned by DP World.
“There is a narrow catchment in south India and because we are already present, we hope to see a good amount of rail traffic coming to us” from the port, Gupta said.
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