CONCOR leaves private competition behind even in a Slowdown

New Delhi: Discounts and a flexible tariff policy have helped the Container Corporation of India Ltd (CONCOR) in tiding over the economic slowdown despite competition from private container train operators. The public sector undertaking under Ministry of Railways has registered an increase of around 15 per cent in its income in the first six months this financial year. That growth is complemented by around 10 per cent increase in volumes.

CONCOR seniors attribute the growth to the support offered to international trade through rebates and discounts, which led to an increase in export-import traffic. Hinterland connectivity and higher efficiency due to state-of-the-art technology gave it an upper hand over the private players.

“Since we depend primarily on the general economic activity, the recovery of our traffic is also linked to the expectations of recovery in overall economic and trade scenario. With the positive financial signs this year, things would be much better from next year,” said Anil K Gupta, managing director (MD).

The compounded annual growth rate of CONCOR was 6.2 per cent in the 11th Five-Year Plan (2007-12), owing to the slowdown and increased competition, against 12 per cent seen in the 10 years till 2008.

P Alli Rani, director (finance), says CONCOR recovered because of a focused approach. “We coaxed our customers by offering discounts and rebates. It meant lesser profit for everybody. We provided services at reasonable cost even when the inflation was soaring. It was in a way giving away a share of your profit for boosting trade.”

CONCOR’s share has risen to 78 per cent this year in container train business, an increase of four per cent year-on-year. Both import-export traffic and domestic operations have taken a hit during the slowdown.

Abhay Agarwal, partner and advisory, EY, said the global economy was reviving and, hence, overall export figures were encouraging in the past six months.

Vishwas Udgirkar, senior director, Deloitte, India, said though CONCOR had an advantage over private companies with better hinterland connectivity, it would need to keep investing in setting up new terminals as demand grows.

The company realises the challenge of growing demand. It plans to set up multi-modal logistics parks and 15 terminals across the country (Tamil Nadu, Dehradun in Uttarakhand, Chattisgarh and Punjab), at an investment of Rs 6000 crore in the 12th plan period (2012-17), up from Rs 1,930 crore invested in the 11th Plan for five new terminals. In the next financial year, CONCOR plans to invest Rs 1,000 crore for new logistics parks, compared to Rs 900 crore invested in the past financial year.

Since public-private partnerships in the infrastructure sector have proved tough, the company plans to execute these initiatives through joint ventures. The company is expecting to raise about Rs 500 crore of the Rs 6,000 crore.

MD Gupta said the most crucial aspect after the recovery would be to catch up with the growing traffic. He said it was for this reason that CONCOR was aggressively investing in new terminals.

CONCOR also plans to set up terminals in the upcoming Delhi-Mumbai Industrial Corridor planned along the Western Dedicated Freight Corridor.

Gupta said: “The slowdown has also brought some important lessons for us. Currently, about 25 per cent of our total income come from domestic trade and the rest from export-import traffic. We are looking forward to expand in the domestic trade. One of our focus is expansion in the hinterland connectivity.”