The September quarter’s financial performance of Container Corp. of India Ltd (Concor) was not exciting. Yet again, the export-import (Exim) business has offset the underperformance of the domestic business to some extent. This trend has continued for the last four quarters.

Containers are stacked in Concor, an Indian Railways Corp. depot in New Delhi. Photo: Bloomberg.

The domestic business continues to bear the brunt of the changes in the rail haulage policy that came into effect from December. However, even as domestic volume declined year-on-year, realization increased as Concor partially passed on the increase in rail haulage charges.

On the other hand, Exim volumes increased, but realizations declined a bit due to reduction in lead distances. Lead distance is the distance in kilometre for which the cargo of a client is transported. The Exim business reported single-digit growth in revenue and Ebit, while Ebit margins declined marginally to 28%. The Exim business contributed four-fifths to the company’s total revenue, with the rest coming from the domestic business. At the Ebit level, Exim accounted for a much higher 93.8% share of the total.

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Accordingly, Concor’s overall performance was driven mainly by the Exim business. The company’s total revenue for the September quarter increased by 5.3% to 994.54 crore. That looks relatively better than the 3.6% revenue growth in the June quarter. However, higher staff costs and other expenditure (including rail freight expenses) led to a 130 basis points decline in the operating profit margin to 26.4% and flat operating profit. Other income almost doubled from the previous year and helped the profit before tax growth of 14%, but prior-period tax adjustments resulted in a 15% decline in reported net profit to 175 crore.

The growth outlook appears muted for the company. Decline in lead distances and higher competition from private operators are key worries. Analysts expect the Exim business to drive Concor’s overall performance. Of course, the domestic business would be helped if any positive changes take place in the rail haulage policy.