Thursday, November 29, 2007

CONCOR : PART 1 : The Indian Rail Logistics Giant !

My first post in over a week!!

This is the first of a four part write up of my analysis of CONCOR (The Container Corporation of India), a state owned rail logistics operator. This is a company with strong fundamentals and a solid growth story. Long term Investments can be considered, in the event of a market decline.

Container Corporation of India (CONCOR), a public sector enterprise and subsidiary of the Indian Railways is the well established incumbent in container train operations in India. Concor also provides a number of value added services like transit and bonded warehousing, consolidation, custom clearance, factory stuffing and destuffing, container maintenance and reefer services. Over the last few years, Concor has significantly scaled up its fleet of high-speed wagons. As of March 2007, its fleet of high speed wagons increased to 5927 & orders were placed for a further 2025 high speed wagons . The container fleet (owned and leased) as of March 2007 was 12,812 containers.

The real strength of this company lies in its strategic network of 58 rail-linked terminals, spread across the country.

In January 2006, the Indian Government opened up the container haulage sector to the private sector, thus ending CONCOR’s monopoly. Subsequently a number of private sector logistics players and port operators have applied for permits to move containers by rail. Under the new container policy, private players are expected to invest in rolling stock(wagons) and inland container depots. The railways will only invest in laying lines and improving and expanding the existing ones.

Increased competition and pressure on operating margins will have an impact on CONCOR’s financials over the long term. However given its headstart and pan Indian infrastructure setup, CONCOR still dominates Indian rail container logistics.

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