Analysis of logistics operations of Container Corporation of India, (COCCOR), railways and roadways transportation cost analysis, working capital comparison with peers, findings and suggestions to enhance commercial efficiency.

1. Making
Operations
Commercially
Viable
INTERNSHIP REPORT
CONTAINER CORPORATION OF INDIA

2. Contents
An overview of
Container
Corporation of
India
Objectives
Research Design
and Methodology
Findings Analysis Working Capital
Weaknesses &
Concerns
Suggestions

3. Container Corporation of India
Incorporated in 1988 A Navratna PSU
under Ministry of
Railways
Network of 83 ICDs
across India
Main Activities:
Container Logistics
Terminal Warehouse
Operator
Air Cargo Division

4. Objectives
Analysis of CONCOR operations for improvement: detailed operations at
TKD, import & export process,
Calculation of operational costs incurred and their reduction possibilities.
A study of the CONCOR’s working capital & comparison with top
competitors.
Finding the weak points and providing suggestions.

5. Research Methodology
The type of research done is Quantitative Research,
measuring the container traffic at various ports and
terminals, identifying the cost influencing factors.
Research on working capital and comparison with
competitors & international peers.
Data collected primarily for the past 2 years- FY 2017-
18, 2018-19; deviation in collection period based on
requirement, availability and relevance of data.

6. Findings
CONCOR Processes
Export Process
Import Process
Cost Analysis
Working Capital
Days Sales Outstanding (DSO)
Days Payment Outstanding (DPO)
Days Inventory outstanding (DIO)

7. Export Process
Transferring empty container from empty stack to stuffing point
at CFS,
Unloading export cargo from shipper’s transport and stacking it
at the nominated space in CFS;
Arranging Customs Examination (including unpacking/opening of
packages and closing them);
Test weighment of cargo (if required); stuffing of Customs
cleared cargo in container, sealing of container;
Transferring loaded container to stack and loading Customs
sealed container on Rail Wagon/Road Trailer for dispatch to
nominated Gateway Port.

8. Import Process
Unloading loaded import container from Rail
Wagon/Road Trailer; stacking it in import stack;
Transporting it to CFS for seal cutting; de-stuffing of
cargo at nominated place in CFS;
Arranging Customs examination; and loading
Customs cleared cargo in Road Vehicles arranged by
importer.

9. /
Cost Analysis
Define
Define fixed and
variable (or running)
costs related to
transport systems.
Calculate
Calculate unit cost
measurements for
variable costs
related to
transportation.
Describe
Describe factors
that drive the cost
of variable costs.

10. Variables Costs
Cost of railway transportation;
Cost of roadway transportation;
Cost of marking, identifying, recording,
as well as transfer and handling;
Cost of stacking/unstacking activities;

11. Cost of Railway Transportation
Rail transport costs, unlike road, are characterised
by high fixed cost of rail, locomotives and rolling
stock, and buildings, but lower per unit fuel and
operating costs, as rail can carry large volumes.
A rake can carry up to 90TEUs of cargo, however
the volume of the cargo does not affect the cost
charged by Indian Railways.

12. Cost of Railway Transportation
Origin &
Destination
Distance (Km) Cost (Rs.) Cost per TEU (Rs.)
Cost per TEU/km
(Rs.)
{a} {b} {c=b/90} {d=c/a}
TKD to JNPT 1497 1750000 19444.44 12.99
TKD to MDPP 1172 1450000 16111.11 13.75
DER to JNPT 1431 1500000 16666.67 11.65
TKD to SNF 1548 1750000 19444.44 12.56
TKD to WFD 2145 2000000 22222.22 10.36
Average Cost - - 18777.78 12.26

13. Components of Costs
Road Transportation
There are several components which contribute to the costs incurred in
road transportation
Time Related Costs
Crew Cost
Overhead Costs
Running Costs
Fuel Costs
Vehicle Repair & Maintenance

14. Cost Calculation
Estimating the cost factors stated above, the average cost of trucks/trailers were calculated,
past accounting data was also considered for precise estimation; the costs for roadway
transportation is as follows:
Total cost for 40’ Container Truck:
Crew Cost + Overhead Costs + Fuel Costs + Vehicle Repair & Maintenance
To reduce error, costs were calculated with various conditions and combining the data with
accounting data the average cost per ton/km was calculated.
The average cost of a truck/trailer carrying a 40’ ISO container came out to be Rs.2.5 per
ton/km.

15. Working Capital
Working capital is money available to a company for day-
to-day operations. Simply put, working capital measures
a company's liquidity, efficiency, and overall health.
The working capital of CONCOR was compared to its
peers as well as other similar international companies.

16. Revenue and COGS
Company
Total Revenue Cost of Goods Sold (COGS)
FY 2016-17 FY 2018-19 FY 2018-19 FY 2016-17 FY 2017-18 FY 2018-19
Container Corporation of India 62,782 58,897 66,125 46,627 44,018 48,183
Adani Ports 71,087 84,394 1,13,230 21,545 25,959 37,294
Aurizon Holdings Limited 1,73,996 1,55,847 1,57,661 97,447 79,860 78,575
VTG Aktien 71,077 78,271 86,111 38,220 41,922 45,789
DP World 2,87,387 3,01,815 3,92,981 1,41,177 1,51,490 2,18,457
Figures in Million Rupees

17. Account Receivables & Payable
Company
Account Receivables (AR) Account Payables (AP)
FY 2016-17 FY 2017-18 FY 2018-19 FY 2016-17 FY 2017-18 FY 2018-19
Container Corporation of India 595 632 909 1943 2593 2759
Adani Ports 24387 26959 43755 4033 4557 4897
Aurizon Holdings Limited 17697 16043 2161 14054 13579 12546
VTG Aktien 10094 12921 15133 8575 12952 12264
DP World 27868 32143 50080 11558 12634 22563
Figures in Million Rupees

18. Inventory
Company
Inventory
FY 2016-17 FY 2017-18 FY 2018-19
Container Corporation of India 183 231 278
Adani Ports 2119 6571 5203
Aurizon Holdings Limited 7684 5545 5982
VTG Aktien 2323 3249 3706
DP World 5374 5762 8045
Figures in Million Rupees

19. /
Days Sales Outstanding (DSO)
3 4 5
125
117 141
37
38
5
52 60 64
35 39 47
0
50
100
150
200
250
300
FY 2016-17 FY 2017-18 FY 2018-19
NUMBEROFDAYS
DAYS SALES OUTSTANDING (DSO)
DP World
VTG Aktien
Aurizon Holdings
Limited
Adani Ports
Container
Corporation of India

20. /
Days Payable Outstanding
15 22 21
68 64
48
53
62
58
82
113
98
30
30
38
0
50
100
150
200
250
300
350
FY 2016-17 FY 2017-18 FY 2018-19
DAYS PAYABLE OUTSTANDING (DPO)
NUMBEROFDAYS
DAYS PAYABLE OUTSTANDING
DP World
VTG Aktien
Aurizon Holdings
Limited
Adani Ports
Container Corporation
of India

21. /
Days Inventory Outstanding (DIO)
1 2 2
36
92
51
29
25
28
22
28
3014
14
13
0
20
40
60
80
100
120
140
160
180
FY 2016-17 FY 2017-18 FY 2018-19
NUMBEROFDAYS
DAYS INVENTORY OUTSTANDING
DP World
VTG Aktien
Aurizon Holdings Limited
Adani Ports
Container Corporation of
India

22. Cash Conversion
Cycle (CCC)
The cash conversion cycle (CCC) is a metric
that expresses the time (measured in days)
it takes for a company to convert its
investments in inventory and other
resources into cash flows from sales.
𝑪𝒂𝒔𝒉 𝑪𝒐𝒏𝒗𝒆𝒓𝒔𝒊𝒐𝒏 𝑪𝒚𝒄𝒍𝒆 𝑪𝑪𝑪
= 𝑫𝑺𝑶 + 𝑫𝑰𝑶 − 𝑫𝑷𝑶
Company
Cash Conversion Cycle
FY 2016-17 FY 2017-18 FY 2018-19
Container
Corporation of India
0 0 0
Adani Ports 93 145 144
Aurizon Holding
Limited
13 1 0
VTG Aktien 0 0 0
DP World 19 22 22

23. High level outside-in
analysis indicates a
potential opportunity
to release a
minimum of
Rs.3,108M from
working capital,
primarily driven by
improvements to
Accounts Payable.
AR AP Inv Total
Stretch Opportunity 0 4,593 0 4593
Base Opportunity 0 3,108 0 3108
0
3,108
0
3108
0
4,593
0
4593
RUPEES(MILLION)
AXIS TITLE
ANALYSIS RESULT
Base Opportunity Stretch Opportunity

24. Weaknesses
Overdependence on a single rail corridor for Exim Business,
60% of the traffic flow remain between North and West India,
which is also a necessity as per our country’s maritime strategy.
Any disruption in these sectors can have serious repercussion on
business.
Large dependence on Railways as a transporter leaves CONCOR
vulnerable to increases in haulage charges & policy changes.
There is severe competition from the Road Sector specifically
for short lead and light weight cargo.

25. Weaknesses
Gaps between quality of service and the ever-growing expectations of
the customers. At some places outsourced services are not of desired
level on account of differences in the objectives of the service providers
and CONCOR.
The Export – Import imbalance creates difficulty in arranging return
cargo leading to empty running. Overdependence on EXIM traffic &
resultant exposure to vagaries of international business/trade trends.
CONCOR does not hold its cash in hand, advance and early payments
have been its regular practice which leaves a potential of improvement
in the DPO.

26. Suggestions
To overcome the overdependence on a single rail corridor for Exim
Business, CONCOR must carry out marketing efforts in small cities with
trade potential to make the most of their 83 terminals spread all over
the country.
Vagaries of road-based logistics makes it difficult for CONCOR to
directly enter this sector – especially given its PSU status and hence
leaves it dependent on other agencies.
To bridge the gap between the customer expectations and the quality
of service offered, a customer feedback process should be introduced in
their service procedure.

27. Suggestions
Despite continuous efforts by various export promotion councils,
India still has a trade deficit $13.4 bn, this results in empty running of
rakes; CONCOR can reduce its impact by venturing into the domestic
sector by providing discounted rates on routes where empty running
is high, the discounted rates will give a competitive advantage over
road transport and will reduce the empty running of rakes.
High level outside-in analysis of working capital indicates a potential
opportunity to release a minimum of Rs.3,108M from working
capital, primarily driven by improvements to Accounts Payable.

28. Any Questions