Ladies and gentlemen, good day and welcome to the Blue Dart Express Q1 FY25 conference call hosted by Elara Securities Private Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. We now hand the conference over to Ankita Shah from Elara Securities Private Limited. Thank you, and over to you, ma'am. Yeah, thank you. On behalf of Elara Securities, we welcome you all to the Q1 FY25 earnings conference call of Blue Dart Express. We will start with opening remarks by the management and followed by a Q&A. So, over to Tushar first. Yeah, yeah, thank you, Ankita. Thank you, Elara, for organizing this investment earnings call for the conference. Good afternoon, everybody. A very warm welcome to all of you into this Q1 Financial 2024 earnings call of Blue Dart Express Limited. As you are aware, the Board of Directors of the company approved the Q1 financial results in its board meeting held recently on 19 July 2024, and the company declared its financial results for the quarter-ending 30 June 2024, wherein the company posted profit of INR 515 million for the quarter-ending 30 June 2024. Revenue from operations accumulated INR 13,457 million. Blue Dart, known for its extensive network and cutting-edge technology, demonstrated consistent growth and remained on track with its expansion plans. Further, for information of investors, Mr. Sharad Upasani, our Chairman, retired as an independent director with close of business hours on 22 July 2024 on account of completion of his second term of the office as an independent director as per the provisions of law, and consequently ceased to be the Chairman of the board. Mr. Prakash Apte, independent director, is appointed as non-executive Chairman of the board with effect from 23 July 2024, which is from today. The company successfully concluded its annual general meeting on 19 July 2024, wherein all the resolutions, including appointment of Dr. Vandana Agarwal as an independent director of the company with effect from 23 July 2024, were passed. The results have been already uploaded on the stock exchanges and also posted on the website of the company. I now request and hand over the call to Ms. Sudha Pai, CFO, and Mr. Sagar Patil, Head Corporate Accounts, for their positions. Thank you, thank you all. Over to Sudha. Yeah, just to highlight on the short-term quarter, our revenue has grown by 6.5%, 6.74%, and the weight by 9.6%. It's a year of investment compared to previous quarter versus this quarter. We have invested in two, you know, the new hub, the new aircraft, in this particular, you know, year, and it is very realistic that would be a little bit of a cost, and this quarter has been on a short-term conservation term, you know, INR 8.1 billion to INR 6.3 billion in this quarter. If you look at the July 2024, we like to, you know, go into questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star then one on the touch-tone phone. If you wish to remove yourself from the question queue, you may press star two. Participants are requested to only use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from Amit Dixit from ICICI Securities. Sir, you may go ahead. Yeah, good afternoon, everyone. Thanks for the opportunity. I have a couple of questions. The first one is, if you could just give the volume number in tonnage and number of pieces, and also state it in ground, air, and surface, that would be great. We don't give questions within our product, you know, the information. But overall, in terms of volume, you know, overall in terms of shipment, last quarter it was 83.94 million shipments, and this quarter it is 90.14 million. And in terms of weight, it is, you know, 285,680 tons in June 2023 quarter, and 313,089 weight in tons in this particular quarter. That's all, that's all the overview at a, you know, at a company level. Thank you very much. This is one of the second question is, if you see on the utilization rate of the 2 freighters, if you could comment on that and the kind of contribution they had in Q1 FY25. So, in the last quarter, you know, this aircraft was capitalized in the first month of the year, which is in June 2023. That's the month it was capitalized at in this particular quarter. It's a full month effect. It's a full quarter effect that was tested in the P&L, and, you know, the impact of it is around like INR 115 million. Utilization, I'd say we would say that it's still, you know, the new sector that has been introduced, which is Guwahati sector, that is yet to be, you know, fully optimum utilized, which is where, you know, the space is challenged on. It's capacity bound; however, the inbounds into Guwahati is around like, you know, between 75% to 80% versus the benchmark of, you know, 85% to 90% being the optimum part. No, I just wanted to ask whether, you know, it has reached the optimum breakeven level of utilization, or still we are? It's yet to breakeven. It's yet to breakeven. It's yet to breakeven. Yet to, you know. Okay. And And when do we expect to breakeven? We expect this somewhere around our festivities getting kicked off somewhere in, you know, from September onwards. We expect, you know, during our festivities, you know, the investments have been fully utilized. Okay. Okay, ma'am. Thank you so much and all the best. The next question is from Mayur Patil from [inaudible]. Go ahead. Hi, hi, ma'am. Thanks for the opportunity. Just want to understand if I recall your commentary in the previous quarter, you were sounding really confident on the PBT margin extension trajectory of 200 to 500 basis points as utilization levels, you know, will inch up in the new aircraft. So given that background, we have seen a decent 9% growth in top line, but we have seen sequential, you know, decline in gross margin level also and also at the EBITDA margin levels, which is looking, you know, making the PBT margin looking like 5.5, closer to that, as compared to the earlier trajectory of 7, 7.5, and where it was supposed to go up to around over a long term. But I don't know, where are we in the journey of margin expansion? Margin expansion is actually a backdrop, you know, two initiatives. One is internal, and another also being, you know, the external, which is the domestic demand. And, you know, while we are, while we are like, you know, while in this particular quarter, we had, you know, additional impact of, you know, the work that we have invested into the depreciation impact of those hubs that is being reflected into the P&L. That's our internal measures that we are taking as an investment, you know, strategy, which will take a bit of a toll on the overall profitability. And ultimately, you know, overall, how does the domestic demand, you know, translate? On the surface, we are growing more on the surface, and on the surface, we are facing a very tough competition. Thus our, you know, margins or the yield would accordingly be not as profitable as we are in the airspace side. That's the current, you know, story that is involved in this particular quarter. So going forward, if we maintain around closer to double-digit top line growth, when should we expect, not exactly that, when should we expect the, you know, that 200 to 500 basis points margin expansion story to begin? Sorry, you said 200 to 300? Sorry. In your previous commentary of the previous conference call, I think you mentioned about there is a headroom of 200 to 400 basis points PBT margin extension as the aircraft utilize more. That's what was the commentary of the previous quarter. Just want to understand if the growth remains steady at around 10% or higher, when should we see that improvement in margins kicking in? As such, we don't give any forward-looking predictions. However, you know, with the margin of double-digit, which is like, you know, 10%, considering it's the Blue Dart trend, it's year-on-year growth is almost between 10% to 15% minus the COVID spread, which are, you know, which is an aberrant year to compare it. Otherwise, 10% to 12% are the different, you know, growth that we aim to look at. And with that perspective, you know, our margins, we would like to, you know, be still in an outlook of decent between 7% to 8%, you know, margin percentage. At the PBT level, ma'am, you know, we were, if I, you know, just referring to your commentary only, in the previous, like you mentioned that as utilization levels in aircraft should go up, you guys are looking at, you know, very sharp improvement from the 7% to 8% margins at PBT level, margins to go up materially for next, whatever, 6 to 12 months, 18 months time. So I'm just finding it difficult to reconcile the commentary with the previous quarter. We had said that, you know, provided, you know, we are able to generate that much level of, you know, provided we go for an optimum utilization. I think that's the one. A is that, you know, we do not make any forward-looking statements. B is, you know, it also depends on, you know, how the market has actually planned out like now. There will be additional loads. Absolutely, I understand. If, but I'm saying if the growth continues to be around 10%+, that should lead to better utilization levels and hence lead to improvement in PBT margins to your previous picks of around 10% to 12%. Is it fair to assume that trajectory, you know, going forward if the growth remains around 10%? If the growth is being effective, I think we expect the growth to be around that percentage, considering the investments that we would do, you know, in the hubs and facilities, considering the IT, you know, initiatives that we would take. Accordingly, you know, the margins would fluctuate. I'll get back to the queue. Thank you, ma'am. The next question is from Alok Deora from Motilal Oswal. Please go ahead. Hello. Thanks a lot. So just on the previous question only, so margins this quarter have been lower if we see it in the last four quarters, you know, and the revenue actually coming in a similar trajectory of INR 300 crores, INR 150 crores. So what has actually happened in this quarter that margins have come off by nearly 150 to 200 basis points on a standalone basis? And is it more like a quarter thing and it will recover in the Q2 onwards? Just some qualitative comment on that, please. The first question, you know, we are facing a situation of growth more in the surface than in the air, you know, in the, you know, in the actual domains. So it's more growth on the ground versus air, and that's where, like, you know, the question on the yields would accordingly be there. As far as expenses concerned, you know, A is that considering the operating expenses and the handling rate increases, that's the cause that has influenced this particular quarter. In addition to the investments into, you know, investments into the hubs and, you know, the depreciation impact of that has to, you know, hit the P&L. That's the broad story for, you know, the drop in the margin, you know, coming from the top line where we are going to focus more on the ground versus the air, and B, you know, the inflationary cost that has resulted in the drop of, you know, margins compared to the previous quarter. So in the coming quarters, directionally margins could improve or because, you know, the growth in surface will always be higher than in the air, right? Because as far as the heavy industry level, the growth is coming, so it will be very similar for the subdivisions as well. So that is not something which could be more of a quarter thing, right? It's not the surface, the air is better, right? So this margin trajectory could we see a better margin ahead, or this could be more of a structural thing and margins could remain at the current levels with, you know, maybe some marginal improvement here and there? As far as our, you know, budgets are concerned, it's a, you know, it's a steady increase of, you know, 10% to 15% increase from one quarter to another, you know, future quarters. Like, so that way we expect to perform in line with our budget. And it actually depends on, like, you know, how the demand would also depend on, like, you know, how much of the business we would do on the ground versus the air. And my expectation is, you know, the margins should improve and. There There 2% to 3%. We don't look for extraordinarily high margins considering it's a festive season, considering aggressive, you know, budgets that we are having. We expect the margins to improve by another, you know, from the current levels to another 2% to 3%. Correct me if, you know, if you add anything you have with this. Sure. This is the last question from my side. In this particular quarter, has there been any one-off costs which have been incurred which might not be kind of repetitive in Q2 onwards, or it's been just a normalized quarter? Just a normal quarter, and we expect those, again, those costs, you know, additional revenue or efficiency to be generated. That, you know, we don't have any one-off cost, but we have a cost for which we expect in the upcoming quarter either the revenue would improve or we would get the efficiency or both, right? Thank you. Actually, that's all my side. If I have more questions, I'll come back. Thank you. Thank you, sir. The next question is from Pritesh Chheda from Lucky Investments. Please go ahead. Yeah, ma'am. Between the two quarters, that is March quarter and the June quarter, and the analysis is there, where your volumes have gone up, your parcels have gone up, but your gross margins have shrunk. So if you could clearly identify the reason for shrinkage in gross margin between the two quarters, and if you can directly tell us the extent of this change between the two quarters, if any. It's driven by margin by the product mix, you know, from one quarter to another. That's one of the key, you know, key drivers, you know, between the last quarter of March to June quarter. We are seeing more growth on the ground and the air, and, you know, the rest of the story remains the same, that yield and stability on air is better than the ground. Okay. To what extent does this change? 400 basis points POQ change in gross margin. To what extent does this change? So one example is that if you talk about Q&Q from JFM to AMJ, one significant question that comes in the AMJ is the increment. So while we would have done most part of the GPIs in the Q1 or calendar quarter of the calendar year, what makes difference specifically April, May, June is a quarter immediately after the financial year end, so the volumes to some extent are softer as compared to the previous ones, which has not happened in this case because we have plied the new sector on air, which is the Guwahati, for the entire full quarter. Whereas in the previous quarter, though, it was 100% of January, the number of flights would be relatively less. It would not be a full for the entire quarter. Incremental impact for this month would be versus last previous quarter POQ 21, the increment, and the second would be the relative utilization of this one sector where we have flown aircraft for the Q1. But consider the reason for underutilization of a particular sector cannot result in a gross margin increase, right? Yeah, so that is one reason. Major reason would be the increment. Increment. So you're saying that if you have taken a price increase that was there of Q1, basically calendar year forward, and not of Q2. So the cost has come in Q2. Okay. So you're saying cost has come in Q2 and all realization came in Q1, higher realization came in Q1. Yeah. So higher realization started from Q2 one, so this is not a differentiated between as far as POQ is concerned, the same realization is there in Q2 as well. But from a cost point of view, this is an additional cost versus Q1 that has come in the quarter. Okay. Is it possible to share the differential based on the groundwork compared to Q2 quarter? No problem, ma'am. It's okay if you don't share. No problem. Just trying to, you know, understand your commentaries, which is important. Is it, you know, last quarter was very clear that you guys have underutilized capacity on your hub, and that capacity was supposed to get built up by some outsourced volumes which were otherwise outsourced. Now we'll start looking at built-up sector long-term. So those volumes will start coming on your fleet. Three-quarter utilization improvement will bring in better margins. So without quantifying how much better, but directionally will bring in better margins. Now, in the, is it, so between the two quarters and the first answer that you gave, is it that the air volume, shipment volumes, shipment Q4 and Q1, Q1 volumes are lower than Q4 in air? One moment. On your overall volumes. Is it that the air volumes are lower in Q2, basically, with June quarter versus the March quarter? Let's see, you know, let us please give us a moment to check, please. Yeah. We don't want absolute number. We just need the direction. Directly, that's the, you know, air versus surface. Just a moment, you know. Yeah. March. March air volumes and June air volumes. Just a moment. Just give us a few moments. Yeah. It's a trend continue, you know, air versus ground, we are, you know, between March quarter to quarter that we are looking in. And overall, overall in terms of, you know, the volume, the shipment, you know, overall in terms of the weight, we are better off in June quarter where the weight is 31,308 and last quarter it was 296,988, you know, to reach it. And shipment being 900. So number we have, ma'am, that number you gave, will the air shipment be lower than air volume of Q2, will it be lower than Q1? Yeah, it is. It is. Okay. So if it is, then that brings you a case for operating negative leverage because your asset utilization will be lower in Q2 versus Q1, right? Yeah. Is the profitability in surface intact or there is erosion in profitability in surface? We do not, you know, give too much of details into our product level. I'm not asking for the, I'm not actually asking for the percentage. I'm just saying, were you making the same profitability margins or there is some slight changes there in surface? It depends on the, you know, also depends on the OD pair use. Like, you know, it also goes on the OD pair. So we can't do it like, okay, you know, the yield has dropped because prices have dropped. Also the OD pair, you know, the short haul, long haul, those all come into the picture. So, you know, that's our overall comment on the yield. No problem. So I'm taking home a case where, so what you mentioned in Q1 commentary and what we understand from your Q2, the case that there should be improvement in margins as in when this utilization increased, that theory remains in place. Yeah. Without figuring out or asking you to comment, okay, what the direction is in place, right? Yeah. Okay. Thank you. Thank you. Thank you, sir. The next question is from Anshu Agarwal from [inaudible]. Please go ahead. Hi. Thank you for the opportunity. Am I audible? Yes. Great. Ma'am, I just wanted to ask a question on the CapEx. The additional hubs that we have sort of commissioned are part of our budget planning and included in our CapEx plans of up to INR 250 crores that we'll deploy in the current year? Yes, it is part of the CapEx plan. You know, it is part of the CapEx plan. It is part of the budget, however we expected, you know, the cost we expected the efficiency to come in whereas we are currently into a cost situation. Sure. So the question that I basically had was, does our CapEx of 250 CapEx guidance of about INR 250 crore by the remaining? Yeah. It does include, you know, the expansion of the hubs. Okay. These hubs would be in the surface business, right? A lot of the CapEx would be on surface now? Both. Both. Both. Both. We have both lines, you know. Okay. So yeah. Considering the competition in Surface Express is very staunch currently. What I was trying to understand was Blue Dart being a premium logistics operator, pricing on surface would also be slightly higher than competitors. In wake of this, how are we trying to win that share? How are we trying to gain volumes in the Surface Express business, ma'am? So our outlook is always, you know, is to increase the market share, definitely, you know, gain the market share. However, we also aim at profitable growth. You know, we also aim for the profitable growth. In the markets where we are dominant and we are leading, the profitability would be, you know, the margins would be higher in the market that we are entering. We always aim for a decent profit, you know, and yes, of course, you know, depending on the outlook for the quarter and, you know, how does the overall business stand. So, you know, we have some risk-taking, you know, risk-taking situations. But largely, you know, even if we face a strong competition on the ground and yet we try to aim for profitable growth in, you know, in the business. Good, ma'am. What I can infer, so technically in areas where we are not dominant, in regions where we are not dominant, our pricing strategy would be to sort of match a dominant competitor wherever we have challenges. Do we have that leeway or do we, you know, use a premium pricing model throughout, despite us being challengers or being dominant in the particular region? It also depends on the customer base as well. Like, you know, if we see like, you know, a customer with steady volumes and, you know, our possibility to do a consolidation going forward may get improved. Considering those all factors, you know, the pricing is accordingly offered and which may be, you know, which may not fit into our, you know, exactly profitable growth. However, you know, depending on the market that we are considering, depending upon the customer, you know, the customer base, we do consider, you know, a leeway in pricing. Sagar, would you want to add? So the term of premium pricing can be at times subjective if you look at it from a different parameter. It depends on what weight breaks the different players in the market are operating. So if a player who is at, say, 50 kg per shipment versus somebody who is at, say, 120, 130 kg per shipment, the 50 kg shipment becomes more of a service proposition than a freight proposition. And the RPK doesn't really become comparable. So as we try to also benchmark at times ourselves in the market, we don't only look at the RPK. So if you look at RPK, one may say for a good premium level properties, that may not be the correct criteria. From a business strategy point of view, we do not really need to acquiring customer base based on pricing as a sole criteria. Service quality is always the prime criteria. Of course, wherever there are opportunities where there is a key customer and a long-term proposition, we may have a special price or a teaser price for initial few months. After the customer realizes the value being delivered, then we next price increase cycle, we ask for the real benchmark price in line with other customers. That has been so, and this happens more on a smaller scale. Will not make a significant difference in the yields or in the margins that we would typically draw from overall business or product perspective. Got it. Yeah. Thanks. Very useful, Sagar. Just last question. So considering, you know, the volume numbers that you gave out of blended realizations are down about 4% on a Q-on-Q basis. While I understand you don't give the qualification between surface and air, from what I can understand, our surface business might have outgrown our air business by roughly 4x. Considering that, you know, it contributes only about 30%-35% to the top line. In that scenario, our air volumes would have, you know, not grown by much. So is the insourcing of cargo that we did in 4Q, right, where we did not pick up mini cargo space, commercial mini cargo space, that would have resumed in this quarter or the insourcing continues to remain at the same levels as it was in 4Q? So two questions. I think one from the surface, ground point of view. Yes, that has been the major, I would say, growth driver. So as we go along, you may see as if overall yield in terms of rupees per kilo may show a dilution, not really comparable number. From the point of view of air cargo, yes, as we have run our new aircraft for the entire quarter, the focus is always on ensuring for Blue Dart, you know, sectors where our flight flies to minimize the commercial backhaul and depend more on the insourced capacity as well. So that would have some impact in the initial phase as we build the volumes in the new sectors. Got it. Just one question. And also what I want to know, you're right, it really costs to, you know, the commercial airlines' side should be controlled. Considering the SQ, you know, where this is the most biggest agenda of permission of, you know, this organization is, you know, to adhere to the SQ level. To meet the SQ level, sometimes, you know, we do take a call on, you know, incurring the cost on commercial space. You know, it's just so that, you know, to give an overview on the TBT costing. Got it. Yeah. Yeah. Thank you so much. Thank you for your time. Thank you, sir. The next question is from Prabhashankar N.J. from Avendus Park. Please go ahead. Hi, I'm Srinivasan. Thank you for the opportunity. My first question is on pricing again. Sorry to harp on this point, but just wanted to understand individually between Air Express and Surface Express, in any of these segments, has there been a price decline sequentially because of various reasons, market reasons or week to quarter? I understand that we have played a role with respect to yield decline. Individually, has there been any yield decline on a Q to Q basis? We do not comment on individual products to sector aspect, Mr. Prabhashankar. You know, overall at RPS, RPK level, you know, versus the previous, you know, versus the previous quarter, like, you know, versus the previous quarter, previous year quarter, we are seeing, you know, a marginal growth on the RPS part. And RPK slightly, you know, slightly down. However, rate per shipment has increased, like, you know, 2.1%, whereas RPK is 0.7% down. These are our outlook, you know, overall at the organization. Understood. So is it fair to assume because you have incurred costs on expanding your hubs on the ground network as well as the air network, to boost utilization similar to what was done with respect to the Guwahati sector, wherein you had taken in low-yield products just to boost utilization levels, is that something of a strategy which can be deployed in the Surface Express business as well just to ensure that utilization levels improve so that you can cover up the cost? That's something which we are actively considering, or is that something which we have implemented per se? So you are saying on the Surface Express business, do we do a better utilization there? Do we do a proper, you know? Yeah. Is there a yield management perhaps just to boost the utilization of expanded hubs which have come through over the last one year or so? From the ground product and Surface Express point of view, the major cost element is the vehicle hire and not as much hubs. So ideally, we would not, and this is already a well-established network. The capacities are almost close to the optimum utilization levels from the, you know, volume point of view. So we would not really prefer as a business to dilute or offer a lower price in order to utilize the hub capacity from the industry point of view. So no, to answer to your question is no, there would not be dilution in the yield because of the expansion of hubs. Understood. Understood. And last point from my side, last question was more to do with the e-commerce business. Is there any further acquisition with respect to pricing strategy over there? Perhaps because increasingly we have seen that the Blue Dart, we are hearing from market that the shipments of Blue Dart share in e-commerce has also increased. So any change in strategy with respect to e-commerce? No change in strategy. We do offer both our aircraft for a faster delivery as well as like what most of the competition does. We also move on ground on this speed network. So as to move on ground, we have such kind of network. And we have started that with major focus since last few years, two to three years especially. We have seen that more after COVID, and we see that also growing well. So it has been continuous continuation of the mode that we had. So no major change in strategy over here. So just a follow-up on that. Is it fair to assume that during this quarter, e-commerce or B2C in ground would have grown much faster than B2B ground surface, or is that, is it fair? Is that something which you can comment on? Don't you product-wise within the product-wise information? No, no. Just no. Just directionally. Directionally, just asking that if. B2C is a smaller segment on the ground part for us, you know? Right. Yeah. Yeah. So on B2C, the ground, so we have the speed network which we call Dart Plus. So that has been growing faster, but it is still a smaller part of the business. But yes, it is growing. Not a very big growth driver, but that is something that probably is a product that will continue to grow faster for a few years to come. All right. Thank you for answering my questions. All the best. Thank you, sir. The next question is from Vipulk umar Anupsinh Shah from Sumangal Investment. Please go ahead. Yeah. My question has been answered. Thank you. Thank you. Ladies and gentlemen, you may press star and one to answer the question. The next question is from Nemish Shah from Emkay Investment Managers Ltd. Please go ahead. Yeah. Thanks for the opportunity. So I just had one question. If I consider the June quarter versus the March quarter, so the RPS per shipment for us in the June quarter is almost the same versus the March quarter. So is it fair to assume that we would have seen some change in the documents business sequentially? If you can give some sense directionally? We have. Weight per shipment, sorry, I wouldn't give the initial change time. So when I just compare the weight per shipment for June quarter and March quarter, so in the June quarter, it's gone up about 70%. So I'm just trying to infer that is this because of our documents business going down or sequentially? Not going down, but the share can be the ground product being a faster growing product. The share would go down against it. We'll have impact on the weight per shipment. Okay. Okay. And just sometimes in terms of how is the competition in the documents business? So it is last year our air business, and so, you know, it's known to be a market which it's known to be one of the largest markets and businesses for the Blue Dart. That's how we can, you know, stay on the DT business. That holds for even, you know, even this quarter. Okay. Yeah. Thank you. Thank you. The next question is from Ankita Shah from Elara Securities. Please go ahead. Yeah. You mentioned that we are doing a lot of investments on creating new hubs. So what is the capability done last year, and what is the number of addition of hubs that you've done? So last year, we didn't have any big investment, you know, into, you know, into these hubs. And this year, I mean, these are the very largely, you know, high-tech, expensive hubs. And, you know, additionally, would be, you know, another two to three or three to four, depending upon the profitability, how we make the profits, and, you know, what would be the strategy for the next year. Considering that, you know, approximate another two to three is what is our current horizon. I hope that answers your question. This means to say that last entire year, we've not added any hubs. And this year, last quarter, for 2020. Over the entire financial year, because even in our annual reports, number is exactly the same. Two, three, four, seven hubs is same as what we had done last year, FY 2023 and 2024. There is no change. And every quarter, press release mentions that we have been adding new hubs on the Surface side. So where are these hubs, and where is the addition? We are not able to capture that. So look at, you know, the Surface side level where depreciation has increased, you know, depreciation and yield increased from last quarter to current quarter. I think that's the one which explains, you know, the increase in the, you know, age increase in the, you know, hubs that we are planning to, that has gone by. Last financial year, we have not added any major hubs. So last couple of financial years has been more of addition of aircraft and convergence from lease to buy. There have been, as a replacement for expansions of the existing smaller facilities this year and the year following, there will be, we are not adding, you can say that we are expanding existing hubs by replacing or in the same facility, adding another piece of land. Yeah. Okay. And you mentioned that we have not yet reached the optimum utilization level at the aircraft. So what is the level right now, and at what level, when we reach, we will achieve an optimal level according to you? Ideal is, you know, ideal is 90%, 20% of the, you know, the actual weight that the, you know, aircraft carries. Considering the volumetric adding, you know, as I mentioned, it takes it up to, you know, between 90% to 98% and so on. But ideal actual weight, it is somewhere between 95% to 90%, we say that it is an ideal optimized aircraft for us. Currently, it would range between 70% to 75%, so what could you? Yeah. So again, I mean, there is a very subjective kind of interpretation of capacity. When we say utilization, there is underutilization, we only talk about the Guwahati sector. The same 737 that we are currently flying, it also touches Bengaluru, Delhi, Mumbai, you know, and then Guwahati. Other than Guwahati sector, which is also from or ex-Guwahati to Delhi or Surfaceline, there is underutilization. However, all the rest of the metros which are flying within the other metros and flying from Calcutta or into Guwahati, they are all utilized. So when we say utilization of 85% to 90%, it is more of in terms of pilot successfully. So every time we fly the aircraft, we would not fly the aircraft unless there is a capacity projected or available optimum, you know, to fly the aircraft. So only where we are flying currently in anticipation of the buildup of volume in the monsoon term is the ex-Guwahati sector. So in the overall scheme of things, it is not a very significant capacity that is going underutilized. Overall, all India capacity basis, it could be less than 5%. Okay. We had also taken a freight hike this year, which we take every first of the year, first day of the year. Is there any impact? Have we been able to pass through that to the customers? Because we don't see any realization gain for in the revenues. Yeah. Yeah. I'm saying we generally get a general price increase in the first day of the year, but we don't see any kind of realization improvement in our numbers. So have we been able to pass on that price hike to the customers, or the entire revenue growth is coming only from volumes? Oh, we have also made it clear in our press release. We have made our general price increases. Of course, it's not to the expected budgeted level what we had, but roughly 3.9% to 4% is about, you know, is the additional revenue that comes from GPI. So in this 9% revenue growth you're saying, around 3% is contributed by the GPI? Yeah. You can say that 3.9% coming from GPI. And did you take both for air and surface business, both or only in particular segment? No, it depends. Like, no, it depends for certain customers, the contractual terms that we have, you know, the period that we have started the contract. And so it spans across all of the products. It is not across the board. It is selectively passed on. I mean, yeah, it is, you know, it depends upon, you know, various factors like we try to do across all the products. You mentioned about the price hike that was given to employees, which has led to increase in expenses and hence lower gross margin. What is the amount of increment or hike that has been which has impacted the margin? So it's increased roughly 50. We'll have to, you know, roughly, you know, 4% YOY, you know, quarter on quarter increase now. 4% YOY and QOQ? QOQ, I would say that, you know, last quarter versus this quarter. And what would be the YOY impact? YOY, sorry, YOY would be YOY is around, you know, roughly 4%. Yeah. And even on quarter on quarter between the three years, roughly, you know, 2.5%. Okay. Okay. Okay. Okay. Thank you. Thank you. The next question is from individual investor, Rajakumar Vidyanathan. Please go ahead. Yeah. Good afternoon. Can you hear me? Yes. Yeah. Yeah. Thanks for the opportunity. My question is on the margin levers. I heard that the, yeah, apart from this better aircraft utilization, I just wonder what are the other margin levers available to the company, and what do you think will play out in the next three quarters? From the quarter point of view, there is normally a volume upsurge in the first few months. So there is one lever which have given yields, so not every quarter is the same. There is some level of similarity. And yes, improving the service quality level and thereby looking for a better price increase is the realization while attracting the new customers. So these are the levers of the business for a given, you know, we have a stable mix, stable customer mix and network. So the idea is always to improve the quality parameters and therefore try and get more customers and get more premium from the customers in terms of price realization. Okay. Basically you're saying only from Q3 onward you can see any uplift in the margin, right? Well, it would be forward-looking, but yes, I mean, the second half is always a good month for the industry or economy in general where we operate. Generally, if you can also give some color on the demand outlook, do you expect, do you think the demand is better, or do you see any kind of, you know, slowdown? We are optimistic. We see as the GDP growth rates improve, the e-commerce infrastructure improves, we see healthy prospects both for the air mode for the critical and faster deliveries required, as well as relatively less cost, but ones which are on ground. So we see in general our customers growing. So yeah, we have a positive outlook. Thank you. Just last one question. So I just wonder what is the sensitivity the fuel cost has to the cost line? How sensitive? So it is an important part of our cost, but by design, it is optimized by way of having a variable surcharge that we have. So typically our customers, our customer contracts our fuel surcharge clause, which percentage increases or decreases based on the global Brent oil prices. To that extent, we have neutralized the impact of fuel cost variations in our realization of margins. Okay. Got it, sir. Thank you. Yeah. Thank you. Thank you, sir. Since we have no further questions, ladies and gentlemen, I now hand the conference over to Mr. Tushar Gunderia for closing comments. Yeah. Yeah. Thank you, Elara, thank you, Ankita, and thank you all investors. So if you do not have any questions, we can close this investors call. Thank you. Thank you all. Thank you all. Thank you. On behalf of Elara Securities Private Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect your line.