Good evening, everyone. Welcome to the Q1 2025 earnings call of Delhivery Limited, hosted by Macquarie. Before we start, Delhivery would like to point out that some of the statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the earnings presentation shared with you earlier. Kindly note that this call is meant for investors and analysts only. If there are representatives from the media, they're requested to kindly drop off this call immediately. To discuss the results, I'm pleased to welcome Mr. Sahil Barua, Managing Director and Chief Executive Officer, Mr. Amit Agarwal, Chief Financial Officer, and Mr. Vivek Pabari, Head of Investor Relations at Delhivery. As a reminder, all participant lines will be on listen-only mode, and participants can use the Raise a Hand feature to ask any questions post the opening remarks. I thank the management team for providing Macquarie this opportunity to host the call. I now invite Mr. Sahil Barua to take us through the key highlights of the quarter, post which we will open up for Q&A. Thank you, and over to you, Sahil. Thank you, Alistair. Thank you, Macquarie team. Thank you to all of you who've joined our earnings call this Friday evening. As always, we'll begin with a short presentation on financial and operational highlights from the quarter that's passed, and then we'll be happy to take questions. The broad summary for the quarter is we've seen a quarter of growth from quarter four last year. Significant growth from our B2B business, both in the PTL space, the supply chain services, and steady volume growth as a business, with an improvement in profitability across all of our core businesses. Aside from this time, I'll invite our CFO, Mr. Amit Agarwal, to actually walk us through the presentation, and then I'll be happy to take questions after that. So over to you. Hi, good evening, everyone. We had a fairly steady and profitable start to the fiscal year, where our top line grew by about 13% on a YOY basis, and our EBITDA for the quarter was at 1.5%, and the adjusted EBITDA was at 1.7% for the quarter. Express Parcel Service EBITDA remained stable at 18%, while there was continued improvement in Part Truckload business service EBITDA to 3.2%. Express Parcel business grew across all non-last mile segments, and within that, we also grew significantly within the heavy goods category, about which we'll talk more later in the call. Part Truckload business grew 25% year-on-year, on back of both volume increases and yield improvements. SCS business growth was 26% YOY, due to seasonally strong quarter, for air conditioning customers. We have a robust pipeline of customers across several sectors, in auto, electrical and FMCG. Overall revenue grew to 12.6% year-on-year basis and 4.7% quarter-on-quarter basis. We did 183 million parcels in Express Parcel, which represented a growth of 0.6% YOY and 4.1% quarter-on-quarter. Our Truckload business was just short of 400,000 metric tons of load, on back of 16% YOY volume increase and 3.9% quarter-on-quarter volume increase. EBITDA was at INR 97 crore or 4.5%, while the adjusted EBITDA was at INR 37 crore or 1.7%. Both these metrics have improved in a range of low to mid-single digits on both YOY and QOQ basis. PAT was INR 54 crore for the quarter or 2.4%. This includes a positive impact of about INR 39 crore while we have moved from WDV depreciation method to a straight-line method, and INR 20 crore reversal on ESOP cost for leaving employees in the past quarter. There was a five crore exceptional item as well. Excluding all these things, items, the PAT was breakeven for the quarter on a like-to-like basis compared with previous quarter. We continue to operate our business off a steady network and infrastructure with no material capacity additions. While growing the business, we have expanded our customer base importantly from 33,000 customers to nearly 35,000 customers this quarter. All other infrastructure metrics have remained stable or have slightly been geared for efficiency, while the team size and partner size and fleet size have improved in line with the business. In Express Parcel, we have grown our revenues YOY 6%, while quarter-on-quarter 5%. The volume increase YOY is 1%, and quarter-on-quarter is 4%. As I mentioned earlier, this is due to higher mix of heavy goods in our business on a YOY basis, due to which yield has expanded. Our truckload saw revenue increase of 25% YOY and rate tonnage of 16% YOY, coupled with 8% yield improvements. Yield improvement has been an outcome of efforts on pricing and mix improvement in this business. Truckload services witnessed a 19% growth YOY basis, and a 10% degrowth quarter-on-quarter due to selective filling in RFQs, which has resulted into 1% improvement in our service EBITDA in this business to 3.2%. Supply Chain Services grew 26% YOY basis due to seasonally strong quarter for air conditioning customers. Cross-Border Services has grown 2% YOY and 39% quarter-on-quarter. The most of the increase quarter-on-quarter in Cross-Border Services is on back of both volume and yield increases in the ocean freight market that we have witnessed. The service, the overall Service EBITDA for the business, is at INR 258 crore or 11.9%, which represents 1.7 percentage improvement on a YOY basis, and 40 bits improvement on a quarter-on-quarter basis. Express Parcel Service EBITDA has held constant on a YOY basis, while it expanded by about 60 bits on a quarter-on-quarter basis. Our truckload Service EBITDA continues to improve as we improve our customer mix and efficiency in operations, and it is at 3.2%. Supply Chain Services service EBITDA margins were 4.4%, slightly below 6% last quarter, primarily due to increase in trucking and manpower cost due to sudden spikes in demand for services in the quarter. Our corporate overheads have remained consistent in a range of about INR 215 crore-INR 220 crore, and they are at over INR 221 crore. This is after the impact of wage inflation that we passed to the employees at a company level. And as a result, the Adjusted EBITDA for the company is at INR 37 crore or 1.7%, which is 3% higher than the same period last year. Adjusted EBITDA, we talked about, increasing to INR 37 crore in quarter 1 FY 2025, which was -INR 25 crore same period last year, and represents roughly about three percentage point improvement on a quarter-on-quarter basis, a INR 16 crore improvement or 0.7%. So overall, revenue from services increased from INR 2,076 crore last quarter, or INR 1,930 crore a year ago, same quarter, to INR 270 crore, which is 4.7% increase quarter on quarter or 12.6% increase YOY basis. Most costs increased in line with the volume increases in the business, with minor efficiencies coming in on freight handling and other expenses for the business. There were two, three critical items I would like to point out here that employee benefit expense, share-based expense dropped from INR 49 crore to INR 21 crore from previous quarter to this quarter, due to INR 20 crore reversal for the sub-charge on account of employees leaving in the last quarter. We have both performance and time-based stock options, so this was a contribution coming in from both performance and time-based options, which was lapsed and added back to the pool. There is a property, plant, and equipment depreciation change in the quarter, where it was INR 83 crore a year ago, to INR 44 crore this quarter, due to movement in amount depreciation policy from WDV to straight-line method. We have given more details in annexures on what is a like-for-like comparable for change in depreciation policy and how this affects this year, rest of the quarters and future years. Broadly, there is roughly about INR 180 crore positive impact expected in depreciation from prior period CapEx into FY 2025. There is about INR 40 crore improvement next year, after which, it is a slightly negative impact. The... Yeah, this, as a result, has led to overall profit after tax of INR 54 crore for the company in quarter one of FY 2026. Thank you. Alistar, happy to start taking questions. Sure. Thank you, Sahil. We'll now begin the Q&A. Request all participants to use raise hand function to ask questions. We'll take the first question from Sachin Salgaonkar. Sachin, please go ahead. Hey, Sachin, if you're saying something, we can't hear you. Yeah. So Sahil, I just got an option of unmuting myself, so I did unmute myself. Thanks again. I have three questions. First question, Amit, wanted to understand any specific reason for change of depreciation methodology from WDV to straight-line? Sure, Sachin. There are a number of reasons why we chose to move to a straight-line method from WDV method. Number one is to be in line with our industry comparables. When we looked at most of our competitors, they are on a straight-line method. Number two, when we adopted WDV method, you know, many years ago, Delhivery was entering into a CapEx cycle, where we were not 100% sure of how the asset quality would turn out over its life, how the performance would evolve over the life of an asset. And hence, we thought that, you know, it would be appropriate for us to more aggressively depreciate these assets in our books. However, given we have outdated our first generation of sorters, which were much more, you know, much more light in quality versus what we deploy now. Those assets have lasted well over 10, 10 years, 9 years for us. And the higher quality equipment that we are now buying and putting in our facilities is expected to last much longer than the useful life of asset that we have assumed in our books. I also want to point out that we have not made any change to the useful life or the residual value of any asset type in our books for any of the assets. This reason, coupled with the fact that our you know, our maintenance costs for these assets is within what our AMC cost agreed with the vendors, is for the useful life of assets. We do not see a reason for you know, WDV being the right method. Also, the disadvantage of WDV method is that when you have a bit of a lumpy CapEx, it tends to distort the profitability of the business on a face value. But none of this changes, frankly, on a cash flow basis, whether we choose WDV or the SLM. Got it. Thanks, Amit. Pretty clear. Second question was mainly on the express volume shipments. Is it fair to say that the worst is over, and we should see normalization of volumes going ahead and perhaps a move back to a strong YY growth in terms of shipments out here? Always a difficult question, given how volatile this market is. I think though we had indicated that we expected to see growth in this quarter, and we have delivered that, despite the quarter being fairly volatile for the industry at large. The next quarter, as you're aware, Sachin, is also gonna contain the peak period, and at least indications so far are, that the peak period is likely to be a period of fairly decent growth for the industry. So I do think that our volumes, leading into this quarter and beyond should be strong. That said, I think this depends on a lot of, sort of, how should I put this? At the platform level, I think strategy is fluid, and as it changes over the next couple of quarters, I think we'll wait and watch. Let me put it this way, I anticipate that our steady-state volumes will continue in line with what we forecasted, which is sort of, you know, annual growth rates in the e-commerce market of between 15% and 20%, and our numbers should be broadly range-bound as well. Got it, Sahil. Pretty clear. And my last question is, you know, one of the companies yesterday, when they reported numbers, stated that quick commerce is gaining market share, also at the expense of e-commerce, and they had some pretty aggressive targets in terms of the number of dark stores they are opening. So the question to you guys is, is Delhivery doing something to piggyback on the last mile logistics on the quick commerce perspective? I do know that certain warehouses are being leased from you guys, but anything we could do to capitalize on the quick commerce growth opportunity? Yeah, I'm glad you asked that question. I think, on quick commerce, or rather, let me put it this way, on rapid in-city delivery for e-commerce companies, we've launched a new product. We've run the mother warehouses in the past for quick commerce firms, but the intention is also to launch a network of shared dark store warehousing, which will be available to e-commerce companies to use on a multi-tenant basis, and then to provide a rapid local delivery, basis those, basis that fulfillment architecture. That said, I think, you know, the consumer need for quick commerce, obviously, especially on the grocery side, while it's fairly established, I think on the e-commerce side, as we look at the market, we still view it as being relatively sort of narrow in terms of its category penetration and its geographical penetration. To give you an example, Sachin, first of all, you know, certain categories, for example, like apparel, categories like heavies, don't necessarily lend themselves to a quick commerce model at all. One of the fundamental tenets of commerce is that the inventory underlying quick commerce has to be fast-moving inventory. The reality on e-commerce is that a lot of the inventory is not fast-moving inventory. To give you an example, Meesho is a marketplace platform, doesn't necessarily lend itself to a quick commerce format. And when you add that up across categories, marketplaces, the long tail that's available online, our view is that the actual volume that's at risk on e-commerce actually is likely to be pretty small. And so I don't think 30-minute or 1-minute or 1-hour sort of delivery timelines are going to massively disrupt the broader swath of e-commerce. I think there are a set of narrow categories, and even within that, a set of narrow SKUs within those categories where the model makes sense. We will provide dark stores. We will also provide a delivery service out of those dark stores. And, you know, to the extent that e-commerce companies want to use those on a multi-tenant basis, we'll help them variabilize that cost. Got it. But I don't think that's going to be a very significant driver of revenue for us in the short or the medium term. Noted. Pretty clear, Sahil. One last small follow-up out here is, you know, in the past, from what I understand, the unit economics were not fitting in this last mile logistics. In the new model, what you guys are looking to do, presume the unit economics will be better, or is it something similar in terms of what we thought in the past? Well, look, the unit economics of trying to deliver, you know, a kajal in 20 minutes by itself to a consumer in, Bombay, are never going to be very good, and so that's not what we're aiming for either. I think we have to distinguish between how, you know, sort of quick commerce and allow me to create a, a sort of magical category here, which is, rapid commerce, you know, which is something like maybe 4-hour delivery or 2-hour delivery in the metros. The unit economics for that, which allow a certain amount of consolidation and a certain amount of route optimization, are still positive. I don't believe that the unit economics for sub-1 hour or sub-30-minute delivery for low-value products with not significant, sort of value density and distances higher than three or four kilometers in an urban environment like India, are going to work out. Got it. Pretty clear. Thanks a lot. We'll take the next question from Vijit Jain. Vijit, please go ahead. ƒYeah, hi. Thanks. So just following up on that question, Sachin, so basically, if I understood this right, you're going to offer a network of warehouses and dark stores to multiple companies, and you would do fulfillment from warehouses to dark stores, or are we talking about dark last mile delivery as well here? We already do fulfillment from warehouses to- Right. Not dark stores, but also, as an example, into retail and into distributors. This is going to be a service which also connects the last mile. Okay, got it. And, Sahil, just a little bit more color would be helpful on how this works in the, you know, providing warehouse and dark store to multiple companies. What are we talking about here in general? The same companies can use... Multiple companies can use the same dark store? Yes. Okay, got it. So it's essentially the process of creating micro fulfillment for most direct-to-consumer brands and creating a network of standalone dark stores is going to be too expensive. The simple reason is that capacity utilizations are very difficult to manage, so you could either end up with a situation where you've over-inventorized the dark store at the last mile, which is going to lead to the weight of the real estate cost and the storage cost of a fulfillment center in city, which will be at the bare minimum, 2.5 times the cost of a larger fulfillment center, which is outside the city. Alternatively, you'll end up with a location where you're paying rent for a large amount of space while stocking a very small amount of inventory. So the idea behind Delhivery's dark store network, which is going to be the same as the idea behind our fulfillment center network, is to allow companies to variabilize that cost. If we've got six customers, for example, in a location who are filling up a dark store, they can all sort of share that infrastructure, variabilize their operating expenses without having to bear the risk of either underutilization or capacity management. Got it, Sahil. And, Sahil, do you anticipate some of the largest of these quick commerce companies to participate in this as well? Or do you think this is, you know, this is something that will see a more reception from some of the smaller guys which are trying to catch up? largest of the quick commerce companies in the sense... Sorry, can you just specify? The top two, three most well-known companies, is that which would— Is that the set of companies which also you think would use multiple tenant dark store model with you guys? Is what I'm trying to understand essentially. Oh, you mean the three, linked- The top ones. Yeah. Zepto. No, I don't anticipate that they will be immediate consumers of our dark store infrastructure. In fact, I'd argue for them, the problem that exists, and it's a little bit of a digression from sort of our strategy, is ultimately with limited shelf space. You know, their problem is not one of how do we bring more people into the dark store, it's really selecting what to put in a dark store, which is probably already full. So I don't anticipate them being customers first. And also, it's a very different kind of inventory.... moving as an example, rice and sugar with, let's say, you know, 400 SKUs which belong to a cosmetics company, are going to be pretty different from an engineering and delivery standpoint. Ours is designed very specifically for, direct-to-consumer companies and potentially some product lines, at the larger marketplace as well. Got it. And Sal, one last question, I think, Amit- Vijit, sorry, sorry to interrupt you. Just, just one last question, if I can. Just wanted to get a—because I think Amit, you know, mentioned some reference to heavy goods that you would talk about later, on the e-commerce side. I just want to make sure that's covered. Thank you. I'll turn back into the queue. Sure. So, Vijit, as I mentioned, our yield in e-commerce parcel has gone up on a YOY basis by about 5.5%. This yield has primarily increased on back of higher mix of heavy goods category. Right. There are certain initiatives that we are undertaking, which could potentially further increase the mix of heavy goods in our business. I also want to point out that this is one category which is very unique to Delhivery amongst the 3PL that we service while our competitors are either not there or insignificant because of the LTL capability that we have. So the first mile and last mile capability between the two are shared. Got it. Great. Thanks, Amit. Those are my questions. I'll jump back into the queue. We'll take the next question from Gaurav Rateria. Gaurav, please go ahead. Hi, thanks for taking my question. The first question is on Express Parcel. You did talk about growth coming from non-marketplaces. Could you elaborate on how broad-based this growth was across different categories within the e-commerce vertical? And also, I know that you started certain initiatives around C2C and others, other things which are also part of the Express Parcel. Just want to understand how big those initiatives have become as percentage of the revenue or as percentage of the total volume for the segment. Sure. In terms of overall growth and volumes from sort of the longer tail of e-commerce, which is essentially anybody who is not a marketplace, I think we've seen growth across all categories and across all client segments. In fact, to be fair, we've also seen growth with the marketplace segments, but the growth across the non-marketplace segments is fairly secular. Vertical-wise, there's not that much of a split, to be honest, because we've seen growth across all categories, both from direct to consumer, where they're more vertical, and even from the absolute long tail or our SME business, where we have probably close to about, maybe about 10,000 different customers on the SME side. So it's been overall sort of fairly good to see because it's been spread across categories, across customer sizes, across customer types, wherever they're non-marketplace. In terms of the consumer-to-consumer shipping, I think there are two parts to what we do. One part is obviously via the Delhivery Direct application, which is where consumers can book packages or freight, and now increasing... We're also launching another service where they can also book mini trucks, as an example, in some locations, directly using the application. That continues to see sort of fairly steady growth quarter on quarter. It's a bigger driver, to be honest, of our brand perception. It's a driver of our yield, and it's also a driver of profits. The other thing that we're doing, of course, is also essentially creating offline resellers. So think of it as similar to a franchise program, pan-India, where a local entrepreneur or a local courier shop can effectively direct volumes into the Delhivery network. This today has been growing for us. We don't break out the numbers exactly, so unfortunately, I can't reveal those, but this has been growing for us year-over-year. The plan is to expand the penetration of our franchise network and to deepen it across states in India, which is all of the locations where we don't have direct business development reach, but our franchise partners have the ability to create SME volumes and to direct consumer volumes into us. Both of these are fairly solid drivers of profitability and revenue for us. Got it. Second question, you know, any sense, if you could give us on how our market share has trended this quarter or last, last quarter or last six months, within the 3PL segment? Have you been gaining market share or it's been pretty steady? And a bookkeeping question for Amit, the depreciation, amortization has, fallen quite significantly quarter-on-quarter. Even if you adjust for the INR 39 crore that you talked about, because of the change in the methodology, the fall appears much, sharper. So what would have been the reason for the fall? Thank you. Sure, Gaurav. Very quickly on market share, I think, the big move in the market or the big structural change in the market over the last several quarters, which you're aware of and we've discussed earlier, has obviously been e-coms internalizing a certain percentage of logistics themselves. I think that's led to a bigger rearrangement of the overall market. Inter se across the third-party logistics companies, there hasn't been any significant sort of inter se movement of market share. So our position as the largest 3PL continues. Bookkeeping question, Amit, answer. Gaurav, we have a bit of seasonality in our CapEx cycle within the year. You'll note that quarter one and quarter two are the periods when we basically start commissioning CapEx, and quarter three and quarter four are the period when that, CapEx is, you know, completed on our books when its depreciation start. So that seasonality you should expect to do, to see this year as well. To put this in perspective of numbers, the CapEx in the quarter one was about INR 80 crores, the fresh CapEx that was done. And, while last year, I think we would have done CapEx of close to about INR 500 odd crores, for the full year, INR 550 crores. So as the CapEx catches up in the second half, you will see a rise in it in the second half. Thank you. Thank you. We'll take the next question from Sachin Dixit. Sachin, please go ahead. Yeah. Hi, this is Sachin Dixit. Quickly, on the question of quick commerce stores, I mean, of entering the quick commerce market. So, the dark store network that, say, Tirunagari is now talking about, is about 2,000 dark stores by the end of FY 2026, right? So, and you yourself spoke about the kind of density that you need of your store network in order to make the unit metrics kind of work. So if I think that you will build as dense a network as, say, one of these people, then you are basically having to build about minimum 1,000 dark stores over the next couple of years. And even if I take a CapEx cost of about INR 1 crore, that means another additional- Oh, Sachin, let me cut in. The answer to that is no. Yeah. Because the delivery radii of the dark stores that you're talking about for 15-minute delivery of groceries, and as I'd mentioned, 2- to 4-hour delivery of e-commerce products is not the same. So we are not going to have to build out 1,000 dark stores to service a city with 2-hour delivery. That's one. The second is, do bear in mind that we already operate 3,450-odd delivery stations across the country. So we do not anticipate that we're going to have to build out anywhere near 1,000 dark stores, nor will we have to incur significant CapEx to do so. Understood. That's helpful. Second is on the market share question. From what I understand is, of course, the part about insourcing has been hurting the overall, you know, revenue growth in Express Parcel for you. That is understandable. But any timelines as to how long you think this will continue? I think the big move, Abhishek, has really been the growth of Meesho's self-logistics. In terms of the other marketplaces, they've insourced previously as well. And per se, I think their insourcing versus outsourcing strategies are fairly stable. And you know, we are, materially important and large partners to both of the other marketplaces. In Meesho's case, I can't really comment for, you know, how, how long or what this exact strategy with, their delivery network is going to be. What I can tell you is that we're a large and sort of fairly high quality partner, to the firm, and they require high quality logistics we deliver to their consumers. And as their consumers mature and as consumers trade up and demand fulfillment experiences which they are able to receive on other marketplace platforms, delivery is a natural choice. Right. So, but is there any data which shows the difference in SLAs between you and, say, something like a Walmart? Unfortunately, I'm not aware of what Walmart's published service levels are. I am aware of our service levels, and I think our service levels are ultimately the fact that they, you know, are pretty robust and are in line with consumer expectations, is reflected in our market share of the third party market and our share with the other two large marketplaces. Fair enough, sir. So just last question on the employee expenses. Generally, there's a bump up in this quarter. This time, it didn't show through, so are you changing the increment cycle or, or what's happening there? No, there's no change in the increment cycle. It's the standard increment cycle. Delhivery's increment cycle ends in March, and Q1 is when we essentially take the cost of wage inflation. So we had mentioned earlier to the market as well that, you know, when we went public also, we said that we don't anticipate a significant increase in our wage costs overall. We are built out to deliver a much larger business, a much larger revenue, and we don't anticipate the need for us to hire additional people and to inflate the wage costs. Got it. Thanks. That's very helpful. Thank you. Thank you. We'll take the next question from Sachin Dixit. Sachin, please go ahead. Yeah. Hi, thanks. Congrats, Sahil and Amit, on a great set of results. I had two quick questions. The first one was with regards to you mentioned that there was a contract with this large customer last, in the last earnings call. Can you talk a bit about this contract? Like, were there any price cuts involved as part of getting this contract? And post that, have you seen their sort of insourcing stabilize at those levels, or it's still continuing to rise? In terms of the contract, I obviously can't get into specifics about the contract, but suffice to say, you've seen our yield, you've seen that the margins overall have improved between quarter four and quarter one. So obviously it's not a reductive contract as far as Delhivery is concerned. I think the important thing in any contract that we negotiate with any customer is how to link pricing that we give them, which, as I mentioned before, you know, our objective is to reduce the cost of logistics for all of our customers linked to the volume that they provide to us. And that's the contract that we negotiate, not just with any single marketplace, with every one of our 35,000 customers, and that's the contract we've negotiated. Of course, the additional thing that we negotiate with all of our customers is also equivalently, should there be an adverse mix that they provide to us, that we're protected against that, and that's sort of the standard contract that we sign. So you can see that reflected in our unit economics in any case. So now, so have you seen any, any changes in the insourcing trajectory of, of Meesho or it's, or you, you are not aware of those changes? I think we're satisfied with the volumes that we're getting, and they're in line with our expectations. But if they've been reducing the share that they're providing to other third-party partners, I would be unaware of that. I understand. Second question, more like a housekeeping question: so on this ESOP reversal that was taken this quarter, wasn't this being done in earlier quarters as well, or this was the first time that we did that? This was done every quarter. There was a KMP exit last quarter, due to which, this affected. Understood. Thanks so much. Just my final question on the ATCR CapEx that you mentioned for this Q1, can you roughly provide a breakup of that as well? Sure, just give me a minute. We have got vehicles worth about INR 29 crore. These are Volvo tractor trailers, tractors, automation of INR 4 crore and plant and machinery of INR 26 crore, and furniture, fixtures, and, Sure. Sounds good. Thanks so much. Thanks so much, and all the best. Thank you. Thank you. We'll take the next question from Aditya Bhartia. Aditya, please go ahead. You spoke about market share in 3P market remaining the same, and given that Meesho has been insourcing a fair bit, is it fair to assume that market shares of the overall online sales would have gone down in the last year or so? That not only for you, but pretty much for everybody else as well. Yeah, I mean, I could say that, but... In the conversations that you've been having with Meesho, are you getting some sense about how exactly their strategy about insourcing is going to play out from a slightly longer term perspective? Especially because, while planning your capacity, I guess at least some of your larger customers would be giving you some indications. No, I think, among the main things that we discuss with our customers, sort of, you know, as I mentioned, their strategies are fluid. This, their strategy on insourcing, I think, is also changing, so it's something that doesn't seem to be stable. The way we look at it, pretty simple, we provide a high quality service, at a cost that is extremely attractive to all of our customers, including the ones, that in source, not just limited to any single marketplace. Our objective is to meet our growth objectives and to meet our economic objectives and to protect those. Outside of which, in our case, do bear in mind that while we certainly provide an extremely important service to the e-commerce industry, it's not the only business that we do. Our ability to provide that high quality service to e-commerce companies is also bolstered by the other businesses that we have. We're pretty confident about our competitive advantages overall, irrespective of what the change in strategy for any single sort of customer of ours might be, and we don't have a very high degree of dependence on any single customer anyway. Sure. Sure. Thank you so much, Sahil. We'll take the next question from Mukesh Saraf. Mukesh, please go ahead. Yeah, hi, good evening, and thank you for the opportunity. My first question is on this Meesho insourcing itself. So, is it fair to assume that Meesho would be insourcing, you know, most of the high-density locations initially at least? And this could also have, I mean, apart from us getting the remainder volumes, but it also affects the quality of business we get from Meesho right now. No. You know, low-density locations, et cetera. No, that would not be the case. We receive volumes across all of our locations. Mm-hmm. And- Okay. The reason also, Mukesh, I think, sorry, I was continuing. One thing to bear in mind... Well, there are two things to bear in mind. One is capacitating our network for what you might think of as a high-density location is also not a trivial exercise. Okay. The reality is that e-commerce volumes are fairly volatile at the last mile. It's really just the law of standard deviations, right? I, I might be able to predict that my volumes in the city of Bombay will vary by only about 15% on any given day, but that doesn't mean that my volumes, for example, in the micro locality of Chembur will not vary by 600%. Therefore, the ability to capacitate at the extreme last mile is extremely difficult. It's, so either you have to run networks which are under-capacitated and higher cost, which, as you're aware of, you know, some of the other sort of in-source players have discovered over the last- Right ... decade or so. Or alternatively, if you're capacitating to meet a cost objective, which, if you're selling sort of low AOV products, you have to do, you know, then ultimately you have to outsource a lot more. It's unfortunately not possible to escape that math. Right. You really merely take high-density locations and outsource the others. Got that. Got that. Thank you for that. Second question is, again, related to this. I mean, now that we'll see the volumes from Meesho come off and, obviously the D2C share for us goes up, we are also seeing in the market that some of the traditional logistics players in the D2C segment are pricing very aggressively. Do you see this kind of impacting us going ahead, on the D2C side of it, aggressive pricing from the traditional competitors? ... Well, I'm not sure about traditional, so I'm gonna assume that you're speaking of perhaps DHL and DTDC, and so on. Yeah, Blue Dart kind of niche. Yeah. Yeah, sure. So look, at the end of the day, the fact that somebody is offering you a lower price, if it's not backed up by a high quality, reliable service, the lower price is not enough. I mean, no customer is going to say that I'm happy to take more delays or I'm happy to have to work with higher returns as long as you give me a lower price. Ultimately, e-commerce companies want goods delivered reliably to customers. Where what we index on and what we want to index on is the quality of our service and the quality of our delivery, and also the reliability of our delivery, and the ability to absorb the inherent volatility that e-commerce contains at this point in time. So we have not actually faced any particular headwinds from any traditional or other competitors in terms of pricing. The other thing also to remember, and we've mentioned this before, we're very confident about the fact that we are the lowest cost operator in this space. Not only are we the lowest cost operator in this space, over a period of time, as we've discovered cost efficiencies in our network, we have passed those benefits on to our customers with time. And as a consequence of that, you know, we are very confident that the pricing that we provide to customers, where we are able to make the margins that we declared, most of our competitors, if they are pricing at those levels or below that, will be unable to make money. So even if they are sort of in a zone where they're pricing below us, the fact of the matter is they won't be able to stay in it for very long at all. Sure. Sure. Yeah. Just quickly on the PTL business, I mean, we have obviously recorded very strong growth while the industry doesn't seem to be growing that strong on PTL. So could you kind of give some sense on, you know, how we have expanded, say, probably pin codes or collection centers? Any data you can provide on where we were, say, last year, first quarter to now in terms of, reach, or, or like I said, collection centers. Apar/Vivek, can you just go to that slide, please? The slide with all the statistics on the network, please. Yeah. So as you can see, Mukesh, there's been no change in the network. We still service more or less exactly the same number of pin codes- Yeah. and we service through the same No, so I meant specifically for the PTL. So in this, obviously, there will be certain pin codes that you'll only be servicing PTL. No, no, no. So, Mukesh, that's what I... You know, that's why our network is unique, because it's integrated across our PTL and our express services. So serviceability for PTL is exactly the same as serviceability for express. There's no- Okay, it's not just the mid-mile that you're able to integrate, you're able to integrate even the last mile as well, is what you said? Correct. Now, the difference is, if you look at Freight Service Centers, which we have 120 of, the highest density PTL locations are serviced by a format called a Freight Service Center, which is uniquely designed to handle freight and uniquely designed to handle heavy products. Now, imagine that there's a location which is servicing, I'm making this up, but let's say 15 tons of load a day. Right. 15 tons of load a day will go to a freight service station. But that doesn't mean that we won't have a customer who, for example, wants to send 300 kilos of load to a location that is not viable to service by our freight service station. In that case, what happens is this will get directed into our express delivery network. Right. Where we have 3,567 of these centers. So in fact, the express delivery network is a humongous advantage when it comes to serviceability for us versus traditional industry, which tends to think of a lot of these pin codes as ODA pin codes. Okay. Okay. Okay. Interesting. Got that. Thank you so much. I'll get back to you. Thank you. We'll take the next question from Manjeet Buaria. Manjeet, please go ahead. Thank you. Sahil, in the past, you had mentioned that even if we sort of disintermediate our first, mid, and last mile, we'll actually still be the lowest cost player in the industry. So in that case, shouldn't we be winners on Valmo as well? You know, because we should be the most competitive to bid on that platform. I just wanted your thoughts on that. But why would we do that? I mean, we already provide a fully integrated service that the principal in question can utilize at an extremely competitive cost with an extremely high service level. The incentive for us to unbundle ourselves to participate in a platform is essentially zero. The better answer is actually for the platform in question to outsource the volumes to us entirely. So I don't anticipate that we will unbundle ourselves to participate piecemeal. The second thing to bear in mind is that the quality of service of a disintermediated network is, by definition, lower than the quality of an integrated network. Because I have the ability today to make decisions all the way from the moment a parcel is picked up, to the moment a parcel is delivered through a single stream, which is delivery. If you have to pass on packages continuously across multiple different partners, there's an inherent loss of service and inherent loss of traceability, you know, and an inherent overcapacity that has to be built at every node. So there is a reason why logistics companies across the world, historically, for 100 years, have provided integrated services. It is because there's a certain power that comes from the integration. So I don't believe that... We don't believe it's in the best interest of our customers for us to disintermediate ourselves. Very clear. And the second question, Sahil, was, you know, whatever Meesho is trying to do, my understanding, and I could be wrong, is but that other 3 PL players are even more reliant on Meesho than we ever have been. So just your thoughts on industry consolidation, because they should be getting hit way worse than we are. So, you know, from an industry perspective, you have some thoughts on when do we see probably the, less competitive capacity go out of the system? Thank you. Sure. You know, I've spoken about this before. I think, as I mentioned, for any customer of ours, the reality is that the mechanism through which you manage your risk across multiple carriers is not by launching a carrier yourself... but essentially by working closely with the existing carriers in this situation, whether you call it self-logistics or not, effectively another carrier has been launched into what already was a fairly sort of shallow pool. It first affected who had extremely high dependence on the platform in question, and potentially at pricing that also is most likely to be unviable. I think consolidation is inevitable in this situation. The question, of course, that I can't answer is, you know, how long people will continue to fund businesses in this state. Also, the reason why this is necessary, I believe, is that over a period of time, India will produce integrated logistics companies. For a variety of reasons that I've mentioned in the past, the economics of running parcel-only networks that are non-integrated are significantly worse than the economics of running integrated networks. The cost curve doesn't flatten out. I'm sorry, the cost curve flattens out too quickly when you're running a parcel-only network. And so, you know, I do believe that it's important for industry consolidation to happen. As to the timelines, I think to be perfectly honest, your guess is as good as mine. But, you know, on a lighter note, today is as good a day as any other. Okay, thank you, sir. I'll come back and with you. Thank you. We'll take the next question from Achal Lohade. Achal, please go ahead. Yeah, good evening. Thank you for the opportunity. You know, my question was on supply chain. You know, if you could talk about where are we in the journey, you know, what kind of growth can we see here? What kind of customer addition we have seen? And in terms of the offering, you know, compared to the other supply chain players, where do we stand in terms of the offering? You know, have we covered most of it, or we have significant element to catch up? Sure. Broadly, on the Supply Chain Services business, as I mentioned, a lot of the new starts that we had, which were to come in, both from traditional sort of the B2B industry, there are specific verticals, for example, in the auto and auto spare, spare parts world, in the wires and cables world, the FMEG world, we had contracts that were starting up. Those have obviously scaled up in this quarter. And obviously for our customers in the consumer durables space, this is a seasonally high quarter, so a combination of those factors obviously has delivered solid growth to us. In terms of our pipeline, I think the pipeline is extremely robust, both from sort of the B2B world, where we continue to make inroads into our focus categories, which are, as I've mentioned, again, auto, auto spare parts, industrial goods, wires and cables, consumer durables, FMCG and FMEG. But outside of that, the other area that's seeing significant growth for us is integrated fulfillment for e-commerce, where we have the ability to provide effectively, as I mentioned before, sort of a think of it as a white label prime service, which is a combination of variable cost fulfillment coupled with extremely high speed delivery in city, and we've seen demand for this sort of rise quite significantly in the last quarters. In terms of the breadth of the offering itself, I think supply chain services, whether we offer it or somebody else offer it, is fundamentally a combination of warehousing and transportation operations spread across primary logistics and secondary distribution or delivery to customer. We provide a comprehensive set. Typically, traditional players have not done the B2C element of this. They've largely focused on the B2B element of it. So the differentiation or the increased breadth of our service is the ability to meet B2C and B2B both. The other, of course, differentiator between our service and traditional services is, our ability to support multiple tenants in the same fulfillment centers, which, essentially, like I'd mentioned on the dark side earlier, allows us to enable companies to variabilize their operating costs of the supply chain quite a lot, as opposed to sort of making heavy investments in capacity. And that's sort of a pretty big differentiator, apart from which, from a technology standpoint, we have the ability to enable companies to virtualize their inventory across all of the fulfillment centers that, we serve for them, and an order management that essentially enables them to direct the right set of orders to the right fulfillment centers, and therefore, achieve an optimal mix of inventory and the lowest cost of transportation. So it's a fairly comprehensive set of services that encompasses not just the physical aspects of storage and transportation, but also all of the information systems that are crucial for supply chain decisions. And then, of course, there's the added advantage of visibility, the tracking, and the reporting services that we provide. Traditional players also provide contract logistics, which is the one area I should point out we do not provide. So we do not do sort of, you know, a service where we're simply sort of providing manpower effectively, while the systems and the management are being run by you know, the principals themselves. So that's what we don't do. Understood. That's very helpful. Thank you. Those were my questions. Thank you. Great. Thank you. So before we conclude the call, this is Aditya from Macquarie, maybe I'll just ask you two questions, please. The first is on the part truckload business. You've been constructive on the formalization opportunity. You've spoken about impressive growth rates here. Maybe if you can just run through your thesis here again? Sure. So Aditya, on part truckload, there are sort of two or three big things to point out. The industry, obviously, while exact statistics are a little hard to come by because of sort of the express, non-express, PTL, FTL, hazy boundaries, broadly, our view is that it's the total spend on PTL is, on express PTL, easily over INR 10 billion. If you look at the market, India is a hugely atypical market, which is it's highly fragmented... whereas when you look at part truckload markets around the rest of the world, they tend to be highly consolidated markets. And the reason is very simple, which is that similar to express, part truckload is essentially a, it's a network business of consolidation and deconsolidation, which lends itself to essentially large economies of scale, and is obviously a technology and engineering intensive business. Our view is that the market will formalize in India. But in the U.S., for example, the top 5 players I suspect, will be, I, I don't have the absolute latest numbers, but will be, let's say, 65%, 70% of the part truckload market. I think India will go down that path because scale leads to efficiency, which reduces cost for everyone. And second thing, obviously, in India, there's a big shift from unorganized players towards organized players, largely because quality of service improves with large integrated national networks. That's broadly our thesis. We don't anticipate any challenges in terms of our ability to grow into this market. As you can see, even in what has been a seasonally extremely weak quarter overall for the part truckload industry, you know, we've had fairly solid growth this quarter, which reflects both the quality of the service and our ability to generate and service demand. So for us, the basic challenge that I've spoken about is to slowly increase sort of our top of the funnel activities, both to make more and more customers across the country aware, sort of aware of the fact that Delhivery provides PTL services. I mean, one of the interesting things is, despite us being one of the largest PTL players in the country, most people still think of us as an express denominated business, whereas the reality is we're an extremely large freight network. And the second, obviously, as I mentioned, is to increase our direct sales capabilities and direct sales outreach into tier one, tier two, and tier three markets. As an express-only player, our business development was really in the beginning, largely focused on places like Delhi, Mumbai, and Bengaluru. But increasingly, as our sales teams have spread, you know, as an example, in the PTL industry, cities like Chennai, cities like Vapi are fairly large markets, and we're expanding our presence into all of those with physical sales. Logically, along with physical sales, we are also building a network of resellers and third-party partners who can sign up with us. And similar to the B2C franchise business that I spoke about, can sign up and essentially direct freight loads into Delhivery, where it's unfeasible for us to have a direct business development presence. The rest of the question, Sahil, was on freight costs and the fact that you're running this integrated network. So freight costs have declined about 180-190 basis points year-on-year. It's down again about 50 basis points sequentially, as measured against revenue. As you scale your PTL business, we'll see how the Express Parcel business shapes up. But should we expect further scale benefits here as you kind of ramp part load up? Yes, absolutely. As I mentioned, you know, before, Aditya, the reality is that our PTL business at the moment, very happy that it's now profitable at a Service EBITDA level, and profitability continues to improve quarter on quarter. But as I mentioned, our PTL network is designed to handle significantly more tonnage than we continue to handle at this stage. And so, as volumes go up through this network, utilization of the network will continue to rise. You know, whether it's the freight service stations, which are designed to handle higher volumes, or the hubs, which are designed to handle higher volumes. And also trucking, aggregate trucking utilization will increase. Our trailer network will densify a little further, from this point on. And the other thing is, as we are bringing in more PTL business into the network, the densification of loads, or essentially the higher weights that we are carrying, themselves have a positive impact on overall costs. And interestingly, Aditya, this has a positive network effect on the express business as well. It's one of the things that enables us to derive a fairly competitive advantage on express costs as well. So both the networks feed into each other. Fantastic. Are you able to kind of provide any guidance here whether at the Service EBITDA margin level or any of the margin lines? On Express, as, you know, you've seen the margins, we are stable at this 18% kind of mark. And as I mentioned before, one of the things that Delhivery is committed to doing is to bringing down the overall cost of logistics for the industry. And as our margins expand, I think wherever we have customers where we believe that offering them a lower price is going to lead to higher volumes for them and consequently for us, you know, we will continue to offer that pricing benefit to them. And we're very happy in the short to medium term with these customers to remain in that 18%-20% kind of margin range on Express. The PTL business, as I mentioned, is exactly the same as the Express business, but merely with larger boxes. So we do expect that the PTL business will deliver margins which are in line with the Express business. Potentially as our cost advantages are discovered, you know, we'll see how it goes, potentially even higher. That's the trajectory we're shooting for. Fantastic. Sahil, I don't see any other questions in queue. If you had any closing remarks, please. Great. Well, nothing that hasn't already been said. I think, quarter one is historically always, you know, one of those difficult quarters for logistics companies, and I think we're very satisfied with the overall performance we've had for quarter one. There's been pretty significant revenue growth, even in what has been a seasonally difficult quarter for the rest of the industry, and also obviously the impact of rains, the impact of the elections. So very satisfactory quarter. And from a profitability standpoint, as we'd mentioned, our focus has always been to improve the unit economics of our businesses. Broad summary is that Express continues to grow stably, margins remain stable in that 18% range. The PTL business continues to grow very fast. The profitability trend continues. We're also seeing significant sort of improvement in the supply chain services business. You know, have a robust pipeline from here on, and we anticipate pretty solid growth in SCS business as well. So overall, good start to the year. And going into the peak season, I think we're feeling quite confident and well set for the rest of the year. So thank you. Thank you. All the best. Thank you. Thank you, Macquarie team, for hosting us. Thank you all for joining.