Ladies and gentlemen, good day, welcome to the Mahindra Logistics Limited Q4 FY 2023 earnings conference call. 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 either by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Shagun Jain from SGA. Thank you, over to you. Thank you. Good evening, everyone, and thank you for joining us on the Mahindra Logistics Limited Q4 FY23 earnings conference call. We have with us Mr. Rampraveen Swaminathan, MD and CEO, along with the senior management team. I hope everyone has had a chance to view our financial results and investor presentation, which were posted on the company's website and stock exchanges. We will begin the call with opening remarks from the management, followed by an open forum for Q&A. Before we begin, I'd like to point out that some of the statements made during today's call may be forward-looking in nature, and a disclaimer to that effect has been included in the earnings presentation that was shared with you earlier. I now invite Ram, MD and CEO of Mahindra Logistics Limited, to make some preliminary remarks. Good evening, everyone. Good afternoon, everyone. Thank you for joining us today. Thank you, Shagun. I trust all of you have had a chance to view our presentation and financial results, which has been uploaded on the stock exchange and the company's website. Before sharing commentary on our operations, order intake, and key developments from the quarter, I should just provide a quick update on the external environment and our end markets and the business as a whole. I will conclude my comments by briefly outlining our financial performance for the quarter just ended and the full year financial year FY 2023, and just talk a little bit about focus areas for the upcoming year. In the interest of just time, I'm gonna keep my comments... I'm gonna bridge my comments a little bit this time, so we actually have more time for questions and answers. Just at a macro level, obviously, I think the global economy is experiencing kind of high-level volatility due to fresh headwinds caused by turmoil in the banking sector, and that's across various economies and concerns over economic stability have been brought to the forefront as a result of the collapse or near collapse of several banks, and the possibility of spillover of that into emerging markets as well. In light of that fact, the inflation continues to be, you know, dodgy, and central banks are continuing their efforts to tighten monetary policy, albeit at a slower pace than the past. Rate of inflation across major economies has been showing signs of moderation over the past several months. The process of returning inflation to the desired level or controlling inflation to desired level is proving to be long and difficult. The Indian logistics industry has been valued at around 14 trillion INR in FY 2021, and broadly, we anticipate that it'll grow at a CAGR of around 14% to around 29.7 trillion INR by 2026. Now the industry and the sector remains extremely critical for the overall growth of the economy, as much of our demand is derived from other economic activity. Therefore, as the economy prepares itself to higher levels, we should see a strong spillover to our sector as well. That said, the sector remains highly fragmented with a large constitution of unorganized players, and large organized players still constitute less than 20% of the overall market. The majority of it is layered and is managed by unorganized operators who have challenges in terms of infrastructure and scale, and limited levels of automation and mechanization. Now coming specifically to the quarter itself and just talking about our specific end markets, and I'll begin with automotive, which has always been our bellwether sector. Obviously the year has gone by without any major impact of COVID, and that's been the first full year after a gap of two years. Through the year, I think overall retail sales has seen robust double-digit growth, especially led by the four-wheeler industry. The two-wheeler segment's annual retail sales of 14.9 million were the lowest in seven years. That sector still remains in distress. You know, EV penetration in the sector has been around 4.5% and it's kind of well set to grow. The three-wheeler category maintained its outstanding year-on-year trajectory with an annual growth of 84%. This segment has seen the most deepest level of electrification, with 52% of volumes now being electrified, in large measure due to the e-rickshaw segment and increasingly due to cargo movement as well. The availability of finance, alternative fuels, and government subsidies have obviously added to the growth of the segment. Passenger vehicle retail sales hit a new high of 3.6 million units, an increase of 23% year-on-year, positioning India as among the largest markets for four-wheeler passenger vehicles in the world. As the year progressed, the shortage of semiconductors have begun to ease, which has resulted in a higher number of product, new product launches and an improvement in product availability. A demand for higher-end models continues to see a disproportionate growth, and that is an encouraging sign. Still the pressure on entry-level models remains, and, you know, lower-end, you know, segments are seeing the pressure of higher inflation. Due to high base inflationary pressures, regular price increase, and regulatory changes, growth is likely to probably slow down in FY 2024 as a period of rapid recovery and expansion is concluded. In addition, unexpected rains and hailstorms in North and Central India have impacted the rabi crop and grain harvesting, which could affect the rural sector, which is important in general for the segment and for us at Mahindra Logistics specifically. In addition, I think this year we continue to expect to see a higher level of EV penetration, which will impact the overall share of ICE products in the market. The e-com industry still remains a very large, you know, demand market for us. The Indian e-commerce tech market was valued at INR 6,210 billion in 2021, and expected to grow at a CAGR of around 27% over the next five years. In addition, I think we estimate to see strong growth in the online grocery market, which is expected to grow at a CAGR of around 34% to over INR 2,100 billion by FY27. While the market has grown exponentially over the last four or five years, there is and been a slow moderation in digital penetration. We expect that this will continue in the midterm. As a result of this network expansion across large e-com marketplaces has seen moderation and consolidation affecting the level of outsourcing in these businesses, including to players such as ourselves, where we have seen a consolidation driving some site shutdowns. Moving on to the consumer durable industry. Following the soft festive season, the consumer durable industry has seen improving demand due to the ongoing summer, especially given the forecast of high temperatures this year. Both channel and leading brands continue to have a positive outlook on demand revival, that is anticipated to accelerate during the summer season. The quarter is a sequentially strong one for air conditioning and air temperature control products, businesses hope to see the high rise in demand on account of that. Higher inflation has impacted some level of consumer enthusiasm for lower priced products, while premium products perform relatively better and continue to do so. Demand for lighting products has significantly not been impacted through the pandemic, and that continues to be robust. You know, clearly our business as well has seen the impact of many of these factors. While the auto and industrial businesses have been strong and have seen an uptick across logos, the slowdown in network expansion in e-com and consumer markets have impacted our business. We have seen some site closures in the 3PL businesses from e-com, and obviously we've also taken some actions in last mile delivery business to moderate the coverage on account of increasing price competition in that space. Overall, the annual contract volume from new order intake was a bit north of INR 100 crores during this quarter, primarily driven by the non-Mahindra side of the SCM business. We expect that to moderate itself in the next quarter or so and kind of have an uptick as we come towards the festive season. Let me talk also about some key business updates, which are relevant to this quarter especially. I'll begin with the express business. Consequent to the acquisition of the Rivigo business, PTL business last quarter, we recently also transferred our existing express businesses to MLL Express Services Private Limited for a lump sum payment of INR 20.8 crores. MESPL revenues reported for the quarter were slightly lower than the preceding quarter when the business was managed by Rivigo, largely on account of some transition impact and slowdown and seasonal adjustments based on specific demand patterns from customers in Northern India. The flow through of the MESPL business of the MLL network business into the MESPL financials will happen post-completion of the consolidation which commenced this quarter. Most of our customers have already been transferred seamlessly, and we have managed to boost our service levels for most of our clients. We believe that our combined express operations are on the right track, and they will generate positive EBITDA towards the second half of the year, somewhere in Q3 of this financial year. A longer-term direction to build, you know, an express business which is among the three or four companies in the industry with revenues of north of INR 1,000 crores, remains intact. At the freight forwarding business, which has been another business saw a lot of change through this year and especially in the second half of the year, the forwarding business remains under significant pressure of downward pricing corrections. While the slope of the correction has moderated, the broad pressure continues to sustain. During the quarter, we saw the impact of that with a steep decline in year-on-year revenues. However, we have been able to mitigate that to some extent through volume growth, which has shown positive movement both across our air and sea products. We'll be launching charter operations from our Dubai hub later in Q1 of FY 2023/2024, and that should help us, you know, strengthen recovery in this segment. Our short-term focus remains strongly on volume penetration across end markets, lane expansion, and kind of expanding our service offerings. We should be able to demonstrate stronger run through on volume through Q2 and Q3 of this financial year. The third business which has, which had a material impact obviously was our last mile delivery business. During the quarter, we continued to invest in growing the last mile delivery business. At the same time, higher pricing intensity has resulted in our decision to cut back on several sites, which are becoming unprofitable, though that has been offset through other wins, in other parts of the last-mile delivery service line. We have taken a prudent accounting approach on various penalties and damage claims in the quarter which some of our customers have raised, which has resulted in an underlying favorable impact on earnings. While these items are still under discussion, we chose to be prudent about them. Our continued focus remains on fulfillment as a service grocery, and same-day deliveries, all of which are showing strong progress in the quarter as it has done in the year, which has gone by. The performance of our EDel Electric Vehicle business, EV-based business is consistently improving. As of today, we are operating in more than 19 cities and have a fleet of more than 1,300 vehicles. Earlier this month, we actually launched our four-wheeler offering right in EDel, and we hope to you know, supplement that with a two-wheeler offering shortly. The 2x2 business is being, is a business which we run company-owned car carriers. For the auto outbound segment, and that's a business which last year had seen a significant impact on the back of shrinking automotive volumes. I think as I mentioned in the last earnings call, we have been you know, starting the fleet back again. Along the way, we have been investing in upgrading the fleet with modifications as per the new CMVR regulations, for adding domes, and also upgrading vehicles in terms of runnability. And we've seen that progress through the fourth quarter. We ended the fourth quarter with our operating fleet almost completely on road, and we expect that in FY 2023/2024, we should see that the consolidation of that turnaround in that business. Lastly, you know, as a matter of significance, I think the warehousing side, we continue to be committed to expanding our warehousing footprint. In the quarter just by, we have announced the development of a new one million sq ft warehouse park in the Chakan- Talegaon region. This is a collaboration, Ascendas-Firstspace, and which will be spread over three phases. The first phase, which is roughly half a million sq ft, will be operational by the end of this financial year. That, that is something we should continue to expand. We also, at the same park, gonna launch our first automation and technology center, which will be where we'll do development and automation technologies for, especially for warehousing. The overall warehousing footprint in the year, in the quarter showed moderate gain, and that was largely on impact of the restructure of the Bajaj Electricals contract, as a result of which we did drop warehousing space of nearly 0.6 million sq ft, largely in distributed branch warehouse locations. Those contracts were all largely back-to-back and therefore do not have any residual impact on our earnings going forward. I'll now move on to our consolidated financial performance. Revenue in Q4 FY 2023 increased by 17% on a year-on-year basis to INR 1,273 crores. That growth was on the back of adjustments, right, of lower growth, obviously, in our consumer business because of the restructure of the Bajaj account and a decline in the freight forwarding business. Adjusted for those segments, our underlying volume growth and revenue growth is approximately 24%. The supply chain management, including 3PL and our network services businesses, combined to 94% of our overall revenue. The mobility business contributed 6% of our revenue. Our gross margin on a fully consolidated basis, including MHPL's impact, stood at 10.2% in Q4 2023, compared to 10.1% for the same quarter last year. EBITDA for the quarter was up 17% from INR 58 crores in Q4 at 22, right, up to INR 68 crores, adjusting for the consolidation of the Rivigo acquisition. PBT on a fully consolidated basis was obviously down, and we reported a negative PBT or PBT of negative INR 5 crores for the quarter, down from INR 9 crores for the same quarter last year. We report PAT on a fully consolidated basis of negative INR 1 crore. The earnings obviously were impacted by the consolidation effect of the Rivigo acquisition. I therefore just share some numbers without the impact of the Rivigo acquisition as well. Without the MHEL or the Rivigo acquisition, revenue for the quarter increased by 11% on a year-on-year basis to INR 1,206 crores. Gross margin for the quarter without the acquisition stood at 11.4% compared to 10.1% in the same quarter last year. EBITDA for the quarter rose from INR 58 crores for the same quarter last year to INR 87 crores. PBT for the quarter grew from INR 9 crores to INR 24 crores. Right, our PAT without the acquisition grew from around INR 6 crores in the same quarter last year to INR 21 crores for Q4 2023. As we obviously see the consolidation and the extraction of value of the Rivigo business, we obviously expect that that will actually be accretive to earnings, and that's covered in the investor deck under a section called Pathway to Pathway to Value Creation. We've talked a little bit about that. Before I close, I just wanna quickly recap subsidiary performance or component performance for your benefit. Our MLL standalone business for FY 23, and I talk about full year numbers. Revenue for FY 23 Mahindra Logistics, which is a holding company, on a standalone basis was INR 4,459 crores, up 27% compared to INR 3,361 crores for FY 22. PAT for the business was up from INR 24 crores in FY 22 to INR 65 crores in FY 23. Large freight revenue for the year was down from INR 450 crores in FY 22 to INR 366 crores in FY 23. Consequently, PAT for the business, PAT was down by around 40%, 36% exactly from, specifically from INR 16 crores in FY22 to INR 10 crores in FY23. The express business showed revenue of INR 122 crores. Most of that is essentially the revenues below from the Rivigo acquisition. MLL network revenues are not factored in this. Revenues continue to be at an adjusted run rate, as I mentioned earlier, right? Overall reported revenue was INR 122 crores for four months and 10 days, I think, roughly four months and a week. PAT loss for the year on that revenue base was INR 32 crores. We did take a deferred tax adjustment in the business, and I will talk a little bit about that in a bit. MLL Mobility revenue was up from INR 185 crores as compared to INR 58 crores in the preceding year. That included underlying growth of around 27% in revenues of the transport services, the airport-based services segment, and the consolidation effect of the enterprise transport mobility business from which was transferred from MLL to MLL Mobility. Consequent to our continuing activities on cost reduction there, PAT has narrowed. The losses have narrowed from INR 19.5 crores in FY 2022 to INR 8.6 crores in FY 2023. We expect the business to be on a strong growth momentum, and we are confident it'll break even in FY 2023-2024. Whizzard, which is the investment we have made, is the last mile delivery business or fulfillment business we made an investment in. Reported revenue of around INR 130 crores, up 18% from a comparable percent per time period last year. PAT for the year, losses for the year expand increased from INR 4.4 crores last year to INR 7.5 crores this year. 2x2, the division has made a loss of INR 4 crores in FY 2023, narrowing from the INR 6 crores in the preceding year. As I mentioned earlier in my 2x2 comments, we expect that to basically cut back to profitability in FY 2023-2024. During the quarter, we also took and we also had deferred tax adjustment in two of our entities, principally MESPL, which is the express services business. That adjustment was on account of our line of sight to profitability and our certainty around the profitability we'll be able to generate in the business over the next six to eight quarters. As we reviewed with our auditors, and other, you know, and the board, and they're comfortable with that accounting adjustment. Overall, we remain focused on investing for growth across all our segments. I think as I mentioned before, we think it is critical in our business to grow scale. We remain committed to our vision of building an integrated logistics and mobility services business, which has deep capabilities in multiple service lines and, you know, combined through technology, people, and process will create, you know, a value of integration for our customers, and emerge as a preferred choice for them as well. With that, I'll open the floor for questions and answers. Thank you very much. We will now begin the Q&A session. Anyone who wishes to ask a question may press Star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press Star and two. Participants are requested to use handsets while asking. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Alok Deora from Motilal Oswal. Please go ahead. Good evening, sir. Just, first question on this, the express business. If you could just indicate what would be the revenue we generated from the Rivigo, you know, business in Q4? Hi, Alok. I think we reported revenues around INR 77 crores for the quarter. Right. for MESPL. Almost all of that essentially was the business which was transferred from Rivigo. Because as you know, we've really not rolled in the revenues or the volume from the MLL network, right, for the large part. Almost all of that was that. You know, I think when we did the acquisition, Alok, we had projected, we had kind of indicated that the run rate number is INR 350 crore range on a yearly 12-month basis. There are of course seasonal adjustments in those numbers, right? That did impact us Q4 because of climatic conditions in the north. We did see some impact in load volume on the lanes in the north, right there. It was not, you know, there's no customer or account losses during the quarter. It was largely because of that. We did have some transition impact because several of our customers, as we transitioned ownership, right, because we had to get contracts in place and so on, they did those stop orders on us for a period of time before they actually triggered it back on. That did have some underlying impact. From an overall perspective, you know, as adjusting for those things, our revenues are pretty much in line with what we gave as an indication at the time of the acquisition. Sure. Sir, if I see the, you know, the EBITDA and the PAT for this segment, so we are currently at around 25% loss at the EBITDA level and around 28% loss, 28%, sort of a loss at the PAT level, which is kind of, worse than what we had done in quarter three. I just wanted to hear, sir, how confident are we to turn around this and break even in the first half of FY 2024, considering that, what signals we are getting from the industry that the express business, you know, as a sector is kind of, you know, struggling because of various factors, demand slowdown and competition and, you know, all those factors? Just wanted your thoughts on that, sir. Sure. Sure, Alok. I think let me give my perspective on it. I think first of all, there is obviously I think the Q3 versus Q4 comms are not actually very accurate because obviously in Q3, what we reported as the express business was largely our own business, with around one month or six weeks of the MESPL business. We have seen obviously a full quarter impact of the Rivigo business. That's the first thing. Therefore, if you reach out to our separate team, we'll kind of give you a better recall directionally of that. Right, what, you know, from an earnings quality perspective, I think the levers which you have said earlier, you know, still remain the same, Alok, right? The first one obviously is that a substantial amount of this is load-driven. We have a network of around 17 hubs, 217 branches, and the load which you carry on the network actually drives the operating leverage of the business. So the first thing which obviously will really make a big impact is the transition of the MLL network volumes onto that. We expect that to be done with very marginal increase in overall cost, right? And that should obviously substantially improve the operating leverage of the business. That is actually under play. We've just transferred effective April 1st the network business of MLL into MESPL. Through this quarter, a lot of that load will actually transition out, and we'll see the benefit of that, which is quite significant given that facilities or operations costs are roughly around 18% of our total cost mix. That's a big operating leverage number. The second big element of course is which will drive value creation there is just the transportation efficiency. Because we'll be able to run at higher load, consolidation of loads will be better. Vehicle efficiencies on line haul especially will increase, and we expect to see better density in feeder and the pickup and last mile delivery volumes as well. So combining both of those, I think even without considering any further volume growth, we expect a substantial amount of the EBITDA loss to come down. As I said earlier in my comments, I think, Alok, assuming, based on our current forecasted transitions of accounts, we expect that by Q3 of this year we will turn EBITDA positive on the business. There are some obviously. Now coming to the other side of the question, which is where will growth come from? I think obviously there is some softening in demand. I think also Express saw a bit of a spike during COVID, right, given that. We still believe underlying growth is still there. I think, you know, India's demand is getting densified, right? You know, on the e-commerce side of the business, customers are more into more supplier fulfilled volumes, which is actually creating demand for supplier pick solutions and offerings, which are also part truckload in nature. Unlike probably what others feel, we do see that there is some robustness in specific parts of the segment. You must also remember that the fourth... I think the other growth lever for us, Alok, is the fact that a substantial amount of our 3PL and other clients actually do have express volumes. Our penetration or share of wallet in that has historically been low because we didn't have an offering, right? As the offering gets rolled out, we expect that we will actually improve share of wallet in those businesses and integrate, you know, FTL warehousing, express, et cetera, in better ways for our clients to give them higher productivity. So, you know, we kind of broadly looked at a 12.5%-13% annualized kind of growth rate secularly over the next four, five years. We believe that given the markets are right now, Alok, those are very defensible and pretty much achievable numbers, given our broad, you know, customer portfolio. I think. You know, kind of mix those three or four levers together. There's also things we are doing in terms of productivity improvement, you know, reducing, you know, productivity, tech, you know, improving density of the workforce, of the shop floor, right, to reduce operating costs. Combining those three or four things, I think we should be able to get first an EBITDA breakeven by the third quarter of this year. hope, you know, and get to probably a breakeven at a PAT level on a running basis by the end of this year. Then we'll kind of kick into more aggressive growth phase. As I said earlier on, our view of the business is, we have the opportunity over these four to five years to build a 1,000 crore business, right? We'll be starting at roughly around 450, 500 crores when the business are consolidated, right, on a run rate basis. We expect that to probably double over the next four to five years and peak at around 3%-4%, you know, PAT levels. As we stand today, I think we are pretty... You know, we've not lost. There's nothing which has given us any reason to revisit those, you know, that aspiration. Obviously any integration does not go, you know, bangs up completely on time on everything. There are things which go a bit sideways, but those are all controllables. We're still pretty. We feel we are in a good place. It has a carry on the numbers, something which we recognize, but it's also a significant step up in terms of MLL's penetration and our ability to be an integrated logistics provider for our clients. Sure. Thanks for the collaborative answer. This depreciation has increased to nearly INR 55 crore at the consolidated level. Sure. What's the normalized run rate we can look forward for depreciation? I think depreciation has gone up. I think there are multiple components to that, Alok. And, you know, obviously a part of that has essentially been around INR 10 crores of the increase in depreciation has been because of the Meru consolidated effect on a full year basis because of the mobility business which you acquired from Meru. Around INR 8 crores of it has really been the run rate impact of the MESPL business. That's approximately been around 20%, if you may, of the increase in the overall in the overall depreciation, prior 22%. The rest of it, right, has really been, right, India's impact of it. In the remaining INR 35-36 crores, India's impact is around INR 27 crores. I can give a more specific number, but I think it is around INR 27 crores. The remaining INR 10 crores is split between electric vehicle fleet addition, right, some other capital items and obviously, you know, software depreciation and so on. From a run rate basis. Yeah, yeah. From a run rate basis, I think MESPL and the Meru depreciation should be capped roughly in this range. We don't expect any significant addition there, right. You know, and as far as the MLL, the core 3PL business is concerned, I think, you know, we will see some normative increase in terms of capital, right, which is in the same range as this year. This year we spent a capital of around INR 85 crores for roughly, INR 75 crores was our CapEx spend, and I think we expect it to be in the INR 80-85 range, at least for 2023, 2024. So we expect that to roughly be in that range. The warehousing will obviously have an Ind AS 116 impact, but that also there's also a tail off impact on Ind AS 116 as some of the older leases come off. So net net we kind of expect that we will be a little bit up, marginally up on the, on the, on the MLL side of the business, probably 7%-8% up on depreciation. The Meru and the MLL Mobility and the MESPL number should roughly be capped. Sure. I have more questions. I'll come back. Yeah. Thank you so much, sir. Thanks. Thank you. Ladies and gentlemen, in order to ensure that the management is able to answer queries from all participants, kindly raise questions to two at a time. You may join back the queue for follow-up questions. We have our next question from the line of Amit Dixit from ICICI Securities. Please go ahead. Hi. Good evening, everyone, thanks for taking my question. Just two questions from my side. Did you take any price hike in this quarter, and how was it absorbed by the customers? If you can, split it, I mean, business-wise, that would be great. Amit, can you, if it is just in the interest of everyone's convenience, can you just ask both the questions? I will answer both of them together. Yeah, sure. The second one is essentially on the industry, given that what you highlighted in your opening remarks that automotive is probably, you know, going strong, consumer durable is likely to pick up and e-com is sort of, you know, still on a sticky wicket. What kind of growth can we expect for FY24 in terms of revenue? These are the two questions. Sure. Let me. Yeah. I think in terms of growth, I think we expect that there will. See, I think what drives our growth is a couple of things, right? I think, one is underlying volume in all our existing sites, and that is, kind of an. That's just how much of flow through we get because we do have, some amount of properties or unitized pricing in our business. We do get some flow through from that. The second one obviously is network expansion. As customers wanna put more sites as they densify their networks. I think from broad demand perspective, I think automotive largely tends to be transportation heavy. We expect that volume to be reasonably robust in the first half, but we do expect a lot of growth in the first quarter. We do expect stronger growth in the automotive, you know, segment from the second quarter onwards. I think from an e-commerce consumer's perspective, I do believe that we will see an uptick in volume definitely through the seasonal course, through the season this year. The question right now is how much of network capacity addition will we see, right? We definitely think volume will go through and we will see kind of, you know, mid-teens kind of growth in volume given what we are seeing across all our end markets and our logos. We are still seeing some tentativeness in terms of site expansion and network expansion. I think that's the one which, very honestly, Amit, it's a bit hard to exactly figure out. We are optimistic that in several segments and given what we are doing, as I said, you know, an annualized contract value in the first, in the fourth quarter was roughly around INR 100 crores, right, for the quarter. That's actually a healthy sign. Hopefully we are confident we'll be able to sustain that, you know, that kind of run rate through the year. Q1 might be a little bit slower, basically is a little bit what it is and we expect. I think from a pricing action perspective, I think, as I said, we operate in multiple segments. The 3PL business, we have seen margin improvement there, I would say largely on the basis of stronger cost management and operational performance. Most of our contracts have been continuing in nature. Really a fair amount of the business is a continuing business and has not changed dramatically between Q3 and Q4. I think on the forwarding business, as I've already said, prices have actually come down. The challenge has been to kind of hold margin levels as prices have come down because I think lot of times people are making forward bets on further reductions in prices and putting those, as you know, making those, taking those projections and putting them into the deal. We've really not been able to do a lot of price movement on the, on the forwarding business. I think, clearly we're not going to do a lot of increase there. I think on the last mile delivery business, I think as I mentioned, we have optimized for margins there. We really optimized not by doing a broad price increase, but actually specifically looking at accounts and offerings where we actually get better realizations, right. I don't think I would say across the board there has been an increase, right. It's been really about how we've optimized our offerings and our customers. I think on the express business we have seen some uptick on what we call the retail end, which is really small and mid-sized establishments, but not so much on the enterprise end. The enterprise end has been more topical or tactical and not really been, I wouldn't say been an across the board increase. I hope that answered both your questions, Amit, and probably we should go there. If you have any further questions, Amit, happy to take you back on the queue later. No, no, sure. I'll get back. Thank you, sir. Thank you. We have our next question from the line of Sarath Singh from Haitong Securities. Please go ahead. Hi. Hi, Ram. I've got two questions as well. Firstly, needed some clarity on the borrowing side. We have around INR 400 crore of debt on our books. Where exactly is this being utilized? Can you give the timeline of the debt repayment? The second question is on the mobility side. We have around INR 185 crore of revenue from Meru. I would expect like, I would assume that another INR 75 crore is from Alyte. What has impacted Alyte in FY23 that the revenue is down 50% here? That's all. Thanks. Okay, Sarath. Let me take both those, I think, questions in some form. I think on the debt side, we do have roughly around INR 400 crores of debt on the books. It's spread across multiple parts of the business. The largest part of it, of course, has been debt acquired by ABSPL, taken by ABSPL for the acquisition of the Rivigo business, which is a little bit around the, roughly around INR 220 crores. That's long-term in nature and has a structured repayment plan around it. Won't get into a lot of details, but it's a structured repayment plan, on a, on a fairly, I think, attractive coupon, right. That is the largest part of it. Apart from that, we have around INR 150 crores which is spread across within the MLL side of the business, which has largely been investments we made, borrowings we made to support acquisition of the Meru business from M&M in F '21-'22, and for the investment in Whizzard. Those were the two larger parts of that, along with some amount of working capital there. There are also, of course, working capital lines in the 2x2 Logistics business. There are working capital lines in the forwarding business as well, and those are purely working capital lines. Right. The large part of our long-term debt is actually in, is largely in, is really around... Two part, large parts, I think 45% of it is working capital to support operating cycle business. 55% of it is really to support the, has been debt taken by me and SP to support the Rivigo acquisition. We are on structured plans. As you know, there's no... Our ratings are good. We have a, we have a window of repaying the long-term debt. From a working capital perspective, I think that number moves up and down, right as we need it. We have. We don't particularly see a significant change on the volume of that line. Right. As far as the other question was concerned, Sorry, could you repeat the second question? Yeah. The Meru numbers. Yeah, the mobility numbers. Yes. The MLL Mobility numbers which you see declared here of INR 185 crores is a consolidation of the revenues of the mobility business from Meru, which was inherited historically from Meru and the Alyte business, right. There's a period impact of it because the transit acquisition or the transfer of the business was done halfway during the year, right. Right. Therefore, there is, the, we want to report full year revenues, right, of the Alyte business. From a full year perspective, the businesses together, in the INR 185 crores, the erstwhile Meru component of that is around INR 50-55 crores. The remaining part of that. That's accounting revenue. It's not platform revenue. It's accounting revenue. The remaining part of that is actually the enterprise transportation business, which is principally Alyte. Right? You'll see that obviously in the other part of our financials, unallocatable expenses have come down in our books, and that's largely because we are no longer reporting the mobility segment as a segment in standalone earnings. Therefore, that external unallocatable expenses have come down. That's with the transfer impact. If you really look at it, the lion's share from a revenue perspective is still actually the enterprise transportation business in the numbers. Got it. Thank you very much for that. That's all from us. Thank you. We have our next question from the line of Krupa Shankar N J from Avendus Spark. Please go ahead. Hi, good evening, thank you for the opportunity. My first question, Ram, is on the warehousing revenues. I mean, well you did mention that there is a 0.6 million sq ft reduction in the warehousing space, but the decline, you know, has been, you know, for two quarters now. I just wanted to get a sense as to are we expecting warehousing to moderate from current levels? Because we had this discussion in the past, and you were quite upbeat on adding close to about 2.5 million sq ft per annum. Is there any change in stance over there? That's the first question. Perhaps after answering I'll learn more. I'll ask you second question. Hi, Krupa. How are you? I hope all is well. Yeah. I think from a warehousing perspective, I think as you were seeing, we reported a 9% declared reduction in warehousing solutions revenues for the quarter, which is on the back of a 6% or 3% reduction I think we reported in the preceding quarter of the year. I think a large part of it actually has been. If you look at warehousing and solutions, Krupa, I think we mentioned earlier, there are two parts to it. The largest part of it obviously is the pure warehousing piece. There is, when you do end-to-end solutions, there is an associated transportation piece as well, which is included in that numbers because we bill to a client on an integrated basis. The decline in the year-on-year numbers in the fourth quarter has largely been on account of the restructure of the Bajaj account, right? What has happened with the Bajaj account obviously is we reported year-on-year nearly a INR 32 crore reduction in revenues, quarterly revenues, because of restructuring of the Bajaj account and all that is a combination of warehousing and transportation. Warehousing, the warehousing space which went away was either given away, as I said earlier on, or was replaced by other customers, right? The transportation revenue obviously completely went away. If you look at our numbers and you adjust that Bajaj reduction, you will find that warehousing, the rest of which is largely pure play warehousing, actually went up year-on-year, right? Where I think the net impact was INR 22 crores for the quarter, right. I think I just pulled out the numbers. Net I think, Krupa, you'll actually see that it has gone up, adjusting for the Bajaj impact. From a long-term stance perspective, there's no change. As I mentioned earlier on, we've just announced the construction of another 1 million sq ft of warehousing in the Chakan Talegaon area. That is at the back of construction which is already going on in Calcutta, in Guwahati. Expansions are going on in other places. We obviously will have to talk tactically, we always do have white space challenges in different parts of the business. As of now, white space is only 4% of the overall volume and therefore that's something which is within our operating operating envelope. All right. Thank you, Ram, for that. The second was on the freight forwarding operations. Just wanted to grasp what here. While I do understand there is a significant pressure on pricing and what is it that we are trying to do with respect to sustenance of profitability? From there on, just wanted to get a ballpark number as to where can the profits or the margins hover around in the freight forwarding business. Given that next year also we are looking at a high base. We are starting at a decline of mid-teens with our volume stations. Any light you can throw on this particular piece. Yeah, I think, Krupa, I think the freight forward and rate adjustment has been secular across the industry, right? I think it's really not, in fact, if you actually look at it, I think on many bellwether lanes for 20 feet cubes, prices are actually down up to 75%-80%. You know, we've actually been able to offset that through volume growth. What I've always said, Krupa, I think on this business even earlier on, is that you've got to go back and look at three years and adjust out this kind of onetime gorilla earnings we've had. And adjust that out, I think our CAGR back to, you know, 2018, 2019 is still around 26%-27% on revenue and is north of that on earnings. That growth trajectory still remains. I think the focus, Krupa, continues to remain on growing volume and supplementing India origin, India destination volume with the hubs or the operations we are building in Dubai and the UK. Right from a broad guidance perspective or about indication perspective, I think our aspiration there has been, you know, to grow the business at that 18%-20% level, which would then in F 2026-2027 mean, you know, revenue probably of around, you know, INR 900-1,000 crores, right on an, on an annualized run rate basis. We believe that the business will be at 2%-3%, roughly the 3% PAT level. We've been there before, not just in the really good quarters. The really great quarters we've been above that. Normalized, I think we expect only the 3% PAT will actually be very sustainable for us. I think once we breach around INR 450 crore-INR 500 crore of annualized revenue, I think we should be in the envelope of around 3% PAT, right? Thereon it's just a volume growth play. As I said earlier on, I think we clearly do understand and recognize that the pricing corrections have been huge, but as I said, underlying volume growth has actually offset a bunch of it. I think as you go forward, if we are able to sustain that volume growth, we should be able to see a recovery to peak levels, our highest quarterly revenue of INR 112 crore, if I'm not wrong. 112-118 INR crores, right, and in that range. I think we'll be I fully expect to be able to get back to that kind of peak rate in the first half of FY2024-2025. Oh, that's really helpful. Thank you and all the best. I'll get back with you. Krupa. Thank you. We have our next question from the line of Tarun Bhatnagar from Tribeca Investment Partners. Please go ahead. Yeah, hi. Thanks a lot for taking my question. My question is on Rivigo. We have seen very heavy losses in this quarter, which has led to a disappointing loss and despite your core business doing really well. In this regard, I wanted to understand firstly, what was the thinking behind you acquiring Rivigo? In case we are planning further acquisition, what sort of returns would you be expecting from them? Finally, how do you get Rivigo back to profitability and generate the desired returns? Thank you. Sure. I think, Tarun, all the questions are, I think, all interlinked in some form, but I'll answer the most outlier there in terms of what, you know, just from an acquisition philosophy perspective. I think, you know, from our perspective, you know, three years ago, we essentially said that, you know, our goal is to build a business which combines the surface FTL transportation business with more warehousing 3PL site, and then build out new service lines around freight forwarding or cross-border movement, you know, part truckload and last mile delivery, so we can actually provide customers, and coverage across their entire supply chain, right? And most of the acquisitions, if you note, have all been in line with that story or that goal. We've not really kind of gone left field away from that, right? That's one thing which I want to say that strategic intent for us, strategic intent drives acquisitions and not the opportunistic value around the transaction itself. That philosophy, I think, will remain in the business. I mean, obviously, we run through returns profiles for all the acquisitions as we have done for Rivigo as well, as a matter of governance with the board. Those return, long-term return profiles are essentially what the Rivigo acquisition will also deliver for us, right, on a fully consolidated express business profile. You know, I won't go into segment targets in terms of returns. The longer-term, you know, target which we have set or the medium-term target we have set for the overall business is to get north of 18% return on equity or around 24% return on capital employed. Our current business plan for the express business also ties into that, right? From a philosophical from a directional perspective, I think it's intent driving the acquisition. The metrics are all accretive in nature. We are not, we don't do Our acquisitions are not designed to basically chase revenue. I think I've always said in logistics, there are oceans of revenue and islands of profitability. We don't intend to be stuck in the ocean. That's kind of clearly there from a philosophical direction perspective. I think specific to the Rivigo acquisition, I think our strategic view of supply chains, in India is that across the board, India will see greater densification of networks. I think over the next five years, what we have seen over the last five to seven years is significant densification of networks. Densification has two dimensions. There are the dimension of coverage and the dimension of latency, right? How deep do you have to cover the geographies and what is the latency with which customers expect delivery to happen? As latency shrinks and coverage expands, the need for moving smaller loads of volume actually will increase further and further. We've seen that play out, and we expect that to further play out in the industry, right? Everything which is happening from things like multimodal, et cetera, is all on arterial line haul kind of movements. It's not actually a solution for densification in the country. As you see more tier 2, tier 3 kind of penetration, this is something which we believe will continue. The intent of buying Rivigo was to build a via digital first business with a strong technology stack the nationwide coverage in terms of direct, right, or near to direct the delivery coverage. And be able to stagger that network with existing volumes we already had with time-defined service levels. That's kind of what drove the acquisition rationale. I think what we've got with the business is very strong network coverage. We are in more than 270 locations across the country, and strong retail or SME presence, right? With a strong business partner network which adds yield to the business and its revenues, right? Obviously a great fit into the rest of our business because it allows us to provide customers with real, you know, real depth, right, in terms of coverage. Right. That's been the strategic intent and everything which we are right now on, we are pretty happy about it. I think, it's kind of delivered our 90-day goal on the transaction. You must remember it's only been 90 days really since we acquired the company. It seems like a much longer time at times. You see the numbers, but it has only been 90 days, right? We've kind of hit that 90-day goal, which has largely been integration. We're happy with the tech stack, and our network coverage has been solid. All that's been really positive. Now that said, obviously the question of the big gorilla in the ring is the profitability of the business, right? Which I think is what you alluded to, right, in larger measure in your question. I think I've answered that earlier when I think it was, you know, I don't know who asked the question, but I think you know earlier that, you know, what we are, there are four levers. I think if you look at it simplistically in your cost structure of the business, you know, you have two big transportation costs, which is your line haul and feeder. The second is your line haul, and the second one is your feeder and delivery. Then you have operating costs of running your hubs and your network because this, you run your hubs and networks no matter whether there's load or not. So it's a high operating leverage model. Then there is overheads and other cost optimizations which are there, which is kind of below the gross margin level, but above the EBITDA line. Right. We have a compression strategy on all of them. Right. Each of them is specific. I think the line haul and the transportation leverage, a lot of that will come as we transfer the MLL volume across and will further you know, increase as we get the additional volume growth, which we estimate to be the 12.5%-15% range over the next few years on an annualized basis, right? That's something which will kind of drive that optimization because we go to more to larger trucks, better loading of the trucks. Like for instance, you know, on lanes where we've already done early optimization in April, we have seen a 6%-7% improvement in the, in vehicle utilization, which brings down which is a very significant impact on cost. Right. The second part is obviously facilities rationalization. Effectively, we are running two networks, an MLL network and an MESPL network. Those networks have been crushed together or combined together and therefore we will get a significant amount of volume leverage by running the same facilities, doing things like running for three shifts, you know, running at higher productivity levels, remanning the floor to drive better improvements there. That is quite significant because facilities and, you know, what is fixed in period fixed costs in nature is around, you know, 18% to 20% of our cost mix. If we can run the same network, with 30%, 40% more volume, we actually get operating leverage flowing in. There's of course a bunch of thing on other cost reductions which are there in terms of our spend levels, overheads and so on, which are also being addressed. Some of those have already been addressed. They have not flown into the numbers in the quarter because obviously as you do optimization on some of that, you have, you know, you have costs of doing that, right? Whether it's shutting down facilities and you have to take costs on shutting down facilities or adjusting productivity on manpower, you have your associated costs of that. Those costs have shown up in Q4, but they will stop showing up from Q1 onwards, right? Therefore you'll see this optimization flow through, right? Our first goal obviously is to get to that positive EBITDA level. As you get to that level, I think then we actually are looking at optimizing the numbers. There is a clear game plan. I understand that obviously there's a sticker shocker in some ways on the numbers, that's actually what we had given as an indication when we did the transaction as well, that we expect that this is a transaction which we closed, I think, on favorable economics from an acquisition price perspective because we have a five to six quarter window to optimize the business and get it to kind of, you know, get it at creative level and probably a little bit more time to get it to peak earnings. All right? As of now, as I said, we are, you know, notwithstanding the size of what you see on the quarter's results, I think we feel pretty good about where we are, and we are well positioned to deliver what we said we will. That will be in line with our 18% return on equity target for the company. Mr. Bhatnagar? Yeah. Thanks for the answer. Just one supplementary question on that. Firstly, maybe you can maybe talk us through, talk through on your acquisition strategy. Are there further acquisitions you're looking at? Secondly, also wanted to understand, you mentioned that you will be getting back to profitability by end of this year is, firstly, can you confirm that? Secondly, like what are the, like, things we should be watching out in terms of the actual operations in the business which you are currently doing and which we should hope to achieve maybe by the end of when we talk three months later and maybe when we talk maybe next year sometime later in the second half. Tarun, I'm assuming your question is specific to the Rivigo business or the Express business, right? Yes, yes. Rivigo and also on acquisition plan. Acquisition philosophy, as I said earlier on, our strategic intent, we identified a few areas and those are pretty much done now. There is no deliberate desire to pursue an acquisition on any specific area in the near term. We might find a tactical transaction if something happens because it's really accretive to earnings and is very favorable as a fit. Let me just say we are not looking right now. I think our focus, as I said last quarter and this quarter as well, Tarun, is to kind of optimize the acquisitions we have done and deliver the earnings which we committed on that, right? As we have done on the 3PL business, right to drive earnings improvement, we've kind of done that turnaround in large part on the Mobility acquisition we did. Now we're gonna focus on doing the same thing on the MHEL, the Rivigo acquisition as well. No real... That's kind of, I think from a philosophy perspective, I hope that's clear. I think from an MHEL perspective, I think the three big, as I said, there are three big parts to this puzzle. I think as you look at markers along the way, I think, Tarun, there are three things which you should, you know, we look for, and I'm, I'll be fairly transparent about that. The first one I think obviously is volume growth, right? We are going through a process of integration right now, so big focus on service delivery and controls, right, putting our governance systems in place, putting some of our processes and policies in place. As we go into the second quarter of the next financial year, I think one thing you really want to look at is that volume growth coming back, right? As I said, you know, our the combination of that volume, which on a cubic feet basis is probably, you know, we were, you know, at a pre-acquisition level on a cubic feet basis, we were probably around 5 lakh tons. That's the first, that's a, that's a starting marker. The question is how much do we grow from there? Our goal is to grow at 12.5%-15% a year. That's one marker to clearly look for, Tarun. The second one obviously is to look at the gross margin line, because that's where you have a lot of the direct costs involved, and that's where the operating leverage of the site utilization and line haul cost efficiencies get better. I think that's something which we hope to make progress on faster than probably on revenue, because we are timing that optimization right now. The third part of course is the EBITDA piece, which is between the gross margin and the EBITDA line, which is a lot around the optimization of various items. Right, obviously there's a carrying cost of the debt which is there on the transaction, which is, I think is a separate, there's a separate, you know, process through which we look at saying what are the ways to kind of, you know, to reduce the impact of that. Those are the four things largely, I think, Tarun, which I would look at, you know, on a monthly or quarterly basis, or hopefully it's only on a quarterly basis. As, you know, to catch up otherwise as well, those are four things which I think will move the needle right on, on the path to profitability on the business. Thank you. Thank you. We have our next question from the line of Sumit Kishore from Axis Capital. Please go ahead. Good evening, Ram. Two questions. The first one is on your path to value creation and the 18% ROE target by FY26. I mean, how does this look when you consider your business returns on a ROCE basis? What is the math when you're using on net margin when you're arriving at that 18% ROE for a relatively asset-light business? The second question is on intangible assets and the increase that you're seeing in the balance sheet there. From INR 10 crores to INR 240 crores, what sort of explains that and what is the intangible asset? Yeah. I think, Sumit, I don't have the exact intangible number with me, but I would say that almost all the intangible. A substantial part of the intangible growth has really been the goodwill on the MHEL acquisition. That I think is the bulk share of that number. Sure. have somebody reach out to you, Sumit, with a more specific breakup of it. I would assure you that, I mean, it is probably 70%, 75% of the number is really that... I would have also thought so, but goodwill on consolidation mentioned in the presentation is flat at INR 3.3 crores in your disclosures. Okay. Okay. I'll come back to this, Sumit. I'm just looking at the numbers. Sure. While we do that, I think in terms of your earlier question, your first part of your question in terms of, you know, the return on equity and how we measure it. I think, as you know, I think we've said multiple sets of businesses, Sumit, so it's hard to say that I have one bellwether number across the board. I think if I look at it simplistically, you know, first of all, I think we do obviously, you know, look at ROE rather than ROCE because now, you know, we do have some leverage in the books. Therefore, if we had zero leverage, we'd obviously look at ROC as being a proxy for ROE. Ultimately it's shareholder value and, you know, wealth which is most important. Bellwether metric is ROE, Sumit, right? Not ROCE. That's more an operating metric for us internally. Now in the constituents of that metric, I think two broad elements. I think one is what's profitability and the other one is what's gonna be our cap table and continued cap investments in the business. Many of our cap table investments in the business, the largest part in terms of density of our cap table has always been the 3PL investment. And I think we've spent around INR 75 crores of CapEx last year. We've always said that can we expect capital to be in that 1.7%-2% range. That's been the bulk of it. I think the only exception was last year when capital went up to INR 120 crores on the back of some of the expansion we were doing. In general, it's always been at that range, and I expect that very much to be at that range, Sumit, right? I think as we model out our numbers or look at our numbers, we kind of look at it being in that range. The other part of the equation, of course, is profitability. While I won't give one number as a number for the entire company, I don't think that's very practical. I think we have said earlier, Sumit, as you know, that we expect the 3PL business to get to around 2% at a PAT level, and we expect the different parts of the network services business to be between 3%-4%, right, at a PAT level. Those businesses, we do believe will remain at 90%+ of the overall basket of MLL earnings. I think those are the primary constituents of that 18% return on equity. Working capital, it moves a little bit. NWC was, I think, 14 days for the quarter, up three days compared to last year. That's largely just been marginal movements on our DSO and not being structural issues around it. Right. I think those three pieces largely, I think, Sumit, are what kind of blend into that, into our confidence in getting that two or past 18%. The biggest earnings element, of course, as we've already discussed at length today in multiple questions, has been the express business. Getting that back clearly is a hang, that's obviously we have a fair measure of confidence in delivering that. That, I think, is the short-term hang which we have to solve for. Then of course, you solve for it and volume builds up. We do believe that... These numbers are even probably lower than some of the comps in the industry. We actually feel pretty good about getting there. I don't know, Sumit, to answer that question. As far as your, I think as far as the intangibles is concerned, I think it's largely around goodwill. I think the intangibles and consolidation. Yeah. I think I'll come back to you on that, Sumit. I have your num- Sure. In fairness, I don't want to give you an half-baked answer. Just give me some time and I will reach out to you separately, Sumit, and send you a note on that. Sure. Thanks, sir. All right. Thank you. We have our next question from the line of Teena Virmani from Kotak Securities. Please go ahead. Hi, sir. I have two questions. One is related to this other unallocable expense, which you talked about the impact of mobility segment also. There is a sharp decline between FY 2023 and FY 2024. Was the mobility segment contributing to somewhere around INR 79-80 crores to the overall component? How do you see it going forward? Like, was it a one-time impact or is it going to be- I think... Teena, I think the way to look at it is a bit of the other way around, right? The mobility business, unallocable expense is X rupees, and that unallocable expense is what is shared between both businesses. When two businesses become one, there's nothing to share, right? Right. Two businesses became one in September, right? We had two segments reported in September. From September onwards, we report only one segment. Because there's only one segment, there's nothing unallocable. Everything is allocable. Right. It's as simple as that. Okay. Don't associate with the mobility business as such, because it's not a cost driven by the mobility business. It's just the fact that our common expense pool, which would have been attributable to two segments, is no longer attributable to two segments because there is only one segment. Okay. Therefore has been fully attributed. This will remain? Yes, that will remain, and therefore has been fully attributed into the 3PL businesses, segments numbers, and it's reflected in the profitability of the business. Okay. Okay. This kind of trend we will see going forward also. Yeah. I don't think. Yeah. I think unallocable expense is pretty flat in the second half of the year, that's actually what I think you should expect to see going forward because the MLL holdco right now is pretty much Mahindra Logistics is now almost completely just a 3PL logistics company. All the individual network services business are individual entities, as is the mobility business. Okay. My second question was related to Bajaj Electricals' contract. Like you mentioned that you're already scaling down the contract. Which components are actually getting scaled down in this particular contract? How much incremental positive benefit that it can yield on the EBITDA side? Because it would have some impact on the revenue side, but what is the negative impact on revenues and what is the positive impact on EBITDA that can happen? So I think- From FY 2024 onwards. Tina, I think the revenue the Bajaj Electricals business at peak was in line with what we had said at the time of kicking off the business. I think when we did the contract, we had said it's roughly a INR 200 crore annual business. I think at a run rate basis, it probably peaked around there because, as you know, we had COVID impact and so on through the year. In Q4, I think revenue was around INR 14 crore. Down, as I said earlier on, down around INR 32 crore from the same period last year. On a going forward basis, we expect that should be at the same level through the most of this financial year. From a margin perspective, the business we are doing now is all margin accretive, and therefore, shutting down the business further does not necessarily add to margins. If that's the question you're asking, that doesn't add to margins. Right? So I think we are right there at a place where obviously the volumes are around 25% of what the contract was initially expected to be at. Right? As I said, the margins are positive today at a pre and post-Ind AS level. Therefore, there is no earnings optimization to further decline of volume. Okay. Got it, sir. Got it. Thank you. Thank you. Ladies and gentlemen, in interest of time, that was the last question for today. I would now like to hand the conference over to management for closing comments. Over to you, sir. Thank you very much. Thank you all for joining us today. I hope we've been able to answer all the questions and queries you had. If you do have any further questions, please feel free to reach out to SGA or Investor Relations partners or the management of the company. We look forward to have the opportunity to respond to those. Thank you once again for your continued interest in the company and our results. A good evening to all of you. On behalf of Mahindra Logistics Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.