Ladies and gentlemen, good day, welcome to the Mahindra Logistics Limited Q1 FY 2024 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 an operator 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. Shogun Jain from SGA. Thank you, over to you, sir. Thank you, Aman. Good evening, everyone, and thank you for joining us on Mahindra Logistics Limited Q1 FY 2024 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 the financial results and investor presentation posted on the company's website and stock exchanges. We will begin the call with opening remarks from Ram, followed by a Q&A session. Before we begin, I'd like to point out that some of the statements made during today's call may be forward-looking. A disclaimer to that effect was included in the earnings presentation. I'd now like to invite Ram, MD and CEO of Mahindra Logistics Limited, to make preliminary remarks. Thank you, Shogun, and good evening, everyone. I trust you all have had a chance to view our presentation and financial results, which are available on the stock exchange and our company's website. In the interest of leaving more time for questions and answers, I'm gonna kind of keep my update short. I will provide a short update on the external environment, our end-market performance, a few key business elements and events for the quarter, including the status of the ongoing integration of the Rivigo PTL acquisition. Finally, I'll conclude by discussing highlights of our financial performance and our focus areas for the remainder of the year. From a broad macro perspective, the economy of India has and continues to see a tremendous transformation in recent years, and the momentum continues to remain positive. As evidenced in the recent visit of the Honorable Prime Minister to the U.S., the centricity of our nation as an economic and geopolitical force continues to grow. This growth, of course, will continue to drive the need for increased logistics. The drive for global competitiveness will not just require infrastructure, but favorable policy and more integration across the supply chain. Over the last few years, our company has been motivated by a mission to offer integrated, tailored logistics and mobility solutions using a combination of technology, people, and process capabilities. We believe this customer-driven approach will help us achieve our objective of a base of revenue of INR 10,000 crore, in revenue and class-leading financial returns. During FY 2022-23, we took several steps to accelerate our pace of growth and drive scale and synergy in this pursuit. Our acquisitions we made last year were aligned in this direction, a combination of scale and structural cost management augments our focus on growth and expansion of offerings. Let me give a quick update on the end markets which we cater to, begin with the automotive sector as always. At a broad level, the segment, especially PVs, both ICE and EVs, remain robust, though some segments are showing signs of moderation in volume growth. Demand remained mainly stable across all the segments, except for interior PV and two-wheeler products, which are not showing any immediate signs of a significant rebound. Despite modest progress in just finished festive and married season, demand in the two-wheeler segment still remains, or apparently remains, quite subdued. There are some early indicators of possible headwinds, indicators of demand slowdown in specific categories such as LCVs and tractors as a result of increasing inflation and interest rates. Slightly weaker global macros prompting new demand concerns for businesses with global exposure. The passenger vehicle wholesale sales rose by 7% year-over-year, driven by new product launches and easing supply chain issues, but sequentially dropped quarter-over-quarter, owing to price hikes post-OBD II regulations and some weakness in the entry-level segment. We continue to expect growth in this segment from our business's perspective, but do expect to see some moderation in the second half across both auto and farm businesses. The consumer durables business, unseasonable rains across the country appear to have dragged on total RAC demand. However, some areas, such as south and east, have performed well, while demand from north and west continues to be below forecasts for the clients which we work with. That has resulted in higher than normal channel inventories. Weaker consumer emotions due to inflation have continued to affect demand, particularly for entry-level products. This has been a challenging summer season for cooling products especially. We've seen a strong April, followed by some pretty strong weakness in May, and some rebound in June. Now we do work with a series of clients in this segment, and we expect here that growth will be quite moderate for the rest of this year. The FMCG industry, the quarter is expected to be a better quarter. The stretched demand in semi-urban and rural sectors appears to have bottomed out. There's some easing in inflationary pressures. Despite this, there's a skewness towards smaller pack sizes across the board. The harvest season following the monsoon were an important indicator for consumption demand and it will determine the viability and future expansion of current green shoots evident in semi-urban and rural markets. Urban markets remain resilient and continue to grow gradually with a good traction in urban markets, a bottoming of rural softness, and a broader base between the improved overall volumes are likely to, you know, begin increasing from here. We have continued to see good traction in this segment with an increased demand for integrated solutions, what we call integrated warehousing and distribution, and several wins here. We expect growth both in account and with new account volumes. The e-commerce sector, which is a, you know, reasonable part of our demand base, right, long-term prospects of the e-com sector remain very positive, driven by an increased trend towards digital adoption and greater penetration across both categories and industries, for digital platforms. The competitive intensity is likely to increase in the short term, with more players focusing across the board on B2C solutions, micro fulfillment, and quick commerce across the board. Given demand moderation in the short term, there is a marked increase in capacity consolidation, which has impacted warehousing and solutions done by different 3PLs, including us. We had mentioned last quarter, we have seen a trading impact of this with the closure of multiple sites in our business, across, you know, several of our customer accounts. In great measure, our continued business acquisition has helped offset this drop in volume. However, we have seen an increase in white space by approximately half a million sq ft during this quarter due to site closures, and most of those were in the middle of the quarter. Our electric vehicle business-based delivery services remain robust, with continuing fleet additions across 19 cities we operate in. We have now expanded to four-wheeler offering, and recently we launched a two-wheeler offering along with the recent peak of a couple of marketplaces. Lastly, the mobility sector. In the mobility sector, the policy drive towards electric vehicles continues to gain traction with major fleet operators focusing on expanding their EV fleets and targeting probably around 40%-50% of vehicles to be electric by the end of 2026. This is mirrored by an increased focus by policymakers and, you know, authorities such as airport authorities, who are pushing towards a broader trend of electrification. Right, we do expect that this will continue over a period of time. The volume of aviation traffic in India has, in airports, has increased by 70% between F22 and 2023, and this year, the aviation traffic volume is expected to grow by another 17%. Now, that has a strong impact on our airport services business, which has been seeing a rebound on account of that. We have also seen a continued but marked improvement in return to office across the board, and this has helped our enterprise transformation business as well, enterprise transport business as well, both through in-account growth as well as the acquisition of new accounts. Collectively, during the quarter, we registered a 39% year-on-year growth in the mobility sector business. If I had to sum it all up in terms of broader demand environment, I think the overall environment still remains broadly positive. For the quarter, we did see an uptick in order intake across our third-party logistics, contract logistics business, which, you know, which improved sequentially in terms of order intake, despite the challenges in e-com. For the quarter, third-party larger 3PL contract logistics order intake was around INR 130 crores on an annualized contract value basis. Obviously, some of that is offset by churn, in, in the e-commerce segment and a couple of other areas. The forwarding business is also gaining volume traction. Sequentially within Q4 and Q1, we did see growth in volume, despite the challenge of continued drop in prices. We have seen some key wins there, you know, across the board. We expanded our presence in integrated solutions for India's leading private telecom player, combining both warehousing and value-added services. For a large personal care products company during the quarter, we have won the integrated warehousing and distribution solution contract for the western region, which supplements the business which we already do with them in the south, with a similar solution format. For a leading global contract manufacturing company in India, we have been chosen to provide 50% of their cross-border logistics solutions. Overall, we do see demand is improving. We've had a challenge, obviously, in the first and fourth quarter of last year with some slowdown in demand closures, but we do expect to see that picking over the rest of this year, and hopefully the momentum will sustain. I'll talk about a couple of important things before I move on to the financial performance. Firstly, the integration of the Express acquisition from Rivigo. As I mentioned before, this was a key quarter for the Express integration. We spent the fourth quarter of last year doing planning around the acquisition, and we entered an integration phase towards the end of that quarter. You know, this quarter, the focus was on integrating both the networks. Through the quarter, I think we have seen our focus on transport cost reduction has been on plan and is moving ahead per our targets, and we have been able to demonstrate and drive synergy on the transportation side, both within the Express businesses as also with the rest of our other transportation businesses. During the quarter, we also invested significant efforts in consolidating the warehouse infrastructure across both networks and aligning the loads on single IT platform. As a result of the work around the transition, we did see some drop in net service levels across our network, as we're doing this transition, and that drop in net service levels did see a reduction in volume across several of our customers. In addition, we also shut down some business accounts for strategic reasons on assessing those accounts. A combination of these factors resulted in a volume drop of approximately 25% to 30%. You know, what we have done as part of the transition is intimate some of the changes in networks to our clients ahead of time. Now as the transition operational issues are resolved, we are starting to see an uptick in that volume again. We expect that this will be recovered by the early part of H2, and we will be back on a growth track at that time. Financial results obviously were impacted by that volume drop, as well as the costs related to the integration of both the networks. We also saw a marginal increase in transportation cost due to the network optimization, but these remain favorable, right, to prior cost structures. That obviously had a large trailing impact on our financials compared to the fourth quarter of last year. On a quarter-on-quarter basis, last quarter, we did actually see, we accrued the deferred tax benefit, which we did not do in the first quarter of FY 2024. On a pre-tax basis, you know, results are fairly comparable, and slightly better between Q4 and Q1, despite the drop in volume. The other things I do want to briefly cover is our warehousing and solutions revenues. As some of you have seen in the presentation that we did report a drop in our warehousing and solutions revenues on a year-on-year basis. That drop was largely on account of two things. I think first, we did see some churn in the e-com business, as I mentioned. We won new accounts, but the net impact of it was marginally down. We also did see an impact on a year-on-year basis of the shift in the business model we do with Bajaj Electric. That change, you know, contributed a substantial part of that drop in revenues. We have obviously, you know, we expect that to come back on track over the next through the middle of this quarter because of the new businesses we have won. On the positive side, I think you would probably see a significant improvement in margins in the warehousing business and solutions business, as we have really invested a lot more in finding cost improvements and driving optimization and productivity in the network. Those improvements are actually trailing down, and those have been a reasonably large part of the improvement in the financial performance of MLL on a standalone basis as well, right? We have seen obviously some, you know, increase in AS 116 costs, which you may also have noticed. Year-on-year, AS 116 costs, both in terms of the return, the RTO costs, as well as the interest costs have gone up. Those are trailing, of course, the increase in margin, which we have seen. Those improvements, those are largely on account of a change in mix, as we have had smaller, or less, you know, less expensive, warehouses being replaced by more expensive facilities, which also allow us to get better yield and better gross margin, right? Of course, if there are any questions on this, I'm sure I'll, you know, cover those in the Q&A. Moving on to the consolidated financial performance. Revenue for Q1 F '24 increased by 8% year-on-year, right, on an overall basis. Supply chain, including our 3PL businesses, obviously contributed 94% of our revenue. The mobility business contributed to around 6%. Gross margin on a fully consolidated basis for FY 2024 was at 10.5%, up 20 basis points from the same quarter last year. This was despite the impact of the MESPL acquisition. Excluding the impact of the MESPL acquisition, our gross margins for the quarter were 11.5%. EBITDA for the quarter stood at INR 72.8 crores, up from INR 68.8 crores in FY 2023, in some part impact due to the consolidation benefits or effects of the Rivigo acquisition. Excluding the EBITDA loss of INR 18.5 crores, which was there in MESPL, the EBITDA stood at INR 91.7 crores, up from a comparable INR 69 crores for the same quarter last year. PBT on a fully consolidated basis is down from INR 19 crores to INR 0.6 crores in Q1 FY 2024. Our PAT was down, as we reported, net loss, consolidated loss of INR 8.5 crores for the quarter. The, you know, the impact of the businesses were very different. The consolidated results were impacted differently by different components of our, of our portfolio. Therefore, let me spend a couple of minutes just highlighting the component performance. In MLL, revenue for Q1 FY 2024 was INR 1,051 crores, as compared to INR 1,068 crores in Q1 FY 2023. That included, you know, that included, in Q1 FY 2023, we did have the Express and the mobility business consolidation inside MLL. Net of those eliminations, the business actually grew by around 7%. PAT for Q1 F '24 was INR 23 crores, compared to INR 14 crores for corresponding quarter in Q1 FY 23. You know, it was impacted largely by operating results and to some extent by other income increases. Other income was up during the quarter for multiple set of reasons, including restatement, including some subleases which are now accounted as financial income, and few other asset categories where we saw movements right in there. Lords was up. Revenue for Q1 was at INR 77 crores, down compared to Q1 of last year, when it was INR 109 crores. PAT for the quarter was INR 1.6 crores, compared to INR 3.3 crores for the corresponding quarter last year. Most of the dip in profits was driven by volume. On a sequential basis, of course, we did show an improvement in revenue compared to the fourth quarter of last year. The Express business had Q1 FY 2024 revenue of INR 84 crores. You know, as a matter of detail, I would just highlight that this includes almost all the consolidation benefit of both the businesses. In the first quarter of the year, there were some businesses which did not fully transition, but I would say the large measure of it was transitioned. This is where the 25%-30% drop in volume is kind of really affected. At an EBITDA level, losses for the quarter were INR 18.5 crores, and at PAT level, losses are INR 29 crores in the express business. The mobility business saw Q1, in Q1 had a revenue of INR 80 crores compared to that, and a PAT loss for the quarter has narrowed quite substantially compared to a loss of INR 2.2 crores last year in Q1. It was at INR 1.8 crores in Q1 FY 2024. Losses were impacted during the quarter by one-time charges for write-offs on account of one customer, which is GoAir. We actually do work with GoAir, and as a result of recent proceedings with GoAir, we have, as a matter of prudence, decided to take provisions for the entire receivables, which are owed, which are due from them, and that has impacted our earnings. Excluding that, we would have been at close to breakeven for the quarter, which is in line or slightly ahead of what we had expected or kind of given kind of indications on earlier. Whizzard revenue for Q1 was at INR 31 crores compared to INR 29 crores in Q1 FY 2023, up by around 8%. The underlying volume growth was around 14%, and we did see a drop, we did have price reductions given to clients, which obviously impacted our revenue as well. Our part loss for the quarter was at INR 60 lakhs, compared to a loss of INR 1 crore for the same quarter last year, a 40% improvement compared to the previous quarter. Despite our, you know, kind of a tough pricing environment, a huge focus on operational areas, right, and the underlying kind of volume growth actually helped us narrow losses on a year-on-year basis. In the upcoming quarters, we have a second investment tranche, which is due to be made, which will, which when made, will make MLL the majority shareholder of, you know, of Whizzard or ZipZap Logistics, as it's actually called. 2x2 Logistics, this is a business which obviously has had, you know, consolidated its turnaround compared to last year, when we had significant losses in the business. Our fleet's completely up and running. We have completed the modifications of the vehicles, and upfitted them both, retrofitted them also for additional features, such as dome carrier capability and so on. Now as the fleet has come back to full operations, I think the business has made a profit of around INR 20 lakhs in the quarter, compared to a loss of INR 2 crores for the corresponding quarter last year. We continue to see headroom in this business. There is still upside in terms of vehicle utilization and in terms of, you know, miles or kilometers the vehicles are running, and we expect to consolidate and continue to improve performance through the rest of this year. Overall, it's obviously been a mixed bag. Our core 3PL contract logistics business, our mobility business, the 2x2 Logistics investment, and ZipZap Logistics, that, you know, all heading in a consolidated, in a, in a structural guide in the right direction, and all demonstrating good improvement, some of them over multiple quarters, trailing quarters. The loss business, the freight forwarding business is in a challenging environment as prices still remain under pressure. I think we've been able to offset that with volume growth and special net growth. We continue to be able to extract margins and hold our margins through solution design, and by kind of strong account focus and segment diversification. The MESPL business is in a transition phase, and as we think we have done in some of the other smaller acquisitions, we remain confident about how to scale up, right, and drive the cost reductions in the business. Overall, I think we'll continue to have a strategic focus on developing scale, and providing a compelling value proposition to our clients as we try to deliver integrated solutions. We do deeply believe that productivity across the supply chain has a high correlation to how well you integrate the supply chain using technology. We remain focused on cost management, continuous improvement, as we kind of navigate through some of these changes. We continue to invest in other areas, especially on diversity and inclusion, expanding the talent base in the company, right? Those are areas which remain a key part of our focus. Broadly, I think those capture the highlights of the quarter which just went by, with that, I'll open it up for questions and answers and open the floor for Q&A. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone 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 a question. Ladies and gentlemen, we will wait for a moment while the question queue assesses. Anyone who wish to ask a question may please press star and one at this time. The first question is from the line of Sumit Kishore from Axis Capital. Please go ahead. Hi, Sumit. Hi, Ram. Good evening. I have two questions. The first one is, you mentioned in B2B Express, there has been a volume drop of 20%-25% quarter-on-quarter. If you could give us some sense on how the volume growth trajectory in B2B Express needs to pan out in the remainder of fiscal, and how does network utilization, you know, need to improve for you to secure your target of becoming EBITDA positive here in H2 of the financial year? That's the first question. Secondly, on contract logistics, the revenue growth of 6% has decelerated, you know, could you give us a sense of how much potential is there to increase revenue in contract logistics by increasing share of business from existing accounts?... What is the addressable opportunity by increasing business from existing accounts? How has business development really panned out, or new client addition panned out in contract logistics? That's all. Sure. Look, I'll take the first one probably first anyway. I think as I said, and you may remember, I think what we had said, from where, from the baseline of the share of the volume both the businesses had, I mean, at the time of the acquisition, collectively, both the businesses had around INR 4 20,000-INR 4 50,000 tons of volume, right? We need another 10% volume growth to be able to get 10%-15% volume growth to get an EBITDA positive level, assuming that all the cost reduction actually would be in play and would fall through. Obviously, the cost reduction is a function of two things. It's a function of operating leverage and the and the velocity of being able to get the volumes through the cost optimizations. Where we are right now, obviously, in fourth quarter, we did see a not a 25% drop, actually a 25%-30% drop in volumes. Okay. As I mentioned earlier, we have not seen any customer really churn out of the system. We've actually, all our customers have been held, are still working with us, and many of them are working with us on some lanes and not all the lanes, because as we made the network changes, we intimated to them, and worked with them to clarify to them that there will be drops in themselves in specific areas, definitely. Customers did pull some, drops us off those lanes, but that's something which we are confident will start coming back, because in July, we are already seeing that happening, right? We should see the progression up. The first milestone, obviously, Sumit, is... To try to wrap it up together, we are probably around 35%-40% off on volume, 30%-35% off on volume to be closer to EBITDA level we need to be at. That obviously assumes that we can also execute on the cost reduction work along with that volume, right? That's why I said, we expect that in the early part of H2, we should be able to hit that volume. You know, obviously, clients will obviously take the volume down in a certain way, and obviously add it back in a phased way as well. We do expect that should really get back to that level by the early part of H2. Okay. Right. Roughly a quarter is gonna give or take a bit of a quarter of an impact compared to where we thought we would be a bit earlier. It could get better and could accelerate the volume faster, but it's something which, you know, we want to be sure the network's redesigned properly the way we want it to be from a long-term perspective, right? A quarter's impact would be, basically Q3 now instead of. In H2, we should think about more like September to December quarter? No, I think, yeah, I think you should say H2 is September to December quarter, somewhere in the middle of that. Okay. Obviously, it's festive season, we expect volumes to be particularly beneficial for us during that period. The network configuration has to get done, and obviously, we have to get all the cost bases aligned, right? There's a bunch of work there, but we are pretty confident about, we're reasonably sure, because volume has started coming back in July. That, I think, is actually, you know, the proof of the pudding is eating it. Obviously, we are starting to see volume come back. As far as contract, and as far as contract logistics demand is concerned, I think you're right. I mean, we've seen, you know, across the board, the automotive segment, overall, a 7% kind of growth in contract logistics, 6%-7%. You know, automotive has, and automotive and manufacturing have led that growth around 13%-14% year-on-year. That's all automotive, including non-M&M and M&M businesses, right? That's been a positive, that's been the positive trend. Obviously, we have seen the impact of churn on the e-com side, on a year-on-year basis, obviously, Sumit, because of the Bajaj account as well, right? The fall, drop and fall in that. Yeah. As I mentioned earlier, I think last quarter, we had an order intake of approximately INR 100 crores in the 3PL contract logistics business. In the previous quarter, last quarter, Q4. In Q1, we've had an order intake of around INR 130-INR 140 crores. Given construction windows are 3 months to 6 months, that's the window within which it'll start falling into our revenues. To put this in context, I think we have been targeting a INR 400-INR 500 kind of annualized order intake growth, given the longer term aspirations we have in terms of revenue and results, earnings. This quarter, this year, I mean, we have started off well in terms of order intake, but it does take 3 to 6 months to actually deploy these solutions. That's been the trailing impact from a revenue acceleration perspective. We should start seeing this again in the second half, in the middle of this quarter, starting to get rebalanced, in terms of the non-automotive growth starting to come back strongly. Right. We have won, let's say, several accounts for a very large telecom company. We are a key part of their 5G program in terms of warehousing and data, the value-added services and distribution for that. We've also won several other larger accounts for integrated warehousing and distribution. We expect those to start trailing in, between the second half of this quarter and the earlier half, early part of next quarter, because those build-outs all align towards the festive season. That's, I think, where we stand, and then hopefully that'll answer your question. Yeah. Thanks a lot, Ram. Thanks, Sumit. Thank you. Any participants who wish to ask a question may please press star and one at this time. The next question is from the line of Alok Deora from Motilal Oswal. Please go ahead. Good evening. Sir, I just had one question around Rivigo. We have seen that again, you know, the in the the losses are quite significant there. I mean, if you were to look at it, we are operating at around 20% of EBITDA you know, EBITDA loss, at 22% EBITDA margin loss. How confident are we in kind of seeing it like a break-even in third, by third quarter, which you were just mentioning? Considering that the feelers we are getting is that there is some slowdown in the express logistics in fourth quarter, and, you know, little bit in the second quarter as well. Just some color on that, if you could, you know, highlight this particular business. k first of all, let me answer your question on the more direct part of, you know, what gives us confidence, and then I talk a little bit more about more strategic factors here. So I think, as I said, when we, when we, when we set up the transaction and we talked to all of, and updated all of you at that time as well, and as I mentioned, just on to Sumit Kishore's question, you know, we did expect that synergies plus roughly a 15% growth would get us to a positively EBITDA window, and from there on, we would actually be able to drive broader growth in the business, right? And that was kind of, that was the, that was the plan, right? Now, what we've seen is, obviously, in this quarter, because we have been doing network transitions, which are there, we've actually seen the impact of those network transitions playing out. What that means, obviously, is we have to reconfigure and rebalance many lanes, as we put in shutdown facilities, consolidated facilities, revisit tech platform, and obviously, as we had customers operating on two separate tech platforms with two different physical architectures, right? One which operated MLL network, operated more like a hybrid mesh, whereas the express, the RSPL, the Rivigo network is a pure hub-and-spoke. As you transition customers across those accounts, we obviously were gonna have things, we had to relay of the entire network. That physical work obviously has been disruptive and therefore, has had an impact on volume. Right, and, the first step, I think, in terms of getting. Our hypothesis still remains the same, that with the synergies and with that volume base, we should be able to we are confident we can break even, right? The synergies in turn, have three parts. It has, firstly, the transportation cost reduction. As I mentioned in my opening comments, those are generally on track, and those are generally on track, even at slightly lower volume base. The second one is the consolidation of facilities and infrastructure. That's also on track. We have done the consolidation of the most of the facilities. There have been some one-time costs related to that. There are some short-term facilities that we have, we are at add as well, but those are directly on play, right? The challenge we have, you know, the challenge we have for the large part is just the sheer level of volume drop, and the impact of the volume drop, because volume dropped around the 30%-35%. That's a big one, which we do need to kind of claw back on. What gives us confidence and able to claw back on, because we're not actually looking at a whole bunch of new business. We are actually working with the large part in terms of business, which was already there, right? Which was already there, and it's business which, you know, we had accounts we already have, and as I mentioned earlier on, Alok, none of the accounts have kind of gone, you know, have gone... I mean, we have probably less than a 5% full churn on any of the accounts. All accounts we are working with, the lanes, we still continue to operate with them. It's not something which we believe is a big stretch. Many of them are also accounts of our existing 3PL contract logistics businesses. That, I think, is somebody to a more direct answer to how we will get back, right? Now, a couple of other things I do want to kind of highlight here, and just ensure we to share the way we see it, and I see it as management. The first thing is that if you look at the business, the business actually had continued to have positive contribution margins, right? This is an operating leverage-based business, and it's volume driven, as you all know very well, right? We don't have negative unit costs on the business. Contribution margins are in the 15%-17% range. We obviously think they have upside more, right? As we can optimize some of these costs in transportation, but that clearly is the spread, right? As we gain volume, and get productivity to the existing facilities, we should see that multiplier effect coming in, right? That's one thing I don't want to highlight that, and just reaffirm that. The second thing I think is that, you know, when we did the transaction, I think we also highlighted, we believe that we got the transaction at fair price, right? What I mean by that is that the transaction, obviously, we indexed in the continuing cost of transforming the network, right? In our acquisition price, and even though the multiple which we paid was probably lower than some multiples that which some businesses in the industry trade at, we felt that that is some part of it obviously, was the investment we had to make, right? The price of the transaction did factor in, you know, what we expected, and we did say that it took us a year, roughly, to make this business EBITDA positive, right? So the trading effect has been a little bit longer in the first two quarters than probably everybody expected, right? Because now we are seeing the actual impact of it. As you have shown with the Meru business, or we have shown with some of the other businesses, that we do believe we have the ability to make scale profitable, right? And therefore, that's gonna be the journey we'll be on with MESPL as well. I didn't want to give this first. I wanted to first, what we had to do about the numbers first and what we're doing there. Sure. no, the only point was that, you know, we are down 30-35% in volume. To, you know, to kind of break even, we need kind of a growth on the initial volume. bounce back, the entire volumes in one or two quarters, could be a big challenge, in a kind of a slowing express market growth with this content. That's a fair point Alok, I mean, there are obviously risks, right, in everything. What I would say first, I mean, we are down 25%-30% on the baseline volume, and I think that's not a end of quarter view, right? That's a full quarter view. Obviously, we've been improving through the quarter. As I said, in July as well, we have been showing improving volumes on all our accounts. The trajectory is there. The trajectory has to hold clearly, we have to execute well. That's something which I take on board completely, as very valid feedback, and obviously, that's something we are working on. you know, I can't really say, you know, that it's all done or it's gonna completely happen. Obviously, I think as early signs are in this quarter, we seem to be on track. As I mentioned, it'll be early part of H2, it will not be, you know, it will not be in Q2, it will be somewhere in the middle of H2, as I just committed to Sumit, somewhere in the October to December window when we'll actually be able to get to that point. Just last question. Also, in MLL Express, there is a taxation impact, I think around. I think- Yeah, yeah. What is that related to? Because, you know. Last quarter, we took in the fourth quarter, because it was the first quarter of the acquisition, post-acquisition, we had to take a deferred tax benefit on the business. We had obviously taken that for the first quarter with the clear intention that as the business moves into an integration environment, we will no longer take those deferred tax benefits. Therefore, in this quarter, we actually did not take that deferred tax benefit. If you actually look at it, at a PBT level, despite the, you know, despite the impact of the lack of. At a PBT level, we actually did show some marginal improvement despite the lower volume compared to Q4. Right. Got it. Thank you, so much. That's all for me. Thank you. The next question is from the line of Amit Dixit from ICICI Securities. Please go ahead. Yeah, hi. Good evening, everyone, thanks for the opportunity. I have two questions. The first one is around, essentially a little bit, you know, confused with the industry outlook that you gave in your opening remarks, where certain segments of automotive, you know, you see a little bit of weakness, demand in north and west remains subdued. E-commerce also, you know, competitive intensity short-term is expected to result in demand moderation. With all these headwinds, where do we expect really volumes, you know, coming from? What is the kind of industry growth that you are looking in your key segments? Not maybe in immediate terms, for the better part of FY 2024. That is the first question. Sure. That's a great question. I'll come back and reframe that to my comments, just to help clarify that. The second question is, essentially, if you could just quantify this impact of GoAir, the one-time loss that we took. Sure. More of a bookkeeping question. Sure, absolutely. Good question. I'll take the bookkeeping one first, always easier. We had pending receivables of around INR 2.5 crores, INR 2-2.5 crores. We can send you a more exact number if you reach out to the investor relations team. Somewhere between INR 2-2.5 crores was the receivables that are due from GoAir. This is for, you know, services which are providing largely for their crew and their staff. Obviously, it has around, you know, DSO or receivables for several months, right? Therefore, what we have done is on a prudent basis, is to actually obviously take, you know, take provisions against those, right? Because, while we are working with the arbitration and the process in terms of finding a resolution towards it, we have taken, you know, just taken prudent action on that. That's why I mentioned earlier, that net of that, we actually were pretty much close to breakeven at the PBT level in the business. The second thing, which I think was, in terms of the demand scenario, I think, let me just contextualize this a little bit. For us, in the automotive industry, firstly, we are, our larger exposure, in the auto and farm businesses is to passenger vehicles and commercial vehicles. You know, we don't actually have, from a downside perspective, you know, Amit, we don't have a large amount of volumes in the two-wheeler business. We have specific accounts which we work with, especially on the electric vehicle side and some accounts on the bike side. Our larger exposures or larger relationships are in high-end passenger vehicles, both Mahindra and non-Mahindra, and commercial vehicles. Those segments are showing some moderation, but continue to be robust. I just want to clarify that part of this volume, what we expect to happen to existing accounts, is because the accounts we work with are actually fairly robust, right? While there might be slightly puts and takes across other parts of the segments, you know, we work with, which is, in the Mahindra's, Hyundai, right, BMW, Mercedes-Benz, right. All of those, Volvo, I think most of those accounts are actually still seeing a fair amount of robustness. Ashok Leyland, right, I should say. We are still seeing robustness there, both passenger vehicles, trucks, you know, EVs and buses. Those are actually, I think, why we are optimistic about our volume growth, despite some of the headwinds I had mentioned in my earlier comments. E-commerce is seeing some softness, and that's a cyclical thing. You know, we had some strong growth in the market over the last 3 years. We obviously, you know, will have corrections in markets. I think for us, what's really important, what's actually growing is right now, discrete manufacturing, which is general manufacturing is seeing some strong growth, and the consumer, the FMCG business especially. As I mentioned, the comments, durables is kind of yellow or flattish, right? Auto is still good for us. The places, accounts we have are seeing volume. E-commerce is kind of yellow to red. It is obviously under pressure. The consumer, FMCG, and, you know, FMCG and general manufacturing segments are up quite a bit. They're not all because of not because of existing accounts alone, they're also because of new accounts we've been winning. I hope that clarifies, you know, kind of our view. I think if you go back to the fourth quarter, where I gave comments and an outlook for the full year, I did say that this year, overall, we expect to have slightly slower growth, right? Other than... I think I still reaffirm that view, that we will see, you know, the comments we made back in April, we still are pretty largely hold true. It'll be a year of slightly slower growth on a blended basis from a revenue perspective. Yeah. Okay, thanks. Just one follow-up on that GoAir thing. This entire INR 2.5 crores you have taken? Yes. Provisional or there is. No, we have taken all of it. All of it? All of it. Okay, great. Thank you and all the best. There should be no future impact, no negative future impact. Sure. Okay, great. Thank you. Thank you. The next question is from the line of Krupashankar from Avendus Spark. Please go ahead. Hi, Ram. Thank you for the opportunity. I had a question on the warehousing piece of business. You know, while you've not provided the space entirely manages roughly about INR 19 million, you did highlight that there was about 5 lakh sq ft reduction. How do you see the warehousing space addition going ahead or perhaps the warehousing piece of business this year? I do see that, you know, the overall margin profile of the supply chain business, the 3PL contract logistics business has been improving. I just wanted to check if there is further avenue of improvement in that particular segment. I think it's good. First, hi, Kripa. Hi. I think, let me just to frame that, I think improvement in supply chain business has been a couple of things. I think we have seen, you know, there we are, just our pure warehousing businesses, we have made a lot of focus on the productivity improvement there, and there's been some yield obviously coming from that. Some bad accounts or poor yield accounts have obviously kind of been shut down, that's helped as well. The third one is where we've built integrated solutions. We have been doing a lot more of cost extraction between the warehousing and the transportation business, right? That's been the three big levers on which we have been working on. I think that will, that focus will remain provided, I don't think that changes. Now, how to exactly quantify that? I think it's hard to put a specific number around it, right? But it's something which has been a focus for us, and it's finally starting to kind of bleed through our numbers. I think this quarter will probably be more stable. But you saw we did some improvement in Q4 of last year, and we've kind of had an improvement now. The contract logistics business actually has been improving roughly for last three or four quarters, quarter-on-quarter. It's not just one quarter's result. Now, in terms of the warehousing business itself, I think, you know, we are around 19 million sq ft of managed space. That includes 1 million sq ft, roughly, which has not turned into directly into our revenue line. That's roughly 1.3 million sq ft is what our express business is in use. That's the business, that's the volume which, you know, actually gets shown up in the express revenues. It doesn't actually show up against the 3PL revenues as such, you know, Kripa. I think we are, as I think I mentioned, the press release we have mentioned, we are on track for expansions. We are not. You know, we believe that there will always be some white space, a little bit of white space will be in the network, because we are reconfiguring customers, they're adding volume, and actually, it's good to have short cycle capacity. Right, India is a short cycle market for the large part, it's a good thing to have some amount of short cycle capacity. You know, for us, the important thing is to get the revenue yields right on the square feet which we are selling, right, even if there's a little bit of white space. I'm not particularly worried about the half a million square foot of white space, which is there. I mean, we are working on contracting down to the right yields, that focus will be there. The addition of new facilities are all on track. I think we mentioned this in the press release. We have a 1 lakh square feet expansion in Nashik, which is on track for Q3 of this year. We have two large facilities coming up in Guwahati, which is the largest in Assam, which is the largest kind of facility in the Northeast. We have an expansion, a new multi-client coming up in Kolkata, and one coming up in Lucknow, if I'm not wrong. All of those. Then, of course, we announced a Chakan facility of 1 million sq ft, of which half a million will come by the end of this fiscal year. All of them are on track. There's no, there is no, there is no delay in any of them. We plan to take possession all of those on schedule, and we have a pipeline for all of them. Some of that's basically reconfiguring our existing customers, into those accounts, and some of it's new clients and new operations which are coming. Got it. Thanks, Ram. My second question is that I did note that in the presentation, you have stated that you are targeting 18% ROE by FY 2026. Now, looking at, you know, the growth trajectory, given that this year is going to be relatively slower, I think, with respect to overall growth. What sort of a revenue CAGR are you targeting perhaps over the next 2 years? Because why I'm highlighting this is because we've seen that the worst is more or less baked in. From here on, you know, you perhaps starting in from FY 2025, you may see that the growth trajectory can be quite strong. What sort of a revenue growth target are you expecting over the next 2, 3 years? I think we're looking at... I mean, so that's giving guidance, and, you know, we don't generally give guidance. Okay. this earlier, that we expect to grow the 3PL business at mid-teens, right? As you know, there are two big plays in our portfolio. The first one is getting the 3PL business operating at that, you know, at the 6,500 crore-ish level, and actually at the right yields and earnings levels. We built the scale now. Last year, as I mentioned, end of Q4, we built 3PL, we have built a point of scale to drive optimization. Right. And now we are looking at the mid-teen kind of growth every year. Kripal, we have fairly good confidence that will hold. Right. There will be a year when it's probably going to be a bit slower, like this year, but it will bounce back. I mean, we've had... When e-com is growing, it's growing at 30%, 40%. It's not always growing at 17%, right? I think it's an issue of how networks get built out. That's one part. The second part actually is growing the network services rapidly. The first step in there, obviously, is to get their cost structures and earnings to the right point of lever point, because then they actually are scalable. If you look at our network businesses, I think, you know, we have, you know, we have, I think the large the forwarding business is from a margin profile and returns profile, right? This has to be scaled up now. The last mile delivery business, we put a lot of effort last year and this year to get the margins up. If you remember, Kripal, I said that we don't think this will be a 14%-15% margin business. In the medium term, it will probably be 8% or 9%, and we have to manage our cost structures to be able to get positive yields there. We're getting close to that point now, right? It's got clearly differentiated modes, a lot of focus on electrification. The MESPL business is the one which we really have to get the margin profile of it right. Once we get that right, we can scale it up, right? That's what I think is key. If we are able to get the right margin profile, unless you are, you have very unfavorable macros, like we are seeing in forwarding now, where prices have gone significant correction. I do believe that, you know, the growth is something which you can, you know, really demonstrate. Even the forwarding business, you go back 3 years, the CAGR is around 25%, despite the price corrections, right? It's something which is over our ability to sustain that growth, and we still remain committed to that. I think, obviously, you know, you know, will it happen exactly by the window we kind of set as an aspiration? It may or may not happen, right? If it was a number which is actually completely possible, then it wouldn't be an aspiration, right? It's a, sort of a chicken and egg thing, and rather go long, right, on it. We are still now, as we stand, even continue now, giving focus on trying to drive with that result, that point. Got it. Thank you and all the best. Thanks as well. Thank you. The next question is from the line of Jainam Shah from Equirus Securities Private Limited. Please go ahead. Yeah, good evening, sir. My question is related to just a bookkeeping time. Can you please bifurcate the SCM revenue between Mahindra and non-Mahindra businesses? Yeah, the Mahindra business' revenue is around 53% of the SCM revenue, I think 51% overall. 51% overall is accurate. It is 51% overall, so we do have an index. It's probably on slightly higher, obviously, on SCM, because mobility was 6%. Got it. Got it. Thank you. We'll go to the next question. Thank you. The next question is from the line of Saras from Haitong. Please go ahead. Hi, Ram. My question is mainly on the mobility business. Can you give us some guidance of how it's going to pan out for the rest of the year? What kind of improvement are we seeing in the reversal of work from home trends? Like you had mentioned about the airport business doing well. If you can give some numbers or some directionally growth for FY 2024? Sure. Sure, Saras. I think the, I think from an immediate perspective, where I think the airport business, the growth there is driven really by two factors. One, obviously, is our in-airport growth, right? The second one is around expanding to new cities, right? For growth in our index airport operations, I think we are reviewing our electric vehicle fleet right now because we have to augment it for me to drive substantial growth there. Broadly, I think the platform revenue level, as you know, the Meru business has platform accounting revenue, which are different because of the aggregator model we use and accounting treatment associated with that. Broadly, I think at the platform level, we do expect revenue growth to be 15%-17% in that range. That's the range it was in the first quarter as well. The first quarter, we obviously saw a substantial amount of growth in the enterprise transportation side. That come from two things. One is return to work increasing across some of our clients, and the second one is the addition of new clients. I think in all tenants, I think if I split it up, I think even as we speak now, the incremental impact of return to office is actually lesser than new client addition we've had, right? One of the things which I mentioned in the past is that obviously, during COVID, a lot of people in this industry, actually, on the supply side, actually kind of basically exited the industry because the volumes fell off so much. As volumes are coming back now, we are seeing several other companies and other mobility companies shut down operations, and that's giving obviously us some headroom in terms of going and acquiring those accounts. In Q1, I think the big impact, actually bigger impact was probably split halfway or slightly in favor of actually new accounts coming in compared to the just pure impact of return to office. That should obviously accelerate a little bit, right? From a full year perspective, I think what we had given as in directionally is that we expect that this year, the mobility business will become profitable again on a fully consolidated basis. That's a turnaround we kind of said we will do. You know, the Meru business we acquired, was losing, it lost INR 22 crores, or INR 19.5 crores at a PAT level in FY 2021, 2022. Right, 2021, we said that we will actually improve it within 2 years, and make the consolidated business profitable. We expect fully to be on track for that, right? I won't give specific guidance as on how much of profitability, despite what we saw in Q1, we expect kind of full year basis, the mobility business will turn around and become profitable this year. Got it. Thank you, Ram. Great. Thank you. The next question is from the line of Ankita Shah from Elara Capital. Please go ahead. Yeah, thank you. sir, you've mentioned on the B2B express business, there is a 25%-30% decline in volume. And we're looking to turn around this business by second half of the year. Any benchmark volume number where you think, you know, this is required to break even the segment? At what level of volume? Yeah. Ankita, I think we have to be, as I said earlier on in my earlier comments, we were around 4 lakh tonnes, right, on a consolidated basis, and we needed to be around 10% above that to be on a full EBITDA base, breakeven basis, including synergy. We are down around 25% from where we were. We, if you do the math, we need around 35, 33, 35,000 tonnes of volume, right? Probably around 35,000 tonnes of volume, for, and then the synergies to play out. Right? There is obviously a lot of work going on around that and through the first, somewhere in the middle of two, Q3, we expect to be able to get there. Early signs on volume growth are positive. I think, Alok had asked a question about. Derive, yes. Yeah, confidence in the number. We said, I think July numbers are ticking up in the right direction. Yes. Therefore we'll have to consolidate and execute better. That's the plan. On the 3PL, contract logistics side, you mentioned about the M&M, non-M&M mix, but about the sector mix, given that there has been a lot of mixed bag in terms of the sector exposure, and some sectors doing well and not doing well for us. For contract logistics, what is the sector mix right now? It's not so changed much. I mean, I think broadly, it's, I wouldn't say the same way. I think automotive for us, the way we report our business, automotive and farm, which is largely the M&M business, is around 50%-51%. The consumer and manufacturing business, as we call it, which includes FMCG, durable, discrete manufacturing, and some of the auto components and non-M&M auto volumes, that's around 35%, and the e-commerce business probably is on the 15% range. Now, that moves quarter-on-quarter basis. Like, in the December, in Q3, obviously, the share of e-commerce will increase because the festive will drive some of that. It's quarter-on-quarter and month-on-month changes, but that's kind of a bellwether number, given kind of just where the- Mm. where the structure of the industry is now. Okay. Okay? Okay. All right. Got it. Yeah. Lastly, if I don't know if you've already answered this, but I got the opportunity. Sure, go ahead. Higher, tax rate is on account of? I think the effective tax rate, and I would request you just send us a note to investor relations, but I think the effective tax rate for the quarter was 26%. That's pretty much in line with last year, was 25.8%. Okay, because the number was very high, the tax difference overall. I think we should. Yeah, I understand. If you look at the decks, I think, Ankita, you'll see that the sort of standalone basis, if you compare last year, MLL profits were around INR 19 crores, and the tax rate was around 25.8%. This year, the MLL tax PAT PBT is INR 31 crores, and the tax rate is around 26%. That is the largest weightage in the overall tax profile. Please do send us a note, Ankita, we will send you. Yeah, I'll go through. All right. Okay. Thank you so much, and wish you all the best. All right. Thank you very much, and thank you for your questions. Yeah. Okay. Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference back to Mr. Rampraveen Swaminathan for closing comments. Thank you. Over to you, sir. Thank you, everyone. I hope we've been able to answer all your questions satisfactorily. However, if you do need for any further clarifications or you want to know more about the company, please do contact our ESG or our investment, investor relations advisors. Thank you once again for taking the time to join us on the call, and I wish you all a great week ahead. Thank you. Thank you very much. Ladies and gentlemen, on behalf of Mahindra Logistics Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines. Thank you.