Please note that this conference is being recorded. I now hand the conference over to Mr. Shogun Jain from SGA. Thank you, and over to you, Mr. Jain. Thank you. Good evening, everyone, and thank you for joining us on the Mahindra Logistics Rampraveen Swaminathan, Q1 FY 2025 earnings conference call. We have with us Mr. Rampraveen Swaminathan, MD and CEO, Mr. Saurabh Taneja, CFO, and the senior management of the company. I hope everyone has had a chance to view the financial results and investor presentation, which were recently 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. A disclaimer to that effect was included in the earnings presentation. I now like to invite Ram to make some preliminary remarks. Thank you, Shovan. Good evening, everyone. I trust you all had a chance to view our presentation on financial results, which I will link to the stock exchange and our company's website. As always, I'll briefly update you with a brief update on strategy, direction, and environment, our business operations, and key corporate actions. And finally, conclude by discussing our financial performance for the quarter just ended and our focus areas for the remainder of the year. A specific overview of the logistics sector: India boasts the second-largest road network globally. The pace of national highway construction has accelerated, significantly increasing from 12.1 km a day in the year 2015 to around 34 km a day FY 2024. the Indian trucking industry is crucial to the nation's logistics sector, with approximately 12.5 million trucks navigating Indian roads as of FY 2024. The preference for road transport reflects its adaptability, accessibility, and flexibility, catering to diverse business and industrial needs nationwide. Furthermore, India's commitment to continuous development, policy reforms, and technology advancements both are crucial to road transportation and logistics in general. This commitment offers significant opportunities for growth and innovation. As the nation continues its trajectory of economic growth and industrial development, the importance of road transport is set to remain paramount, enhancing efficiency, connectivity, and economic prosperity. The growth will unlock new avenues for expansion and improvement, and it's an important part of our own growth philosophy as we look at the sectors increasing its levels of formalization. Looking at some of our end markets in the last quarter, and I'll just begin with the automotive industry as I normally do. In Q1 FY 2025, automotive OEMs reported volume growth of around 10% on a year-over-year basis, with broad-based growth in almost all segments. Two-wheelers, interestingly, outperformed with 11% year-over-year growth, followed by passenger vehicles with 6% growth. Commercial vehicles and tractors grew by approximately 4% each. Poor passenger car volumes continue to underperform utility vehicles, as demand for entry-level categories remained weak. Overall, automobile demand in Q1 was subdued, impacted by the effects of continuous heat waves in many parts of the country and some election-led slowdown, especially in commercial vehicles. As a result, retail demand lagged wholesales in almost all segments, including two-wheelers, passengers, and tractors, leading to an increase in dealer stock at the end of Q1 FY 2025, as reported by Saurabh. The consumer durables industry has performed better, especially the electrical consumer durables industry, supported by pickup in demand due to the increased level of heat due to the summer season, leading to a stronger demand for the product portfolio of RACs and air coolers. The farm industry has witnessed sequential improvement as the market stabilizes post-enactment of the BEE norms. Lighting prices are gradually stabilizing as the industry witnessed good growth for Q4 FY 2024, which has been sequentially improving in the current quarter as well. The kitchen appliance category continues to remain impacted, as almost all segments continue to post-peak growth. Professional luminaires and facade lighting are picking up pace with the government's focus on lighting infrastructure and also in terms of just given the broader commercial construction. Structural demand drivers, like improved construction activities, real estate upcycle, increase in capital expenditure, premiumization, and recovery in the rural market will stimulate growth for the cable and wire segment. Strong real estate sales should help drive demand for consumer durable products, and increased recovery in rural markets should drive further growth during the rest of the year. The FMCG industry has seen overall demand rise, especially towards the end of the last financial year. The summer demand, as witnessed in Q1, has remained healthy due to increased heat, especially in northern Indian region. Overall, the industry is bolstered by favorable input prices. Advertising and sales promotion spending was higher due to stiffer competition from local players and increasing number of launches and broad volume push by all incumbents. E-commerce end markets have been seeing continuing growth over the last couple of quarters, even though growth has been moderated over from historical highs. Despite broader slowdown in growth, we have seen some segments of hyperlocal and grocery grow at a strong pace, and this should help us grow significantly to a better position in these segments. The optimism for this year has also seen the upcoming peaks this year has also seen a larger amount of interest in flex and pop-up solutions, and that has helped us enhance our order flow from the same. MLL and deliberate focus on growing new accounts, expanding our regional focus in areas like the east, and focusing on grocery and large appliances has helped us increase our order base and recover the loss of business which we experienced in the previous year. Telecom, the industry's growth is expected to be driven by an increase in ARPU mix and growth in industry subscribers. Capex remains relatively stable compared to the last quarter, given the ongoing investment in 5G infrastructure, and that also densified rural networks. Our range of transportation services, warehousing solutions, and value-added solutions focused on network expansion and operations has been demonstrating strong growth this past quarter, and we continue to remain focused on deepening our coverage in this segment. A few operational highlights for the quarter. As you have seen earlier from my earlier comments, we have seen a mixed demand environment. Elections and slower consumption, some categories affected our volumes in shorter cycle businesses like B2B express, and also resulted in a slower ramp-up and rollout of new sites in our last-mile delivery business and 3PL contract logistics business. Despite that, order intake of over INR 210 crores during the quarter, comprised of long-term contracts, showed a steady and continuing growth, including our 3PL logistics, contract logistics, last-mile delivery, and forwarding businesses. During the quarter, we won several key orders, including four new FCs for a large international personal care cosmetics company and new FC and sort center for a large e-commerce marketplace, a new micro-fulfillment center for a leading foods and personal care products company in Western India. In freight forwarding, we saw a robust growth in ocean and port movements, and our new pro-trucking network transport offering saw expansion orders from a leading paint manufacturer. While the order environment was positive, we are witnessing longer construction periods, which is resulting in higher pre-operating costs and expenses, largely due to customer difference. This has resulted in lower than projected order conversion in the quarter, but we remain confident that this should correct itself in the second half of the year. During the quarter, we also launched a new 300,000 sq ft multi-client facility in Guwahati, Assam. This is the largest facility of its kind in the Northeast. It is a platinum-certified facility, which is completely powered by renewable energy and will be our gateway for the Northeast. While we did go live with the site due to customer changes, we had to push back occupancy rates, and this has resulted in a higher one-time cost during the quarter. Weakness in the farm sector has impacted our transport solutions business in the auto and farm segment this quarter, and we had some carry because of that. Operating costs in the 3PL business are further impacted by unfavorable labor conditions, both in terms of third-party contract availability and costs. We have overall seen a 4%-5% increase in contract labor costs, though partially offset by productivity measures. These did impact our continuing earnings. The express business has had a challenging environment with volume drops on a sequential basis, which affects our ability to further optimize costs. Volume dropped approximately 8% on a tonnage basis sequentially, while we did maintain yield through better account management. The drop in volumes, we believe, is an industry-wide phenomenon driven by a sharp reduction in in-account volume in April and some amount of impact of election-led liquidity issues across the market. While we did see a recovery in the second half of the quarter, that challenge remained persistent on a full quarter level. Despite that, we continue our cost improvement journey. We did come a little bit short of our expectations in the quarter, but we did report improving EBITDA margins on a quarter-on-quarter basis. We continue to work to get the business to EBITDA breakeven by the end of the second quarter of FY 2025. All other businesses, apart from the 3PL business and express business, had very stable operations. We did see some broad impact of a tighter pricing and volume environment, but that was all largely offset through focused cost management. EV penetration continued to grow, and we have now completed over 13 million green miles during the quarter. We also launched our Centre of Community Excellence in Bhiwandi, which is a program through which we train a larger set of members of the local community for job opportunities in the logistics and mobility segment. We follow the location in Bhiwandi with another one in Guwahati later this year and other locations as well. In the quarter, we also announced the formation of a joint venture with SENKO Holdings, one of Japan's leading auto logistics companies. Under terms of the joint venture, we will collaboratively with SENKO focus on Japanese automotive OEMs, a large segment which is significantly underpenetrated by existing business operations. The incorporation of the company, the formation of the company, will stretch out through the rest of this financial year, and we expect to start seeing operating results from the business towards the tail end of this financial year. With that, let me move on to the financial performance itself, and let me begin first with our component performance by individual companies. At Mahindra Logistics, revenue for the quarter was INR 1,157 crores compared to INR 1,051 crores approximately for the same quarter last year, and marginally down compared to the sequentially prior quarter. PAT for Q1 FY 2025 was INR 10.2 crores as compared to INR 23 crores in Q1 FY 2024, down by approximately 54% on a year-on-year basis. In the express business, revenue for Q1 FY 2025 was INR 71.1 crores, down compared to INR 76.8 crores in the same quarter last year. Revenue, however, showed a strong improvement on a sequential basis, with revenue growing by 12% compared to Q4 FY 2024. PAT for Q1 FY 2025 was INR 1.8 crores as compared to INR 1.6 crores in Q1 FY 2024 and INR 1.2 crores in the sequentially prior quarter. The express business Q1 FY 2025 revenue was INR 10.2 crores, up by around 6% compared to the same quarter for the prior year, but down compared to the immediately sequential quarter. PAT losses for the quarter shrunk from INR 29.4 crores in Q1 FY 2024 to approximately INR 24.6 crores in Q1 FY 2025. PAT losses also shrunk compared to the earlier quarter by approximately 6%. The mobility business continues its turnaround process. Revenue for Q1 FY 2025 was around INR 81.3 crores as compared to INR 81.1 crores in Q1 FY 2024, impacted by some slowdown in enterprise business. PAT for Q1 FY 2025 showed a marked improvement and stood at INR 1.7 crores as compared to INR 1.8 crores in Q1 FY 2024. In Q1 FY 2024, we had taken a one-time charge of around INR 2.5 crores on account of an earnings charge we had taken on bad debt due to Go First, excluding that charge of around INR 2.5 crores, PBT quadrupled from around INR 0.4 crores to INR 1.7 crores. The express business continues to improve its journey to its path towards profitability. Revenue for the quarter was INR 37.7 crores, and PBT swung from a loss of INR 0.2 crores in the same quarter last year to a profit of around INR 0.2 crores for the quarter. The 2x2 Logistics business, which provides auto outbound services as part of our 3PL contract logistics business, also continues to show a strong improvement. The division made a profit of INR 1.7 crores in Q1 FY 2025 compared to INR 1 lakhs-INR 10 lakhs in the same quarter for the prior year. Moving on to consolidated performance for Q1 FY 2024, revenue for Q1 FY 2025 increased by 10% compared to Q1 of the prior year to INR 1,420 crores. Revenue from the warehousing segment and 3PL business stood at INR 259 crores in Q1 FY 2025, up compared to INR 227 crores for the same quarter last year. Supply chain management, including our 3PL and network 3PL contract logistics and network services businesses, contributed to 94% of our overall revenue, and the mobility business has contributed to 6% of our overall revenue for Q1 FY 2025. Gross margin at a fully consolidated basis stood at 9.5% in Q1 FY 2025 compared to 10.5% in Q1 FY 2024. Gross margin without the impact of the MESPL business was down from 11.1% for the same period last year to 10.6% for Q1 FY 2025. The impact of that was largely driven by the factors which I said earlier in terms of higher labor costs and extended startup period, which resulted in pre-operating expenses and the additional cost of the capitalization of the new facility in Guwahati. EBITDA for the quarter overall stood at INR 66.3 crores, up from INR 56.6 crores in the immediately prior quarter due to consolidation effects of the Rivigo acquisitions. Overall, PBT for Q1 FY 2025 stood at losses for the quarter, net losses for the quarter were INR 9.3 crores compared to INR 8.5 crores in the prior quarter, compared to INR 8.5 crores in the same quarter in the prior year, and improvement from approximately a loss of INR 13 crores in the sequentially preceding quarter. As a company of ML, we continue to learn our core principles, which we believe will help us adapt to an ever-changing logistics industry. We think our success depends on the well-being of our employees, customers, vendors, and the logistics community, and we strive to create an inclusive, welcoming, and safe workplace for all our individuals to learn, grow, and flourish. Our commitment to create a value-based culture gives us confidence to move forward. With this, I'll open up the floor for questions and answers. Thank you. 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 assembles. Number four. The first question is from the line of Alok Deora. From please go ahead, sir. Yeah, hi there. Alok Deora from Motilal Oswal. So sir, just had a couple of questions. So first is on the MLL express business, which is the Rivigo business. So there we have seen kind of quarter-on-quarter flattish profitability. I mean, the losses are at very similar levels. So could you just indicate, I mean, we were looking at loss reduction here, and it stands similar. We understand that the quarter has been soft for the industry. So just from inside here, how are we looking at the break even now? Because if you just look at the time we have acquired, we have incurred around INR 115 crore-INR 120 crore of EBITDA loss, right? So just how are we seeing this business now? Thank you. That's a good question. I think it's good that you covered a lot of the aspects because it's probably a question others will have as well. So if you look at the numbers overall, obviously it's a difficult quarter for the business, for the industry as a whole. And for us as well, revenue dropped 11% on the back of tonnage drops around 8%-9%. I think despite that reduction in volume, obviously we actually did show an improving operating performance. Contribution margins in the business grew by around 300 bips, largely driven by our continued focus on cost optimization. EBITDA at a percentage level actually came down from 21.4% last quarter to around -15.8% in the quarter we just went by. So despite lower leverage in the business on account of the volume drop, we actually did have managed to maintain and continue operating performance. And that has meant that at a PBT level, our losses have come down by around 3% compared to the preceding quarter, sequentially preceding quarter, and of course down by around 15% compared to the same period last year. So those are just the facts and the highlights. I think from our perspective, obviously the demand environment alone has been a challenge for us. That said, I think the quarter was really in two parts. The first part, which was really April, was a particularly challenging period for us, but we did exit June with a slight uptick compared to the March numbers. As we look forward between July, August, and September, I think there is really a really good part of our improvement focus is going to be on getting more volume. That increased volume will allow us to obviously not only accrue the contribution margin from the tonnage, but also allow us to further optimize the cost side, which has been important for us, especially on the line-haul side of the business. So we are as of now hoping that we can get and planning that we can get a 10%-15% improvement through the quarter. We should not be very far away from our EBITDA break-even targets. We will probably not be able to exactly hit EBITDA break-even at the end of the quarter, but from a run rate perspective, we hope to be able to start getting to that point if we can get 15%+ kind of growth through the quarter. It may slip a little bit, but I think we are still fairly confident that we actually will be able to get there. From a contracted volume perspective, I think we've actually grown contracted tonnage by around 4,500 tons in the quarter, which is approximately a 15%-ish growth. The challenge for us in the quarter was a sharp downgrade, which happened in our existing accounts in April and May, and that has to reset itself. So I think really the turnaround is really a function of two things. How quickly we get back to recovery on the downgrades. A lot of that happened through the end of June, and how quickly we can get the volume scale up through the month. If you see our run rate EBITDA right now is around a INR 4 crore loss. If you look at our run rate EBITDA, now that's compared to INR 8 crores, which is where we ended Q3 of last year. So we've already gone up half the number on roughly similar volume. So we do need to get the volume in, and as we stand right now, I think we feel fairly confident about our ability to bring that volume in through this quarter. But we have to wait and watch. I think there is a risk we'll have some slippage through the middle of Q3, but we are working towards it. I think all other elements, if you see, I think have generally been under control. We have had a small uptick in financing costs, but otherwise, I think all our other cost elements have been getting compressed in line with what we've shown now. Sure. No, actually, thanks for the elaborate answer. The reason I was asking is because the whole industry is kind of talking about, especially in the express side of it, it's talking about almost no growth or kind of a degrowth. And even in 1Q, for us also, we have seen a Q1Q kind of a degrowth here, even in volume, even in realization. And nothing has significantly changed even in July and so far in this month. So 15% Q1Q growth, I mean, unless we are doing something very different because none of the other industry participants have even headed any number close to that. So do you think that this break-even could go, practically speaking, could go to end of the year? Because even mid last year, we had spoken about break-even by end of FY 2024, and now even in the first quarter, we are at INR 14 crore EBITDA loss. So considering the industry is very slow right now, yeah, yeah, just some. Look, I won't dismiss the risk. I won't obviously say that you are wrong in terms of the materiality of the risk. I think the risk is real. There is a volume that has been coming. We will not be able to drive the optimization to get the improvement. So that, I think, is a fact. I think what really hurt us was actually not new account growth. As I said, we are down 28 accounts in the quarter. We did grow contracted volume in line with what we had expected. I think the down trades on our existing accounts were the real challenge for us. So when I say 15% growth, I think you need to bear in mind that we were down the quarter 11% compared to the preceding quarter. So compared to Q4, our revenue was down around 11%. Volume was down 8%-9%. So actually, 15% from the Q1 numbers, it's actually a recovery to 9%, which is offsetting the Q4 reduction plus the 6% growth. Is there a risk? I think there is definitely a risk. I mean, market conditions are pretty muted right now, and we are, of course, trying to defend yield. There was a minor drop in yield during the quarter, but not a very substantial drop in yield, and that was largely because of mixed changes between retail surface, air, and enterprise or large account surface. So there's really the mix in terms of our customer segments which drove it. In customer and in segment, yields are fairly stable. So I'm not so worried about the yield part of it, but definitely there is a sensitivity to volume. We are updating back on those accounts. I'm confident or optimistic about it, but there is definitely a risk of slippage from Q2 probably to somewhere in the middle of Q3 or even probably to the end of Q3. Just one last question. Now, from a longer-term perspective, I mean, we have taken this business. We have incurred nearly INR 115 crore of EBITDA loss and INR 170 crore of PAT loss since the time it has come in. I'm sure we didn't have these kind of numbers. We were expecting a break-even much, much faster. I mean, if this continues, then how are we looking at this segment? Because the segment doesn't really fall in sync with the 3PL business, and most of the other players who are doing only express business are also struggling here, struggling to maintain the volumes or to maintain the margins or both. We are operating this segment in a separate way. I understand it may be integrated in some way, but express industry is very different than 3PL. How are we looking at it? Because there has been a lot of carry-on here, and if it continues for three more quarters, we are looking at nearly INR 30 crore-INR 40 crore of more EBITDA loss coming in. Yeah. So I think it's a very broad question, but I'll try and simplify it in the interest of other people in the queue as well, and then we can pick it up again later on in the call. But there are two parts. I think we look at businesses firstly strategically from a long-term perspective, and we do believe that for multiple macroeconomic drivers, we expect that part of global continues to see strong secular growth as a service line and also as part of our kind of approach towards integrated solutions. And that will kind of play itself out very clearly. I think in terms of the earnings, obviously you can look at a path or you can look at a slope. I think in that case, we should have a glass half full or half empty. I think we are confident in the forward-looking view that we continue to drive the optimization, but there is definitely a risk that the pace of the optimization alone may not be exactly in line with what we had said earlier given the current market conditions. I think from a broader construct, which is the market, we have lost INR 150 crore, etc. I think a couple of things which one must, I think, be cognizant to. I look at it. I think the first one is how much time does it take network businesses to generally build out? I think in our experience, most businesses, most networks take a decade and plus to build out, and to get strong coverage across 10,000, 20,000 PIN codes with traded volume across them is not easy. Many businesses who have been scaling up networks have gone through that pain. What the acquisition gave us firstly was a chance to kind of jump-start that. Therefore, I think that's one thing we must be cognizant of that factor. Therefore, I think today while we are looking at, and we said it will take us 15 or 18 months to get the PAT break even with the transaction, we are probably looking at around 24 months or probably 37 months now. It does not materially change the fact that that's still a whole lot shorter than spending 10 years on building a network. So that's one thing I look at it. I think the second thing is that while we have lost around INR 150 crores in terms of EBITDA losses, we acquired the company for around INR 210 crores net, which adds up. If I added all that together, the acquisition cost of around INR 360 crores, which still is roughly 1x revenue, which is still kind of fairly undertraded in terms of what I think many comps in the industry are. So none of the stakes that we are needing our focus to get the returns back, get the earnings up, but I just want to give you a flavor of how at least we tend to look at it. What I encourage a look is in the interest of all the other people in the queue is if the moderator can go to the next person and we'll have you back in the queue based on all the two laws. Of course. Thank you. Thank you. Thank you. The next question is from the line of Amit Dixit from ICICI Securities. Please go ahead. Yeah. Hi. Good evening, everyone. Yeah. And thanks for taking my question. I have a couple of questions. The first one is on your warehousing yield. So if I look at the chart on slide number 39, it is indicated that the yield was INR 6.2 per sq ft. Now, I understand that having impacted, as you mentioned, pre-operating cost of new launches. But these new launches, they will keep on happening. So just wanted to get a sense of the trajectory of this yield when it can be returned back to, let us say, FY 2024 level. And is there a broad number you have in mind that this would be the ultimate forcing yield that you are targeting? Yeah. I think the same question, if I recall, you had asked a similar question in last quarter. So I think our answer is the same. I think compared to 7.2-7.5, which we had in earlier preceding quarters of last year, I think we believe the kind of the anchor for the business is around 7. It's around 6 right now. 6.2 is what I've been reported in the slides. And I think we said last quarter as well that we think we're anchoring the business around a 7 kind of return on the warehouses. And obviously, what has impacted us in the quarter, I think there are two different parts to it. I think one, pre-operating expenses have been higher. They, of course, are continuing in nature. As we drive growth, we will have some pre-operating expenses every quarter, which has been there. We have had some delays in projects at our end. So if you look at the staircase from 6.2 to 7, around 25%-30% of that is really around, which is the unusual or exceptional pre-operating expenses. There's probably around 35%-40% every quarter in terms of pre-operating expense yield. There's around another 40%-50% which has happened because of higher labor costs during the quarter, which we are resetting now. We offset some of that through productivity, but it's an ongoing journey. I think as we have seen just a tighter labor market and some of our contracts, which are on a cost per unit basis, they do get reset periodically and not necessarily in quarter. So there's just been the work which has been done around that, and that did affect us as a predictor. That is actually the same issue which happened last quarter as well. So last quarter, so we had some of this kind of inflation tearing in. But we are anchoring the business to be around INR 7 of margin per sq ft. And I don't think we'll be there at the end of Q2, but we expect to be there somewhere at the end of Q3. There's a lot of optimization work which we're already doing, and that should get us back to that level. This quarter would have been around 6.6-6.7 except for some of these labor costs which came and gave us a bit of a swing, but we are working on getting them under control. But I don't think we'll necessarily get to 7.2 or 7.5. I think preceding year-on-year, the same quarter was 7.5. The prior quarter was 7.2. We think 7 is roughly the most stable range we'll be at. Okay. Great. The second question is again on your logistics, sorry, express logistics business. And so you mentioned that you expected 15% volume growth. So is this for Q2 or you expect for the rest of the year that number one? Q2. Yeah. I think Amit was in response to Alok's question saying, "How do you see the turnaround accelerating?" And what I've said is obviously we need 15%. We need to fix the updown trades which are around 8% or 9% and then get an additional growth of around 6%. If we can do that. Yeah. I got that. Yeah. I got that. My question is that which factors do you see contributing to this growth specifically? Yeah. So I think, I mean, 8%-9%, 8% of your results is down trading we had in our existing accounts. It was not actually loss of share. It has largely just been the customer at the top volume. That needs to get back, and that has to kind of get back to that level. And then I think we need around 7%-8% from growth. And I think we are largely expecting that to come half, partially half of it to come from FMCG, and probably another half of that growth is essentially coming from existing accounts of the 3PL contract logistics business where we have synergy opportunities to create better leverage. So it's really those two which should add an 8%-ish kind of growth from the locals. Okay. Great. A related question, if I may. You mentioned that volume dropped 8% on Q2 basis. Is it possible to get the similar number on YOY? YOY is actually up around 2%-3%. If you compare revenue as well, it's up from INR 84.8 crores to INR 86.8 crores, which is approximately, I think, a 2% variance on revenue. And yeah. Yeah. So INR 84.8 crores to INR 89.5 crores is roughly a 6% growth. And I think that largely is a volume growth number as well. Okay. So 6% YOY volume growth. Yeah. Yields have not changed much for us. I mean, probably a little bit less than 6%, a tad with less than 6% because compared to last year, yields have actually firmed up a little bit. Okay. Wonderful. Thank you and all the best. Thank you. The next question is from the line of Krupashankar NJ from Avendus Spark. Please go ahead. Hi, Krupa. Hi, Ram. Hi. Thanks for the opportunity. I think I had one question on the express piece of it. Given the subdued environment, are you seeing the industry pricing environment softening? Because we've typically seen that under pressure, a lot of companies doing boost utilization levels compromise on the yield. So any such trend observed at your end? I do note that your yields have maintained on a Q2 basis, but just wanted to get a sense from you on the overall industry basis as well as implications on our operations. I think it's a tough market. I mean, Krupa, there is obviously a tough market in terms of pricing. Pricing is a very tight corridor right now for us. But I think, and therefore, it's hard to say that there isn't a pricing problem. There is a real challenge in terms of declining yields. And that's especially true on the enterprise on the large account side. I think the retail side is a little bit easier in terms of yield management. So we are seeing some of that. And there is some churn happening already in our base because we are exiting those accounts where we are exiting the bottom of our yield curve, and we're placing them in slightly better accounts as well. So long story short, I think there is a lot of pressure. I think there's mainly especially pressure on some sectors and some set of lanes, but we are just blocking and packing our way through it to ensure we are maintaining yield. I think our strong retail network does help us. As you know, we have around 270 branches. We have more than 260 business partners across different geographies. We're expanding that, especially in the east and the south. So that does certainly give us slightly higher yields, Krupa, and that actually allows us to balance some of this. But there is fairly intense price pressure, and it does affect us. Then there's a trade-off always between share of wallet and profitability or yield on the business. So there is no perfect answer here, but it is a challenging and tough environment. I think from our perspective, Krupa, as I said, our challenge in the quarter, probably like many others in the sector, has just been some volume down trades happening without losing share of wallet. There's customers who actually dropped lower volume. That has been recovering, and we have not seen too much of price pressure there. But on new accounts and new business, it is quite intense. The price pressure is quite intense. Understood. Understood, Ram. The second question was onto warehousing piece of it. You did state that there is an emerging demand for flex warehousing, and the inquiries have been quite good. I mean, a couple of years back, we did face certain challenges relating to increasing flex warehousing commitments, but eventually underutilization. So how are we thinking about the flex warehousing piece at the moment, and what sort of a capacity expansion are you building up on warehousing on a temporary basis for getting to this market? So Krupa, you have been around for a long time, so we have seen a couple of the slides. I think in 2021, we actually saw the flex boom. If you remember, we had this massive boom of flex. We had nearly 2.5 billion sq ft of flex, and it was extremely good for us. We actually kind of prepared the playbook around it and scaled it up. In the next year, in 2021, of course, we had a bit of burn around, and that's probably the one which you're referring to. We had some stress on flex, and obviously, that remains a bit of a challenge in terms of what we learned from that. I think this year, it's still early. I think a lot of our customers are planning flex. I don't think all of that's actually done in yet, because they would obviously, I think, wait through the August peak to some extent to firm that more clearly. But we are doing basically operating on three principles. We are avoiding large boxes. So we have in the past, I think in 2021, 2022, pre-hired some large box spaces for flex for the season, and we kind of had a bit of a burn. And that's one thing we're avoiding, Krupa. I think the second thing to kind of focus is we are aggressive on flex where we have white space. We have traditionally been roughly a 4% white space business. In the last quarter, especially, we went on this quarter just by went on to 8%. That's largely, of course, partially on account of the Guwahati launch, but also there's been a bit of white space creeping across all our sites. So that's the second thing which we are doing. And the third thing I think is we are trying to contract much closer to the season. So I think just the overall softness in warehousing. In 2021, 2022, warehousing was really hot, and I think we actually had to go ahead of the cycle and place some leasing bets, which we have avoided doing this year. I think currently, I think the space environment, especially the buildings coming out of construction, remains steadily favorable. So we should be able to push back any leases, bookings, etc., back towards probably the August, September timeframe. If we can do that, then obviously, we'll have a far more contracted, far cleaner contracted space than the most of flex space. I hope that kind of answers your question, but those are the things we need to do. Yeah. Yeah. I understand, Ram. I think then just to follow up on that, then how do you see the overall e-commerce piece of it, then contribution from e-commerce shaping up for the company over the next year or so? You have won some great contracts. That's why I'm just questioning on that. I think we lost some as well, right? So I think it's both. So I think e-commerce, if you remember, was around 17, 18, EPL, 3Commerce. So e-commerce is having, I would say, had two divergent impacts on our business last year. The contract logistics part of it obviously declined year-on-year. As you know, we did see a fair amount of churn, especially on large box warehousing, FCE, which, as our customers insource that. And we did obviously see a fair amount of churn because of that. That did hurt us first in terms of revenue drops, but also towards the end of the year in terms of the peak in white space. I think at the same time last year, our last mile delivery business, which is just purely volume to me. Despite a very challenging environment, I actually showed some had shown a 16%-18% revenue growth and volume growth. So there's a bit of a mixed bag. The part of our business continued to win by volume when the last mile grew. The parts of our business that are more asset-driven in the first mile and second mile actually had that churn. I think positively, and revenues, which are approximately on the contract logistics business, around 14%-15% of our business was 3PL that actually declined towards the end of the year to around 11%-12%. I think the action that team has taken, has countermeasures on that, has actually helped. I think we are focused on three things. We are focused on some geographies where we think there's emerging demand and our customers are underrepresented, especially the east, where we have been expanding in Kolkata, Guwahati, and now we're expanding Agartala as well. The second thing I think has been focusing on more complex offerings, especially around and especially around grocery, which has helped us strengthen our business. That part of the business is growing in general, and that I think has helped us a lot. And the third one has been on expanding to new accounts, where we actually have picked up a bunch of new accounts, both in terms of warehousing and transportation and things like supplier pickups and so on. So those three actions, I think together, I think have helped us. We also launched a pro-tracking service for one of the larger marketplaces. So I think a combination of those, I think, has now allowed us to recover the losses or the churn which we've seen. And this year, I think I expect that e-commerce on the contract logistics piece will come back to around 15%-16% of our revenue. Obviously, on the last mile delivery business, we continue to grow year-on-year, and we organically inside the MLL part of the last mile delivery business, but also in the Rivigo part of the business. So together, that business should continue to see, and a lot of that is e-com driven. Probably 85%-90% of that is driven by e-commerce, and that should also see that growth. But that's actually the broad outlook. I think this year, it really is about getting our offerings in place, doing the optimization on cost, and getting revenue back. I think our team did a credible job on the revenue growth. We still have some work to do on margin expansion and recovery and capital efficiency. But broadly, I think we have tended in the right direction, Krupa. And hopefully, well positioned by the end of this year for what I think next year, I believe will be a bit of a breakout in e-commerce as facilities in the last mile space. And our goal is to kind of set ourselves up well for that. Right. So I was referring to the Valmo tailwind, which, of course, has gained a lot of traction. And that's where I was wondering if profitability-wise, was there some challenge because it's a very cost-conscious segment? And that's where probably I think Krupa probably answered some part of it, that grocery is someplace where you're looking at. Any other further view on Valmo as a business for you? No, I think if you ask Valmo, they're in the best position to answer that. They made their own business, I think. Krupa is in the best position to answer that. Great. Thanks, Ram. Thanks a lot, and all the best. Thank you, Krupa. Thank you. A reminder to all the participants that you may press star and one to ask questions. The next question is from the line of Aditya Mongia from Kotak Securities. Please go ahead, sir. Thank you, Ram, for taking my questions. I'll start with the first question. This is more on the edge of the business. If you could give us a sense of the scale of business in terms of revenues with the parts of this business, it would be useful. Some sense of the break-even revenue per day per vehicle and how far we are from that point. Your question is around the EDel electric vehicle business? That's true. Yeah. All right. And any other questions, Aditya? So I can answer them together. As in those are more related to vehicles, so maybe I can grab them separately, yeah? Okay. All right. So EDel's fleet is around 1,600 vehicles right now. This year, it's almost completely three-wheelers. There is a stacking of four-wheelers, which are largely sub-one ton, and now we're adding some probably going up to around seven tons on the fleet, but it's almost dominantly three-wheelers. We, as you know, do both. We do transportation or delivery as a service from that business, where we essentially just provide vehicle-based deliveries. And we also provide. EDel also operates on an integrated model on station plus delivery together. So it's difficult to actually pull out a specific number, but broadly, what I would tell you is that we operate at around INR 1,200-INR 1,300 per day on a revenue basis. And at that level, we'll be at around 18%-20% growth point level. The game then is how we figure out the right level of utilization. That's actually where we're doing where the continuing operating part is. I think right now, the fleet is around 75%-80% sold out. It's utilized around 75%-80%. We make those kind of margins in that business. Of course, we have around 15%-18% of vehicles which are in downtime where they're not utilized because of lack of customer contacts or they're in transitions between different locations or they're under service contracts, service requirements by the stations. Overall, I think if you look at and so if you did the math, I think we are approximately probably running at around INR 145 crore-INR 150 crore run rate on that business in revenue terms. And on the operating margin, the gross margin will be in line with that. The business is not burning. In fact, that's the question. We are not burning money on those things. We still have some headway in terms of driving utilization. When we fully pick it up, we should be about 18% accounting for the target which we have for the business. I hope that's sufficient. If you do want more detail, I can provide that. But I think in the coming months, we do obviously hope to expand our four-wheeler business, which, as you know, larger clients and non-e-commerce customers have stronger requirements for that. We are doing some non-e-commerce right now. We're doing, for example, deliveries for a consumer product business. We just started micro-fulfillment, and they're going to probably use some electric vehicles for a personal care products company. So we are scaling it up, but it's a lot harder to run every dense network on non-e-commerce customers. So optimization remains a challenge. And so larger vehicles help there. And we should be targeting through the rest of this year to launch a two-wheeler-based offering as well. So our vision for EDel is not to be a three-wheeler vehicle. It's essentially to be packaged on the go. So whatever you want, whatever the size of the package, we should be able to support that, whether it's a two-wheeler, three-wheeler, or four-wheeler in the fleet. Is this business a PAT positive business? I understand the gross margins are heavy. I'm just trying to get a sense that are we against INR 1,200, INR 1,300 of revenues? Are our aggregate costs higher or lower? No, only our per vehicle cost. It is per vehicle PAT positive, including overhead. As I said, it depends a little bit on how utilization works. Last quarter, for example, utilization was good. Utilization doesn't work every month exactly, Aditya, but I think through the year, if I run FY 2024, it is an EBITDA positive business. And actually, a PBT positive business as well. But we'll confirm that to you. I'll come back and confirm that to you. That's all I will do, but that should be fairly close to our numbers. Great. The next question that I had was more from your remarks. This is in the B2B Express business where some amount of down trading is happening. If 100 was your revenue scale a year back, how much of that revenues could have been taken out, and what's the reason behind the same? I think if you compare to 100, our revenues last year, our revenues are actually up by 6%. What I'm saying is that's a net effect, right? On a growth effect basis, you're adding new accounts, and the existing accounts are kind of withering away. Yeah. So if you just let me finish. So net 100 has become 106. In that, I would say we have dropped around 13, 14. We have probably dropped around 13, 14 compared to Q1 last year. 4, 5 of that is because of the performance issues. Let's say probably around 6 more than slightly more than half of that is because of the performance issues which we had, coming out of the network integration. So probably 100 became 93, and 93 became other, I think, 87, 88 because of accounts which we distinctly either because of lien imbalance or because they were not profitable for us. And that also happened. So I think together, we probably dropped around 13, and then we clawed back around 19. The 19 clawback has been new accounts, and it's also been in-account growth. So as our performance got better, we obviously have increased share in some of our existing accounts. We've obviously seen, as I said, addition of new accounts in the business. Together, that actually has been so that's been the comeback around 18-19. That would broadly be the math. I would say it's a very specific question, but I think my answer will be fair. It will be close to being fairly accurate. Win rates have been healthy. Even last quarter, I think, as I said, we did sign up 28 new large accounts. We have added around 20 new retail partners, business partners. The annual volume from those from a contract perspective is probably around 4,500 tons a month. That's reasonably large for us. It's like a 15%-16% month-on-month monthly growth. And then it's an issue about how well we're able to monetize that. But that's kind of just some flavor on how that volume is moving. Just a little question. Is this issue of performance-linked kind of issue in down trading, is it continuing? Is it stopping? What are the trends over there? We've had less than 1% churn on performance and SLA issues in the last two quarters. Quarter on quarter, churn because of performance issues has been less than 1% of our revenue. We've had some losses, Aditya, because commercially, somebody goes and downright undercuts us on statutory, and we will lose some business because of that. I've explained before as well that we remain very focused on lane protection, and we are not going to chase the margin, chase the revenue. Some level of down trade will happen because of that, which happens all the time. We also do. For example, if we had a very imbalanced lane, we would probably a little bit be more aggressive on the pricing there. Price independent, if you just look at performance issues, I think less than 1% of churn. Network is pretty stable now. There are some ups and downs always. 19,000 PIN codes, 640 lanes. So hard to hit all of them bang on every day, but it's pretty stable right now. The next follow-up question would be that, from what I recall, utilization levels are fairly high in the B2B Express business. And then you are probably improving the profile of customers by letting go of those which are paying you less. Is there enough kind of leeway that you can see of turning around this B2B Express logistics business? I'm still not very, very clear. Utilization levers have broadly kind of played out, if I'm not wrong, right? Yes and no. I think I'll just go back to what I said last quarter. I think last quarter, as well as I said, forward-lane utilization is around 90%-92%, 90%-ish. And return-lane utilization is around 74%-75%. That was Q4 numbers. In Q1, actually, those numbers dipped. We continued to run, obviously, the lanes because of the fact our service levels have to be maintained. And both forward lanes also dipped, especially in April when volumes kind of tanked. We did see a big dip in forward-lane utilization. So right now, at the end of Q1, utilization on forward lanes is in the mid-80s, mid- to high 80s. And we have a 12%-13% headroom there. And reverse load, backhaul, return-lane utilization is even lesser. So we do believe we have the headroom to get to that. And that's exactly what I said last quarter as well. We do think we have the headroom to get to that 10%-15% growth level. And then, obviously, we have to just add more lane capacity after that. Not necessarily node or hub capacity, but we obviously have to add some lane capacity in terms of vehicles past that. But we do feel pretty good about that ability to shift that if we can get the volume coming in. And we can play the math out in a bit more detail if you wish, but I think from that statement from the last quarter still remains. All that's moved this quarter, we moved down in volume and moved down in utilization. And we still have the headroom, we think, in the network. To run the facilities at much higher volume. Obviously, on lane-based basis, we have to add capacity as required. Thanks for the clear. Just one more question from my side, and then kind of give it to other participants. And just looking coming from your remarks on labor cost, isn't this becoming a periodic issue in the warehousing business for us to manage, given our contracts and the way they are structured and how it ends up kind of hitting us? And if so, what is the solution over here? Do we need to kind of redo the contracts? Do we have that leeway? How to think through this? The way to think through that is two things. I think the first one, obviously, is automation. I think we are automating more of our systems and processes. It's not easy. Some part of the warehousing solutions allow that fairly easily, and some don't. But that does affect us a little bit. I think the second one has been that this has been more remarkable. This has been more pronounced in some geographies of the country. I won't get into specific details. I don't want to make a geography call out and say the South is bad, Tamil Nadu is bad, etc. It's probably inappropriate to make that color at that level. But yes, we do have some geography-based challenges. And the third one is obviously improving dexterity. I think warehousing contracts require us to continuously improve our optimization, improve our productivity. What has hurt us is not being the underlying cost per person, Aditya. It's actually been a sharp increase in terms of absenteeism through the last couple of quarters. It's happened. I think we were in, but it happened around 4, 5 quarters as well. We were actually up in a peak quarter. We kind of lost our shirt 2 years ago in the peak because it happened. So we do get these flameouts or scale-ups. What's kind of hurt us specifically this year has been since Diwali, actually, I think we've had a continuing challenge in different geographies with just a higher level of absenteeism. Now, weather issues, etc., have obviously added to that. But it's been a particular challenge for us in the last 7 months or 8 months. This past quarter was probably a little bit more severe. With increased heat, the weather challenges in different geographies. We just saw much higher absenteeism over there. And when that happens, you obviously have to bring in people with much lower dexterity levels. And that means productivity gets impacted. We are working on multiple approaches there in terms of partner workforce retention, better dexterity, building out larger tech gridding pools. We launched, for example, the e-commerce business. We launched a program to get better gig workers in who can actually help us to turn around and try to train them better. We're doing similar things in our contract logistics business in the consumer side. So I think it's three, four things that you have to do. And I think it's a fair point that we have to get on top of this also because this only will increase over time. I don't think it's going to come down. Nobody's going to get cheaper over time. And obviously, our workforces are going to get more demanding in terms of work-life balance and personalization and so on and so forth. So we are obviously trying to invest a lot more in flow productivity, flow measurement on the shop floor, but also trying to fundamentally drive in continuous improvement in skill and dexterity. And that's something which we have to learn and invest a lot more on. So we have to continue to invest in that. I think this is a bit of a one-time flashpoint without getting into a lot of detail, but still something which, as you point out, we need to get a better handle on because it comes every five, six quarters and kind of gets us away. That's noted. Thanks for the cover. Appreciate that. Those were questions on my side. All the very best to you. Thank you, Aditya. Thank you. The next question is from the line of Saras Singh from Haitong Securities. Please go ahead. Saras is there. Hello. We have lost the participant. Ladies and gentlemen, that was the last question for today. We have reached the end of question and answer session. I would now like to hand the conference over to the management for closing comments. Thank you all. I hope you've been able to answer all your questions completely, and I've responded to all your queries. If you have any questions, further questions, you may contact SGA Investor Relations Advisor or our team at Mahindra Logistics. Thank you all once again for your interest in our company. I wish you all a safe and good evening. Thank you. On behalf of Mahindra Logistics Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.