Good morning, ladies and gentlemen. Welcome to VRL Logistics Limited's Q1 FY 2023 earnings conference call hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhijit Mitra from ICICI Securities. Thank you, and over to you, sir. Yeah, thanks, operator, and good morning to all the participants, and thanks for joining in. We are hosting VRL Logistics management for discussing Q1 FY 2023 results. So without further ado, I hand it over to Mr. Sunil Nalavadi, CFO of VRL Logistics. Over to you, Mr. Nalavadi. Yeah, thank you, Mr. Abhijit. Good morning to all participants, and Sunil Nalavadi here, CFO of VRL Logistics Limited. I welcome all of you once again for the earnings conference call at the company for the period ended June 2022. See, as compared to quarter 1 of the last year, which was impacted due to COVID restrictions, later on the economic environment was substantially improved across all the sectors in India. In this connection, I wish to state some of the data points released by the Ministry of Finance, Government of India. The GST collections have crossed INR 100,000 crore for every month from July 2021 onwards and reached an all-time high GST collection of INR 168,000 crore in April 2022, which have been driven by an 11-year high GDP growth as well as tightening of compliance by the government. The generation of E-invoices hits an all-time high in February 2022, which is around 26 lakh average E-invoices per day from the date of introduction of the E-invoice system. The improved economic environment in the country and the initiatives taken by the government to curb the non-compliant transactions supported us to reach the all-time high revenue in the current quarter. The total revenue of the company reached INR 720 crore as against a revenue of INR 417 crore in the last year and as against INR 672 crore in the preceding quarter. The EBITDA of the company reached INR 117 crore as against the EBITDA of the last year of the same quarter of INR 40 crore. The profit for the quarter reached INR 49 crore as against a loss during the last year of INR 6 crore. The growth of the goods transport business, which is contributing 90% to the revenue, is extremely good in the current quarter as compared to last year. The revenue from this segment reached INR 609 crore as against a revenue of INR 385 crore in the last year, which is increased by 58%, and quarter-on-quarter basis, the revenues increased by around 4%. The increase in GT business, the goods transport business, is on account of increase in tonnage. The tonnage is increased by around 45%, and the remaining growth is on account of increase in realization. Apart from the better economic conditions, the increase in tonnage in the goods transportation segment is also due to expansion in network by the company. During the quarter, we have opened around 68 additional branches, and from April 2021 to today, around 157 branches have been opened. These branches have contributed around 8% to the total tonnage in quarter one of the current year. As we always mentioned that, our industry comprises a majority of small fleet and unorganized operators. To curb on the evasion of tax, which were supported by the unorganized operators, the government modified the e-invoicing regulations. From April 2022, all the business entities with turnover of INR 20 crore and above have to compulsorily generate the E-invoice irrespective of the value of the invoice. From October 2022, they are proposing to reduce this limit to INR 10 crore and above turnover entities. We hope that these steps taken by the government clearly indicate that the business transaction needs to be done in a compliant and organized way rather than the non-compliant manner, which were being supported by the unorganized transporters while transporting the goods. Due to which, we are acknowledging from the market that many of the commodities transportation, which used to be transported only by the unorganized operators till date, are gradually shifting to us. On account of the shift from the unorganized operators and the expansion in our network, the base of the customer also tremendously increased. It has increased; around 400,000 it was there during the pre-COVID level. Now, the number of customer base increased to around 700,000. When it comes to the profitability analysis during the quarter, the EBITDA of the goods transport segment increased to INR 100 crore from INR 43 crore, and percentage-to-revenue also increased from 16%, increased to 16% from 11%. The quarter-on-quarter basis, the EBITDA has decreased from INR 122 crore to INR 100 crore. The diesel cost, which is a major cost in our operation, has increased further in the current quarter. The diesel cost as a percentage-to-revenue has increased from 29%-31% on quarter-over-quarter basis. The increase in fuel cost is due to increase in the procurement cost. The cost of procurement as compared to previous quarter increased from INR 85-INR 93. During the current quarter, we are unable to buy the fuel from the refineries, which was around 40% of our total consumption. The same was declined to 25% in quarter four, and absolutely the zero quantity in the current quarter on account of increasing bulk purchase fuel rates by the government, due to which we were almost losing savings of INR 2 per liter. The lorry hire charges are also increased in the current quarter on account of increasing fuel rates. The cost of lorry hire charges year-over-year increased from INR 25 crore-INR 57 crore, and percentage-to-revenue increased from 7.42%-9.37%. The higher growth in GT volumes resulted in higher growth in revenue during the year, and the percentage of certain variable and fixed costs to the revenue has declined due to operational synergy in our operations. The one example is the vehicle repair and maintenance expenses, which have been reduced from 7% of revenue to 6%. Moreover, the employee cost, which is a major fixed cost in our operation, around 15% of the revenue, instead of incremental process conducted by the company in the first quarter in January 2022, the employee cost as a percentage to revenue has been maintained. The earnings before interest and tax, the EBIT of goods transport segment has reached around INR 69 crore in the current quarter. As compared to previous quarter, the margin has declined on account of decreasing the EBITDA margins. With respect to differences in accounting is concerned, the company has changed the useful life of the Goods Transport vehicles from nine years to 15 years based on higher useful life in the past due to our own maintenance facilities. The Bus Operations segment has been turned to positive EBITDA earnings in the segment post-pandemic. The bus performance is also better in the current quarter on account of the holiday season. The realization and occupancy levels have been increased, and that resulted in an increase in revenue and EBITDA margins in the Bus Operations segment. Due to the better profitability, the overall net cash generated from operation in the current quarter reached around INR 100 crore. The majority of the cash flow used for the purpose of CapEx in the current quarter, during the quarter, we have incurred around INR 85 crore CapEx, and which is predominantly used for the addition of goods transport vehicles. The net debt of the company has also increased from INR 130 crore to INR 155 crore due to investment in the CapEx. To concentrate on the high-growth-oriented and high-return LTL goods transport segment, the company has decided to sell the non-core segment, and as a step, we sold the wind power business, and one of the aircraft also, which the company was owning. About the wind power project, the entire consideration has been received in the first week of August, and the final documentation is in the process. Considering the shift of goods transport segment from the unorganized operator to organized operators, we are expanding and further expanding our network. We are hopeful that the turnover or volumes what the company is expecting are in line. Since the expectation is surely reduced from third week of May, the full benefit of reduction is going to benefit in the coming quarters. So the diesel cost as a percentage, also, we are hoping that it will be, under control, or it may a little bit reduce in the coming quarters. Since the realizations are improving on account of route needs, we are hoping that the EBITDA margins will also improve from the current level in the coming quarters in goods transport segment. The CapEx as announced by the company to a purchase of goods transport vehicle is in the process and will be completed as scheduled. The change in useful life of the goods vehicle will result in a lower depreciation charge as a percentage to the amount of investment. It will result in an improvement in return metrics going forward. So with this, I conclude my initial remarks. Now, I request all the participants for any queries or questions. Thank you. Ladies and gentlemen, we will now begin with the question-and-answer session. Anyone wishing to ask a question may please press star one on your touch-tone telephone. If you wish to remove yourselves from the question queue, you may press star 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. The first question is from the line of Alok Deora from Motilal Oswal. Please go ahead. Good morning, sir. So just a few questions. First, sir, on the bus segment, we saw significant traction in terms of, you know, the revenue as well as on the profitability side. So just wanted to understand, is it some sort of some part of it like a one-time thing, or is it sustainable? I mean, for bus segment, what's the revenue which we are forecasting now for the full year? Because INR 90 crore kind of an almost INR 100 crore kind of a run rate we have not seen since a while. Yeah. Basically, this is on account of good holiday season in the current year. And even post-COVID, now the people are traveling, and that's the reason, in the current quarter, actually, we did a good, you know, the occupancy levels were good, and realizations were good. So that's the reason the revenue is on a higher side. And going forward also, again, there is a possibility of a dip in the bus revenue. Okay. So, what's the full year, you know, number we could look at for the bus segment? Definitely, if it's as against the INR 90 crore, there will be an average around INR 60-65 crore of a revenue in the coming quarter. Okay. So around 270 or so for the full year could be 270 or 300? Yeah. Yeah. Sure. Sure. And so. Even in the month of July post this June, we are seeing that, again, there is a drastic reduction in the revenue. Okay. Because, again, the people are taking precautionary steps to travel, and they are hesitating to travel now. Sure. Sure. Sure. And, It is a one-time, holiday season, actually, that resulted in a good revenue. Got it. Got it, sir. And, sir, in this goods segment, we have seen, you know, the margins come up quite a bit. So we understand that we have not taken a price increase despite the diesel price change, so it has impacted especially in the first half of the quarter. So in the second quarter, we should be good with the margins back to the, you know, Q4 run rate, or it could take some more time? It will not be to the extent of Q4, because, if you see the increase in the diesel price, it has increased from INR 85 to almost INR 94. Mm-hmm. But after the post reduction of this expectation also, that much of reduction is not there as of today. Even against the average of INR 94 Q1 cost, now the current average is in the range of around INR 90. Yeah. Even, we lost, you know, some of the benefits of this, you know, fuel consumption from the refineries. Yeah. Yeah. Where, actually, we used to save almost around INR 2 per liter. That benefit is no longer there yet. Right. Right. So even as of today, our average cost of fuel, say, in the month of July also, it is in the range of aroun,d INR 90-INR, 91 rupees, like that. So that's the reason. There will be some improvement in the EBITDA margin, but not to the extent of Q4. Okay. Of last year. Okay. Just a last question. So, sir, this depreciation, you know, because of the increase in the life of the asset, the depreciation is down by around INR 10 crore for the quarter. So, is this the quarterly run rate for depreciation going ahead? How should we see that? Yeah, definitely. For this current year, every quarter, that kind of a benefit is going to come. Uh-huh. Going forward, it will become, again, see, overall, charge to the P&L will be less compared to earlier. Earlier, what used to happen, even whatever CapEx we used to incur, say, for example, if we incur a CapEx of INR 100 crore in the vehicles. We used to depreciate over a period of nine years. Now, in the span of nine years, it will stretch to 15 years. Okay. Okay. Okay. Got it. Since we are growing and we are investing in the CapEx, the overall depreciation charge as compared to the investment will be reduced. Got it. Got it. And in this air segment, we have booked zero revenue, so there, it's like no further revenues are expected there going forward also, or it's a small piece, but I just wanted to understand. It's zero revenue for us, right? No. That revenue and cost have been allocated as an unallocated segment because it is no longer a reportable segment, based on the turnover and the assets, which are in that particular segment. Got it. That's the reason we treated it as an unallocable segment. Sure. See, at the time of two years ago, we used to make around, say, INR 11 crore also revenue. Now, it will be half of that. Got it. Got it. Okay, sir. If I have more questions, I will come back in the queue. Thank you, and all the best, sir. Yeah. Thank you. Thank you. The next question is from the line of Ankita Shah from Elara Capital. Please go ahead. Thank you for the opportunity and congratulations, sir, on a very good set of numbers. So my first question is on the CapEx side. So we've added net 200 vehicles this quarter. So how many more are we planning to add in the next 9 months, and what kind of CapEx outgo will go for this? And related to that, what would be the impact on leverage debt levels going forward? Yeah. Basically, the CapEx will be in the range of around INR 85-100 crores on a quarterly basis. See, this quarter, we incurred total CapEx of around INR 84 crores, and predominantly, it is for the purchase of the vehicles. So similarly, in the coming quarter also, there is a similar kind of an investment. We have around INR 80-85 crores on the total CapEx, and in the goods transport segment, it will be in the range of around INR 80 crores. And the addition here is, actually, we added around 322 vehicles. Out of that, some of the vehicles have been scrapped also. 312 vehicles have been added, and 92 vehicles have been scrapped. The net addition is around 220 vehicles. When it comes to debt level, we are seeing that there will not be an increase in the debt level because one is the INR 48 crore what we received from the sale of wind power project; that has been completely increased for the CapEx purpose. Apart from that, whatever cash flows we are generating on a quarterly basis, say, for example, this quarter, we generated INR 100 crore CapEx cash flows. Considering these cash flows and this one-time receipt on account of sale of windmill also, even though we invest around INR 80-85 crore of a CapEx in a quarter, the debt levels are not going to be increased. Okay. So this number should be kind of maintained for the full year? Yeah. Debt level will be in the range of around INR 130 crore-INR 140 crore. INR 130-140 crores. Okay. And total gross addition, how much are we planning or net addition, how much are we planning for this year, vehicles? As we announced, 1,600 vehicles, so these are over a period of, you know, 12-18 months what we said. So accordingly, every month, the addition will be in the range of around 80-90 vehicles will add every month so that, that every quarter, it will be in the range of around 270-300 vehicles. And scrappage will be there, again, 75-80 vehicles we have to scrap on a quarterly basis depending on the condition, depending on the thickness that is there. 75-80, you said, per month? Per quarter. Per quarter. Per quarter, scrappage? Yes. Okay. Okay. Secondly, sir, on this sale consideration, we have booked that in the revenues or other income? So basically, see, the sales consideration, we have to account, you know, account the profit from sale of this project. The profit will be in the range of around INR 78 crore. Only that much of amount will come to, P&L account. The rest of all will go to, you know, it is a balance sheet adjustment. That is adjusted in other income? Yeah. It will be shown as another income in the current quarter, in quarter two. Because that transaction is going to be completed in the month of August. Okay. Okay. Got it. And, given the robust growth in volumes in the GT segment this quarter, 45%, you know, do you think that, you know, for the full year, you know, you want to revise the number that is given earlier, 20% plus kind of a growth number that you had told earlier? Do you think there is a possibility that we can do better than that for the full year level? Yeah. As I said, last year, Q1 is impacted, due to some COVID, impact. And if you see the subsequent quarters in the last year, the performance is also good. So considering those, incremental turnovers as compared to quarter one of the last year, and this year, we are expecting on a full year basis, as you said, around 20%, volume growth year-on-year basis. Got it. That's it from my side. Thank you, and wish you all the best, sir. Thank you. Thank you. The next question, this is the line of Krupashankar NJ from Spark Capital. Please go ahead. Good morning, sir, and thank you for the opportunity. First question is on the new branches which you have set up. So you have highlighted that, you know, whatever was set up in FY 2022 as well as first quarter is contributing close to about 8% of total turnover. Given that, you know, historically, you have been highlighting that more and more branches are coming up in the north and the eastern parts, so the lead distance, you know, incrementally, is just driving 1% increase in overall realizations? Is that how you have to see it on a sequential basis? No. The quarter-on-quarter, if you compare the Q4 versus Q1, the overall revenue increase was 4%. Out of that, the turnover, of course, is 1%. The remaining 3% is on account of improvement in the realization. That realization improvement is only on account of, the route mix, not on account of increasing the freight rate. Got it. But we don't intend to take any general price hike as well because, you know, traditionally, we have seen inflation price hikes taken on an annual basis. Are we not taking one this year? No, just we are waiting for a summer time, how the things will turn. But as of today, there is no plan to increase in the freight rate. So we are more focusing on the increase in the volume since, we are getting, you know, a lot of new customers and new routes we are adding. So rather than increasing the freight rate, we are concentrating more on the accumulation of the volumes. That's what is the current objective of the company. Understood. Looking at also, you know, the extent of passenger growth in terms of seasonal reasons, can you highlight what would have been the passenger growth for the quarter and, you know, and the realization for passenger? Yeah. Sure. See, basically, the capacity is increased to 90% in the current quarter. So in Q4, it was around 84%, and last year, it was around 75%. The realization is, of course, we are currently at INR 1,300 in the current quarter. And Q4, it was INR 1,022, and last year, it was around INR 1,100. Understood. Understood. Thank you, sir. I'll, I'll get back in the queue. Yeah. Thanks. Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star. The next question is from the line of Sanjaya Satapathy from Ampersand Capital. Please go ahead. Yeah. Hi, sir. Thanks a lot for the opportunity. See, you've mentioned that your margin will improve led by better realization. You also said that it is mostly because of the route mix. So, I cannot really understand this aspect that are you saying that there are some routes which are more profitable than others? Yeah. Basically, when it comes to the long haul, since we are opening the branch in the untapped market, especially in the eastern and northeastern market, so basically, here, what will happen, these are all additional new turnovers what we are getting. But for these new turnovers, there is no need to invest more further in our fixed expenses. Only that related to those branches, it will be there. Say, for example, if it comes to the common fixed expenses like employee cost and even for the purpose of the vehicle taxes what we are paying, and similarly, the insurance expenses what we are paying to the vehicles. And apart from that, these corporate expenses what we are incurring. Even though the turnovers are increasing, say, around 20%-25% or whatever the turnovers addition on account of the expansion in the network, correspondingly or in proportion to that, these expenses will not increase. That's the reason the proportion of these expenses will come down as it is to the revenue. So definitely, we will have savings on these costs, and the margin will improve. And apart from that, if the more number of branches are open, more number of routes are open to the in the network, then we will definitely have a better utilization of the vehicles, and the kilometers of the vehicles will be better. So on account of this, again, there is a possibility of reduction in certain variable costs also as a percentage to the revenue, say, built-up vehicle maintenance expenses like that, even driver payments. Understood. And so, you have not taken price hikes despite these freight rate hikes. Is this because of the competitive intensity or it's a deliberate strategy to kind of take market share and we just grow through volume-driven efforts? Yeah. It's a deliberate decision at the management side. Basically, see how it is happening. Now, there are a lot of things happening at the government side. Even they want to curb. See, as you know, our industry is totally compromised. Almost around 70%-75% of the contribution is coming from the unorganized operators. And even on the other side, government is increasing a lot of these compliance procedures. So considering these things, many of the customers, actually, they are looking for an easy solution, and they want to come under a compliant network. So we want to gain out of this. On account of this, whenever we approach to the new customers, we cannot go with a higher rate and all these things. Considering this environment in the market, we want to maintain the freight rate as usual to grab more number of customers into our fold, to increase our volumes further. Understood. Lastly, if I can just take you through, considering this new strategy, unlike in the past where your medium-term volume growth used to be somewhere around mid-single digit, can we expect your volume growth to be consistently above 15%-20% range, going forward? Yeah. In at least the next three years, we are expecting our turnovers will be in the range of around 20%. Understood. Understood. And, and with some amount of margin improvement because of operational efficiencies? Yeah. At the moment, volume starts increasing, we will have more flexibility on the expenses side. Even we can have better control on the expenses, and that will result into increasing the margins. Understood. Thanks a lot, sir. Thank you. Thank you. The next question, this is the line of Abhijit Mitra from ICICI Securities. Please go ahead. Yeah. I hope I'm audible. Just to understand, Yes, please. Yeah. So, so just to understand the, some dynamics here. So your, your branch additions over the last, you know, three, four quarters have been upwards of, upwards of 100. So it's more than a, you know, 12%-13% addition in branches. But your, QoQ increase in volumes is, charting a 1%-2% rate. So are we getting ahead of ourselves in terms of, CapEx or, the volume guidance, or you feel you can catch up, with the remainder of the three quarters? You see what kind of trends you see on the ground in terms of volumes, you know? Because QoQ movement has definitely slowed down over the last three quarters, is what we can see. Yeah. See, basically, this number of branches, the numbers we cannot calculate, you know, we should not calculate in proportion to the total branches. And we cannot expect, you know, the turnovers should grow, grow in the proportion to the branch addition. See, basically, these all are new branches handling a very low quantity as of today. So going forward, the volumes will increase from these places. And these branches have been opened up gradually. It's not on a single day. Even in the last year, see, we started opening up the branches from quarter three onwards. So most of the branches have opened after the first half. And current year, considering the growth and the performance of these branches, we suddenly take a decision, and we open 68 branches in the current quarter. So basically, what will happen to develop these branches—at least it will take earlier, it used to take in the range of around nine months to 12 months to increase the turnover at expected level, at least to reach a breakeven. Now, what is happening, within two to three months, these branches are reaching to breakeven. And expected level of volume growth is coming. That's the reason the more volume growth contribution will come in the coming quarter rather than the expected addition at the immediate level. On account of that, actually, we are hoping that in the current quarter, even though quarter-on-quarter growth is at a very low at a 1% turnover growth, and even the realization improvement, say, 2%-3% is on account of these new branches only. That's the reason going forward, these branches will contribute more turnovers to our total turnovers, and that will result into increasing the volumes as well as increasing the realization. That will support the entire growth in the revenue as well as profitability margin. Right. No, I'm just trying to understand. So then, this, this theme of shift from unorganized to organized, that has sort of played out for the time being, or? Yeah. It is, see, prior to April 2022, that e-invoicing, as I said, the limit was around INR 50 crore. Now, it has been reduced to 20. And government has already proposed to reduce it to INR 10 crore and above entities. Compulsorily, they have to generate an E-invoice from October 2022 onwards. So these kind of decisions are definitely going to support us because for them also, they have to comply on each and every regulation. So as I said, some of the commodities like coconut product, the leather product, even, some of these, the cashew nuts, and, these kind of commodities, actually, the growth rate is very high. And these are all on account of shifting of customers from the small fleet and unorganized players to us. Right. Just last question, this, you know, 1% or 2% QoQ growth won't help you achieve your 20% target. So you are expecting. Yeah. A significant uptick in Q3, Q4. Yeah. At least we have to grow in the range of around 4%-5% quarter-on-quarter. Right. Right. Okay. Thanks. That's all from me. And we are expecting that, again, the season is coming now. The quarter two, quarter three will be much, much more. Growth will be there. Because the season starts now, the festival season and all. So more of the commodities, actually, we are getting now. So we are based on that, we are hoping that the 20% achievable will be an achievable number. Got it. Got it. Thanks. That's all from me, sir. Yeah. Thanks. Thank you. We'll move on to the next question. We've got us on the line for Alok Deora, Motilal Oswal. Please go ahead. Yes, sir. Thanks for the follow-up. Sir, just wanted to understand, we had given a target of 100 branches in, you know, opening 100 branches in FY 2023, and we have already done 68 additions in the first quarter itself. So any change in that number now or, just some color on that? Yeah. These numbers are going to be increased, not restricted to 100. But, most of the branches have been opened in quarter one, because to take advantage or benefit of this season, what is going to come now, festival season now. But going forward, the number of branches will not be to this extent. See, around 60-70 branches will not be there every quarter, but those numbers will be in the range of around 25-30 branches average. Sure, sir. Sure. And, also, sir, just, you briefly mentioned in the previous question about, you know, July, August, you know, some color on the second quarter. Just wanted to understand how has been the volume been after the first quarter ended, I mean, after, in particularly in July and August? Not really a number, but just some qualitative sense. Yeah. July, actually, we are again highest turnover, turnovers as compared to last three months. Okay. Definitely, that 4%-5% expectation what quarter-over-quarter we can achieve based on the July turnover. Okay. Okay. And how about August? I mean, it's, it's short term. August is better than July now. Okay. Okay. Great. Great. Yeah. Also, sir, just one last question from my side. So last, we had taken a price hike of around 8%-10%, if I remember correctly, last year sometime in June or July. Yeah. April. Yeah. Yeah. After that, we have not taken, right? Because we generally end up taking once in a year. So any price hike is there around the corner, or, we'll kind of hold on to it for now? Yeah. For the time being, we are holding on this, you know, increasing the freight rates. Basically, we want to gain more from the market as of today. Sure. Sure. Okay. All right, sir. That's it from my side. Thank you, and all the best, sir. Thank you. Thank you. A reminder to the participants, anyone wishing to ask a question, may please first start in one. The next question is on the line of Krupashankar NJ from Spark Capital. Please. Thank you for the follow-up, sir. Just a couple of more questions. In the presentation, of course, we have talked about expansion of existing branches and increasing branch density in key markets. So just want to understand, you know, how what has changed with respect to existing markets is that you're setting up new branches. Sorry? Can you repeat your question, please? Sure. So you are also setting up rather than apart from, you know, new branches in the untapped market, you're also setting up newer branches in existing markets in a few of the key locations. Actually, that's what I could gather out of the presentation. So just wanted to understand, you know, the key reason behind setting up more and more branches in the existing locations, is that because of the unorganized to organized shift which you're seeing because of compliance reasons, or is there any other driver which you're seeing? No, basically, see, customer wants to have branches nearest to them. It's because, in our case, they are having auction. We want to collect the goods from our branches also. So that's the reason, actually, they will see the branches to be nearest to their business location. And apart from that, if we do a ODA conversion more, see, for example, we can give service to anywhere to anywhere. If our branch location is, you know, if it is distantly covered as compared to their business location, then again, the cost of operation will be more. Then we have to charge them ODA charges, door delivery charges, all these things. So instead of that, wherever, you know, there are a lot of these industrial areas and wherever these markets are there, nearest to them, if potentiality is there, then again, we are opening branches in those areas. Right. So it's some part of it might be cannibalizing from existing branches, but you get access to newer client, newer customers, whom you were not catering to earlier. Is that the right way to understand? Yes. Yes. Yes. Yes. Yeah. Understood. Understood. And second thing is on the biofuel procurement. I do see that, you know, the palm oil prices globally have come up substantially. And given that, you know, the biofuel procurement looks lucrative vis-à-vis diesel at this juncture, how do you see that, sir, going ahead? Will they go ahead and increase procurement, or is that something you will always want to sell now? No. Currently, we are buying very low quantity of biofuel. It only in almost very, very negligible quantity. And, going forward also, see, always we are interacting with the manufacturers. If the price is matching at our expectations, then definitely we want to buy the biofuel. But till they are still, as of today also, they are unable to supply at the expected price. So at least we need, around INR 5-INR 6 lower as compared to the, the retail diesel, diesel price. Then only the, there will be benefit to that for using by using, this biofuel. Otherwise, there will not be benefit much. So given that, you know, same amount because the primary procurement has curbed and the price has still been higher, does that make it a lucrative proposition is what I was trying to? Yeah. Definitely. See, if the product is available, then definitely we are the first people to use it. But we are interacting with the manufacturers. Still, their cost of, you know, manufacturing is higher than what I have said. They still are unable to supply the price what we want. Basically, it should be a gap of around INR 5-INR 6 as compared to the retail price. Understood, sir. Last question from my side. Sir, we are also seeing that there is a fair bit of increase in organized competition in the space. I just wanted to get a sense that is it, is it are you seeing more of shift just going in from unorganized to organized, rather than competitive intensity increasing amongst organized players? Is that how you're, how, how do you view the space at this juncture? Yeah. There is a scope for every operator, every organized player. Absolutely, no doubt in that. But some of the results what we observed in the recent past, even the LTL market, basically, quantity what they used to handle earlier, actually, they have shown the lower performance even there is no growth in their volumes. So if we see such kind of a performance, then definitely we are in a better position compared to them. Right. But, you know, traditionally, you know, being on a pre-COVID basis, when you could see even the LTL market was going anywhere closer to about 10%, around about, see, if I look at it from a turnovers standpoint. So if you are taking in a 20% turnovers growth category over the next three years, and competition from the unorganized organized side is also increasing, so the confidence is more that the share, the predominant share will come in from unorganized. Is that a fair understanding at this juncture? Yeah. Just today, if we see the more, and it is not the case also. See, predominant increase is coming from the unorganized to organized. That is one. And there is a growth from the existing customers also. And even in the organized level, actually, there are some customers, actually, they have shifted to us considering the lower service level or poorer service level service from other organized players also. Actually, some of the customers have been shifted to us. Understood. But that percentage is not in the range of, say, around 15%-20% or something like that. More percentage growth of, is coming from the unorganized to organized players. Right. Okay. Sir, sir, sir, if I may excuse you, one more question. Just wanted to check. Actually, given that your newer branches have come up on the northern and eastern side, so I just wanted to see is the mix of each geography has it shifted vis-à-vis what we have seen in FY 2023? If you can quantify what would be the contribution from southwest versus north and east, that would be really helpful. No. Based on the source of the commodities or what we are sourcing from the different region, the percentage is not very much. But there will be some changes, you know, after 1 year or so because we are more concentrating on this Eastern and Northeastern part. So those regions will contribute a little bit to the overall turnover. So definitely, at that post-1-year or 2-year period, the percentage will change. As of today, there are no much changes. Understood. Understood. Thank you and all the best, sir. Yeah. Thank you. Thank you. We'll move on to the next question. That is on the line of Amit Jeswani from Stallion Asset. Please go ahead. Hi, sir. Sir, I wanted to understand. Now you've increased pre-COVID from 400,000 customers to 700,000 customers. The last five to seven years before COVID, you were growing at 5%-7% volume growth. Now you're speaking about 20% volume growth. In, so that's a big change that is happening in this, segment. Sir, what kind of margin do we expect? Because there's been margin volatility that we faced this quarter and a heavy margin volatility. It shows that we don't have pricing power, at least on the costly level. What do you think, sir? What kind of margins, EBITDA margin is sustainable, and any guidance for revenues, for this year? See, the revenue increase will be in the range of around 25% because there will be some improvement in the realization management of the change in growth mix. So if the turnovers growth is 20%, then overall, we can see the increase in revenue in the range of around 24%-25%. And when it comes to margin side, again, there will be improvements. In the first quarter, it will be mainly on account of the increase in diesel cost. See, post-election, actually, the government has suddenly increased the diesel prices. And, on account of this, increase in the bulk price also, it's impacted on the other side. That's the reason the diesel cost has impacted very badly in the first quarter. Since they have reduced, the excise duty on the diesel from the third week of May onward, now that is resulting as to increase our margins. So compared to Q1, again, we are expecting that the Q2 margin will be better. So in my view, definitely, this, maintenance of the EBITDA margin in the range of 17% to, see, 17% is absolutely not an issue. Got it. Got it. Sir, we've sold our wind energy business. We have sold 1 aircraft, so we are cutting out non-core assets. Any plans on selling the bus business as well because then we'll be a focused logistics client? Yeah. As of today, we do not have such plans. If any such development, then definitely we will inform. Got it. I got it. So you've got excellent ROIC despite being a brilliant, you know, despite being a truck owner because, being an asset-heavy model, right? The new investments that we are doing, okay, what kind of ROIC are we reinvesting our capital at? Because we're doing INR 100 crore investment, INR 80 crore, INR 90 crore, INR 100 crore a quarter, right, for the next four quarters. So broadly, INR 400 crore. What kind of ROIC we should expect from these investments? See, normally, the payback period according to the internal analysis, it is in the range of around four years, four to five years. So considering those, the payback period, definitely it will be 20% ROIC for the new investments. Got it. Got it, sir. Got it, sir. So, okay. So we've got very strong operating capacity. So what kind of dividend payout would you would you still be able to maintain dividend payout? We've got INR 150 crore of net debt. Last many years, sir, we were not expanding as rapidly, so you were doing massive dividend payouts of 70%, 80%, 50% kind of dividend payout of our profits. So, just trying to understand the reinvestment structure going forward. So this year, if you are saying that, you will do 25% revenue growth, that means our revenues last year was INR 2,400 crore, and this year our revenue will be closer to INR 3,000 crore. You are saying we'll have 17% EBITDA margin. That means INR 500 crore of EBITDA margin you'll have. And then, of course, that will change. So broadly, is INR 250 crore the right estimate, for the PAT this year? No. We are actually here to exclude the bus segment since we are calculating the growth and profitability for the entire terminal. If you see only the goods transportation segment, then you'll allow the correct figure. I got it. So the bus segment last year was INR 205 crore of revenue. This quarter, if I'm not wrong, you've done INR 100 crore, closer to that. So, and you said that we'll do INR 60 crore the next three quarters. So that is Q1 to Q3, 180 + 100. You'll do actually 40% growth in the bus segment also. So, okay. No problem. Got it. Sir, it's INR 250 crore. About the goods transportation segment, actually, FY 2022, we did INR 2,137 crores. Right. If you do 25% growth, then it will reach around INR 2,650 crore. Got it. With 17% EBITDA, it will be in the range of around INR 460 crores-INR 470 crores. One more thing, sir. We received INR 48 crore from the wind business and INR 8 crore, INR 7 crore from the airline charter. So that will decrease the net debt, right? The net debt doesn't reflect the airline and the bus, sorry, the wind business. No. That will come in the quarter two. The amount is received in August first week. Got it. So our net, net debt, got it. So we will generate INR 100 crore of cash flows this quarter, okay, plus, in Q2 I'm speaking about. Out of the INR 100 crore, we, we will also get, INR 50-odd crore, INR 48 crore from the wind business and, INR 8 crore from the charter, the air, the aircraft crew that we have to pay. No. I want to clarify here. The INR 8 crore has been already accounted in Q4. That has been sold in the quarter four of the last year. In quarter two, this, Wind Power, consideration is going to come. Basically, 100% of our operating cash flows will go into CapEx. That's probably. Yes. Yes. Got it. And that will. On the INR 48 crore, we have to pay certain taxes also on the sales consideration. Overall, there will be the reduction of our debt in the range of around INR 35 crore-INR 40 crore. Got it. Sir, my last question to you is about your competitive advantage, right, because you are fighting with many listed players now like Delhivery, etc., but you're also fighting with large unorganized players. What was the reason that we didn't increase our freight rates this quarter when you knew that diesel prices were going higher? It was not something which you couldn't expect or, you know, you didn't know. What was the reason why we didn't expect increased prices by 2%-3%? No. As I told, see, we are adding a lot of these new customers. And you want a lot of new routes also. So considering these environments, these scenarios, right now, we want to maintain the freight rates. So once the market is acquired, then depending on our cost structure, how the profitability will move, accordingly, we decide on the increasing the rates. This quarter also you've not taken any rate hikes but till now? No. As of date. Got it. So we are taking a short-term risk on our cash flows, which is like a marketing activity. Cash flow, there is sufficient cash flow coming. Even we are flexible at the debt level and all these things. We are flexible on the investment side as well in the CapEx. So that's why the focus is now to acquire more market, to increase the customer base, to grow, you know, better grow in the top line, the increase in the volumes and all these things. Got it. So you're taking some short-term gain for long-term gain. I got it. Sir, also on the number of, so you're now at 5,000 trucks, trucks. My congratulations to you and your team for that. So when do you expect to reach 10,000 trucks kind of number? Because there's a large number. So now we planned already 1,600 vehicle additions. So by the end of this year, definitely. Yous're scrapping also, right? Yeah. You're scrapping also, right? So net number I'm speaking about. See, it will be in proportion to the increase of the volume. See how the volume will increase. Accordingly, the number of fleets will increase. Got it. Got it. So, sir, when I think about long-term, do you think that VRL you said that next three years, you are a 20% CAGR kind of story. Do you think long-term, you can be like a 15% CAGR because there's a massive unorganized market out there, and you are in advantage. You don't you don't burn money. Your cash flow policy so like aggression and reinvesting for growth is the right strategy, and I fully agree to you. So just trying to understand, do you think that VRL for next 10 years, we are 15% CAGR story, a 20% CAGR story, or we'll go back to that 8%-9%, growth level ever? No. That's the reason see, we are now visible for the next three to four years. That's what actually I shared. Then depending on the further situation, again, the things will change. Got it. Got it. But my guidance is consolidation and the whole industry shape is going to change. Got it. Got it. That's what I can say. Got it. Now, such things, October, the INR 10 crore e-invoicing is coming. It's a big advantage for players like you. Yes. Exactly. Thank you. Thank you so much. I wish you all the best. Thank you. Thank you. The next question is from the line of Depesh from Equirus Securities. Please go ahead. Yeah. Hi, Sunil. Thanks for taking my question. Sir, I just wanted some more from the industry and how it is shaping up. So over the last one to two years, we understood that the small truckers were facing operational issues due to COVID, and organized players like VRL won market share. Now with increasing compliance, again, organized players look on a strong footing. So one to two years down the line, how all this will add up, right? So, will these small players keep on losing market share, or they become more compliant and take back their market share? Or third, maybe they may join the process with the asset-light truck aggregators and try to gain market share that way. So I just want to understand your thoughts on the market share argument, how much more we can gain and sustain. Yeah. Basically, you know, the contribution from these unorganized people, the small fleet operators, is going to come down going forward. But they, they will become organized, you're saying, that way, or they may, you're saying they will just shut the shops? No. Many of the, you know, their financial position is not really up to the mark. Most of the operators, they are unable to revamp their businesses. That's what actually ground level, we are acknowledging some of the operators. Considering those things, we are seeing that, there will be, you know, consolidation in the market. The number of operators are going to be reduced substantially in the days to come. Okay. Got it. More and more consolidation takes place to be towards the organized players and the bigger operators. Got it. And, sir, do you have any plans to maybe acquire some of the small operators, or you basically look to organically grow in your number of trucks and everything? No. No. No. Our policy is to grow organically. See, we can open more branches. Even the opening of, see, 100 branches, 150 branches in a year, it is just like adding of a new business, or acquiring of a new business. It is equivalent to that. Understood. Understood. Yeah. Thank you, sir. I will take it off. We need to grow organically. Yeah. Yeah. Sure. Thank you, sir. All the best. Thank you. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for the closing comments. Yeah. Thank you, all the participants, for your patience here. And, basically, see, most of, the questions related to about, the future growth of the company, we are very much sure that, there will be a volume growth, especially we used to concentrate more on our Goods Transportation. And, there, actually, we are more concentrating on increasing the volumes by extending our network and, by doing aggressive marketing to acquire the new customers. And that's the reason, definitely, we are hoping that the volume growth will be 24%+ onwards in the next, coming days. And, by opening up these new branches in the untapped market, or especially in the eastern and northeastern market, we are giving some of the flexibility of, the number of kilometers per vehicle, even the vehicle utilization front. On account of that, even some of the realizations are improving. So, considering all these benefits, even, we are hoping that definitely we can maintain our EBITDA margin also in a good manner. So with this, I wish, I would like to conclude my words. Thank you. Thank you once again. Thank you. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you. Thank you.