Ladies and gentlemen, good day, and welcome to the Q3 FY23 earnings conference call of VRL Logistics Limited. 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 0 on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Alok Deora from Motilal Oswal Financial Services. Thank you, and over to you, sir. Thanks. Good morning, everyone, and welcome to the 3Q FY23 earnings conference call for VRL Logistics. We have with us today Mr. Sunil Nalavadi, the CFO of the company. I would now hand over the call to Mr. Nalavadi to give opening remarks and discuss on the performance of the company. Thank you, and over to you, sir. Thank you, Mr. Alok. Good morning to all participants. I'm Sunil Nalavadi, CFO of VRL Logistics Limited. I welcome all of you once again for the earnings conference call of the company for the period ended December 2022. We are glad to inform you that as we strategized to focus on high-growth goods transport business, the exits from the remaining segment process have been completed as of date. We wish to inform you that the other key segments, such as wind power business and bus operations business, are discontinued and receive the applicable relevant regulatory approvals. Since the NCLT approvals have been received in the month of January 2023, the profit on sale of these businesses will be accounted in quarter four of this year. As mentioned in the press release, the profit before tax on sale of these businesses is to the tune of INR 187 crore. That is, from wind power business, it will be around INR 10 crore, and for bus operation business, it will be around INR 177 crore. This is profit before tax. The company has received the consideration on these sales transactions as of date and predominantly used for the repayment of debt, capital expenditure, and also we invested around INR 50 crore in mutual funds to take care of related tax expenses on these transactions, and it will be paid prior to the due date. We wish to state that the net debt of the company stands at INR 46 crore as of 31st December, and it was around INR 130 crore during the beginning of this financial year, and as of second quarter end, it was around INR 164 crore. If we consider investment in mutual funds, we are debt-free as of today. With respect to the performance of the businesses concerned, the performance of the goods transport business was better than the expected level in the current quarter. The revenue from goods transport segments is increased to INR 675 crores from INR 596 crores on a year-on-year basis. The increase in revenue is mainly on account of increasing tonnage, which has been reached to 10,000 tons in the current quarter as against 877,000 tons in the previous year, which is increased by almost around 15%. We wish to state that our average daily tonnage handling has been reached to 10,900 tons in the current quarter. The increase in tonnage is on account of increase in the branch network by the company. We added around 218 branches post-pandemic, and these branches have contributed around 12% to the total tonnage in quarter three. Our strategy of expansion of branch network is going to be continued and planning to add around 25-30 branches every quarter, especially in the untapped market. Apart from the expansion in branch network, we are acknowledging that many of the customers are shifting from anonymous operators to us on account of increasing compliances under GST law. Some of the sectors have grown tremendously in the current quarter, to name a few: the agriculture products and equipments, these commodities have been increased by around 47% on a year-on-year basis; the automobile has been increased by around 25%; the educational goods-related item usage increased by around 31%; FMCG products are increased by around 23%; footwear is around 36%; metals and hardware around 28%. Further, we wish to inform you that the turnover limit for E-invoicing requirement is further reduced to INR. 10 crore to the business entity from 1 October 2022. This will force the many business entities to fall in compliance network, which is going to support us in the process of shifting of clients from anonymous sectors. Considering the stagnant or little dip in realization, we have increased the freight rate by 5% on non-contractual freight business, which is contributing almost around 60%-65% of the tonnage. This rate increase we did from mid-December 2022. This will support us to increase the realization and pass on the increasing cost to the customer to maintain the better margins in coming days. When it comes to EBITDA margin for the goods transport segment, we again back to the normal EBITDA in the current quarter. We have reached 216.5% EBITDA. The year-on-year EBITDA is impacted on account of increasing fuel cost. As we informed earlier, the bulk purchase of diesel from the refineries has stopped from February 2022 due to abnormal increase in the cost as compared to the retail price, and it impacted an additional cost of INR 2 per liter we used to save earlier. We wish to state that currently, on account of reduction in crude oil prices, the bulk purchase diesel prices are in line with the retail prices, and again we started to buy the bulk fuel from the refineries from mid-December 2022. As of today, we are procured 30% of our requirement, approximately 80,000 liters per day from the refineries, as compared to the total fuel requirement of around 250,000 liters per day. The lorry hire cargo cost increased as a percentage to the revenue as compared to last year. It was around 8.63% in the last year, which has been increased to 10.2%. This is mainly on account of engagement of more outside vehicles and increase in the kilometers of higher vehicles. Also, the lorry hire cargo cost per kilometers has been increased. The toll charges also has been increased as compared to last year. The percentage to revenue is increased to 7.42% from 5.98%. The increase in toll rate is one is increase in toll rate from April 2022 around 5.6%. Not only that, if we compare the toll plazas across India, last year this number was around 867 numbers. Now the toll plazas in the country increased to 1,204 numbers. So on account of this, the toll cargo costs are continuously increasing. The loading and unloading charges also increased from 5.97%-6.56%. This is only on account of increase in the rate to the loading and unloading labors. The employee cost also increased from 13.76%-14.45%. This is on account of annual increment effected from the month of January 2022. Against these expenses increased, the vehicle repair and maintenance cost has been reduced. This is on account of increase in the kilometers covered by the new vehicles. So on account of that, the vehicle repair and maintenance as a percentage to the revenue has been declined. Similarly, in the current quarter, the revenue from goods transport segment is increased by around 4%, and the EBITDA margins we reached again from 15.5%-16.5%. Almost 1% there is an improvement in the EBITDA margin in the current quarter. This is mainly on account of one is the decrease in the diesel cost. Around 0.33% the diesel cost has been decreased. And similarly, the vehicle running and repair expenses have been decreased. The tire cost is also decreased. The employee cost, which is mainly fixed in nature, this also has been reduced. So with this and considering the expansion plan in terms of expansion of branch network, shift of customers from anonymous to organized players, and increase in the fleet size, we are very much confident that our growth plans or the growth rate what we are maintaining today will be continued going forward. On margin side also, since the bulk purchase of fuel is already started, and also we increased the freight rates on non-contractual freight, which is almost around 60%-65% of the total tonnage from mid-December, these two factors are going to help us to increase the margin side also and pass on the increase in expenses to the customers. So we are hoping that there will be further improvement in EBITDA margins in the coming quarters. With this, I conclude initial remarks. Now I request to the participants to have any questions or give more clarifications, if any doubts. Thank you. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may please press star and one on their touch-tone phone. 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. We have the first question from the line of Mukesh Saraf from Avendus Spark. Please go ahead. Yes, good morning, and thank you for the opportunity. My first question is on the volume growth. You have mentioned that 12% of the volume this quarter have come from the branches that you've added last year and this year, which is about 280-odd branches. So I was just wondering, given that we have reported a 15% volume growth and bulk profit is coming from the branches that you've added, these 218 branches, and we have 1,000-plus branches, so it seems like the growth is not so much in the remaining 800-odd branches. So could you give some sense about why the growth is not I mean, it's just maybe a couple of%, 1%-2% growth, yes, in those other branches? Is there still some kind of competition there, or what exactly is happening there? So basically, this 12% what we are competing with, it is from both the side, booking as well as delivery happening from these branches and connected with the existing branches. The reason why we are putting a 12% is, say, assume that these branches were not there. Even the existing booking branches were unable to contribute to this business. That's point number one. And point number two is even many of the existing customers are using our network to increase in the tonnage. That is also another reason. And if you see, on a one-sided basis, if we consider, the net increase will be around 6%. The remaining all, again, it is from the existing branches also. In operations, how it will happen, it is connected both booking and delivery offices. Right, right. So the tonnage that you report for the quarter, like this 1 million tons that you reported, that is one side only. That is not both sides. Yes. Okay, okay. So actually, that 12% is not a comparable number. Got it. Yeah, I think. Right. And my second question is relating to pricing. I think the previous quarter also, generally, your commentary suggested that your focus is going to be more on growth, and you might not actually look at price hikes. But now in December, we have taken price hikes of 5% for the non-contractual customers. So what I mean, is there some change, or I mean, do you see competition increase prices and hence you got this opportunity to increase? So what has led to these price hikes, which was earlier not any such? No, basically, see what happened, this expansion plan we are doing now after the pandemic, which is almost more than a year now. And the necessary, the volume growth is also happening. What we anticipated, actually, the growth is much better than that. So at this scenario, considering the growth as per our plans, the tonnage is growing at our plant. So at this moment, we thought that why can't we pass whatever additional expenses we are incurring? These are all mainly the variable costs like toll cargo and other things, say like a lot of cargo. Why can't we pass it on to the customers? That is a thought process, and accordingly, we take a decision of increasing the 5% rate. Okay. So this 5% will entirely accrue to us. It's not like there will be some additional discounts, etc. This 5% will flow through in terms of realizations for us. Yeah, yeah, yeah, definitely. Okay, okay. Wherever the next quarter, again, we open around 25, 30 branches. In the December quarter also, we opened around 30. These routes, wherever we are entering, there actually will be some competitive price, but not across all the routes. Okay, okay, okay. Understood, understood. And just one last one, very quickly. Last quarter, the margins were impacted because of there were some goods in transit where the costs had been accounted for but revenues not. And so this quarter, that has got normalized, sir, that cost and revenue that mismatch? Yeah, it is normalized. See, as I indicated, the margins on account of that, they're around 40-50 basis points. So that has been normalized in the current quarter. In the current quarter. Got it, got it. All right, sir. Thank you so much. I'll get back in the queue. Yeah, thank you. Thank you. Thank you. The next question is from the line of Harsh Shah from Dimensional Securities. Please go ahead. Hi, good morning, sir. As far as I look at your lorry hire charges, it has been consistently increasing. So you've also mentioned in your presentation that cost per kilometer is also increasing. So on one hand, we are not able to up until now, I mean, you took a price hike in December, but up until now, we were not able to take a price hike. But the lorry hire, but the lorry hire which we used to hire, they were able to take the price hike with us. So how would you explain this sort of dichotomy? No, about increase in freight rates, this was our internal strategy. Since we were into more of an expansion mode and to acquire a lot of this, many of the new market, new customers, that was our strategy not to increase the freight rate. It was nothing to do with the market. Whereas on the other side, since the fuel rates increased, since the cost of toll charges has increased, so these lorry hire owners, continuously, they have increased the rate. Okay, okay. And. Since lorry hire cargo rates are increasing. No, to take care of these increases, again, we also take a rate hike in the middle of December. We increase around 5% rate on non-contractual customers. Okay. While you have a guidance that we'll continue to increase the number of branches, what would be the guidance on vehicles? Will we be adding more vehicles, or this lorry hire charges will continue to stay where it is right now? No, if you see on quarter-on-quarter, this is the lorry hire charges is stagnant. So at this stage, actually, it's not increased beyond this level. It will be around, say, 10% to the revenue. If I have to compare your own vehicle versus lorry hire vehicle, what would be the margin differential? Where would we be making higher margins? Higher margin, obviously, it will be in the company-owned vehicles because our vehicles are built as per our requirement. We are having a lot of advantages in our own vehicles. One is on account of the size of the vehicles. We carry more load in our vehicles. Not only that, we are having effective cost controls, be it a price, be it a driver payments, and even the maintenance costs. These are all costs that are very, very controlled expenses in our own operations. But these things, we do not have control on the outside vehicles. The outside vehicle, diesel, he is going to increase at wherever he wants. The driver's actual cost, he is going to increase. And apart from that, the vehicles, they will not maintain properly. That will be additional cost for them. Even the size of the vehicles, the structures of the vehicles are not as per our requirements. That's the reason, actually, we focus more on an addition of our own vehicles rather than depending on the outside vehicles. Just because of these circumstances, since the tonnage is expanding beyond our capacity expansion, so we need to depend on the higher vehicle until we increase our own capacity. So that is what I was coming to. Since we are very confident about 18%-20% volume growth for next, say, two, three years, why aren't we being aggressive on adding our own vehicles as well? No, we are very much aggressive now. See, in the current year, itself, we plan to add around 1,600 vehicles. Out of that, around 800+ vehicles have been already procured. The remaining 800 vehicles are going to come before September. See, moreover, see, 100% we cannot own and operate. Sometimes what will happen, there will be change in the demand supply. Some seasonality will be there. Beginning of the month, there will be less load. At the end of the month or quarter end, there will be substantial demand. So considering all these factors, we are very cautious on increasing our capacity also. So with these all metrics, we will analyze it properly. We have to study route-wise analysis, route-wise demand also. See, sometime what will happen, there will be sudden demands during festivals and all. There will be huge demand from Surat and remaining routes. But there will not be return load to Surat. All these vehicles have to come empty to Surat. We cannot run empty. Again, it will impact on the margins. So considering all these parameters, we will add our capacity to see that our vehicles should be used at an optimum level. And wherever excess demand will come, excess tonnage we are going to handle, that has to be handled through outside vehicle only. Okay. So if I look at it another way. Sorry to interrupt, Mr. Shah. May we request you to kindly. Just one. Okay, just one last question. Pertaining to buybacks, will the promoters be participating in the buybacks? Yes, promoters are participating. The size of the buyback is around INR 51 crore. See, this buyback is, again, just to have a clarity, this is only the alternative to the dividend because of the effective tax structure. Every year, we are paying the dividend. Now, this buyback is for an alternative to the dividend payout. Thank you. Thank you. The next question is from the line of Ritesh Poladia from Girik Capital. Please go ahead. Yeah, thanks for the opportunity. Sir, just want to understand this realization pattern of INR 6,649. Sir, what would be the average distance covered in this? See, average distance, we are not monitoring. And this is across all the routes because we are handling the multiple routes. In a state alone, every city is covered. Every town is covered. And like this, if we cover entire states, there will be a huge number of routes. So we do not have that average kilometer cost. But the pricing is always on per kilometer, per ton basis, right? No, it is not so. It's always on a route basis. Okay. Sir, the other question is, when we say that a company does about 11,000 tons per day, and your carrying capacity is 80,000 per day. So is it that your goods from point A to point B, average days covered would be something like 5-6 days? Yeah, average, that is a stage. And again, we have to consider some of the maintenance. Some capacity will be held for maintenance, the loading and loading per factor. All these parameters, we have to consider. Okay. Yeah, that's it from my side. Thank you. Thank you. The next question is from the line of Ayush Shah from Elara Capital. Please go ahead. Good morning. Congratulations for good set of numbers. First question was, do the contracts that we have, the 25%, do they have a price hike clause? And if yes, then when do we see that when do we see a freight rate increase in those also? Yeah, mostly, contracts are having the price escalation clause. But it will relate only to the fuel rate. If increase in other costs are not part of these contracts, only when the fuel escalation will be there or fuel increase or decrease, accordingly, those prices will change. But if you see in the last one year, the fluctuation is there, but again, it is very temporary. Again, there are reductions in excess duties. And if you see the quarter two versus quarter three, there is a stagnation in the diesel price. But in spite of that, there are increases in other expenses, which we were unable to pass even on a contractual discount. But these contracts are renewable once in a year. At that moment, other than the fuel escalation, we will consider increasing the freight rates again when these contracts are due for renewal. Will that also be 5% timing, or will it be dependent on the client-to-client, or? Yeah, it depends on the client. It depends on the tonnage, what they are contributing. It depends on the routes also where they are contributing. Second question was that so earlier, last quarter, we were focusing more on the volume growth, and we weren't focusing much on the freight rate increase and with an EBITDA margin cap of floor of 15%. So has that stand changed right now? So will we focus more on margins, or how will it go ahead? No, no. Absolutely, that stand is not changed. If you see, the volume growth is continuously going to increase. The volume growth is basically the expansion of our network and expansion of our branch network capacities and all this. That actually is anything we are doing. Apart from that, I mentioned very clearly that wherever we are entering into the new market, new customers, obviously, we have to offer a competitive rate. At that time, again, there will be the lesser realization in those routes. But in the rest of the routes, wherever established, wherever we are not facing much of a competition. In those routes and those customers, the rates have been increased. It has nothing to do with the increase in the tonnage versus increasing this rate. That increasing tonnage, the enhancement in the capacity, those plans are going to continue even going forward. Okay. Thank you. That's all from my side. Thanks. Thank you. The next question is from the line of Amit Dixit from ICICI Securities. Please go ahead. Yeah, good morning, sir. Congratulations for a good set of numbers, and thanks for taking my question. Just two questions from my side. The first one is on the fleet size. So is there any specific target you have for addition in fleet? And what category are you focusing on in terms of fleet size addition? Also, is it possible to let us know the relative profitability of your fleet? I mean, tonnage-wise, if you have, which category is more profitable than the others? That is the first question. No, one is about the vehicle additions. As we explained our capacity and earlier, we ordered 1,600 vehicles in the beginning of this current financial year. Out of this, already, 800+ vehicles have been procured. And remaining vehicles are going to be added in the next six months. And the category of the vehicles will largely be in the range of 15-25 tons, meaning that category. And there are some smaller vehicles also. But predominantly, it will be around 15-25 tons in that category because these vehicles, we are mainly using for hub-to-hub operations. And there, actually, we want to add more capacity. And there, actually, we are engaging more of our outside vehicles also. And when it comes to your second question was. Sir, I'll see if relative profitability, if it is possible to share with us, which category? As far as profitability, we do not have those workings. Always, we do a route-wise, how that particular route, what is the rate, and how the realizations are there, and what is the net change we are saving out of it. But we do not have a product-wise calculation of the profit. See, in a single vehicle, we carry multiple goods. For example, when it comes to Mumbai, in a particular branch, if you take, say, any Bhiwandi or the Masjid Bunder or any particular branch, there, actually, the branch person will accept the goods as per our rates based on the weight as well as the square foot. So depending on the size of the material, depending on the weight of the material, the rates have been fixed. Irrespective of the commodity, whatever nature it is, he will book accordingly. So it will not be all product-wise. Sir, just to follow up on this, you said 1,600 vehicles this year. Is it a similar target every year you are planning to add from 1,000 to 1,500 or something like that? Is it possible to give a longer-term target per year addition of vehicles that you will do? Yeah, definitely. See, now, this is our plan till still September. So again, quarter two of the next financial year, again, we will revisit on our CapEx plan. And based on that situation, how the market is turning, where actually we have already established, how the tonnage is contributing, accordingly, again, we will define our CapEx plan. And even in the past, if you see, always, see, around 85%-90%, always our own capacity we are using in our business. That trend is going to continue even going forward. Okay. The second question is on procurement cost of diesel. It's a bookkeeping question. If you can let us know the procurement cost of diesel in this quarter versus the last one. See, Q2 versus Q4 is almost around INR 89-90. And even in the last year, also, it was similar, see, in the range of around INR 88-89. But here, what happened in Q2 and Q3 of this year, we were not having the bulk purchase. See, around 40%-45% of procurement we used to buy from the refinery in the last year, December. That opportunity was not there in the current years from Q1, Q2, and Q3 because the government has withdrawn subsidy on the bulk purchase. And the rates have been sometimes around INR 25-26. The bulk fuel was costlier than the retail fuel rate. Now, what happened because of the reduction in the crude oil prices? Now, again, these prices are matching now. So the bulk purchase price is similar to the retail price. If we buy from the refinery, then we will save around INR 2 per liter that we started now. Okay. Understood. Thank you and all the best. Yeah, thanks. Thank you. We have the next question from the line of Rakesh from HDFC Mutual Fund. Please go ahead. Yeah, hi. Thank you for the opportunity, sir. Just one question on your capacity. So based on the capacity plan what you have now, how much volume growth is possible next year and the year after that? No, again, I want to clarify to you. The capacity ownership and the increase in the tonnage both are independent. The tonnage increase always depends on our increase in the clients, increase in the branches, increase in the network as well. Again, when the increase in tonnage happens, accordingly, we increase our capacity. So in the current scenario, see, since the increase in the tonnage is more than the capacity increase, what we are doing, that's why these engagement of outside rates are increasing. But going forward, we are very much confident that the current trends are going to continue. And even in the next financial year, we are expecting that around 20% growth in the tonnage. That is possible based on the current plan what we are doing. So for this 20% tonnage growth based on the capacity addition what you have, will the composition of your outside vehicle requirement go down, or will that remain the same? The reason I'm asking is this will have a bearing on your EBITDA margin, right? Because when you own the truck, the cost actually goes through your depreciation and interest line. But whereas when you hire the truck from outside, it goes from your EBITDA. So I just wanted to get the equation right. What is the right way to sort of look at for the next two years' margins considering you are in a high-growth tonnage phase and you have a certain plan to hire vehicles from outside also? Yeah, our plan is very clear. We want to grow the tonnage at around 20%. Accordingly, the capacity is also going to be increased. See, because of some temporary period, there is an increase or decrease in the lorry hire. It will not increase more than 10%-12% to the equivalent. We will maintain EBITDA also. So is it fair to say that if the tonnage continues to grow at, let's say, 20%, then the contribution of the cost from outside vehicle will remain in the range of 10%-12%? Would that be a right understanding of the economics, how your P&L is working currently? Yes, yes. If the tonnage growth were to lower, so let's say if tonnage growth comes down from 20% to, let's say, 10% or 15%, depending on economic situation, how it pans out next year, would that mean that our costs would go down in a similar proportion? Yes. Okay. Secondly, how much price hike we have taken during the last quarter? And I mean, what is the benefit we will have in the P&L in the sense that how much of the cost we are taking in our P&L which is currently hitting and which we would recover going forward? So basically, this price increase is on the 60% of the tonnage what we are handling today, 60% of the business. On that, we increase 5%. Does that mean that all things equal, your margin should increase by 300 basis points? Yeah. See, if costs are stagnant, definitely, that will be the additional EBITDA. But again, costs are increasing. So we can see at least around 1% improvement in the EBITDA margin considering the increasing costs also. Understood. Sir, one bit more on the margins. So next year, again, we are talking about 20% tonnage growth. How should we think about operating leverage in the business in the sense that let's say you probably would be, let's say, 17.5% margin if I go by your price act commentary. So from that 17% margin and you have a 20% tonnage growth, what is the operating leverage that can play out for the margins to either remain same or even go higher? No, sir, whatever the operational leverage will be there, that actually we have to use for the expansion in the business. See, wherever we go enter into the new market, obviously, we cannot earn nowadays, we cannot earn the equivalent margin what we are earning in the established market. So on a net-on-net basis, actually, we are saying that around 17% EBITDA level is maintainable. Understood, sir. Thank you very much. And last one, on the CapEx plan. So after this capacity expansion plan, how much CapEx should we sort of think about the sustainable CapEx in your business? Or will you keep looking for adding more trucks probably in next year also? See, next year, there are 2, 3 developments here. One is about the Scrappage Policy. See, we are getting some clarifications from the government. See, it is a voluntary scrappage policy, but every operator has to get a fitness certificate for the vehicles. So how it is going to work going forward, we have to see. That is one. And more than 15 years, we are already having around 7,200 vehicles with a capacity of around 8%-9% of the total capacity what we are having today. So how that capacity is going to be used after this scrappage policy, that is point number one. Point number two, considering this expansion plan, what is the capacity we require, that also we need to work out. But these are all more clarity we can give only in quarter two of the next year. Understood, sir. Thank you very much and all the best. Thanks. Thank you. The next question is from the line of Vikram Suryavanshi from PhillipCapital. Please go ahead. Yeah, good morning, sir. I think most of the questions were answered. But just to look at the fuel side, one more opportunity we used to have was a biodiesel. So how is the outlook on that front to save further cost or are biodiesel prices still not attractive? Biodiesel, again, see, some interactions are happening. Currently, we are using very, very low quantity. Again, see, still, there is a gap between this retail price and biodiesel. It is not economical. But definitely, considering the current fuel trend, what is happening in the market, if we go down further, then obviously, there is an additional opportunity for us to buy or to use the biodiesel. But as of now, it is not something which is materialized as of today. Got it. And this bulk purchase what we used to do, did the government have changed the stock structure or OMCs have changed the pricing to match with the retail price? How is that basically turned out? No, the government has not changed its policy. But the crude oil, bulk fuel price is always linked with the crude oil price. Now, what happens, retail, again, the government intervention is there. Actually, they can still control the retail price. But on a bulk purchase. Ladies and gentlemen, the management line has been disconnected. Kindly stay connected while we try to reconnect them. Ladies and gentlemen, thank you for your patience. The management line has been connected. Over to you, sir. Yeah, I'm extremely sorry on this issue. See, about bulk fuel, just to have a clarity, it is not a government regulated or something. It is directly linked with the crude oil price. Since the crude oil price is continuously declining, this bulk purchase order, refineries are in a position to supply the fuel even to the bulk buyers, which is more or less equivalent to the retail price. So considering this opportunity, now we started buying from the refinery. Since we are buying on a bulk basis, actually, we can save around INR 2 per liter. Got it. So basically, your fuel will remain lower than probably at least 30%-35% of bulk purchase. We'll continue to see that advantage at least for us. Yes, yes, yes. Got it. I think that's good. Last one, we also used to add some electric vehicle in our fleet, particularly for last mile and short. So how is that addition we are looking going ahead? See, as of now, we are operating around 60-70 vehicles on a very, very small capacity. There also, there is a lot of these technology changes that are happening. Accordingly, we are continuously focusing on those aspects as well. Once these are definitely useful for us as an investment side or even on the operating side, if that is the case, definitely, we are going to add a good number of electric vehicles. Our continuous research, analysis, everything is happening on all the aspects. It may be CNG. It may be electric vehicles. Even we are working with some of the OEMs to convert the existing fuel diesel vehicles into being electric vehicles. Even we are working on those projects as well. Got it. And last question for me because if you look at our business is more on B2B side, there might be very insignificant or low-walk-in customers. So when we say non-contractual, what does exactly it mean? Because in the B2B, I thought. No, even in B2B, yeah. Yeah, Yeah, even in B2B, we do not have contract with the customers. See, around, say, 40% what I mentioned, with those customers, we are having an annualized contract with them. Got it. Okay. In that, 25% is monthly billing. Even some of the contracts are there in Paid and To-Pa y customers also. On net basis, around 60% of the customers, we do not have any contract with them. Those customers are B2B again. Got it. Okay. Yeah. Thank you very much. Thank you. Thank you. The next question is from the line of Sanjay Satpathy from Ampersand Capital. Please go ahead. Yes, sir. Thanks for the opportunity. Sir, my question is that you have been mentioned that since you were going into newer locations, newer network, you were keeping your prices unchanged despite cost pressure. So now that you have taken a price hike, are you going to lose out on market share? No, no. See, after analyzing all those metrics only, we decided to increase the 5% rate. Now, to give more clarity on this, see, basically, after the pandemic, it is almost more than a year now. From that day to till date, we have not increased the rate. Some of the routes have been already established. Wherever you want to be opened a new branches, new network, those markets have been already established. Considering these metrics or considering these parameters, we took an increase in the rate hike. Now, wherever, again, we are expanding, wherever we are going for the new locations, new branches, new market, and so forth, again, in those markets, again, we offer a competitive rate. There, again, the realization will be lower. But that strategy, again, will be for a one-year period also. Once the market is established in those areas, again, we can take an increase in the rate hike in those areas as well. Understood, sir. If that is the case, then you will be constantly adding your network in as much proportion as you have been this year. The new routes will continue to be less profitable. Considering that the mix will always remain somewhat like this, then how will your margin improve? So the margin improvement, see, now, just before opening of these new branches, just to give one more example, if you see just a year before, okay, our tonnage was almost around 25%-30% lower than the current tonnage. On that tonnage, actually, now, whatever increase is there on the tonnage, whatever the existing tonnage was also there, on the entire tonnage, we increase the rate. So whatever the additional tonnage is going to come, say, 20%, 15%-20% additional tonnage is going to come, only on that tonnage, the relation will be lower. Sir, what kind of price difference is there between you and your competitor in new routes and old routes? See, old routes, again, when it comes to compliant transaction, see, definitely, we are charging a little bit premium to them. When it comes to non-compliant transactions, the other people are charging hefty rates. It is just not at all comparable, 2-3 times more than our rates. So that's why still they are in the market, most of the unorganized operators. But that ratio is drastically going to come, and it is coming down. So that's how it is going to help us. Understood. And sir, last thing just wanted to understand is that this quarter, your volume growth was about 13 odd%. And so considering that there is kind of a slowdown which we are seeing almost everywhere, how is it that you are looking at sustaining 20% volume growth? Is that what I heard correctly, sir? Yeah. So see, the thing here is, again, see, we are highly diversified. That is a plus point in our case. So dependence, even the top customer contribution is not 1%. Even top 10 customers, if you see, it is not even 3%. And even just I want to give one more information. Even if you consider the top route contribution, it is hardly around 1%-2%. See, that is a kind of diversity we are having. It is highly fragmented. We are having 700+ customers with all the sectors. If one side downfall, another side will improve. Like this. So the Indian, whatever the daily requirement to the Indian population, we are carrying. It will slow down and all the basic needs of the people, the basic commodities, that demand is not going to reduce. That is true. But say your growth rate came off this quarter. Sorry? Your growth rate was lower than this 20% which you were targeting in quarter three. Quarter three growth was on 13-odd%, right, sir? Correct. See, quarter three is always a good quarter. Now, what will happen, this base will continue in Q4 and hence onwards. So in Q4, Q1, if you see the last year, those bases are small. So with this base, Q3 of base, definitely, the percentage will be more in the coming quarters. Sir, very last question, if you can, just explain, sir, a lot of your one-off transactions will get completed in quarter four, including buses and power. So can you give us a sense what would be your actual gross debt and net debt at the end of all these transactions getting over? No, after these transactions are over, see, as of now, I said, including that investment in the mutual fund, if you see, we are debt-free as of today. And going forward, whatever new CapEx we are going to increase, there actually, we use our further internal approvals to meet our CapEx manager and the little bit debt we may take. But at the debt level, we will not cross around INR 50-60 crores at any point in time. That is our view. Is it gross debt or net debt, sir? It is a net debt, what I'm saying. After this buyback also, again, there will be change. See, you can assume the debt levels will be always less than, say, around INR 100 crore net debt. Understood. Thank you a lot, sir. Thank you. Thank you. The next question is from the line of Keshav from VT Capital. Please go ahead. Hello. Thank you for taking my question. The first question which I have for the management is that the industry is moving on an asset-light margin, and we being the only player who have a fleet size of around 5,000+ vehicles. So depreciation eats a major chunk of our expenses, leading to difficulty in attaining double-digit margins. So how do you see this playing out? No, your question was not clear. Will you repeat, please? The entire industry is moving on a asset-light margin, and we are in the distance being the. Sorry to interrupt. Please slowly. I mean. Yeah, yeah. I'm unable to hear it properly. Yes, sir, please. Okay. So my question is that the entire industry is moving on a meager margin, and VRL Logistics is the only player which has a fleet of around 5,000+ vehicles. So this leads to depreciation being a major chunk in our expenses along with the interest cost, which leads to difficulty in attaining double-digit EBITDA margins. So how do you see this playing out in the future? Will we be able to achieve double-digit EBITDA margins? Well, as I said, our strategy is very clear. We will continue our operations with having our own infrastructure facilities access to the vehicles. That is going to continue. The depreciation, yes, there will be additional charge in the depreciation, but always, we more concentrate on the cash flows, the cash profit, which is much, much better than as compared to other players in the industry. So that's the reason this trend is going to continue. Around 90% of our operation, we want to invest in infrastructure and operate. That is very clear in our mind. Okay. Okay. So my next question will be that we are in a time-sensitive business. So how do we plan to invest in automation of our hubs, or we are planning to build some sorting centers because it will help in reducing our turnaround time? Yeah, definitely. We are continuously working on it. Wherever on need basis, definitely, we are doing a lot of automation. Even if you see the hub operations, even the material handling, compared to earlier, the technology updates and everything are much, much changed now. That's the reason the turnaround times have been improved. That's why we are in a position to add more of our corporate customers also and more the customers who need the commodities on time. Thank you. The next question is from the line of Nimesh Shah from Emkay Investment Managers. Please go ahead. Yeah. Thanks for the opportunity. So I had a question on the branch expansion that we are doing. So like you mentioned, we have added about 218 branches post-pandemic and about 127 branches in the first 9 months. So can you help us understand how much of these branches would have broken even by now, and what would be the utilization levels for those branches? See, except around the branches which are opened in the last quarter, say, hardly around 15, 20 branches are not reached with break-even. But all the rest of the branches have been reached with break-even. So now, to reach a break-even, it is hardly around 2-3 months the branches are reaching break-even. Understood. Okay. Okay. And sir, if you could help us understand, what would have been the organic growth this quarter and in the first nine months? You mentioned the new branches contributed 12% to the tonnage, but if you could just help us understand, what would have been the organic growth excluding the branches? No, the overall growth is around, if you see, the 9 months to 9 months, the tonnage is increased around 24%. Out of this, see, in the current quarter, this 12% growth is coming. But this is, since I clarified in the first question, it's changed. See, overall, this is contributing both booking and delivery of the containments. If you see the growth metrics or something, it will be contributing around 6%, and the remaining is contributing from the existing branches. 6% would be for the first nine months or this quarter? For year-on-year growth, I'm saying. Yeah, but for the first nine months. Year-on-year growth is around 15%. On that, around 6% from the new branches and remaining 9% from the existing branches. Understood. Yeah, that's it from my side. Thank you. Thank you. The next question is from the line of Srinidhi Karlekar from HSBC. Please go ahead. Yeah, hi. Thank you for the opportunity. Srinidhi, given in terms of there are too many moving parts in terms of buyback received from the diversion of the business and the ongoing CapEx program, wondering, would it be possible to guide us on likely level of net debt as we end this financial year? Well, by the end of this financial year, the net debt will be around, say, INR 50-60 crores. Because, see, as of now, whatever consideration has been received out of that, the INR 50 crores is invested into mutual funds, which will be used for the payment of taxes related to these transactions. Excluding that, we are having a debt of around INR 50-60 crores, and we have to do CapEx also. With buyback, it will be around INR 100 crores. Instead of INR 50-60 crores, it will be around INR 100 crores. Sorry. So including buyback, you are guiding for about INR 100 crore of net debt, right? Yeah. Yeah. Yeah. Okay. Yeah, understood. Sir, correct me if I'm wrong. In the last call, you guided that our margin in the contractual customer as well as non-contractual business is broadly similar. Is that correct? In what terms? In terms of EBITDA margins. Yeah, it will be similar. Now, after increasing the rates, the non-contractual data will be better. But again, it is a time gap. Because in contractual, what will happen, as soon as we renew those agreements, see, we will do some rate hikes. That is not possible in non-contractual. Over a period of time, again, it will be similar. But as of now, the non-contractual customer margins are better. Okay. Srinidhi, in which month or in which quarter typically we revise contracts for the larger customers? So it will be on a continuous process, but most of the contracts will be renewed in the month of April. Okay. Yeah. At the start of new financial year, basically. Yeah. Yeah. Last one, Srinidhi, we typically give. Sorry to interrupt, Mr. Karlekar. We have to take the next part as well. Is there many others who are waiting for their turn? Thank you. The next question is from the line of Alok Deshpande from Nuvama Institutional Equities. Please go ahead. Yeah. Hi, Srinidhi, sir. From the evaluation, it's a good set of numbers. My first question is, in this quarter gone by and looking forward, which are the top two, three sectors from which you are expecting this 15%-20% kind of volume growth to come in? So just two, three big ones which can contribute to that volume growth number. See, basically, contribution means across all the sectors because we are depending on many sectors, as I said. But typically, wherever the unorganized contribution is on a higher side, from there, actually, the contribution or growth rate will be much higher. As I said, even in the current, some of the sectors I mentioned about, the agri-commodities, the footwear. And see, agri-commodities, basically, again, the coconut product, the dry fruits market, and even some of the areca nuts, what I mentioned earlier also, that is continuously shifting towards these products where we are expecting higher growth. And similarly, the leather market, especially from UP and surrounding areas, those markets are improving. And apart from that, even on a textile front also, the Surat and other areas, most of these earlier, they used to engage in a lot of these small players and everything. Even that market is shifting towards. So broadly, if you see, even some of the FMCG composite commodities in the organized market also, that growth is coming towards. See, one is because of the change in the regulation, because of this GST control, because of the e-invoicing, these markets are contributing to us. Apart from that, because of expansion in our network, because there is a good connectivity as of today, even a lot of these additional customers are also contributing to the growth rate. So in my sense, see, the more growth will come from the unorganized to organized market, and the remaining will be in the range of, again, normal growth, in the range of around 12%-15%. And since we are getting a newer market and new customers, on all put together, definitely, we are confident to grow at around 20%. Sure, Srinidhi, sir. Understood. And one other bookkeeping question was, see, this transaction of the bus business that you have contributed, since it completed in January, now, in quarter four, will we see any profits from discontinued operations at all, or will it be only, I mean, how would Q4 look like when you report it? It should be only the trucking business, and then you'll see the cash on the balance sheet, right? Yes. Okay. Understood. There will not be P&L items from these discontinued operations in the Q4. From quarter four itself? Yes. Okay. Thank you. Thank you, Srinidhi. For comparison purposes, we have to show the previous numbers. But for the current Q4 standalone assets, there will not be any revenue or expenses related to these businesses. Sure. Understood. Thank you so much, and all the best. Thanks. Yeah. Thanks. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Sunil Nalavadi for closing remarks. Over to you, sir. Yeah. Thank you all participants for your patient hearing. If you have any further questions or if you need any clarifications, you can reach out to me. As I said, again, I want to put the closing remarks in such a way that our expansion plans are going to continue. Our branch network is going to continue the enhancement in the branch network. Definitely, this will help us to grow further in our volumes. There is a lot of shift from unorganized to organized players. That is also the additional benefit for us being organized players. The rate increase is only to focus or only to pass on some additional expenses, the variable costs like toll payments and other costs. Directly, we can pass it on to the customers. Considering these expenses, actually, we have increased the 5% rate only on the non-contractual customers. But our growth plan, our expansion plan, our increase in tonnage plan is going to continue. So with this, actually, definitely, we are confident to maintain our growth rate in the range of around 20% and with the EBITDA margins of around 17% going forward. With this, I wish to conclude this call. Thank you, sir. On behalf of VRL Logistics Limited, that concludes this conference, thank you for joining us, and you may now disconnect your lines.