Ladies and gentlemen, good day, and welcome to Mahindra Logistics Limited Q2 FY 2024 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Shogun Jain from Strategic Growth Advisors. Thank you, and over to you, Mr. Jain.
Thank you. Good afternoon, everyone, and thank you for joining us on the Mahindra Logistics Limited Q2 and H1 FY 2024 earnings conference call. On the call today, we have Mr. Rampraveen Swaminathan, MD and CEO, Mr. Saurabh Taneja, CFO, and the senior management team of MLL. I hope everyone has had a chance to view the financial results and investor presentation recently posted on the company's website and stock exchanges. We will begin the call with opening remarks from management, followed by an open forum for Q&A. Before we begin, I'd like to point out that some of the statements made during today's call may be forward-looking. A disclaimer to that effect was included in the earnings presentation. I'd like to now invite Ram, MD and CEO of MLL, to make some preliminary remarks. Over to you, Ram.
Thank you, Shogun, and good afternoon, everyone. I hope all of you had a good weekend and enjoyed this week's break. I'm of course joined today by several members of our management team, including our new CFO, Saurabh Taneja. It's having him on board. Saurabh joined us a few weeks ago. He comes to us with significant experience across the finance domain, having worked on the audit and the corporate side, and has worked closely as part of leadership teams in, you know, in growth-oriented businesses. So we are happy to have him on board, and I'm sure all of you will get a chance to engage with him more in the coming months. I also trust you all have had a chance to view our presentation and financial results, which are available in the stock exchange on our company's website.
As I normally do, I'll provide a short update on the external environment, iron markets, kind of performance across our high between segments and supply chain mobility, and some key operational highlights. Finally, I'll discuss our financial performance in Q2 and H1 of 2024 and kind of elaborate some of our focus areas for the remainder of the year before opening up for questions from all of you. So moving on, I think from macro environment, the first half of the fiscal year has gone fairly well. No notable surprises like in the Indian or global economies. Of course, we have seen continuing geopolitical tensions in Europe and now more recently in the Middle East, but those really have not had any significant, have not significantly altered economic carry yet.
Inflation rate in India has remained high but has been fairly well managed. Monetary policy of hiking further, resulting in higher bond yields, tighter liquidity and rising capital costs. Demand for logistics services, as always, is driven through the underlying sectors, and that those continue to change, as you can see increased digital commerce, corporate consumption, industrial activity, of course, and an increased focus on Make in India. These trends are driving a greater focus on visibility and agility and productivity in supply chains as organizations try to respond to these, these opportunities. And companies are moving towards integrated logistics solutions, right, which keeps providing better productivity across their supply chain.
Furthermore, increasing consumer demand for Tier 2 and smaller towns requires an increased focus on tech and reliability compared to more conventional urban consumption centers. This, in many ways, is the focus, the core of our focus in the supply chain space, and our strategy always has been built around a hypothesis that transitioning from 12%-14% GDP level of logistics cost to 8%-10%, as the government desires for the government, you know, this with, you know, with increased, this focuses and requires increased infrastructure, improved regulatory efficiency and higher productivity in the way companies and firms operate their supply chain.
Our vision of providing integrated solutions is thus, you know, predicated really on the third lever, which is to help enterprises manage their supply chains towards higher levels of productivity. And this requires moving away from just providing a bouquet of services to integrating these services using technology, processes and human capital. So the supply chain becomes more efficient in its total cost of operations, and that has been the core of our strategy over the last few years. And before I talk about our specific businesses, let me quickly do a quick recap on how our end markets are shaping, at least from our company and our sector's perspective. And let me begin, obviously, the automotive sector, as this year has unfolded, retail, autos, retail sectors embarked on, embarked on kind of a note of cautious optimism.
The first half of the fiscal year has been a continuing period of resilience and recovery, with the total auto retail growing at around 9% year-on-year. Passenger vehicle retail in H1, in the first half of the year, hit an all-time high of more than 1.8 million vehicles, exceeding the previous record, which was actually set, you know, last year, right, at around 1.7 million vehicles. On a year-on-year basis, that represents approximately a 6% growth. The passenger vehicle industry obviously has continued to grow over the last two years, which has been evidence both of the recovery post-COVID and the continued response to the sector's focus on diverse and innovative products and services.
On the commercial vehicle side, we have seen some uptick in sentiment across our commercial vehicle customers. Like, in specific issues and segments, we have seen some signs of breakout. But across the board, there has been no big breakout yet. And I think across, across the industry, we are all looking forward to some, you know, some kind of, some uptick as we come to the end of Shradh and come, you know, the beginning of the festive season. The consumer durable industry, kind of a mixed quarter there. Obviously, rising temperatures and, and slightly weaker monsoon in some parts of the country have led to a rebound in, in RAC demand. And of course, in, in segments like, you know, in, in terms of like, like air conditioning.
But demand in ECD segment, especially lightings and lighting fans, remain kind of fairly weak. Kitchen appliance sector is still growing, though we are seeing a lot of the growth actually as a premium end of the market, right, with the entry-level volumes still being fairly muted. Competitive industry in this market obviously intense, with many smaller players adopting aggressive strategies. And as commodities have cooled off, there has been a more intense kind of price-led competition in the market. However, structural drivers such as increased construction activity, kind of an uptick in real estate, increased CapEx, right, and general trend towards premiumization will support growth across this segment, and we are quite optimistic about it, as you know, as we look at the next couple of years.
Let's look at the FMCG segment. The rural market was initially expected to rebound due to lower inflation, rising income levels in the beginning of this year. We are, we've not seen a significant change here, in many ways. But we are seeing, with our clients, seeing a consistent improvement, and we expect the industry will recover through the, the upcoming recruiting session, the upcoming holiday session. And as liquidity pressures relax and government spending increases in an upcoming election year, we do see a positive, move there. On a more positive note for us, for us specifically, I think we have seen a greater expansion, of post GST, you know, you know, distribution restructuring by many of our customers.
Most of the logos which we are working with have now started working on expanding their network again. As they do that, they are becoming more omni-channel in their approach, and this is allowing a faster transition between service providers, with stronger technology and integrated distribution capabilities. You know, compared to a couple of years ago, I think we see a sharp uptick in this, both in terms of bid activity right now, and that's, that's a positive sign, you know, across the board. After the substantial impact of inflation in the previous fiscal year, you know, rural market is showing better signs of recovery this fiscal year.
Obviously, many FMCG companies have focused on raising their yields or their prices, as there's been a challenge of, you know, increasing raw material costs, and frankly, some, you know, increasing logistics expenses as well over the last couple of years with the kind of continuing impact of high fuel prices. Moving on to e-commerce, and I'm not going to talk a lot about the tailwind in the sector broadly, because I think we've talked about that many times. In the recent past, of course, we have seen some slowdown as the post-COVID, the kind of COVID-fueled growth, right, has started kind of plateauing out. And we've talked about this, I think, both at our calls and on the industry level.
The big question always has been whether we are starting to see a breakup in the industry. You know, while we have been contributing consolidation in mid-mile, we have started seeing green shoots this quarter as peak approaches. There has been kind of an uptick in terms of billing activity and obviously in terms of ordering intake as well. And these include demand for some clear last mile delivery and express services and solutions. And some of these obviously are beyond the upcoming peak itself. We believe we remain very well positioned. We have strong partnerships with customers such as Amazon and Flipkart, as well as very strong growth relationships with other marketplaces and quick commerce companies. From a long-term perspective, this sector remains, segment remains pretty important for us.
India is still under, underserved from a digital or online perspective. And, and given the strength of our relationships and our network, it remains something which we are excited about, and kind of upbeat, and, and continue to innovate in terms of offerings and solutions for this, for this market. And finally, just a quick tap on the mobility sector. The domestic air passenger travel obviously has doubled, more than doubled over the last several years. And more recently, I think from the, from April to September 2023, the first half of this year, domestic air passenger traffic increased by 142% to 113 million passengers. Right, so that's been strong, that's a strong uptick.
The increased demand for air travel along with the start of India's festival season is projected to result in record levels of air traffic in the coming quarter. And that's and therefore we have seen strong traction on the B2C airport services business. More importantly for our business, return to work or return to office has become far more formal across the board. We are seeing, you know, in addition to BFSI, we are seeing a clear move in several of our tech, you know, IT customers and tech customers, towards more pronounced return to work or return to office. And that obviously is something which you can see has resulted in increasing volume and growth for us coming from this business.
We remain very well positioned in the enterprise mobility space, right, with market leadership across the, you know, more than 22% market share across the seven big cities which we serve. And therefore, we are optimistic that as RTO accelerates, we should see a bit of a hockey stick plan, as we have kind of predicted will happen in the past. Now, let me talk briefly about our individual businesses themselves, and I'll begin obviously with 3PL contract logistics business. The contract logistics business, as you all know, is primarily housed in the MLL subsidiaries, and again, includes, of course, our 2x2 joint venture. The business did have a positive quarter.
Order volumes, the momentum, and others remained robust, while increased order intake on consumer and manufacturing commerce meant that we were able to start drawing into the churn we saw in the previous quarter. Overall, our business, you know, grew 6% sequentially on a quarter-on-quarter basis. As I mentioned on the news call last year, there had been churn, in fact, especially from e-commerce more than other segments, as we saw a consolidation of capacity in the mid-mile. And this quarter, we've been able to outstrip that churn with new business, and that's shown up in our sequential velocity of growth. Right, and that's been positive.
For the quarter, we had a 3PL contract logistics order intake of over INR 100 crores, on an annual contract value basis, which is our second straight quarter in a row, and that's been important for us after a slightly weak Q3 and Q4 of last year in terms of order intake. We were optimistic that we should see this consolidating further in the coming quarters. During the quarter, we had some key wins, including a large program with Corning India to establish their India logistics center in Maharashtra. You know, we kind of, you know, have started working with J&J, for their Western Indian, we're serving their integrated warehousing and logistics distribution solutions.
Some of you will notice, we launched a program with Flipkart for providing network line haul services across the IDW, ID, IWIT network. And we also have been selected as a single partner for Ashok Leyland's in-plant logistics services across the nine plants in India. During the quarter, we also commissioned, you know, our new warehouse facility in Bhiwandi, which is a multi-client facility of around 6.5 lakh sq ft. It is the largest single block facility as we speak in that part of the country. And construction is on plan in expansions in the Chakan, Talegaon region, in Kolkata and Guwahati. Warehousing operations for 3PL alone were around 18.1 million sq ft at the end of this quarter.
As a matter of note, I think the investor deck also carries specifically our warehousing operations only for the 3PL business, right? And going forward, we have renewed reporting warehousing, which is warehousing yields for express and other services. Warehousing for 3PL alone was on 18.1 million sq ft at the end of the quarter. Our continued focus on cost reduction has resulted in healthy gross margin, gross margin improvement on a year-on-year basis. You'll see that in our warehousing yields as well, which have been included in the investor deck for your reference. On a sequential basis, margins were impacted a little bit by mix, as you see slightly higher mode of transportation in the quarter, right?
Some peak-related costs as peaks are coming a bit earlier this year, and foreclosure costs of one of our e-com sites in India, where we kind of foreclosed the site and took an impairment on the assets which are invested in that site. The 2×2 joint venture has continued to ramp up. It's been a positive thing, as we have kind of got fleet back on the growth, and it's back on a pro pathway to profitability, and we expect to see further growth in coming quarters, as we kind of look at fleet expansion in that part of the business. So while the 3PL business has been having a continuing positive quarter, right, given some of the challenges from an overall market perspective.
Moving on to the freight forwarding business, this has been a particularly tough quarter for the forwarding business. You know, Q2 is a seasonally weak quarter, generally, and we also continue to see pressure on ocean freight prices and higher levels of competition across the board. In the quarter specifically, we also saw some key customer contracts in telecom, especially those services we are providing for the 5G network rollout. Those contracts saw a deferral in their volume, volume which is expected or kind of forecasted for this quarter actually moved significantly. Those will come back to us in Q3 and Q4. They've really been deferred due to customer rollout plans, but that did have a significant impact on quarter-on-quarter revenues, right, in the second quarter.
On the positive side, despite some fairly intense competition, we have managed to hold on to our margin levels in second. Gross margin levels continue to trend well, and we are hopeful that the real focus for us is on getting the volume back. During the quarter, we also commenced commercial operations for air charter services. As you will all recall, we had launched air charter services in Dubai, business based in Dubai in June this year. And we've invested in business development through the quarter. We did start our first charters in September, and we're expecting a further pickup in that business through the second half of the year.
So the forwarding business, while it's going through a tough part, largely in great part driven by broader macros, you know, we are focused on driving recovery, and the recovery plan is really focused on volume growth. While we think there is some exposure on downside pricing, that has largely bottomed out, and, you know, and a big part of the focus is on driving that volume growth, both from large enterprises and mid-sized companies again. Recent conflicts in Europe, and of course, the Middle East now point towards some increased volatility in cross-border logistics, but we have not yet seen any immediate, immediate impact in pricing or in the primary trade lanes we operate. You know, when it coming to quarters, we are hoping that we will get back to the higher level of volume growth.
Some of the deferral we saw on revenue in the second quarter will, will flow through in the third and fourth quarter. And we have done a bunch of, a whole lot of series of initiatives to increase our account penetration, both in large enterprises and mid-size businesses. We try to deal with some tough industry level macro trends in this business. I now move on and talk about the express business, which obviously has been at the heart of our conversation or part of our conversation in the last earnings call as well.
Right, we had in the last quarter, we outlined some of the challenges we had as the integration had been impacted, and has been delayed due to multiple factors in the speed and the quality of the integration. During the quarter, we continued to see some challenges, but we saw broader positives as well. On the positive side, we have seen revenue being stable. You know, our rate, our realization per kilo, across our network has been pretty stable through the quarter, and we've not seen any declines there. On a delivered volume basis, we saw a 3% quarter-on-quarter growth, in delivered volume basis.
And during the quarter, we signed up new contracts, which should have ideally been around 9% growth, if that volume had come in fully. That volume, of course, did not come in fully because of timing. We signed several contracts through the quarter, and there's a ramp-up period. We also through the quarter added 27 new retail partners and added 12 new customer accounts on the enterprise side. So, you know, we did make some progress in terms of expanding demand generation, though it came in shorter than what we had expected. We also focused heavily on increasing our service levels, a challenge which we had had during the integration, and we have completed the transition to one physical network and a technology architecture across the entire express business.
Despite this, as I said earlier, our volume growth has been lower than what we estimated in the recovery plan, which I commented on last quarter. As some of you might note, we had indicated that we had seen a volume drop of around 30%-35% through the integration. We have recovered around 7%-8% of it. We still have a distance to go. Through the quarter, as we focus on service level improvement, we did, you know, run our line haul network at higher levels to ensure that service levels are met. And we did that at lower utilization to ensure that service levels, you know, were constant, and/or at least they recovered.
So operating the network without the volume which we expected, but at higher levels of operations, did result in an increase in line haul costs. And, and there's a higher cost overrun because of this, which impacted our earnings during the quarter. At an overall level, our, our margins declined on the quarter-on-quarter, despite higher volumes, largely on account of the cost of running a network at a higher level. As we look forward, I think we are running, we still believe we are running, close to six months behind the initially planned transition. Most of the improvement actions we had put in from a back-end operations perspective are now in play, and the focus is on recovering volume growth.
So there is the pressure of the engagement on winning back the customers and driving the volume growth, while we continue to enhance service levels and, you know, drive the network's growth and yields across the board. And there will be a continued carry of this, as we had mentioned, but we are, we remain focused on trying to get to EBITDA breakeven by the end of this year, as has been the aspiration laid out earlier, with, with, with all of you as well. Moving on to last mile delivery business. Again, the business checks in improving quarter, despite the intense pricing environment, we have grown, you know, 4%, year-on-year in the quarter. Underlying volume growth, net of pricing impact, because we have seen pricing impact, the underlying volume growth is around 8%.
We have continued to grow our distribution and service business, with a focus on niches such as grocery and e-commerce-based delivery services. That has helped us kind of, you know, tighten and improve margins in the quarter, on a year-on-year basis. We've also seen similar growth and improvement in express, as losses have shrunk year-on-year by more than 40%, and we are on a good path in terms of earnings recovery there. Overall, the immediate focus has been on sustaining and improving gross margin, with a broader focus on growth. We are in the process of launching our ONDC partnership, which is the partnership with ONDC for last mile delivery, which we estimate will go live this quarter.
In the upcoming quarter, we hope to complete the second tranche of investment in Whizzard, which will make us a majority company, and will consolidate the business. That acquisition will be continuing to a proper closure of terms, which we have signed with Whizzard's promoters, and other regulatory filings and requirements. I'll now lastly comment on the mobility business. Our mobility business is pretty well positioned as we operate on, you know, 6,000-odd cabs in nearly 14 cities with a network of around 350 business partners. We have seen strong, strong growth in ETMS volumes, and B2C services across both.
And a big part of that growth has been, as you know, as we emphasized earlier, that as a return to office would happen, we would get better growth. But we've also seen stronger level of new client acquisition on the ETMS side, and a renewed focus on what we call city to airport, which supplements the airport to city services. You know, we reported a PAT positive quarter for Q2 of 2024, and we are on track to remain to be PAT positive for the full year, as we had indicated earlier.
Since the Meru acquisition, through volume growth and operational synergies, we have been able to move, you know, move that business from being a very high loss-making business at the time of acquisition, to become, now to become profitable on a consolidated basis... reflecting our continued focus on integration and synergies across, our portfolio. Before I talk about consolidated numbers, I'll cover the specific components. MLL standalone, which largely hosts the 3PL business. Revenue for Q2 F2024 was INR 1,136 crores, compared to INR 1,195 crores in Q2 F2023. PAT for the quarter was, was, 19 crores as compared to 11 crores in Q2 F2023. Right, revenue grew sequentially compared to the, to Q1 F2024.
Profits declined marginally, declined, right, sequentially due to, you know, as I said, specific elements like, you know, the mix moving as well as some one-time charges for the quarter. Logistics and the freight forwarding business revenue for Q2 F2024 was INR 53 crores, down 50%, compared to INR 106 crores in the same quarter for the last year. The company was at breakeven level with a PAT of 1.1 crores compared to a PAT of INR 4 crores for the corresponding quarter last year. The Express business reported a quarter of, you know, a revenue of around INR 87 crores for the quarter.
Right, that largely reflected the consolidated impact of both, the 3PL, the Express industrial MLL business and the Rivigo business. Overall revenues for Express grew by 68% on the back of that combination. As I said earlier on, I outlined the reasons for our earnings hits, and we reported a profit after tax loss, a loss after tax of INR 35 crores, for Q2 F24, which compared to around INR 31 crores in the prior quarter. Our mobility business, our revenue in Q2 F2024 was INR 86 crores compared to INR 22 crores in the same quarter last year.
That growth is a function of both underlying market growth as well as the impact of the transfer of the mobility, the enterprise mobility business from MLL to MLL Mobility, which happened in the second half of F2023 of F2022, '2023. As I said earlier, we reported a profitable quarter with a PAT of around INR 1 crore for Q2 F2024, compared to a loss of INR 3 crores for the corresponding quarter last year. Whizzard, and I'll add it as just a comment on it as a matter of significance. Revenue for the quarter was around INR 31 crores, that's compared to INR 33 crores last year. PAT lost some substantially compared to a loss of 1.7 crores in Q2 F2023. We had a PAT loss of around INR 0.4 crores.
So we are close to breakeven, which we hope to achieve, by the end of this year. The 2x2 business, which largely serves the 3PL business, has done well, and the division made a profit of INR 1 crore in the quarter, compared to a loss of 1.1 crores, for the corresponding quarter last year. Now more on to the consolidated performance for the quarter. Revenue for Q2 F2024 increased by 3% on an overall consolidated basis to 1,365 crores, and up sequentially by 6%. Revenue from the warehousing segment grew; it was around 256 crores for Q2 F2024.
Supply chain management includes our 3PL and network services businesses, contributed around 94% of overall revenue, while the mobility business has contributed to 6% of overall revenue for Q2. Gross margin at a fully consolidated basis stood at 9.2% for Q2 F2024, compared to 9.7% in the same quarter last year. However, without the impact of the new 3PL business, the gross margin was around 11.2% and 150 basis points improvement on a comparable basis to Q2 of F2023. EBITDA for the quarter stood at INR 54 crores, down from INR 68 crores, right, in Q2 F2024. This again saw the consolidation impact of the consolidation from Rivigo.
Without the impact of that consolidation, EBITDA grew on a year-on-year basis. PBT on a fully consolidated basis is, you know, down to INR 8 crore, a loss of INR 8 crore in Q2 F2024, and we reported a loss of INR 16 crore for the quarter, largely on account of the caveat of the network expansion in MESPL. Excluding the MESPL business, of course, the profit grew in most parts of the business. Before I close out, a few other operational highlights. As I said earlier, construction of new multi-client BTS facilities is on in Chakan, Talegaon, Kolkata, and Guwahati. These will collectively add around 2.3 million sq ft of multi-client, you know, Platinum or Platinum-certified warehousing capacity in the next 15 months. We have further continued to consult our green logistics portfolio.
eDeL, our EV service today has, today has nearly 69 vehicles, and we have under 250 passenger vehicles in the mobility fleet. We have operated nearly 20 million green kilometers to date at the end of Q2 of this year. In addition, nearly 40% of our last mile and mobility fleets are also CNG operated, right, operate on CNG, aligning our commitment to the sustainable transportation and logistics. We today have over 3.3 million sq ft of IGBC- or LEED-certified warehousing. As we continue to grow our sustainable warehousing portfolio, and almost all of that is carbon neutral or energy neutral. We've, our One Carbon program focuses on, you know, developing our client partnerships and supporting their energy transition.
This is a digital platform and which is fully integrated with the rest of our technology stacks and provides customers online measurement of their carbon footprint, and we continue to expand, you know, more, more, helping more customers online. During the quarter, we also certified as a Great Place to Work again, reaffirming our commitment to creating a performance-driven, inclusive culture. During this, during the end of the quarter, we recently launched an initiative called Deliver Happiness to support and recognize delivery associates across the entire logistics industry for their efforts during the upcoming festive season. If I open the floor, let me just quickly summarize how I think we stand today and our focus for the rest of the year.
In our core 3PL contract logistics business is in positive momentum, with improved performance at 2x2 Logistics, we remain positive with the upcoming festive season, despite some costs in H2 in there. The mobility business has now completed the turnaround, which we had indicated we'd do by the end of this financial year. And at the time of the Meru acquisition, we had, what we had indicated we'd be able to combine - meet the combined business. We estimated the combined business will be profitable at the end of FY 2023-2024, and we've remained, you know, on track to deliver that integration, and synergy value. The last mile business is on improvement momentum, and we continue to believe in an electric, you know, or a green future for this segment.
Today, we operate India's largest EV cargo provider, and we can hope to continue to accelerate this. You know, contingent to the completion of the acquisition of majority ownership in Rivigo, we then start working on accelerating synergy opportunities between the MLL last mile delivery business and the Whizzard business, and we believe that should further, you know, improve earnings across that segment. Our key challenges today clearly are in large and express business. As you look at the rest of the year, the focus for us is to get volume growth back. You know, we have put in actions on service level improvements on an MESPL, and we now believe that the offering and the network are in good shape, and we have to work close with our customers to bring to get that volume back.
And similarly, we are working on several initiatives to drive growth, volume growth in the forwarding segment as well. With this, let me open up the floor for questions and answers, and I'll hand it back to the moderator.
Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take the first question from the line of Alok Deora from Motilal Oswal. Please go ahead.
Hi, good afternoon. So sir, I had a couple of questions. First one on MLL Express. So we have seen the quarter-on-quarter, there has been marginal increase in the revenues, but, you know, the profitability has gone down quite, I mean, the loss has increased further. So what's our view here? Because, you know, this is kind of the festive season we have entered now, where volumes are expected to be on the higher side, then again, it could be slightly muted. So this profitability trajectory, if you could just highlight here, because earlier in the last call, we had mentioned about a break even by third, mid-third quarter. So how are we looking at it, this segment now?
Sure, Alok. Is there any other question, Alok? I can take them together then.
Yeah, yeah. So this was on the express side. Second was on MLL standalone as well. If you just look at the EBITDA margin on MLL standalone, that has also come down on a QOQ basis. So just your thoughts on that.
Sure. So let me take the first one first, Alok, anything, because that's a question probably others have as well. So as I mentioned earlier, so we had, you know, compared to Q1 of last year, we have invested in getting our service levels back substantially, Alok. We did see a degradation in our net service levels in the quarter. And getting service levels back in our business is really a big function of reducing TAT or turnaround times for our customers. And to reduce our turnaround times, we had to actually run the vehicles more consistently and more regularly, even if the load was not there.
Right, because just for the customers who do give us load, we have the commitments on TAT, and so even if we don't get load, we still have to run the vehicles up substantially. And therefore, that's kind of what is the story of Q2. While we did get, we did get the service level up, right, we had to obviously invest more in that period, right, to run those vehicles, and, and that resulted in a carrying cost with transportation costs going up substantially, right? And, and, and unfortunately, the volume which you undersized in the quarter did not happen, and, and that was the problem.
So if you see our contribution margins are still positive, but you will note that our contribution margins actually declined quarter-on-quarter, but reflecting, that, that's the impact of the higher transportation costs without adequate volume there. Now, after many lanes, we actually ran at substantially lower, lower levels. Now, you know, what are we doing to fix that? You know, I think as I mentioned, we, our first step, the playbook is still the same, Alok. I think as I mentioned, mentioned earlier, the first step is to get back to our, get back to, an EBITDA breakeven. We are around 30% off on volume to get to the EBITDA level. The gap has shrunk. It was 35%, at the end of last quarter. It's around 27% now.
So our focus is to get the volume back. Once the volume comes back, Alok, the transportation costs will not go up, right? Because the vehicles are running at lower utilization now, right, and, you know, a large part of our network is running less than 70% utilization. So as the volume comes back, utilization will go up, transportation costs will not go up linearly, but the revenue and margin goes up. And so the big part of our focus really is to get that volume back. Right, we had hoped to be, I'll be honest, we had hoped to be at a closer point at the end of the second quarter. The gap should have been lower. That's kind of what we had given as guidance or indications earlier as well, Alok.
We are running a little bit behind on that volume growth. We are very focused on it. I think, based on what I'm seeing right now and what we see in the market, it's still happening and some other things which are happening in our own service level getting a little better. And I hope we will, I'm hoping that we will be able to get to a point of EBITDA breakeven by the end of this year. That requires us to recover volume around 20%-25% over the next five months or 6.5 months, which is roughly 4%-5% month-on-month growth.
Right, and then a large part of that is getting customers who had dropped their share of business with us back on board. So we have specific customer programs focused on getting that volume back. But as I said earlier on, we are running behind the nine ball here a little bit. But a lot of work is there. We have fairly high confidence that we will be able to get to that point by the end of the quarter. Right? So that's just my comment on the express business. Apart from that, I think the express business has not seen any significant change.
We did see an increase in, like, we also saw an impact in the profits because of a higher level of provision on receivables. As you know, we inherited some part of the receivables as part of the acquisition, and we have taken prudent, as we get closer to our to the period of completing the acquisition accounting, we have taken a stronger look at the numbers there and, and kind of brought and, you know, taken some prudent action there in terms of our depreciation level. Now going to your other question, which is on the EBITDA levels, I think and I'll make some general comments there and of course, Saurabh, if he wants to add anything as well, there.
But I think on a quarter-on-quarter basis, EBITDA did come down in the standalone entity, but also looking on a year-on-year basis, we actually did show an improvement. That impact largely on a quarter-on-quarter basis is a couple of things there, Alok. One has been the mix. You know, we are just seeing warehousing revenues were flat to down in the quarter on a sequential basis. And therefore, we see an uptick in the transportation revenues for the quarter. And that means that, you know, we see that impact right, affecting our EBITDA margins on a standalone basis compared to the sequential quarter. We also had a one-time impairment of some fixed assets or some assets.
We shut down a fulfillment center in the western part of India as part of a customer consolidation, and that had an impact of approximately 20 basis points of EBITDA, 20-25 basis points of EBITDA, and the rest of it largely was for the large part, a mix level issue. I think the more relevant thing actually is obviously a quarter-on-quarter, year-on-year comparison, where you know, our EBITDA compared to last year, you know, on flattish income or slightly income, just slightly down, you know, on the standalone entity grew from INR 64 crores to INR 74, INR 64.3 crores to INR 74 crores for the quarter. That's in performance.
Similarly, if you see the first half of the year, standalone EBITDA grew from INR 127.6 crore to INR 157.2 crore, which is a 19%, a 19% year-on-year growth, on the back of, you know, 4%, or actually a 3%-4% decline in revenue. Let me check. Let me also see. Saurabh, if you want to add something, otherwise we can go, we can, we can go to the next question.
Thank you, Ram. I think you've covered it well. Nothing to add from my side.
All right, cool.
Yeah, thanks for the elaborate answer. Just to last point: so MLL Express, we are looking at a 5% volume growth every month, but, you know, when we speak to other industry players, the express market for the full year, they're not talking more than even a 10% sort of a volume growth. And, so I mean, this INR 24 crore sort of a loss in the EBITDA, which we are doing in a current run rate kind of a scenario, I mean, if these volumes don't come through, this could kind of, you know, be little extended till the mid-next year also?
So that is it. So, so obviously, I think, Alok, you... It's math, right? I'm one hundred percent it's math, and the math is exactly as you pointed out. I think our confidence... So you're right. I think if the, if the volume doesn't come in, there is obviously a risk that this is going to be extended. We have done wider options for further cost optimization. Volume is the big driver. And I also concur with your, your other comment that at an industry level, there has been a bit of softness on express, and therefore, general industry growth is now in the mid-teens, early to mid-teen levels. I think what's important from our perspective, Alok, is to, is to kind of see where the volume growth is going to come from.
Yeah, and for us, the big challenge really is the fact that, you know, that the decline which we saw in volume, you know, we did see a 35% drop in volume on the back of the integration. And that's all. Most of the customers have not stopped trading with us. Many of those customers are actually trading with us. They're also customers of ours in the third-party logistics business. And therefore, you know, the key thing for us is to win customers back, right? These are accounts that are already trading with us, so we're not looking at new account expansions. From new account expansions, we are only looking at, you know, we are hoping to acquire only in, in roughly the same level at which the industry grows to expect that.
So that's the key thing, Alok, is to get back the customers who kind of drop their share of business with us. Now, that's, that's why we are confident that we will be able to get that kind of volume growth. And it won't necessarily happen 5% in month-on-month. You know, some months will be higher, some months will be lower, but that's kind of what we are targeting, though. But you are, but you are-- you're mathematically right, is that if we're not able to deliver that, then there will be an extension to this turnover.
Got it. Thank you, sir, and all the best. Thank you.
Thank you. We'll take the next question from the line of Namit Arora from IndGrowth Capital. Please go ahead.
Yes, thank you for the opportunity. I have two questions, and they're sort of related. I would be very grateful for your thoughts on, firstly, the organic opportunity versus inorganic pursuits. And secondly, the domestic India opportunity versus your international initiatives. That is sort of one strand of question. The second question is any learnings as an institution from the Rivigo acquisition and other acquisitions and other key takeaways. And thirdly, how are you insulating or managing management time and bandwidth in the turnout of Rivigo so that you are able to do justice to the organic opportunity? Thank you very much.
Namit, thank you for that question. Always good to get questions from you. So let me try and get through that in some order. I think organic opportunities versus inorganic opportunities, I think it's a good question, and, you know, frankly, from our perspective, right now, as I mentioned earlier, we are not really out there in the market looking for any further inorganics, right? So first, we just want to clarify that. You know, we had always laid out 3-4 years ago that as an integrated services provider, we are looking at four main services. Right, third-party contract logistics, freight forwarding, cross-border, you know, B2B express and last mile, and today we've got the decks in some way set in all of them, Namit.
So there's really no, no focus on further inorganics in terms of our attention and energy. I can't, I can't say there won't be inbound interest to us, but there's no outbound interest from us. So it's a very straightforward, perspective on that. In terms of domestic and international, I tend to look at the international business for the forwarding business. We look at the international business as an important part of that story, because as you know, a substantial amount of trade into India does not originate in India. The commercial agreements are actually done outside the country, and therefore, I think a large part of the international operation for a forwarding business we need to have, right? And India-- and but we are doing it cautiously. We're not throwing the kitchen sink at it.
And therefore, you know, we're waiting for each of them to stabilize. I had mentioned last quarter that we are looking at doing Europe, for example, this year. But given this, the slowdown and some of the international tensions in the Middle East and kind of continuing challenges in Europe, we, for example, have slowed that rollout. So it is a wait and watch learn kind of process and, and therefore, I see international more so as a set of pilots for the business. And, you know, back in 2021, we did pilots in forwarding, in express, in last mile, right, in electric vehicle cargo to establish the business model's efficacy. And we are doing the same thing, on the international side today. So it's not a significant amount of.
It is not intended to be a significant investment at this stage. Though, for longer term perspective, I think there are broader opportunities which exist globally, but they only happen after we have cemented a strong domestic business, which remains our priority for now, okay? In terms of acquisitions and our takeaways, obviously, I think, you know, all acquisitions are the same in some ways and are different in some ways, Namit. So it's, you know, it's hard to put a specific one size fits all approach. You know, we do have a playbook in the company, both in Mahindra Logistics, and we take some support from our parent as well on, on from M&M as well on this. And, you know, if you look at our acquisitions, several of them have gone well.
I think the LORDS forwarding acquisition, barring the short-term macro impact, you know, has gone well. We've seen strong earnings, working capital, you know, and brand value and good integration with the core contract logistics business. Similarly, I think if you look at what's happened with the mobility acquisition of Meru, you know, we, we've been on track with what we told the street. We told all of you that we expected in 18 months, we'll get this back on track. You know, Meru at one time was losing INR 20 crore in 19-20, you know, 2021 lost, you know, had a PAT loss of INR 19 crore on revenue of around INR 40 crore. Right?
We kind of said that we are confident through synergies and, you know, build outs that we'll be able to kind of fix that, and we have, right? We are now at a point where we are confident about the profit journey there. So those acquisitions have gone well. You know, the Whizzard, the business, while it's an associate of ours, there's a lot of collaborative work which are happening, between businesses and the way we look at, at different things and learnings, and synergies on an ongoing basis. So there are acquisitions—some of the acquisitions have gone very well, obviously. I think on the Rivigo acquisition, we've actually taken those learnings and put it into the, into the MESPL acquisition as well.
I think there are some learnings for us clearly, around, you know, around network integration, around culture management. And those are, those are learnings which obviously are cementing. As I said, you know, to your earlier question, to the earlier part of your question, Namit, on organic versus inorganic, we're not really out there in the inorganic space. So as you complete the MESPL integration consolidation, we will further sit back and take those learnings into our playbook. And they are good learnings. The Rivigo acquisition is a first largest one, which we did. The earlier acquisitions were smaller and probably, you know, we had the benefit of scale or lack of it in the at the pace at which we did it. But the acquisitions, you know, these are 7-9-year business models, right?
When we build these acquisitions, you know, the network acquisition of RSPL was not based on a 2-quarter business case. It was built on a 7-9-year business case, as we shared with our board and other stakeholders. And while we are behind, you know, we continue to believe that the longer term business case is not adulterated in any form. If you look at other companies which are building networks, there are companies which seem they are losing money after 11-12 years of building a network, right? The Rivigo acquisition has given us probably a 6-7-year head start in that process. There is a bit of a burn. It doesn't take away the fact that we've not executed very well.
We are putting measures to fix that, but, but those learnings will be consolidated, obviously, over a period of time. In terms of insulating management bandwidth, I think, the way I look at it, Amit, is that we really run a multi-business unit structure. There are, you know, each of these business units is fairly, is fairly, you know, engaged and, and self-contained from a sales operations perspective. It also has, for the large part, except for technology and brand and marketing, except for those two areas and, and, and, and legal, even in other areas, we have dedicated teams for each of the businesses. So the businesses are fairly self-contained in that form, right?
And the 3PL business leads the solutions for it, but it then pulls in the other parts of the service or other businesses as required. So it's a very well-structured, you know, self-contained business. Each of the businesses has general managers or, you know, or leaders or business leaders, and many of them are on this call. And they all have their individual pieces to do. And so the management focus is a bifocal one. There are individual heads for each of the businesses, right, who are focused on delivering to their targets. I think, as you've seen in several parts of our businesses, as we have driven improvement, those are teams which are delivering ahead of the curve, right, and getting there.
And obviously at a MLL group level, we are focused on more, which largely is our core functions, so technology, marketing, you know, finance, you know, legal, myself. You know, a lot of us are enterprise transformation. We are focused obviously on providing support to the individual businesses, where they are running well on track, and providing additional support and involvement for the businesses where they are not. Right? And so today, after some amount of higher bandwidth obviously goes on the express business. A large part of our functional resources are kind of engaged on working with them, whether it's ops excellence, whether it's transportation. And I forgot to mention them earlier, but they're all focused on supporting the businesses.
So, that's kind of the way we run the thing, and therefore, it's not a significant, you know, bandwidth challenge. Now, I get . . . We get asked this question at times, and obviously, you know, on earnings calls and in smaller group meetings as well. It's obvious our, you know, it's a business of multiple services. We've predicated on, you know, one or few individuals, and it's really not. It's a fairly, you know, elaborate team. And as you can see, many of our businesses are now at sweet spots in terms of getting earnings up and driving the value. So it's something which I have—There's a model which I have a very high level of confidence in.
You know, this is obviously this is a very hyper local business in the end, and therefore, you need to have, you know, empowered teams which are charged and are highly accountable and responsibly deliver results. Right? Centralization is not, you know, is not a great approach for us. So we, we believe the structure works, and on the large part, I think it's working for us. I hope I've answered the three questions, but-
No, it does very, very comprehensively. So I really appreciate your very detailed and candid perspectives on all my questions, and all the very best to the entire team. Thank you, sir.
Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, please rejoin the queue. Thank you. The next question is from the line of Jainam Shah from Equirus Securities Private Limited. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. Sir, there has been always an industry commentary that express business and contract logistics, 3PL SCM business, will have some synergy benefits. So as we've acquired the Rivigo, we might be giving our express part of that 3PL business to some other counterparties. How has been the things has moved for this part of the business in last one year? And how we are looking at, apart from external volume growth, has there been any growth that can came from the internally from this kind of synergies?
Yeah. So thank you, Jainam. And I, and, you know, so there's not too much of ins-- So, so, so first question, I think there isn't a huge insourcing lift. You know, I think, you know, we had, you know, back in 2021, we had started our own express services internally. And therefore, we were obviously serving some of the... We didn't have a high market share, but we were serving a fair number of our express requirements locally in-house, right? And therefore, the process of insourcing has already started. And, and before we did the MESPL full acquisition, there wasn't a huge amount of outsourcing.
But we do sign up new outsourcing partners on the express side, but that's a lane-specific or geography-specific strategy, because, you know, in the, in, in, at a state level and locally intra-state level, for example, you know, we don't actually may not always have the depth, which other players have in, in inbound geographies, and therefore, we co-load with partners which are there. But I don't see a significant amount in insourcing benefit because we already were doing it in-house, and that's kind of what we transferred. What we think is a larger benefit, which is there, is, you know, I think when you look at, look at supply chains, you know, they are, you know, they, they comprise three, four different things. They'd always comprise, you know, full truckload volumes, right?
They do comprise warehousing, but there is also a substantial part truckload and time-defined part truckload movement, which happens. You know, and as India expands consumption to Tier 2 and Tier 3 cities, right, and Indian road infrastructure gets better, the propensity to do more part truckload will increase. Because companies today are often moving full truckload because they find the transportation is unreliable, it takes a lot of time, they think a full truckload gives them better security. But as infrastructure gets better, and they go to smaller demand consumption points, there will be no choice but to increase part truckload. And therefore, you know, having a strong express capability is, in our view, essential to the longer term, you know, the long-term view of the Indian logistics space.
And therefore the synergy will come as you provide more integrated warehousing and distribution services. So today, if you look at, as an example, you know, for Dr. Reddy's in northern India, we run a fulfillment center across the country. And if you look at what we do, we bring in, you know, drugs in coming from different Dr. Reddy's plants into that FC. And we run the fulfillment center, which is temp controlled, and from that FC, we use our, you know, the 3PL business uses its own trucks for full truckload. It uses the express business for part truckload, and it uses, you know, some air partners for air.
So, so those are the kind of solutions which you can do more and more of, because we have stronger express—our own express capability, especially one which is highly evolved in terms of time-defined deliveries. And that's where synergy over a period of time you should see, and we are hoping to—we believe we will exercise, is the ability to sell more integrated solutions to our clients, and be able to win more business with our clients as we provide them better productivity across the supply chain. And today, our customers don't have to work with one company for express, another company for warehousing, a third company for full truckload. And we are seeing that shift happening. I think you will see some of our wins which we've been reporting.
You will see more and more wins moving towards integrated warehousing and distribution, where express is a very important part.
Got it. Got it, sir. Sir, just on one data point question. How much of the SCM or consolidated revenues came from the parent group?
From the?
For this quarter.
I think, I think around 53%, but we will send you a confirmation. We'll send you a more specific number, Jainam, but I think around 53% for the quarter.
And this-
From 3PL, for the 3PL contract logistics.
Got it. Got it, sir. Thank you so much.
Thank you. We'll take the next question from the line of Abhishek from Dolat Capital. Please go ahead.
Thanks for the opportunity. Sir, in 3PL business, how much mix for auto versus non-auto segment?
Yeah, for auto was around. Auto is around 68%, for the quarter. That includes the Mahindra businesses and the non-Mahindra businesses. Auto and manufacturing is around 68%-70%. Close to 70%.
That is for the 3PL business only, no?
Yeah, for the contract logistics.
Okay. And in the non-auto segment, how much is from the e-commerce and consumer durable?
So, no, we—I think we really don't report that specifically every quarter, but I would say at a bellwether level, it's probably half and half. Right. I think the consumer and consumer business is around 15% and 14%, and the e-commerce business, excluding last mile delivery, is around 17%-18%.
Okay. Sir, in the 3PL industry, penetration is quite low in India. That is around 5% versus global average of 10%. Expect 20%-30% CAGR growth going ahead. You have also a good market share of around 6%-7%. What is your plan to gain market share in the fast-growing industry, sir?
No, I think, all the statistics you have provided are all accurate. You know, the 3PL business, third-party logistics business is, you know, is, you know, in India is under-penetrated. But the definition also is, is, is a mixed bag. When we look at the market, you know, the challenge which we have even in India is that, you know, what are the third-party logistics providers do? They essentially, they provide productivity by integrating different service levels across service lines across, right, for a customer. And in India, the challenges in this, in 3PL penetration has really been, you know, the high level of, you know, fragmentation in industry and the lack of regulation.
And because of that, delivery quality and capability has always been a problem, and therefore, the Indian industry has always moved, has always, you know, depended on asset owners and aggregators rather than third-party logistics companies. Now this is slowly shifting. I think I made a... Post GST, there was a big expectation that that will change at a very rapid pace. That change has not happened at the pace everybody expected, because companies found it difficult to move incumbent networks out completely. And across India, there's a lot of variability in the, you know, in, in the ability of us to provide service across India. So a company cannot run, you know, with its own trucking, with direct trucking in one state, with 3PL in a second state, with a CFA in a third state.
Companies obviously want to have common, common fulfillment models, right? So that actually, those have been challenges for companies in transitioning towards, towards a more 3PL model. But as I mentioned in my opening comments, I think as we are seeing today, what we are seeing is companies, you know, we are seeing far greater consolidation. As companies are laying off newer networks, there are, the three big challenges they are looking at. One is, how do they bring down the cost of the supply chain by reducing waste? Right. It's not that any company in India is buying product purchase price. It's only the waste in the supply chain which has to be eliminated. The second one is companies are struggling to establish supply chains that are multimodal... right? Because we have, we have multiple modes of transportation, different kinds of warehousing there.
And the third thing is that demand inherently has become omni-channel. You know, it's not just one traditional network, it is modern retail, it's online. And therefore, companies have far greater complexity in their supply chain, and that is driving a greater transition towards 3PL. So while, you know, I would not, well, I think, you know, I would not specifically hold the candle to a 25% CAGR going forward. You know, over the next few years, we should start seeing that 5%-6% penetration of 3PL going to around, you know, 9%-10%. And hopefully within that space as well, a greater formalization. Because even inside the 3PL space, if you see it, you know, at 6%, 7% market share, we are probably the largest or the strongest position there.
Otherwise, even inside 3PL, it's very fragmented, with a lot of smaller players, and hopefully, that will actually give you some better consolidation as well.
Thanks, sir. Thanks for your details as well. That's all from my side.
Thank you. The next question is from the line of Vikram Suryavanshi from PhillipCapital. Please go ahead. Mr. Suryavanshi, I have unmuted you. Now kindly proceed.
Yeah. Thank you. Sir, can you highlight about absolute revenue in terms of warehousing? We have given per square foot, but in terms of absolute revenue and growth, and how is the outlook?
Yeah. So I think revenue, warehouse revenue from warehousing services for the quarter was around INR 246 crores. I think I mentioned that in my comments. And that's largely on the 3PL side. As you know, we do not count, we do not count the... You know, we use warehousing for last mile also, but we don't count it as warehousing revenue. Right. So the revenue for warehousing solutions was INR 246 crores. I will, I'll give a more specific informed number. It was around INR 246 crores in the quarter.
Got it. Thank you, sir.
Thank you. We'll take the next question from the line of Krupas hankar NJ from Avendus Spark. Please go ahead.
Hi, good afternoon, and thank you for the opportunity. One question on the mobility business, Ram. On the return to work, I think what I was looking at broadly is that, you know, FY 2019 this segment was generating about INR 385 crores of revenue. And now you add Meru's overall operations on top of that. Assuming it comes back to the, or the levels of FY 2019, can we expect, you know, somewhere a 25% higher number vis-a-vis FY 2019 numbers in FY 2025?
Hi, Krupa. Good to hear the question. But just to put some context, I think, you know, in 2018/19, which is a peak year for the mobility business, we had INR 370 crore of revenue, and that's around 4% PAT in the MLL business. And at that time, I think corresponding revenues in the Meru business was around INR 55 crore. On accounting basis, platform revenues are probably higher. The business was reporting a loss, so I've lost, you know. So consolidating this at a revenue level, it had been around INR 420 crore-INR 430 crore, right?
Mm-hmm.
And obviously with return to work happening now, we should start. And underlying inflation per kilometer prices, your hypothesis is right, right? As we get to full volume at a pre-COVID level, this is what we have been saying as well, Krupa, you know this, that we do expect a hockey stick playing out in mobility. So I, I'm cautious about calling on a timing for the hockey sticks. But we are, I think, definitely seeing the convergence of, or the start of the hockey stick now. Right. How quickly it ramps up is something which is hard to predict, because there are some fundamental shifts also happening in terms of work from home.
It's not like even though RTO is becoming more significant, Krupa, I think work from home is also a reality. And therefore, there is a probably at least in the long term, there's probably gonna be a 30%-35% reduction in volume happening because of work from home. Right?
Right.
If you take that index, you reduce it by 20%-25% because of the long-term work from home pattern and do a kind of organic CAGR growth. Yeah, you'll probably land up at INR 450-INR 500 crore number at least.
Right.
Right? But, but that's a point, that's an endpoint. The question has always been, Krupa, we've said this earlier on also, that that's an endpoint which we do see clearly. The question for us is, how do we kind of get the ramp up and the shape of the hockey stick?
Got it.
I don't know if it's gonna be 2024, 2025, but I'm sure it'll happen at some point.
Sure, sure. Second question was on the freight forwarding business. So I did see that, you know, the profitability has weakened quite considerably out here. Any one-offs you want to call or any commentary on profitability coming back to at least on an EBITDA basis at around 3-odd% levels in the second half?
So to be honest, Krupa, this is... As you know, this is just a volume play. I think if you look at the details of it, there is not, you know, there's really been a drop in gross margin, dropping down to EBITDA and dropping down the PAT, right?
Gross margin percentages actually have held for the large part. You know, I won't say- I won't call out a specific improvement because it's a moving number, but percentage of gross margin have generally held. The question really has been the volume shrinkage, right? If you look at it, we are roughly, you know, we are roughly down 50% on revenue compared to last year. If that revenue had held and there are INR 56 crore more of revenue with, you know, 10.5%-11% gross margin, we'd have probably been at the same INR 4 crore PAT line.... Right. So it's really just a straight volume play, and the key thing for us is to get the volume play back. You know, I-- you know, while we are maintaining discipline, investing in the business as well, right?
We don't want to shrink our long-term investment in the business because this correction will happen. It is an industrial macro thing, so volumes will, you know, I think have great confidence in our organization, our sales teams there. I'm confident the volumes will come back over the next couple of quarters. It'll take probably a bit more for it to further accelerate itself, but it's just a volume.
Got it, thank you and all the best.
Thanks, Krupa. Take care.
Thank you. The next question is from the line of Alok Deshpande from Nuvama Institutional Equity. Please go ahead.
Hi, Alok.
Hi, hi, Ram. Good afternoon. Two questions from my side. First, on the express business. So, the OpEx costs that we have, I'm simply going by the difference between revenue and EBITDA here. This OpEx of about INR 110-INR 112 crores. Now, as the revenue ramps up, can we consider this as an absolute sort of floor in terms of... I mean, is there any chance of this OpEx going down by any chance? Maybe due to any one-offs or anything of the sort, and due to, or, you see this number going up.
Why don't you finish the questions, Alok, and I'll answer all of them together, just in the interest of time.
Okay.
I'll just take a couple.
Yeah, second question is on the core business. I think somebody did ask this a little earlier in the call. I just wanted to just wanted to get some clarity on this EBITDA margin going down in the core business or the standalone business. The last couple of quarters, this Q4 and Q1, we have seen that number around 8% or so. So, as we enter festive season, do you see that margins going up in the second half and, you know, more closer to 8% or 10%, or what's your, what's your outlook on that?
Sure. So I think, so Alok, I'll take the first one first, the express side of the business. So I think to your question, whether our total costs are, you know, are, you know, are going to remain at that INR 111 crore level, which I guess the way you have computed that, you have kind of taken the EBITDA loss and the revenue, right, and kind of added them up.
Yes, yes.
Right. So if you're looking at INR 111 crore, there are three parts to it. There is a pure line haul transportation, a pure transportation piece, which is around 60%-65%. There is, of course, the network, the physical network, which is the warehouses and everything else. And then there is an overhead and management cost, et cetera. It's around 10%. The overhead management cost, of course, does not change at all. That's, kind of, pretty much, I think, at an optimized level. Now, the network cost should not dramatically change. I think we have laid out the network. There'll be some puts and takes which happen as we look at expansion, but those are going to be revenue and growth led.
They are not just going to be fixed in nature or going to be, you know, intrinsically, you know, negating. But the key thing for us is to optimize the transportation piece. As the transportation piece, which is, which right now in the transportation, so in both the, in the, in the warehousing piece, as the volume goes up, it's purely leverage. Right? The operating costs are approximately, you know, it's probably around 30% of this, the cost of running the network. Right. The network is probably not going to see a significant amount of cost increases or look to probably around 1.5-2 times the current volume. Right? And to that extent, we should be able to run it without adding a substantial amount of cost to that. Right?
So that's a pure leverage for us, which is what I think we explained to you earlier as well, and even earlier call, which was there.
Thanks.
Thank you. Ladies and gentlemen, the line for Mr. Ram has been disconnected. Kindly stay connected while we try to reconnect him. Ladies and gentlemen, thank you for patiently holding. The line for Mr. Ram has been connected. Over to you, sir. The participant has left the queue. His questions have been answered. We'll move on to the next question, which is from the line of Sumit Kishore from Axis Capital. Please go ahead.
Hi. Good afternoon, Ram.
Hi, Sumit.
Just one question. I heard your commentary around the contract logistics business around autos, FMCG, e-commerce. I mean, basically, we have heard about 5% or top line growth in the first half of the year. One would have expected this business to continue growing at closer to, say, mid-teen levels, you know, more from a medium-term perspective. So is there going to be a pullback to double-digit growth in the second half of the year? Or is this more or less the sentiment that is likely to show up in numbers for the full fiscal as well?
I think, it's a, it's a good question, Sumit. There are a couple of things that I think, you know, we are. You know, if you look at the quarter-on-quarter, velocity of growth has been around 6%. I think last quarter we told you that we did see a bunch of the churn impact coming in. And the focus really is on ensuring that we will get, that velocity, we could maintain the velocity, right? Order intake has been positive and therefore we should. I, I can't call out saying it should still be in the 12%-15% growth level, uh, Sumit. But, uh, if we take out the impact of the Bajaj volume and some of the churn, I think by the end of the year, we should be running this.
Our run rate should be at a double-digit growth level, is what I would expect we will be at, right? Now, will that be the full fiscal impact? It's hard for me to say at this stage, Sumit. I don't have the numbers actually in front of me. But at a run rate level, we should be getting back to a double-digit number. I think equally important is that we are maintaining, trying to maintain stronger commercial discipline as well, Sumit. So that's something which we are trying to ensure, we are trying to enforce across. That it is not growth for the sake of growth. And so that's something which we are trying to be cognizant about.
There's tighter pricing we're trying to drive as well, which has, which had some impact on distribution kind of conflicts. But to your broader question, run rate should be in the early teens, definitely net of these kind of adjustments by the end of the year.
Okay. And, you know, with that kind of growth schedule, I know-
I'm sorry to interrupt. Mr. Kishore, your audio is not clear, sir.
Is it better now?
Sir, may we request you to come to the network area? I mean, like, your voice is breaking.
I hope I am audible.
This is better, sir. Please continue.
Yeah, Sumit , you're fine. Just, just carry on.
Yeah, yeah. Now, just, on your broader vision, I know it's a vision, but, FY 2026 getting to INR 100 billion, is there some recalibration required in light of, you know, what we've been seeing on freight forwarding side as well as, you know, softer growth so far this fiscal?
It's hard, yeah, so it's hard to kind of put a specific hold, you know, to hold exactly, you know, to a specific thing. I think, as we said, you know, what I do feel very good about is we had laid out a vision of around 6.5 thousand crores for the 3PL contract logistics business. We feel we're in a good place to get there over the next three and a half years, right, on a run rate basis.
I think the challenge for us is some of the macros have affected forwarding, like they affected mobility, right? And as those macros get reset, there will be hockey sticks which will come back on the forwarding side as well. So, are there upsides which exist? Clearly, we think the upsides do exist. Do I think there's a need for us to right now go back and start reworking those long-term aspirations? No. Right. I mean, those aspirations could move a quarter or two here or there. It's about doing the things which will deliver those aspirations for now, which are important, right? So, that it still remains a very much a focus. You know, we've not tried to be shy about putting the aspiration out.
As you know, we put it out in the middle of COVID, right? Meaning that because we believe that that's the potential the sector and our business model offers. Will it move, you know, it could... Can it move a quarter or two here and there? Of course, it could. I'm not gonna say there are things we still don't know what the next three years could happen, right? There is. There was the COVID effect and so on. But at this stage, I think our focus as a management team is to do the things which will drive that, right?
To see that's what we've been doing in the contract logistics business, which kind of now as a run rate, you know, at, you know, probably north of INR 4,000 crore on a run rate basis, 4, 4, between 4 and 4.5 crore on a run rate basis, can go- we, we feel grow further, build further, go to 6.5 in the next 3.5 years, right? Similarly, some of the other stuff has to play out. And, you know, and the intense focus on getting the leading things done. And when we get the right leading things done, Sumit, then it, a, a couple of quarters here and there to us does not make a big difference.
But if we run it just on the market, on markets being favorable, then you know that probably at some stage, the markets will move against you, and the number will not hold, right? So, that's kind of my broad answer. We are not in a hurry to change that number or recalibrate it right now. We'll do it at the appropriate stage. You know, you know, towards the end of the year, we'll take obviously a strategy review at the end of the year, and we'll relook at it at that point.
Sure. Thank you, and wish you all the best.
Thank you. Ladies and gentlemen, due to time constraint, this is the last question for today, which is from the line of Ankita Shah from Elara Capital. May we request all the participants to limit their questions two per participant. Thank you. Please go ahead.
Yeah, thank you. I just have two questions, sir. If you can help me with the volume, volume number for B2B express business for 2Q, and how much do you expect to close this year, you know, by fourth Q, one. And second, how has been the order intake in 3PL business for the quarter versus YOY?
Sure, Ankita. I don't have... Hi, Ankita. I don't have the exact, forwarding volume number, but I can reach out to our team, to SGA and our team should be able to get that out to you. Don't have it right off the cuff. I know that our As I said, our volume did grow 3% on a QOQ basis sequentially. Right, but if you reach out, we'll give you a more specific number. I think on the contract logistics side, you know, volume, for the order intake for the quarter was north of INR 100 crore. So that has been accelerating itself. We had a weak Q3 and Q4 last year, right, because of some of the churn happening. And, you know, and, and I think the Q2 last year was very strong.
It's kind of in line with Q2 last year. Order intake is in line with Q2 last year. And, you know, e-commerce slightly still lower than Q2 last year. Non-e-commerce is up, e-commerce down, but it's still pretty, it's pretty much in line with Q2 last year. But what we find is that the bidding activity is pretty strong right now, so we are pretty confident that Q3 and Q4 will hold. The pipeline is good compared to last year, when we saw a very big impact in Q3 and Q4, because of some of the churn and the slowdown in e-commerce. Okay?
Miss Shah, does that answer your question, ma'am?
Just, just one part you missed, I think. For the B2B Express business, what level do you think you will close this year in terms of volume tonnage?
Yeah. So I think, as I said, I mean, our aspiration is to be able to get back to that, to get back the full recovery of the volume loss. So we have another 20%-25% growth to go there, Ankita. So that's kind of what-
Okay.
I, I think I mentioned it earlier in question response to, I think, Alok's first question on Express.
Okay. Got it. Got it. Great. Thank you so much.
Thank you, ma'am.
Thank you.
Thank you. Ladies and gentlemen, as that was the last question for today, I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Thank you, everyone. I hope we've been able to answer all your questions satisfactorily. However, if you need any further clarifications or want to know more about the company, please do contact our team or engage our investor relations advisors. On behalf of my colleagues at MLL, I wish you all a very happy Diwali, and hope this year the festive season brings happiness to you and your dear ones. Every year during the festive season, millions of our delivery associates across our industry will call you at home to deliver festive joys. These delivery associates are the backbone of our industry and our celebrations, and I urge you all, if possible, to spend a few minutes spreading kindness to them, providing them a glass of water or some snacks or just thanking them for the work they do.
I think it makes a big difference to our industry. I wish you all a very happy Diwali and a prosperous year ahead, and thank you once again for taking the time to join us during this call today.
Thank you very much, sir. Thank you, members of the management. Ladies and gentlemen, on behalf of Mahindra Logistics Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you!