Good afternoon, everyone. I am Mohit Lohia from ICICI Securities. I thank you all for joining us today for quarter 3 FY 2025 earnings call of TCI Express Limited. From the management side, we have Mr. Chander Agarwal, Managing Director, Mr. Mukti Lal, Chief Financial Officer, Mr. Hemant Srivastava, Chief Operating Officer, Surface Express Business, and Mr. Ashok Pandey, Chief Operating Officer, Multimodal Logistics Express. This webinar is being recorded for the compliance reason, and during the discussion, there might be certain forward-looking statements which must be viewed in conjunction with the risk that the company faces. I now hand over the call to Mr. Agarwal for opening remarks, which will be followed by Q&A session. Thank you, and over to you, sir.
Thank you, Mr. Lohia. Good evening, everyone, and welcome to the Q3 and nine months financial 2025 earnings conference call of TCI Express. Thank you for taking the time to join us today. Our earnings presentation has been shared on the website and stock exchanges, and I hope you had a chance to go through it. I will begin by providing an overview of our business performance and key developments, followed by our CFO, Mr. Mukti, who will further elaborate on the financial performance for Q3 and nine months financial year 2025. During the quarter, we continued to demonstrate operational resilience and strategic adaptability in a dynamic market environment. The logistics sector faced challenges due to moderation in manufacturing activity, evolving demand trends, and seasonal factors. India's manufacturing PMI softened slightly in the later months, reflecting slower production levels.
The festive season demand in October was lower than expected, while November and December saw a marginal slowdown, impacting overall freight movement. Inflationary factors, including annual toll revisions of 8%-10% and increased labor and transport costs, added pressure on operating expenses. Amidst the challenges, we remain focused on operational efficiencies, network expansion and automation, allowing us to maintain stable business performance. In the Air Express segment, we are strengthening our metro city delivery network and have launched direct delivery services to improve service levels and customer reach. The contribution from Multimodal services is steadily increasing, and we are planning to achieve 20%-22% revenue share from Multimodal Logistics in the next two to three years.
During nine months 2025, we incurred a CapEx of INR 20 crores, including INR 9.38 crores in Q3 2025, primarily directed towards expanding our branch network, constructing sorting centers, and ramping up IT infrastructure. Our debt-free balance sheet and disciplined financial management has resulted in strong cash flow generation with INR 40 crores cash flow from operations during the period. Furthering our commitment to shareholder value, the board has recommended an interim dividend of INR 3 per share, reinforcing our confidence in the company's financial stability and growth prospects. Our strong customer mix, extensive network, and market positioning enabled us to maintain stable capacity utilization at 82%. We are honored to have received several prestigious recognitions this quarter, reinforcing our leadership in logistics and commitment to excellence.
TCI Express was awarded the CII SCALE Award 2024 for supply chain and logistics excellence from CII Institute of Logistics, highlighting our technological advancement and operational strength. We are also featured in Forbes India's Select 200 companies with global business potential, DGEMS 200 2024, recognizing our strategic growth and positioning. Our corporate social responsibility initiatives were acknowledged with the Indian CSR Award 2024 by the Brand Honchos, and we are proud to have again achieved the Great Place to Work 2025-2026 certification for the fifth consecutive year, underscoring our commitment to fostering a positive and employee-friendly work culture. Looking ahead, we remain optimistic about the anticipated recovery in economic activity, supported by government infrastructure investments, fiscal measures, and a renewed focus on manufacturing growth. The Union Budget 2025-2026 introduced key measures to strengthen logistics.
A new social sector scheme for gig workers would enhance job security, attracting skilled talent and improving service quality. Access to the PM Gati Shakti database will optimize route planning, reduce transit times, and lower operational costs. Air cargo infrastructure upgrades will enhance express delivery efficiency, reducing lead times. These initiatives would provide a strong foundation for TCI Express to drive growth, innovation, and operational excellence. With this, I hand over the call to Mr. Mukti, who will take you through our financial performance for the quarter.
Thanks, sir. Now I am just going through with our presentation for the three-month quarter, this quarter and nine-month consolidated. I will quickly run that. Can you just go on the slide, please? Next slide. Yeah. So this is our key features. This is almost nine years. We are near to complete nine years after demerger, and our service is 97% B2B and 3% B2C. We have 60,000 service locations. We have 970+ branches, 3,000+ workforce. Next, please. These are our USP which we are consistently carrying since the last two decades, like asset-light business model, we carrying high-value cargo. We are really working hard on low working capital requirements. We have the lowest cost structure, and we also expanding on similar kind of services in express logistics. We all have our own branches.
Then we have the containerized movement 100%. Next, please. These are fundamentally-- We offering six major services, which is Surface Express, Air Express, domestic and International Air Express, C2C Express, Rail Express, and Pharma Cold Chain Express. These are the services we offering. These are our footprint across India, where we operating 970 branches, 280 sorting centers. These are two sorting centers we already automated, Gurugram and then followed by Pune. Next would be, we will be, I think, end of next year or maybe first quarter of FY 2027, we will be implement the automation in Ahmedabad and Kolkata. We already finalized the contractor, and soon we will start before March end, we will start the construction in those two facilities. These are Surface Express USP where we have as mentioned 60,000 delivery location and 50,000 is the pickup locations, and these are our strength here. Next, please.
Air Express is a USP of that we delivering in a measure of 24- 48 hours. Across India, we covering 72 plus air gateways, and we also delivering in tier 2, tier 3 cities with the time span of 48- 72 hours. Next, please. These are the International Air Express where we delivering across the world. We delivering through. We almost have 3,000 pickup point for international business. It is also growing very well and we have very positive moment from the. We also doing import from the other countries to deliver in India, so we're doing the two-way. We sending the material from India to abroad and from abroad to India, we're delivering. Next, please. Rail Express, as we keeping very high attraction from the customer is growing very well. Now we almost have the 150 routes and 5,000 customer base. This is also increasing.
Now we're seeing continuously frequency of the customer. We getting the repetitive order from that, though as is in its next segment, but growing very fast. C2C, again, as we mentioned in earlier calls, it is a growing sector, is a niche segment. Majorly this used by auto industries, where we clubbing, we picking from the one location, delivering two, three location at destination and vice versa, also picking from the two location, delivering on one location. So these kind of service we giving and adding the new customer here. Next, please. Pharma Cold Chain , we again, as mentioned, we only focusing on pharma deliveries. So this is also running, but not on a good speed. This is running in a normal way. Yes, please.
These are the Q3 highlights where we achieved a revenue of almost INR 300 crore with an EBITDA of INR 33 crore, which is at 11% margin, and profit after is INR 21 crore. We, as mentioned, announced the second interim dividend of INR 3. So put together is INR 6 now. We can skip that already discussed. We've seen clearly this visible in this industry, there is two aspect. One in revenue side, where few sectors still not improved, like one is lifestyle product, second is engineering goods, and some other sectors also not improved. Second part, every logistic service provider is facing challenge on cost side where cost has increased for the drivers, toll tax. We also facing one more challenge is to increase the air cost also due to duopoly of these service provider. Second is prioritization of these airports.
So these are the two things where we faces the challenge on revenue side because volumes are low. Other side, cost pressure is also coming. So these two thing clearly visible in overall industry purposes. These are the quarterly. Here is just three quarter what our performance is. Yes, next please. This is our nine months where we've seen a growth of INR 900 crore plus. There's a decline in revenues almost 3.5%. At EBITDA and PAT level is around almost 27%. This is a highlight for the nine months. Again, capacity utilization in our truck as seen is overall in nine months is around 82%, and we obviously have the two sorting center. Cash flow operation is INR 40 crore. Total dividend we have given like INR 6. Revenue mix slightly change in nine months. It is 51 big customer and 49 is SME.
In Q3, it also slightly different. It is almost 53% big customer, 47% is SME customer. That is why one of reason to decline in our margin levels. Cash profit, you see, is a decline of only 25%, and that has been reduced from INR 114 crore to INR 86 crore. Yes, please. These are, again, nine-month performance. We have given for the comparison of last four years. Please. Key ratios, if you notice, like return on capital employed slightly declined because there was a reason, because margins are slightly down and initially, CapEx is growing fast. I think in initial or of 2-5 year, we have to face slightly moderate kind of return on capital employed. Once we finish with the CapEx, then we will again start to enhance and have the planning to go back to in the range of 35% plus.
Cash conversion ratio is again strong. There is no challenge on that. It will be in the range of 70%. Please. Yeah. I just discussed, we can skip. Leverage profile is robust. As you see, payable days are 35 days, receivable days is 58, so networking requirement is in the range of 22 days. For the running of our daily show is really not need any kind of funding, and these are self-sustainable system. In spite of all the challenges, we still highest PAT margin in the industry, which you can see in out of these six industry players, we are the highest one. Second player here is also our group company, TCI. We can skip that. We already discussed in last. Strategy and outlook is very clear. We will be diversified on the both way, customers as well as supplier side.
We will keep continuing expanding branch network. This time we slightly slow down that because we opening up the branches to cater SME customer majorly. We see a slowdown in SME customers, so we pause that one for the time being. Though we are opening up one or two branches in a month, but not aggressively going on. Once we will be seeing the volume back from the SMEs, then we will aggressively expand on a branch network side. CapEx side, yes, it is also as per expectations, but in this year, I think it will be slightly low, but next year we have very clear visibility for the CapEx of around INR 110 crore. This is our priorities. We will keep continue to growing in the other markets.
Sustainability side, yes, we will be ESG, we will be focusing on that and we will put basically to put EV vehicle for the last mile, first mile deliveries or wherever is possible to put into in mid mile, we will give that. We will also like putting hard wherever we building up new sorting centers, we going as a solar for the electricity generation. So we will keep going on to putting our pressure to these ESG initiatives. Technology, yes, is a backbone, so we also putting more and more digitalization in every function in company. Please. We can skip that. We can skip that. These are again a long-term perspective. The logistic industry's growth drivers. We can skip that. This is a management team. Please, next. This is clearly visible, these things. Transportation cost has increased, margin has been declining in this particular time.
Manufacturing activities is surprisingly in a good month, where we anticipated a good month, that has been declining and lower consumption economic. I cannot say slowdown, but is a muted one. Customer confidence index has also slightly reduced. These are the thing which is really clearly visible in overall way. Next, please. Next, please. Next. These are the award recognition, as you already discussed with that. Next, please. Thank you very much. We can now take the question and answer on that. We are happy to answer.
Participants, we are going to open the floor for question and answers. Please raise your hands to ask your questions. We will begin the question and answer with Mr. Deora. Mr. Deora, you can go ahead with your question.
Hi, I am audible?
Yes, you are.
Yeah. So, sir, very good evening. Just had a couple of questions. First, if you could just indicate what has been the volume growth for this quarter? Or rather, de-growth, I think.
Yeah. So volume is reduced by almost 3% in this quarter.
Okay. So, sir, I just wanted to understand, the growth has been pretty muted through many quarters now. Even this has impacted the margins also quite significantly. It has come down by nearly, if we see year-over-year, it is down nearly 500 basis points and quarter-over-quarter, it is down by nearly 200-plus basis points. So how are we seeing this market now? Because you have been mentioning about even in the earlier call that how other players are taking price hike is not known and market is very tough. So how do we see the fourth quarter also shaping up now? Because I think this volume growth, even in January, I don't think there would have been much improvement. So would this volume run rate of Q3 continue through Q4?
Would this margin also, which has come down to almost like single digit now, would this be in this tight range?
Yeah. Very well. There is two type of things happening simultaneously. One is, volumes are down. That is very clearly visible across the industry. We are hit because SME is first time getting hit, and that is why its volumes are down for that. That is why it is also hampering our margin because as you are aware, prices from the SME is higher than my contract customer. That is the one-off reason. Second reason, that has never happened where volume declining and cost pressure is also simultaneously there. But in this year, this is a different situation where we are facing the challenges and also muted volumes. Second, cost pressure, which is visible across the industry, which is, as I mentioned, is contributed by increase in toll tax, increased by driver shortages, increased by labor cost. In our cases, added by fuel, also by air cost.
Ultimately by lower volume, our utilization of truck is reduced. By these, you see in a two way. Once we will be bounce back with the volumes, once it normalize the situation, which is really very hard to comment on Q4 because once we like in last quarter, October month was slightly okay, and then we see November and December month. December month is again always the best month, but we have not seen that kind of even de-growth on that month. That was one-off reason also where e-Way Bill site has closed on a last day. That has also impact my volume in this quarter at least 1.5%- 2% on that day, particular day. These kind of thing is happening. I am not seeing any much difference, but it is really very hard to comment on that. This is the one, volume side.
Second, cost side, I think this will be continue because we discussing with the customer. Our case, if you see earlier, we were the first one to take the price hike from the customer because 50% is a SME customer. But this time, SME customer is already facing the challenges due to high inflation, high interest cost. They are not able to support us on this time because again, volumes are very less and they also have the impact of muted growth. We now touching the all big customers, so they also assuring us to be giving the price hikes. Gradually we are getting that. In this quarter also we are getting a benefit of, like getting a price impact of 25- 30 basis point. But from January onwards, we are getting good price hike from the customer. Both things will be improve in this quarter.
Next year, I think hopefully, we will be seeing the situation is improved a lot.
Sure. Sir, have the competitors, a couple of them have given, I mean it's public information, like Blue Dart and Gati had mentioned about a price hike from January onwards, and VRL Logistics has already taken a price hike at the end of first quarter. So, have these price hikes gone into the system? In VRL Logistics' case, it is much visible that it has already shown in the margin profile. But what about your other competitors like Gati, Blue Dart and others from the unlisted side? Has the competition taken price increase? Because we have not taken price increase and still the volumes have not come by. Just some clarity on that, if you can provide, it would be helpful.
I think whatever name you've taken for the competition, they also not growing in volumes. Either they're growing through the price hikes, I guess other competitor said we've taken so much price, and that growth was also equal to that. This means volumes are not there. Price may be due for them because good thing was with us, we consistently taken the price hike in over the period of four or five years, and that's why our margin has jumped from 8%- 16%. That was sustainable. But this year is a slightly unique position where SME is hit, and we always like taking the price hike from there, so they are not able to increase.
But I am not see other customer in pure express they will be able to take the price hike because again, this segment where we dealing with this segment, specifically lifestyle, engineering companies and electronics companies, they will be allowed to increase the prices in this tough time. So I'm really not confident about to be like increase the prices by these all competition.
Sure. Just last question. We generally maintain that we will grow at 1.5 of the GDP. Do we maintain that or it's something that it's not in sync at this point for the entire sector, not just for the company, where the growth in the GDP is not really reflecting in the growth in the road logistics sector, which could definitely impact us as well. So just that would be my last question. From a longer term perspective, like two years, how do we see the growth?
Yeah, well, this year, this is clearly visible. You see like FTL industry slightly grow because that government CapEx happened and that's why I think they have the slight growth on that. But they also have the very high pressure on margins, every FTL company. Second part, this is the exceptional year in this, which is we stick with that 1.5 kind of X growth for the GDP. This year, more GDP is coming from service and less from the manufacturing. So we will be stick with that 1.5x of real GDP growth. And this is, I think, one exceptional year we've seen.
Awesome. That's all from my side. Thank you and all the best, sir.
Thank you, Alok.
Our next question is going to be from Nimmagadda. Mr. Nimmagadda , please go ahead with the question.
Yeah. Hi, sir. Thanks for the opportunity. Couple of questions from my end. First is, you spoke about some improvement on the pricing from January. How is the volume trend like? Do you see any kind of recovery out here? Also, if you can provide the absolute volume number in the quarter, please.
Very well. So in this quarter, we achieve a volume of 2.42. You are talking about quarter or this month?
This quarter, sir, in 3Q.
Yeah. Q3, we have achieved a volume of 2.42 lakh tons. We have taken in a volume in Q3.
Okay. How is January been, sir? Because you spoke of price hikes and because some of your peers are speaking about price hikes, you should be able to garner that kind of market share, right? I am just trying to understand how the volume growth has been, or day growth, what is the scenario like in January?
Honestly speaking, this January is fantastic or you can say that it started a growth, but again, we are also worrisome because all the time we seen in last three quarter where good month is not performing well. So we are depending upon the March, how March month is playing. So we have taken a growth in January, but we are really not sure, very hard to comment on March, how they are playing it. So same way, like in Q3, we were in a good note on start with the October, but finally December month was I think you can say is a worse perform. So this sales is really hard to say, but yes, we always keeping trying to be hard to get the volume growth back to normal.
Okay. Sir, what was the price hike that you took in January? You spoke about a decent amount of price hike, so anything that you would like to quantify approximately?
Sorry, come again. I just missed your last.
Sir, I was asking what is the kind of price hike that you took in January. You were speaking about that you saw some decent price hikes in the month of January. Any quantum that you would like to indicate?
Again, SMEs, we are not pressing for price hikes because again t hey are still in a slowdown or muted growth. We now are targeting our big customers. Hopefully, I think, in this whole quarter, we will be able to take the 1% price hikes overall basis. Because 50% is out. Remaining 50%, supposing we get from the only 30% plus, 30% customer, ultimately it will be converted into an almost 100 basis point.
Sure, sir. My second question is on the investments that the board has approved on the Singapore side, the $7.5 million. I mean, this is roughly about 35%-40% of your cash balance. I am just trying to understand what was the rationale behind this investment and why is the company looking to do it in the current scenario when the domestic market, there are challenges where you still have to cut down on the CapEx. What was the thought process here, if you can help us understand this, please?
Well, this new capital requirement is not for this year. It is for 2025, 2026 and 2026, 2027 for the two year. Overall cash flow will not be more than in the range of 10%-15% in each year. Second, our rationale to establish that company to be having freight forwarding business across world to Singapore and inbound and outbound. That will also help us to support an Indian business where we can import the things in India and then can distribute across India as in from the express model. We want to establish operation in Singapore but in a gradual way. That way we will be putting it.
Okay, sir. The reason I ask you that question is also in the context of the weakness that we are seeing in the domestic market and where we also had to curtail the CapEx. Somehow, it feels like that means what you are doing perhaps is right. Just trying to fit it in the context. I mean, at the time when you had to cut down on domestic CapEx, you are looking at international investment. That part I was trying to figure out.
No. Basically, we are not curtailing any CapEx because our CapEx, why I am saying, our CapEx is completely depending on the buying of the lands. We not curtailed any CapEx. Whatever CapEx we are doing, we are doing that. Now we already finalized as a contract because after buying a land, we are taking almost one and a half year to be clearance and everything to finalize everything. Now construction will be start in this quarter only in, as I said, in Ahmedabad and Kolkata in a big way, and both facility put together would be around 5 lakh sq ft. Next year, these will be ready by March end. Our commission will be maximum again March end or max first quarter of next year. Everything is planned and is not on cost of domestic CapEx to international investment. This is a separate thing, a separate strategy for that.
Okay. Sir, just to understand, does your sister company, Transport Corporation of India, have any presence in Singapore or you don't have any presence over there?
No, they don't have any presence in Singapore.
Got it, sir. Thank you very much for patient answers. Thank you.
Thank you. Please.
Our next question is from Mr. Krupashankar. Please go ahead with the question.
Yeah. Good evening and thank you for the opportunity. Sir, my first question would be slightly more on your contribution from SME as well as the large corporates. One of the reasons why we had a higher preference for SMEs was, I think, sir, but really the operating efficiencies has been lagging because the volume also has not been contributing to our overall system. Are we relooking at adding more corporate customers and changing the mix because that can be one lever which can drive your overall operating efficiency. Any thoughts around that?
Absolutely right. You rightly said. What we also strategizing because specifically if you see on eastern part of India, there is an SME, eastern part of India or other part like down south and all, there is no manufacturing and we completely depending on SME customers. This is a dual challenge for us from the eastern part and this part of India where we have the SME presence, they have less volumes. That's why my utilization level is 32% right now. We also more focusing on a big customer there wherever we have, we really getting good response on that side. Aggressively we're pushing to be more focused on a big customer rather than SMEs. Once this will be normalized, then we will again take this ratio like 50-50. Absolutely right, we're doing our strategy on that way only.
Got it, sir. The second part is primarily on, while I do appreciate that MSMEs are facing a lot of challenges here, you are supporting the trade at this point by not increasing price hikes or not taking price hikes, rather. Just want to get a sense because we are in a hyperinflationary environment, if I were to put it, across all cost hikes, and tonnage is weaker. Why the hesitation in passing the increase in cost? It's not that we are profitiering higher and that's one of the reasons why we are taking a price hike, right? We are just offsetting the cost which is there. Just want to get your thoughts as an industry itself. Why is it that there is a favorite of hesitation to take price hikes at this point?
Yeah. Well, these are the SME customers which helped a lot us all the time to support us. Now really they need support from our side. We have the informal relation with them. We have the long-standing relationship of more than one decades. We are listening them carefully. They helped all the time. This time, and also if you see, cost is also manageable. Wherever we did, our costs have just increased by 200 basis point, which will be normalized once volume will be back to normal. I don't think so very any worrisome. They will be also support once they will be normalized on their business part. We're really not seeing any problem there, and we unnecessarily don't want to be put more pressure to enhance our profits, basically. This is a give and take in a business, basically.
Understood. Lastly, if I may, while you have highlighted that the branch addition is going to be not as aggressive as previously anticipated until traction and growth is visible. Any thoughts around what would be the potential branch addition in FY 2026, 2027, given that you are adding a lot of CapEx towards constructing new hubs, especially in Ahmedabad and Kolkata, and also you had constructed two hubs in Gurugram and Pune. Just getting a sense of any plans around FY 2026, 2027 on branch addition.
Yes. Well, so basically, we opened up the branch to support SME customers because to cater big customer, we really do not need the much branch network.
Right.
So that is why now SMEs are really in a slightly muted growth. So we decided just like in a go slow on that, not the stop. Next year, again, we will be have the planning to open a branch in the range of 50- 75, and in 2026, 2027, again, in the range of 75- 100. That surely we will be open that branches. More focus, like we have the strategy to be open almost 30%- 40% branches to support the Multimodal Express business, remaining for the Surface Express business.
Got it.
This strategy we will be go there.
Okay. Last question, if I may, sir, is are you open to sharing data relating to contribution of new services like the Rail Express and Pharma Cold Chain Express and et cetera?
All put together, services is still stagnant at 17.5%-18%, and remaining is Surface Express.
Got it, sir.
Another one aspect also would like to mention here. Earlier, we have the e-commerce share in overall revenue is 4%. Now it is also shrink to 2.5%- 3% only. Because as you are aware, our focus is not on a B2C. Now a few customer asking again price reduction and also we are not going into these things. So our B2C share is also shrink to 2.5%- 3% from 4% in last year. So that's also one of reason to be reduced this volume in this side.
Got it.
Yeah.
Thank you, sir. That's it from my side. All the best.
Party submitting to ask question, please raise your hands. Our next question is from Mr. Rohit. You can go ahead with your question. Mr. Rohit, you can go ahead with your question.
Am I audible now?
Yes, you are.
Hi, sir. Just one question from my side. Of the total revenues, how much will be the retail portion that we have right now?
Right now, Rohit, right now in nine months, the ratio is 51 big customer, 49 small customer, but in particular this Q3 quarter, it is 53/47.
Sir, I am speaking about the retail, so maybe the lifestyle that you said, lifestyle segment.
Oh, okay.
How much?
Okay, you mentioned that. Yeah, retail.
Yeah.
Retail is, overall basis, almost around 9% to overall revenue to us.
9%.
Yeah.
Okay. That is it from my side. Thank you.
Yeah.
Next question is from [Bastu]. Please go ahead with the question.
Yeah. Hi. Thanks for taking my question. I wanted to understand from you, how will this gradual move from road to rail, the implementation slowly of the DFCs financially impact and operationally impact our Surface Express business over the long run?
Yeah, well, because rail is not in a really competition with the road. Whatever they are building up, this Dedicated Freight Corridors, this is meant for to be carrying commodities and like EXIM cargo. They are building it for that because for the road, it really cannot be Multimodal Express for that. FTL, as you are aware, these are direct from factory to factory. Our business also like door-to-door, so rail cannot be covering that. But tomorrow, supposing this is really viable and economically viable to have the mid-mile through that is a faster or connections and service loading and loading at platform is really fantastic, then we can be think over to shift our mid-mile. This is very good for the overall industry. Then we will be think on that.
But then this Rail Express vertical of yours, what is the exact purpose from which you started that, and what are you trying to achieve by blending? I am assuming you are blending Surface Express and Rail Express.
They are two different products. Surface Express, usually the transit time is 5- 7 days, and Rail Express is 2- 3 days. So that is the difference in the service offering. The pricing is higher for Rail Express because it is a faster delivery service. Therefore, there is no overlap between rail and road in the express business for us.
Rail also, like to mention here, rail is through passenger trains. We are not utilizing this goods train.
Yeah, that is what I was asking. Could you explain the business model of your Rail Express business? That was my question.
Yeah, it is again, is a substitute of Air Express services where they're giving whatever prices, and we're doing this Rail Express services in like 25% cost and with the same kind of tat where we putting our material into in a passenger train and then delivering. So it is also door-to-door service, and we're giving on a similar kind of, tat which we deliver even competition in air mode with the highest price of 4x. This is the model we have. That's why Rail Express is moving very fast.
Okay, understood. When you say door-to-door, you mean then a truck collects the product from somewhere and then delivers it to the customer?
Exactly. It's a Multimodal Express basically, where we pick from the customer's premise, bring to platform, put into a passenger train, and then collect from destination location and deliver to customer's destination, customer's place. So it's the whole value chain we are giving to them.
Understood.
Yeah.
Okay, great. Thank you.
Our next question is from Mr. Ravi. Please go ahead with your question. Mr. Ravi, you can go ahead with your question.
Hello.
Yes.
Are you listening to me?
Yes, Ravi. You are. Yes.
Okay. I am shareholder since last 10 year. What commentary, Chander, you said before two to three years, now business is different. What you said earlier, I visited Gurugram sorting center too. Had you any idea such bad time come to lifeline of country business? If it comes, when it will be a normal one?
Nice to speak to you again. This year is election year, and last year, sorry, I mean. The whole of the financial year, there have been elections. We saw the poor situation of the economy because cash had dried up from September of 2023, since the 2,000 rupee was banned. We saw the economic downturn started happening. Coupled with that was the high interest rate and the inflation rate. Everything is now subsiding. Elections are over. Hopefully now, there will be a rate cut.
Of course, let us not forget that the global challenges of the three wars that were happening. All that also came into factor where we started getting affected, the country started getting affected. The situation was so bad that to win the power, nothing was being cared about for the businesses or the country. Now, that is aside, we have already started seeing growth from January onwards. Going forward, we are well-poised, well-positioned to handle the growth which will be coming on. Now, let us not forget that we have been paying dividends very taxfully and also at the same time, we have been profitable also to the extent that we have not taken a loan till now. Looking at that, a glitch like this is okay. We are able to manage it and sustain it and go forward.
Also to add that, Mr. Ravi, basically, we seen these kind of cycle in 2008, 2009. That time global slowdown was there. We seen this kind of problem again in 2014, 2015, before GST time. That time has been run through by one and a half year and then again, whole industries come with the next leap of the growth in that. We hope also now worst time has gone, tough time has gone and we will be start to moving in a positive side.
Thank you very much for your reply. Okay.
Yeah. Thank you.
Our next question is from Mr. Jinesh.
Am I audible?
Yes, you are.
Yeah. Thanks for the opportunity. Sir, my question is on our volume growth trajectory. I think if I remember right, in the last call, you had mentioned that our target for FY 2026 is approximately 13%-15% in terms of volume growth. But given how the performance has been so far, especially on the SME side where you mentioned that there is a pain which they are going through. Essentially, how should we look at the next year in terms of volumes? Also if you can call out any specific sectors that are witnessing more challenges within the universe that you operate. I think you mentioned that retail is at about 9%, but any specific sector which is having a major impact as far as your volume uptick is concerned?
Yeah. You rightly said. We have taken a target to be grow in the range of value-wise in the range of 12%-15%. Volume, we will be grow like double digit, at least 10%-12%. We also intend to take the price hikes in next year also. One of that. Second part, you rightly said. We now think why should we so depend on the SMEs because this is not doing well. We more aggressively going for the big customers and we also achieve that result in this January month. We will be go with that strategy. Third thing, we also like very aggressive to be for the Multimodal Express businesses, wherein Rail Express and Air Express are the forefront for that. We are putting high effort for that as well. Margin is already like erode on a 300 basis point.
We have not seen any further erosion on that. This is like sustainable margin, whatever we did that. I have seen there is enough growth aspiration for the next FY 2026 we will be achieve in time to come. Yeah.
Sure. And sir, I am a bit new to the industry, so this question might sound a bit basic or silly in nature.
Yeah, no worry.
Just wanted to understand the overall universe. Given the challenges that we are facing, how are the other competitors doing? Are we holding onto our volume market share when we say that we are at about 242,000 tons? Are we holding onto our volume market share or are we seeing volumes shift across the competitors? What is the overall universe in terms of total volumes and what kind of growth or rather degrowth one has witnessed in that universe, say in the last couple of years? How do you see the overall demand scenario shape up for the next year?
Yeah. If you see other industry player where FTL and LTL, they are slightly in a growth because this market is very fragmented and they can get the FTL moment from the unorganized player very well, very easily, but must be compromised on a margin level. If you see the express industry is working in a different way where we catering to B2B customer. Our challenge, we can't be compromised on a service level. FTL industry, LTL industry can be compromised on a service level. Because we are as a premium service provider, we can't be compromised on a service level. This is one aspect where once volume will be back, then we will normalize our margin level. Second, new industry we also targeting like new bath ware, kitchenware, home furnishing.
These are the new industry where people like buying and we also putting very high emphasis on that to be adding these kind of customers. So we are doing that. Third, we also changing slightly our aggressive strategy to be focusing more big customer than SME customer, because SMEs, I think that will be maybe go like in again for the three or six month, maybe have the pen, depending upon the how like RBI maybe cut on the rate or inflation plays. So this all depending on the various thing, but we clearly intend to be keep ready for the FY 2026 to achieve like 10%-12% in a volume growth.
Got it. Okay. Thank you. Thank you so much.
We can have one or two more questions, then we will need to close that.
Our next question is from Ms. Achar. Please go ahead with your question.
Yeah. Good evening team. Thank you for the opportunity. Sir, just two questions first. Did I hear you right, in terms of your Multimodal Express revenue mix is about 17%, 18%?
Yes, correct.
What kind of contribution are we looking at over next two years or three years?
We are planning to have 22% at least in the next three year, after three years. Each year we want to enhance with the growth of, like faster growth in Multimodal Express, because these are a very niche segment in Air Express and Rail Express. We want to enhance at least 1.5% each year. By after completing three year, we want to be that share in 22%.
That comes at a superior margin to current level or similar level of margin?
So these slightly superior margin in Air Express and Rail Express.
Understood. When you are looking at a double-digit volume growth, which are the two or three sectors you think will drive that growth? Secondly, as you said, you obviously going to focus a bit more on the corporate side, which will be at a lower margin. What is the typical margin difference between the two, in terms of between corporate and the SME?
No. Basically it will not impact my margin, rather it will be improved because now is a matter is to fill factor of my truck has to be improved on those routes where we really have the low volumes. It is really help to improve the margin, even not reduce the margin. This ratio is also not bigger one, like we just looking for the 2% or 3% kind of change in that ratio. Ultimately it will be again, we all said all the time saying, big customer giving the volumes and small customer giving the prices.
This time we really need the volume, so that is why we catering that and once normal time will be come, then we will be more aggressive to get the business from these SMEs and get correct this ratio again in the range of like again, 50% SME, 50% big customer. That is the strategy we want to be adopt, specifically on a return loads, where we have the emptiness in the truck. We want to be fill up because as I said, we cannot be compromised at all on a service level. This is the fortunately, unfortunately, in good time is a good thing where we have the higher volume and good margin, but in this low time, we have the face the challenges of like vacancy, and it is a direct cost to us.
Tomorrow, supposing my volume increase, that completely will be very fastest will be improve my margin level of 200 basis points, once fill factor improve by 2%. This is directly linked with the service levels and volumes.
In a sense if I understand right, essentially what is happening is that your, because of the weak volumes, there is an underutilization of the fleet. So fill factor is lower.
Yes.
Can you just give some sense in terms of how it is trended in 1Q, 2Q, and 3Q? Has it gone down materially? Has it remained stable?
It's almost-
Or more or less similar.
We highest we achieve in one quarter where we highest volume is around 84.5%. In this year, we achieved 82%. So volume, this vacancy level is around, this is reduced by almost 2%.
Okay. Is it any particular lag, sector, region, it is acute and which is even though the overall number may not look that low, it has a disproportionate impact on the market?
Slightly that we, as I said, SMEs is slightly weaker, so we getting impacted through like eastern side, from eastern to across India and down south to across India. These two sector where we depending on majorly on SMEs. That's impacted.
Understood.
Yeah.
That's very helpful. Thank you and wish you all the best.
Thank you. Please.
Our last question is from Vikas. Mr. Vikas, go ahead with your question.
Good evening. My question is, as we are planning some international services, already we are having but offices in international locations like Singapore, what can we expect in next 3- 5 year span contribution from international services and especially the network, how many countries we will be doing, which type of services, LCL, FCL or only Air Express? My second question is on the automation. We have done two hubs automation. Finally now all the teasing these problems must be over. What's the impact of this automation on OpEx and operational efficiency?
Yeah, Mr. Vikas. Basically, international side is really very hard to say on the numbers. We are not diverse. We can answer on a one-to-one basis. But basic idea, because we already have the network across India through agent network, we do not have any further office opening in worldwide. We will keep the office in Singapore only, but we do the work. We want to be a hub there, so we can do from Singapore in and out. Second part on automation side, as already mentioned, there is an efficiency improvement a lot in these two center where we reduce our time to process the cargo in these two hub, those two sorting centers. Ultimately, we reduce the cost by 30- 50 basis point put together in these two center in overall basis.
We will keep adding the sorting automation in the new center wherever we building up. As mentioned, Kolkata and Ahmedabad will be the next one, followed by Chennai and Mumbai. We will be going in by data strategies.
Thank you.
Yeah. Thank you.
With this, we end our question and answer session. Mr. Mukti Lal, would you like to have ending statements?
Yes, Mr. Chander will begin.
I must thank everyone for participating the TCI Express con call for Q3 FY 2025. To summarize, despite the evolving macroeconomic landscape and sectoral challenges, TCI Express has continued to demonstrate resilience, adaptability, and strong commitment to operational excellence. As we move forward, we remain optimistic about the long-term potential of the logistics sector, and the express industry, supported by favorable policy initiatives, infrastructure development, and growing demand for express transportation solutions. We are confident that our asset-light model, disciplined financial management, and customer-centric approach will continue to drive value for our stakeholders. With that, I must thank you.
Thank you, please.
I would like to thank management once again for providing us the opportunity to host this call. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your line.
Thanks a lot, please.