Good day, ladies and gentlemen. It is my pleasure to welcome you on behalf of TCI Express Limited and SKP Securities to TCI Express Limited's Q4 FY 2024 and FY 2024 earnings webinar. We have with us Mr. Chander Agarwal, Managing Director, along with his colleagues, Mr. Mukti Lal, CFO, and Mr. Hemant Srivastava, COO, Non-Surface Express Business. This webinar is being recorded for compliance reasons, and during the discussion, there may be certain forward-looking statements which must be viewed in conjunction with the risks that the company faces. I now hand over the webinar to Mr. Agarwal for his opening remarks, which will be followed by a Q&A session. Thank you, and over to you, Chander.
Good evening, ladies and gentlemen. I welcome you to the Q4 and financial year 2024 earnings conference call of TCI Express. Let me start by giving you a brief summary of the economic conditions we encountered during the fourth quarter of financial year 2024. Despite challenges in the operational environment during this period, TCI Express demonstrated resilience and adaptability in navigating the market dynamics. We maintained stable growth margins and consistent capacity utilization due to a strong customer base, robust network, and operational efficiency, enabling us to outperform industry peers. Aligned with our shareholder-friendly capital allocation strategy, the board of directors has recommended a final dividend of INR 2 per share. This brings the total dividend financial year 2024 to INR 8 per share, amounting to a significant payout of 400% on the face value, underscoring our commitment to delivering value to our shareholders.
Moving on to a brief update on the business developments. The Rail Express has garnered significant interest from customers, and our customer base has grown considerably and over 125 routes to cater to the growing demand. A lot of the air cargo business has also kind of moved towards the rail cargo segment, is what we have noticed. Moreover, I am pleased to announce the successful implementation of automation at the Pune Sorting Center. This 1.4-lakh square facility is now equipped with AI-enabled automated cross-belt sorter, enhancing operational efficiency, streamlining sorting processes, and minimizing errors. This advancement has resulted in faster deliveries and reduced inventory holding periods. These efficiency improvements will again firmly establish TCI Express as the innovation leader in the express delivery industry. As we look ahead into the future strategy, our focus remains on investing in technology and automation to boost operational efficiency and deliver exceptional customer service.
In financial year 2024, we allocated a total capital expenditure of INR 46 crore towards expanding our branch network, advancing automation initiatives, and fortifying our IT infrastructure. Throughout the fiscal year, we expanded our footprint by establishing 25 new branches, supporting our multimodal express business, and enhancing market reach and customer accessibility. Now, all our surface and non-surface products have their own team, which will contribute significantly to the top line and bottom line as we proceed. Our strategic investments in technology and infrastructure have significantly ensured that we remain in the forefront of the industry. I am also happy to announce that our sorting center in Chakan, Pune has achieved a gold rating in the LEED v4 BD+C warehouses and distribution centers rating system. This achievement underscores our company's dedication and also our approach to sustainability.
In the ongoing commitment to people first approach, we are proud to announce that we have been recertified with Great Place to Work, reaffirming our dedication to fostering a positive and inclusive workplace environment. Also, we are honored to have received prestigious sustainability award from CUMI, a leading manufacturer of coated and bonded abrasives in India. We have also been recognized as the best B2B logistics partner for 2023/2024 by Royal Enfield. These accolades affirm our commitment to excellence and our strong partnership within the industry. Looking ahead, the sector is set for substantial growth, driven by government infrastructure and policy initiatives aimed at enhancing transportation infrastructure, especially at major freight routes, logistics parks and road and highway connectivity. With this favorable industry outlook, we are confident in our capability to capitalize on the opportunities in the Indian express logistics market and generate long-term value for our stakeholders.
With this, I now like to hand over the call to Mr. Mukti to talk about the financial performance of the last quarter. Thank you.
Mukti, should I share the PPT?
Yeah, please. Yeah, good evening, everyone. As this time, we are not only doing earning presentation, we are rather giving full presentation to have the feel about the company. That's why we moved on from concall to webinar. I will quickly run through this presentation, and then we can have the question answer session. So we, like you all are aware, we started this company after demerger from TCI eight years back and almost we are the 3,000 workforce and 970 branches right now. Yes, next please. So we, in this year and continuously, we will be focused on offering comprehensive logistics services across multiple domains, including Rail Express, Air, and International, C2C and Surface express, and tailored to diverse client needs. We continuously will be focused on asset-light model.
We will be carrying high-value cargo and continuously expansion of services. We will be continuously focused on automation of our sorting centers. This is our geographical footprint. We are present across India, which not other companies are. We are west to south and north to east, we are everywhere present. We are offering all the services: surface, pharma, Cold Chain Express, Rail Express, e-com, C2C Express, and Domestic and International Air Express. As two years back, we established first fully automated center in our Taj Nagar center, which is near to Gurgaon. Now second one has also, as Mr. Chander has mentioned, we second one we also launched in Pune in March month. We are now streamlining the things. This is also with the sustainability, where we have the solar in Taj Nagar as well as in Pune, both we have the solar electrifying through solar only.
With that, we reduced the turnaround time of this cargo almost by 40%. These are the service offering which we started two to three years back. Rail Express is getting high good traction. Right now, we are the 4,500 customers. Now currently we are operating off 125 routes and is continuously increasing the numbers of customer and all. This is again, customer are very happy with the services and our target is to be converting air business into rail business with a 1/3 cost. Same way, Cold Chain Express, we are only focusing on pharma. We are not going into other field of food and other related products. That's why we will be keep the same thought where we keep ourself asset-light. We will be hire the assets on outsource model. We will be keep the same way.
C2C Express, yes, this is a new niche segment where we creating the business for fast tracking and milk run model, where we collecting the cargo from two locations and delivering on a one location or vice versa, where we picking from the one location and delivering two, three locations. Again, same way will we go with the outsource model. We will be keep ourself asset-light, so return would be higher. This is having very huge market. We converting into in gradually in our favor. Now move on to Q4 highlights. We have to achieve a total income of INR 320 crore. EBITDA is INR 47 crore, which is, EBITDA is percentage margin is around 15%. We announced the final dividend of INR 2. So totality for the whole year is INR 8 and 400% on face value.
Utilization level of trucks in this time is around 83.5%. Next, please. This is the financial performance. You can see, we grown in this quarter almost de-grow by 2.5%. Accordingly, PAT is also lower. In full year basis, we grown on 1%. At EBITDA level, we de-grow around 3.5%. Same way, we have achieved INR 46 crore of CapEx in this year. In totality, we have added for the full year, we added 25 branches. In this quarter, we added almost 10 branches, especially focused on our multimodal express business. This is a quarterly performance. We compare Q4 and then Q3 of last year. Sorry, Q4 of last year and Q3 of this current year. You can see the numbers, like margin is in between of 15%-17%.
PBT margin, still the highest in the industry, in the range of 13%-14%. Yes, please. This is FY 2024 highlights, and which you see we have achieved a revenue of INR 1,261 crore, which is 1% higher, and EBITDA is also INR 194 crore with a margin of 15.5%. Yeah. Can you go back, Navin-ji, slightly, please? In this year, if you see, we achieved a cash profit of INR 151 crore compared to INR 154 crore of last year. So cash profit side will be almost the same what we achieved in the last year. Yes, sir. Next, please. This is the annual performance of last four years, where our revenue is increasing trend, EBITDA is also increasing trend, and PAT margin is again still the highest in the industry. Yeah.
These are the key ratios where our return ratios are in high range, in the range of 25%-35% over the period of last four years. Cash conversion ratio is again, very robust. So we are converting almost 70% cash into EBITDA -to -cash ratio. Leverage, we maintain continuously, like receivable days is hovering from 50-55 days continuously. Since one decade it is also in the same line. Again, payable days, we are also having very good scheduled payment system. So that is why payable days is also in the range of 35-38, and accordingly, net working capital cycle is also 14-16 days. We are maintaining that since last one decade. This is a balance sheet. We are showing here, balance sheet size has been grown from INR 735 crore to INR 850 crore.
If you compare it, there is no big differences there. Only trade receivable has increased from INR 211 crore to INR 231 crore. Assets increased by almost INR 30 crore. Net assets increased by INR 35 crore. Rest increase in whatever surplus fund we have, it is increase in short-term investment, which grown from INR 32 crore to INR 90 crore. So almost INR 60 crore has gone in there. Same way, if you see on the liability side, everything is added to our net worth, and trade payables are also the same. These are cash flow. As I mentioned, we have very good cash flow from operations. This is we are showing the comparison our margin profile with the industry player. So still we are, whether it is EBITDA or EBIT or PAT, we are the highest one.
These are the nine-month results we are comparing because still few industry players will be launched or giving their results. They are in waiting. So that is why we compare with the nine months results. Last eight-year takeaways is like our location has grown from 32,000 location to 60,000 location, and branch office increased from 500 to 950+, and sorting center from 26 to 28. Customer base has also hugely increased from 1.5 lakh customer to 2.25 lakh customers. That will be. If you see, EBITDA has been growing in the range of CAGR of 17%. Yeah. This is our strategic and outlook, where we, again, will keep the same way of balance in between of SME and big customers, where we continue focus on metro and tier one cities.
We will keep adding the new services, which we offer, started one or two years back. Our planned CapEx for the next five years is INR 500 crore. Of that, we already incurred around INR 170 crore in last two years. Remaining INR 330 crore will be spent in next three years. These are the strategies by 2030, where we want one fourth of the share of multimodal services in overall revenue. Rest, we want to create a wealth for shareholders accordingly. We will keep continuing focusing on asset-light business model, and we will increase the customer base, and we will keep the sorting center strategy the same way, where we want to create the big sorting center from leased to owned one. These are the industry numbers, where we have the market share by volume.
Transported by us is around 7%, which is almost 7% market share. Next, sir. Next, please. Government is also pushing hard to improve the infrastructure continuously. Last year they did INR 11+ lakh crore kind of they carve out the money, capital expenditure for infrastructure development in 2024/ 2025. That will certainly help us to improve our efficiencies. Yes, sir. These are management team, where our chairman, managing director, our-- Next, please. Sustainability is also our core pillar, and we are working hard on to all the ESG component, environmental, social, and governance. We soon will release our ESG report. First ESG report. You can find this on our website also. Please. These are the recent awards we get, and Mr. Chander has also mentioned, so no need to repeat again. Like fullest sorting center, then award by the Royal Enfield and CUMI.
Please. Please. Yes, please. These are capital market information, where we given a CAGR of, since last eight years, we given CAGR of 14% + in our share returns. Please. Please. Thank you so much. Now we can have the question answer.
Thank you, Mukti.
Yeah, please.
Friends, we now open the floor for the Q&A session. Anyone wishing to ask a question, I request you to raise your hand, we will unmute you and take your question. Friends, if you can introduce yourself, with the name of the company or the fund house that you are representing. Wait for a couple of minutes while the questions line up. We have a question from Alok Deora. Alok, please go ahead.
Yeah. Hi. Can you hear me?
Yes, Alok. Loud and clear.
Yeah.
Please go ahead.
Yeah. Good evening, sir. This is Alok Deora from Motilal Oswal. Just on the results, firstly, if you could share the volume number for fourth quarter and the full year, and how it was YoY in the fourth quarter.
Mukti, you need to unmute.
Yeah. To start with, tonnage numbers for this quarter is exactly 258,000 tons, and that is almost 2% in negative of same year last quarter. For the full year, we achieved 1 million tons exactly.
Okay.
Yeah.
Sir, I just wanted to understand because it has been a pretty muted quarter and even a muted year, if you see the full FY 2024. What is really happening at the ground level? If you can just give some insights because the growth has not come through and we have been forecasting nearly at least a 10%-15% sort of a volume growth, and we have closed on a flattest number. How do we see the FY 2025 panning out and our long-term guidance on the revenues of nearly INR 2,000 crore? How those numbers stand? Any color on that please?
Yeah. Chander, sir.
I think this is just a temporary phenomena because we know that at the ground level, consumption has been badly hit because of high prices. In general, we have seen the consumption taper, especially from the Q3 onwards. Surprisingly, the Diwali that we expected was not a bumper Diwali at all. That kind of influx of high cost and even the fact that cash was pulled out of the market. India being a cash market, I think that also played a very important role in not enabling growth in the service sector.
Hello?
Yes, Alok. Continue.
Yeah. Just one last question.
Yeah.
What kind of growth we are now looking in FY 2025, and margins will remain in this range or could we see some improvement there? That is my last question. Thanks.
We expect about 10%-12% growth. Also Q1 is the election quarter, so we have to be very careful about that. And profitability, yes, will be remaining the same. We will try, of course, our level best to increase it by 100 basis points.
Sure. I will come back in the queue. Thank you and all the best.
Thanks, Alok. We take the next question from Lavina Quadros. Lavina, please unmute yourself and go ahead.
Yeah. Hi, Chander. Hi, Mukti. Lavina from Jefferies. Just wanted to check, on this volume angle, can you just let us know which industries, if you can give us a broad sense on which industries have seen a decline? Because CapEx seems to be picking up, manufacturing is doing well. So exactly which industry has disappointed on the ground, and broadly your volume composition. That would really give us some color on what's exactly happening on the ground. Thanks.
Yeah. Chander, sir.
Lavina, hi. Manufacturing has been growing, but consumption has not been. If you look at the pricing that's happening, the major price increase at the ground level, it's not as opposed to, say, the top level or the medium level of the economy, the income level. It's pertinent to understand that the consumption in, say, travel tourism and all that, which has been high, is a factor of several reasons. But if you look at sectors like, even though we are not in that, consumption and even textiles, electronics, all of them have not been growing. The high prices that we're looking at has really made the consumer, not just in India but globally, I'm seeing that the consumption levels have come down. It's probably a temporary thing, with the high interest rates and the high inflation.
Hopefully this year, as we are expecting that the interest rates should start easing out by September, then things should start getting better.
Also to add what Chander is saying, I think we also faced already inventories are so high with all the showrooms and all the B2B customers. That is the one-off reason. Now I think once consumption will restart, though manufacturing is there, but movement of goods is not there where we are in picture, where we have to be coming into picture. So that is also one-off reason where dispatches by these manufacturers is less because they already have the inventories there. So that is why.
Sir, can you give us some industry color? Let us say on your volumes, how much is approximately consumption back, how much is in manufacturing back, so that we just get a sense that whenever consumption picks up what could be the impact for you all? On your broad cargo volumes. Just a broad sense.
Yeah. Basically, if you see, except auto, all the sectors are not growing, whether it is lifestyle products or pharma, because after COVID time, pharma still is in flattest growth, they are not growing. Also, like I mentioned in the last call, where they restricted some to be sending the sample to doctors, that has not picked up again because they limited some sending these goods to doctors as a sample. So these are the, again, engineering goods item, which again, not that much growth. They have a very low growth. So these are the, I think except auto, every sector facing a challenge on the consumption side.
Okay. Thank you.
Thanks, Lavina. We take the next question from Ashwini Agarwal. Ashwini, please go ahead.
Yeah. Hi. My name is Ashwini Agarwal. I am the founder of Demeter Advisors. A quick question. Just looking through the pricing and the premium margins that you have versus the industry, is it possible that your growth reflects your premium positioning and competition is kind of capturing the growth because business environment is challenging and people are looking for deals. Are you losing market share? Do you have any proxy for that? How do you maintain your competitiveness on the service side, I understand. But on the pricing side, are you being edged out on growth because of pricing? That's the real question.
If you see, your concern is right, but that's not the case actually, because if you see all the industry numbers, nine month number are available and no one has grown. This is as mentioned by Chander-ji, basically it is an industry-wide phenomenon where no growth has come. Everybody is facing the challenge on the revenue side. But if you see price-wise, this industry is really not price hungry because earlier I also said, sometime what freight we are charging in comparison to their product value is less than 1%. They're really not concerned about the pricing. Pricing is not a concern at all. It's the overall economic situation and customers are like less dispatches are there. That's why it is happening. Once this volume will be back, we will be there.
There is no case at all where we even think for losing market share. Our margin is a premium margin. This is happening because we have a widespread presence across India. Second is our utilization of vehicle is fantastically on high side because we are getting the business across India, that is why utilization level is higher. This is not the way we are losing market share. That is not at all.
Our service levels are top in the industry. There is no way that, I do not think that the pricing is making a difference. It is just that the dispatches from the manufacturing companies are less and because of less consumption.
My follow-on question along the same lines is that, obviously the government has spent a lot of money on augmenting rail capacity in the last four, five years. Is it possible that the traditional road network is becoming less competitive and rail capacities are taking away some of the share with-
I would like to interject. It is actually all the money is going in passenger rail network development, not in cargo or freight. In the Western world, you have a separate line for cargo and freight, and that is not the case in India.
Okay. So that's not the reason either. Okay, fine. I'll come back in the queue. All the best. Thank you.
Thank you, Ashwini. We'll take the next question from Jainam Shah. Jainam, please go ahead.
Hello. Can you hear me?
Yes. Please go ahead.
Yeah. Firstly on the data point part, if you can share the railways share in the total freight for 4Q as well as full year FY 2024.
Sorry, come again. I just missed your question.
Yeah. What is the proportion of the total freight has been contributed from our railway and other services in fourth quarter and for the full year?
Yeah. Basically it is hovering around 17.5%-18% continuously last year. For the full year is also like 17.5%-18%.
Okay, got it.
Yeah.
Sir, of course this year has been quite muted for us, and if we see the trend for the last eight years, we have grown substantially at 17%- 18%. So what we can see from a 5- 10 years perspective in terms of growth, along with that, in terms of margin, have we taken any price decrease because of cutting diesel rates or something in the second half of the March, or we are continuing with the same pricing?
Yeah. So again, our strategy would be growing 2x of the GDP, except this year was not great and muted for everyone. But next year onwards we hopefully, again come back to that process where we will be growing at 2x of GDP. On margin side, yes, once we will be come back with the higher volume, certainly our margin will be further improved by 50 basis point- 100 basis point. Again, what the second you asked? Yeah, Jainam.
Jainam, you had a follow-up question.
Yes. After margin, I was asking about the overall growth for over a medium to longer term. That is like 2x of GDP, right?
Yeah. Margin, certainly we will be improving in time to come once volume will be back. Otherwise, if you see our strength is there. In this year, also in a low volume, even we maintain our gross margin at the level of 32%, which was the same in last year. Whatever degrowth in slight margin is there due to manpower cost and increase in manpower cost only. Even admin cost is also same, what we had last year.
Got it. Sir, this last question was on the pricing part. Have you taken any decrease in the pricing with respect to the rate cut in the diesel price in the second half of March or something?
No. Basically, if you see, we have the only price hike clause. We don't have any clause which is supposed to be reduced. Wherever price is increasing or decreasing is a positive arbitrage for us. Because why I'm saying, once price is increasing, then we passing on to everyone, every customer. In all the time, we able to passing on almost 85% customer overall. Then we passing on to our suppliers also, but on their prices, so on my cost. Arbitrage is there. I am passing on my price to customer on my prices, means sales price, and I'm passing on to my supplier on my cost price. That gap obviously is around 30%-35%. It's always positive arbitrage. Once prices is decreased, we are not decreasing prices. Exceptionally, two or five customer, or 1% or 2% customer is okay.
Otherwise, we are not reducing. It is directly, we keep retained with us. We also like reducing the price of our supplier. That way, this industry is working. No need to reduce the prices, because again, that cut was not a big one. That is hardly, they reduced the price by 2%-2.5%.
Got it. And sir, one more question from my side.
Jainam, please.
Yeah.
Jainam, let us just keep this as the last question because there are a lot of participants waiting.
Okay, thank you.
Please. Thanks. We'll take the next question from Krupashankar. Krupashankar, please go ahead.
Hi. Good evening, and am I audible?
Yes, you are. Please go ahead.
Yes. Thank you for the opportunity. Sir, quick question. Just wanted to get a sense around any specific sectors as such, which can give a better performance in FY 2025, which you are having a positive outlook around, and that can be a key growth catalyst with respect to volumes. What are your thoughts around that, on the first part?
Yeah. Our thrust to be improve, we hopefully in engineering goods and basically in pharma. These two sectors we are seeing. Obviously auto will be continuing to grow. We are not so optimistic about this one, lifestyle products or you can say textile products. We are not so optimistic about that. But otherwise, hopefully every segment will be increased, every product will be increased. Otherwise, we are also focusing on this time on defense sector and also in solar sector, because government is also pushing to install the solar on 1 crore houses on next years. So we are also focusing that products.
Got it, sir. Now, based on my understanding of the sector. Lifestyle and textile constitutes a big portion of the B2B express industry. Are you not seeing any green shoot at all? Because we are seeing that there are companies which are reporting a relatively better growth in specific pockets, at least. Where is the gap, is what I wanted to understand, is that the growth or wherever TCI Express is present much more, the growth is not happening on those pockets, and that's one of the reasons why we are not able to see that volume growth happening?
Interestingly, we doing the work with only premium brands, whether a name of all big brands, and I think they are not in that safe or in growth. That's the only reason. Because pocket, they may be grow because we don't doing much transportation for regional level or in intrastate, basically. We are doing interstate. We doing the work majorly for the big brands, and I think that is still in, they have some pain.
If that is the case, is it likely that there is an annual price hike anticipated in the first half of the financial year?
Yes. Last year, as we did not take any price hike because there were muted numbers and volumes. So we have not initiated the process. But this year, we are initiating the process again, and hopefully this year, we will be finished with the 1.5%-2% price hikes this year.
Got it. Thank you. Thanks a lot. I will get back in the queue.
Thank you, Krupashankar. We will take the next question from Dhanan Bagrodia. Dhanan, please go ahead.
Hi, sir. What were the total volumes for the quarter?
Volumes are like 258,000 tons for this quarter, and for the whole year is 1 million tons.
It is 258,000 tons. One million is total.
Yeah.
Okay, we had volume decline of 2% year-on-year.
No, so it's not declining. It's almost flat or I think 0.5% growth over last year.
For the quarter?
Yeah, quarter is yes, - 2%.
Okay. Sure. Thank you.
Thanks, Dhanan. Take the next question from Anshul Agrawal. Anshul, please go ahead.
Hi. Thank you for the opportunity, Navin. Question for Chander-ji and Mukti-ji both. I was reading your comments that we have jettisoned a few customers which are unprofitable in nature. Wanted to understand, are these SME customers, and what would our mix of SME customers be in our revenues currently?
No, basically these customers which is not profitable one is in a big segment actually. And our customer on SME side is non-profitable one. That's why.
What would be our mix, Mukti-ji, for SME customer mix in our overall revenues currently?
Yeah. Currently it is around like this quarter we maintained around again 51 big customer and 49 is small customer, and for the whole year is again 50/50. Because we intentionally don't want to get disturbed that balance. Since last two decade we maintaining that.
Great. The remaining CapEx of odd INR 300 crore that we intend to spend in the next 2.5 years, could you help us understand which all hubs would we plan to automate and where this CapEx will get used?
Yeah. Very good question. As I mentioned already two sorting centers are already automated. Now in pipeline are like Ahmedabad, Kolkata, Mumbai and Chennai. These are the four one, which is in pipeline. I think in next year we will be start the construction, we'll be start in this year in Ahmedabad or Kolkata, in two places.
But the project will get completed only in 2026 for Kolkata and Ahmedabad?
Yes.
So these benefits will only come in 2026. Would that be correct?
Yes, that is correct.
Despite that, we are saying that we will see margin expansion in the current year?
Yes. So margin expansion like this is very good thing where we at least started these two sorting centers. So at least on lag between Pune to Gurgaon we will be have some benefit on that because there is in a both way we have the simultaneous automation. So certainly we will get the benefit in that. What we earlier understand estimated. So we will get the benefit here.
Thank you so much.
Yeah. Thank you.
Thanks, Anshul. The next question is from Naysar Parikh . Nehal, please go ahead.
Hi. Thank you. Sorry, my question is for Chander-ji. This year, we can maybe understand when we look at the last five years, right? Pre-COVID to now, we've practically not grown. We were INR 1,000 crore odd in FY 2019, and now we are some INR 1,250 crore. Whereas competition has grown significantly. Blue Dart has gone up from INR 3,200 crore to INR 5,200 crore, so INR 2,000 crore. Safexpress grown from INR 1,600 crore to some INR 3,500 crore, so another INR 2,000 crore. And Delhivery has gone up from INR 1,300 crore to INR 5,200 crore. So that's another INR 4,000. So all of them have kind of grown revenue strongly, whereas over the last five years we are practically flat. So what is the reason for that?
This is a very good question, Naysar. Basically, if you see, these are all players in a different mode. If you talk about Delhivery, they are completely in B2C segment and there is a different one. They also like doing FTL. That is why they are growing very fast, and they also added the new company acquisition there. To talk about another company, you talk about Blue Dart. If you see the last one decade, their number. Their number earlier they was in a hugely negative, and then they bounce back gradually. That is the thing is happening. About the third company, you name it. I think they are more into focusing on third-party logistic and full truck load, not in a majorly into express cargo. These are within the industry, there are different products they are having.
The express industry, if you compare us, that is a vis-a-vis like we are there and then Gati is also there, and then Spoton was there. Spoton was like now merged with Delhivery. These numbers, if you see, there is the same kind of number you will be found there. It is very important to see whether which product we are comparing. That is the only thing I can say.
Sorry. You are saying over the last five years, the market is only higher by 25%? The market that you are in. That is less than 5% CAGR or 4% CAGR.
Sorry, what you said?
I'm saying you grew from INR 1,000 crore to INR 1,250 crore, right? From pre-COVID to right now.
Yeah.
My question is, that's less than 5% growth. Are you saying that the market that you operate in grows at less than 5% in the last five years?
COVID we had - 20% growth.
Yeah.
Please factor that in.
No, but I am comparing pre-COVID to now. You are saying pre-COVID to now, if we look at CAGR, the market CAGR should be less than 5%?
These two years you cannot be compared with that. Like 2020 is also hit by that and FY 2021 is also badly hit by that. Then we grow in 2022 and 2023, both year we have grown. So we cannot see like put the same because these two years just like wasted on that, due to that COVID. That is the only one reason you can say you cannot take is like CAGR. If you CAGR see like before that, we have grown like 15%, 16% CAGR. That will be again volume industry. This is a very temporary phenomenon. Once volume will be back, we will grow again.
Mr. Parikh, you compared unorganized segment with the organized segment in Express. That is not really an apple to apple comparison. If you look at our direct competition, which is listed, you will see the results are available. You are talking about new age delivery companies. They have their own way of working where they will take on any business and every business that is possible. But if you look at the B2B business that they are in compared with ours, there is far big difference. I think getting into detail, minute details is very critical in this industry.
Okay. Got it. Second question which I had is, from a volume perspective, I think this question was asked earlier, but can you give a split by sectors for yourself? How much is pharma? How much is textiles, et cetera?
Yeah. Volume is 55% from these major five sectors, which are pharma, electronics, engineering, lifestyle products and auto. Remaining are with other sectors.
Okay.
Yeah.
And for this year, can you mention which were the top two, three sectors that did. Top two sectors in growth and bottom two sectors in growth?
Basically, growth was in this year is in auto, obviously, and lowest growth in lifestyle products.
Okay. Thank you so much.
Yeah.
Thanks, sir. We take the next question from Priyank Chheda. Priyank, please unmute yourself and go ahead.
Yeah, hi. Coming back to the aspirations to grow 2x of GDP, and if you see our nominal GDP still growing at double digit. There is overall a buoyancy in the macro environment except for commodity sectors. Most of the sectors which you mentioned, which contribute large chunk of the revenue have grown. SME credit growth itself is double digit. What I really want to ask is, what is the introspection that is required from a TCI Express side now what actually is required on the strategic level to change for so that we being such a smaller company in a whole of the large logistics sector can grow despite all the macro headwinds. Just on a strategic thoughts, Chander-ji, if you can help us, it would be great.
We have tried lowering the prices earlier to gain market share, and that I think is the worst strategy to take on. We can also take on. We can do what other companies are doing, and just take on every kind of business and not worry about the value. The question is then what we had expected from the anvil of GST from 2016, that how the economy will change, how the economy will prosper. Took a little bit of shuffling because of GST coming in 2016 and then elections happening, and then COVID happening, and then elections happening again. So within the five years, we have seen that whatever we have created, whatever we are running on, it's geared to withstand all those challenges and still continue with profitability.
Now, the top line growth, what I think you all are concerned about, is something which I keep saying is temporary. It's a temporary halt. It's not something which is taken back. The problem would have been if we did not achieve the 15% EBITDA or 16% EBITDA. That would be the concern. There is nothing that we will change. There is nothing that needs to be changed. We have aligned our manpower, our infrastructure in the proper way that can withstand and can go up and down as the economy is going. What we need to, as investors, as promoters, we are very patient, and we have to understand, and if we take that in stride, we will definitely keep achieving our targets.
Correct. If I have to again circle back the strategy and the placement of whole of the business construct that is there, is rightly placed. And we have to wait for a macro to change in our favor or customers within the cohort where we are should change in our favor, right? I mean, nothing on a strategic level changes that are required at a TCI Express end that are required.
Nothing at all.
Very clear. Thank you.
Thank you.
Thanks. We take the next question from Akash Vora. Akash, please go ahead.
Yeah. Thanks for the opportunity. Two details I required. One was, what was the capacity utilization for this quarter?
Mukti, you're on mute.
Yeah. This quarter, capacity utilization was around 83.5%.
Okay.
And for the full year, it is around 84%.
84%. Okay. How do you expect it going forward?
Once volume will be increased, then certainly we want to be going in the range of 85%-86% in near term. And in longer term, we want to be in a range of 88%-89%. Beyond that-
What would be our peak?
Yeah. That is why I am saying. So peak would be, we may not go beyond 90%, obviously. Then we will be compromised on our service level, which we cannot. That is why we hopefully, in longer term, we want to be 89%- 90% max.
Okay. And sir, could you explain the increase in other expenses this quarter, especially?
Basically, CSR amount. CSR and few other items, basically.
Okay.
Yeah.
We do make a quarterly provision for CSR?
Not really, because this is as and when this is incurring, that is why we are putting the money on accordingly.
Okay. What would be the amount for CSR this quarter?
For the whole year? For whole year is around INR 3.5 crore .
INR 3.5 crore . Just last question from my end, sir, was on the price hike. I think in one of the earlier questions, you said that you all didn't take any price hikes this year. I think a quarter or two back, you all had mentioned that in a phone call itself, that you all had taken a 0.5%-1% kind of a price hike.
In last year, yes, we did. Initially, we had taken the price hikes in quarter first. Subsequently, we are not taking the price hike intentionally because continuously flattest volume was there. In this year, we again will be surely to take the price hikes in the range of 1.5%-2%.
Okay. In FY 2024, there is only one price hike, and how much was that for?
Sorry?
In FY 2024, we took only one price hike. That was in quarter one.
Yes.
By how much?
It's around 0.5%- 0.75% overall impact.
0.5%- 0.75%. Thank you, sir.
Thanks, Akash. Friends, anyone wishing to ask a question, please raise your hands. We'll unmute you and take your question. While some questions line up, can we take a few questions that have come on the Q&A board? Mukti?
Yeah, please, sir.
Kunal Bhatia is asking, please give CapEx breakup of INR 46 crore towards branch, machinery, technology, and others.
Yeah. So basically it is going around INR 25 crore in machinery, which is machinery and other related construction, and remaining around, I think INR 15 crore in expansion of branch and other related construction, and INR 5 crore in technology. You are on mute.
Kunal, I hope your question is answered.
Yeah.
Samyak Jain wanted to understand the correlation of our pricing to customers. Is it directly linked to fuel prices, or we go by market rates, or do we have a pricing advantage for delivering the shipments quicker? Secondly, what is our revenue segmentation in terms of B2B clients versus B2C clients?
Yeah. Very good question. Basically, pricing environment here usually is not market-driven. It is because these are the premium products. It is differentiate on terms of which customer we serving, like big customer slightly giving less prices, small customer giving slightly higher prices. Different product even have the different segment have the different prices, like pharma have different, auto have the different prices. That is also varying. But overall, if you see, which I mentioned, sometime what freight we are charging in comparison to their product value is less than 1%, or hovering around 1.5% max. That is the case is there. Second part, prices is also linked with the diesel prices. Wherever diesel is increasing, we increasing the prices to customer. Yeah. I hope I mentioned that.
Okay. There was one second part to it. What is our revenue segmentation in terms of B2B and B2C clients?
Almost, we have 97% volume from the B2B segment and only 2.5% - 3% from B2C segment only. Because B2C, we are not focusing intentionally. There is no margin since other companies since bleeding since last one decade. That is why whatever business we have as a B2C is really profitable one, and we are doing on a very limited way with the smaller customer, not these big two guys.
Dhanan Bagrodia , he asked, what are the total tons for the quarter?
Total tonnage for the quarter is 258,000 tons.
I think you had answered. You had spoken about this.
Yeah.
Krupashankar asks, "The KMPs have been appointed recently. Notably, there is a new head for e-commerce. Is there any added focus on increased e-commerce to TCI Express's portfolio?"
On the e-commerce side, we want to grab more market on the B2B side, where so many people are sending the goods to these e-commerce players. We are doing the reverse of that. We are not doing B2C, but we are doing B2B for that. So many people sending the goods from there to these marketplaces. We should not be left out with that market. We are focusing on that, from picking from the small vendors and then delivering to these guys. That is the market we are focusing on.
Manjeet Buaria, "Can you please tell how we compare with key organized players on cost per ton transported? Are we the lowest cost operator?"
If you compare two, three players, I think we are in the midway, and we still have slightly lower prices in comparison to our other two competition. New guys like Delhivery may have slightly less realization in comparison to us.
Utkarsh Maheshwari, "What can be the lead indicator for a pickup, as last year has been a flat year?" Another one is also: "How does DFCC impact express cargo as a sector?" I will just repeat the first question. "What can be the lead indicator for a pickup, as last year was a flat year?
Chander sir, you would like to answer on that?
Yes. The DFCC is not really a threat because DFCC is built for the commodities and export cargo. The whole idea was that, from North India to JNPT, it takes about two weeks on the road, and on the rail, they want the rail network to take it in a week's time. That's the whole idea. And commodities also, when they move on trucks, it's not possible to have that efficiency. The benefit would be if, for example, I know it's a far-sided thought, but imagine in the high-speed rail, whenever that starts in India, we can actually use that. That could be of a benefit, but I highly doubt that that'll ever happen. It'll only be for passengers.
Thanks, Chander. Friends, there are a lot of you who are posting questions on the Q&A board. We've kept the webinar, please go ahead and raise your hand and we'll take it up, because if you have a two-way interaction, that'll be better, I think. Nevertheless, Anshul Agrawal, once again, "What would be the differential margins on new services versus existing express business?"
Yeah. Basically, margin in rail and air is slightly higher than surface express, always.
Krupashankar asks, "Is there any assessment of what is B2B portion of B2C?"
No. You can separately ask for that. I will provide the answer wherever more clear.
Krupashankar, please feel free to write to us. We will take it up with the management and get back to you.
Yeah.
Thank you. Next question is from Vinod, "Can you indicate the level of customer stickiness in our business? Does a price hike ensure that the customer would stick with us or have a propensity to switch between the suppliers?"
There are two types of customers we have, SME customer and big customer. We always, wherever we ask for the price hikes, we ensure they should stick with us. As mentioned, they are not really concerned about the cost because it is hardly 1.5% to their product cost. SMEs, there is no challenge, and I said we are always able to take the price hikes in the case of 85% overall basis, 85%-90%. Few customers, yes, they are rigid, they will not be given any condition. They maybe have more pricing power or more muscle power to renegotiate, or they can threaten us to switch the business. That is always there. But yes, we are ensuring wherever we ask for the price hikes, it has to be compensated with good service level or higher volumes. That is the way it is happening.
We are always ensuring they should not move away from us. Sorry, Navin -ji, we finish in five minutes, we have another meeting.
Friends, we have another three or four questions on the Q&A board, and that is all the time that we have for this evening. What I will do is I will share my coordinates on the chat, and if there are any unanswered or follow-up questions, please feel free to write to me. We will take it up with the management and get back to you. Mukti, we will just take the last few questions on the Q&A.
Please.
CSR INR 3.5 crore versus last year. Any one-off in other expenses? 20% margins can be achieved at what volumes? How has been the volume growth till May? Multiple questions.
Sorry, so many multiple questions are there.
Okay.
Just-
Any one-off in other expenses?
Sorry?
Were there any one-offs in other expenses?
If you see, Navin-ji, if you see our other expenditures are almost same to last year. Quarter is not important. There is some vary from quarter to quarter. That is not a big issue. Overall here if you see, that has been same level. Last year, we did INR 72.5 crore. This year, we did around INR 74 crore. That is almost same.
Okay, the second part was, what is the sort of volume that we need to achieve 20% margins?
It is very important, you know, like earlier we reached to almost on 70% level, and for 20%, each year, because this cannot be achieved in a single year. Once we are trying, supposing we grow in a volume of 15% in next three years, we certainly touch to 19% - 20%.
How has been the volume growth till May?
I think it is very early to say. As I mentioned, there is an election year, so many rallies are going on, politicians going, coming, so this is disrupting all logistics. It will be, I think, flattish for what we have in quarter four, same way.
Okay. Saurabh.
Even we told in last, after in Q3 concall we said that same way, and this is the same way is running. This is an election time, so we cannot commit anything.
The board of directors has approved investment of additional equity for an amount not exceeding SGD 1.5 million in the wholly owned subsidiary, TCI Express Pte. Request to please share more information on the investment into this subsidiary.
I think we will be then can separately answer for that. It is a long answer, basically.
Saurabh, you can send us a request. We will try to connect you with the management, or you can drop me a mail, and we will get back. Thanks. Jainam Shah, the last question. As management has been commenting about stocking and not much deliveries, are we planning to expand into warehousing? Is not it a big opportunity for us?
Really, we will not be going into that sector. We are very clear about that, and we will not be going that sector at all. We will be stick our express industry only.
Okay. The final one. Manjeet Buaria, actually is follow-up. I was checking cost per ton for us, not realization per ton we charge our clients. It is basically asking what is the cost per ton for us.
What the cost for us?
Yeah.
Basically, if you see, my gross margin is 32%, so you can imagine is a 68% is cost. You can divide on that. Simply, it is like INR 6.80 kg because it is 1 million. I need to see that. It is around I think INR 8.5. It is a 68% of our revenue, so you can directly divide on that.
Friends, we will have to wind up out here. Thank you very much for all those questions. I have shared my email ID, so please feel free to write to me. I would like to hand over the webinar now to Chander for his closing remarks. Chander, please.
Thank you everyone for joining us today. We have tried to address all your questions, and if you have further inquiries, please connect with our investor relations team, and we will be happy to address the same. We look forward to meeting you in the next quarter. Please stay safe and healthy. Thank you once again, and thank you, Navin.
On behalf of all of us at SKP Securities, I would like to thank Mr. Agarwal, Mr. Mukti Lal, and Mr. Srivastava for joining us and taking all the questions from the investors, and we look forward to hosting you again for the next quarterly results. Thank you, and have a wonderful evening. Bye-bye.
Thank you.
Thanks a lot, please. Yeah.