Ladies and gentlemen, good day and welcome to TVS Supply Chain Solutions Limited. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations of the company as on date of this call. The statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participants' rights will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation completes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand over the conference to Mr. Prabhu Hariharan, Head of IR of TVS Supply Chain Solutions Limited. Thank you, and over to you, sir.
Thank you, moderator. G ood morning and welcome all to TVS Supply Chain Solutions Earnings Call for Q1 FY2026. I hope everyone had a chance to look at the financial results, which were posted on the company's website and also on the stock exchange. Here we have with us today Mr. Ravi Viswanathan, our Managing Director, and Mr. R. Vaidhyanathan, our Global CFO. We'll commence the call now with opening remarks from our management, along with the business performance update. It will be followed by an open quorum for Q&A. Before we begin, a customary remark. I would like to point out that some of the statements made during this call may be forward-looking in nature and must be reviewed in conjunction with the risks that the company faces. A disclaimer to this effect has been included in the investor presentation.
I request and hand it over to Ravi to make the opening remarks. Over to you, Ravi.
Thank you, Prabhu. Good morning to all of you. Firstly, let me welcome all of you once again to our earnings call to discuss the performance for the first quarter ended June 30th, 2025. Let me start with the key highlights for Q1. We delivered year-on-year growth in revenue and profitability, driven by disciplined execution, continued cost focus, and benefits from our strategic investments. A major highlight was a substantial swing to profitability, both year-on-year and sequential, in our Integrated Final Mile business in the U.K. and Europe. This performance underscored the effectiveness of our turnaround plan and the structural changes that we have implemented for the last year. Our balance sheet remains healthy, and we are well positioned to capture opportunities in our priority markets.
As you may recall, in our last earnings call, we have spoken about a series of strategic actions, including leadership restructuring, headcount rationalization, and rate-shoring, with a sharp focus on lowering operational expenditures across our entities. I am glad to say that all of these actions are well underway across all the regions. Let me start by explaining the structural transformation we have initiated in our U.K. and Europe business. Effective April 2025, we have combined our Integrated Supply Chain Solutions and Integrated Final Mile businesses in the U.K. and Europe under a single leadership. The integration of ISCS and IFM reflects a fundamental shift in how we want to deliver value, aligning our services with how our customers consume our services. By bringing these businesses together, we are creating an integrated platform by combining warehousing, distribution, and final mile that enables more seamless engagement and stronger cross-sell opportunities.
The unified leadership and operating structure will enable us to present one face to the customer, unlock synergies and efficiency in service delivery, and drive sharper commercial focus while meeting the integrated solution needs from our customers. The integrated business in Europe is now led by Jon Croyden. John brings over 30 years of experience in operations and logistics. He began his journey with TVS OCA as a Managing Director within the IFM business in the U.K. and Europe, and subsequently elevated to the CEO of IFM in 2023, and he has been successfully leading the turnaround of that business. This change in operating model also led us to realign our segment reporting structure, starting this quarter. We have made two changes in our segment reporting. One, ISCS now includes Integrated Final Mile services, while GFS, reflecting freight forwarding business, will be a standalone segment.
This segmentation reflects the way we manage and serve our customers going forward. We have undertaken a reclassification of warehousing contract services. Certain warehousing contracts in Singapore and Thailand, which were previously grouped under GFS, have now been merged with ISCS. Out of this structural integration emerged our formal restructuring and transformation program for the U.K. and Europe business, which we call Project One. Project One is designed to integrate the two businesses across every layer, from leadership to operations, commercial processes, and support functions. It also involves consolidating warehouse infrastructure, streamlining our brand architecture, removing all manpower overlaps, and bringing other synergies, which will drive efficiency across the platform. Project One is expected to deliver about INR 110 crores-INR 120 crores in annualized cost savings, with about INR 50 crores-INR 60 crores benefits starting to reflect in FY2026 itself.
Under the new structure, we have taken significant steps to simplify and strengthen our operating model, anchored around the key pillars: right sizing, simplifying, and bringing leaner organization layers through integration; right shoring, establishing certain roles and activities from high cost to optimize cost locations; management restructuring, which is streamlining leadership to support the unified operating model; warehouse consolidation, rationalizing and consolidating warehousing infrastructure to drive scale and efficiency; brand realignment, harmonizing our go-to-market identity under one unified brand to reflect all of our integrated offerings; and finally, a consolidated business development team focused on unlocking cross-selling opportunities. All of this is currently underway in the U.K. and Europe. As a consequence of Project One, we have recognized certain one-time restructuring costs in this quarter, and we had already mentioned this in our Q4 earnings call. R. Vaidhy will elaborate more on this shortly.
Another important milestone for the quarter is that we have realized value from our early-stage strategic investment in TVS Industrial and Logistics Park. While our core model is asset-light, we made a strategic investment in TVS ILP several years ago, a business that acquires and develops warehouse infrastructure. In Q1, TVS ILP transferred approximately 11 million square feet of developed assets into an InVIT platform backed by marquee global and domestic investors. This transaction has delivered significant value. We recorded INR 177 crores as our share of profits in this quarter. Let me now briefly touch upon our financial performance for the quarter.
We reported a consolidated revenue of INR 2,592 crores, reflecting a growth of 3.7% sequentially and 2.1% year-on-year. ISCS segment continued to deliver steady growth across regions, while GFS segment saw sequential improvement with uptick in volume despite ongoing macro challenges and stock rises. Our adjusted EBITDA stood at INR 173 crores with a margin at 6.7%, showing clear recovery from Q4 FY2025. We also delivered a strong improvement in our PBT. Our underlying adjusted PBT, excluding the share of profits from associates, improved to INR 19 crores this quarter, up from INR 14 crores in Q1 FY2025 and INR 17 crores in Q4 FY2025.
Additionally, the share of profits from our strategic investment in TVS ILP stood at INR 177 crores this quarter, significantly uplifting our reported PBT to INR 196 crores. Our GFS segment continues to face macroeconomic pressures, particularly around uncertain tariff environments and softening trade rates, which all of you are well aware of. In our Q4 earnings call, I have specifically called out that GFS is impacted by uncertainty and potential contraction, influenced heavily by policy-induced trade disruptions. We have seen this playing out in Q1 FY2026, and we expect this volatility to continue. With the above strategic initiatives outlined in today's call, we remain committed on our growth targets and to achieve our target of 4% PBT by Q4 FY2027. Let me now hand it over to
Vaidhy, our Global CFO, to take you through our financial highlights for the company in detail. Over to you, Vaidhy.
Thank you, Ravi. Good morning to all. Thank you for joining us today. Before I get into the financial performance, I would like to call up a few critical highlights in Q1 FY2026. As Ravi mentioned, Project One is a major transformation initiative to integrate our ISCS and IFM businesses in the U.K. and Europe. This program is expected to generate approximately INR 120 crores of sustainable annualized cost savings, with INR 50 crores-INR 60 crores savings expected to start accruing in FY2026. This will be one of our key levers to achieve our 4% PBT target by Q4 FY2027. In line with this, we have recognized a one-time exception cost of INR 91 crores during Q1 FY2026. It is important to note that out of INR 91 crores, INR 53 crores is expected to be the cash expense, primarily towards employee redundancy cost and site consolidation cost.
The remaining INR 38 crores is related to the impairment of legacy brand, which is non-cash in nature. Also, out of the INR 53 crores we had provisioned in Q1, we have incurred approximately INR 17 crores, and the balance is estimated to be incurred in Q2 and Q3 FY2026, which is already provisioned in Q1. This is expected to improve both the EBITDA and PBT percentage going forward. As outlined in our earnings presentation, we have made changes in our segmental reporting. ISCS business and certain warehousing contracts in GFS business are now reclassified to ISCS segment. GFS reflects the freight forwarding business as a standalone segment. Going forward, our segments will consist of ISCS and GFS. The erstwhile IFM segment will only have GFS, and accordingly, it is renamed as GFS segment.
Lastly, our strategic investment in TVS ILP has enabled us to realize significant gains in Q1 FY2026 as TVS ILP has transferred their warehousing assets through the InVIT listing. INR 177 crores is our share of profit in TVS ILP in Q1 FY2026. TVS ILP will continue to develop warehousing assets and transfer to the InVIT platform. Now, I will walk you through the financial performance. We reported consolidated revenue of INR 2,592.3 crores, reflecting a growth of 3.7% sequentially and 2.1% on year-on-year basis. ISCS segment, now inclusive of Integrated Final Mile businesses for U.K. and Europe, delivered steady growth with revenue at INR 1,982.9 crores compared to INR 1,943.4 crores in Q4 FY2025 and INR 1,905.6 crores in Q1 of last year. This translates to a growth of 2% sequentially and 4.1% year-on-year.
On the GFS segment, we reported INR 609.4 crores of revenue this quarter, marking a 9.7% sequential growth, largely on the back of volume uptake, partially offset by a sharp decline in the rate. On a year-on-year basis, revenue declined by 3.8%, primarily due to the continued pressure on the price range. Pricing continues to remain under stress, both sequentially and year-on-year, and macroeconomic uncertainties and tariff volatility continue to weigh on the safety impact. Overall, we remain encouraged by the positive momentum in the ISCS segment, while continuing to be cautious on the GFS business with geopolitics and trade uncertainty. Based on our various discussions with the investors over the last few quarters, the question often asked is the impact of the price results in overall performance.
With our new segment structure, investors can now have a clear visibility on the impact of the volatility in the GFS business to the overall margins of our consolidated operations. Now, moving into the cost structure, freight clearing, forwarding, and handling expenses declined from INR 734.3 crores in Q1 FY2025, which is INR 680.3 crores in Q1 FY2026. This reduction primarily reflects the lower freight rates within the GFS segment, as both ocean and air freight rates suffered during the quarter in response to the subdued global trade. On a sequential basis, it increased from INR 632.8 crores in Q4 FY2025 to INR 680.3 crores in Q1 FY2026, in line with the revenue growth from the GFS segment.
Subcontracting expenses increased from INR 343.3 crores in Q1 FY2025 and from INR 357 crores in Q4 FY2025 to INR 377.1 crores in Q1 FY2026, in line with the growth in the ISCS revenue and also due to change of resources. Material-related costs remain largely stable on a year-on-year basis. Employee expenses increased from INR 577 crores in Q1 FY2025 and INR 610 crores in Q4 FY2025 to INR 619 crores in Q1 FY2026. This increase was primarily attributable to the higher operational volumes in the ISCS business and due to yearly inflation. In terms of profitability, our adjusted EBITDA for the quarter stood at INR 173.3 crores, translating to a margin of 6.7%.
This compares to INR 185.3 crores at 12.3% in the same quarter last year, while the decline was largely attributable to the GFS segment, which saw a year-on-year compression in the margin due to rate declines and pricing pressure. On a sequential basis, we saw a clear improvement. EBITDA improved from INR 161 crores at 6.5% in Q4 FY2025, driven by margin recovery in both the segments. Specifically, within ISCS and IFM, operations delivered a step up in profitability, as we had communicated last quarter that IFM would see a gradual increase in margin going forward. With respect to the GFS, margins improved sequentially on the back of operating leverage from higher volumes, despite continued pricing headwind.
Our adjusted PBT before share of profit from TVS ILP was INR 19 crores, up from INR 14 crores last year, a growth of 35% year-on-year, and reflecting margin improvement to 0.7% from 0.5%. On a sequential basis, a growth of 10%, which is INR 19 crores in Q4 FY2025. Our reported PBT before exceptional items for the quarter is INR 1.95 crores, including share of profit of INR 177 crores from TVS ILP. Our reported PAT for the quarter was INR 71.2 crores, as compared to a loss of INR 3.9 crores in Q4 FY2025 and a profit of INR 7.5 crores in Q1 FY2027. Before I conclude, I would like to call out slide 28 of our Q1 FY2026 earnings presentation, where we had explained our approach to improve the PBT percentage to 4% likely for FY2027.
Three core levers driving the PBT growth are the IFM turnaround, which will improve our PBT margin by 0.4%, primarily on account of the actions we have taken to turn around that result that includes significant pricing corrections in the market. Second, savings from Project One, which will deliver approximately 1.2% of the PBT. As I explained earlier, the annualized savings from Project One is estimated to be approximately INR 110 crores- INR 120 crores due to a combination of factors such as unified leadership structure, freight consolidation, right sizing, and right shoring in the U.K. and Europe business. A last improvement in the operating leverage is expected to deliver additional 1.9% PBT improvement. While we brought the revenue and gross margin, our overall growth will grow at a much lower rate, resulting in higher operating leverage.
Our diversified portfolio, leaner cost saves, and actions we have taken on the other initiatives that are currently underway give us high confidence in reaching this goal. With this, I will hand it back to Ravi.
Thank you, Vaidhy, for the detailed analysis. Let me now touch upon our business development efforts and key customer engagement to continue to support our revenue momentum. In Q1 FY2026, we secured new business wins of INR 124 crores, representing around 5% of Q1 FY2025 revenue. The contributions on these wins have been relatively muted this quarter, primarily due to lower than anticipated volumes in some of the new contracts, as well as delays in revenue start dates for a few key engagements. We expect more volume ramp-up and revenue recognition to improve in the upcoming quarters. Our order pipeline remains strong at INR 5,300 crores, giving us solid revenue visibility going forward. During the quarter, we won several notable contracts.
On the ISCS side, we secured mandates from one of the large global agri-equipment companies based in the U.S.A. the largest diversified omnichannel retailer in India, a leading global tech and entertainment company from India, a premium electric vehicle manufacturer from Asia, a European telecom infrastructure services provider, a global footwear brand with manufacturing and retail presence in India, a German engineering and technology conglomerate in Asia, an Indian IT service and consulting firm with operations in the U.K. a leading personal computing and printing solutions provider in the U.K. and a global IT services company with a strong presence in the U.K. On the GFS side, we added a global commercial vehicle manufacturer, a global leader in battery technology, an Asian multinational food and beverage company, a global health supplement and cosmetics firm, and an international retail refrigeration equipment vendor.
These wins reflect the trust leading global and domestic brands place in our capabilities and position us well for continued growth in the coming quarters. In summary, our year-on-year performance with improving profitability highlights the steady momentum in our business. We are consistently winning key deals and tapping the emerging opportunities across sectors and geographies. With the new structure, we are well positioned to participate and convert more opportunities in the future, and we remain confident about sustaining the growth trajectory and creating long-term value for all our stakeholders with a clear roadmap to achieve 4% PBT by Q4 FY2027. With this, we'll open the floor for questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue opens. The first question is from the line of Sucrit Patil from Eyesight Fintrade Private Limited. Please go ahead.
Morning to the TVS team, and good morning, Mr. Viswanathan . This is Sucrit Patil here. I have a bit of a telescopic question. As TVS supplies the quantitative Integrated Network Solutions, how are you thinking about deploying AI across the demand for forecasting, warehouse automation, and freight routing? Do you think it can drive the margin improvement? Do you see this helping TVS build a scalable, tech-driven edge in global supply chain solutions over the next two to three years? Thank you for that. That was my question.
Thank you, Sucrit. This is Ravi here, and great question. I had mentioned in my earlier calls sometimes the last 15 years that we have started pilot programs in AI. We actually have scaled the deployment of AI in select engagements in the U.K. U.S. and India, where we use a fair amount of visual computing and bringing in order of efficiency. I think the question that you asked specifically around demand forecasting, these are models that we already have in our software tool, and we are building AI into it. Let me just say that where there is great opportunity to bring AI is in our operations. Agentic AI is something which we will talk about over the next few quarters.
We believe that there is a great scope for us to improve process efficiency and bring down the ability or increase our ability to drive more volumes with less using agentic AI. We have multiple AI engagements which are in various stages of both as an initiative and in deployment. AI for our automation and agentic AI for our process automation, and a significant amount of AI that we are deploying, we have our own toolset called BiteKick, which is like a ChatGPT kind of tool. It helps us drive internal efficiency, especially in tapping into the various knowledge nuggets that we have within the enterprise. Multiple initiatives, we will update you as we go forward in our journey. Thank you, Sucrit. I hope I've answered your question.
Yes, thank you very much. You pretty much answered my query. The next two quarters would be very interesting to watch for TVS . Thank you very much.
Thank you.
Thank you. Before we take the next question, we would like to remind participants you may press star and one to ask a question. The next question is from the line of Ishant Lalwani from Ashika Institution Equity. Please go ahead.
Hi. Thanks for taking my question. With the recent segmental reporting change, where ISCS now includes the IFM business, what are your revised short-term and long-term revenue and EBITDA targets for each segment?
Thanks, Ishant. As you said, as of now, the ISCS segment is hovering around 8.3% adjusted EBITDA margin. In the medium term, we expect this to go about 10%, 10.5%. As we tell you, in the past, the revenue would be somewhere around 15%.
Revenue target?
The revenue growth would be around 15%, yes.
Okay. Also, despite absolute profitability holding up, adjusted EBITDA margins have declined. What are the key reasons behind it?
As we mentioned, that's primarily because of the GFS segment, where there was a drop in the freight rates, which in fact affects the absolute profitability. One of the primary reasons is the GFS segment.
Just wanted to clarify we continue to see that as there will be a fair amount of volatility given the overall trade environment. If you see even in our restated numbers, you will find that the GFS has been fairly volatile, and that volatility has impacted the overall EBITDA share.
Okay. How should we view the contribution from previous TVS ILP for the full year?
Can you repeat your question, Ishant. Your voice is bit muffled.
Yes. How should we view the contribution from previous TVS ILP for the current year given that it has been adjusted and treated PBT?
I think what happened in Q1 is ILP has transferred their warehousing assets, and because of which, we had a higher share in Q1. I think going forward, it will be a normalized share of profits from ISCS for the rest of this quarter.
Okay. Just the last question. The exceptional item expense related to your Project One, will this recur in FY2026 or was it a one-off?
This is a one-off expense, Ishaan, because relating to the Project One restructuring cost, now they called out over INR 91 crores, INR 53 crores is a cash expense that is likely to be incurred, including Q2 and Q3, where we are taking the provision in Q1 itself. The program calls for, you know there is an obligation for us to recognize this cost in all its shares. As per the accounting standards, we have recognized this cost because it's a formal restructuring program that we are doing in the U.K. and Europe. Because of the obligations, we had to recognize this cost in Q1 itself. Even though the actual cost will be incurred in Q2 and Q3. The INR 38 crores, this is a brand, legacy brand we had. As you know, we had a lot of acquisitions in the past, and we are selling this legacy brand.
As part of this Project One, we are integrating everything into a unified brand architecture. That is why we have taken this write-off of INR 38 crores of brand, and which is non-cash in it.
Okay. All right. Thank you.
Thank you. Participants, if you wish to ask a question, please press star and one on your touch-tone phone. The next question is from the line of Saumil Shah from Paris Investments. Please go ahead.
Yeah. Hi, management. Good morning and congrats on a very good set of numbers. Sir, my question was related to TVS ILP . Basically, we are having 25% holding in this company, and with INR 177 crores is our share, right? 25%?
Correct.
In the previous quarter, we were not having any gains from such sales.
Saumil, this year, this quarter, since ILP went through an InVIT process, they transferred their warehousing assets to the InVIT platform. Because of this, they had a gain, and we are getting a share of that gain at a rate of 25%.
Okay. Going forward, how can we look at this particular segment? Every quarter, we will have some or the other gains, or it would be like a once in a year kind of a realization?
Yeah. I think, see, as and when ILP starts developing warehousing assets, and they will be transferring to an InVIT platform, at that time, there will be a gain. What has happened in Q1 is that they have transferred almost INR 11 million worth of warehousing assets to the InVIT platform, through which they have recognized this gain in Q1. As they keep developing more warehousing assets and transferring to the platform, plus there will be, depending upon the market conditions, there will be a gain.
Okay. Basically, what is the size of the development? INR 11 million has generated INR 177 crores. What is the total size they are developing right now?
They have, in their prospectus, said that they have a plan to develop about 20 million square feet, but there's no definite time frame. I would say in the next, in the medium term, that is their plan. As they continue to develop assets, they will continue to put it in the InVIT platform. That's their plan.
Currently, whatever they have developed, they have already transferred it. Right now, as of now, for the next few quarters, we will not get any such gains?
We don't anticipate in the next couple of quarters, for sure.
Okay. How should we look at this? I mean, this would be one-off kind of exceptional items, or it is a TVS Group only profit? How should I look at this?
Understood. The way you look at it is that, you know, the plan of TVS ILP is around 20 million square feet, of which they have invested about 11 million. There is a balance of 9 million in the medium term. You know, that's the way to look at it, and not from a quarterly perspective.
Okay. Because, sir, as a shareholder, I mean, it's been a long wait. More than two years, our stock has not performed. In fact, it's even below our IPO price. Please don't get me wrong. There is no question on management's integrity, but I mean, for the last two years, shareholders have suffered. Can you please give some comfort to the shareholder community that what's our growth outlook for the next few quarters? I mean, what we are guiding, 4% PBT, and maximum kind of a revenue growth. Are we on track to achieve it?
Firstly, let me thank all the investors for their substance and patience. Yes, I completely appreciate and acknowledge it. Having said that, I think, like Wadi outlined, there's a clear plan for us to get to 4% PBT, and that should unlock significant value. That's our belief. The management is absolutely focused in doing that. All of the actions that we have taken, especially in bringing this structure together and leaning the organization and taking significant costs out of the organization, is all focused on this one concept of profitable growth. I just want to reassure you, if you look at the pipeline, it's probably a very healthy pipeline. We continue to grow our pipeline. The GFS segment has been incredibly volatile, and that has had, I would say, a fluctuating impact. We are well on a track to get to a 4% PBT.
I just want to reassure all of the investors on that.
Along with the revenue growth guidance of mid-teens?
That's correct. The key for us is to continue to convert the INR 5,350 crores and keep building the pipeline. If you see the trends, we have been increasing our pipeline on a quarterly basis, and our revenue growth has been consistently up. I think all the leading indicators are showing positive signs. That's the way I will guide, Saumil .
Okay. We really hope that this quarter will be a turnaround quarter, and we start delivering to our promises. That's it from my side. Thank you and all the best.
Thank you so much.
Thank you. A reminder to participants, if you wish to ask a question, you may press star and one. The next question is from the line of Kunal Sabnis from Nine Rivers Capital. Please go ahead.
Hey, hi. Thanks a lot for the opportunity. Just confirming the Project One impact, what you mentioned was that in quarter one, INR 17 crores hits you have taken on the back of that. The total impact will be INR 53 crores for the full year, the cash impact, right? You also said that some INR 50 crores-INR 60 crores of savings will be there in Q2 FY2026, which means that the Project One is useful for this year, and then you have a cost savings of INR 120 crores next year.
Correct, Kunal. I think whatever is the initiatives that we have taken, that will give us a savings in FY2026 itself, about INR 260 crores. The annualized savings is the number, is about INR 110 crores-INR 150 crores.
Got it. In Q2 2026, you also take a hit of INR 53 crores. The understanding is correct, right?
Correct.
Perfect. One thing on the GFS side, what’s the normalized EBITDA margin of the carved-out piece, which is now pure freight forwarding?
Kunal, the GFS on a normalized basis should be somewhere around 3%, 3.5%, Kunal. If you look at the path, 3%, 3.5%. Correct.
Got it.
Yeah, ISCS should be 10% to 10.5%. That's the 13.5%.
Got it. Correct.
Yeah. Great. Thanks, Kunal. That's all from my side. Thanks.
Thank you. Before we take the next question, we would like to remind participants you may press star and one to ask a question. The next question is from the line of Darshil Jhaveri from Crown Capital. Please go ahead.
Hello, good morning. Thank you for taking my question. Hopefully, I'm audible.
Yes. Hello.
Yeah. Hi, sir. Sir, just wanted to ask, in terms of, you know, project, like our PBT margins, the guidance is quite similar for FY2027, but how will we be exiting, you know, FY2026? These benefits will be accruing Q2 or it will be more back ending towards FY2027? Okay. Sir, thanks.
Darshil, see, what will happen in FY2026, there will be a sequential improvement in the PBT margin, Darshal. Okay? As I said, the Project One, the IFM turnaround will start giving us the benefits. You can start seeing those benefits from the early quarters of FY2027. By the time you reach Q4 FY2027, I think we are confident of this hitting that 4% PBT.
Yes, sir. Just wanted to ask one more thing. Currently, in our planning, we have the accountants for these GFS up and down because driving our margins is around 3%, 3.5%, but right now we are at 2%. Because of that, will there be some operating deal leverage or some volatility in the margins because of that, sir ?
Let me just say it's very difficult to model the current volatilities that we are seeing. Having said that, what the company has done is to significantly reduce our cost structure so that we remain within a very narrow band in terms of work, overhead to revenue volatility. If the revenue increases or decreases, then we should not have a linear increase or decrease in the overhead. That's the plan. We have taken a lot of cash in terms of redundancy. We had mentioned it even in the last earnings call. We continue to take cost out of that business to make sure that we remain very lean and agile. It's very difficult right now in the current environment to look at what impacts it will be.
One of the things I think the new segmentation does is for investors like you to see the GFS, the impact on the GFS based on all of the things that we are seeing around us, by calling them out. Typically, it was in the Network Solutions segment. By calling it out, it gives us better ability to model our numbers going forward. I'm sorry, that's the best answer at this point that I can give.
No, I get it. It's a bit difficult to model. My question is towards that. Is there a client risk because the GFS segment will not be able to reach our goal because of the volatility? I'm assuming in the PBT margin of 4%, we would have margin around 3%, 3.5% EBITDA margin. If it sustains like this for some more time, then our margins will not improve the way we want them to improve. Is that the fair understanding of it?
Correct, Darshil. I think GFS will assume that the GFS probably in one or two quarters it will return to some kind of a normalcy. Once uncertainty tapers off, and we'll hit the 3%, 3.5% PBT margin, no EBITDA margin for the GFS segment. As Ravi mentioned, right now the situation is a bit uncertain, so you'll have to wait for more stability in that segment.
Okay, fair enough . I'll just answer to understand with regards to our order pipeline right now. Any more conversations happened, or how does, in general, the INR 100 crores pipeline, how soon can we see fruition? What would be maybe our win rate of it,sir?
As a company, our win rate is about 22%. We continue to see how we can improve that. Some of the effective ISCS segment has large gestation deals. The good thing is, they are long-term deals and they are multi-year deals, but it all could take a long time to satisfy. The pipeline that I've shared is actually our annualized revenue pipeline, which means that if I win all of those deals, that's the revenue I'll be able to recognize for the year. I would say that, given the pipeline, we remain confident on the revenue growth.
The revenue growth should be around mid-teens, right, sir?
That is the current outlook, yes.
Okay. Fair enough. As I said from my side, thank you, sir. Alvida.
Alvida.
Thank you.
A reminder to participants, if you wish to ask a question, you may press star and one. The next question is from the line of Saumil Shah from Paris Investments. Please go ahead.
Yeah. Hi. Thanks for allowing me a follow-up. In our presentation, I think we mentioned that the best, I mean, industry-class, other companies, they are helping a PBT of 8%- 11%, whereas we are targeting for 4% by Q4 FY2027. What would be our long-term guidance for this beyond Q4 FY2027?
Yeah. Clearly, I think the article is that, you know, we want to get to that benchmark, but our first step is to get to 4% PBT by Q4 FY2027. We see how we can deploy additional rewards. There are quite a few opportunities, like the first caller had mentioned. I mean, the agentic AI and the AI pilots that we are doing are aimed towards, you know, changing that trajectory. We expect those to get deployed sometime in the later part of the next fiscal. Those are things that we can keep building on as we see opportunities increase. Our immediate goal is to get to 4% PBT by Q4 FY2027 and then build a roadmap to get to the 8%-1 1%. We'll take it one step at a time, as you can appreciate, Saumil.
Okay. Is there any debt reduction plans for this year?
Saumil, as of now, I think we are comfortable with the debt, and most of the debt is coming from working capital level. We are comfortable with the debt position.
Okay. Okay. That's it from my side. Thank you.
Thank you.
Thank you. A reminder to the participants, anyone who wishes to ask a question may press star and one. The next question is from the line of Riya Sharma from CK Capitals. Please go ahead.
Hello. Am I on Zoom?
Yes, Riya.
Hello. Sir, I have two questions for you. The first one is, the new business wins considerably dropped for this quarter from the usual 10%- 12%- 5%. Any reason for this, and how is the deal pipeline currently holding?
Okay, is that two questions?
Yes. That is the first question.
Okay. Let me answer this first. I think the first one is my commentary is that we secured new business wins of INR 124 crores, which was muted compared to what we have generally seen. Predominantly, it came on two counts. One is volume reduction, lower than anticipated volumes in some of our existing deals. Also, a couple of large deals that we assigned had, I would say, delays in revenue start dates for those engagements. From a pipeline perspective, we remain very healthy, INR 5,300 crores of active pipeline, and it continues to grow. The number of opportunities that are in different stages in our pipeline gives us tremendous confidence that we will stay on our growth plan. Lead indicators are good.
Yes, I did mention in my summary that the revenue growth, which normally is about 9%-1 0%, was holding around 5% this quarter, which is on account of lower than anticipated volume. Again, it's a reflection of the overall trade environment and also some engagements we started a bit later than the plan to be.
Okay. Got this . The second question is that the over-India businesses of ISCS and GFS this quarter have been on a slowdown since past few quarters now. Can you shed some light on the same?
Two things. I think if you see the Q1 numbers in India, it itself has been muted. In a way, I would say that from a supply chain side, we reflect that. Again, like I said, the lead indicators are good. The number of opportunities that we are chasing are still on the up. We remain confident. In many ways, it's a reflection of the overall performance here and of India since Q1.
Thank you for this from my side.
Thank you, Riya.
Thank you. Ladies and gentlemen, that was the last question for today. As there are no further questions, I would like to hand over the conference to management for closing comments.
Before we wrap up, let me first thank you for your questions, your interest, and we remain very committed to our overall strategic growth that we have spoken about. Let me reiterate the key takeaways from this quarter. Q1 has been a strong start to the year, driven by disciplined execution. The Project One we have initiated in the U.K. and Europe, combining ISCS and IFM under one leadership, optimizing our footprint and realigning our brands, is already setting the foundation for a leaner and more customer-focused organization. Project One will also be one of the key levers in delivering our 4% PBT targets by Q4 FY2027, alongside the sustained turnaround of IFM and operational leverage that we can get across our other regions.
We remain watchful of the macroeconomic and geopolitical certainties, but our diversified portfolio, resilient cost management, and healthy balance sheet functions as well to navigate volatility and capture growth opportunities. We are confident that the actions we are taking today will deliver sustainable value creation for our shareholders in the quarters ahead. Once again, thank you all for your time, your questions, and your continued interest in the journey.
Thank you. On behalf of TVS Supply Chain Solutions Limited, this concludes this conference. Thank you for joining us, and you may now disconnect.