Ladies and gentlemen, good morning and welcome to the VRL Logistics Limited Q1 FY 2026 earnings conference call hosted by PhillipCapital (India) Private Limited. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vikram Suryavanshi from PhillipCapital for opening remarks. Thank you and over to you, sir.
Thank you, Nidhi. Good morning and a very warm welcome to everyone. On behalf of PhillipCapital, I'm pleased to welcome you all. We have with us Mr. Sunil Nalavadi, Chief Financial Officer at VRL Logistics. We'll begin the call with opening remarks from the management, followed by interactive question and answer session. Over to you, sir.
Yeah, thank you, Mr. Vikram. Good morning to everyone. I warmly welcome you all to the Quarter One FY 2026 earnings conference call of VRL Logistics Limited. I am pleased to share that this year marks a significant milestone, the 10th anniversary of our listing on the stock exchanges. VRL Logistics continues to demonstrate resilience and strategic clarity as we navigate a period marked by contract restructuring and broader industry recalibration. During the quarter, our total income registered a marginal growth of 1% on year-on-year basis, and our EBITDA margin remained robust at around 21%, underscoring the strength and discipline of our operational model. Before diving into the financial status, I would like to take a moment to provide some industry context. The Indian logistics sector is currently undergoing a structural transformation fueled by policy-driven reforms such as National Logistics Policy and Unified Logistics Interface Platform.
These initiatives are streamlining operations, improving digital integration, and enhancing transparency across the supply chain. Now, coming to our quarterly performance, total income grew by around 1% year-on-year basis, largely supported by the price rationalization initiative implemented in Q2 and Q4 of last financial year. These were aimed at ensuring sustainable margins and led us to take a conscious decision to exit from low-margin freight contracts. While this strategy has resulted in short-term decline in volumes, it aligns with our long-term vision of remaining one of the most profitable players in the industry. As a result, volumes declined by around 12% year-on-year basis. However, we view this decline as temporary, and we have already initiated multiple steps to regain momentum without compromising profitability. We believe volumes should normalize again from Q3 onwards, led by positive macro tailwinds, including a strong festive demand cycle and favorable monsoon conditions.
That should stimulate freight momentum in the coming quarters. Apart from the industry tailwinds, we are taking several proactive steps to improve volumes. We have a customer base of nine lakh GST accounts, GST-registered customers whom we serve, and this is the highest in the industry. To sustain our leadership position, we have intensified marketing efforts across both existing and new branches, with a clear focus on securing high-quality, profitable contracts. With a wider pan-India network comprising 1,241 branches and 50 transshipment hubs, we are actively expanding into similar towns and local markets to capture incremental growth opportunities. As part of this strategic expansion, we recently inaugurated a new branch in Meghalaya and plan to deepen our presence across the northeastern region. To further reinforce our competitive position, we continue to leverage the strength of our extensive network and key operational advantage, having our drivers on the company's payroll.
In an environment where the industry is grappling with a shortage of skilled drivers, this capability positioning VRL Logistics favorably to capture additional market share and ensure consistent, reliable, and service delivery. Our ability to retain talent is also reflected in the lowest attrition rate in the industry. Complementing our strong human capital is our continued investment in technology. VRL has built robust in-house digital infrastructure to enhance efficiency and deliver a superior customer experience. Our proprietary ERP system and operations monitoring tools provide real-time visibility into consignment tracking, vehicle movement, and fuel consumption. GPS-based tracking and advanced consignment management systems enable timely deliveries, while tools such as capacity utilization tracking and real-time reporting optimize route planning and vehicle loading. We have also implemented several automation measures, including e-way bill and e-invoice generation, as well as OTP-based vehicle unlocking, which strengthen compliance and security.
Centralized CCTV monitoring, private cloud hosting, and customized alert systems further enhance transparency, improve response times, and reinforce customer confidence. One of our core operational strengths remains our ability to consistently maintain 100% hub-to-hub efficiency across our network. This operational excellence allows us to reduce turnaround time, optimize vehicle utilization, and ensure timely deliveries across our pan-India presence. We believe these strengths equip us well to navigate near-term challenges and capitalize on long-term growth opportunities. Moving on to the cost front, we continue to enforce rigorous control measures across all major expenses. Fuel is our largest cost component, saw a significant improvement in internal procurement, rising from 33% in Q1 FY 2025 to 41.5% in Q1 FY 2026.
This shift, along with a reduction in fuel procurement cost per liter from INR 86 to INR 83 per liter, helped us to bring overall fuel cost down to 25% for the quarter, from almost 29% in the same period last year as a percentage to the total income. Our ongoing route optimization efforts further minimize loading and unloading stops, enabling better utilization of our own vehicles and reducing dependency on hired vehicles and drivers, particularly for shorter routes. As a result, lorry hire charges have declined from 7% to 4% of total income. Other expenses, including administrative charges, stood as approximately 2.2% of the total income in Q1 FY 2026, up from 1.4% in Q1 FY 2025, mainly due to some higher legal and professional fees and also loss on the sale of vehicles to the extent of around 350 crores.
Employee costs around INR 3 crore 50 lakhs, and employee costs remain stable at around 18% of the total income. These cost efficiency initiatives collectively enabled us to sustain strong EBITDA performance, with margins sustaining above 20% and standing at around 21% for the quarter. During Q1 26, we added around 18 new branches to our existing network and closed down around 30 branches. These closures were part of a deliberate strategy, some being underperformed locations while others were consolidated to make way for larger, more operationally efficient branches within the same area. As of Q1 FY 2026, our total fleet stood at around 5,949 vehicles, compared to 6,177 in the same period last year. This slight reduction reflects our ongoing efforts to optimize fleet utilization and improve efficiency. Our net profit for the quarter stood at around INR 50 crores, compared to INR 13 crores in the same quarter last year.
This translated to a PAT margin of around nearly 7% for Q1 FY 2026. We are pleased with the direction in which our margin profile is evolving, and we remain committed to further strengthening our bottom line. In terms of key updates, our CapEx for the current quarter stood at around INR 15 crores. Currently, we are slower on the CapEx, considering the sufficient capacity of the vehicles available. However, depending on evolving market demands, whenever we find good opportunities, we may look to deploy additional funds for fleet enhancement and for investment into transshipment hubs. Importantly, we are well-positioned to fund any such requirements through internal accruals while continuing to maintain healthy cash flows. Another point I would like to highlight is the increase in employee cost expectation in Q2.
This is a result of internal salary increments undertaken to recognize and reward the contributions of our employees in driving business growth. While this will lead to a slight uptick in costs during the quarter, we see it as an investment in our people and in the long-term growth of the organization. Looking ahead, we are focused on diversifying our revenue base across industries, enforcing strong discipline on receivables days, and expanding into newer untapped markets. With the supportive external environment, including a good monsoon and early festival season, we are optimistic about an uptick in freight volumes in the coming quarters. This concludes my opening remarks. We now open the floor for questions and look forward to an engaging discussion. Thank you.
Thank you very much. We'll 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'll wait for a moment while the question queue assembles. The first question is from the line of Alok Deora from Motilal Oswal Financial Services Limited. Please go ahead.
Yes, sir. Good morning. So just had a few questions. First is on the volume, which has declined by 13% or so, primarily because of your restructuring in terms of letting go low-cost, low-priced customers. So this restructuring is now completed, or is it still ongoing? And how would the volume shape up in the Q2?
Yeah, it's completely done. And again, we are instructing to the new customers and even to our marketing executives that we have to maintain our freight rate strategy even going forward. So there is no compromise on that factor. And in terms of volume, yes, it's around 12%-13% decline in the Q1 because of these strategies what we adopted in the last year. Now, we are expecting at least around 8%-9% for the year-on-year decline will be there. But in the Q3, because of festival seasons and all, we are expecting that the tonnage will be matched to the extent of last year turnover what we did. And for Q4, definitely there will be a growth. This is what actually we are expecting as of today.
Got it. Got it. And sir, in terms of realization, which we got around 17% in this quarter, why? Now, that was a dip from 2Q, right? Because your price hike benefit which you had taken, that was at the end of 1Q. So now in 2Q, the realization improvement could be more like an 8-9% kind of a number, right?
Yeah. The realization what we did in Q1 will be maintained. It's around 7,800 per tonne. So around that, the realization will be maintained for throughout the year.
Got it. And just on the margins, so margins have come off a little bit if you look at the last quarter. And also, it's got to do with increasing the other expense, which rose because you mentioned about some professional fees and all. So that would be more like a one-time increase in the cost, right? So what could be the margins like? And also, you mentioned about the employee cost increasing by, I mean, the impact of 2-3% on the revenue for this financial year. So if you could just throw some color on these two aspects and the overall implication on the margins in the remaining three quarters.
Yeah. With respect to administrative expenses, the professional and legal fees, the additional of around INR 2.5-3 crores will continue for the next quarter or so. But the loss what we accounted on account of scrap of vehicle, it is around INR 3 crore 50 lakhs. It is a one-time expense. So that will not be any repetitive. But what will happen with the scrappage of the vehicle what we did in the Q1, it may touch some increase in the sale of scrap materials in the Q2. But it is not so significant to highlight here. And the second thing is about the margin side. We have carried out the employees' increment in the August. Now, this will cost us around 2%-3% of the revenue.
So based on that, for the Q2 EBITDA margins, we are expecting that the impact will be around 2%, whereas in Q3 onwards, the impact will be around 3%. That's what the expectation is.
Okay. So sir, the new normalized margin would be more like an 18%-19% range?
Yeah. Q2 will be around 19% or so. Then further, it will be around 18% for the remaining quarters.
Got it. Just last question. So any more price hike possible in the later part of the year and how we see this demand also shaping up? Because in your specific case, the volumes would be very volatile in terms of it won't be in sync with the industry because of your restructuring, which is going on. So for the full year and next year, how do we see things moving?
No. Unless there are major cost changes going forward, we are not going to change any freight rates. It all depends on the cost, how the movement of the cost will be.
Got it. Got it. All right, sir. I'll come back in a bit. Thank you, sir. All the best.
Thank you. The next question is from the line of Mukesh Saraf from Avendus Spark. Please go ahead.
Yes, sir. Good morning, and thank you for the opportunity. My first question is on the volumes again. So, last two quarters, we are seeing the decline, double-digit decline in volume. So the question is that these customers who we have let go, they have gone back to the unorganized market at lower pricing. How should we, I mean, are they expected to return back, or we'll have to kind of mine new customers here?
No. Currently, what is happening with respect to the corporates, wherever we declined their contracts or discontinued their businesses, again, some of the corporates, actually, they are going to organized as well as unorganized players. And some of the corporates, actually, they faced their operational difficulties about distribution of their product across India. And some of the customers have come back with our price increase and again, continuing the business with us. And not only that, actually, we are going forward. We are educating our marketing team and pushing to attract new customers. And we gathered a lot of many new customers also with our new pricing terms. That's also we acquired from the market. And basically, our highlight is about our service. The claim ratio is very low, and we are maintaining the turnaround time, the safety of the commodities, and even the network. These are the key highlights.
Actually, some of the customers, they are not finding alternative solutions, and they are coming back to us.
Okay. Is there a case where you are kind of getting into the express PTL zone in terms of pricing? Because we see that a lot of express players are pricing at around INR 10, INR 11 per kg. We are now at around INR 8 per kg. So because of our pricing strategy now, are we somewhere in the middle from the earlier PTL business that we did versus now the express PTL guys? So are we kind of in the middle there somewhere, and hence it's difficult for us to get some volumes?
No. Basically, see, even I explained during the earlier calls also, there is no much difference between the express cargo and the service what we are providing. When we approach to the customers, if it is a door pickup, door delivery service, then it is nothing but similar to that.
Right. So what does the realization?
Yeah. The realization comparison what you are doing with express cargo versus SC, basically, we are having the majority of short routes. Especially in the state of Karnataka and southern India, our routes are very small, and per kg realization are very less in those routes because the distance itself is very low.
Right. Right.
It is only because it's a route mix.
Okay. So our pricing is more or less equal to express guys now, sir? If I say an equal route, a long distance, if it's equal right now, or is it still lower than that?
When it comes to the door pickup, door delivery, it is more or less similar to that range.
Okay. And what proportion of our revenue now is door to door? Or volume?
The door-to-door reached around 38%-40% of our revenue is door-to-door.
Oh, okay. And what was this say last year, sir? I thought it was much lower earlier.
Yeah. Earlier, it was around 25%-28%. Now, around 10%-12% has been increased.
Understood. Understood. And lastly, on the fleet, I mean, I'm seeing that the fleet has gone down in the last three months in terms of just the number of vehicles. We are now 5,950 odd. We used to be 6,100 plus. And even within that, we are seeing that the 20-30 tons seem to have dropped a bit more. Is there anything we need to read into this as to why the higher tonnage has dropped a bit more? Are we not replacing the older higher tonnage vehicles with newer ones?
No. Basically, see, as tonnage is now a little bit impacted about the pricing terms what we decided. Because of that, wherever there are major expenses on the maintenance of the vehicle, so we are scrapping those vehicles. And whenever the tonnage will pick up again, we will go for a fresh vehicle, the newer vehicles. That's what the strategy is.
All right. All right. All right, sir. Thank you. I'll get back in a bit.
Thank you.
Thank you. The next question is from the line of Achal Lohade from Nuvama Institutional Equities. Please go ahead.
Yeah. Good morning, sir. Sir, if you could help us with respect to what was the tonnage which was let go in 4Q and how much of that has come back, like you mentioned, part of that has come back, how much would that be?
Yeah. In Q4, now, out of overall tonnage, see, what happened, I'll tell you. Initially, in the month of January or so, we informed to the customers that we are unable to go along with this tonnage, whatever the rate terms. And subsequently, some days, all corporates and other clients what they did, actually, they have taken some time. And in the mid of February or so, actually, some of the contracts have been discontinued. And that has been continued in the March. Now, on the overall terms, if you take, see, almost around some 5%-6% of the tonnage, actually, we got it back compared to what we lost in the Q4.
So broadly, I mean, if I were to look at 4Q, we had a million ton, right?
See, for example, now in the quarter, we did around 930,000 tons, which is lower by almost 12% as compared to the last year, and out of this 930,000 tons, you can say at least around 30,000-35,000 tons, again, it came back from the lost customers in Q4.
How much was total lost? Was that INR 200,000? Was that INR 100,000? Or was that INR 300,000?
Yeah. On a monthly average, we used to carry nearly around 360,000 tons in Q4. That has came down to around 320,000 tons. And some of the addition is on account of the new customers what we added. And the decline is also because of some of the lost customers. Out of the lost customers, around 3 to 4% has come back in the tonnage.
Right. So what you are saying is that on a monthly basis, we would have lost about 100,000 tons and of that 30,000 tons - 35,000 tons has come back. Have I understood right?
Yes.
Is that number right , sir? like 100,000 tons was the lost volume?
See we used to do around 360,000 tons. 360,000 tons. Okay?
Okay.
See, just I'll tell you, in last year, January, we did 356,000. February, 315,000. And March, 334,000. Now, compared to January to February, if you see, we lost almost 30,000 tons. Okay? In the same quarter.
You're talking about 2025, right?
2025, right?
Yeah. Okay.
Yeah. 2025. January, February, March, in Q4 what you are referring.
40,000 you had lost. Okay.
Yeah, and when it comes to the April, we did 313,000 tons, 318,000 tons in May, and 302,000 tons in June month. So, in this, 313,000 tons to 320,000 tons, whatever we did, out of this, some of the customers what we lost in January, February, they came back and contributed around say, 25,000 tons to 30,000 tons extra.
On a monthly basis. Is that so?
Monthly basis. Yeah.
I mean, theoretically, then sir, what I'm trying to figure is, ex of the lost or let-go cargo, what is the underlying growth? Is there a growth or is there a decline? Or is that flat number?
Yeah. Yes, lost customer, it is a growth.
What percentage?
Otherwise, yeah, at least around 4% to 5% growth in the tonnage. See, for example, if the lost customer, if there is no growth from the new customers, our tonnage decline would have been in the range of around 15%-16% instead of 13%.
Okay. Understood.
Yeah.
The second question I had was in terms of the price increase, after you taking the price increase, what is the price difference between you and the second player, sir? Is that very large? Is that very small? Have they also responded with a price increase?
Yeah. You can see many of the organized players. Some of the organized players have been increased the rate, even from last year, Q3 and Q4. From the unorganized people, actually, we cannot track the price exactly. The reason is actually depending on the customer, depending on the arrangement with the customer, actually, they go on changing the pricing.
Understood. And what proportion of our customers' wallet share do we typically have? Like, is it 40%-50%? Is it 5%-10%? Or is it 70%-80%? I'm talking about the large customers.
Large customers contribute around 15% of the total tonnage with whom we are having a monthly contract. Around 15% of the tonnage is coming from the large corporates.
Of their cargo, how much would our share be?
Of their individual customers, you are saying?
Yes. Yeah, yeah, yeah. On average, would that be 40%-50%? Or would that be still 5%-10%? I'm just trying to figure.
See, it all depends, actually. If it is the South, West, and North, actually, we are having a good share of their business. But since our presence is not up to the market in Eastern and Northeastern areas, they actually give even 5-10% share to us. It all depends on their network and where actually they want to distribute the goods.
Understood. And if you could also highlight, what is the average lead distance we had in 4Q and 1Q, FY 2025 and 1Q FY 2026? Would you have that?
See, lead distance, we do not have that information. Basically, we all concentrate on hub and spoke model. Each hub, how the movement and other things. Normally, we don't go by the lead distance.
But the pricing would be a function of the distance?
No. Pricing, again, it is between the hub and branches, up to hub and branches. See, our price is very high.
Yeah. Okay.
Our price structure is in such a way that we are having a 50-transshipment hub. First, our price will be between the hubs. See, for example, if it is a Bengaluru to Delhi, then Bengaluru to Delhi, what is the price? Then all, again, subsequent branches, there will be additional rate.
That bifurcation is given to the customer as well? Or this is only for your?
No, no, no . It is all internal.
Right. So I mean, theoretically, sir, what I'm trying to impress upon is that if it is Bangalore, Chennai, the lead distance is low, the pricing, hub to hub price will be lower, price will be lower. If it is Bangalore to Delhi, it will be larger, so I'm seeing from that perspective, if you are so there are two parts, actually. One is, I'm just trying to see in terms of the pricing difference between you and the express. And B is, if there is a case of increase in the lead distance and hence the realization and hence the profitability further.
That possibility is there because of the expansion in the network what we are doing. See, basically, earlier, most of the cargo movement was in the South, then gradually extended to West and North. So automatically, the lead distance has been increased. Now, since we are expanding our network in Northeast and Eastern part, again, the lead distance will increase. But in terms of margin, I'm telling you, it will be very similar as compared to the short distance as well as the long distance. Our pricing structure is in percentage.
The percentage you are saying? The percentage margin?
Yeah. See, for example, I'll tell you one route. See, for example, Hubballi to Bengaluru, it's hardly around 400 km. See, just the rates will be in the range of around INR 4-INR 5. But similarly, when it comes to, say, Bengaluru to Delhi, the rate may be 10%, but the distance is rate may be INR 10, but the distance is around 2,500 km, 2,200 km. There, actually, the per kilometer realization will be lesser in the long route, whereas in short route, it is higher, and it is having additional cost also. For example, loading and unloading, the vehicle has to wait for multiple loading and unloading time. Considering all those factors, actually, we define the rate.
Understood. Sorry, just one more question, sir. With respect to the technology part of it, since when have you implemented that, and what kind of benefit, if you would be able to quantify, what kind of benefit have you seen, and if there are any further expectations that we have on that?
Which technology you are referring?
The ERP or the slide what you have given?
See, these are all since from inception, actually, we are into it. Whenever the technology started implementation in the business, we started with our proprietary ERP system, and from that, those days, actually, we are using the technical tools.
So there is no incremental change in that sense, right? I mean, whatever the trucking capacity utilization or a GPS or a real-time report generation, etc., that has been there for some time now. There is no incremental new thing here to really argue for price or the margin improvement. Have I understood right?
No, there are possibilities, but even maintaining the existing operation with efficiency is also one of the kind of improvement. For example, just two years back, actually, we started barcoding in all our consignments. Now, the result is coming now. Now, our claim ratio is one of the lowest in the industry. For a turnover of around INR 3,000 crores, our claim expenses itself is hardly around INR 2-3 crores. And moreover, our shortages, earlier, it was in the range of around 17%-18% shortages used to be there. Now, that ratio has been reduced to 2%-3% because of the tracking of goods consignments have been improved based on this barcode technology. So this has resulted in reduction in manpower, service level have been improved, and customer's trust has been developed.
No, fair point. Fair point, sir. Just last question, if I may, sir, with respect to the pricing, again, competition perspective, have you seen competition kind of intensifying, weakening, or it's as usual? There is no change in the competitive intensity in terms of the way you go to the customer, ask for a price increase or a reduction in the receivable days, and the customer give a pushback?
No, those are all business negotiations. See, ultimately, it all depends on the, yeah. No change.
There is no change. I'm just trying to figure out if there is any change you are seeing on the ground with respect to competitive?
Competitor intensifying what is happening, I'll tell you. The unorganized presence is becoming weak day by day. But it will take a long time to quantify that. But actually, the competition from the unorganized players is not sure. But when it comes to organized players, again, there are very selective few operators in India who are having the service across the nationwide presence with our kind of a network and the infrastructure facilities. So basically, whenever we approach with the customers, we are putting our network, the service level, and even the pricing will come next.
Right. Sir, since we are on the topic, sorry, this is last, last question. Okay, I'll come back again.
Sorry, question comes after follow-up question. Thank you so much. The next question is from the line of Disha Giria from Ashika Institutional Desk. Please go ahead.
Hi, sir. Good morning. So my first question is regarding the capital expenditure. You just mentioned that considering the volume to decline or kind of remain stable by year-end, you have been forgoing the 25-30-ton trucks currently. So I mean, since this year would be a kind of tough volume, how do you see the capital expenditure for vehicles coming out for this financial year?
Yeah. Basically, in the first quarter, we invested around 15 crores in capital expenditure and predominantly around 8-9 crores for the vehicles. Going forward in quarter two, we are not again putting more CapEx on the vehicle because we are more concentrating on the increase in tonnage. So once the tonnage is tabulated, say, for example, in Q3 and Q4, again, we may start investment into the vehicles. So typically, our CapEx plan is always in line with the tonnage growth what we did. If it's in FY24, FY 2025, we invested more into vehicles because we achieved a good kind of a tonnage growth. So it is directly linked with the tonnage.
All right. So we have.
Moreover, the planning for CapEx, in our case, it is a very short-term plan. See, assume that in our system, we require, say, 100 vehicles as of now. To decide on the structure of the vehicle, the kind of the vehicle, and investment into those vehicles, it may take hardly around 15-20 days that the vehicles will come and operate in the system. Because of this short-term, we always go with first the tonnage to be tabulated, then always tonnage confirmation should be there that the vehicle should not come and have an idle capacity in the system. That's why always we do a CapEx in line with our tonnage growth.
Sir, how do we arrive at the figure that 100 vehicles are currently required?
So it's all based on, again, the declaration of the vehicle at hub level. Each hub, actually, we allotted certain vehicles. And along with our own vehicle, they engage outside vehicles as well. If the dependency on the outside vehicle is increased, then we replace that outside vehicle capacity with own vehicles.
Okay. So my next question is regarding the CapEx for different hubs. So last year, we had Bangalore hub, and you had indicated that you are looking for Kolkata, Salem, and other regions as well. So is there any update on the same?
Yeah. Still, we are doing some new investment, actually, we are doing in Kerala. It's a small investment in the range of, say, around INR 20-25 crores. But on bigger facilities, nothing has been finalized, but we are looking in some of the cities like Pune, we are looking, Trivandrum, we are looking, Salem, we are looking. And for that matter, in the long-term plan, Delhi also, we are looking some of the property. These are very long-term plans, and nothing is finalized as of today. But we are looking for the facilities.
So, we could expect it to impact our capital expenditure by, say, FY 2027, have a higher capital expenditure in FY 2027, FY 2028 around, but not in FY 2026, correct?
No, it may happen in 2026 also. But nothing is finalized as of now. At the moment, if anything is finalized, then definitely we will inform through exchange.
All right. My final question is in terms of branches. So how are the new branches turning up? How much are they contributing to our overall volume? And what is our branch expansion trajectory? I believe this quarter we had foregone a few branches, but how do we see that forward?
No, on a net basis, if you see, in the last one year, there is no increase in the number of branches. But whatever number of branches have been opened in the last one year, forget about whatever branches are closed, those have contributed around 1% to the tonnage.
Okay. All right. Yeah, sure. That's it from my end, sir.
Yeah. Thank you.
Thank you. The next question is from the line of Devam from ARDEKO. Please go ahead.
D uring the call, you probably mentioned that LTL growth is 4%-5% in tonnage. So just to clarify that, excluding all the, let's say, the loss of tonnage and gain of tonnage, the LTL growth of all the customers who are in the system, that is 4%-5%, right, for this year, the year-on-year LT L growth?
Yes, that is correct.
And just wanted to understand that you did mention that on claim ratio, we would be the best in the industry. How would the industry measure itself on turnaround time, and how do we rank over there?
Yeah. Turnaround time, see, basically, when we see our interact with the customers, it is more or less similar turnaround times.
But there will be on the claim ratio. See, we are unable to get that internal information, but whenever we see the claim expenses in some of the P&L, it is on a very higher side in some of the other competitors.
Okay. And sir, would you say that there is any sort of over the longer term, over the next, let's say, two to five years, there is a possibility of reducing the cost in the P&L by, let's say, using electric vehicles, batteries, or, let's say, automation loading and unloading? Are these aspects possible in the next two to five years?
Yeah. We are examining all these options, but unfortunately, nothing is have a solid plan that, yes, definitely, this is usable in our system, and we can go for it.
Even we tried for some of the EV vehicles within the city movement and all, but again, the battery life is not coming at the expected level. That's why, again, we stopped to adding some of the vehicles because commercially, it will not be viable. The battery is the main cost for EV, but the life of the battery is not up to the mark.
Okay. And sir, finally, if you can just throw some light on what kind of ground-level efforts we are doing to increase the tonnage side. Obviously, we are present as a network. We have a huge asset base. We have a huge infra. So what efforts are we putting in to increase the tonnage?
No, basically, we are planning to add some more branches in the network, especially in the untapped market.
Apart from that, we are doing a lot of this commodity study in each and every market, and we are approaching those customers about the safety, reliability, and even on the pricing front. Actually, we are justifying before the customers that why actually we are charging these rates. In some of the customers, what is happening, they offer lower rates, and again, they may add some additional expenses after while the billing and all. So on a gross level, actually, we are comparing. We are educating the customers that we are not so costly. So based on, actually, we got back many of our customers.
Yes. Okay. Sure. That's it from my side. Thank you.
Thank you. Before we take the next question, I would like to remind the participants, if you wish to ask a question, you may press star and one on your touchtone telephone. The next question is from the line of Mukesh Saraf from Avendus Spark. Please go ahead.
Yes, sir. Thank you for the opportunity again. Sir, in some of the previous calls, you had mentioned about the invoicing and how, say, from 2023 onwards, the threshold has come down to 5 crores, and hence, customers have to move to organized players like you. So I mean, we're not seeing any benefits from that coming through now because if you're saying that customers are moving to unorganized, at least to some extent, with your pricing going up, but if they are under the invoicing regulation, they probably cannot move to unorganized. So just help us understand this phenomenon, sir. How is the invoicing trend, and how is that still not benefiting you?
So basically, what we observed after these changes in the legal provisions, basically, till the within-state movements have not improved because of this change in the law. But most of the interstate movements have been drastically changed, and actually, they are compulsorily they have to generate an E-Invoice and E-Way Bill. But within-state movements, still, that effect is not yet coming.
Okay. What proportion of our volumes will be within-state and interstate, sir?
See, out of the total tonnage, within-state movement is at least around 55% to around 50%, 55% is within-state movement.
Okay. So this whole.
Within Karnataka, within Maharashtra, that's how it is.
Yeah. Yeah. So this last two quarters, the volume decline that we have seen where some of the customers have moved out, are they largely the shorter lanes within-state kind of customers?
No, within-state customers, we have not taken a much increase in the price, but interstate movement, actually, we have taken a because all hub-to-hub movement, largely, it is interstate movement.
Interstate. Okay . So there.
I nterstate movement.
So that means there, it's not like the customers have moved to unorganized. They've just moved to some other organized players, basically.
Some other organized, and in short-term, short routes or route-wise, some of the operators are there. In those cases, actually, they have shifted to such operators.
Got it. Got it. And just lastly, you also mentioned about expanding into the Northeast and eastern regions. We've kind of been mentioning this for the last year or so in terms of branch expansion, how we are looking to add more branches in the East and Northeast, and they should start yielding some results. We haven't yet seen that. So any kind of initial teething troubles you're seeing in terms of volumes in the North or Northeast, and what are we doing? Apart from just branch expansion, what are we doing to kind of start seeing some volumes in those regions?
No, basically, since the pricing strategy has been changed in the last year, so whenever we go to the newer market and new branches, obviously, we have to compete initially on the freight rate. So, since the pricing strategy has been changed, then initially, for the time being, actually, we are slow on the branch expansion. But once it is stabilized, again, we will go with, again, a number of branch expansions will be moved. Just we are waiting for the freight rates to be stabilized.
Right. Right. All right, sir. Thank you. All right. Good.
Thank you. The next question is from the line of Ankita from Elara Capital. Please go ahead.
Yeah. Hi, sir. So given that overall volume demand will be fluctuating in this year, first half being weak, second half being better, so overall for the full year, how do you think the volume growth should be there on a FY 2026 basis?
No, we are expecting better growth in the coming quarters. Basically, one is the monsoon season is very good this fiscal, and the second thing, now the festival season is yet to start, and we are expecting more of an improvement in the rural economy also that will support a lot of these agriculture commodities and all what we are carrying. We are expecting some good growth in those sectors.
So can you see a 2-3% off on a full-year basis growth for FY 2026 volume growth?
So volume growth will not be there. So basically, we may more or less will match to the last year's tonnage.
Got it. Got it. Amid all this, I know it will be really difficult for us to plan on the vehicle addition, but just a ballpark thought on how much net addition in vehicles can happen in this financial year, given that you are expecting improvement in demand in the later half of the year?
No, for the time being, the total number of vehicles will be around 6,000 or so. That similar number will continue.
Okay. Got it. And same thing on the branch as well? You would like to further consolidate?
No, branch closure of the branches will be lesser going forward. The more will be in terms of new branches, what we are going to add. The number of branches will increase.
Got it, and it could be lower than what your earlier guidance was, 100 branches per year? It could be slower than that?
Yeah, a little bit slower on that. But only we are waiting for the freight rate stability. Once it is achieved, then definitely we will go for some good number of branch expansion.
Got it. Got it. Great, sir. That's it from my side. Thank you.
Thanks.
Thank you. The next question is from the line of Achal Lohade from Nuvama Institutional Equities. Please go ahead.
Sir, just a small clarification. Out of the customers which were let go, how much was intrastate and how much was interstate, sir?
No. Most, actually, some of the corporates what will have multi-level. Once we discontinued their contract, now it is both intrastate and interstate. We do not have that clarification.
But you would have how much was their cargo interstate and intrastate before, right, as you actually would have handled?
No, not necessarily. We have not gone into those kinds of details .
Got it. Got it. So, if I understand right, from a full-year perspective, you're saying FY 2026 in terms of volume at best will be flat YoY with a 7,800 approximately realization. And how do we see FY 2027 and 2028? Can we expect double-digit growth? Should we expect a mid-single-digit growth?
Yeah. Definitely, FY27, there will be a growth. Definitely, it will be in the range of around 7%-8% at least it should happen.
Right, but with the low base of FY 2026, ideally, the growth should be higher, isn't it, sir?
No, but we are maintaining this pricing now forever.
Right. Understood. Understood. All right, sir. Thank you so much. And that was all from me. Thank you.
Thank you so much. This will be the last question due to time constraints. I would now like to hand the conference over to the management for closing comments.
Yeah. Thank you, all participants, for your questions. I hope that I have given the explanation at your satisfaction. If any queries, any doubts, any clarification required, then definitely you can reach me too. And we have appointed the investor relationship agency of the SGA. So, contact details have been already given in the presentation. Thank you. Thank you very much.
Thank you very much. On behalf of PhillipCapital (India) Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.