Ladies and gentlemen, good day and welcome to the Q4 FY 2023 Earnings Conference Call of VRL Logistics Limited, hosted by Motilal Oswal Financial Services. 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 zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Alok Deora from Motilal Oswal Financial Services. Thank you, and over to you, sir.
Thanks, Michelle. Good morning, everyone. I support the earnings conference call of VRL Logistics Limited. We have with us today Mr. Sunil Nalavadi, CFO of the company. I would now hand over to Mr. Nalavadi regarding the earnings conference call of the company. I'll hand over to you, sir.
Yeah, thank you, Mr. Alok. Good morning to all participants. I'm Sunil Nalavadi, CFO of VRL Logistics Limited. I welcome all of you once again for the earnings conference call of the company for the quarter four and year-ended March 2023. As we informed earlier, the company is going to focus only on the high-growth-oriented goods transport business, and accordingly, the sale of bus business and wind power business as approved by the shareholders, the transactions have been completed in the current quarter. The company has made a profit of INR 187 crore out of these transactions and shown as exceptional items in the profit and loss accounts. The company has realized an amount of INR 223 crore net of taxes on these transactions. The company has used these proceeds predominantly for capital expenditure related to goods transport business and as well as for repayment of debt.
On the sale and transfer of these businesses, the company now is only engaged in the goods transport business, which in the context of the AS 108 operating segment constitutes a single reportable business segment as of March 31, 2023. Accordingly, the transport of passenger by air segment, which was previously considered as a reportable segment, is no longer considered as a reportable segment. However, to give more clarity on the numbers, the unallocable revenue and expenditure details, along with the EBITDA of goods transport segment in comparison with earlier reported numbers, have been shown separately in our earnings presentation, page 11, which depicts the changes in revenue and expenditure on account of no reportable segment in the current year. With this background, going forward, we'll have only one business in the company, which is the high-growth-oriented goods transport business.
The performance of the goods transport business is better than what we expected during the financial year, including in the current quarter. During the year, the revenue overall we reached around INR 2,663 crore. However, if we would have continued with the bus operations and windmill project, we would have crossed around our revenue would be around INR 3,000 crore plus. So we have grown around 22% in the goods transport segment. The increase in revenue is mainly on account of increasing tonnage. The tonnage has been reached to 3,912,000 tons in the current year, which is grown by around 21%. We wish to state that our average daily tonnage delivery has been reached to 11,400 tons in Q4 FY 2023. The increase in tonnage is mainly on account of increase in branch network of the company.
We added around 184 branches in the current year, and the contribution from these branches is around 5% to the total booking tonnage. Our strategy of expansion of branch network is going to be continued and planning to add around 20-25 branches every quarter, especially in untapped markets. Apart from this expansion in branch network, the steps taken by the GST authority to increase in compliances, especially with respect to applicability of E-invoice for the movement of the goods, is further supporting the shift of customers from unorganized to organized players. Recently, the GST department issued a notification stating that all business entities having turnover of INR 5 crore and above compulsorily have to generate E-invoices as effective from 1st August 2023. Initially, when they started this mechanism, the limit of turnover was around 70 crore per entity.
On account of these developments, we are hoping that going forward, the GST department is going to compulsorily make it for every GST registered holder to generate e-invoices. The customer base is also increased from 700,000-800,000 customers in the current year. On account of these developments, we have seen drastic growth in transportation of some of the commodities in the last few years, which were highly dependent on unorganized small fleet operators earlier. For example, the coconut product, the areca nut product, and other spices from the south, leather and footwear product from UP and surrounding area, the textile materials from the west, and hardware materials from Punjab and surrounding areas, the growth of these products is highly contributing to our tonnage growth. During the year, the realization will be around 1%.
To achieve better growth in tonnage and market capitalization, during the year, we have not increased the freight rate except from mid-December 2022, during which the rates have been increased for the non-contractual customer businesses. However, considering the further expansion in branch network in Q4 and offering better rates to match the return load to various routes, we offer discount on selective basis. On account of this, the increase in rates in December 2022 was compensated with discounts in quarter four. In spite of this, EBITDA margin in quarter four reached to 17% as against EBITDA margin in quarter three, which was around 15.7%. The EBITDA in 2023 declined from 17.9% to.
Sorry, Sir , can you please repeat your last line because your voice broke a little bit?
Yeah. On account of this, increase in rates in December 2022 was compensated with discount in quarter four. In spite of this, the EBITDA margin in quarter four reached to 17% as against EBITDA in quarter three, which was around 15.7%. The EBITDA margin for FY 2023 declined from 17.9% to 15.6%. The margin is impacted on account of increase in fuel cost. As we informed earlier, due to withdrawal of subsidy on bulk purchase of diesel, we were unable to continue our practice to purchase fuel from the refineries and save the cost in diesel approximately INR 2 per liter. The claim was stopped between February 2022 to December 2022. We wish to state that currently, on account of reduction in crude oil prices, the bulk purchase diesel prices are in line with retail prices, and again, we started to join the diesel from bulk purchase from mid-December 2022.
In quarter four of 2023, around 28% of diesel quantity has been purchased through refineries. Further, the average procurement cost of the diesel is also increased from INR 87 to INR 90 in FY 2023. With this, fuel cost as a percentage to revenue increased from 29% to 30% and impacted on EBITDA margin by almost 1%. The lorry hire service also increased as a percentage to the revenue from 7% to 9% due to increase in kilometers by the hired vehicles. Increase in lorry hire charges as per kilometer and increase in charges for last-mile collections and deliveries. Overall, own vehicle capacity increased by around 16% in the current year, while our tonnage increased by 21%. To meet this gap, we were dependent on the hired vehicles. The increase in toll charges sharply impacted on the EBITDA during the year.
The toll charges as a percentage to the revenue increased from 6% to 7.28% and impacted EBITDA by almost 1.12%. The increase in toll charges is on account of increase in toll plazas across the country. These numbers were around 850 at the beginning of the year, now increased to almost around 1,400 numbers. Further, the toll rates also increased by almost 5%. The loading and unloading charges also increased on account of increase in loading and unloading charges per ton. On the other side, certain expenses have decreased and supported to increase in EBITDA margin during the year. The vehicle repairs and maintenance costs decreased almost by 1% on account of low maintenance costs on the new vehicles, and also the kilometers covered by the new vehicles increased on year-on-year basis.
The tire costs also reduced as a percentage to the revenue by 0.46% due to increase in kilometers covered by the new vehicles, which have been supplied with the fitted tires. The employee cost, which is a major fixed cost in our operation, is decreased by 0.33% from 15.91% to 15.48%. It is evident that the increase in tonnage always supports to have better control on the fixed costs, and the same manpower can handle additional volumes of business. With this background, the EBITDA margin is reduced by 1.68%. This is only on account of a decrease in the EBITDA margin. Similarly, the year-on-year performance of Q4 quite satisfactory on account of increase in revenue. It is increased by almost 17% from INR 600 crore to INR 703 crore.
The increase in revenue is on account of increase in tonnage by 16%, which is the increase in tonnage, again, is on account of better performance of newly opened branches during the year and even after pandemic, and which leads to addition of new customers as well. The realization per ton also increased by 1% in the current quarter. The year-on-year decrease mainly on account of fuel cost, and the fuel cost is impacted almost 2.4% on the EBITDA margin. The fuel cost increased due to increase in diesel procurement costs by INR 3.21. So as a percentage to the revenue, it is increased from 85%. The per-liter cost is increased from INR 85-INR 89. Toll charges, rent, and Hamali expenses have been increased, whereas tire costs, vehicle repairs and maintenance costs, employee costs have been reduced.
When we see the quarter-on-quarter performance, the revenue is increased by 2.46% from INR 686 crores to INR 703 crores. The increase is mainly on account of increase in tonnage by 2%. Normally, we see quarter three as the best quarter in terms of performance of revenue and EBITDA margin, but during the year, the quarter four is surpassed with the quarter three performance in terms of growth in revenue and also increase in EBITDA margin. The increase in EBITDA margin in Q4 is mainly on account of decrease in lorry hire charges by 2.15% from 10% to 7.88% on account of increase in own vehicles. The improvement in the performance of the company resulted in increase in cash flow from operating activities before working capital changes from INR 413 crores to INR 462 crores.
The company has incurred a total cash flow of INR 412 crore during the year, out of which INR 384 crore is related predominantly for the goods transport sector. The net debt stands at INR 168 crore as of the end of the year. Considering the improvement in profitability, improvement in the cash flow, and lower debt levels, the board has decided to return to the shareholders by way of buyback of shares worth INR 61 crore at INR 700 per share, which was much higher than the prevailing share price in the market. Further, the board has recommended a final dividend of INR 5 per share, which is subject to approval of the shareholders in ensuing AGM. Going forward, we are very much confident in our growth momentum, expecting to grow tonnage in the range of around 15%-20%.
Our branch expansion plan is going to be continued, and we are planning to add around 20-25 branches every quarter. The further increase in compliance just by the GST authorities will further shift this business from unorganized players to organized players, which is a major portion in our industry. Being an organized player, this will support us in a big way. We are confident to increase our customer base further on the existing level. To meet the growth in tonnage and considering the Scrappage Policy announced, we placed an order to buy 1,667 customized trucks, which are expected to buy in financial year 2024. The addition of own vehicles supported to increase in operating margins by reducing the dependency on higher vehicles, which was resulted in quarter four of the current year.
Since the bulk purchase of fuel is also started, the crude oil prices are at a lower level. We are confident to maintain our EBITDA margins in the range of around 16%-17% going forward. In view of government regularizing the scrappage of vehicles, we wish to establish our own registered vehicle scrappage facility. We are in the process of applying for a registered vehicle scrappage facility. This facility will be at our centralized maintenance facility at Hubballi, Karnataka. The total project cost will be in the range of around INR 3 crore-INR 5 crore. The board also granted in-principle approval for the sale of transport of passengers by air segment, which is an assessment associated with goods transport business as of today. We are in the process to get the requisite regulatory approvals, etc., to complete the transactions in the coming days.
With this, I will conclude my initial remarks. Now, I request the participants to open for a question and answer session. Thank you.
Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star, then one, or touch the phone telephone. If you wish to remove yourself from the question queue, you may press star, then two. Participants are requested to use hands up while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have the first question from the line of Amit Dixit from ICICI Securities. Please go ahead.
Yeah. Hi. Good morning, everyone, and thanks for giving me the opportunity. I have two questions. The first one is on realization. Now, realization we saw in Q4 was essentially flattish compared to last quarter. Any indicative reasons for that? Now, going ahead in FY 2024, are you planning to take any further increase in realization? Because it was limited to the detailed guide earlier. And secondly, what kind of realization increase can be expected given that new branches are going to be opened as well?
Yeah. So basically, on the increase in the prices, now the costs are under control. Basically, the major cost is the fuel price. So we are not seeing any increase in the fuel rate. That's point number one. Point number two, since we are on an expansion mode, especially to open up new branches, new customers, considering these points in view, we are not planning to do any increase in the rate. However, we will see that we analyze our margins regularly on a monthly basis. If at all any costs are impacting on the margin side, on the EBITDA margin side, then we will take an appropriate call. Otherwise, blindly, we will not increase the rate.
So you didn't see any problem of customer acceptance in the course as far as the realization price increase is concerned?
Actually, no. That's the reason what we did. Wherever there are competitions, we maintain the rate. But wherever we opened new branches and wherever we were facing problems of frequent loads, in those routes, especially, we have reduced the rate.
The second question is on trucks. So we are procuring a good quantity of trucks in this particular year, FY 2024, given Q2020. And at what level of capacity or could these trucks start contributing? The breakeven point, essentially. And I'm sure this component will be in phases. So I'm informed to speak specifically what kind of profitability can we expect, and when do we expect them to become profitable?
Yeah. These trucks will earn a profit from day one itself because whenever we put our own vehicles, initially, it will be replaced with a hired vehicle. Apart from that, we buy the vehicle based on the requirement. We will not buy a vehicle and hold it for the load. Depending on the requirements of the trucks in the system, accordingly, we put place in order or supplying schedule will be given to the OEMs. So in that way, these vehicles are going to be purchased. Even last year, we bought almost around 1,300+ vehicles. So basically, these vehicles have purchased gradually over a period of time, over one year time. Even these new vehicles are also going to be purchased in the same way. We will buy the vehicles as and when required based on the growth in tonnage.
On a net basis, just to inform, based on the scrappage of the vehicles and increase in capacity, these new vehicles are going to be at around 20%-25% in our tonnage capacity. We are expecting at least around 15%-20% growth in the tonnage. The additional capacity, if at all we buy, it will be replaced with the outside vehicles.
Okay. Great, sir. Thank you. I appreciate it.
Thank you.
Thank you. The next question is from the line of Krupashankar NJ from Avendus Spark. Please go ahead.
Sir, good morning, and thank you for the opportunity. My first question is on the invoicing. What you clearly stated is because it has been mandatory for companies wherein values are higher than INR 5 crore. I understand that earlier, based on the expectation as well, we had an outlook of about 18%-20% growth over the next three years. But with more pool of potential customers coming in, is there a possibility of a higher tonnage growth going ahead, and what is the I mean, is there any challenge why you're not guiding for a higher tonnage growth for the next three years?
No. See, historically, if we see our growth in tonnage was in the range of single digits. It was in the range of around 6%-8% or maximum around 10%. Last year, our growth is around 21% in the tonnage. And similarly, see, the steps we are always concentrated on the profitability also. See, our growth plan is related to, again, maintenance of the EBITDA margin as well. Considering these factors, wherever there are profitable businesses, which will earn at least EBITDA margin in the range of 15%-16% or up to 17%, then only we will do such businesses. That's the reason. Considering all these points, we are very conservative in our growth. And definitely, in my view, 15%-20% is a very good number as compared to earlier.
Right. And sir, what we have clearly seen is that your capacity addition has been lower than the tonnage growth, at least in FY 2023. So while you're putting a number, I think that 1,657 trucks and I'm viewing 400 trucks from the previous orders also going to be added in the current financial year. Are you going to? Can you tell us from a tonnage standpoint, what would be the growth number vis-à-vis the tonnage addition on.
After addition of these vehicles, considering the scrappage of the vehicles, it will be around 25%.
Okay. Net basis, so in FY 2024, it will be 25%. Okay. Got it. And last question from my side. So sir, you've highlighted in the presentation that there's a higher competition from new branches as well. Can you take it a little bit further, sir, as in what is it? Is it from a specific geography? As in, for example, is it north or is it east region wherein you are seeing the comparatively higher growth coming in? And the next step of branch expansion, I mean, are you planning to do any specific, are you targeting any specific geography? Because there is a plan of about 30-50 branches per quarter over the next two or three years, I think. So just wanted to take your sense on that.
No, just I want to refer to the Indian map, actually, which has been given in the presentation. If you see the state-wise number of branches, see, south states are having higher numbers. If you see the north states, actually, the numbers are less. See, if you take Karnataka as an example, we are having around 222 branches. Uttar Pradesh is a bigger state than Karnataka, where we are having 54 branches. Similarly, if you take Rajasthan, we are having 24 branches. Gujarat, which is highly potential for commercial activity, we are having 88 branches. In these locations, definitely, we can replicate. Still, there is a lot of scope to increase the number of branches. Basically, we are planning to open more number of branches in these areas.
Apart from that, even in my introductory comments, I mentioned that see, some of the commodities which were totally in the hands of the unorganized operators, especially the spice products, even the agarbatti, all these products, the coconut, betel nut, which were predominantly in the hands of unorganized operators. Now, because of the improvement in the GST compliances, all these customers are shifting to organized players. There, actually, we are seeing a lot of growth. Similarly, Surat, we used to do a lot of business in Surat to south market. Now, what we are doing in Surat to east, we are doing in Surat to north, we are doing because our network is established in those areas. Considering these points, our main focus will be on the eastern and northeastern side, even to some extent on the west side also.
In the south, there also, we will open up branches.
For the year gone by, can you highlight as to geography-wise, what was the contribution, for example, north, east, west, and south?
Yeah. Again, geographically, since the east is contributing around 20%, and the north and east are contributing almost around 25%-30% to the business. And the south is contributing around 30%-35%. And the MP, Chhattisgarh, and these are contributing another 5%-6% to the tonnage.
I understand, sir.
This is again based on the origination. See, we cannot define if business is related to south, west, or north because if the containment is booked in south, it will be delivered in north, or it may be delivered in west. So it depends on all the geography. To give more clarity on that, see, for example, if you open any branch in the Odisha, that branch will be connected to the rest of all 1,200 branches in our network. It may be booking or delivery, irrespective of the region-wise, actually, that branch starts operating.
I understand, sir. I understand. I have more questions. I'll get back in a bit. Thank you.
Thank you. The next question is from the line of Ritesh Poladia from Girik Capital. Please go ahead.
Yeah. Thanks for the opportunity. Sir, we are adding about 10% of trucks this year, I think, from 5,600 to approximately 6,600 to 7,000 fleet. And that's about 50% increase in your balance sheet. So your return ratios will be a bit under pressure for this year, is my understanding correct?
Absolutely, no. See, the reason is initially, yes, these are all going to be added over a period of time. See, we have to see the average capital employed. So always, if you see the average capital employed, still, even in the current year, we are maintaining around 20%+ returns.
Next year, your capital employed will increase by 50% with the 700 floor capital. I believe the 700 floor CapEx will happen in 2024 only.
Yeah. That 700 is based on the list price what the OEMs have been displayed. But in actual cost, if you compare in the current year, for example, for 1,300 vehicles, we invested almost around INR 400 crore. So in that calculation, if you see, the total investment will be in the range of around INR 470 crore-INR 480 crore.
Okay. So your CapEx would be like, say, INR 400 crore. So that's about a 20% increase in your balance sheet, and your capacity also will increase to that extent.
Yes.
Okay. Yeah. That's it for me, sir.
Thank you. The next question is from the line of Gaurav Gandhi from Glorytail Capital Management. Please go ahead.
Hi, sir. Congratulations on the good set of numbers. Just one question, sir. What control do we have over the behavior of the person at the branches? Because there is a good competition at the ground level. So to get core potential and to get good new clients, how do we control those things? So basically, see, we are having an exclusive marketing team in the eight metro cities. We call eight cities as metro cities, top cities. Their exclusive marketing team will deal with the customers. And the rest of the places, we are having the general managers, deputy general managers, area managers. They will approach and do marketing. And in smaller cities or smaller towns, the branch manager looks administrative along with the marketing. So the area managers, these are all highly educated, good educated people.
Definitely, they are dealing the behavior of these people are good with the customers. That's the reason, if you see, it is evident from the recalls that the customer base also increased from 7 Lakh to 8 Lakh customers.
All right. I mean, we are confident over there, right? I mean, there is no question of going any business to other competitor due to just behavior of the person, at which is because I've observed somewhere at some branches that the person sitting over there is not guiding us properly or is not giving good service. That's why I'm asking.
No, there are no such incidents. Moreover, we conduct continuously meetings of these people, the senior management meetings. Every two months, we conduct a senior management meeting. The communication from the top level will go very clearly to these people. Apart from that, the local area heads, they educate the people. Moreover, we are having a long-experienced management team, including the branch people. They are experienced with the company. They've grown up with the company. There are no such incidents.
All right, sir. Yes. Thank you. Thank you very much.
Thank you.
Thank you. Mr. Nalavadi, before we move ahead, can I connect you on the mobile phone, sir? Because there is a voice breakage on this line.
Yeah, please.
Thank you, sir. Ladies and gentlemen, kindly stay connected while we try to reconnect Mr. Nalavadi again. Thank you. Ladies and gentlemen, thank you for patiently holding. The line for the management is connected back. We take the next question from the line of Ankita Shah from Elara Capital. Please go ahead.
Yeah. Hi. Thanks for the opportunity. I wanted to understand what would be our sustainable GT segment margin going forward?
Sustainable EBITDA margin will be in the range of close to around 17%, sir.
For GT segment, for the company? Okay. And for the CapEx that we are planning, so the net CapEx for FY 2024 is INR 1,667, right?
For number of vehicles, the CapEx will be in the range of around INR 470-480 crores.
470-480. How much would be for these?
For vehicle, you are saying?
Yeah.
Per vehicle, it depends on the category of the vehicles?
For all vehicles. No, I meant for the vehicles. I mean, this entire thing is for these vehicles only?
Yeah, yeah. Vehicles only.
Got it. Got it. Okay, sir. Thank you, Anish, for all the details.
Yeah. Thanks.
Anisha, a reminder to all the participants, anyone who wishes to ask a question may press star and one now. The next question is from the line of Krupashankar NJ from Avendus Spark. Please go ahead.
Sir, thank you for the follow-up. Just checking up on the realization aspect. So while the rate is not given in the fourth quarter, can we expect that the realizations will increase by 4%-3% starting in from one fifth, given that there is almost a 5% hike on close to about 30% of revenues? So can you expect that change coming in from the first quarter, or do you see some softness right now?
No, no. That has been already delivered to the customers. See, again, it will not be taken back. So the same kind of similar kind of realization will continue even in next year, quarter one, quarter two. And again, it is subject to the increase in cost and other factors. For example, as I said, we review our finances every month. We review our expenses. Depending on that, we will keep it going.
Understood. Understood. With respect to the behavioral change on the unorganized side, I mean, while we have seen time and again that unorganized eventually have come out when they are put in the corner, so are you seeing any change in the way they are operating or something wherein which they continue to remain relevant? Because, I mean, clearly, someone is taking away their revenue shares. They will fight back. So what is the typical reaction you are seeing, and how does VRL plan to counter that? That's something which I wanted to understand from your end.
Majority of the small city operators, what they do, it is owner-cum-operators. Basically, in today's world, what is happening, a lot of practices have been changed. See, for example, even in terms of the availability of the vehicles, the BS-VI vehicles, it needs proper maintenance and everything. And the kind of new-age vehicles are coming, be it electric vehicles or CNG vehicles. In that sense, also, they need a good experienced team in the operations. And apart from that, compliance is what the GST is imposing regularly. They have to meet the requirement of the compliance. Otherwise, they will end up with paying huge penalties. So all these factors, actually, they have to change all their practices till that year together. It will be a very tough time for them. That's the reason we are confident.
We have seen a lot of good products which we were unable to get those products, but now we are getting. That's why the competition from the unorganized people. It will not be so forceful as it was earlier going forward.
All right. And you don't see them massively discounting prices on specific trade lanes because, time and again, that's a function which has impacted our margins in the past. So just giving you confidence level, at least at management end, is quite high with respect to ensuring that the markets remain at these levels. Is my understanding correct?
No, no. In compliance, the transactions cannot compete with this because the scale of operations, what we are having, the cost of operations, is very much, much lesser than expected of them, be it the fuel, be it the purchase of the steel cars, or even tires with a lot of these suppliers. See, these kind of arrangements, they cannot book. And that's the reason all these days, actually, they used to earn premium margins in non-compliant transactions and compete in the compliant transactions. Since the non-compliant transactions are getting very bigger, they cannot compete in the compliant transactions with us. And moreover, just one more thing I would like to bring. Even the CNG vehicles still, even though it is not cost-effective, but still, we have to add a vehicle because in some of the locations, it is compulsory in Delhi and surrounding areas.
These kind of restrictions for the unorganized players, further it will burden on them.
Got it. Last question from my side. While you.
Sorry to interrupt. I would request to quickly rejoin with you because there are several participants who we.
Sure. No problem. No problem. Thank you, and all the best, sir.
Thank you. We have the next question from the line of Abhishek from Dolat Capital. Please go ahead.
Thanks for the opportunity. Sir, how much revenue makes B2B and B2C business in the FY 2023?
Yeah. Again, predominantly, it is B2B segment, almost around 90%, 90, 91% coming from the B2B segment and around 8%-9% from the B2C.
You have an LTL product in the e-commerce segment and the tanker segment. So do you have any plans to expand business in these areas?
No, no, no. See, we are completely focusing on the B2B segment, which is a highly growing market in India and a profitable business. So we want to concentrate on the B2B market and no e-commerce or B2C business.
What is your contribution in the e-commerce segment? Are you present there, or you don't have any presence there?
Presence wherever the suppliers which are moving goods to e-commerce operations particularly are booking through us. But we are not delivering to the customers directly to the customers, means the retail customers. That service, we are not doing.
Okay, sir. How is your revenue mixed from the different segments like the automotives and textile and other secondary and leather breakup?
Yeah. It's spread across the different products, but major contribution is coming from cloth and textile, which is almost around 8%-7%. And the rest of the products are in the range of around 6%-10% range. And next is agriculture commodities, which is contributing almost around 10% to the tonnage. There's the remaining products, the remaining sectors we're contributing in the range of around 6%-7%.
Okay. And my last question is related to your current capacity utilization of your fleet, sir.
Capacity utilization, as I said, we add a vehicle or buy the vehicle only when required. And moreover, the moment we buy, it will be replaced with an outside vehicle. And always, it will be used with complete capacity. And moreover, hub-to-hub operation, we maintain 100% utilization. So that hub-to-spoke, normally, we will not see the utilization of the vehicles because it is a compulsory service from hub-to-spoke. Their utilization levels are in the range of around 60%-65%.
Okay. And your fleet explanatory FY 2024, sir?
Yeah. FY 2024, as I said, we are going to add around 1,667 vehicles. This will result into around INR 470 crore-INR 480 crore totals.
Thank you, sir.
Yeah. Thanks.
Thank you. The next question is from the line of Aman Vij from Astute Investment Management. Please go ahead.
Good morning, sir. My question is on the industry growth in, say, April and May. Any initial signs you have seen if you can talk about this thing?
Yeah. Normally, see, after the end of the year, April is closing in every year. Currently, see, again, it is recovering. April, May, yes, normally, because of some of the new year plans and all, always, it will be slow. A lot of these holidays will be there. That's the reason every year, it is the same scenario. Again, from Q2 onwards, again, it will be picked up.
Sir, that part I understand because March is normally the best month. Apart from that, any other slowdown or improvement you have not seen compared to normal April?
The normal operations metrics are there. There are no drastic improvements or drastic reduction in the growth.
Sure. Sure. My second question is, so, sir, is GDP a good way to understand the growth of industry? Compared to industry, what kind of industry growth are you seeing? For the whole industry, you've talked about our growth, but for the industry, can you talk about it? Is E-way bills a good way to understand the growth in E-way bills?
The growth in the E-way bill, one is on the growth aspect of the industry. And second, these are many customers who are shifting from non-compliant to compliant. So on account of that, also, the E-way bill change is happening. So definitely, it will indicate the growth in the industry as well as the shift from unorganized to organized players.
Sure. The question was also, what kind of growth are you seeing in the industry for FY 2024?
From industry side, even in the current year, if you see, normal growth is around 8%-10%. This year, again, it may slow down because last year, what happened after the COVID, the growth was much, much higher. Compared to last year to this year, the industry growth may be around 67%. Again, it's the GDP growth what we are talking here.
Aside from that, you are still guiding for as strong growth like we did last year?
Yeah. See, for us, what will happen, one is growth from the existing industry. That is point number one. Point number two, the expansion to the newer geography of new branches. That will come additional growth. Even in the current year, if you see the growth, it will be almost around 5%-6% additional tonnages on account of the new branches. That is going to continue in the next year. And further, shift from the unorganized to organized. So all put together, we are expecting our growth range in tonnage in the range of around 60%-80%. Sure, sir. Thanks.
Thank you. The next question is from the line of Abhijit Mitra from Aionios Alpha Investment Management. Please go ahead.
Hey, yeah. Thanks for taking my question. Congrats on a good set of numbers.
Thank you.
Just to understand the volume guidance a bit more, so we can see 15% coming from existing branches and 6% coming from the new branches. You just repeated that 6% from the new branches is possible in 2024 also. 6% from the existing branches is possible without or with the existing resource list. Or I mean, what are the constraints to sort of repeating that 15% from the existing branches is what or 10% from the existing branches is what we are trying to do?
The cyclic growth, what I indicated, is in the range of around 60%-80%. See, I think that if new branches again, these branches, one of these branches will be opened in the current year. So similar kind of numbers will not be there. See, we are planning around 60-85 branches. So it will all be around 80-100 branches. So contribution from additional new branches will be lesser because the base for the current year for this 184 branch is already growing. Over and above, again, it will be in the range of these branches, growth from this level will be in the range of around 10%-11%. So considering this parameter and the new branches, what we are planning in the next year, it will be in the range of around 50%-70%.
Okay. So essentially, this year, 200,000 tons are found from the new branches. So it's probably, I assume, 10% additional from that. And 80-100 new branches, which will contribute additional 10%, and the rest from the existing branches. That's the broad picture.
Yes. Yes.
Got it. Got it. Got it. Okay. That's all from my side. Thanks.
Thank you. The next question is from the line of Nemish Shah from Emkay Investment Managers Limited. Please go ahead.
Yeah. Thanks for the opportunity and congratulations on the website and numbers. I just want some data. In Q4, what was our?
I'm sorry to interrupt, Mr. Shah. Your voice is not clear. I would request you to use your handset, please.
Yeah. Is this better now?
Yes, sir. Please continue.
Yeah. I wanted some data. In Q4, what would have been a bulk procurement for diesel?
Around 28%. 28%.
Okay. And what was that in Q3?
Q3, it was not there, hardly around 4%-5%. Because we started in mid of December. Yeah. That contributed hardly around 4% also. But in Q4, it is 28%. Going forward, again, the contribution will be around 28%-30%.
Okay. So generally, what is the differential between bulk procurement and retail?
Yeah. Around INR 2 the difference. The fuel is cheaper by around INR 2.
I understand. Okay. So this quarter, if I just compare Q3 versus Q4, the fuel cost went up by 1.50%. And our bulk procurement from 0%, it went up to 68%. So I know you mentioned in the presentation that this was largely due to increase in consumption. So just to highlight, what is the net benefit of procurement of fuel?
See, every day, we are consuming around 2.5 to around 260,000 liters. Out of that, around 80,000 to 90,000 liters are from the refineries. So that's around INR 2 we are saving. In Q3, around 1.5 to around INR 2 we are saving for this. That's one. Here, the reason why fuel cost is increased, the lorry hire charges have decreased by around 2%. Means the dependency on high-end vehicles has been substantially reduced. That has been those kilometers have been covered by the own vehicles. That's the reason the fuel cost is there. If we merge these two, still, we are saving at around 1% around 80 per margin.
Correct. Understood. Yeah. Thank you so much, sir.
Thank you.
Thank you. The next question is from the line of Rajesh Rai from ITI Limited. Please go ahead.
Hello, am I audible?
Sir, I would request you to use your handset, please. Your voice is muffled.
Is it better now?
Thank you, sir. Continue.
Yeah. Thanks for the opportunity. Most of the questions were answered. But one question I had on the fuel mix and what are the dynamics and where do you see it the way it will pan out maybe in the near or medium-term future? Because we have also been ordering CNG vehicles. And of course, EV, I don't know if for last-mile connectivity, if you are still looking at it. I just wanted your thoughts on this particular area.
So basically, CNG, we added hardly 50 vehicles in the current year. That's only for Delhi and surrounding area for local operations. Otherwise, in the rest of the roads, we are keeping the diesel vehicles. And in some of the locations, we added the electric vehicles, which are hardly around 60 to 15 numbers. Again, the small electric vehicles. So there is a lot of maturity yet to come on the EV vehicle side. There are no specific guidance as of today, even from the OEMs. That's the reason we are waiting for diesel. And definitely, if that market is matured, we are the first people to grab that opportunity and subject it as beneficial to the company. And till that time, definitely, to meet our growth plan, we are going to depend on the diesel vehicles only.
Sir, any other class, let's say, even the OEMs keep talking of LNG vehicles and etc., but.
Yeah. It may be any class. See, being a large-scale operator, we are open to all these opportunities. If these are beneficial to the company, then we are the first people to use that new technology.
Okay. Okay, sir. Thank you, sir. Thanks a lot.
Yes. Thanks.
Thank you. The next question is from the line of M.B. Mahesh from Kotak Securities. Please go ahead.
Just one question. Standard growth of SCVs that you're doing for checking out on the price side, what have been the interest rate changes from the lender side?
Interest rate changes?
Yes, sir.
Yeah.
Increased recently. But however, last year, most of the loan, we get at around 7.9%-8%. Now, the rates are increased to around 8.3%-8.5%. Still, we are trying for around 8%. Okay. Sir, second question is that when you say that at each and every pasting cycle, when GST compliances have increased, how much of this are you actually seeing on the ground? In this latest move of IQROS, how much of incremental benefit do you see from companies such as yours? That would be all.
See, the thing I mentioned, some of the commodities which we were unable to get earlier, see, like the chicken neck market or even the coconut products, the leather products. See, these are indicators from our side. But in the market side, again, the different people are getting different kind of benefits. But overall, it is converting the market from the non-compliant to compliant market. We cannot differentiate exactly because what the percentage is or something.
Okay. Okay, sir. That's fine.
Thank you. The next question is from the line of Jainam Shah from Equirus Securities Private Limited. Please go ahead.
Hi, sir. Am I on you?
Yes, sir. Please answer.
Yeah. So my first question is related to the sale of old vehicles. So any kind of smaller inflows are we expecting from the same for this around 1,200 vehicles? What's the mechanism? Is there?
Please, will you repeat your question, please?
So I just wanted to understand, as we are having around 500 crore CapEx plan, are there any such kind of inflows from the scrappage of vehicles, like any kind of scrap sales or something, any smaller number or something?
Yeah. Scrap sale, again, is going to increase. Whatever vehicles we are scrapping, definitely. But we are not going to get benefit under the government. As of today, what we are doing, we are scrapping ourselves. And moreover, what we are planning is we are planning to establish our own additional scrappage facility under license from the government. So that is going to help us because the moment we scrap our own vehicles, we can use around 50%-60% of the existing spares available in those vehicles will be used for the rest of the vehicles, be it an engine, be it a hub, so many things. So that's the reason we want to have our own facility and get a good kind of benefit out of it. And what we are selecting from is only that we will sell.
Got it. Got it. Got it. Sir, and sir, on the other part, is it around INR 170 crore? And I guess the big cash flow would be mostly only INR 60 crore of bank. So around INR 100 crore of sorry, INR 100 crore of so how we are seeing the net levels to be pan out with this INR 100 crore of CapEx that we are going to benefit 2024? How much will be from the internal accruals and what kind of additional we are going to have?
Yeah. Considering the profitability plus depreciation, we are having a cash flow in the range of around INR 450 crore-INR 460 crore. So definitely, and this is a pre-tax. And post-tax, this amount will be in the range of around INR 380 crore-INR 400 crore. So most of these cash flows will be used for the CapEx. And apart from that, whatever amount required, we will borrow. And initially, what will happen at the time of purchase, we go for a debt. And then when surplus money will be there, that will be used for the debt.
Got it. Got it. This is for my contribution.
Thank you. The next question is from the line of Ankita Shah from Elara Capital. Please go ahead.
Sir, just a bookkeeping question. Can you give the annual numbers for all segments for FY 2023?
Annual numbers?
Segment-wise, annual numbers, FY 2023 for bus operations and wind energy segments, if possible.
You want top line or profitability?
Top line. Top line. Top line.
Yeah. From bus, see, goods segment, it is around INR 2,600 crores. It's almost INR 2,660 crores. And wind power, normally, the revenue will be around INR 20-24 crores. And from bus business, it will be around INR 320-330 crores.
Okay. And also, one more thing, the net debt increased QoQ from INR 46 crores to INR 168 crores. So any color on that? Because we were planning for INR 100 crores of net debt in the last phone call. So why is such a?
Yeah. We did a buyback again. The INR 61 crore has been deployed for the buyback. The internal sources have been used because of that, again, that disbursement is increased. And see, in the current board meeting also, the INR 5 per share dividend is, again, subject to approval from the shareholders in the annual general meeting. So these are some of the outflows which the internal accruals have been deployed for these purposes.
Okay. Yeah. That's all for my side. Thank you.
Thank you. The next question is from the line of Aman Vij from Astute Investment Management. Please go ahead.
Yeah. My next question is basically if we can break our revenue bin from the key clients and MSME customers?
Yeah. See, again, the clear breakup we cannot do because one way the corporate book and delivery will be MSME and MSME will be corporate will take delivery. But however, we are having a different kind of mode within our company. Basically, we call it as trade and account customers. For account customers, we are having a payment or agreement with the customer that consumes almost around 80%-20% of the revenue. And the person who is receiving the goods, he pays a freight before taking the delivery of the goods, which is almost around 60% of the revenue. And 10%-12% of the revenue is paid booking. Means customer pays a freight amount and books the consignment. And remaining is mix of some FTL and all. Container will pay part amount. Container will pay part amount.
The remaining is a mix of all this: To Pay and account.
Mr. Vij, does that answer your question?
Yeah. Yeah. Thank you.
Thank you. The next question is from the line of Karan Kawa from Motilal Oswal Financial Services. Please go ahead.
Hold on. That's just one question I had. This branch addition, we did nearly 180 branches, which is much higher than what we had expected for. So now we are, again, doing 180 in our output again, which is very positive. Why we are going slow now on addition? Any particular reason or where we are?
No, it's not. See, even earlier, we added around 100-120 branches in a year. But actually, we did 184. See, depending on the local survey, if opportunities are there, definitely, we will grab a few. And currently, our plan is like this. We open up around 20-25 branches every quarter. If there are more opportunities, then definitely. See, as I said, again, we are very cautious even in a branch expansion because it should not burden on the margin. With that background, actually, we grow. Ours is a healthy growth. See, always, we concentrate on margin plus growth.
So there is kind of an initial estimate higher?
Yeah.
Yeah. I think so.
Thank you. Ladies and gentlemen, as that was the last question, I would now like to hand the conference over to Mr. Sunil Nalavadi of VRL Logistics Limited for closing comments. Over to you, sir.
Thank you. Thank you, all participants, for your session sharing. Definitely, as I said, we are focusing only on goods transport segment. The entire management of the company is concentrating on these businesses. Definitely, we are seeing good development and good environment, both from the growth in the industry as well as from the government initiatives about control or curb on the non-acceptable transactions or non-supply transactions. Definitely, these kind of initiatives are going to help us. Considering these scenarios or this kind of environment, we are planning for more expansion into this business. That's the reason we've grown almost around 21%-22% in the last year. That is having a good base for us. On that, definitely, our growth will be continued with the maintenance of good operating margins going forward. With this, I would like to conclude this call.
Thank you.
Thank you very much, sir. On behalf of Motilal Oswal Financial Services, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.