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Edited Transcript of VRLLOG.NSE earnings conference call or presentation 12-Aug-19 5:00am GMT

Q1 2020 VRL Logistics Ltd Earnings Call

Hubli Aug 20, 2019 (Thomson StreetEvents) -- Edited Transcript of VRL Logistics Ltd earnings conference call or presentation Monday, August 12, 2019 at 5:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Sunil Nalavadi

VRL Logistics Limited - CFO & Investor Relation Officer

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Conference Call Participants

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* Abhijit Mitra

ICICI Securities Limited, Research Division - Analyst

* Alok Deshpande

Edelweiss Securities Ltd., Research Division - Research Analyst

* Ankit Panchmatia

Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst

* Ankita Bora Shah

Elara Capital, Inc. - Associate VP of Institutional Research

* Krupashankar NJ

Spark Capital Advisors (India) Private Limited, Research Division - Analyst

* Mukesh Saraf

Spark Capital Advisors (India) Private Limited, Research Division - VP of Equity Research

* Prateek Kumar

Antique Stockbroking Ltd., Research Division - Analyst

* Shrinidhi Karlekar

HSBC, Research Division - Analyst

* Vikram Suryavanshi

PhillipCapital (India) Pvt. Ltd., Research Division - Analyst

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Presentation

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Abhijit Mitra, ICICI Securities Limited, Research Division - Analyst [1]

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Good morning to all the participants. Welcome to Q1 FY '20 Conference Call of VRL Logistics. We have from the management, Mr. Sunil Nalavadi, CFO of VRL Logistics. Without further ado, I'll hand it over to Mr. Nalavadi for his opening remarks. Over to you, sir.

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [2]

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Yes. Thank you, Abhijit. Good morning to all participants. I'm Sunil Nalavadi, CFO of VRL Logistics Limited. This call is related to earnings presentation for quarter 1 of financial year 2020.

First, I'll start with the year-on-year comparisons then quarter-on-quarter. With respect to year-on-year comparison for the same quarter, the total revenue of the company has increased by around 2.11% from INR 528 crores to INR 540 crores. And including other income, it has increased around 2.09% from 231 -- INR 531 crores to INR 542 crores. The growth in revenue mainly contributed by Goods Transport segment by 3.29%, and Passenger segment revenues decreased by 3.06%, and the sale of our (inaudible) -- by 11.13% and transport of passenger by air has increased by around 58%. The EBITDA of the company has increased by around 45% from INR 63 crores to INR 91 crores, and percentage to total income is increased by around 5% from 11.81% to 16.82%.

And on account of Ind AS 116, the EBITDA of the company is increased by around INR 18 crores and the percentage to revenue increased by around 3.4%. The profit before tax of the company has increased by around 16% from INR 36 crores to INR 42 crores, and percentage to total income is increased by 0.94% from 6.89% to 7.83%.

And on account of Ind AS 116, the PBT of the company is decreased by INR 1.73 crores and in percentage to revenue by 0.32%. The PAT of the company has increased by around 13.5% from INR 24 crores to INR 27 crores, and percentage to total income increased by 0.5% from 4.56% to 5.06%. And on account of Ind AS 116, the PAT of the company has decreased by around INR 1,13,00,000 and in percentage to revenue by 0.21%.

When you see the key segments of the company, the Goods Transport segment. The Goods Transport segment revenue has increased by around 3.29% from INR 410 crores to INR 423 crores, and the growth in Goods Transport business is on account of increase in tonnage by 4.21% and the decrease in relation by around 0.6%. The increase in tonnage is on account of increasing business from the existing customers as well as addition of the new customers.

The EBITDA for Goods Transport segment is increased by around 49% from INR 42 crores to INR 69 crores and percentage to total income is increased by 4.57% from 10.28% to 16.19%. And on account of Ind AS 116, the EBITDA of this segment is increased by around INR 17 crores. And in percentage to revenue, it is increased by around 4%. The remaining increase in EBITDA margin is mainly on account of decreasing average procurement cost per liter of fuel, and the percentage of fuel cost to the revenues is decreased around 1.43% from 26% to 24.73%. As compared to the last year, diesel prices decreased from INR 65 to INR 63 per liter, whereas our procurement cost is reduced from 63.75% to 61.5%. We try to control on fuel cost by procurement of more biodiesel quantity in the current quarter compared to the same quarter of the last year, and the quantity of the biodiesel as a percentage to the total quantity consumed is increased from 18% to 31%. And the rest of the expenses are more or less in line with the increase in revenue. Except whenever 1 increase in expenses is on account of increase hamali cost by 1.15%. The percentage to revenues increased by 5.11% to 6.26%. And this increase in expenses is compensated by a decrease in clearing and forwarding expenses on account of uses more owned vehicles for the local delivery and pickup.

Then another segment of the company is Passenger segment. And during this quarter compared to last year, the overall number of business have been reduced by 25%. On account of that, the Passenger segment revenue is decreased by around 3% from INR 107 crores to INR 104 crores. And the total number of passenger travel days reduced by around 8%, and the occupancy levels have an increase by around 2%. And the relation per passenger is increased by around 5.35%. With expected EBITDA of this segment, it has increased by around 15% from INR 18 crores to INR 21 crores and percentage to total income is increased by around 3% from 17% to 20%. And on account of Ind AS 116, the EBITDA of this segment is increased by around INR 1,35,00,000 and percentage to revenues is by 1.3%. The remaining increase in EBITDA is on account of increase in realization per passenger and increase in occupancy level and some decrease in fuel costs also.

Then when we compare our financials on quarter-on-quarter basis, the total revenue of the company is increased by around 5% from INR 512 crores to INR 540 crores. And including other income, this has increased by around 5.29% from INR 514 crores to INR 542 crores. Again, the growth in revenue mainly contributed by Goods Transport segment. It is increased by 1.64%, Passenger by 17%, sale of power by 108% and the transport of passenger by year by 112%. The EBITDA of the company is increased by around 47% from INR 61 crores to INR 91 crores, and percentage to total income is increased by 4.8% from 12% to 16.82%, including the Ind AS 116 entries.

The profit before tax of the company is increased by around 29% from INR 32 crores to INR 42 crores, and percentage to total income is increased by 1.49%, including the Ind AS entries.

The PAT of the company has increased by around 33.8% from INR 20 crores to INR 27 crores, and percentage to total income is increased by around 1.07% from 3.99% to 5.06%.

And with respect to Goods Transport segment, the revenues increased by 1.64% from INR 416 crores to INR 423 crores, and growth in GT business is on account of increase in tonnage by 0.7% and increase in realization -- there is a decrease in realization. So increase in realization per ton by 0.9%. The increase in tonnage again is on account of increase in the business from the -- some of the existing customers as well as new customers.

With respect to EBITDA of the company, the Goods Transport segment, it has increased by around 24% from INR 55 crores to INR 68 crores, and percentage to total income is increased by around 2.9%. The increase in EBITDA is on account of one is the Ind AS entries, and the remaining -- the marginal -- apart from Ind AS increase, there is a decrease -- marginal decrease in EBITDA for this segment. This decrease is on account of increase in present tool charges by 0.36%. This is on account of the reduction in cashback discount for the sale of (inaudible) . Earlier, it was around 5%. Now from April, the percentage of cashback has been reduced to 2.5%.

Then other increase in cost is the tire cost is marginally increased by 0.37% and hamali expenses, again, it has increased by 0.36%. The fuel expenses compared to last quarter, it is decreased marginally by 0.13%. This is on account of one is a little bit reduction in the price of the fuel as well as uses of more biodiesel. The rest of the expenses again are in control and increased more or less in proportion to the increase in revenue.

The Passenger segment, the overall number of buses have been reduced by 18 compared to last quarter and the revenues increased by around 17% from INR 88 crores to INR 103 crores, and the number of total passenger travel is increased by 3.65%. And on account of increase in occupancy levels as well as realization per passenger, the EBITDA of the company -- EBITDA of this segment is increased around 1 37% from INR 88 crores to around INR 21 crores, and percentage to total income is increased by around 11% from 9.96% to 20.16%. And on account of Ind AS entries, the EBITDA is increased by around INR 1,35,00,000, and percentage to revenue is around 1.3%.

Then another -- the key expenses in this segment is, during the quarter, we scrapped around 18 vehicles for these vehicles we were having a book value of around INR 2,23,00,000. That entire amount has been written off in the books.

With respect to wind power, again, one major change in the wind project is, one, WTG has been scrapped in the current quarter on account of technical glitches. And book value of that machine was around INR 2.19 crores and Suzlon committed to compensate the amount of -- compensate this loss to the extent of around INR 2 crores that has been accounted in the quarter. So this is a brief summary of the financials.

Now I request to the participants to ask any clarifications or questions. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Krupashankar from Spark Capital.

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Krupashankar NJ, Spark Capital Advisors (India) Private Limited, Research Division - Analyst [2]

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I had a question relating to the GT segment. So given that the tonnage has grown 3.4% for the -- during the year -- sorry, during the quarter, are we seeing any green shoots? And which sector are we seeing this growth? So any clarity on that?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [3]

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No. Growth is -- one is -- again, our business is highly fragmented. If we compare with the specific sectors, the percentages are very minuscule. Overall, there is a contribution from all the segments, but there are no specific credits in the current quarter. But one is on account of this delayed monsoon and other things, there are certain commodities related to agriculture sector alone. There is less quantity, actually, we carried. But apart from that, there are no major in -- major increase or decrease in other sectors.

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Krupashankar NJ, Spark Capital Advisors (India) Private Limited, Research Division - Analyst [4]

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So what is our outlook for the coming year, sir? What is the tonnage growth we are anticipating?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [5]

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The outlook is -- basically, what is happening, yes, overall, there are pressure in the market. One is our expectation of the growth was much higher. But in spite of that, we are unable to reach that stage. This is on account of overall -- the weak economic conditions across the country.

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Krupashankar NJ, Spark Capital Advisors (India) Private Limited, Research Division - Analyst [6]

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Okay. So was there any discounts given to increase volumes? That's the question which I'm going to actually.

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [7]

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No. In the current quarter, we have not given any discount, but see as -- we'll discuss the one earlier, when it comes to the quarter 3, quarter 4, again, we passed on some benefits of increasing fuel cost as well as actual load to the customers. So that discount, whatever we have given, that was the final. But in the current quarter, we have not given any discount to the customers.

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Krupashankar NJ, Spark Capital Advisors (India) Private Limited, Research Division - Analyst [8]

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All right. And so if the outlook of the tonnage growth is as per our expectations, mostly up 8% to 10%, if that is the case, would we continue to add more trucks during the year?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [9]

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No. Additional trucks are not required. The reason is, one is that payload increased. Again, it is not effectively coming into system because overall the weakened tonnage. The moment the tonnage growth will be, say, 8% to 9%, definitely, the utilization levels will improve from the existing vehicle (inaudible)

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Krupashankar NJ, Spark Capital Advisors (India) Private Limited, Research Division - Analyst [10]

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So can you share the utilization levels of the trucks currently?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [11]

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No. The earlier, whatever the tonnage levels the truck capacity has been utilizing 100%. But whatever additional capacity has been given. And additional capacity, the utilization is not -- you want 3%, 4% extra, mean the, earlier, around 15%, 20% additional capacity has been loaded to the existing vehicles. In that 15%, 20%, the additional utilization is already around 3% to 4%.

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Krupashankar NJ, Spark Capital Advisors (India) Private Limited, Research Division - Analyst [12]

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Okay. Is this because of more volume?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [13]

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(inaudible) we can -- comfortably around 6% to 8%, at least.

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Krupashankar NJ, Spark Capital Advisors (India) Private Limited, Research Division - Analyst [14]

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All right. So is this more because of volume is good, sir? Is this -- any other reason for that?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [15]

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There should be continuous flow in the tonnage. In that case, actually, we can know which further vehicles to carry more load. And definitely, the utilization levels will increase. Now considering the -- it's more or less hardly 4% increase, and it is more or less as compared to earlier before increasing actual load. We do not give effectively more scope to load to the vehicles at that particular moment. So that's the reason, actually, we do not -- ultimately, we have to cover a good number of kilometers. And in that scenario, we can't utilize more than 3%, 4%.

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Operator [16]

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The next question is from the line of Ankit Panchmatia from B&K Securities.

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Ankit Panchmatia, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [17]

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So my question is more to do regarding our CapEx plan now. So as we have seen that we have added high (inaudible) vehicles in the current quarter. So how are you going to go ahead with that CapEx plan?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [18]

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No. We decided, for the time being, we are not going to add any further vehicles, unless there good increase in the volumes. But considering the current scenario, we are not forcing any such kind of drastic increase in the tonnage. So considering those factors, we are not planning to add much of a CapEx in the current -- coming days, right?

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Ankit Panchmatia, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [19]

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Sir, maybe let me ask it more correctly. So the earlier order, which we had given -- have we resumed all those vehicles? Or we are yet to receive some of them?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [20]

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No, these are the last vehicles delivered in this quarter we received, but there will not be any further de-test from that order. We have already given clear communication to the suppliers. And also, we are done with all these effects. Yes, still commercial operation will start from 15 (inaudible)

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Ankit Panchmatia, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [21]

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So is it right to assume that the CapEx for the current year will be very negligible? Or the maintenance CapEx?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [22]

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Yes, as I indicated in the last call itself, we're around -- we're in the range of around INR 50 crores to INR 60 crores. Yes, that is the CapEx. And in the current quarter, yes. Yes, In current quarter, we incurred a total CapEx of around INR 21 crores, and most of this CapEx is related to Goods Transport segment around INR 18 crores.

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Ankit Panchmatia, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [23]

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Okay. And sir, regarding this biodiesel, so if I see that Q-on-Q, the component of biodiesel has increased drastically, but that has not been reflected in the margins. So how should we read this?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [24]

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No, margin in that sense it is now one -- we identify one new supplier in not as (inaudible) supply is happening from (inaudible) Currently, the quantity, what we used, there is a saving in cost, but there are some changes in the fuel prices also. So now the fuel price, what I have said in the opening remarks is about procurement cost, not the market price. So going forward, definitely, this is going to benefit us.

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Ankit Panchmatia, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [25]

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And is it right, we do see that the current level of biodiesel blending would continue? Because earlier we used to do around 18% to 20%. And now this is 31%, which is highest ever for us. So...

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [26]

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Yes, this is a new source actually what we identified. This, we have to still go through some more (inaudible) to see that it is permanently within use this for vehicle quantity. Then only otherwise, the 18%, 20% is actual percentage on an annual basis, but the new source, what we identified in the north that to be -- we have to go (inaudible)

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Ankit Panchmatia, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [27]

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And sir, we are almost through with the early 2 months. So I just wanted your view on how the pickup in the economy is there, is it still languishing? Or we are seeing some...

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [28]

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I feel the confidence of the customers is not coming up. Everybody in all sectors, basically, there are no much of investment. Nothing is happening. So even demand side also from our end, we are putting a lot of effort to identify new customers and all these things. On account of that, we are in a position to maintain at least some growth in the tonnage.

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Operator [29]

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(Operator Instructions) The next question is from the line of Prateek Kumar from Antique Stockbroking.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [30]

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Yes. So my first question is on this cashback thing which you mentioned 5% to 2.5%. So this is a new government rule, which you mentioned about. And does that have impact year-on-year as well?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [31]

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Yes, definitely. Year-on-year, the overall (inaudible) toll is almost to maintain. But when it comes to quarter-on-quarter, it impacted a little bit around 0.36% to the duty business. Basically, what happened when they started this first time, initially, they offered around 10% cashback. Then year-on-year, it has been reduced to 7.5%, 5%. Now it is 2.5% from April. I think, from next year, then it will (inaudible) 2.5% also.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [32]

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But this is -- relating electronic (inaudible)

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [33]

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Yes, yes. So around 60% of our cost we're using -- making payment through (inaudible) Our government is thinking to make it 100%, but still that infrastructure and all actually they have established.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [34]

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Okay. And then (inaudible) Volume in the segment would be lower than 4% during the quarter, volume growth in goods segment?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [35]

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(inaudible) there is one on (inaudible) based on some of the other companies review, yes, there is no increase in the high core tonnage. And even this (inaudible) recently won the bulk also, there is a decline in production at (inaudible) so these things actually will definitely -- we may see that interpretation (inaudible) impact.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [36]

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Sir, do we have (inaudible) to our cost segment? Or to ancillary or spare parts?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [37]

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Actually, it's only the car segment one we're having around 100 vehicles to carry the cars. But yes, about spare parts they're definitely, around 7% to 8% of our total tonnage belongs to auto sector.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [38]

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How much?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [39]

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(inaudible) 7% to 8% of our total tonnage.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [40]

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So that would have...

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [41]

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I don't know. We are not seeing any (inaudible) in that because these are all single spare parts.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [42]

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Okay. And then you mentioned about the discounts (inaudible) the 1% increase in Q-on-Q realization is on account of rollback of discount and not because of (inaudible)in price increase.

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [43]

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Yes. The cost of the freight, we have not increased. But in some of the quotations earlier, when we increase the rate even in the last year, there's -- those quotation rates were due on an annual basis. From first capital, there are certain increment in those metrics but in percentage to overall discounts, it's very less. So on account of those things and we cited -- wherever there is some competition in all not addressable again, on a select group or our customer bases, if you want a credit basis or something like that. Here also, we increased a little bit flat rate. (inaudible)there is an increase in realization.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [44]

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But we were giving discounts still in Q4?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [45]

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In Q4, we extended discounts to the customers.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [46]

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Okay. And regarding the Surat facility, so now first quarter, we have done 4%. So Surat facility would add to volume growth during the year?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [47]

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Yes, definitely we are anticipating that because this -- definitely, this infrastructure will -- the commercial (inaudible) operate in prior to this goods season. So definitely, we can expect some good quantity in the festival season.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [48]

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That's a full year...

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [49]

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(inaudible) from these places, the textile. This is entirely textile market. So definitely, we can do some better quantity.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [50]

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And we weren't catering to this market indirectly earlier in a meaningful way?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [51]

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Yes. Earlier, we used to have some 3, 4 offices in the city. And sometimes, we used to close a booking because of no vehicles, no space. That was a scenario for all transporters. Now this is a new facility where actually we can store temporarily the alignment. It's a total area of around 260,000 square foot. So definitely, at this stage, at least, we'll not stop booking. Whatever come, definitely, we can book in the current year.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [52]

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So I mean we started at 4%. So we can -- I mean can this take us to like 7%, 8% for the year, this Surat facility.

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [53]

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No. But overall, Surat still will not contribute to that extent, but there are overall pressure in the market. So some disclosed onward, actually, the economics facing that has to come out (inaudible)

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [54]

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And just question, this last week, there was just notification from a couple of transport organizations saying that they will not be buying trucks. So are we also part of that? I mean all scheme of things.

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [55]

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Again, let's say, we are having our whole plans about CapEx. Earlier also, whenever we announced, we gave a specific reasons why we are adding so many vehicles and why is the one withdrawn again because of the government notification of increase in actual load again we what overall -- whatever order we restricted to buy some of the vehicles out of that order. And in the current scenario, since we are having a good capacity, still we can increase in utilization in the coming days. So when we (inaudible)that. Yes...

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [56]

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If industry doesn't add as well. So that should help realizations for you and industry.

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [57]

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No, but there should be some demand in the market also. So if industry is not adding if there is a demand for the transportation, then definitely, we can increase the realization. But unless that comfort will come, again, we are not in a position to increase rate.

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Operator [58]

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The next question is from the line of (inaudible) from (inaudible) Advisor.

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Unidentified Analyst, [59]

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I think my question is related. So sir, could you give a color in terms of the Passenger? So is that -- which is 70% of the business? So is this like an express business? What are the kind of rates do you normally carry? Could you give some color on that?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [60]

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Yes, we do both the express as well as the general parcel. But expense, we call it as a priority segment that contributes almost around 11% to 12% of our gross and full volumes. And rest of all related to general parcel.

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Unidentified Analyst, [61]

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So which is mostly LDL?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [62]

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Yes. Both priority as well as the general parcel are LDL.

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Unidentified Analyst, [63]

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Okay. I see. Less than...

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [64]

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STL is around 7%, 8% to the (inaudible) revenue.

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Unidentified Analyst, [65]

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Okay, okay. So I think what are the cases -- what are the minimum cases that you do plan...

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [66]

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In terms of rate, minimum, which charge to the customer, is 25 cases. And again, there is no limit on the upper side. About 25 cases, say for example, if somebody will come to the lesser weight. For example, some mobile handset or something. We can't carry or we can't mix those commodities along with our products. So such for us (inaudible) package, then we'll not accept. In some cases, for example, spare parts and only one, though, are putting rate of that particular commodity is lesser, but we charge it 25 cases. We carry those goods also. If those goods are -- if we are in a position to mix those goods along with our existing good. Goods Transportation, yes.

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Unidentified Analyst, [67]

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Okay. And regarding the upcoming [BHX] and the kind of vehicles that you have, how much CapEx would you need to do to upgrade them?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [68]

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No. [BHX] upgradation will not apply to the existing vehicles. This normally apply only for the new vehicles.

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Operator [69]

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Okay. And do you have plans to purchase new ones?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [70]

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No. As of now, no. And even after [BHX] we'll wait for some more time because technically we have to see how -- which vehicles are wearable and all these things. And after that we are surveying.

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Unidentified Analyst, [71]

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Okay. So basically, it's driven through demand. If you see enough demand on the ground, you may go in and upgrade. And...

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [72]

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Yes, yes. For example if currently increase in the volumes or something happened, then if it is required to add a vehicle, then we may add.

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Unidentified Analyst, [73]

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Okay. And what kind of guidance would you be able to share for the full year, if any, based on what has happened so far?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [74]

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No. It's very difficult to give a guidance, especially in our sector because it's related to all the sectors in the -- of the economy. Even crude oil, say, for example, to (inaudible) and pharma and something like that, then little impact. But in our case, the BTS, we are not depending on a particular sector. The contribution from the textile, which is our highest sector what we are carrying, it is around, say, around 14%, 15%. But the rest of the sector is not more than around, say, 7%, 8%.

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Unidentified Analyst, [75]

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So considering there's such a huge slowdown in textile at the moment, how have you been able to maintain your margins or improve that actually?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [76]

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No. Basically, see, again, in textiles, we carry from the manufacturers to the dealers in the sense all these are ready-made garment or finished product. So in last quarter, what happened because of some festive season of Ramadan and all, there was a demand. So again, that may be compensated. But even in last quarter and overall compared to year-on-year, there was no reduction in particular segment as of today. Yes, we have to see in our future how we can go.

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Operator [77]

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The next question is from the line of Ankita Shah from Elara Capital.

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Ankita Bora Shah, Elara Capital, Inc. - Associate VP of Institutional Research [78]

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Yes. Sir, I just wanted to check to the write-off that we -- you had mentioned about INR 4 crores on buses and in windmill. These will be effective in 2Q? Or...

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [79]

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No, it will be effective in quarter 1 itself. And the INR 2.3 crores of write-off that has been -- that was directly impacted to these margins of bus segment. And about the wind turbine, whatever loss of around INR 2.20 crores, there is (inaudible) compensated around INR 2 crores in this quarter itself. Still, the discussions are on. We may expect some further additional compensation in the next quarter, but it will be a very small amount.

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Ankita Bora Shah, Elara Capital, Inc. - Associate VP of Institutional Research [80]

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Okay, okay. And sir, I missed the Q-on-Q volume growth number in the GT segment.

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [81]

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Volume growth, yes, it's 0.7%.

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Ankita Bora Shah, Elara Capital, Inc. - Associate VP of Institutional Research [82]

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0.7%. And sir, the overall tonnage growth for the year, having -- you had said it would -- expecting around 8% to 10%. Can we know how much lower can we expect this year? Probably around 5% to 7%? Or if you could just help (inaudible)

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [83]

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No. It is increased by around 4.21%, but around 5% to 6% increases -- there's no real income for that level. But we have to see how this economy will turn.

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Ankita Bora Shah, Elara Capital, Inc. - Associate VP of Institutional Research [84]

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Okay. Okay. And sir, did you mention the absolute utilization level number for this quarter and same quarter last year?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [85]

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No, no, no. See, the utilization levels are well -- prior to increasing actual order, again, the utilization is up to the mark, 100%. But in addition to that, the utilization levels have increased by around 3%, 4%. Now whatever this volume growth of 4% is there, this 4% increase is carried in the existing vehicle itself because there -- on account of this increase, there are no increase in lorry hire charges, and the existing kilometer vehicles itself covered this additional quantity. So that's why the utilization increase were around 4%. But still, we are having a scope to increase this utilization to around at least 7 -- 6% to 8%.

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Ankita Bora Shah, Elara Capital, Inc. - Associate VP of Institutional Research [86]

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It will be -- will be share the absolute number, the increasing 4% to how much?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [87]

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Around 6% to 8%.

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Operator [88]

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The next question is from the line of Alok Deshpande from Edelweiss Securities.

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Alok Deshpande, Edelweiss Securities Ltd., Research Division - Research Analyst [89]

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Two questions. One is just wanted to know your views on freight rates, how the rates have moved in the last 3 or 4 months and what is your sense on -- is there room for these rates to go down further? Or they can bounce back from these levels? So what is that? And the -- yes. Go ahead, sir.

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [90]

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Yes. About freight rate, in (inaudible) we're always increasing the rates, even in the -- we are verifying with other competitors also, instead of this increase in the fuel costs on account of the budget. In budget, actually, they have increased some of the tax rate on the fuel. So effectively, it is increased by around INR 2 plus. But in spite of that, nobody is increasing the freight rate. As of now, we continue as it is, according to me. But subsequently, if volume starts increasing, then there is a scope to increase as well our freight rates.

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Alok Deshpande, Edelweiss Securities Ltd., Research Division - Research Analyst [91]

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Okay. But sir, given the pressure that is in the industry, do you think there is room for these rates to fall further? I mean in terms of -- I know that the rates are getting like this based on diesel prices. But otherwise, the core rates, is there room for it to go down further?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [92]

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No. You -- for the insurance then the -- then for the competition, we'll increase. Then there'll be a chance or there will be some situation to reduce rate risk further.

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Alok Deshpande, Edelweiss Securities Ltd., Research Division - Research Analyst [93]

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Okay. Understood. And second question, sir, on this tonnage growth that you were mentioning, about 5%, 6% or so. Is it more of sort of a market share gain in the sense that smaller truck operators not being able to have the required volumes and does the kind of business you're seeing more to your company? And -- or is it 5% or 6% industry growth that we are talking about?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [94]

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Industry, it is under pressure. But when it comes to whatever 4%, we achieve because the -- we -- our services are scattered across all segments. Even Europe-related, widely spread. So definitely, we can -- again, we are putting in a lot of efforts to add more new customers. One is actually is a good this is we are not increasing the freight rates, that is one. And second thing, the compliance levels are much higher in that case compared to other operators. And third thing is about our network and service levels. So on account of this, again, we are marketing very strongly in the market to get new customers. That may help to add some quantity.

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Alok Deshpande, Edelweiss Securities Ltd., Research Division - Research Analyst [95]

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Okay. So from that, is it fair to assume that slightly bigger fleet owners like yourselves or slightly smaller, slightly larger will continue to do relatively better than a lot of the smaller truck operators given the pressure that is in the industry?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [96]

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Yes. That is true. But again, it depends on geography also. Against (inaudible) some of more -- it's always happening in the north northeast, like [West Bengal] compared to the rest of the state. But our presence is mainly in southwest and not the Delhi side. So in these sectors, actually geography is still it is a better position. Again, it is our -- it's my personal view.

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Operator [97]

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The next question is from the line of Mukesh Saraf from Spark Capital.

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Mukesh Saraf, Spark Capital Advisors (India) Private Limited, Research Division - VP of Equity Research [98]

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So firstly is on Surat. Could you give some sense on -- I know you said that you will start operations on 15th August, but some sense on the -- how many vehicles you're planning to allocate to that geography or what's the plans in the next, say, 12 months, what kind of revenue you can start generating from there. How is that facility going to help us? Is it more like the transition moving from south to Surat and they're coming back probably not as great utilization that will now see better utilization rates? Could you just give some more color on this one?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [99]

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Surat, basically, we are looking for the -- I guess starting at a good time because before the festival season, that's one good thing. And presently, our plan is to allocate some of the -- our existing vehicles to this area. And for volume size increasing, definitely, we will hire outside vehicles for the time being. So 1/3 of that lorry orders confirmed while all these discussions are happening. Once it is announced we are permanently are going to change and once the vehicle category, once we decided, then definitely, we are going to add -- our all vehicles would be sector also. Currently...

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Mukesh Saraf, Spark Capital Advisors (India) Private Limited, Research Division - VP of Equity Research [100]

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What number, sir, you are saying? Sorry?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [101]

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About this BSA, overall, these discussions are happening, right? And apart from that, basically, we are anticipating a good kind of volume growth from this sector. So in my view, and definitely, we can increase at least freight of around INR 100 crores from this geography itself. Yes, for the beginning. And definitely, that is going to improve further.

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Mukesh Saraf, Spark Capital Advisors (India) Private Limited, Research Division - VP of Equity Research [102]

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Right, right. And like I said, is it like new volumes? I mean organic volume like you were not currently servicing that geography, and now you will allocate up there. Is it that way or are we already...

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [103]

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Currently, what is happening from Surat, we have more services we are offering to Southern Surat. Now we want to expand this service to across the country.

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Mukesh Saraf, Spark Capital Advisors (India) Private Limited, Research Division - VP of Equity Research [104]

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Okay, okay, okay. Right, right, right. Any specific reason why Surat? I mean is that -- inherently, is there a good amount of tonnage available there, but it's not being serviced currently? Or because the -- I mean if there is tonnage available, it should be serviced already by some other operators.

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [105]

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No. Currently, what is happening is the transporter's office is situated in that city. Our case also, it is present in 4 offices. There are no proper infrastructures available in the city. And as per the local government instruction, we help more of the city in the next 1 year or so. Every transporter. So we're -- actually, we created this in process in one transport method. There, actually, all the transporters are shifting. The advantage is, as I said, because of this lack of infrastructure earlier, we used to provide service only from Surat to South. Now we have also expanded the sort of the geography that is going to be additional volume. And we want to also -- total volume will increase because in some of the season to date, we are unable to book the consignment on account of for the lack of infrastructure or even the good kind of demand that -- during the seasons. And in a year, seasonally, with there at least for around 6 months.

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Mukesh Saraf, Spark Capital Advisors (India) Private Limited, Research Division - VP of Equity Research [106]

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Okay. Yes. And my second question is, I remember, last year you were mentioning the number of vehicles that you're contracting will come down, I mean the outside vehicles, as your actual load norms are coming to play, and you've been able to expand capacity. So how are we seeing that? What proportion of our current tonnage carried was carried on outside vehicles?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [107]

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Yes. Again, it is in the range of around 9% to 10%. But whatever the additional volumes will increase around 4%, that additional volumes have been carried in our own vehicle fleet.

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Mukesh Saraf, Spark Capital Advisors (India) Private Limited, Research Division - VP of Equity Research [108]

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Okay. So that should have helped the margins to that extent.

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [109]

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Yes. Margins are a little bit improved. You see, year-on-year, definitely, the margins have improved. But compared to the last quarter to this quarter, there are some marginal decrease in the margins. Because in last quarter also, we used most of our own vehicles for additional capacity. But this additional capacity will really yield benefit once we start utilizing, say, around 6% to 8%, the additional load levels. Currently, what is happening, we are utilizing around 3% to 4%. So you -- this utilization further, there is a scope to increase up to 6% to 8%. Once we reach that level, then the preliminary margins will improve by at least around 2% on account of this.

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Mukesh Saraf, Spark Capital Advisors (India) Private Limited, Research Division - VP of Equity Research [110]

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Okay. Sir, I remember you had mentioned earlier, sir, that a lot of the cargo you carry is volumetric, and it's not necessarily heavy cargo. And so in volumetric cargo, the additional action load, you might not be able to apply it at all anyway.

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [111]

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So no, no...

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Mukesh Saraf, Spark Capital Advisors (India) Private Limited, Research Division - VP of Equity Research [112]

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Any changes in mix there because...

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [113]

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Yes. I also mentioned, the additional capacity will be in the range of around 15% to 20%. But the tender capacity, we are unable to use because of our volume business, but we can increase at least up to 6% to 8%. That too have to have a moment...

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Mukesh Saraf, Spark Capital Advisors (India) Private Limited, Research Division - VP of Equity Research [114]

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Right, right, right. And just one last thing. This whole -- I mean we ask you often this question on FCM/RCM. I mean there are also general expectation in the last 2 years that once GST comes in, the level comes in, there'll be a lot of shift from unorganized to organized truckers and hence, you should be able to move from RCM to FCM. But it doesn't seem to have happened. So we assume that there has been no move from unorganized to organized. And hence, this has not happened. And so this will not happen in the future as well? Or what's the take there?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [115]

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No, it is not in that way. See, basically, what is happening, even if we see overall our customers' profiles, B2B, so for example, the people who are having the GST numbers, that is around 92% to 94% of our core customers having the GST numbers. And earlier on, 6%, 7% of our customers are not having a huge number. Now if we shifted to Arunachal, definitely all this 92% of our core customers are in a portion to claim the credit. It is -- they're entitled for that credit. But here, what is happening? Currently, say, we are charging 5% makes RCM 5%. Now if we ship we assume we have to apply 12%. And in (inaudible) what is happening, systematically, the cost will increase by around 7%. But we are in a position to clear more credit of not more than around 4% to 5% of all this one, but there is still gap of around 2% to 3%. Either we're to reduce the rate to that extent or we have to educate the customers that they're going to claim an important credit in all this. Now -- unnecessary, customers are not in a position to block this 2%, 3% of their freight expenses.

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Mukesh Saraf, Spark Capital Advisors (India) Private Limited, Research Division - VP of Equity Research [116]

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So I mean -- the 5%, I assume, that other -- I assume that you are doing -- you don't claim an input on that, no, sir?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [117]

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We're not allowed to claim an input on that. But on the...

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Mukesh Saraf, Spark Capital Advisors (India) Private Limited, Research Division - VP of Equity Research [118]

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On the 12%, you can claim an input on that.

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [119]

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You can claim, and there's 12% total inputs (inaudible) not more than, say, around 5%, 6% of our total outflow.

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Mukesh Saraf, Spark Capital Advisors (India) Private Limited, Research Division - VP of Equity Research [120]

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So then you'll have an additional 1% or 2%, but you'll have to pay -- if you have 12%.

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [121]

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Either I have to pay if I want to. Otherwise, customer has to pay. And so still, there are -- the discussions are on with respect to change in rates and all. Now there are certain news that they are going to merge 12% and the 18%. That will happen. Again, this gap will increase further. Yes. In view of that, still, we are holding.

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Mukesh Saraf, Spark Capital Advisors (India) Private Limited, Research Division - VP of Equity Research [122]

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So unless, say, diesel moves to GST, it doesn't make sense for you?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [123]

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Yes, exactly. And moreover, so even in 5% reversal, your customers are eligible to claim an input tax credit. So there is no harm to them also.

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Operator [124]

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The next question is from the line of Manisha, an individual investor.

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Unidentified Shareholder, [125]

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Sir, I just wanted to ask about the recent lags which has been happening in the Karnataka and Maharashtra, which is on-state, and plus the average diesel increase which has happened in this quarter. What will you expect?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [126]

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Yes. Definitely, there will be a lag in the -- in all the business because of these slowed activities. The recent year also now today and the call to mobile rather than landline because all landlines have been disconnected. So that is a situation here. And definitely, there'll be lag that will happen now, most of the business activity is completely stopped in the state of Maharashtra and North Karnataka. But we are expecting there, this call will ship to the coming days and of course, some relief activities and all these things. But overall, you came back early on some of the sectors like agricultural sector and all, especially in this area.

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Unidentified Shareholder, [127]

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So you will be able to claim it back in September? Or it is not possible?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [128]

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September, it is very difficult, but it is spread over a period of 2 to 3 months at least.

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Unidentified Shareholder, [129]

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Okay. Because your major operations are in Belgaum and those cities. So I think even in the Passenger transport will heed because the Mumbai -- Bangalore-Mumbai Express had been badly damaged. So your Passenger...

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [130]

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We have rerouted some of the vehicles. And moreover, for Passenger anyway, this is a flat season. And with respect to the diesel rate, what you mentioned, yes, we have not increased the rate. We are absorbing that as the additional cost in the existing revenues. Then definitely, that will impact on a little bit on the margin. But we are compensating that increase through increase in biodiesel and all this.

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Operator [131]

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The next question is from the line of Shrinidhi Karlekar from HSBC.

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Shrinidhi Karlekar, HSBC, Research Division - Analyst [132]

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So I just want to understand, as this strategy, is the company now more focusing on volume growth compared to what it used to focus, say, 6 months or a year back versus the trade-off between margin and volume? That is my first question. And sir, secondly, I want to understand some breakup of this, about 20,000 employees you have. How much of it is our office staff? How much is their work? And how much is like more of like branch and hub level, like none of this stuff? So my question really comes from the scope of some mechanization of processes so that your dependence on the employee cost reduces. So is there, first of all, scope to improve mechanization level at your hubs and branch level? And are you targeting that?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [133]

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Yes. First, you asked about this one, right?

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Shrinidhi Karlekar, HSBC, Research Division - Analyst [134]

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Strategy on volume growth versus margin.

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [135]

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Yes. The strategy is basically what is happening. There are no volume front and -- on overall industry. If volumes start increasing, definitely, we'll have a scope to increase in freight rate also. Now since there is a pressure, we are not -- we don't want to take a chance to increase the freight rate and take a further rate on the volume. That is a strategy what we are adopting currently. So that's why even though the diesel price is increased, we decided not to increase the rates, but we can compensate a lot that by procuring more biodiesel as well as bringing more efficiency in the system. That's what actually the internal's thought process is. And with respect to employees' concern, you want a breakup.

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Shrinidhi Karlekar, HSBC, Research Division - Analyst [136]

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Yes, sir. Breakup. And the second, more importantly, sir, is there a scope to like mechanizing the way you handle materials at, say, hub level so that...

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [137]

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Yes, definitely. Currently, what is happening -- you have mentioned about 20,000. Now the number of employees is around 17,128. Now the breakup of this 17,000 is around 734 people are working staff, staff in a sense these are manager and the clerical staff. This is only in the duty segment again. And around the driver component, it can be on a higher scale. The driver components are around 8,000 numbers. And overall employee is actually including the Goods Transport and Passenger segment all put together. It is around 19,000.

See, we reduced some of the employees. Earlier, it was around 20,000-plus. We're in a position to reduce around 700, 800 people despite increasing the business. This is on account of improvement in some mechanisms since we started introducing some loading/unloading machines and all these things. And apart from that, since this additional load is happening from the existing vehicles, even the same driver, actually, we can fly on the same vehicle. And moreover, about the loading clerical, so what will happen, the same person will load until the completion of the vehicles because there are no handling of multiple vehicles. So there is some efficiency involved in this. So on account of that, there is a reduction of employee of -- in the number of around 700 to 800 people.

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Shrinidhi Karlekar, HSBC, Research Division - Analyst [138]

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And sir, is there still a significant spot still available for mechanizing in terms of particular -- the one I understand, like coming from a higher cap -- tonnage carrying capacity for the vehicle. Another is like the way the goods are handled.

(technical difficulty) Is there such scope of a level?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [139]

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Scope, again, we are to study about cost and then the cost-benefit analysis. So on that basis, actually, we are implementing some of the machines and all. If we can use some of the routes to current and all with the barcode system and all for the moment, but it can cost us. Considering the nature of commodities and other things, we are unable to do that. But in some of the priority materials, we are using that system. So definitely, there is a scope to use more technical things in our process. But obviously, closely, it will happen, not at one go and get a sense of it. And closely, again, the employees versus the increase in the revenue, definitely, there will be per-employee basis. There will be more revenue in the coming days.

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Shrinidhi Karlekar, HSBC, Research Division - Analyst [140]

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Right. And then the last one, if I may. I just wanted to know absolute number of like Passenger, Transport or property numbers.

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [141]

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What's the question?

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Shrinidhi Karlekar, HSBC, Research Division - Analyst [142]

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Bus segment. You said you -- it has improved by 2 percentage points. I just want absolute numbers with that.

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [143]

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Yes. As I mentioned, year-on-year, there is an increase in number of passengers that is around 8%, and the realization is increased by around 5%, from INR 1,081 to INR 1,138. And average net occupancy increased by around 2%.

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Shrinidhi Karlekar, HSBC, Research Division - Analyst [144]

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Yes. I want the number of potential...

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [145]

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Yes. From 86% to 88%.

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Operator [146]

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The next question is from the line of Vikram Suryavanshi from PhillipCapital.

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Vikram Suryavanshi, PhillipCapital (India) Pvt. Ltd., Research Division - Analyst [147]

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Yes. Yes. Sir, my all questions were answered.

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Operator [148]

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The next question is from the line of Prateek Kumar from Antique Stockbroking.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [149]

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Further follow-up. So first thing, on -- sorry, for the business environment, your customers being small and medium, so is there pressure on the receivables from them also in your business?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [150]

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No. Receivables, again, this is accounting facility we provide only on our selective customers who are (inaudible). We have not extended this credit facility to all the customers. So that's why the small customers has -- almost around 70% of our business is cash and carry, either they have to pay at the time of booking or they are to pay at the time of delivery. But that percentage is not increased, the credit facility to whom we are doing it. There was -- around what has happening, the number of days in terms of receivables has come down. Earlier, it was in the range of around 18 to 19 days. Now that is to around 14, 15 days.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [151]

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But the credit, cash and carry business remains same, so how is it reduced?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [152]

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No, no. The receivable business has been reduced in terms of number of days.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [153]

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So the customer (inaudible) now?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [154]

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Yes. We are -- given again the cash discount for the customers who will pay immediately. And in terms of receivables, again, they are often restrict amount. They have to follow whatever we spend with them. They have to pay within that.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [155]

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Okay, sir. Can you repeat this Passenger growth, the Q-on-Q revenue growth mix?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [156]

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Yes. It is increased -- the overall number of passengers are increased by around 3.6%. The increase in realization is by around 13% from INR 1,007 to INR 1,138, and the average occupancy level increased by around 4.23%.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [157]

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On a reduced number of passengers?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [158]

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Yes.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [159]

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And sir, regarding this Capex at Mangalore alongside Surat and last year, what is that exactly? It's not been in...

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [160]

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I've been in Mangalore, that is a booking and delivery office. Earlier, we used to have on a lease basis for a long period. It was around 25,30 years. Now we bought that property. That property belongs to Tata Coffee.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [161]

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Sir, how much was the CapEx last year on this?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [162]

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Around INR 15 crores.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [163]

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Out of INR 200-odd crores we did last year.

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [164]

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Yes. Out of INR 211 crores.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [165]

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And sir, just lastly on tonnage volumes. So what was our FY '19 annual tonnage volumes, which we carried in absolute number?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [166]

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It's around 6%.

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Prateek Kumar, Antique Stockbroking Ltd., Research Division - Analyst [167]

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No, no. Absolute number of volumes?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [168]

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No. That we are not certain.

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Operator [169]

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And the next question is from the line of Krupashankar from Spark Capital.

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Krupashankar NJ, Spark Capital Advisors (India) Private Limited, Research Division - Analyst [170]

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Right. Just a question on the fleet, what would be the average age of fleet currently?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [171]

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It is around 9 years.

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Krupashankar NJ, Spark Capital Advisors (India) Private Limited, Research Division - Analyst [172]

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Okay. So given that you have a policy of scrapping vehicles every at least 10 years, right? If I'm not mistaken.

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [173]

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No, no, no. We don't have any scrappage also for the bus vehicles. We use these vehicles until the vehicles will run in a good condition. And on account of our own maintenance facility, again, we can increase the life. We can -- even the 25, 30-years-old vehicles, we are looking for a local delivery and all these things. As well as the efficiency level is in the -- equivalent to the new vehicles.

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Krupashankar NJ, Spark Capital Advisors (India) Private Limited, Research Division - Analyst [174]

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So from a depreciation point of view, we depreciate a truck in 8 years' time.

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [175]

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Yes. We depreciate over a period of 9 years.

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Krupashankar NJ, Spark Capital Advisors (India) Private Limited, Research Division - Analyst [176]

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Okay. Okay. So if we ask, let's say, vehicles that are greater than 10 years old, so how is -- the book value of these vehicles are higher, right, currently?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [177]

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No. Book value is at INR 1. The vehicles which are having more than 9 years, the book value is INR 21. And this, I want to bring some light on this new scrappage policy. Scrappage in the sense -- actually, there is no scrappage, which -- what the government has came up with their organization. Still, it is in a draft stage. What they are proposing is actually, after 15 years, we (inaudible) now we used to do that on an annual basis. Now they are going to make it twice in a year. So until we get this certificate, we can use these vehicles in our operation. There are no, as of now, the restriction on the age of vehicle, even in the new policy, but still it is in draft stage. We have to see the final version and how it will come.

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Krupashankar NJ, Spark Capital Advisors (India) Private Limited, Research Division - Analyst [178]

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So what would be the composition of vehicle credit in 15 years' time?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [179]

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Yes. More than 15 years, around 700 vehicles. But again, we are (inaudible) yes.

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Operator [180]

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The next question is from the line of Ankit Panchmatia from B&K Securities.

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Ankit Panchmatia, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [181]

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Sir, I wanted to understand, regarding this hamali charge. So is it effective some date? Or this is a general increase which we are seeing a growth?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [182]

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Yes. This is a general increase. And actually, some of the rates have been increased. Again, it is a variable question, Ankit, because most of the payments we are making in proportion to the tonnage of what they're handling. But the hamali rates have been increased in the recently.

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Ankit Panchmatia, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [183]

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Would -- in the range of?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [184]

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Overall, it impacted around 1% on the revenue, but that has been compensated with decrease in other costs.

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Ankit Panchmatia, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [185]

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Okay. Okay. And sir, this minimum wage act or revision or something like that -- because earlier also, I think so, our employee costs were higher because of this minimum wage act. So are there any chances that this would again impact going ahead maybe in the next year?

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [186]

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No. In terms of minimum wage, anyway the employees are getting the more amount here, but what we are doing is for the first provision, we are considering minimum wages as their salary. About the minimum wages, we are paying them allowances. And now minimum wages, there is -- 1/5 revised again if it is revised. Then what will happen, there will be shift from operating cost to employee cost, but there will be some additional burden on the company in terms of the contribution to the statutory obligations, yes.

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Operator [187]

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Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Sunil Nalavadi for closing comments.

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Sunil Nalavadi, VRL Logistics Limited - CFO & Investor Relation Officer [188]

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Yes. Thank you all participants. So I hope that your queries have been resolved. If you have any special queries, again, you can call us. Thank you.

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Operator [189]

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Thank you.