Allcargo Gati Limited (532345) Earnings Call Transcript & Summary

Ladies and gentlemen, good afternoon, and welcome to the results conference call of Gati Limited, organized by Batlivala & Karani Securities India Private Limited. [Operator Instructions]. Please note that this conference is recorded. I would now like to turn the conference over to Mr. Sailesh Raja. Thank you, and over to you, sir.

Good evening to all on behalf of B&K Securities, I would like to welcome you to the Gati Limited Quarter 2 FY '22 earnings call. From the management side, we'll be hearing from Mr. Phil, our CEO of Gati; and Mr. Ravi, our Chief Strategy Officer from Allcargo Logistics. So, without taking much time, I hand over the call to Mr. Ravi for the initial remarks, and post which, we will open up the floor for Q&A. Over to you, sir.

Hi. Good afternoon, everyone, and thank you for joining us on Gati Limited Quarter 2 FY '22 Earnings Conference Call. I'm Ravi Jakhar, Chief Strategy Officer for Allcargo Logistics. And I have with me my colleague, Mr. Pirojshaw Sarkari, Phil, our CEO, for Gati Limited. I trust all of you, your dear ones and colleagues are well and keeping safe, as the pandemic situation around us also continues to improve. I also hope you have had a chance to look at our results and the presentation, which have been uploaded on the stock exchange and the company website. So speaking about the macroeconomic environment, I think the most important thing is how the management of the pandemic situation in the country has been going on with the vaccination mark crossing 1 billion doses. That's something which is very heartening because it speaks volumes about the ability of the country to manage the prices and also gives us greater optimism around continued unlocking and improved trade flows, which should happen in the coming times as we hope that the COVID pandemic continues to remain -- continues to decline in the times to come. As Gati, covering 99% of the pin codes in the country with a robust network, which has operated extremely well despite all the pandemic challenges, we remain confident of benefiting from the continued progressive unlocking and increased trade flows across the country. Over the last quarter, ending September 2021, Gati has managed to stay strong, focused on core operations and deliver a resilient performance. As you are -- most of you might be aware, Gati Limited has a subsidiary, Gati-KWE, GKEPL, which is the main operating entity wherein the Surface Express, Air Express and the Supply Chain Management business division [ indiscernible ]. So speaking about the GKEPL, which is the core express division, our volumes stood at the highest level of 260,000 metric tons, which is an increase of 30% as compared to last year and an increase of 46% as compared to the preceding quarter. In terms of the revenues, the business division delivered its highest ever quarterly revenue of INR 334 crores. And this has been led by significant contributions from the key enterprise accounts, which stood at nearly 56% during the quarter. And as we see opening up of the country and the progressive reforms being undertaken by the government, we believe that the role of MSMEs would continue to expand. And we, at Gati, are committed in preparing ourselves to service the needs of SMEs, MSMEs and on the retail front, which where you sharpen our focus. I would request Phil to now talk a bit more about the industry and about the business. Thank you. Over to you, Phil.

Thank you, Ravi. Good afternoon, everyone. It is good to speak with all of you once again. Having settled into the organization over the previous quarter, a much better sense of the situation at hand and a grip on the operation. It gives me a great deal of confidence looking at the progress of the transformation efforts so far and initiatives put in place that we are all well on our way to achieving our vision. Having said that, I would like to give you an update on the quarter gone by. On the regulatory front, at a national level, the recently announced INR 100 lakh crore Gati Shakti Master Plan has come as a welcome push for infrastructure in the country and targets cutting logistics costs from 14% of GDP to 8%. This will be done by bringing together 16 crucial ministries under a unified platform, thus minimizing delays while maximizing coordination. In addition to the objective of reduction in logistics costs, the Gati Shakti Plan also includes the establishment of logistics infrastructure, which will go a long way towards enhancing service levels, the reach and scale for express logistics service providers like us. Our express logistics solutions are used extensively across industries as diverse as automotive, pharmaceutical, e-commerce and retail with a network that already spans 99% of pin codes and the ability to deliver virtually anything anywhere in India. We, at Gati, are extremely excited about being an integral part of the future of logistics in our country. While a significant part of our recent volume growth has come from large and key accounts across diverse industry verticals -- We have also now begun aggressively pursuing an expansion of market share in the MSME sector. The sector continues to be unorganized and fragmented with only 3 million out of 63 million MSMEs registered in the country. With our extensive network, service offering and ability to integrate, what we can do for them is unmatched. We are able to give MSMEs, the ability to reach and serve in a timely manner previously inaccessible markets and customers. We have always been very passionate about Make in India, and it is our privilege to enable move in India, no matter how distant, difficult or small, the markets may be. Express Logistics has and always will be a key growth enabler. We have seen time and again, a 2x of GDP propensity for volume growth across developing economy. However, it is my belief that India will beat the trend, and this segment will most likely continue to expand at super normal rate for the foreseeable future. In this respect, we are working towards becoming future ready with a business model that focuses on integration and is technology enabled while being able to serve both demand flex as well as semi-urban and rural needs. I will have more details for you over the next few quarters on our MSME strategy. Our business model at Gati has been undergoing a major shift as we develop and keep pace with enhanced offerings, market and technology trends. we have been pursuing an asset-light model. And as you can see from our financial performance, we have been able to effectively pivot and ready the organization for the next phase of growth while simultaneously improving our ratio. Another important development I wanted to share with you was an upgradation of our infrastructure. We have decided to build 5 mega hubs across the country over the next few quarters. The first such Express distribution mega hub will be inaugurated next month in Suraj Nagar, Haryana and will serve the whole of North India with unmatched connectivity, best in automation, technology and safety. We will be able to simultaneously handle over 100 vehicles at any point in time. and have deployed world-class material handling and automation infrastructure as well as safety and technology process and systems. Continuing a long tradition of employee welfare and benefits at Gati, we have also set up Gati Niwas, residential quarters and kitchen facilities for all our employees and drivers at the new hub, ensuring 24/7 availability of sleeping quarters, sanitation facilities and hot meals for them. The next 2 hubs with similar facilities and scale will be operational in Mumbai and Bangalore in quarter 1 of F '23 followed by Nagpur and Indore. These mega hubs will allow us to enhance our volume throughput, innovate new service offerings and improve service levels while simultaneously ensuring the safety and satisfaction of our employees. Another focus area for me has been the digitization of our processes and the impact it has on customer satisfaction and loyalty. While many programs are in the process of being implemented, and we are constantly looking at enhancing our technology as well as digital capabilities. One milestone we have already achieved this quarter is the deployment of the gold standard customer relationship, CRM system from salesforce.com. This extremely evolved and well-established CRM will allow us to better manage our key customer relationships and enhance our ability to offer an increasingly wide range of services and solutions to both large as well as MSME customers. I will keep you abreast of further digitization and technology milestones over several quarters to come. Moving into the highlights, the transformation project and this quarter and half year financial highlights. The balance sheet restructuring -- Having completed 80% of this activity, we now remain focused on our core verticals, which are Express business and supply chain. We have already exited our cold chain business and have shut down or in process of shutting down other non-core subsidiaries. The fuel pump divestment and sale of other non-core assets remains on track. Debt reduction. The consolidated debt has reduced from INR 324 crores to INR 187.4 crores year-on-year. This is primarily on account of sale of Gati Kausar -- We have further reduced debt by another INR 7.5 crores. The balance debt of around INR 160 crores is only short term for meeting our working capital requirements. Stringent cost control over fixed costs has led to improved in profitability, Initiatives like headcount rationalization have made the organization lean and efficient. Now let me share the financial performance. First, I will cover the financials for quarter 2 and then for H1. For quarter 2, consolidated revenue increased from INR 337 crores to INR 401 crores, an increase of 19.1% year-on-year and a quarter-on-quarter increase over previous quarter of 37.8% from INR 291 crores. GKEPL registered revenue increase from INR 262 crores to INR 334 crores, an increase of 27.5% year-on-year and quarter-on-quarter over previous quarter by 40.93%. Revenue from Surface Express of GKEPL contributes to 94% of the GKEPL revenue, remaining 6% is being Air and SCM revenue. For GKEPL, the EBITDA for the quarter 2 financial year '22, INR 17.2 crores versus INR 21 crores of FY '21. The EBITDA numbers are slightly less on account of onetime expense that were booked in the current quarter. Compared to quarter 1 FY '22, EBITDA has improved from a negative INR 0.7 crores to a positive INR 17.2 crores. The PBT before exceptional items for the period was INR 6 crores compared to a negative INR 12 crores in previous quarter. Now let me share with you the financial performance for the half year ending September 30, 2021. For Gati, for H1 consolidated revenue increased from INR 500 crores to INR 693 crores, an increase of 38.6%. GKEPL registered revenue increased from INR 374 crores to INR 571 crores, an increase of 53% over last half year. GKEPL EBITDA for H1 F '22, INR 16.5 crores versus INR 2.6 crores, H1 FY '21 registering a growth of more than 600%. The PBT before exceptional items for the period was negative INR 6 crores compared to negative INR 26 crores in H1 FY '21. With the above results, one can see, we are on the right trajectory. And with the continuing momentum we are building -- Gati is back on track as a major contributor to move in India. With this, we can open up the floor for questions and answers. Thank you.

[Operator Instructions]. We have a question from Mr. Sriram R. from RTM.

My first question is what were the tonnage volumes for first half of FY '20? And my second question is, we have done 7% on GKE on a normalized basis. So should you throw some more light on the margin improvement going forward.

So let me comment on the second part first. In the express industry, the way that we look at it is we look at a gross margin of excess of 30% in a steady-state business, and an EBITDA margin of 12% in a steady-state business. We are inching towards that, and we believe that, that should be the state in which we should reach in a few quarters. Have I answered your question?

Yes. So that is by FY '22, Q4 of FY '22?

So from a time period, we are looking at a few quarters, and I would not like to right now kind of let you know the exact quarter that we would achieve this. Coming to the first question. The first half tonnage was 440,000 tonnes and the quarter tonnage of quarter 2 was 260,000 tonnes.

So this is for H1 -- FY '20, right?

FY '21, H1.

No, I was asking H1 FY '20. I just want to get some perspective on the pre-COVID volume setup.

Okay. If we can move on, we will get back with that answer.

Sure, sir. Sure. And my last question is on the price hikes. How much have you taken this quarter? Is there anything or this is purely volume basis?

Okay. So we have got the H1 FY '20 tonnage was 289,000 tonnes.

So that is currently at 436,000 tonnes for H1?

440,000 tonnes, Yes.

Yes. Yes. Okay. Okay. Fine. And on the price hike part?

So as you know, in the express industry, the price is a component of 2 figures. One is the base price and 1 is the fuel surcharge. And we dynamically increase or decrease our fuel surcharge with our customers as and when fuel increases or decreases, which we have done.

Yes. Is it possible to quantify that, sir?

There is a formula with which we do that. And it is based on various components, including what kind of business that the customer gives, et cetera. So there is no 1 size fits all, but the average of the 4 metro cities in the 4 zones of India is taken as the price increase or decrease.

Okay. And sir, the 289,000 with -- the number you gave, I think that is H1 FY '21 actually. So I require H1 FY '20, if you can get that maybe during the call that will be helpful.

Okay.

We have our next question from [indiscernible] Sharma from [ Arka ] Investment.

So first of all, on the tonnage growth of the GKE business, I think it's a fairly good tonnage growth of 30% odd that you have seen -- So it will be helpful if you can share some more color on how much of that has come from new client additions and how much of that has come from all share gains? If you can sort of quantify that, it will be helpful.

So majority of our business today comes from our key accounts. Almost 50-plus percent comes from our key accounts and incremental business from our key accounts is what has given us the tonnage growth. Although we have a strategy now of going after the MSME customers, which I said in my speech also, and we will be looking at how to enable the MSME customers from a go-to-market partnership that we want to create with them. Basically, a lot of the MSMEs in India have very small reach. They are either a city player or a state player. -- and we want to enable the MSMEs to be able to distribute their products all over the country. So that is going to be our strategy as we unfold it by -- in the next quarter.

Okay. So if my understanding is correct, then our quarter-to-quarter from Q1 to Q2, the number of clients that we have is broadly the same, right? You mentioned in the PBT that you have added 3 new franchises and mostly the growth that we are seeing has come from the -- basically the existing client volume going up. Is that understanding correct?

No. We have also increased our number of customers. During this quarter, we have increased our customers by more than 30-plus customers during the quarter.

Okay. That's helpful. My second question is on actually the SME strategy or the market share gain strategy at large. Sir, when we go to a new client who is -- I mean what is our value proposition vis-a-vis the other organized express logistics there. I understand that we are able to provide an integrated service, a pan India operations. But there are some listed companies who are similar to your scale and they can also offer the same service -- So just trying to understand what is the differentiating element that Gati brings to the table for either for SMEs or for [ indiscernible ] PT enterprise accounts? And I mean, is it the price, is it something else if you can help us understand, sir.

Sure. So there are a couple of things that Gati prides in having -- as a unique feature. Number one is, we have penetration that is unmatched in this country. Specifically, when you go to Tier 2, Tier 3 cities. Like we said, we are today covering 99% of the government of India approved pin codes. That is one big advantage that we bring to the table. Number two is that we have a unique model in the sense that -- For us, the package that we collect from the customer is basically done by GAs who are entrepreneurs and these entrepreneurs basically know the customer on a one-on-one basis, and they facilitate the customer in various ways. One of the things is they entirely understand that business that the customer is giving and therefore, the situation of going with the wrong kind of assets to pick up their load does not exist over there. The second thing is if you're an entrepreneur, you will make sure that, that customer gives you more business because you will earn more from the business of that customer. So it's a unique model we have in place, and there is a great understanding of the business between the GA and the customer. On the other side, we strongly believe, this is a very important point. We strongly believe that in Express Logistics, the customer who contracts us is not really the customer. The customer who receives the goods, which is the customer's customer is the true customer because if he does not receive the goods on time and in proper condition, he is not going to be asking for our service. In fact, he can become a distractor for Gati or whoever the service provider is. So we do what we call channel management in Gati, which is that we make sure that once we sign up a customer, we meet with their large receivers on the other side. And just as for pickup, you have to understand the customer, even for delivery, you have to understand the customers' requirements. And that is something that we pride in doing.

Very interesting, sir. Sir, last question, if I may. I mean, just to build a little bit more on the previous participant's question on gross margin. I mean it's slightly -- sorry, overall margin. So let me ask my question -- focus my question on gross margin instead, sir. If I look at your gross margin versus the gross margin of a listed peers account within the same business, you have -- you both have similar sales -- I mean, you bought have a similar realization per tonne -- And my assumption is that the truck fill factor, which is another lever of gross margin will not be very different also. -- even then we see that your gross margin is sizably lower than the other peers I'm talking about. So basically, when you say that your gross margin will go beyond [ 30% ], what will be the drivers or what will be the areas of improvement that Gati [ needs ]. So if you can share some thoughts around that.

Definitely. So you have to understand that this is Gati 2.0. Let us all understand that on the call. This is not the old Gati now. This is Gati 2.0. In Gati 2.0, there are a lot of things that require to be done. Number 1 is there is infrastructure, which is outdated, and therefore, we, as an organization, are investing in new infrastructure. As you know, the components of gross margin in the Express business, are twofold. One is your trucking linehaul cost. The second is your pickup and delivery costs. And as you all know, since you all are logistics analysts over there, the trucking line haul cost forms a major proportion of the direct operating cost of a logistics company and especially an express logistics company. And if the turnaround time for a truck is high, you start paying more if the turnaround time for a truck is low, you get benefit of that. And therefore, your infrastructure directly or indirectly influences the turnaround time of a truck, which means that if you need infrastructure, which requires 25 trucks to be loaded and unloaded at the same time, but your infrastructure today only allows you to load or unload 15 trucks. That is where the truck starts standing and therefore, your cost goes up. So for us, Gati 2.0 is a combination of bettering the infrastructure, which existed in Gati. Number 2 is, at every stage in Express Logistics as the volume increases, the efficiency tends to increase as well as decrease and what does that mean? So capacity utilization of trucks is basically the name of the game as your volumes increase and hit a capacity utilization of about 90% you have to add more trucks into the network. As you add more trucks into the network, you have to build out that capacity. So there is always, if you see -- whether you see my fear or whether you see me, there will always be quarters in which the gross margin fluctuate. Why is that so? That is because if the capacity has increased beyond 90% -- sorry, the utilization has increased beyond 90%, additional capacity has been put in, which drives the cost up for some time, but then the benefits come in as your volumes increase. And therefore, Gati is at that stage now where if you've seen our volumes have started increasing. And therefore, that stage comes in where the capacity utilization drops a bit, and then it comes back because you get more and more volume. So a combination of the infrastructure and capacity utilization drives the linehaul cost for an express company. What brings efficiencies is digitizing this process -- And definitely, we are in the process of digitizing our entire linehaul. This will benefit cost efficiencies also because -- If a truck reaches on time, you turn around the truck on time and you can deliver your goods on time. So A combination of these 3. And like I said, Gati 2.0 is on its way to optimize all 3 of them infrastructure, like I told you all in my note, we have identified the choke points in the 5 mega hubs being put in place. As they come in, we will see that those routes will become easier for us to operate and optimize. As Farukh Nagar comes in, it has the capacity of loading and unloading 100 trucks at a point -- at a single time. Now look at the current capacity that we have and that itself will tell you that how the cost optimization will take place. And with Bombay, Bangalore, Indore this will kind of proliferate into the system. So that is the difference today, as I see it, I don't know exactly -- I'm not going to compare myself exactly with the peers, but I know where deficiencies are. And the most important is you should know where your deficiencies are so that you can pluck them and then get into the next phase.

We have our next question from Mr. Suraj Nawandhar from Prithvi Finmart .

Sir, my question is sort of a follow-up question to the last participant. You said that you need to upgrade the interesting infrastructure in order to drive your margins? So what would be your CapEx outlay for this year next year, if you can give some color on it.

So like we have said right from the time that we have acquired Gati through Allcargo, we are going to be an asset-light company. So when I say new hubs are being built out, these are build-to-suit lease hubs. These are not going to be bought by us. So that we are going to lease these on a long-term basis. The CapEx will be more on automation and technology that will be built into the hub and not on the building or the land that we are going to purchase. Sorry, we are not going to purchase.

Okay. Sir, also, you spoke about reaching more to MSME sector. So do we plan to open new branches across Tier 2, Tier 3 cities to reach out to more MSMEs and drive more volumes from them?

In fact, the network that we have and when I joined Gati to around 3 months back now, I was pleasantly surprised by the network that Gati had. And that is Mainly the reason why in my strategy document, I have now looked at how do we enable MSMEs because we already have that reach. We already have that network. How do we enable MSMEs in India to be able to take advantage of the network that Gati has. The strategy is twofolds. It is about creating a go-to-market for these MSMEs. And it is about also making sure that the customers that the MSMEs sell to receive their goods with a lot of transparency and assurance so that they don't have to maintain stock at their end. So from a time-to-market perspective, and a go-to-market perspective, we will be looking at the entire MSME sector. In fact, we are going to unfold some plans on the whole MSME strategy that we have, which I have promised you all that I'll talk about in the next quarter call. This is going to be very, very important from a Gati strategy point of view.

Okay. And sir, also from let's say 1 year or 1.5 years down the line, like currently, we have 55% of our revenue is coming from our key accounts and MSME vis-a-vis is around 25%. So how will this mix change coming like 1, 1.5 years, 2 years down the line, if you can...

So business has to grow, right? Today, the 55% is 55% of INR 120 crores a month. And the 45% is 45% of INR 120 crores a month. We want to see how it looks at INR 200 crores a month. So the 45% of INR 200 crores a month will still be a double figure for getting it from the MSME sector. I -- if you're asking me how the mix will change, I am not -- so I have not told my sales team to stop selling key accounts. Key accounts have to be continued to be sold. But definitely, I don't want to reach a situation where our business becomes 70% key accounts and 30% MSME. The ratio that is there today is a good ratio. But as we start becoming a larger company, larger revenue, I don't want that ratio to be skewed to key accounts, and therefore, the MSME strategy is being put in place.

Okay. And sir, my last question is about the margin difference that we get from key accounts and MSME and retail, where we have much more pricing power. So if you can quantifying in numbers, how much is the margin differential between key accounts and SME and retail?

So the one business that gives you a good margin, definitely is the retail business, right? But the retail business is a very small business for us logistics, the express logistics players. When it comes to MSME versus key accounts, like I said, margins depend on various factors. It is not just a price. So a customer who gives me a lesser price, but gives me a large volume maybe a better margin customer for me than a customer who gives me a larger price but a smaller volume, and that is because my line haul capacity utilization gets covered by the first customer, right? So that balance is very important for us because when we move these shipments from A to B. We don't move single customer shipments. We move all the shipments together. And therefore, this balance of volume versus [ indiscernible ] is extremely important for us in this business.

[Operator Instructions]. We have our next question from Neelam Punjabi from Perpetuity.

Sir, if we look at our fixed cost during the quarter, sequentially, our fixed costs have increased by almost INR 10 crores. If we put employee expenses and other expenses together. So sir, if you can please explain why has this increase happened because that way our growth in top line has not translated into operating leverage.

Yes, just a sec. So if you see the increase is equal in the people costs as well as the other admin expenses, right?

Yes right.

Yes. So we are, like I said, Gati 2.0, we are taking on good quality professionals into the organization. And that is an initial increase that we will see in our people cost because basically, we need quality people to take this organization to the next level. once we are done with it, which will still happen in the next quarter, we will start leveraging our employee costs. On the other admin costs, I will get back to you in a short time.

Okay. And my second question is, sir, what would be our market share in the surface express distribution currency.

Our market share is approximately 17.5% in the surface express currently.

Is that the organized market share?

Yes. That is the organized market share. when I say organized market share, I'm taking the entire Express Logistics to be around INR 10,000 crores.

We have our next question from Ankita Shah from Elara Capital.

Sorry, before that, can we answer the earlier question on the fixed cost increase?

Yes. So as you noticed, there was a fixing cost increase is approximately about INR 6 crores in employee expenses and about INR 5 crores in other expenses. And detailed in the presentation, this also includes about INR 5.2 crores of one-off expenses. These include higher provisions for consultancy charges to various consultants working with us on transformation programs, which is not a recurring cost and also certain retention bonuses and changes in NDA policy, which also had a onetime impact. [indiscernible] total increase, approximately INR 5.5 crores, INR 5.5 crores is also coming from these one-off items in addition to what Phil already explained about the investment in PP Capital.

We have a question from Ankita Shah from Elara Capital.

Sir, I wanted to understand this within the key enterprise accounts, which are the key sectors that we cater to?

The sectors -- our key sectors are automotive, pharma and retail. I do not state e-commerce because e-commerce plays across these sectors for us. In e-commerce, we would be moving retail also, and we would be moving pharma also. So therefore, automotive, pharma and retail are the 3 main sectors.

And are they almost broadly balanced mix? Or do we have a skewness towards a particular sector?

So again, like I said, the Express industry requires both dense cargo as well as volumetric cargo. And as you know, automotive gives you that volumetric cargo, and pharma gives you that dense cargo. So it's a good mix to have for us. I do not want to make a comment just now whether all 3 are equal or not if that is what you're asking.

Sure. Understood. And due to this -- because you have exposure to auto, have you faced any issues due to the chip shortage business?

No. On the contrary, in the express industry, you're actually moving aftermarket of auto. And aftermarket of auto has really gone up because, as you know, the sale of new vehicles because of the chip issue has gone down, -- The people who are in line for buying new vehicles are still running their old vehicles. And therefore, we see, in fact, that the aftermarket business has gone up.

Okay. Okay. Helpful. Got it. Also, sir, what kind of growth, if at all, if you can share on this -- what kind of a growth in volumes are we expecting in the near term? What's your outlook on that?

So basically, the way we are looking at growing Gati is growing our market share, okay? Today, if you look at it, our market share is around 17%, as I said, every 1% growth in the market share on a market that itself is growing at 12% to 15% should be a large amount that you have to add on. So for us, we will look at how we want to become the market leader. And today, the market leader in this industry has a 30% market share.

Okay. Fine. And lastly, any time line on the sale of the fuel business?

So on the fuel business, it's more of a procedural part which takes longer, but we anticipate that over the next 4 to 5 months, we should be in a position to dispose off the fuel station.

We have our next question from Mr. Prateek Kumar from Antique.

My first question is on -- so when we indicate the 30% plus is like the aspirational gross margin, where do we stand today in terms of gross margin?

So today, our GKEPL business is at about 28.8% gross margin.

And when we say about this INR 5.2 crores of cost, I think that we have been incurring for in past quarters also. So when is this expense expected to last?

These exceptional costs, like I said, are one-off and what you are perhaps referring to the constant reference of such costs is because we have been going through a restructuring and transformation. Naturally, there have been several one-off items. The transformation program by itself is near the conclusion towards the end of this year. And therefore, beyond one quarter, the cost variation should not be significant.

So you mean one more quarter, we'll have this INR 5 crores, impact. After that [indiscernible] I mean.

There could be some impact which could be there, but not to this extent. -- because like I said, this also includes significant amount of one-off employee expenses as well, which would not be recurring. There could be a much more minimal one-off item. -- in the coming quarters and beyond that, there shouldn't be any more one-off items.

And just one question on your -- I mean while we are focusing on asset-light properties and leasing assets, but for tech and otherwise, what is the CapEx outlook we have for '22 and '23?

If you look at the technology part as well, we are trying to take an approach wherein we go with an OpEx model, be it using -- so we're trying to see how we can adopt technology in a more license per use kind of a model rather than investing behind. So even when it comes to choice of various systems and tools and technologies that is where we adopt. In fact, that's something which runs across the philosophy of the organization. And right from if you look at owning offices versus renting them out, branches, facilities, the same approach extends towards IT as well. And today, there are opportunities to use technology as a service rather than having to put significant CapEx towards the same.

Questions from Neelam Punjabi from Perpetuity.

For the follow-up. So we have currently around INR 153 crores of assets held for sale. So is this largely the fuel station assets? Or do we have any other assets as well?

No, the fuel stations would be a small part of that. fuel stations are not a large business in that trend. These are largely various other real estate assets held by the company, which are -- which include constructed property, empty land real estate and other variety of real estate assets, which are not core to the company's operations and therefore, have been marked for sale.

Okay. So sir, what could be the time line for selling these assets and divesting them?

We have already mentioned in the past that we anticipate concluding the entire divestment through the FY '23. And it should continue to go on a steady pace, and it has continued to progress in the same direction over the last 6 months. So this was the direction we had given about 6 months ago that over the next 18 to 24 months divestment will happen has been moving on to that.

We have a question from Suraj Nawandhar from Prithvi Finmart.

Thank you for the follow-up. Sir, once we reach our targeted gross margins what would be your EBITDA margin target then?

So like I said, a steady-state business should have an EBITDA margin of anywhere between 12% and 15%.

[Operator Instructions]. Sir, there are no more questions. Any closing comments?

So thank you all for joining the call. We hope that we've been able to answer your questions and provide you with important information and update about the company and our operations. In case you have any further queries, any questions, please feel free to reach out to our Investor Relations team and also to the SGA team who has been working as our Investor Relations adviser. Thank you very much, and I wish all of you and your family members and colleagues, very happy and healthy [indiscernible] season ahead. Thank you so much.

Thank you.

Ladies and gentlemen, this does conclude your conference for today. We thank you for your participation and for using iJunction conference service. You may please disconnect your lines now. Thank you, and have a great evening.