Allcargo Gati Limited (532345) Earnings Call Transcript & Summary

Welcome to all of you to Allcargo's Annual Meet 2025. I'm your host, [ Joonamaris ], and we are delighted to have you here with us as we share our journey, growth story and vision for the future. Thank you for taking out the time to be here with us today. What started out as a vision over 30 years ago to bring greater efficiency to operations at the [ Ultra Bombay ] port in a port liberalization in India has over the years grown into a logistics multinational with a global presence known for operational excellence, digital logistics solutions and commitment to customer centricity. Today, we will have the management of 3 of our listed entities, Allcargo Logistics, Allcargo Terminals and Allcargo Gati, who will present an overview of the businesses and way forward for the respective companies. Each of the presentations will be followed by Q&A. As we commence the proceedings of the day, I call upon our Founder and Chairman, Mr. Shashi Kiran Shetty, to share his message with us. Mr. Shetty's entrepreneurial foresight and commitment to building future-ready logistics solutions has shaped Allcargo into a global leader, delivering comprehensive services to [ it to ] companies. Let's focus on care that goes beyond business, guide Allcargo towards this purpose of helping global supply chain by carrying sustainability. Inspired by his commitment, the group has taken a strategic approach to sustainability and aim to be carbon neutral by 2040. Mr. Shetty also serves as Chairman of the Board of Governance, IIM Mumbai, where he champions industry academia partnership by fostering innovation. He has been widely recognized globally and within India for his contributions to logistics and philanthropy. Mr. Shetty, could I request you to please take the stage.

Thank you, [ Jostna ], for the introduction. Thank you very much. Good afternoon, dear friends, ladies and gentlemen. Thank you for your valuable time and efforts to come here today to understand our group's progress. We are very happy to be here to present that and help you to carry with you our dedication to create stakeholder value. Last 5 years have been very exciting, challenging and rewarding. As you will see, my team and I have spent a lot of time driving the group's vision, purpose, mission and values. I'm very proud to say we are the only Indian company who is present in all relevant verticals of logistics in India spread across the world. This brings in tremendous strength of knowledge, brand, and most importantly, very high energy and high-quality people to serve the company. Please join us as partners in our company's sustainable -- and sustainable growth in the years ahead. As you know, India is growing by [ specha ] and by economy. We stand strong to help the logistics need of our country and grow together. Largely, a lot of my time has been spent in the 4 high message that you read in the slide. I have been spending tremendous effort, my experience, my knowledge in what we call as institution building by giving the strategic direction, creating independent Boards to run the companies and have 2 independent chairman also in a couple of our Boards of the listed entities. You all know that we also went through a demerger process, and I'm very happy to announce that yesterday, the NCLT has heard the final restructuring of our companies. And hopefully, we will get that approval within a week. We also spent a lot of time in robust system development, or rather, giving a vision for our team to develop a very good system and process, which is very essential for institutional building, as all of you know. Also spending a lot of time making sure that we are a very compliant organization, have -- are on top of our governance standards and compliances. The next one is the innovation and execution. I have my son, who is right now, not in the room. He's traveling in China. He has been working relentlessly on improving our digital standards and capabilities. You will hear more about that from his colleague, Mr. Kapil Mahajan, who is a very industry-renowned CIO, who's been with us since the last few years. And this is one of our core investment in the last few years, and we'll continue to do that in the years to come to make ourselves a digitally enabled global supply chain service provider. You will get to also see more slides later. I don't want to take the thunder away. We are very proud where we have achieved probably one of the best in the world, which will bring a great amount of value in the years ahead. As you know, one of the most important things for any sustainable and growing organization is what you need as a core value and a clear direction and the vision of the group that we want to end up. We want to make sure that the company is well managed. Even when people like me retire, there will have to be younger people. There will have to be a brand, there will have to be a robust system process for the company to continue to operate in a very profitable environment. So that has been one of my other core messaging and communication and driving the value in the organization. At the end of the day, all that needs to end up in value creation for the shareholders. Market leadership, as all of us know, for us to have investments in managing the business by top people of the industry or people who are very specialized in managing the functions to attract that kind of talent and invest in systems, et cetera, you need extremely good market leadership position so that you can invest your money also to manage the business centrally. So that's been also one of the core focus, and that is where we have our group finance function, Ravi Jakhar, our group human resource function, this is Indrani Chatterjee, and many other who are in the room today. Care for environment and society has been a core in my mind all the time because I come from a very humble background myself and built this entire organization through a tremendous amount of goodwill, which is built due to the hard work and sincerity and compliances. So ESG is something that we've always been practicing as a group right from the younger days, and we continue to invest in that, continue to build on that to make sure that we do our contribution towards the environment, towards the society and build a sustainable organization with the right kind of governance, which are very, very simple believe is a pillar for any organization to last. So the vision is built to last, the vision is to stay strong, vision is to be a very respected, admired company from our own very country. Thank you very much. I now hand over back to the team. Thank you.

Thank you, Mr. Shetty, for your message. To keep the proceeding forward, let us now look at our progress over the last 5 years and the road ahead. We are now request Mr. Ravi Jakhar, Allcargo Group's Chief Financial Officer and Director of Strategy, to take us through the Allcargo growth story over the last 5 years and share the road map for the years ahead.

Thank you, Mr. Shetty, for your message. And these core principles have been guiding the management and operations of all our 4 companies across the group and for us, [ functions well ]. So if you look back, what we have done over the last 5 years and where we had had in the next 5 years, I've tried to put together in one slide. Over the last 5 years, we undertook a massive restructuring program, which, like Mr. Shetty just shared, got concluded yesterday with the final hearing. And now we believe that effective first of November, we should have the international supply chain business demerged into the new company, Allcargo Global. This has allowed us to have a very sharp focus on each of the businesses, a very simplified management structure. And besides that, coming in directly from the founder's core priority, all of us have spent a considerable amount of time in building digital platforms, technology and all those things have been pivotal in our journey in the last 5 years. We entered into new markets, we expand into Latin America, we acquired new container fleet stations. We got into new business segments in the domestic supply chain, getting into meaningful opportunities. We acquired companies across Scandinavia. We expanded into Latin America, diversified [indiscernible]. There's a lot of things have happened over the last 5 years despite the natural economic environment and the challenges that were presented to us. Now when you look ahead in the next 5 years, there are 4 key things which we believe are going to drive us. And what we essentially mean is any business is done by its core people. And that's something which we have taken up as almost as a strategy, whereby we have brought in world-class talent across new country managers being hired in Germany, Japan, many other countries, high Indian [ tire ] leadership team in Latin America, teams joining us across Central Asia, Latin America and parts of Asia as well. The key part here is it's pretty simple, everybody knows that people drive business. But how do you affect the best with the people? How do you make sure that you build an organization that attracts the best talent in the industry? And that's something which I think it's a very proud moment for us as a group and perhaps for us in the country as well. Because as far as the [ LCL ] consolidation is concerned, this impeccable organization that started with [ official ] vision and what we've built today, across the world, any market, any country, we are able to pick the best talent. Everybody has a desire to associate with and work with Allcargo and the ECU Worldwide as our global brand operating across the world. The second part, we are very sharply focused on value-accretive growth, taking the asset-light approach. And you will hear about that from my colleagues, the managing directors for various businesses on how each business has built its own state of being asset light or asset light as the business demand be. And that has ensured that we are able to plan optimal leverage and have a very efficient growth strategy, which will continue to ensure that we have strong foundations to grow upon. My colleague, Kapil, will speak more on the technology side. And the core of it, I think it's an advantage to be an Indian company in today's macroeconomic environment, with many of our businesses directly benefiting from the immense growth that India is witnessing as an economy. On the domestic supply chain, there are tailwinds, now compounded with the GSC simplification. There are tailwinds with new sectors emerging on the contract logistics. India is bound to grow in the manufacturing capabilities, which means that there are opportunities to expand in the [ Exim ] business, which benefited directly at Allcargo Terminals business. There is new infrastructure coming in. We are building up facilities that connect to dedicated freight corridor. So India as a country, as an economy as the market opens up infinite opportunities for us, and that's something which we truly look forward to taking advantage of. So these are broadly the things that drive our vision and strategy across the group, but perhaps to take it more deeper look into each of the businesses, we would now get to the 3 key logistics businesses about the group. So back to you, [ Jostna ]. Thank you.

Thank you, Ravi. With that overview in mind, let us now turn our focus to our international supply chain business. I now welcome the management of Allcargo Logistics, the one and only Mr. Adarsh Hegde, Managing Director, Allcargo Logistics. Ladies and gentlemen, a round of applause, please.

I got to change after you have a very tall man standing on the [indiscernible]. I guess I'm audible. Good evening. This is all -- thank you very much for all the support, investors, analysts, colleagues, everyone who are present here. Without you all, probably, we wouldn't have also stood here in front of you and share that is -- sharing about this organization, the brand that has been built, which you guys have been acknowledging and appreciating as well. Well, before I get into the real presentation, a little deeper on the international business, I want to give you a little glimpse before I give the other glimpse -- before I give you a deeper glimpse, I would like to a little recap on what happened in the last couple of years back during COVID publicly and with the COVID. With the COVID, what happened was that we -- everyone got benefit out of it. The entire logistics industry was benefited out of it, and we took benefit in a large way. While it set some perspectives, it set some expectations, right? And we went along. While in the last 2 years, you suddenly saw some dip, it completely changed the scenario changed, and that didn't happen just for us. It happened for the entire industry. While we were not immune to it, right? We've seen this before as well, but this was very, very different. Having said, what we did was also we immediately recalibrated ourselves, got back onto the drawing table and set things right. During COVID, there was a lot of costs that got built because you know the volumes had gone up and multiple things happened around that time. So there was cost built in. The first initiative, if I recall, 2 years back as well, the Chairman himself had expressed there is a BCP program that we launched to bring down the cost immediately. A lot of actions were taken. And with those actions, we were able to bring down the cost, and mind you, the market strength, but we held on to our volumes. The profit was challenging, but we held on as well in terms of the percentage. So just to give you that part of it, but what we did during those 2 years and which has now set some momentum for what you have been seeing in the last couple of months, it's completely changed. And those are the efforts that we're going to share with you and some which Ravi did mention, well, I'm sure you all know about this. Our global presence in 50-odd countries in the Americas, with about 134 offices, Europe, close to about 30 -- in 37 countries in Europe, 52 offices, 68 countries in the India subcontinent, Middle East and Africa with about 122-odd offices. And in the APAC region, about in 25 countries with about 67-odd offices. And these offices obviously are also with some of our agents as well. We operate close to about 2,400 direct trade lanes. We have 4,000-plus employees. Needless to say, 35, 3.5 decades of experience. What we've done in the last 10 years, we would have been probably known as the [ LCL consolidator ], which we continue to be. But in the last 10 years, we've also grown our [ FCL ], the neutral FCL business, where today, we clock about 650,000-plus TEUs with about 9 million [ CDM of LCL ] cargo. And in the last 3 years, we've also started the air part of it, where we have done about 30,000 tonnes of air. For our 4 pillars of value proposition, which I always say is a single brand global network. The other is digital-first approach, end-to-end logistics and local hands on the deck. When I say single brand global network, across the globe, if you look at any of our competitors as well today, ours is the only company which has the maximum number of offices across the globe. So what I mean to say the entire network is controlled by digital-first approach. Needless to say, Ravi mentioned it, the Chairman mentioned about it. The change that has been brought in this organization for the last couple of years since the young -- young man comes on board with their digital mindset, [ rational sete ], turned around, and what he has done and what he has demonstrated what digital can do for our organization, you will see it from what Kapil will present. Of course, Kapil being a pioneering in it, the CIO of the company, will present it a little more deeper. Now that's also given us a lot of insight, a lot of decision-making abilities that come through these digital that we have introduced. End-to-end logistics, obviously, with the people around, with the infrastructure that have been created across the globe. And with digitalization, we are now able to give end-to-end logistics solutions, providing complete visibility to our customer. And when I say hands on the deck, it's our people who manage the -- like if it was rightly said asset right, of course, in some places, we still work with the vendors, partners. And in some places, we have invested on our own and where it's being controlled and managed by us. The other growth initiatives that we have taken up is getting deeper into the hinterland. While I'll tell you this also, you must have heard about the recent crisis that we've been going through for the last couple of years with geopolitical situation, multiple issues around the [ reg fee ] and obviously, the tariffs which has been keeping us up at night as well. And to get over this, what we have done is also we've identified areas where we can actually get into new markets, building new products as well. So one of the areas that we have identified, as you know, China is a huge market. We've started getting deeper in. We've named it as [ Home China ]. We've already seen the results of it, and there's huge more opportunities for us to do more there. Expansion in Africa. Africa is an area where we have a huge potential to grow. We've started getting deeper into Africa as well. We also have strategically thought about in the CEE region, the Central Europe, Europe, where, again, [ a come ] Europe is being done so that we go deeper into that area. Like where we said in LatAm, we have built our infrastructure in terms of people. Our new team has been brought on board for the last couple of months. We had some political situations in some of the countries in LatAm, which has changed now completely. And we see a huge opportunity. So we are aiming for better market share. We have already seen some reserves that's come out of Brazil. We're already knocking as the #1 position in Brazil itself. Expansion in the retail business into the additional international markets. And obviously, the expansion of our [ FCL ] business, FCL footprint, which in the last 10 years, you've seen that we have started -- we have around about 650,000 TEUs, aiming to get to 1 million in the next 5 years. Creation of global CFS product. Recently in [ Busan ], we have gotten where we -- it was the [ need of the war ] that could change the entire dynamics for us, and we've already seen the results in the last 4 months. Cross-border e-commerce, e-commerce is a big name that's been spoken about everywhere. We've already got into that product as well. We've introduced some services like written of cargoes as well, written logistics for the e-commerce business. And expanding our air product as well, wherever we see an opportunity. We're trying to expand it slowly as well. The strategic initiatives are, of course, focused more on profitable long-haul trades. We've already launched about 20-plus new trade lanes in the U.S. and LatAm. Technology led, obviously, sales to capture long-tail customers in China, LatAm, as I said. Sales acceleration. This is something that we've been deeply involved for the last couple of years. And this has actually started reaping a lot of benefits. This is integrated with our CRM. And our Chief Commercial Head based out of Dubai is continuously focused on driving volumes and garnering and not losing customers. The customer retention of ours has really gone up through this process. Huge growth opportunities in regional and local accounts, we do see, while our dependence has been on the global accounts. And now our focus also continues to be in the region and local accounts, which was always there, but we have now strengthened ourselves and have started going deeper in to garner more market share. Global FCL growth. This is something through the [ E360], we've just recently launched about 2 months. I can tell you, I have not heard of anything like this in the industry. I'll be surprised if I know there's something. There are some IT-based logistics company who have recently actually reached out to us that if they can come on board and use this technology. So you can imagine what I'm saying that's something that we have introduced is very, very unique, and this is going to be -- we should be having the first mover advantage on this. Needless to say, the cost initiatives continue to be key for us. In -- whenever we saw that there was opportunities for us to bring in shared services, which we have introduced already in Mexico in [ Cebu ]. These are the 2 hubs that we have created. This has really benefited in strategically as well and also, of course, on the cost parameters, efficiencies, et cetera. Processing system. This continues to be key for us. New business process management structure has been created with our new COO coming on board, due to which we've seen a lot of process being optimized. And this optimization is delivering quality, productivity, utilization and of course, the world-class standards, which reduces complexity for our customers. [ ITOPAS ], this is the transport management system for us, I would say, is -- has been there earlier, it is known as [ TOPAS ], is being re-architected to a cloud native and AI-enabled platform. AI and automation. I don't want to dwell too much on this, as our colleague, Kapil will speak about it as we move forward. And of course, we've also got into some strategic partnerships, which will help us to build what we want to achieve to be ahead of any of our competition. On the procurement front, yes, as cost is always a key in this business, and it's very, very important, our procurement is very, very strong. we have strengthened our procurement at the regional levels, so that it is not centrally controlled due to which what happens is there is a lot of focus in negotiating every step of on the freight part of it. As you all know, freight is the biggest part of our business, and that is very, very key to the profitability of this organization. So we've strengthened that part of it. There's a long-standing relationship. And obviously, with a lot of volumes that we now generate does give us the power to go and negotiate. So that was from my side. And in case anybody has any questions, happy to take or before do the digital part of it, we do it and then we take the questions, yes? Okay. So let's have Kapil, and thank you very much for your patience here.

Good afternoon, everyone. In today's world, speed is the new currency, and intelligence is the new fuel. At Allcargo, we have both, and we are deploying them at scale. Let me start with how AI is shaping the way we work. Take [ Aqua ], our e-mail to quote AI. It's already live in 4 countries and has slashed quoting time by nearly 60%. We're doing about 20,000 quotes every month. That customer delight, delivered at speed. [ Elma ], our operation assistant, it's like having a digital copilot, guiding our teams with the latest SOPs, ensuring compliance while keeping execution fast and flawless. And finally, [ Sara ], our AI for customer retention, deployed across 25-plus countries worldwide. It uses AI and machine learning to engage customers smartly. And in our early pilots, attrition dropped significantly amongst customers that we connected using Sara. That's loyalty powered by intelligence. But we didn't stop here. We embedded AI into the very heart of sales, pricing, operations and finance. For sales glimpse, AI gives teams instant customer insights, enabling sharper consultative conversations. Marketing automation ensures accuracy in targeting, and pricing intelligence recommends the smartest [ feline ] prices with multifactor precision. On the operations and finance side, AI is quietly -- on the operations and finance side, AI is quietly realizing the playbook. [ Iwa ] AI captures inquiry, e-mails and drafts perfect responses without a human in the loop. Booking AI converts booking seamlessly with human validated accuracy. Document AI and [ invoice intelligence ] transforms unstructured [ kiosks ] into structured clarity. In fact, our finance AI delivers real-time insights, deviation analysis and instant alerts. So leaders act proactively, not reactively. Together, these AI engines form what I call, what I like to call the digital nervous system of our enterprise. And at the center of it all, as you heard in the previous speakers talk about it, is our flagship customer-facing digital platform already acclaimed as best-in-class worldwide. With 2,400-plus trade links, it offers instant quotes, bookings, dashboards, track and trace, truly connecting any corner of the world to any other. The trajectory ahead is even more compelling. We are introducing predictive visibility, advanced personalizations and sustainability, with [ CO2 ] visibility embedded in every quote and booking. Furthermore, [ EQ 360 ] is evolving into a growth engine, extending into trade finance integration, new customer segments, and adjacent services such as domestic trucking, FCL and air freight. In a sense, it is not merely a digital tool, but a strategic ecosystem. Our ambition is clear: to integrate speed, intelligence and security into the DNA of logistics, creating solutions that are smarter, faster, more resilient and sustainable for our customers while delivering long-term value for shareholders. We are not simply responding to the future. We are shaping it thoughtfully, at scale and with purpose. Thank you.

I now call upon Mr. Ravi Jakhar to take the stage. Okay. Sorry. My mistake. I now call upon Mr. Stephen Dunn, Global Finance Director, ECU Worldwide, to take the stage.

Good afternoon. Good evening. I'm Steve Dunn. I'm across from Dubai, actually from New Zealand originally. So hopefully, my accent isn't too confusing for everyone in the room. But I'm really excited to be here. I'm here to lead the finance transformation for ECU Worldwide. And my role is pretty simple, it's to dramatically lower the cost to serve as the finance functions of the business as well as improve the quality and service delivery to the business. And the really good thing is ECU has got such scale and breadth that it's the right time to deliver the finance transformation. And with technology coming on second fast, there's some very strong things that we can do to deliver in that area. Basically, when I started this process, what we analyzed, we divided finance into 6 or 7 core functional areas. For example, you can look at areas such as AP, AR, GL, FP&A, treasury impacts. Each of those, we divide into 3 areas: systems, process and people. And it's pretty simple. We want to optimize in each of those as well as having synergies between those sub-functional areas. But the general theme that we want to, first of all, is build the machine. So build a machine essentially is about deploying a world-class technology. And then also bringing in world-class leaders, we know what good is to then deliver and optimize in each of those areas. So already in this process globally, we've deployed Microsoft [ D365 ], which is 1 of the best global accounting platforms out there, comes out of the box with a lot of AI enabled, a lot of integration and analytical tools. At the same time, we've deployed Oracle Hyperion for budgeting and consolidation, which is used by about 40% of Fortune 500 companies to support analytics, rapid reporting and a very secure business planning process. The second phase really after build the machine is actually to look into centralization. And I'll go through some of these functional areas in a second, but the centralization enables us to realize savings as well as to reduce the cost to serve. But then some of those savings can then be reinvested into other value-added activities, such as SG&A. So looking at some of the functional areas and where we're at. So if I look, for example, what we call financial operations, which covers accounts receivable, accounts payable, the vision there really is to centralize as much as possible and then to wrap AI enablement around all those core functionalities. And we're already well into our path. We've chosen 1 of India's leading digital automation partners. And we've already moved a lot of people into our centralized shared service center. And now we're moving into the AI enablement to automate as many core processes as possible. And we've gone live in 3 or 4 pilot countries, and the results are really quite outstanding and quite exciting. I mean, AI is completely transforming, what can be possibly done in the finance function. So the next stage is to take those pilot countries and rapidly expand it around the rest of the world to materially reduce the cost of sales for the finance business. In areas such as -- we're complementing that strategy. We've been regionalizing our accounting activity. So the aim is essentially to decentralize a lot of the finance functions around the world because currently, we're quite globally distributed. And then to bring those into 3 regional shared service centers where we can apply scale economies, we can get consistency of outcomes. And once we have scale economies, you can then wrap technology around those as well. So if your finance function is spread around sort of 100-plus locations around the world, it's quite hard to get those scale economies. So the first thing you need to do is bring everyone together and then apply technology. So that's pretty exciting, what's happening in that space there. Within areas such as, for example, [ SP&A ], which is really where the modern finance function should be delivering, this is about delivering service to the business to enable the business to drive stronger commercial outcomes. So we're pretty excited in that space, too. We've brought on strong leadership in there. We're investing in the technologies. And we're really looking at what AI can do, what capital was going before. It's about getting instant value-added information on [indiscernible] so everybody in the company that need it to make better decisions that impact financial outcomes. So there's a lot of exciting things I feel are happening in that space. And this is where -- actually, the modern finance function really, really delivering a lot of value to the business. On top of those areas there, there's -- now that we've built a machine, now that we essentially have strong analytics and we've lowered the cost to serve, we look at some of the other financial areas such for example, as tax and treasury management and control. So from a treasury management point of view, there certainly is a lot of opportunity for us. We're strengthening the treasury leadership and we're looking at ways we can fully optimize working capital. So there's many more solutions on the market today than they were 10 years ago. Some of the ways that we're looking to drive and optimize working capital by looking at deploying a global factoring program. We're looking at offer supplier trade credit programs, which enable you to finance your payables and receivables. And we're also -- we're in many, many countries around the world, and some of those countries, it's challenging to get some cash out of, but there's digital innovations and there's methods and ways to start getting more of that cash out of some of these hard-to-get countries, which we are in bringing into a central pool. Other initiatives that we've achieved recently as we've migrated our business with the global bank. The global banks enabling us to then have global cash pooling, which means that we can all the surplus cash out of those countries around the world into a central hold. That central hold means we don't have to draw down our revolver on a day-to-day basis. So that's really actively driving data cash management. So within that space, I do believe that we get a lot of value to release more cash to the business to fund growth and service any future dividend flows. So yes, we're pretty excited in that space. Within the tax area, too, there's a lot of opportunity for us. I think ECU has grown over the years through acquisition, and we've taken a look at the whole structure of the group, and we're optimizing tax, all the tax processes. There's the way the companies charge each other. There's the there's the dividends flow in and out of the group with withholding tax. Now that we have strong expertise building in these areas, we're able to optimize and eventually bring in a lot more value from a tax management point of view. So we're very excited in that space as well. And I guess in other areas, too, is just about finance delivering small wins to the business. So for example, in a complex straight forwarding operation like ECU in the company is a major factor. And in many of the companies I've worked in the company has been a challenge for many companies to solve. But we are deploying technology and AI to mean that we can get rapid settlement and rapid understanding of our numbers, which then means that we have more visibility and control of all the group accounts and letting processes. And we're just right now launching a global netting portal which is fully automated. So I think that where we are in our journey, we've got a lot of things happening with strength in each of the functional areas, we're bringing in strong leaders who know what good is, that had time to then develop their plans, and we're now implementing the plan. So I do believe we're at the cusp of starting to deliver some tremendous value to the business. And as I said, for me, personally exciting to build a modern finance function that can be seen as a value-added business partner. And along with that, the final stage is to make sure in all of our countries around the world, we don't really have bookkeepers who just do [ divers ] and credits. We want to have leaders in the field and finance who are business partners, people who can help support management to drive commercial results in separate numbers in the business to do storytelling and then help improve the overall performance of all of our regions in the world. And the word that I like to use is kind of democratizing information. So making sure that the branches of the world have the same quality of information, analytics, thought process as the most senior parts of the organization. So if we can do that, we can do it, I believe, build a finance function that's true value add to the business. So thank you.

Thanks, Steve. And basically, if you look back at all the growth initiatives which others spoke about, the cost initiatives and also all these financial initiatives, fundamentally, what that leads us to [indiscernible]. If you look back at financially what it means, what are we trying to deliver as a business as the entire management team. If you look through the last 4 odd years or rather, 5 years, the red line is the [ old catenate index ], that's how volatile the freight rates have been. And naturally, there was some volatility in our gross profit as well, while the volumes remained steady. But if you see what we've been able to do over the last 12 months and that's been consistent with the efforts, all the [ interest rate ] spoke about, the freight has continued to be downwards over the last 12 months, but the gross profit has been moving outward. And that's what is creating the ability for us to drive profitability even in a challenging market. And the very principle that we are trying to apply as a management team is that we drive volume. We drive -- we maintain the yield, which means that we can expand the gross profit on the back of all those initiatives. And if we can keep our costs in control. And Steve spoke about a lot of these things, shared services, automation, a couple to give an idea about how every process is being transformed. The cost of operations comes down when we have technology enabling it. So all of these things mean that our gross profit should go up and the SG&A cost should grow at a much lesser proportion. And is the arbitrage of gross profit to SG&A margin that basically helps us create enhanced [ profit ]. And that's what the direction broadly is. We have tried to put together what our aspiration should be in terms of these numbers. And the presentation is uploaded, so it's available. I just broadly say that we believe that we can continue to grow across all the business segments. Naturally, the smaller base business would have a higher growth rate, but across all the businesses, we believe we would continue to grow over the years to come by. And from a profitability standpoint, the numbers should more than double from where we are over the coming years. The way to look at this from a company structure point of view, like we spoke earlier, Allcargo Global Limited, which should be the new listed company for the international supply chain business post the demerger getting contributed, these numbers would basically be reflecting the performance of that entity. And all of this, like what you all try to do here together is a combination of efforts between the group management team across functions, driving technology, digital, HR and finance, along with our management back others and also an impeccable team which is driving the international supply chain business in particular. We have functional expertise across commercial operations, FCL business segments. And then we have 6 regions that is how the business operates. And each of these regions are like independent profit centers, driving growth initiatives, controlling their costs and operating like a different company, which is a part of the large enterprise. So that's the structure which basically helps us to of work on our plan, strategy and drive performance. So that's all from our side. And maybe I can invite back [indiscernible] to join in, and we can possibly take up some questions.

Thank you, Ravi. It's always a tall order to follow up to you. Ladies and gentlemen, we now open the floor to questions. We have 2 lovely hostesses who are there with the mic. [indiscernible] question. Raise your hand, the host is coming to you.

Sir. My question is about this -- nearly -- or will be demerged global company. So this U.S. 50% tariff, how much is it will have disrupted that trade of the businesses?

Are you -- sorry, just to get it clear. You're asking what is the impact of the tariffs?

On all our -- the industry, correct.

So basically, if you look at it, India, of course, does have a little. But if you look at our entire global volume in that perspective, the effect is not going to be much. While I presented something on the screen at that time, there have been new areas that we have already identified to compensate for those small drop that would happen immediately. So you would not see a much of impact. In the immediate perspective, if you look at some volumes, yes, there would have been dropped from India on the FCL part of it, the full container load part. There is about -- close to about anywhere between 50% to 60% lower as well because the tariffs have gone up. In China, if you look at it from China to U.S., there is also a drop. But for us, what has happened is from China to other countries, in the APAC, the other countries, the volumes have picked up. So there is sort of overlap compensating. So it shouldn't be a big impact for us. In fact, I would look at it that the -- we should have some more impact in fact, getting more volumes on the LCL because people probably would only send only small quantities is what I look at it till things settle down.

Yes. From [ Larson ] from Jefferies. A couple of questions. If I look at -- if you can maybe take it back to the previous slide where you put your 2030 target, right? So just trying to understand how are these aspirational numbers or these stated targets that you have? And also if you can provide some color on the math behind it? I mean, what is the kind of market share assumption that you have put in on what meets numbers on the [ LCL ] side or the industry on for a little bit more color on that, please?

So fundamentally, we have started with a product-wise breakup. That's how any plan is built. And across product categories, the growth is largely driven by various initiatives, which my colleagues and others spoke about. We are entering some new markets, we have started some new products. So all of those initiatives lead to a compounding impact on the growth. So we are not looking at market share expansion in the existing markets where we already have a stable, mature market like in European market, et cetera. You're doing the same market share expansion there. But there are pockets of opportunities where we are not present entering in [ Adesto ], about Brazil or some of the Latin American countries where we have rapidly grown market share. So we have built the volume assumptions product-wise which are leading to the increase in the volumes. And as you know, our business is focused on gross profit. The revenues were from outline depending upon the freight rates. So we are hoping that the yields will remain same. We are not looking at yield expansion based growth despite the fact that as you increase the door percentage, you infuse the value-added offerings, if you can see the long-haul trade lanes, it should have a positive impact. But largely, assumptions are more volume-driven, volume growth is initiative-driven. On the cost side, like I said, there's an inflationary adjustment which you've assumed, and Steve spoke about varied services that would lead to efficiencies. Kapil spoke about the technology is. So all of those initiatives have been baked into planning inflation, offset by initiative net impact. That's how we -- and the [ property ] just outcome of that.

Sure. So these are stated targets. I mean maybe [indiscernible], fair enough. And sir, secondly, on the initiatives on the cost side, right, there are 2 parts or 1 with respect of manpower, the allocation and also optimizing on that trend. For the past few con calls, we are also speaking about real taking some of the cost to lower cost economies maybe move from U.S. to business kind of examples. So where are we on the journey at this point in time? And then from the initiative standpoint from [ G2 or some ] to EBITDA conversion, I mean some current ratio, what is the potential opportunity you look at under conversions? And secondly, on the finance initiator side, is there a same number identified we expect low pot dividend flows or centralizing operations? Is there a number that's been identified and potential direction on the time that you're looking at?

Yes. So in terms of the operational shared service centers, we've already done that for some of the large countries like U.S. And we are currently underway for the European countries and some of the high-cost station countries as well. I'll let Steve talk about the financial shared services, where we are on that. But each of these targets, we have a very clear visibility, whether it's tax optimization or shared services, each of the initiatives is broken down into a specific office, specific number of rationalization on cost. So it's not a high-level approach. It's a very down level approach in terms of its poly broken down in maybe 50, 60 initiatives, each of them have separately. Maybe Steve, if you want to give a color on where we are on the financial?

Yes. So essentially, we are already underway with 1 region around the world, which is the first regionalization, which is AR, AP, NGL, and that should be largely finalized by end of Q1 of next year. And then following that, we have the other -- we have detailed plans for the other 2 regionalizations as well. So everything is fully planned out. And it's a matter of sequencing at the right pace that the organization can handle. If you transform too much too quickly, it adds too much risk. So we'll do 1 region and we'll do another and do the rest. So we have very clear targets, which are a cost savings, which we feel very confident we can hit.

You mentioned that the current profitability of the business is under pressure given the global situation. So in this environment, how are we doing relative to competition? Like what would be the profitability of some of the larger global peers at this point? And you also mentioned that from initiative, you want to add new markets. So as you add new markets, would that mean lower utilization and initial losses in those markets? How confident are you about sustaining margins given new market entry and so on?

So I'll share some of the insights, and then let others share on to that. So primarily, as we spoke about serving the only global single brand company in the 2-year sense, many of our competitors are in specific country or regional markets. Now if you look at our own performance also, it is not secular. We have countries which have operated the losses in the last couple of years in the countries which have demonstrated growth in profit. So what we find is some of these settling markets where the macroeconomic environments have been complex for the European countries, those local players have been under pressure and operating in losses. Now these are not listed companies, so we tend to get data delayed by maybe about a year sometimes. In September to November, we get the data. And -- but you do have a lot of industry base operating in losses. Among the global peers, there is no exit benchmark, but I would say our sense is that based on how we efficiently utilize the boxes and price our services, I would imagine that we would be among the most profitable in the industry in terms of the current environment. Of course, delivery would be on the lower side. But on a relative basis as you are, so I think we should be on the higher side.

Yes, absolutely. I think the other main thing that has kept us if you look at yields that we have been able to hold, which I shared during the presentation as well, has been possible because of our new markets, the new initiatives that we have taken. And of course, we've worked on a lot of cost parameters because the selling, it's market driven, right? The only thing that we can do is the cost can be controlled by us by digitalizing a lot of process of or the [ RPA ] projects that we introduced, the shared services that we spoke about. All these have [ combinated ] to holding on to our -- the numbers well, in numbers well. Having said that, if I look back, like what Ravi said, within the competition, there are a lot of trade lanes that we operate, which probably they don't operate. And that's 1 of the reasons that we've been able to bite them in terms of numbers, whatever we get. Obviously, I wouldn't want to comment on it. Maybe it's right, it's wrong, but I'm very confident that we are way, way ahead of them. Yes, it's a difficult market, but I think we will have a lot of room to do and which we are doing, and that has kept us going. Also, if you look at the FCL part of the business, if you look at the share of our -- market share globally, if you look at it, we are very miniscule. We might be ranked among 17, 18 in the world, but we still have a lot of room to grow there. And that's 1 other opportunity that we continue to work on, which keeps us on. On the cost of people, cost out.

So good afternoon, everyone. And I think it's a pleasure to address all of you and be here and speak on behalf of the organization. There are multiple initiatives, which are initiatives, people-related initiatives that we have launched in the past, and some of them are already implemented. One of them being a global payroll system to 1 of the largest payroll provider of the world, which is ADP, which is listed in the New York Stock Exchange. We have [ engaged them ] 18 months back to implement the global payroll system, the objective being to have 1 single source of fruit for all people-related costs and have a better transparency and control over the cost. We are very, very happy to say that almost 85% of the project has been implemented successfully with a very good feedback from our stakeholders. And we are like having around 7 countries, which are already underway to get implemented. End of next year, we will have the entire organization on that. What we'll get out of it is first on a source of [ fruit ]. Second is we will get the full clarity on the cost, something that we all are very conscious about. And third is, of course, a better management of all people-related information through single source of [ fruit ]. Thank you.

Thanks, [ Mani ]. So basically, if you look back at all the things that we have done, if they were not done on the cost control outsourcing of -- was U.S. itself was about USD 4 million, USD 4.5 million impact. If you look back at all the initiatives, centralizing payroll controlling, we had not done, we would ourselves be in a very different situation. And in terms of the overall market, I think we do not see initiatives of scale being done like what we have tried to do over the last 2 years to meet the challenging environment. And that's why possibly, profitability should be on a higher side compared to competition.

No, there is a question right there.

[indiscernible] from [ Equipoise ] Capital Management. Since you have explained your focus on digitalization, are you planning to move from 3 player in logistics to 5 player logistic player?

Not yet, but you never know. If there's an opportunity if you see the business makes sense, then obviously, we would look at it. But for now, no, we want to focus on our core, and we'll continue to focus within those areas what we serve.

Sir, You have given the targets or the guidance for the next 5 years in terms of the top line and the EBITDA. Can you also tell what will be the capital employed and the profitability ratios. And that's why possibly [indiscernible] said should be on a higher side compared to competetion.

No, there is a question right there.

[indiscernible] From [ Equipoise ] Capital Management. Since you have explained your focus on digitalization, are you planning to move from [ 3 player ] in logistics to [indiscernible] logistic player?

Not yet, but you never know. If there's an opportunity if you see the business makes sense, then obviously, we would look at it. But for now, no, we want to focus on our core, and we'll continue to focus within those areas what we serve.

Sir, you have given the targets or the guidance for the next 5 years in terms of the top line and the EBITDA. Can you also tell what will be the capital employed and the profitability ratios, which we can expect in 2030? And the other question to the management is what do you focus on? You focus on profitability? Or do you focus on growth? Because if you believe that after you reach a certain size, then profitability always automatically follow, then that's a good strategy. But what's the target in the next 5 years?

Yes. So if you look at our business, it's completely asset-light and barring some investments in technology, there's no major gap which means that essentially, our capital employed will continue to remain flat, maybe rather some of the historic assets to depreciate. So therefore, capital employed should remain the same. And therefore, the entire expansion on the EBIT should lead to an expanded return on capital employed. In terms of your question on what we focus on, I think the beauty of our business is that profit is an outcome, like I mentioned, of arbitrage between inflation and growth. We always focuses on driving growth through initiatives. We're not looking at driving growth through aggressive pricing, or in our growth initiatives. We are very conscious of that. We try to drive growth through all the initiatives which the others spoke about. And when you drive growth and contain costs, that's the operating leverage that expands profitability in the best possible way.

Are there any more questions? If there are no more questions [indiscernible] session.Okay. Thank you, gentlemen, and thanks to the audience for the questions. It was an engaging conversation. And with that now, we turn our attention towards to our Allcargo termials, which [ percicate ] trade to expand in our presence of CFS and [indiscernible] May I invite the management team of Allcargo Terminal, starting with Mr. Suresh Kumar, Managing Director.

Good evening, everyone. After that very engaging session with our international supply chain it is the turn of Allcargo Terminals, which is the CFS-ICD business of the Allcargo Group. First of all, let me thank all of you for accepting our invitation to meet us today. And here, the story of the group companies. Over the next 30, 45 minutes, me and my colleagues will take you through the ATL journey. What is it that we have achieved over the past few years? And what is it that we have planned for the coming years. So starting with the first [indiscernible] in 2003. The CFS ICD business of the Allcargo group has grown steadily to becoming a market leader in the CFS space. We have 7 facilities across 5 locations in the country. And these 5 locations kind of manage about 80% of India's ex trade. Out of these locations in which we are present, there is [ GNPA ] and Mundra, where we have two facilities each given the fact that these are the 2 largest port clusters in the country. We have our other facilities in [ Dadri ], which is an ICD, and we have got facilities in Chennai and in Calcutta. ATL at this point in time, operates with about 230 acres of yard space across the facilities that I've mentioned. And we have got close to 1 million square feet of warehouses, which is a combination of bonded and general warehousing that we have. We handled about [ 6.79 lakh TEU ] in the last financial year. This is the laden volumes that we handle. Along with this, we also handled close to 3.5 lakh NT container movement, which is a critical part of [indiscernible] as you are aware of. We offer the full range of portside logistics services right from transporting containers from the port to the CFS, stuffing, destuffing, customer-related work. Special cargo [indiscernible] cargo, the entire suite of services is what we handle. Over the past 20 years, we have built a very strong brand and we are valued by our stakeholders for a bouquet of things. Firstly, for our pan-India presence in an industry which is extremely fragmented, there are about 170 CFX players and about 45-odd ICD players in addition to that. We are one of the few operators who have got presence across multiple cities. And as I mentioned to you, we operate in ports, which are handling about 80% of India's [indiscernible] We have synergies with the Allcargo group, which gives us an opportunity to support the international supply chain in their LCL and FCL businesses. We have strong and deep shipping line relationships, which help our customers. We are versatile when it comes to different operating models with which we work, for example. We have a [indiscernible] operating model with CWC in Mundra. We have got a joint venture facility in Dadri with [indiscernible]. We operate landlord royalty-based lease models in NPA. And therefore, across the CFS spectrum, the different operating models is something that we are quite familiar with. We bring in our expertise into it and we ensure that these partnerships are a win-win for all stakeholders. Of course, the focus on ESG and sustainability like our Chairman spoke. This is something which is ingrained into the group. We do our bit on that front. And about 19% of our electricity consumption across the facilities is powered by solar. 1/4 of our three turn forklifts are electric. All our facilities are ISO 9001, 14001 and 45001 certified. This is in the realms of safety, environment, the ISO certifications ensure that we are industry-leading. We have been a pioneer when it comes to various things in the CFS industry. Years back, we were the first to introduce [indiscernible] in the CFS yards. We continue that tradition. And some of the latest things that we have done in this is we are the first to introduce digital enablement for [ extent ] cargo clearance. So we have got our app called [indiscernible] backed by [indiscernible] to which access is given for our customers. And 2/3 of the entire extent cycle can actually be operated through the app, or the [indiscernible] without even visiting the CSS. So after we have launched this about 3 years back, there are a couple of others who have followed it, but we continue to set the standards in digitally enabling our customers to do the XM process. In the international supply chain presentation, you heard a lot about AI which is something we just starting to touch every aspect of our business. So that is AI enablement that we have started to do with regard to cargo management by introducing tagless yard management by which the containers are placed appropriately stacked in a certain manner so that retrieval is possible. So this is something that we have piloted in one of our CFS and will extend to others in due course of time. We have an experienced team a small team of 355 people who are on roll, supported by about 2,000 associate team members. We have a gender diversity of about 9%, which is quite commendable in the logistics space in the country. And we have experienced per team member, which is more than 10 years in the logistics space. I talked to you about the operations excellence in terms of the ISO certifications that we have. This is backed by stable vendor relationships and a vendor ecosystem, which supports us to maintain an asset-light approach wherever we require in terms of transport, security and equipment. The scale efficiencies that we have by operating multiple facilities come in and help us keep the cost lower. All this finally translates into great experience for our customers, and we have industry-leading Net Promoter scores of over 65%, and this has been consistent over the last 4 to 6 quarters. The other thing which our stakeholders value in us is our financial discipline. If we were to look at our balance sheet, it is strong. There is very minimal debt. We will talk about it as we go ahead. And we have a very efficient working capital management. Our DSOs are in the range of 15 to 16 days. In the last 3 years, it's something that I want to talk to you. The last 3 years, if you were to look at it was preceded by COVID. And before that, the huge thing called DPD. So let me spend a couple of minutes talking about DPD, because in every forum that have gone, the first question that comes my way, when I say that I am part of CFS is the impact of DPD. So if all of you have to look at it, DPD started sometime in 2018. It's a great move to ensure lower cost of logistics and a whole lot of other things that come along with it. We support it fully. But when it comes to DPD impacting the CFS business, we have JNPT, which operates currently at about 75% DPD. [indiscernible] is at about 35, 40-odd percent, Mundra is at a lower level. The advisable market or the addressable volumes which come into the CFS haven't significantly been affected. This is simply because CFS is play a role in smoothening out what you would call freight rate hikes, which you saw in one of the earlier presentations and the commodity prices. And therefore, customers see us as custodians of cargo for a certain period of time, and we also add value-added services to it. Therefore, the addressable market, which has been there for the CFS have grown at a steady clip, maybe a shade shorter than the overall container growth, but the addressable market continues to grow stronger and we get our share of that. The other thing is during COVID, when the overall supply chain systems across the world were severely affected. There was transition and shipping lines. There was cargo, which was piling up. I think India was a very good exception. Credit to all the good work which the various boards have done and the ecosystem have done. The small role which CFS played in terms of evacuation of cargo was a critical thing which enables that board function smoothly. Therefore, our position with regard to DPD and the way in which CFSs progressed is that CFS are vital in the Indian port ecosystem. They are natural extensions of the port and the value additions that we do for customers ensures that our addressable market grows at a consistent pace. In that consistently growing addressable market, we have held our market share steadily between 12.5% and 13.5% over the last 8 to 12 quarters. We have kind of defied industry norms in a way as we have grown our EBITDA per TEU consistently over the last 8 to 12 quarters, what was INR 1,800 per TEU EBITDA about 9 quarters back. It's currently running at about INR 2,100 to INR 2,150 EBITDA per TEU. This is on the back of a lot of efforts that we have done in cost optimization, yield management and also ensuring that we do the right things when it comes to operations. We have transitioned from an asset-light model when we listed about 3 years back, we talked about an asset-light model. As we continue to do business, we realize that there are strategic opportunities where we will have to invest directly. And we have done that, and we have a hybrid model of operations in which we use leased facilities in some of our locations. And we have also invested where it makes strategic sense. So some of the investments that we have done is in [indiscernible], which is the Haryana Orbital Rail Corporation. This gives us access to the dedicated freight corridor for the upcoming [indiscernible] ICD, which we will talk to you about. Mundra is an extremely important market. We have been operating the two facilities within the [ Adani ACS ]. As we look forward, we believe we need to create a larger facility. And therefore, we have invested in land outside the [indiscernible], while the other two facilities continue. So this model of operations is asset right, which you heard our CFO also talk about. We completed the acquisition of [indiscernible] Multimode. [indiscernible] Multimode is now a 100% subsidiary of Al Cargo Terminal. We have renewed our contracts with CFS Mundra last year, and that gives us visibility and we have recently enhanced our capacity in JNPT. So in summary, what we have done in the last few years is we have as one of the front-running CFS organizations in the country, consistently run our business in a manner in which it delighted customers. Our capacity utilization is one of the best in the industry, and we are in a position now to scale up. So in terms of opportunity, I would now request my colleague, Ashish to join me, to kind of take you through the opportunity that we have. And from now on, some of the slides we will run together. Because I think there are a lot of information that we would like to share and it does better when we work together as a team here. So with regard to the opportunity, I'll just said the initial thing. So there is this graph, which talks to you about the port volume growth in the country. So if you look at FY '20 to FY '25, 12.6 million TEUs is what we had in FY '20. And this is now close to 20 million TEUs, and I'm talking about the ports in which ATL is operating. On top of this, there could be another 20% because we operate in ports, which handle about 80% of our volumes. We expect the port volumes in the ports that we work in to grow to about 28 million in the coming 4 to 5 years. And there are multiple reasons why these volumes will grow. One is India is on the back of one of the strongest growth stories among the largest economies in the world, that drives extent volumes. There is capacity creation across the various terminals, which -- which Ashish will talk to you. Ashish is the CEO of our organization.

Thanks, Suresh. So Suresh has taken you to what Allcargo terminal has been doing, and I think that's a good flavor. Good to know that all these years, we've never been in the red. We've always been green. So where we are expanding and ever-expanding story. I think what we are also trying to say is the port expansion side. What's generally happening now is in the last -- from 2020, and if you take it to 2030, we have already doubled the capacity of the terminal in India. So [indiscernible] us come up with its second [indiscernible] which has kind of enhanced and double-digit capacity of [ Navasiva ]. [indiscernible], which is coming in Mundra is going to come in with another capacity, adding to what [ Adani ] is already doing. But what we are also heading towards in 2030, which is going to be [indiscernible]. And I think to the story really defines post that. So in 10 years, India has not only kind of doubled. It's actually making it 3x the capacity of the terminal. What does that mean to our business, right? So that's the connection that we're trying to bring in. With 2020, if you see the number, we were somewhere around 12.6 million TEU capacity in the terminal. 2025, we are looking at [ 19.6 ], and 2013, we are going up to [ 37.5 million ], and this is [indiscernible]. Presently, where we stand with our facility, we have completely come to a situation where we are 85% to 90% of capacity utilization. So what we're trying to do now is enhancing our capacity, and that's what our next plan is. So what are we expanding now? Like -- so JNPT, which is our flagship facilities, we have presently running two facility out of there. What we've already done since last year to now, we've added another 25 acres of land parcel to our existing facility. And we are also kind of redeveloping the [indiscernible] facility, which [indiscernible]. So by redeveloping that facility, I think we are coming up, and we are increasing our market -- our capacity over there. The second thing that we've done is that Suresh already mentioned that we've taken about 60 acres of land, which is in Mundra. Now this is kind of not only going to grow our facility, but it's also kind of the location that we have gotten. It's in between [indiscernible] and Adani [indiscernible] right. So what we are already trying to do is we're already trying to cover the kind of market that is going to start rising into [indiscernible]. So that's a very interesting expansion that is coming up. [indiscernible] we have two terminals now. So one is like [indiscernible] port. The other coming, which is already now [indiscernible] We are now building capacity in [ Katepally ]. So the volume we see is increasing in [indiscernible], and we are already getting ready for that volume increase. And our biggest one is [indiscernible], which is going to be an ICD rail link RCL connected, and that's going to be the expansion that we're going to do in North India.

So these 4 projects kind of define what we intend to do over the next 3 years, and these are projects for which we have absolute visibility and that we are working on. Cumulative CapEx on this is about INR 400 crores. There's already investment of about INR 110 crores that we have done for [indiscernible] about another INR 30 crores, INR 35-odd crores that we have done from Mundra. So about INR 150 crores of investment we have already done. We will talk about investment and how we propose to fund this as we go ahead. Quickly on the capacity addition, what -- we intend doing and this is a summary. FY '25, we started at about 8.3 lakh capacity. CWC Mundra, we have done the renewal with an additional 10 acres giving a 50,000 additional capacity. JNPT, actually, just mentioned what we have done with regard to additional 25 acres. And the balance 3 blocks is what we need to do now, the [indiscernible] new facility, [indiscernible] and Mundra. That will take us to about 13.5 lakh capacity under our immediate visibility and control. I would also like to draw your attention to the fact that the asset right strategy that we are following helps us to acquire lease land, develop them quickly and increase capacity depending upon opportunities that become that we see. So in terms of capacity expansion, there is a clear blueprint that we have laid. And this blueprint rides on the India growth story on the [indiscernible] story. Therefore, we believe that there is a great opportunity that we are tapping into. I would just like to take you quickly through one of the opportunities to give you a flavor of what we are talking about, which is the [indiscernible] opportunity, which is also the largest investment that we have amongst the 4 things that I have spoken to you. So the [indiscernible] opportunity in the NCR market, if you were to look at it, the market size is about 12.5 lakh TEUs per year, and of which the addressable market side saw CFS and ICD is about 2.5 lakhs. The throughput capacity that we are building in in [indiscernible] is about [indiscernible] in terms of capacity. We expect to get to about 70% capacity utilization given the kind of industries in that area. So if you look at it, there are two other existing operators but we bring in through the RCL connectivity, the unique advantage with lower transit times, which we estimate to be about 15% to 20% for transit from Mundra -- from [indiscernible] to Mundra or whenever the [ DFC ] gets completed into JNPT. So that's a unique advantage that we offer. We have mapped the market there. We have met a whole host of customers who are in the auto, auto parts, electronics, metal, pharma. There are a whole lot of industries which are there. There is a model electronic township, which is coming up there. There is a lot of stuff which is happening in the NCR region, which is the gateway to the Northern India market. And in the India growth story for 2030, and in the biggest bar growth story of 2047. North India is supposed to be the driver, and that is where we are positioning the [indiscernible] So base is all this, what is it that we are aspiring for in FY '30? Current volumes of 6.8 lakhs, we expect to hit 1 million laid in volumes by FY '30. Our revenues over around INR 750 crores at this point in time. We would like to double that with the addition of capacity and the facilities that we talked about. And the EBITDA to be growing at a faster pace than revenue. And then the asset-right approach that we spoke to you about, the geographic expansion, getting into Northern India at this point in time. significant portion of our business interests are in West and in South. So we get a gateway into North with [indiscernible]. That's also a rail-linked ICD. We will continue our commercial excellence and operational excellence, keep a sharp eye on digital enablement, wherever it is possible. Keep a sharp eye on costs, SG&A and make the partnership that we have run successful to reach the aspiration that we talk about. To run this aspiration, we have got a very capable management team, some of it which have the pictures here, Ashish is here. I request [indiscernible] to join me on stage. We will have [indiscernible] this. So it's a very experienced team that we have, and we have divided our business into key regions. So that is a southern region. West, which compares with the GNP and Mundra. And then there is a northern east which is handled by 3 regional heads that we have. And then you have the HR, the operations side and the finance. So [indiscernible] a year. With that, we come to an end of what we wanted to share with you. And thank you for patiently listening to us. And we turn it over to you, and we would like to hear from you what you think about what we said and any questions or clarifications that you may have.

[Operator Instructions] In case you have any questions, please raise your hand. You all have the first question.

This question is to the CFO. I read somewhere that there INR 685 crores of contingent liability. Can you elaborate on that?

Major portion of INR 685 crores contingent liability is on account of old guarantees and bonds, which we have to give to the customs and various port authorities as a part of doing business. So the real contingent liability in terms of claims and the tax-related issues than only in the range of INR 30 crores, plus INR 5 crores of customer [indiscernible] all the portion of contingent liabilities, which we disclose are part of bank guarantees and bonds, which are considered in a normal increase of CFS and ICD.

So it's only INR 35 crores, which is a possibility of not?

These are, I would say, income tax disputes plus customer claims, which are, again, normal business cases.

I'll just add over here. What you read, 685. So actually, when you're running a CFS business, we have to give a custom bond. That is basically a part of business and not only Allcargo, I think so all the CFS ICDs are linked with customs. It's a bond that we are giving, which is being believed as a liability, not -- it's not an actual liability on us.

So in the last con call, you mentioned that due to the DFC, you have started to see throughput increase due to faster turnaround time. So cargo handling and cargo transportation revenue, will it increase? And how much revenue -- how much revenue the company earns from handling the cargo versus warehousing the cargo?

Yes. I think let me clarify how -- let me try to understand what you're asking. There are two portions of the things that I mentioned. So one is the [indiscernible], which is the future that we are talking about. Which is rail-linked ICD and maybe that is what you're referring to. Is my understanding right?

It's related to CFS.

The current operations?

Yes, the current.

Okay. The current operations, if you were to look at it, the revenue model of import export that we have. We have ground rent, we are handling charges than the value-added work that we do. These are the things that we do for the customers. Ground rent, which used to be a larger portion of our revenue has shrunk to possibly about 15%. And rest of the revenue that we get is on account of transportation and the value-added service that we do, plus the work that we do with regard to stuffing the stepping of cargo. Is that fair to kind of answer your questions?

So again, I'll add over here. So what -- when we say like our revenue, right? So if you see what we just mentioned, like the capacity of the terminal increasing, what has not happened in [indiscernible] is like the capacity of CFS and container base station has not increased. So if you see what has happened in the last 10 years, there has not been any additional CFS, or a land that has become a CFS in the last 10 years, right? So the only addition that has happened in the 25 acres that we have added to our facility. What that means is that as the cargo and the volumes increasing in [indiscernible], the supply-demand is now going to be changed. So earlier, there was an oversupply of CFS with respect to the terminal volumes that we were handling. As years past, and by 2027, as we have marked by 2027, we are actually kind of getting into these deficit positioning of CFS with respect to the volumes of the terminal. This actually starts giving us better revenue, better yield and better ground and storage stories coming in the future. And as it not we are talking about '26, '27, '28 is where we see this happening once PSA second phase is completely running into the system.

And to the last point you made that the demand-supply situation is now reversing. Can you comment on what sort of utilization is the industry at in some of the key ports that we have, maybe JNPT, Mundra [indiscernible]?

So let's put it -- I'll give you a demonstration from our numbers starting from, let's say, from 2017 vis-a-vis what we are in 2025 and how we look at 2028. So 2017, we were actually about 2.5x capacity CFS more than the volumes that we were handling within [indiscernible] local [indiscernible] volume. 2025, we have come down to like where we say like most of the facilities are 80% to 85% full, or being utilized. By 2027, we will be at least 15% lower than your capacity will be 15% lower than what the terminal capacity is going to be. So by 2027, 28, we are actually a 15% deficit capacity in CFS with respect to the import volumes that is going to be added into [indiscernible]. If you look at the other terminals, [indiscernible] as a speciality at [ Chennai ] is already over capacitated the moment. So most of [indiscernible] facility is working at 85%, 90% efficiency. What we are doing, we are building up facility in [indiscernible] looking for facilities in [indiscernible] to build our capacity. And that's where the work in progress. Mundra, again, whatever the [ SEZ ] capacity of CFS is there. Most of all the CFS over there are, again, 85% to 90% full. We have taken the extra initiative of getting into a land process of 60 acres outside the [indiscernible], which kind of brings us again into -- in between [indiscernible] Adani, and we pull that capacity there. So overall, I think so what has happened in the trade is because of the government -- the government had actually kind of stopped giving CFS licenses and ICD licenses. They have managed to kind of bring the supply-demand story in line now, and we see now like the things are going to be more diverse because the capacity of port has increased faster than what is the CFS ICD capacity. So I hope that answers your question.

And on the [indiscernible] facility, can you comment a bit more on how much investment would that take in absolute terms? And what sort of revenues and profits do you expect from there? And how much would you want to own the land and the infra? Or would you leave that.

So to answer the first part of your question, we are -- we are expecting to invest close to INR 200 crore [indiscernible] It will be a mix of own as well as lease land parcel, which we are looking to have here. In terms of profitability, traditionally, ICD business do have slightly marginally higher profitability as compared to CFS ICD business, which will be a case for [indiscernible]. [indiscernible] would also have real revenue coming in because we will be venturing into rail freight business as well. So that would be -- that would basically give us better yield. And also marginally, marginally lower EBITDA because rail trade business would be more a volume-driven business, where the volume would be a key factor. So just to answer your question, basically, INR 200 crores of investments in [indiscernible] project, which we are looking at right now from here on and ICT margin in line with our existing business, slightly higher maybe.

Got it. And the existing competition in [indiscernible], the two that you have identified, how much capacity do they have?

So [indiscernible] on [ LCR ], we are basically surrounded by 6 other ICDs at the moment. So we are looking at [ Dadri ], we are looking at [ Panipat ]. So we are looking at [indiscernible] and where [indiscernible] that is present is we are exactly in the center of all these [indiscernible] What we have done is we've done a mapping of 0 to 90 kilometers with existing factories and companies that are evolving cargo from there. Our Mundra [indiscernible], the time line that we save is, I think, so covering that 90 kilometers of deficit, or the 90 kilometers of extra kilometers that we might have to work with. But the one we're saving is going to be more beneficial in terms of cargo connectivity. So for us, like it's the 6 ICDs who we are going to not compete with, but possibly beat it. And that's what we are working on now. You have the [indiscernible] over here so you can just see what we are talking about.

Initial thoughts on our existing investments in Dadri joint venture with Concor. Where do we [indiscernible] there is this whatever new plan [indiscernible] And what's the EBITDA per tonne that -- sorry, per TEU?

So [indiscernible] investment we have done a few years back, we have invested INR 5 crores in our joint venture at that point of time. And we are holding 51% stake in Dadri joint venture. The profitability has -- I think the revenue profile of [indiscernible] ICT business is more or less in line with our CFS business. I would say revenue per TEU, which currently overall business, we are doing INR 12,000 per TEU, as a revenue per TEU. In [indiscernible], we have a similar profile. In terms of profitability, currently, we are doing EBITDA per TEU close to [indiscernible] profitability is slightly higher as compared to that. But I would say not too much of a difference in terms of what we are drawing from [indiscernible] ICD as of now and what we are doing in our rest of our CFS business.

Yes, going forward for next 5 years, what's the view?

So [indiscernible] joint venture will continue. We'll continue that joint venture, and we will look to add more capacity as the market is growing there also. But as of now, there are no -- basically, there are no firm plans on [indiscernible]. We are focusing on the 4 projects, which we have mentioned here, and that's how it will be our growth drivers going forward.

So just to conclude, the capacity of Dadri is now over. So basically, the joint venture that we've had with Concur. There are 4 of the joint ventures on into [indiscernible] So there is not much scope of expansion within [indiscernible], neither for [indiscernible] So what we've done is we've already exhausted our capacity there. We're doing a very stable business. If you see our eclipse over here, it's basically taking care of [indiscernible]. We are talking about [indiscernible] [ Faridabad ], [ Sonipat ] and then [ Bhiwadi ]. So this is our enactment area for [indiscernible] Dadri is a very, very stable business. It's a kind of an annuity business that you're going to continue and it will continue with our JV with [indiscernible].

Yes. And the second question is your EBITDA per TEU is moving from almost 1800 or 1900 to 2750 in the next 5 years. So can you tell what is that actually going to contribute which is a major leverage which will come in?

So if you have gone through the projects which we are executing. The first project, which we have already executed is JNPT capacity expansion. This is purely on OpEx model. We have invested minimal CapEx there. And this particular facility just adjacent to our existing APL [indiscernible] capacity. So this addition has happened without any increase in [indiscernible]. So straight way, whatever margins we are doing there is getting added to the bottom line. So that is the one big push which we are having when we are talking about EBITDA per TEU. Another example I can give you for our facility at Mundra. So Mundra, we have acquired 60 acres of land. And the plan there is to basically, in future, once the facility is ready to consolidate our operations there. So that will give us substantial savings in terms of rental and also the cost efficiency. So I think our projections of improvement in EBITDA and improvement in EBITDA per TEU is based on these plants, which we are there. It will be driven by a lot of consolidation initiative, a lot of operational efficiency, which we are planning going forward. So that's how we are looking to improve our EBITDA per TEU in the long run.

Just to add the earlier point with regard to [indiscernible] coming in will also help in driving the EBITDA per TEU.

Like I was puzzled by revenue per TEU moving by 2,800 and [indiscernible] coming somewhere around INR 850. So that's why I was wondering whether 30%, 35% can be captured, so easily?

So can you just repeat the question for more clarity?

So revenue per TEU is moving from INR 11,400 to INR 14,000. So to take a hike of just INR 2,800. Whereas EBITDA is moving from INR 1880 to INR 2,750. So what we are capturing is against INR 2,800 is, almost INR 900 is getting increased -- converted into EBITDA?

I think if you were to look at the current EBITDA, we are running at close to INR 2,200. So that's the first number that you might want to kind of say. So I don't know a way of reading these numbers from. We can just talk to you offline and the current EBITDA of the previous quarter, EBITDA per TEU is INR 2,290.

We'll take it offline. I have the numbers, which is the...

We can look at.

Yes, two questions from my end. So I'm over here. So first question is with both operators venturing into the logistics space and predominantly the top two operators, do we any charge headwinds to our volumes, especially at the locations where these operators operate?

Can you just restate the question? I mean get the first part of it.

Sure. So with poor operators like Adani and BAW been sitting into the logistics space, and trying to capture that part of the supply chain, do we envisage headwinds or competition from the operators. And they'll obviously have an upper hand in getting the volumes from customers, which usually park the containers at our locations, at our CFS. Do we envisage any headwinds or competition from these two guys?

So I wouldn't say a headwind. I think that it's a healthy competition. I think at what JSW is building -- JSW not building of continue [indiscernible] story. JSW tried to build a more domestic ICD story like, right? So is actually trying to cater to a lot of their in-house supply, and that's how they are acquiring certain positions and stuff like that. In terms of terminals, JSW still is running very, very small portion now they enter into [indiscernible]. So that's not a market that value comes into our game plan. Adani again, as not a CFS player. Adani is again a more domestic ICT player along with its terminal with a rail connectivity. So -- so it's a healthy competition but not a headwind I would say.

Sure. Second question is on a comment that you made that customers basically use CFS to sort of ride out spikes in container shipping rates or [indiscernible] In the current environment where the container shipping rates have moderated, does this opportunity sort of downside for us?

So I think that's a good question. So if you were to look at it, we stand to benefit on both ends. So if there is a longer dwell time with which ends as happening at the CFS, there is a certain amount of ground and realizations that we do. But given the capacity in which we operate, if the containers move away fast, then we make money with regard to faster turnaround. So it is in a way of win-win situation. It's not really something which impacts us. So if you were to look at it, there are times in which [indiscernible] and there are certain set of customers and certain set of commodities, which end up being in the cable for a longer period of time. So that will be there. And there are a set of customers that have certain set of commodities for which the well are in place for which multiple turnarounds help us make money with regard to the transportation with regard to the handling charges and the live services that we do. So it kind of balances. That's how I would put it.

Sir, just one last question on our aspiration targets. I think we're forecasting about 8% volume growth and 13% revenue growth. Are we building in certain value-added services? How are you building this realization growth?

That's why the [indiscernible] angle also starts to come in. So in the 1 million TEUs that we are projecting by 2030, there is about 10% to 15% of those volumes, which start to come from [indiscernible], which has better revenue profile compared to the rest of the CFS. So that is one. Second, over the last multiple quarters, we have started to see tariffs not flipping back like what it used to do between '22, '23. And that is linked to what Ashish said in most of the locations, CFS capacities are starting to get filled up. And I think that will kind of ease the pressure on tariffs, which is something that we have been going through. That also is something that we have factored in.

Got it. We're not building in any tariff hikes? Or they're building a marginal [indiscernible]?

Marginal tariff hikes and then wherever there is an opportunity to value-add with regard to labeling or any of those kind of opportunities, which are possible. I think we will get into that and that has additional revenue stream that we will build on.

This is [ Anand ] from [indiscernible] Sir, so what is the total capital expenditure that you are planning to do till FY '30 for the targets that we want to deliver? And are we further planning to dilute any equity beyond the warrants that were recently issued to the promoters?

So the overall CapEx that we have shared with you, we are messaging on top of what we have already spent another INR 400 crores for the projects. You currently spend about INR 150 crores for these projects on top of that, another INR 400 crores. How this will be funded, the warrants, I [indiscernible] to kind of share those details with you.

So the key source of funding this CapEx expenditure first source would be our internal cash results, which we are having currently plus the strong internal accruals, which we are having. As of now, the existing business, as we have said, that there is a very efficient working capital management is generating good cash flow. And a lot of this investment will be funded by existing cash flow. We are looking to have equity infusion of INR 220 crores for CapEx focus basically. And most of these investments are coming in FY '27, wherein we would also go for a bank loan to bridge the gap for a short-term purpose. But otherwise, I would say a major portion of the investment would come from our internal accrual than equity infusion and some bank funding for a temporary period.

And the investment that we've done in HRC the INR 110 crores, that's mainly a strategic investment to secure the rail network to DFC? Or I mean, what kind of profitability do you view investment?

So I think the primary purpose is to get the rail connectivity. And I think this is a very large project, the [indiscernible] project, and it's a very long gestation project. So we are not really looking at that capital appreciation or the return from that at this point in time. For us, [indiscernible] is important. This gives us access to the DFCC, which brings an USP for the customer. That's how we have thought about it.

And the investment in [indiscernible] you mentioned about INR 200 crores, that on top of the INR 110 crores that we've invested in the [indiscernible] right?

Yes.

Are there any other questions Okay. If there are no other questions, can we close the Q&A session. Thank you, Mr. [indiscernible] Kumar, Managing Director of Allcargo Terminals; [indiscernible], Chief Executive Officer; and Mr. [indiscernible], Chief Financial Officer of Allcargo Terminals.

Moving on. We move on to our Surface Express and contract logistics business and Allcargo [indiscernible] and Allcargo supply chain. I request Mr. Ketan Kulkarni, Managing Director and Chief Executive Officer of Allcargo [indiscernible] to kindly come [indiscernible].

Thank you, [indiscernible] I see a lot of people from the back moving out, should we take a 2-minute break? Those in favor, please raise your hand. Yes, there are a few who have raised their hand. So let's take a 2-minute break. I think it's been 2 long hours. A lot of heavy-duty presentation and numbers from my colleagues in the group, so I'll kind of give you some time to lose on the [indiscernible]. Thank you, and wait for all of you. [Break]

Should we ask some of our colleagues to go out and all the members that's done. Thank you. Generally, they have this bill that rings in most of these convention halls. Do we have one outside, [indiscernible], can you check? I would request everybody to settle down. I'm very eager to present to you. I'm glad to see the eagerness as the room is back to its capacity now. Thank you. Thank you, everybody. Welcome to the analyst meet. Thank you for coming. The group and the member companies are very, very grateful for you to spare your valuable time and come to listen into our plans as we get into the years ahead. This presentation is about Allcargo [indiscernible]. We run two businesses. One is the Express business, which is essentially moving brown boxes at speed across the country. And the second business, which is a subsidiary of Allcargo Logistics is the contract logistics, or the supply chain business which we in the company call consultative logistics. Because the supply chain business, warehousing business is so much consultative. You sit across the table, with the customer and design a solution for him. Whereas on the Express side, it is such a network and standardized business where the customers' shipment of box has to fit within that standard and network. I'll also invite my colleague, Deepak Pareek, our CFO on this stage. -- because there is an equal distribution of slides. He was very keen to present a few and wonderful of him to kind of join us here. In the Q&A session, I will also invite our Director of Supply Chain, Mr. [ Sushil Rathi ] to join me on the stage during the Q&A session. What is it about today that is special essentially going ahead, what the results will be, and all of you are keen to know the how and the why. The how and why is very, very simple. It's a very, very strong execution plan that we have put together. The logistics market today in the country and as we heard from our previous speakers is a very attractive growth opportunity. There are sunrise industries, sunset industries that come in and go over decades. But this is one industry that stays very, very, very stable. And we as a team are committed to realizing the company's potential for future growth and expansion. The strategy of stronger, leaner, innovative and tech driven, which you will see in the coming slides, focuses on delivering results above market growth, thereby enabling us to consistently improve our market share by targeting macro indicators, which are the tailwinds of the economy and high-performance micro indicators by micro indicators, I mean, the customers and the industries we work with. Profitability improvement, the core of any business that is sustainable by focusing on the financial health. You will see our deep dive into that through quality revenue growth and margin enhancement. That elasticity between the cost and what we get from the customer is very, very important, and we are going to be very focused on that. Strong commitment to deliver increased ROCE and attractive shareholder returns. And to do all that, we have a team with a proven track record of exemplary execution. The capabilities they possess. We are very, very confident we'll deliver a lot of value for our stakeholders. We'll see the team at the end of the presentation. What does stronger innovative and tech-driven mean? As we go into the slides, we'll see that. But since the group opted into [indiscernible], what are the things the group has done to further enable those 4 pillars of stronger [indiscernible] innovative and activity. Allcargo invested about INR 900 crores. We have repaid about INR 250 crores of debt. We have recovered some income tax returns about INR 150 crores. Available funds today are about INR 300 crores. We raised INR 169 crores in a qualified institutional placement. We've improved our DSO, which is collectible from customers, days sales outstanding by 12% over FY '20, resulting in faster collections impacting the cash flow. We've reduced employee costs by 9%. A lot of work has happened together, and these measures have truly transformed all cargo, date into a financially resilient company with a clean balance sheet and net cash position. We are very, very focused on growth, and we are very focused on the bottom line that the growth brings. Let me invite Deepak to take the next 2 slides. Over to you, Deepak.

Thank you. Thank you, Ketan. Thank you all the analyst team present here. So taking the slide further, what we are drilling on in the last 5 years. The chart slide, which you can see here is the summary of Allcargo [indiscernible] the company which group acquired in '20 and '25. So what we admit here is, I think the revenue and gross margin have been flat. That's on a backdrop of a lot of management bandwidth, which has gone in measures which can explain in the first slide in terms of putting the model right. So the pillars of the company, which you see infrastructure. We have bespoke models where we are scattered across the country, geographical presence to consolidate that into a model, which was an asset-light model that took a lot of bandwidth of management. I would say the working process is over now, and we are into a phase of -- to build the growth story on that infrastructure now. People, yes, whether it's customers, whether it's employees, or had different ethos, which Allcargo ethos has to be inculcated. So that was another consumption of effort happened. Processes as we have the legacy processes of the company, which had to be [indiscernible]. And also on technology. There was already a strong [ GMS ] platform of [indiscernible] which had to be front-ended. So all those took a lot of effort, but notwithstanding, we have to admit that we could have done more on the revenue and gross margin front. But notwithstanding that, what we achieved is the EBITDA improvement in this 5 years, we grew at 14% CAGR. That's the philosophy of Allcargo group actually to see ROC and improvement has been a key focus area. If you see PBT from a negative of INR 48 crore in FY '20, we are at INR 5 crores as we speak on FY '25, which is a significant CAGR growth. Also, the ROC, again, as Ketan and I mentioned, and also Chairman mentioned, is one of the area where we keep focus on all the mandates. So that has been kept under -- and though it's a small number, but a 200 bps improvement has happened in this year. So I think now from here, last investment of 5 years into building up building the structure and the model will help us to build our growth strategy as we look into the next 5 years journey from here on. So moving on from Allcargo [ Gati ] company. What is happening here is [indiscernible] mentioned about the scheme of demerger, which is approved yesterday, the order is awaited. What that will add further to the growth story of Allcargo [indiscernible]. If you can see the chart, the structure, I will just dwell for 2 minutes on the scheme of demerger because we have started it quite some time back. And now we are getting into a reality because I think I think the right time to refresh ourselves from the analyst point of standpoint. The existing structure, actually, there's an overlap of shareholding internally from Gati to -- CPL is an operating entity, which you see here on the screen, where the main operating business of Express is domiciled. That's how you can see the Express business worded there. Ketan mentioned about the contract -- consultative logistics business, sorry, that's domiciled in ASCPL, which is Allcargo Supply Chain Private Limited. That's a 100% subsidiary of Allcargo Logistics as of now. So what we are -- what we have achieved now with the scheme of demerger is a domestic logistic plain slate structure where consultative Logistics and Express business will be domiciled under the brand name of Allcargo Logistics and the Allcargo Logistics, which will be focusing the earlier -- which had domestic and international coming together under one company, will have international ocean freight business under Allcargo Worldwide brand. So that's the 2 structure which will come into effect. So the significance of telling this year now is the supply chain business, which has a revenue -- substantial revenue in FY '25 will get start added to Gati. And what will happen from FY '26 onwards, we'll see a consolidated revenue number of consultative Logistics and Express business under the fold of Allcargo Logistics. So this will make the structure more simple. We'll have a domestic business under one entity and also the international entity, which you saw in the first presentation will be under the separate entity. I think I'd like Ketan to take us the strategy from part from here on. And yes, over to you, Ketan.

Thank you, Deepak. And any more questions on the merger, demerger, we'll definitely take in the Q&A. What are going to be our growth enablers and volume developers for revenue and profit improvement. We're going to focus essentially on 3 key areas to grow the business. One is the Surface Express business, which is a large component of our Express division now. And as we merge the Consultato Logistics business. As I said earlier, Express is a standardized end-to-end logistics solution. It's a network business. Customers fit into that model. We use a lot of multimodal deliveries. We have over 9,000 trucks, and it offers 24/7 tracking services. It's a live model. Customers are embedded on our platforms and digitization plays a very, very important role. The second is consultative logistics, customized solutions for multiple industries. bespoke solutions, different for auto, different for e-commerce, different for consumer durables, different for consumer electronics, whether it's distribution centers, sort centers or warehousing, whether it is milk runs for e-commerce or retail major, whether it is in-plant logistics for automotive or various value-added services, for example, in the chemical industry, where we are the market leader, or if it is long-haul transportation for FMCG or retail. Everything is designed in a solution manner. One important area that we have got into and has given us a stronghold in the auto segment, which is the best-in-class industry-leading offering that we have is the JIT and GI, just in time for production and just in sequence for production. This is a gold standard in contract logistics, and we have displayed our capability very, very strongly with customer segments that need it. On the Air Express distribution side, we are a very, very small operator. We have a lot of headroom to grow. From the time we have brought in the focus on the business a few quarters ago, it's been growing exponentially. We have strategic alliances with India's leading airlines. We use multimodal delivery. We deliver on-time assured deliveries, and we operate over 150 flights daily. The business is on a very, very strong growth potential and is also a great value enhancer to our profit pool. Apart from that, special products like Student Express, where we engage with Gen Z and talk to future influencers, future logistics leaders, Bike Express, again, a market-leading product for us, where we move motorcycles across the country door-to-door. Lab and Surface Light focused on MSME and SME businesses. Tier 2 India, Tier 3 India, Bharat that we essentially call SMEs and MSMEs are going to be the trajectory of growth, of value creation in those markets as producers, -- and we are incumbent as logistics players to enable their connection to all the pin codes, all the pin codes 100% of the country that we do, which is in the next slide, very -- those growth enablers that I showed you earlier, they will be delivered through a very, very strong geographic governance model. We do 100% of the 19,000-odd pin codes in the country. Gati in its previous Star was known for its reach and transit time. And after its joined the Allcargo Group, it has strengthened its reach and transit time. We ve over 700 facilities across the country, 90 hubs, 80 logistics parks, 8 air logistics centers, 12 million square feet of space along with our CL business and over 3,000-plus business associates that deliver the business for us, whether it's pickup or deliver or enable anything else that a value-added services that would be needed by the customer. 3,000-plus business associates servicing over thousands of customers that we service every day. All this strong governance allows us to have the fastest transit time in the country, and we were not satisfied with that. At the end of the month, our project on how to become much faster on transit time and bring cost down and improve service quality to the customer will culminate with one of the top consultants in the express industry. Expansive reach across the country that will be further strengthened. advanced automation and tech. We all heard about the focus on tech, digitization and automation that the group has. We are equally, if not more committed to taking that backbone of business ahead because shipments essentially move only on 2 models in logistics. One is the physical model and the second is the digital highway model. state-of-the-art grade A hubs. We are a leader in chemical logistics. These require PSO certified facilities. We have all of them. An extensive Tier 2, Tier 3 and Tier 4 penetration through 3,000 of our business associates, enabling SMEs and MSMEs to grow their market and serve their customers. What does stronger, leaner, innovative and tech-driven mean? If these are going to be the growth accelerators, they better be detailed because only detailing will allow for a flawless execution. stronger, well equipped to adapt to changed market conditions. We are constantly scanning markets, constantly scanning indicators with syndicated data and with consultants to know where we need to go, why we need to go and when we need to go. A value chain creation system for our customers, which will be enabled with the merger, demerger that you just saw, continuous quality improvement, NPS, Net Promoter Score, regularly tracked customer satisfaction surveys regularly done with customers. More long-term contracts as we become 2 businesses into 1 and a very, very strong focus on yield management. Those who are following the company would have seen that on the 1st of October last year, we announced a GPI and that we had promised will be an annual process. We want to realize every penny for the value-added service that we bring to the customers. What does leaner mean? A well-diversified margin business, very, very focused on the bottom line, not too much skewed towards any particular geography. We are equally balanced, not too much skewed towards any industry, we are equally balanced. Self-financed transformation, stay asset-light. We are a zer0-owned asset company. defocus from low-margin contracts, we have given up a lot of customers where it didn't make sense to move a shipment and lose a rupee. Every shipment we move must earn the rupee to the bottom line. Network adaptation constant and regular, like I just told you about the transit time project. So we'll always be agile, which will allow us to become leaner, innovative, a company that benefits from tailwinds. As I said earlier, constantly scanning macro micro indicators, the government policies, which I will show you in the next few slides, building a tailwind for the logistics industry, which is incumbent for all of us as logistics players to take advantage of and enable this country on its growth path towards Viksit Bharat 2047. Sector-specific solutions. I will detail that in the next slide. Top line acceleration in the top segments that we work with, auto, consumer durable, consumer electronic, life science, health care and e-commerce. Tech-driven, a word much heard throughout the day today, a lot of focus at our company, data science and AI tools on customer service, HR, sales, operations, SME onboarding already deployed and being strengthened, very strong cybersecurity scores for the group and the company. And whatever we make will be a delightful customer experience. All applications for the customer when we go for a feedback are really delighting them. This is the same customer we know that consumes an Amazon or a Micho and his expectation from the logistics service provider is nothing less. We are cognizant of that. And all our effort is to build tech that's really world-class and best in the sector that we operate. The growth accelerators further supported by the B2B Express logistics market growth, which will happen between 10% to 12% CAGR over the next 5 years or 6, '24 to '30. Logistics is a factor of the GDP. Most of us will know that. It grows at 1.2 to 1.5 factor of the GDP. Supply Chain Services will grow at 12% to 15%. And the combined market 2030 for us, addressable will be about INR 1 lakh crore. And what is that we will do to take advantage of that? Macroeconomic growth enablers, Make in India and PLI scheme, boosting logistics spend, growth of MSME sector leading to better growth of the organized operators because most SMEs and MSMEs as they're getting regulated, they want to work with the organized logistics players. Growth in the e-commerce sector growing phenomenally, and we partner with the top 5 e-commerce companies in the country and the top 5 quick commerce companies in the country. Regulatory changes, GST, e-way bill, again, making the sector more organized, more regulated, tech adoption, customers prefer partners having better digital and tech interface. Nearly 85% of our invoices today are generated through API, which integrates with our large customers. The government's focus on the national logistics policy, Gati Shakti, ULIP leads to push mobilization of organized logistics, increasing customer expectation, again, leading to the adoption of organized players and the logistics infrastructure investment in Sagarmala, Bharatmala, DFCs, et cetera. And today -- or yesterday, we also heard the INR 70,000 crores that the government will pump into encourage the shipbuilding industry. So a lot of macroeconomic tailwinds for the industry. And what's the micro focused growth accelerators for us. As I said, we need to detail out if you need to have a strong execution plan. On e-commerce and quick commerce, we will expand nationally and enhance offering to our current and new entrants. On auto and engineering, we will specialize in growing requirements of VOR, which is vehicle off-road, moving engine parts and high-value engineering parts. In Life Science and Healthcare, we'll specialize in pharma transportation through packaging solutions, multi-temperature storage, which we already do, multi-temperature last-mile delivery and various value-added services. In consumer durables and electronics, preconfigure solutions with increased convenience for consumers and also manage returns. Chemical market, the market leader, that we are in CL, a strong regulatory and compliance adherence and focused on advanced inventory management, sampling, kitting, repacking, tank-to-tank transfer, we have built expertise in all of this. MSME and retail will continue to be a focus. Our pricing strategy and value-driven commercial approach to maximize their growth, our growth, their profitability and our profitability. Cross-sell opportunities will happen with the CL and Express businesses now working very, very closely together. Multiproduct offerings will happen. Logistics managers in customer spaces love to work with a single spot. We'll enable that. And all this will enable us to build a very, very strong balance sheet. I told you we have a lot of focus on tech, driven by the group and also within. It's a very important part of our growth acceleration through tech and digitization. What are the strategic pivots? We will be mobile first. I just told you about the experience that customers want to have. We will be cloud native so that we are asset-light, Gen AI enablers, a lot of AI is being embedded in CS, in sales, in operations, agile framework, modular so that it's resilient and fast changing, very secure. I spoke to you about the strong cybersecurity we have and very social. We will be engaged with customers on all digital platforms. We work with the best partners in the industry. You can see that AWS, Oracle, TIBCO, IBM, et cetera, work with the best in the industry, which are the implementation pivots. We have a control tower and what is the result? Improvement in on-time pickups. We are close to 100% on-time pickups, a high in the industry. A new booking app, which our business associates, 3,000 of them carry every day to pick up the 3,000 tonnes that we carry every day, building a lot of pickup efficiency. Finance ERP transformation, working closely with Oracle, streamlining the financial process, a WMS system for contract logistics. We already have a WMS. We are upgrading that, efficient space utilization, improved profitability. [ Consignee ] app, somebody who receives the shipment, how will he know where the shipment is enabling that, increasing new customers. Customer portal, for customer service excellence, Hub, which we recently launched for real-time visibility of trucks getting in and out of our hubs, where do they need to do, how much time will they take to unload and load back depending on the dockets and shipments and tonnage they are carrying. All that is known to us much in advance, allowing better planning and infrastructure utilization. And Gatecan, similarly at our hubs to enable accurate mapping of trucks. All our trucks that move across the country are GPS-enabled real-time tracked 24/7. Strategy 2030, stronger, leaner, innovative and tech-driven. I'll call on Deepak to walk us through the numbers.

Just give us a minute. Sorry about that. Just give us a few minutes. Okay. Coming back to the plan, what Ketan mentioned in detail about integration and how that will add to operational efficiency. Also from 2025, the effort which is done to make the model asset-light, how it will pan out in the years ahead. I think this slide talks about that. Here, what we have done in FY '25 are the combined numbers of Allcargo Gati and supply chain business, that's a subsidiary of Allcargo Logistics now on the revenue front. From that, we have removed discontinued operations, which are adding like a drain on a gross margin. So that -- which are fuel stations, that business will be closed by next month or so. The agreements are underway of execution. So what will happen? I think the strategy, what we discussed to have a stronger, leaner, innovative and tech-driven model, which I think the accelerated focus would be on yield management, I think, which will be through product mix, air, surface combination and all of that, including the contract consultative logistics revenue bump up, which will happen. That will add to enhancement in revenue. So if you see from FY '25, nearly INR 2,000 crore revenue on the combined basis would go up at a CAGR of 10% over by '28 and going up by 12% by FY '30. That will also move in proportion the gross margin, which is actually right now INR 600 crores going up to by same proportion of revenue. The effect of this will also have on our EBITDA because what we are targeting to do have a free cash flow model, which will actually enhance in our EBITDA Also in terms of cost optimization, the focus on SG&A and employee cost rationalization that will add to EBITDA from the INR 200 crores of FY '25, which will go up significantly by 20% upwards, enhancing the ROCE, which is actually right now at a 5% level, going up by nearly 1,000 bps by FY '28 and by 2,000 bps by FY '30. This is the strategy. It looks difficult, but from the work which is already put in over the last 6 months, and we see more or less achievable, the resultant value creation, which we aim in terms of enhancing ROCE and making a structured profitable growth on year-on-year basis, that's the strategy from current year onwards. So what will happen by this is the pillars which you talked about, about infrastructure, people, all are -- the work is completed. I think what we would aim to make them all stronger, leaner. And the 3 stakeholders, which are the shareholders, our customers and employees. That's the process we started on the Net Promoter Score, where we started this year, we started -- we are in a bottom or slightly better than the average, but we are sticking a target on that front also to go to a 60 percentile. And also on the employee opinion survey, which is above 80%, which is good, going up to 95%. Notwithstanding, I think the shareholder value is primary in the entire strategy because a main stakeholder, achieving higher profitability from a combined PBT of INR 10 crores, achieving a CAGR of over 100% or 150% as we move on till FY '30. So that's the quantification of the strategy, which we -- Ketan discussed in detail. Over to you, Ketan, to take this slide further.

Thank you. I think that brings us to the end of the presentation. That's the management team. Happy to have Mr. Sushil Rathi now on the dais for the next session, which is Q&A. At the bottom, you have the leaders on sales and operations. We recently onboarded our Head of Operations for CL, where we had an exit. And these are the partners we work with. As I said earlier, the best of the best. If you pick up the listing of the top 500 companies, you'll see all of them are our partners. So thank you very much for your patient listening, and happy to get into the Q&A session.

The floor is now open for questions. Our hosts are ready with the mics. Please raise your hands if you have a question. This appears to have been a very comprehensive presentation. No questions. We have one.

Sir, my first question is, before Allcargo acquired Gati in 2019, the revenue from the Express Logistics business was around INR 1,450 crores. Today, at -- after 5 years of journey with Allcargo, we are at INR 1,500 crores. The profitability has been impacted pre-Ind AS, we were 5%-ish. Today, we are 4% post-Ind AS. Just wanted to understand the journey, what kind of difficult decisions that we took to revamp the company and how this is going to progress further?

Yes. Thanks. Yes, I think it has been a flat journey. We admit that. So that was the intention of putting that revenue slide on the table. What had happened is in this year, I think the market pre-COVID -- post-COVID, we had a bump up on the domestic business. But post-COVID, what we have seen is a fall in terms of various factors actually, which could be internal to us, maybe putting up right people, that was one thing. But overall, I think notwithstanding the stagnation or the flatness in the revenue and the gross margin, what we see the ROCE and the EBITDA margin focus that has been maintained. So if you see in this 5 years, there's no burn on cash flow burn, which has happened. We continue to add value in terms of retiring the debt on the company and adding more free cash flow. So if you see the slide, which Ketan mentioned, the 5-year effort of shoring up the free cash flow in the company, that has happened. Yes, we compromise that the toll took on revenue. I think now the plan which we have in place, it's visible that the revenue cycle will move up in line with the growth in the GDP horizon, which will be upward of 7% year-on-year, followed up by 10% with the yield enhancement, which we have in plan in place. Also, you want to add, Ketan?

Yes, surely, Deepak, you covered quite a bit. But I mean, Deepak covered it. The top line was stressed, but you saw some green arrows at the bottom of that slide. Culture essentially eats strategy for breakfast. So a lot of cleanup was needed on the people side, on the customer side, enhancing the brand's image, which has happened over the last 3 to 4 years. Infrastructure was upgraded. We added newer hubs. A lot of money was invested. So it's a very, very strong footing that we have now and the business is at an inflection point, and that's the confidence that we have demonstrated in that slide going into FY '30. That would be my take on the question. Thank you for the question.

Sir, my next question is related to automation of warehouses. Just wanted your thoughts, are we going to spend CapEx on automizing the large warehouses that we have today? And secondly, we have also focused on creating larger hubs from the smaller hubs that we had earlier. I just wanted to understand that what benefits it is riping at this moment? And going forward, what will be our focus to improvise the utilization and the yield of the assets?

Yes. So infrastructure, if we are in a hub-and-spoke model actually. So as I mentioned, the investment in terms of modernization of all the hubs is already in place actually. All our facilities are grade A rated now. So even if you go ahead in future, we don't see a large outlay in CapEx happening. Even if you see it's a number of INR 15 crores, INR 20 crores is actually easily absorbed in terms of year-on-year. Over a period of 5 years, I think if you see INR 70 crores, INR 75 crores could be investment in modernization of hubs. But with all those gate scan and hub automation, control tower initiatives, which are already -- that investment has already happened. So the benefit of all of that is now going to accrue. So it's not that it's -- it will add any cash flow drain, but it only add to efficiency and increase in profitability as we go ahead. Do you want to add?

No, just to clarify, your question was for the Express hubs or the CL warehouses, okay.

The Express hubs.

So my question is on contract logistics business. From quarter 1 FY '25, we undertook a deliberate expansion into newer segments. We were first focused on chemicals. Now we are focused on different autos and ancillaries. So this expansion has led to a decrease in margins in the contract logistics business. So what would be our strategy going forward? Do we expect the margins in the same range? Or do we expect it to increase?

Yes. That's a difficult one. See, contract logistics or the consultative logistics business, we call it, we have 4 segments: auto, chemicals, as you rightly say, we are the leader in that segment, which is a high-margin product or the segment category for us. followed by auto, we have pharma, some bit of FMCG and e-commerce. So the rationale for in FY '21 of putting e-commerce as a product was, one, the top 4 e-commerce players in the country or rather internationally, they were based on our service offering on the chemical sector, they wanted to associate with us, which we started the journey and now what we have consciously allocated our revenue distribution equally among all these 4 buckets. Margin, as you said, has been consistent. It's not fallen down. I know we can sit -- we can discuss offline on this. But all the 3 products, yes, some bit of margin up and there would happen seasonally. But e-commerce, as you know, seasonally, the margin impact is more. So that's why you must be seeing that variation. But otherwise, the margin expectation on EBITDA front is uniform across all sectors. I hope I've clarified. Anything you want to add?

Yes. If I can just add to what Deepak has said. So primarily, we are into 3 segments very, very clearly. Chemical, we have been a market leader for quite some time. Our next level competition would be at least 40% lower than us in the chemical logistics space. Apart from that, to take advantage of the growing e-commerce segment and the quick commerce segment, we have invested into the people, processes and technology to adopt to that model. And today, some of the large e-com players are our customers, and we are growing that business also pretty strongly. And the third segment, of course, is the automotive and engineering, which is the -- a segment which has outsourced a lot over a period of time. And that is where a lot of 3PLs have grown. And we have also tried to catch up on that segment after the chemical and e-commerce. And now it is a pretty strong segment for us. And this also has helped. And as Deepak said, the margins are actually more or less consistent over a period of time, but we have been able to achieve a phenomenal growth in terms of our top line in the last 2, 3 years.

Can you share some thoughts on your air volume? How much is right now and how you want to take it up in the next 3 to 5 years?

Sure. The Air Express business grows in low single digit in the country, between 3% to 5% -- we want to grow at about 4 to 5x that market, which will allow us to consistently be the fastest grower in Air Express and also improve our market share. Half the market today is with a logistics player that has its own aircraft. But the other half of the market is for everybody to kind of chip away at. So that's a very, very big opportunity. Our market share is also currently in single digit. The focus we have brought on the product is seeing increasing market share quarter-on-quarter, more new business and new customers signing us quarter-on-quarter. So we're very, very excited about the growth of the air business. Deepak kind of covered it in his presentation where he said the blended yield of the company also improves much more when a lot of air business enters the system. So we are very focused on how that benefit will also accrue to the yield of the company.

Can you share in tonnage terms, how much it is right now? And what are your aspirations?

In terms of tonnage, as I said, we will grow by about 20% to 25% consistently. We are at about #4 position now, and we aspire to take #2 position in a very, very short period of time because the gap between 2, 3 and 4 is much easier for us to cover, and we are kind of realizing that with the growth that we are experiencing over the last few quarters.

Can you share some thoughts on -- in terms of operating fixed line between 2 countries or 2 where it's assured volume full flight?

Two cities because this is a domestic business. So 2 countries is not something that we are doing. We're not doing any import and export on air freight.

Yes, there's some questions at the back.

Sir, just wanted to understand about the competitive scenario. So on one hand, you have the new age players who have been going aggressive in the past. So how do you see -- I mean, where do you see we have the competitive advantage over someone like them? And second, on a longer term, like with all this improvement in infrastructures and all, I think a lot of these economy players have also been -- economy PTL players have also been telling that the turnaround time is going down for them also. So do you see in the medium term, there would be a massive differential between an express service as well as an economy service?

Yes. Thank you. The only product that all of us deliver to the customer in Express is service quality. And the 2 very strong pillars of that service quality, one is reach and the second is transit time. We are the strongest in terms of reach. We do 100% of the pin codes. On transit time, we are the best in the industry on nearly 70% of lanes. Our project that should end next week will give us the road map, which we will execute in the coming quarter to become the leader in terms of transit time. These are the 2 areas that the customer looks at. Express will continue to grow. And as we have seen in more mature logistics markets globally, as economies mature, and that's what's happening in the country, as they become more and more regularized, as the infrastructure improves, customer expectations improve, Express plays a very important role than the FTL or the economy players. And that is why you will see the large majors in the world call themselves Express also. Apart from that, on the consultative logistics side, we operate an FTL business for retail, for automotive, we do milk runs. So that opportunity will also always be addressable in our playbook. We will not let that go away. The divisions will focus individually on the opportunities in the market and Express will be a major focus area.

So sir, correct me if I'm wrong, your contract logistics business is -- like currently, they have expanded their warehouses capacity from 7 million square feet and plans to add around 3 million square feet over the next 3 years. So according to some reports, the Grade A warehouses is approximately cost around INR 2,000 per square feet. So the CapEx is around INR 600 crores. So I just wanted to understand how you are going to source the CapEx for the next 3 years? And if possible, provide with the time line for this CapEx.

So as mentioned earlier also by Ketan, we operate on an asset-light model. So we don't construct the warehouse or we don't buy the land and construct the warehouse, but we take it on long-term lease. And these long-term leases are commercially negotiated, et cetera. We may enter into a 3-year, 5-year kind of lease for these Grade A warehouses and which we operate for our customer as a multi-customer operation in those warehouses. So the only investment which we do inside the warehouse is in the MHEs, racking, et cetera. And for that also, now we have moved into an OpEx-led model and which helps us in terms of conserving the cash in the company to be utilized for the other growth and still manage the operation in the best possible manner. So there is technically hardly any investment which goes into the warehousing despite we increasing our footprint from current 7-odd million to 10 million in a few years' time.

Just to add, Sushilji. So here, even on the BTS model, what we have, all those investments which Sushilji mentioned, which are the residual part, that are also on a buyback commitment with customers. So actually, there is no exposure on company. It's pure asset-light product. And any commitment -- any investment which is done for a customer is paid back over a period of 3 years to 5 years. So to that extent, that there is no -- what you said about the CapEx investment, we don't see that happening because that's not our model.

Can you just highlight what the debt split will be between the 2 entities post the demerger? Like how much stays in the Allcargo Global and how much would be with Gati?

So there is a small portion of debt which will come to Gati. That's already documented in the scheme, which is approved by shareholders as of 1st October '23. So the residual -- large part of debt is already repaid by Allcargo Logistics over the period of 1.5 to nearly 2 years now. So there will be a residual around INR 20 crores, INR 30 crores of debt coming in as a part of this business -- domestic business to Gati. I hope that clarifies.

And how much would be the number for the global business in case someone can cover that?

Global business, I think we can have the benefit of group CFO, Ravi is all there. I think we can have a discussion later.

So I think in the coming days, we'll also share more precise numbers since the scheme is likely to get approved now in the next couple of weeks. But broadly speaking, on a net basis, Gati would be near -- Gati as in the Allcargo Logistics with the combined domestic supply chain and the Express business would be more or less cash positive, while majority of the net debt, which is visible today on the Allcargo Logistics consolidated basis, that would sit in Allcargo Global. Only a part of that net debt -- I would say less than INR 20 crores, INR 25 crores of net debt will be on the Allcargo Logistics side. Rest all on the console Allcargo, what you see today goes to Allcargo Global.

How much is that number, Ravi, if you have that number hand? Speaker 2 We'll share that number in the coming week or 2 maybe as we get the approval.

In one of the slides that you have shared today, you have said that the growth in top line would be 10 percentage. Could you bifurcate that in volume and value terms?

Yes. Thanks. I think I covered actually. So there will be 2 components. One is the consultative logistics business. So I'm coming to that. So another is an Express business. So Express volume plays a criteria. So volume growth, 7% we have factored over 2 years coming to -- increasing by 10% as we move on to to FY '30. And to top it with the yield enhancement because yield is one of the, I think, important component in terms of the extra service charges, which we built in. So that will add to another 2% growth on the revenue front on the Express. And consultative Logistics, as such, the business is -- has been growing at a CAGR of around over 25%. We expect that to continue in the future. So that is the breakup of the overall revenue increase. That combined effect will be 10% to 12% moving on till 2030.

Fair. And secondly, as majority of the long-haul cost has been taken care till now, my thought was that gross margin should have grown at a faster -- gross profit should have grown at a faster pace, whereas you have presented that it would be in line with the revenue growth. And the margin expansion in EBITDA terms to reach to 13.5 percentage by 2028 would have components of employee and other expenses, which is not the bigger portion. So just wanted to understand how are we enhancing the journey by not improving our gross margins, whereas improving our EBITDA margins?

Yes, I think that's a good calculation. So gross margin, yes, we kept it at a steady level, 30%, which actually we have plans to top it up. line haul cost, which you mentioned, is one of the key component because it depends on the load factor of volume and the lanes, which have to be very efficient. So that toggle around has to happen based on the volume growth. So that we see it happening as we move in the festive season and the year ahead. Coming down to the EBITDA, the improvement is on various counts. Actually, one is the tech factor, which has built in and reduced dependency on other costs, which would actually have a larger impact as compared to the gross margin. So that -- we have kept some room there. But I think, as you said, there is a room of improvement there also.

What kind of EBITDA per tonne we are expecting in Surface Express business?

So we don't quantify that way like in the terminals business, do it on a tonnage basis. But EBITDA on a margin -- on a percentage basis, we are at -- from 10% to 15% is what we are looking at over the period of 5 years now.

Sir, my next question is related to the Air Express. As you said that you are expecting to grow at 20%, 25%, which means today's volume, which is around 10,000 to 11,000, which would expect it to reach by almost about 20,000 in -- by FY '28, a yield where 5x is generally the charge compared to surface. Certain yield expansion is expected to happen by this itself. Are we -- so what is going to be the reason for us to gain the market share is one. Second is, are we profitable in this business? And what kind of EBITDA margins do we do in Air Express today?

Air Express is definitely more profitable. actually. If you see on the gross margin front, it's northward of the margins which we have on the surface front. Mainly what happens in this business, I think Ketan is expert on this. He can add more. I can just comment on the margin front, which is profitable and the yield enhancement, which is on account of the mix diversification of air, we have assumed a sizable growth going ahead from '28 onwards upwards. So 3 years, we are building up the network in terms of the new airport infrastructure, which has come in play. So that penetration will happen and that the benefit will start accruing from '28 onwards. Ketan, do you want to add?

Yes, sure, sure. Also, why will we get the growth on air? I think 1 or 2 points I must make here. Number one is the focus on air, which was lacking because Gati was synonymous with Surface Express. We are bringing the focus back. How are we bringing it back? We have identified sectors that consume air, and we were weak in carrying air for them like automotive, like I showed you earlier, pharma, life science and health care. That is point number two. The third is the synergy as we kind of work together much more now on the CL and Express side, opportunities we are seeing on the consultative logistics side also where we handle the Express for some of our large customers who are consuming air, but not using us. profitability point, Deepak kind of covered because the investments are very, very marginal. Also, it's very, very asset-light for us. That's the model we operate. So all these kind of mixed together, we have realized is a secret sauce to success, which we can kind of exploit now and happy to do that going ahead with the focus that we are bringing on the service and the immediate green shoots that are visible quarter-on-quarter with the focus we are bringing.

If you could just give the ballpark number of EBITDA margins that Air Express business does.

You're talking of future, how.

Today itself and future, if you can highlight that.

Yes. So today, you have the reported numbers, which are for FY '25, the operating entity, we are in the range of 5% to 6%. Sequentially, growth, if you see, which will happen to 10% in 2 years and going up to 15%. So that's the margin.

So surface and air, both are on the similar...

Yes, the combined margin.

Fair. Sir, just one last question. It is related to the restructuring that is taking place. What was the rationale behind investing directly into GESCPL, which is the Express business of 30% rather than going through Gati and investing in -- taking the rest of the 30% stake from GSCPL?

I would not know the details. I think we would take benefit of Ravi to take yes, later on, we can answer that.

So in your -- one of your slides, I saw you do also business of 20 kgs to 5 kgs, right? So my question is, the new generation e-com players who don't have any focus on profitability only on the buildup of customer base and they are funded by private equity. So how do you compete in that space? And actually, why should you be in that space?

Thank you for your question. We are not at all in the e-commerce last mile delivery space. The product you saw LA and Flexiite is essentially for SMEs and MSMEs and retail customers. E-commerce is a very big segment for us on the warehousing, fulfillment, consultative logistics side. On the Express side, we are hugely focused only on B2B deliveries, a pickup from a business and delivery to a business.

So you are not into B2C at all?

Not at all.

Any other questions?

Ketan, sir, I just wanted your view on one thing. There is this platform-based company called as Valmo, which is a company of No. I just wanted to understand, can such platform-based company come and disrupt the Express Logistics business in future, if yes or if no, your view on that?

I'll just twist your question around a bit, if you allow me. platform-based Valmo,ichos offshoot, eCart, Flipkarts offshoot, Amazon's offshoot, ASCPL, ATSC, Amazon Transportation Services, whatever that acronym is, they all operate, and they're very heavily into B2C. B2B has seen some disruptors on the tech side. You read about them every day. But I said earlier during my presentation, 2 very important components, a digital highway and a physical highway to move shipments. And I think the stronger capability differentiator, stronger moat that you have is currently about the physical infrastructure to move the shipment rather than the digital infrastructure, which is easily replicable. So I don't see that happening in the near future. We will continue to be differentiated with our service quality on the physical aspect of the business. Tech is a very big focus area. We have those digital platforms ready. We have integrated with ONDC. So all that kind of sums up well for the direction for us to go ahead.

Any more questions? If there are no more questions, we can close the Q&A session. Thank you so much, Mr....

Thank you. No, I'm just thanking everybody for coming and hope you all had a lovely day and a lovely evening still continues, right? Josma?

Yes. And thank you, Mr. Rath, Mr. Kulkarni, Mr. Parik. I now call upon Mr. Ravi Jakhar for the closing remarks.

So I'll quickly take the question which was pending on the direct investment into GESCPL. When Allcargo invested into the Gati Express business, it was structured as a 2-layer transaction with Gati being the listed entity where we were engaged with the erstwhile promoter in negotiations. And we also had our partners in the Japanese company, KWE, who were partners in the operating entity, GSCPL. And the way the deal was structured, there were obligations and discussions with both of the exiting shareholders, one in the operating company and one in the listed company. And those obligations were signed for by Allcargo Logistics in a definitive agreement, which had time considerations. And therefore, it was done in line with what was agreed at the time of the initial investment in end 2019, early 2020. So these were the reasons why it was done structurally. And I just wanted to bring in a bit of a group perspective on the Allcargo Gati business, which stands out a bit different as well in the sense the international supply chain business run by Adarsh, which we spoke about in the Allcargo Terminals business. These businesses were pioneered in India by Allcargo. We were the first ones perhaps, and we went on to become and stay the largest and the biggest businesses in India and globally. Allcargo Gati has been more of an investment that we invested in over the last 5 years on the Express business and over the last 8 years in the Contract Logistics business. Particularly on the Express business, I think Ketan and Deepak spoke about the massive transition. And from a group perspective, having seen it over the last 5 years since we acquired -- there was a lot of pain on multiple fronts on the Express business, but that is all behind us. Now I do not see any challenges operationally, infrastructure, financial governance, everything is now behind, and that's the good part, and that's where we feel there's an opportunity for strong growth from here on. You saw the number of INR 900 crores on the slide, which is an investment by Allcargo. That only accounts for the Express business investment. We have also invested subsequently and prior to the Express investment in the Contract Logistics business, which, let's say, now these 2 businesses, we are putting in about INR 700 crores of investment worth the Contract Logistics business, INR 900 crores of equity invested into the Express business. This INR 1,600 crores of investment made into this business, which is now coming together on a 5-year strategy plan into Allcargo Logistics is primarily made on 3 fundamental beliefs: one, the story of India and our need to focus on the domestic supply chain. Second, the huge advantage of being businesses which cannot be disrupted easily. The last express distribution company, which came up in India was still in the last century. Nothing has come up. Whatever came up has -- it doesn't exist any longer. And third was our ability to bring in the best of the people and our founders' very strong belief in the team that's now operating it. So on that note, we believe that we've answered most of your questions across all the businesses, but our colleagues would be around and happy to catch up. Thank you, everyone. Thank you.

Thank you, Ravi. As we come to the close of today's analyst meet, I would like to thank the management teams of Allcargo Logistics, Allcargo Terminals and Allcargo Gati for their presentations and all of you for your presence and participation. We hope you found today's discussions insightful. Should you have any queries, Sanjay Panjabi from our Investor Relations team would be happy to address them. Sanjay. Yes. This is Sanjay Panjabi for you. Thank you once again. We have for you a small token of appreciation. Please do not take it before you leave. And you have been a wonderful audience. And may I now request the pleasure of your presence for dinner. The buffet is now open. This is your hostess, Josna Moris signing off.