BlackBuck Limited (BLACKBUCK) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Zinka Logistics Solutions Limited Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. Please note that a copy of disclosure is available on the Investor Relations section of the website as well as on the stock exchanges. Anything said on this call, which reflects the outlook towards the future or which could be construed as a forward-looking statement must be reviewed in conjunction with the risk that the company faces. Please note that the audio of the earnings call is a copyright material of Zinka Logistics Solutions Limited and cannot be copied, rebroadcasted or attributed in the PR media without specific and written consent of the company. I now hand the conference over to Mr. Ankur Pant from IIFL Capital. Thank you, and over to you, Mr. Pant.

Hi. Good evening, everyone. On behalf of IIFL Capital, I welcome you all to the Q4 FY '25 Earnings Call of Zinka Logistics Solutions Limited. To give you an in-depth understanding of the company and answer all your queries, we have from the management team, Mr. Rajesh Kumar Naidu Yabaji, CMD and CEO; and Mr. Satyakam Naik, CFO. With this, I would hand over the call to Mr. Rajesh. Thank you. Over to you, Rajesh.

Thank you so much, Ankur. Good evening, everyone. Welcome to our third earnings call and also the summary of the last whole financial year. And yes, so -- are you able to -- am I audible? Can the IIFL team confirm, please?

Yes, sir, you're audible. Loud and clear.

Yes, you are audible.

Okay. Super. So just first, giving a snippet of the whole financial year which went by. This is our third earnings call. This is Q4 '25 is what we'll be presenting and a full year FY '25 numbers. We did gross revenues of totally INR 462 crores last financial year, which is a growth of roughly about 46% on a year-on-year basis. Continuing to operate in the dimension of platform-led revenues, software-led revenues, which have high contribution margin profile, our contribution margin profile continues to be steady in the range of 93% to 94%. We made INR 429 crores in contribution margin in the last financial year, which is a 49% growth on a year-on-year basis. This led to delivering an adjusted EBITDA of close to about INR 139 crores in the last financial year. Adjusted EBITDA does not include basically the ESOP costs as everything essentially gets factored and that's roughly close to about 10x growth over the last financial year. Last financial year, when we went public and filed the DRHP, that number was close to INR 13 crores, INR 13.5 crores, and that number today is roughly closer to INR 139 crores. These are revenue numbers, which in our business model typically lags the platform activity. As you can see, we have close to -- in the last full financial year, close to about 7.2 lakh transacting customers, which is roughly 20% of India is what transact with us on a yearly basis, which grew at roughly about 21% on a year-on-year basis. Users continue to deepen and users continue to use more services. Close to 3.5 lakh users are using more than equal to services, which shows the love for services, deeper penetration and cross-sell, upsell, which is happening, which is roughly a growth of roughly about 32% year-on-year on a customer basis. Payment, which is one of our leading verticals of revenues and large part of that comes from tolling, continues to grow at a very healthy pace, which has grown at about 34% year-on-year, and we have done close to INR 23,000 crores of payments in the last financial year. Committing into our strategy, which I think has been consistent over the last 4 years of execution. We are, as a company, continue to grow profitably at the same time, not at all compromising on aggressively investing into solving -- problem solving for our customers, which will unlock new growth opportunities as we keep moving along. Taking a step back and reflecting on what really the company is trying to do. As all of you know, we are executing in a space of trucking in the country. Trucking is the majority mode of execution of goods transportation. It's close to about a $180 billion freight industry, which is growing at about 8%, 9% CAGR over the past 5 years. Largely operated by small and medium-scale truck operators, people -- 75% of these trucks are owned by people who own less than 5 trucks. And the universe of India is roughly 12.5 million trucks owned by 3.5 million truck operators. Each and every area in the journey of a truck operator when he enters the business, right from buying a truck to financing it to getting loads to payments to compliance and to maintenance, the industry is basically layered by intermediaries. Industry is largely inefficient and has a huge room for improvement, both from a predictability of customer experience perspective, cost perspective, expansion of business perspective. We believe that the macro problem of inefficient logistics cost and a debottleneck logistics ecosystem for the country where Indian logistics costs of 14 to 16 percentage points, most of them are basically anchored in the microeconomic problem of how a truck operator operates in this industry. So BlackBuck started off as a company to really look at how can we build a new avatar of trucking in the country, really unlocking that, disrupting this industry, right? That particular vision, we believe, can be realized by really unlocking and really making truck operators' life seamless. And that's the midterm vision, probably a 4-, 5-year vision, which we'll be essentially executing, which will pave way for us to play a much larger role at transforming trucking for the country. Moving forward, that broader view into what is the crux of the strategy, which is delivering revenues, delivering profitability, building BlackBuck from strength to strength. We spoke about this in the last 2 earnings calls also, and we'll keep iterating this. There are 3 key sort of dimensions in which most of the companies work or most of the people in the company work in. The first key dimension is essentially offerings. Offerings is nothing but problem solving, solving for every pain point of a truck operator. Every pain point probably may not be commercially viable today, but then gets viable like maybe in a few years or a few quarters. Like, for example, fuel sensor was one of the products which we probably first introduced or first fuel sensor we installed in the country in our company was in the year 2018. But the whole economics in terms of the cost of a fuel sensor in terms of what money a truck operator was willing to pay at that point in time did not make that business viable. But we continue to isolate on that particular business model, and that business model became viable over the last 2 quarters, and we are scaling really well in that business model, right? So that's the role of offerings dimension, where the goal of those teams is to basically take a problem of a customer and try to keep solving for it, try to create customer value, try to create a commercially viable proposition. And like today, obviously, all these offerings are live. We do tolling, we do vehicle tracking, we do fuel payments, we do vehicle finance. We enable truckers, fill their return halls and get them more efficient. We have a fuel sensor platform. We've got fleet box. Like this, there are multiple other features under development, which we keep working on and keep launching. All those offerings sit on our platform. Our platform is nothing but the customer app on the front-end side and a huge number of APIs and services which we've built inside the BlackBuck platform. This platform is basically probably the storehouse of most of the value what the company today stands for, right, which is basically having 7.7 lakh transacting customers in the last quarter. The earlier number of 7.2 I presented that was the annual monthly transacting average. This number is only the last quarter's average. There is 7.7 lakh customers, which is growing at close to 20% on a year-on-year basis. And we are the top of the mind recall when you say digital for truck operators. The usage keeps deepening. So the usage is 44 minutes daily app usage by the truck operators. So that's the platform which continues to scale, continues to deepen. And what is really important -- what is important about this platform is that the launch of a newer offering essentially gets penetrated across any trucker across the country in a very low-cost way, and that's how new verticals keep getting launched. Powering this platform is the most important vector for us is the distribution workforce all across the country. Truckers have a persona, which are largely middle age, 35 to 50 years old, largely uneducated. So how do we really reach to them and service them, right? That's the story about distribution. So we have a 10,000 people touch point network all across the country. We have presence in 85% of the districts today, and that's like a very wide reach. Within this touch point network, there are technicians, there are channel partners, there are our own workforce, there are agents standing at toll plazas. There are like varied degree of people who typically sell to a customer or service the customer, right? So this is our revenue delivery sort of engine. We create offerings, offerings are launched on our platform, platform continues to get stronger, newer offerings launching becomes easier and aided by a very seamless, efficient, low-cost distribution, the widest distribution network coverage to all truck operators, which is one of the biggest moats for us in this business. Now -- moving into giving an update on what happened last quarter and what happened in the whole financial year, right? These are the key KPIs, which we talked about in the previous earnings call as well. Starting with the first one, which is a platform metric in terms of what is the monthly transacting track operators on the platform. As I mentioned, that's close to 7.7 lakhs, which was 6.5 lakhs last year, which is growth of about close to 18% on a year-on-year basis, which on a financial year basis has grown from close to INR 6 lakhs to INR 7.22 lakhs, which is roughly 21% growth. Wherever there is an FY narration, I will narrate it separately. If not, I will continue on the quarter-on-quarter basis. Then similarly -- similar to that, the monthly transacting users using at least 2 services grew about close to 27% on a year-on-year basis. Time spent on the app grew by close to about 9%, which stands to at close to about 44 minutes is what is an average customer is spending time on the platform. GTV on payments. Last year, same quarter, we did close to INR 5,000 crores, which grew to about close to INR 6,600 crores this quarter, which is a growth of about 33%. And on the whole financial year grew from INR 17,300 crores to INR 24,000, which is a growth of 35%. Synonymous to that, the payment transactions will flow with a synonymous thought process. Coming to gross revenues. In this quarter, we did close to about INR 137 crores of gross revenues, which is a growth of about 38% on a quarter-on-quarter basis. In the full financial year, as I presented before, it is INR 462 crores on a financial year '25, which is a growth of about 46% from the last financial year. Revenue from continuing operations did a growth of about 31% and on an overall financial year was roughly about 44%. Revenue from growth businesses, which removes the core verticals of tolling and vehicle tracking, that grew at roughly about 90% on a year-on-year basis, and it grew about close to 50% on a year-on-year basis. Moving forward, contribution margin profile and synonymous to that, the contribution percentage from growth businesses increased from roughly 11.5% to 13% in this particular quarter. Contribution margin profile, again, similar growth front here, roughly 40% more on a quarter-on-quarter basis and 49% on a year-on-year basis. Contribution margin profile continues to stay steady as we discussed in terms of the nature of revenues continue to remain the same. Last year, same quarter was 92%. This year is about close to 93%. All of this brings us to delivering an adjusted EBITDA in this quarter of roughly INR 54 crores, which was in the same quarter last year, roughly about INR 17 crores, which is roughly a 2.2x growth. And more notably, the full year numbers because last year was the year where probably we broke even in middle of the year. From a financial year perspective, we delivered INR 13.5 crores in adjusted EBITDA in FY '24, which grew to INR 139 crores in FY '25. which is again a testimony to the quality of revenues and the operating leverage, which we've been able to deliver as a company. Furthermore, going deeper into the adjusted EBITDA metrics, if we remove the other income part, which is largely the interest income, we delivered close to about INR 39 crores of adjusted EBITDA this quarter, which was in the last year, INR 10.5 crores, which is again a growth of close to 3x. But more notably, in the last financial year, removing interest income, we were basically negative INR 6 crores, which has jumped to now INR 103 crores. And that's a good performance. Largely, most of this performance was locked in probably, let's say, a few quarters -- a few years back because the clear nature of profitability profile of our business where we do most of the sales and acquisition and incurred costs in this quarter and the revenue compounds because those cohort of customers not only continue to give us revenue, but also continue to expand, and that's the reason for the operating leverage. Summarizing these numbers into more narration in terms of what really happened in the last quarter and the last year, right? As we discussed the numbers, 37% growth in the last quarter year-on-year and FY '25, 46% growth. But if you double-click into the core businesses of tolling and vehicle tracking, one of the good milestones for us was we've received the in-principle approval for the PPI license in the last quarter, and it will take us probably a few quarters to operationalize that. This will really help us gain an end-to-end ownership of the payment stack, which will enable us deliver a very superior customer experience. Definitely, some economics will also improve over the period of time. But the most important thing is that this is one of the core business verticals for us. This gives us end-to-end ownership in this particular business. Second area, area of telematics, which is the second largest contributor to revenue for us. And in that, there is a device specification called as AIS device, where -- which is basically one of the prevailing device wherever the government mandations typically happen. There, we've developed a new hardware from scratch, which has got ICAT certified. So that will be a BlackBuck device from an ownership perspective, end-to-end. So that, we've been able to establish over the whole last year, a supply chain in terms of sourcing, manufacturing, components, et cetera, which not only has helped us improve customer experience, but probably makes us probably the lowest cost device manufacturer and procurer in the country. This gives us a very strong price advantage, which will help us build scale at a much faster pace and capture a much higher market share. Moving into the growth businesses. There, notably, there are 3 businesses which typically have been driving a large part of the growth. One part is the fuel sensor, which we gave an update last quarter that vertical has broken out. The last quarter, we were able to double the sales from the previous quarter, which is a good milestone, where we are basically fixing continuously the whole product experience, fixing the whole installation experience because it's a very involved product from a perspective of customer. Second vertical, which is the used CV loan vertical. In that vertical, we continue to scale with our partners. We've extended this particular -- last financial year, we used to operate more close to about 50 hubs. Here, we have doubled the hubs in the last financial year, and we are offering this service in close to 100 hubs. This vertical continues to scale. Although given the whole macro environment of last year, our partners were going a bit slower in terms of disbursals. So we definitely did not see the kind of scale we thought we would foresee. But then obviously, there's good growth in this particular segment. And being in the lending space for our partners, it's better that they grow slower with a high -- very, very high-quality portfolio quality. I think that's more important here than really [indiscernible] on a growth perspective. The third biggest vertical for us is the loads vertical, where as many of you know that we started closed looping the loads, which is going to be the bigger future for the loads business. There, that business continues to take shape. Obviously, that business because it is at a very smaller scale. We're growing in multiples from a quarter-on-quarter perspective. But there, the biggest focus today is on product development. We've built the whole end-to-end fulfillment stack, the payment stack, the customer experience stack. Most of the work happening there is to really deliver strong customer experience to our truck operators who are using the platform in terms of payments, in terms of onetime fulfillment and all of that. And most important there is how do we really create a playbook first scale because availability of supply for BlackBuck is not a challenge. We are present in very high market shares, anywhere in the range of 15% to 70% depending on state to state. So scaling that playbook will not be a big challenge, but I think creation of the playbook is the most important thing there, and that's where most of our eyes and attention is focused at this point in time. Going into platform metrics, I think steady growth over there, as we discussed, monthly customers are growing, payments GTV is growing, time spent by the users is growing on a year-on-year basis. Thirdly, the profitability as we read out the generation, adjusted EBITDA in the quarter on a year-on-year basis increased by close to about INR 37 crores. And in the whole financial year, we created a shift in roughly close to INR 125 crores in the overall adjusted EBITDA. That's again the testimony to the quality of the business model we've been operating and continue to operate. As always, we've explained to you the reason for -- explained to you during the slide, the context on operating leverage and the quality of operating leverage we've been having. So if you can see from a revenue perspective, on a year-on-year basis, we grew about close to INR 37.5 crores, and most of that revenue -- most of that gross revenue converted into adjusted EBITDA, which shows the leverage from an operations perspective. So 99% is the efficiency there. Then when you look at it from a sequential perspective, we've grown roughly close to INR 14 crores. And out of the INR 14 crores, INR 12 crores has flown into EBITDA, which is at about 84%. So again, reiterating the drivers of operating leverage are that recurring -- most of the revenue are recurring in nature, which means users we have acquired, let's say, in financial year 2021, those revenues continue, and we don't really have to do -- have to incur any costs to gather those revenues every year. So hence, those revenue profiles continue. And because most of these revenues are platform in nature in terms of subscription, in terms of net commission-based revenues, with a high contribution margin profile and it's a very strong flow-through from revenue to contribution. And as we've always discussed, the user retention typically 3 to 4 years -- after 3 to 4 years, flatlines, we hardly use users, we lose users. And because of the quality of products we've built, our users retain and our revenue retention rate as disclosed in the DRHP as well, as you can see, have been very, very strong. So that drives the whole operating leverage. And obviously, to add more revenues, we don't really spend any money from perspective of asset deployment. So it's an asset-light business and hence, the scalability of the business model as well, right? So yes, so basically summarizing in one line, platform -- BlackBuck platform revenues are driving a strong P&L for us and which drives strong operating leverage. Giving a snapshot of the quarterly P&L, as you've seen last quarter as well, there's a shift in P&L from negative INR 6 crores in Q1 FY '24, steadily increasing because we are having a consistent revenue growth and most of the revenue growth in efficiency of 80% to 90% has been flowing back into bottom line, and that's resulting in quarter-on-quarter profitability, sequential profitability, year-on-year profitability continue to compound. And where we stand today is on adjusted EBITDA to revenue, this percentage in adjusted EBITDA has already reached close to 40%, which again is basically the quality of revenues, which is helping us reach here. Giving a more snapshot on -- accounting snapshot on what PAT looks like and the waterfall from revenue to PAT. Revenue from operations, as we discussed, INR 122 crores moving into -- with other income, total income being INR 137 crores, with direct costs largely growing lower than the revenue growth rate because of the nature of -- the optimizations in place, that has grown about roughly 16%, which led to increase in the overall contribution margin like to about INR 127 crores, which is about close to 40% growth on a year-on-year basis. And total expenses, as you can see on a year-on-year basis, continue to stay steady, continue to stay flat because as you know that we've achieved critical scale in terms of our platform where 20% of India's users transact on a monthly basis. And in the verticals we operate where we directly acquire customers for revenue, most of our investments in terms of -- the scale of investments are have reached, which means our penetration levels in terms of pin codes are there. So we don't foresee even in the future, massive expansion in our sales and marketing budgets. And that's the reason why you can see that there is marginal or no increase in -- there's no increase in our total expenses, which are steady at INR 83 crores at a quarter level on a year-on-year basis, which helped us create an adjusted EBITDA of INR 54 crores. And if you remove the other income, which is largely the interest income, the adjusted EBITDA simply becomes INR 39 crores. And -- another important metric, which is basically PBT, where you basically add the cost of ESOP, but you exclude exceptional item and you exclude the discontinued operations, which is probably a good -- probably a much better quality of metric from a company's profitability perspective, that's trending close to about INR 42 crores and -- which largely in a normal quarter would have mimicked the PAT. But in this quarter, because the first time we have delivered PAT there is an accounting transaction where the profit, the losses, the carryforward losses, which were of the past basically have been basically accounted in the -- yes, deferred tax has been recognized on the balance sheet and credit to the P&L has come through. Sorry, I was just taking Satya's help to narrate that. So that's why you see a nonusual PAT getting created of INR 280 crores. But largely, the PBT number is more where we can get anchored is where the PAT reflection is going to be, which is obviously from a financial year perspective, roughly at close to about INR 91 crores. If you look at adjusted EBITDA for the whole financial year, which is roughly INR 103 crores, and if you remove ESOP charges of the last year, that comes to about INR 91 crores. And for the future ESOP costs, there is a schedule provided by our team in terms of what you can expect in the future of all the granted ESOPs as on date, you can see the schedule of those charges. So yes, so that's at a summary level, what the profitability profile looks like, the waterfall of profitability. Now from a walk-through from PAT to adjusted EBITDA, fairly simple, profit after tax, roughly about INR 280 crores. If you add back the profit and loss from the discontinued operations and then the income tax expense, which we talked about and the depreciation, amortization and the ESOP based costs, et cetera, you arrive at the adjusted EBITDA of INR 54 crores and other income of INR 15 crores, you basically get to adjusted EBITDA, excluding other income of INR 40 crores. So -- that's a simple walk-through. And that's all from our side. We would be happy to take questions.

[Operator Instructions] The first question is from the line of Sachin Dixit from JM Financial.

Congrats Rajesh and team on a great set of results. And I had a couple of questions. My first question is regards to -- there's a lot of background noise. Can you hear me? Can you hear me?

Now we can hear you, can you repeat that, please?

Sure. Yes. So basically, my first question is on telematics side, right, so if we think from a truck operator's angle, right, and obviously, during the DRHP and all, you have highlighted why a GPS device helps the truck operator and all. But other than regulatory requirement, do you -- like what value proposition does a typical truck operator see in telematics device? Are they willingly paying for that or only when regulatory push comes that they are willing to pay for that? And similar in terms of fuel sensor, right, how do you think of the value proposition from a truck operator's angle versus what you're saying?

Yes. Yes. Yes. See, basically, telematics at an overall level, right, in the Indian context, right? Truck operators -- Indian context, like India is a land of, first of all, truck owners who employ drivers who drive the truck, which is the largest majority, right? Now the -- one of the biggest problem for a truck operator is to have control over the truck and the driver when the truck is essentially not in front of his eyes and doing long-distance trips, right? So today, now if you segregate telematics into 2 parts, one is vehicle tracking and second aspect is basically fuel sensor, right? Vehicle tracking, the biggest value prop for a customer is driver management in terms of where the driver is, how much distance has he traveled today, what speed has he traveled today, speed alerts in terms of overspeeding, et cetera. Second biggest value proposition is that when he is filling a load for a particular customer, the customer's anxiety in terms of where the truck is? Will it reach on time? You have said that it will reach by 5:00 p.m. I can't see it anywhere. Like why -- where is it? He says it's 2 hours, but then he doesn't believe him. So in terms of sharing the information on the whole on-time delivery. The third part is a little bit because, let's say, our product is a very low ARPU product in terms of the cost. So if you look at in terms of the driver -- in terms of like truck preventive health maintenance, driver's driving behavior in terms of harsh acceleration, harsh braking is basically what gets captured in our device, which gives the indicator of quality of driving for the truck owner, right? So essentially, everything about like gaining control over operations and the driver management when he's sitting remotely in his own village, but the truck essentially is flying all across the country is the biggest value prop. Along with this, there is obviously a more risk use case where we also provide a facility to remotely turn off or on the truck, assuming that the driver is drunk and driving and the owner has lost control on him. He would like -- want to turn off the truck, he can do that remotely, right? So essentially, vehicle tracking solution is all about this. Now within the vehicle tracking, today, roughly about 25% plus, plus of the devices we sell are of AIS standards. These -- most of these devices are largely driven by mandation because the ARPU of the AIS devices, the cost which the truck operators pay for AIS devices is also on a higher level, right? So answering your question, value prop is strongly driver management led, right, and customer experience led in terms of delivery of goods. Under that, there is 25% of the device sales are driven by mandations. Those mandations are again state specific from a mining area perspective, parking perspective, depending on different needs, which the government wants to govern in terms of vehicle movement, right? So today, summarizing, today, it's a larger use case, which a truck owner wants to use the device to manage his operations effectively. Now this is the whole vehicle tracking part of it. Fuel sensor part of it is completely to do with his need. Fuel is the largest expense for a truck operator. If you take a long-haul truck operator, it will anywhere range between 45% to 60% will be the expense of fuel. Now the biggest fight between an owner and a driver happens is basically on theft of fuel, right, and because fuel is the largest expense, right? Number one. Number two is that a lot of fuel stations like -- a lot of fuel stations are nonstandardized. So you also don't know when you're filling fuel, whether you're getting 100 liter -- when you have paid for 100 liters, are you getting 100 liters or not, right? So fuel sensor is all about being able to keep track of how much did I fill fuel. When you have done 100 kilometers, how much fuel do you consume? Any sensitivity on a threshold of probably a few liters, maybe 4, 5 liters gets detected by the fuel sensor which we provide. So the whole use case is with paranoia on really managing fuel fully fledged effectively for the truck operator is what -- is why they pay for fuel sensor.

Rajesh, I think basically, one thing that I wanted here was like I understand what value proposition you are providing, right? But from truck operators angle, why exactly is he actually using it? Are they really able to manage, for example, some truck operators that we speak to, they are like we know driver is deceiving us on the amount of fuel that they are buying and selling and removing it from the tank and all those things. So does the truck operator really believe that they can actually control it by having these tracking devices? Or this is more of -- some of them are taking it.

Yes, yes. So this is a value proposition we provide because a truck owner wants it. See, earlier, we were selling this product in the ARPU range of INR 15,000 to INR 25,000. It was not getting sold because it's a very high-value product for him. But then when we were able to really reengineer the device and we were able to really work on the cost of the device and really bring down the price, the whole product has taken off. So it's a product we've built because there was a need and there was an ask by the truck operators.

Understood. Understood. My second question is that there are some market chatter that one of your telematics peers is looking to also enter the profit pools that you have shown, thanks to getting listed and showing those brilliant numbers. What is your view on that? Why do you think they will have a play or might not have a play?

See, basically -- I mean, sorry, but like I think I am not in the information on which name you're referring to. But at the end of the day, as I mentioned in the earlier part of the presentation, in terms of the 3 capabilities on offerings, distribution and -- offering platform and distribution, the only reason why we are able to deliver our revenue profile and profitability profile is by really outinvesting in those areas over the last 5 years. And we continue to deliver the best-in-class product experience for the customers, we've built by hours of research and hours of hard work. And I think it's obviously more competition in this space is always better because truckers are -- truckers in the community where there are very few people who are handholding them and really creating very good solutions for them. And we believe if there are more players, it will really help build the whole space very fast because the space is hardly lubricated, and if more people can do more better work, better for the industry. Probably we can go much faster.

Sure, sure, Rajesh. One housekeeping question, if I can quickly squeeze in. G&A expense seems to have jumped quite sharply. Can you just explain the nature of it.

G&A expenses.

You mean other expenses, Sachin?

So I'm talking about depreciation only.

Depreciation. Yes. Depreciation was on account of it's a onetime. So we did a fiscal verification like we do at the end of the year, and there are some GPS devices where we have to take some accelerated depreciation. Generally, it should stay in the range of this INR 8 crores to INR 10 crores as we move forward for quarter.

Next question is from the line of Abhishek from ICICI Securities.

Congratulations on a great set of numbers. Just a couple of questions from my side. Am I audible? There's a lot of noise.

Yes, we can hear you.

Yes. So quickly, so from this PPI license, what is the upside that you see in terms of take rates for the business?

Can you please repeat the question? Sorry, we can't hear you.

Because of this PPI license coming in, what is the upside in terms of take rate that you will be able to get?

Yes. See basically, our -- of the total revenue pool, which is out there and whenever we do a transaction, of the 100, we typically keep close to about 80, right? And the remaining is with the partners. So that upside we would get, but we don't foresee an upside coming in automatically because we will -- because we have a huge customer base, and we will continue to be working with partners. This is basically a license which we'll use to probably innovate a bit for the customers and probably to improve a bit of customer experience. But you would not see the improvement in the take rates immediately, yes.

Got it. With regards to the telematics device, so are you actually looking at manufacturing it? Or are you kind of sourcing it from outside somewhere.

Yes. We typically have a full control on the BOM. We have the control on the design. We own the design as well. And we typically do a lot of -- the recent product which we've created. This was a project with a supplier in China for a good long period. And we typically invest in the lab and we sort of create the product. We obviously do the same thing in India as well. So we've got suppliers across India and China as well. So nowhere we are manufacturing the product. We don't foresee the value add from a manufacturing would really justify getting into that core activity. But in terms of firmware level coding, in terms of really BOM, in terms of what device to build, in terms of really keeping the whole information and knowledge in terms of how to really get the device done that we keep in-house. But then getting it done, we typically depend on our partners outside from a manufacturing standpoint.

Understood. Now for both the tolling business and the telematics business, what is the risk that the original equipment manufacturers will start installing these things into their products? I mean, more as things go on. And is that a risk to your business?

Yes. So OEMs, like not only in like, let's say, be it, as you rightly said, payments and telematics, not only in any of these, they have generally been providing this not only now, over the last 5 years, right? On tolling, the most important thing to note is that, first of all, tolling, when it happened, it was a stock business. New vehicles obviously kept coming over the period of time. But remember that anyone who's buying a new vehicle, typically is a large fleet operator who has like more than 10 trucks. And if 10 fleet is operating with, let's say, a provider like us, when he's buying extra 2 trucks, right, it's very hard to have a different provider for that. So that typically ensures that in tolling, every new vehicle, which is being bought, our relevant market share typically flows to us. So there, we don't see any threat at all. And obviously, the kind of distribution we have, we cover the new dealerships, we cover all the truck operators. So we have a very strong sort of presence there. Now in terms of telematics, again, not only now, over the last 10 years, telematics devices were being provided by the OEM continuously. OEMs operate at a particular price point, which is generally very high, and that provides also very, very high reliability of the product. We, as a company, have operated at different price points in terms of driving growth in telematics category, but those high price points never work. Roughly, our price point, when we first sell a device, including the device and the first year subscription, roughly cost us about something INR 3,500 for the full year, right? Now OEMs would operate at a multiples of price point to that, right? So we have a very strong price point advantage, right? Second is in terms of the kind of product this is, in terms of the kind of serviceability needs to be provided, we've got like high -- very high number of technicians who are deployed all across the country. So in terms of our focus in terms of running this product is like very high, which typically we end up providing a very high customer experience. Third point, again, same as tolling, like because majority of these large fleet operators operate on our telematics devices, whenever they buy a new device, they typically would want to fit with the same platform which they have been using. So we've never seen any kind of a resistance with a new truck versus an old truck. Our sales have been pretty much secular across any kind of a customer footprint.

Understood. Now with regards to the loads brokerage business, right? So that has been tried quite a few times in the past as well, right? But -- so what gives you the confidence that this time, what you are trying to do will probably work better?

Yes. So basically, explaining the loads at a very broad level, right? Loads industry in India is a $200 billion industry, right, $180 billion to $200 billion industry. Of that, if you remove part truckload, express, e-commerce, like you remove everything which is very specialized in nature, over-dimensional cargo and many different -- many of those industries. So you're left with a TAM of like anywhere in the range of $100 billion, $120 billion, which typically operates in an open market load scenario. We are, as a company, have been trying to address that particular business. That's the broad sort of background. Number two is that the way this industry operates is that the load typically originates from enterprises and SMBs. SMBs probably originate 60% of the overall loads and enterprises originate about 40%. And as the industry fragmentation on the supply side stays same, 70% of the trucks owned by less than 5 truck operators, right? And the industry has 2 layers of intermediaries. One layer is the small broker layer. There are about 2.5 lakh brokers in the whole country who are organizing supply. Other layer is basically the bigger broker layer, which is basically organizing the demand, roughly about 10,000, 15,000 of those guys exist, right? As you rightly asked, there are various attempts by BlackBuck in this industry to solve the loads marketplace problem. The first product market fit of BlackBuck was basically the enterprise kind of a model, where we were like any other big broker, and we're trying to crack the whole marketplace. But the biggest problem we were not able to crack that business was because we never had highly scaled supply. Number two, these enterprises work on working capital, which is a very hard thing to manage because in India, nobody pays on time. They say it's 30, 40 days, but the money comes back in like 120 days, right? So it was an unscalable model. Whenever we scaled immensely, whenever we scaled exponentially, we lost more money. That was a model which we did not continue. That is why if you saw, we pivoted towards the whole strategy of saying that we need to solve supply. That's what as I opened up my presentation, I was explaining that we need to first organize truck operators lives around them. So that was our first foray back in 2018, '19. We basically pivoted into a strategy of saying that let's build fleet management services for truckers. That's how we organize payments, telematics, et cetera, which basically became acquisition engines, not only acquisition are also delivering today's revenues and profits, right? So those are acquisition engines. And when we actually built closer to 2 lakh, 2.5 lakh truck operators base, that's when we launched the classifieds version of the loads. Classifieds created the new go-to-market, which is basically a very technology-led opportunity, which paved way into launching loads. And as you can see in the DRHP, in the last financial year, we did close to about 2.2 million loads. This year, the number of loads, we have done close to 3.1 million, 3.2 million loads. So that business is scaling continuously. But in classifieds, because it's a verticalized classifieds platform, delivering high trust and delivering strong customer experience is really not possible, right? So the newer -- the entire evolution of classifieds into brokerage is what you are seeing this year, and that's the center stone -- cornerstone of the strategy for this year, where all these classifieds, right, basically, wherever our ability to close loads is higher, wherever we have more amount of supply and more obviously closer to home Bangalore, we started the brokerage model, where we don't earn only by subscription. Let's say, on the classifieds model, we only earn INR 12 on the customer side, on the shipper side, and we earn about INR 20, INR 25 on the trucker side from a loads perspective, right? But in terms of brokerage, you earn anywhere in the range of -- like long-term steady-state commission rates are going to be higher. But even now, we are earning between 6% to 8% on a transaction basis, right? So that's the whole flip. And we believe that by being the most dominant player on the supply side, by having the highest mind share and the trust of truckers who are already trusting us with payments, which means they are paying to us. So obviously, they will trust us a lot when we will be paying to them in the brokerage transaction. We believe this is the marketplace problem, marketplace approach through which we will be able to really solve the intercity trucking problem.

Next question is from the line of Manish Poddar from Invesco Asset Management.

The first was regarding this telematics...

Manish, sorry to interrupt you. We are losing your audio. Can you please come in a better reception area, please?

Yes. Is this any better?

Yes, please go ahead.

Yes. So Rajesh, first one, if you can help me understand, let's say, in this telematics, now, let's say, what is the cost of making the device? And let's say, when you sell it with a bundle, let's say, with fuel sensors, what is the pricing like? And in the same spread, in your understanding, what would your market share be in telematics?

Yes. So basically, on the cost side, Manish, I think it is very difficult for us to disclose that because these are competitive information, right? So I will not comment on that. In terms of market share, we believe that in terms of the total telematics devices, which are sold in -- on a monthly basis, I think we are probably able to capture roughly close to about 30% of those devices. This is on the vehicle tracking side. And on the fuel sensor side, also probably this will be a bit more, probably more in the 40% -- 40%, 45% range.

And cumulatively, what is the price now, let's say, if one takes the telematics with the fuel sensor, what is the combo cost?

What is the?

What is the combo cost? Let's say, has that come down is what I'm trying to understand.

Cost to the customer?

Yes, yes.

Combo cost to the customer will be -- yes, between depending on customer to customer basis volume discount between INR 8,000 to INR 10,000.

Okay. So this has come down from the last quarter. Is that so?

Of course, yes.

Okay. And so -- and the second area which I want to understand is, let's say, this freight brokerage, how many hubs do we have right now? And let's say, what is the sort of people investment which has gone there?

Investments in brokerage, like as any marketplace, the investments are on 2 sides, investment on demand side, investment on supply side. In trucking, because shippers are always searching for a truck, and that is the reason why 2.5 lakh brokers in the country exists because trucks are wherever they are and they need to be figured out and they need to be matched, right? So development of -- development cost of demand side is generally fairly lower. Development of cost of supply side is generally very high. But given our strategy where we acquire truckers using telematics and tolling and then basically on loads, they get essentially cross-sold, our supply costs are like close to like negligible or 0 and large part of our costs are in demand side, right? And the -- if you're asking me in terms of whether the investments on the brokerage side, are they really material from a P&L perspective? The answer is no at this point in time.

So if I get it right, you said Bangalore is one hub, which we've started. Have we taken this pilot to another hub is what I'm trying to get some sense on it?

Sorry, I'm not able to hear you, Manish.

No, no, I'm saying, let's say, Bangalore is one hub where you've taken this business, right? So I'm just trying to understand, have we started doing it in other hubs also? And how many hubs have we set right now?

Yes, yes. Bangalore is the first hub. And again, Bangalore also, we are -- basically, we want to really double down and deepen in Bangalore. And as you rightly have asked, we are live in totally 5 hubs. But yes, I mean, the business is largely in a playbook building phase and very hard to explain any form of the business at this point in time. But yes.

Okay. And Rajesh, if I can squeeze in one last one. Let's say, in terms of the growth businesses, which has roughly doubled in size, if I look at a full year basis, can you help me understand, let's say, incremental -- in terms of incremental contribution, let's say, if I had to think about it, what are the larger parts in that?

What are the larger thoughts?

Larger parts, let's say, in terms of delta change in revenue.

Larger parts. Yes, so basically -- yes. So as mentioned before, broadly, the mix is similar. The vehicle finance business would be the largest in that. And then the loads brokerage business and then the fuel sensor business, largely from a timing and the scale of the businesses perspective. Yes.

Next question is from the line of Nilesh Jain from Astute Investment Management.

Congratulations for a great set of numbers. My first question is on your number of monthly active operators. And currently, we have almost a share of 20%. So how should we expect growth on this side through acquisition of new users or the truck operators?

Yes. So basically, I think if you're asking from a perspective of the user acquisition on the trucker side, I think you should expect this number to be range bound in this zone for a good number of years. I think the important point to also understand is that if you segment this particular market share across different categories, we have, let's say, much higher market share on the intercity truck side because of the nature of the services we provide and probably a lower market share on the smaller vehicles kind of perspective, right? So the way to look at is that the kind of businesses we as a company want to venture into in the future, in terms of loads, et cetera, right? I think for these businesses to become bigger and generate massive revenues, right, the scale of user base and growing at this level is basically perfectly fine, right? So if you're asking me, is the growth slowing down? Obviously, the answer is yes. It will be in the range of high double digits, lower double digits over the next course of 3 to 5 years. But this does not determine the growth rate of independent business verticals. Because if you see the maximum penetrated category for us is tolling. Telematics has probably half the penetration of tolling, so which means there's a much headroom of growth. Loads has very less penetration in terms of the brokerage, let's say, which is the largest revenue -- which will be the ticket size or the largest revenue-generating vertical, right? So if you ask -- if the question is from a perspective of headroom of growth, all verticals have very high headroom of growth. But from a perspective of addition of customers, like as the broad statement, which I mentioned, it will be in the double-digit numbers in the foreseeable future.

[Operator Instructions] Next question is from the line of Lokesh Manik from Vallum Capital.

My question was after you get the PPI license, what is the increase in fixed cost that you are expecting...

Lokesh, sorry to interrupt you. Your audio is unclear. Can you please come a little closer to the speaker and talk -- your mic and talk, please?

Yes. Is it better?

Yes, go ahead. I think it was a little unclear, but I think we've also got the question. I think your question was that PPI license, what is the cost increase, right? So basically, like remember that the whole journey of building the stack to deliver the payments experience to the customer, like a lot of the stack is already existing with us, right? And like the incremental cost would be far outweighing even -- let's say, assuming that we do, let's say, some X percent business on our own prepaid stack end-to-end, right? The incremental cost even from day 1 on a variabilized basis at like even a very small scale, even if 5% of our business comes from our prepaid stack, the incremental costs are far lower than the overall improvement in economics. So there is not going to be any fixed -- increase in fixed overhead. It is still the same team, same technology team, same product team, which is going to build and manage the same stack internally.

Next question is from the line of Gaurav Malhotra from Axis.

Congrats on a good set of numbers. I just had a couple of questions. Rajesh, there has been -- the cost control has been excellent. Just wanted to get a sense as to how much more you can sort of squeeze out of the growth of your business without sort of really meaningfully increasing your cost? That's my first question.

So basically, we will -- we don't expect reduction in costs, right? I think we fairly run a very -- I mean, we have a very lean culture. We have been operating like this forever in terms of all our policies, everything. We typically have a very lean approach to it. Even launching a new business, we have a very lean approach to it. Let's say, assuming we start off a brokerage business, like we just take a 5,000 seater for 100 people, which is a INR 500 sort of cost per seat, INR 40,000 seater. So basically, that's always the approach in terms of a very lean way of executing. I think you would expect the cost to be largely lean and then would not reduce, I would say. Second part is like, obviously, you will always see like a benefit of operating leverage there that whatever we do incrementally, we will be able to deliver operating leverage, but inflation linked is what you can largely assume.

Next question is from the line of Parikshit Kabra from Pkeday Advisors. Due to no response, we move on to the next participant. Next question is from the line of Nidhesh Jain from Investec India.

First question is what is the profile of our truck operators? Are they single driver owners, fleet owners? And what is the average size of -- what is the range of size of fleet that these truck operators are managing?

Yes. On average being 2 to 3 trucks, small truck operators. Think of it as large truck operators always had a lot of people to serve them because they are more profitable segments because cost to get to them is easy. You go to a big truck guy who has 50 trucks, you can just sell them a deal and economize on your cost of sales. We were able to develop a unique method by using tech using platform and on-ground workforce to be able to really serve these small users all across the country. So yes, so this was always an underserved segment. Using technology, BlackBuck was able to really penetrate and get them online and build a business model from there.

Sure, sure. And what percentage of your revenue will be coming from this telematics or fuel sensor segment?

We only give the split of core and growth at the moment. Core and growth put together, we've already disclosed that's roughly close to about 85% of the revenues. And in that payments is the larger revenue vertical, telematics is second.

Okay. And third question is on cash flow generation. Cash flow generation this year is a bit soft. Cash flow from operation is almost 50% of EBITDA -- adjusted EBITDA. So any particular reason why the cash flow from operation is much lower?

Yes, good question. Cash flow from operations for us always mimics adjusted EBITDA, right? In this particular year, there are basically 2 things which have happened. The cash from operations -- cash flow from operations you're referring is basically the cash flow of consol P&L. One is basically the loans disbursed by the NBFC arm of BlackBuck. That's roughly about INR 30 crores of loans disbursed by them. So that's one thing which you need to account for, which is leading to the number not being there. The second number is that there is a one-off working capital item, which you can see. There's a INR 50 crores of working capital gap, which went into the business. There was again a one-off that got clawed back -- actually on 31st of March, in fact, that got clawed back in the first week of April itself. That was to ensure that on 1st of April, a lot of banks don't operate, that was to ensure that the whole payments business does not have any working capital sort of a crunch. That got clawed back. If you add both of them back, the number comes close to the adjusted EBITDA of INR 105 crores. So every quarter whatever adjust EBITDA we deliver, that's the cash we generate.

Next question is from the line of Deepak Poddar from Sapphire Capital.

Yes. So just first, I wanted to understand, I mean, in terms of revenue CAGR, if I have to see next 2, 3 years, what sort of CAGR range we might be looking at? And what would be top 2, 3 growth drivers to achieve those kind of growth. So that would be my question.

Yes. So we, as a company, have basically taken a position on not providing guidance. But to just help you, like you could like really -- I mean, the growth businesses is anyone's guess because all of that is our big optionalities depending on how we crack some business models and how we really outscale, right? In terms of the core businesses, like we have got very strong tailwinds from perspective of India's infrastructure development and householding growth in the country. I think most of those indices would help you be able to sort of model how that looks like.

And what would be top 2, 3 growth drivers we are seeing?

Top 3 growth drivers. I mean, basically kilometers built in the country, the inflation on toll fares, how they work, number of trucks, how they are increasing, how we are gaining market share on a continual basis, right? If you map all these factors, you would be able to simulate this.

Fair enough. And in terms of -- I mean, would you be able to provide in terms of revenue mix? I mean, how much we earn from brokerages, how much we earn from commission or subscription base? So some breakup would you be able to provide in terms of percentage?

Yes. We only provide split between our core businesses, which is basically tolling and vehicle tracking services and the growth businesses. Only these 2 split we provide. Subsplit, we don't provide.

So how much would be tolling and tracking?

85%.

80%, 85%?

85%...

And remaining would be...

85%.

Remaining would be growth?

You can see it in the earnings deck, it's provided out there. There's a quarter-on-quarter flow as well.

Next question is from the line of Nilesh Jain from Astute Investments.

My question is on the tolling business for the FY '25, what would be our market share roughly, if you can provide that?

So we ended with -- we started the year with 37%. We ended the last year with 37%. This year, we ended at roughly 45.

Do we see ample opportunity for us to further increase the market share or we will be stable around this level?

We believe that every month we acquire market share, right? So we believe that we will continue -- we continue to have good headroom, but we don't know where we will land at. But see, I mean, how much ever our incremental acquisitions are away from our current steady-state market share, our market share will keep growing. So I think we can only like help you understand how the past has been, which has been like we moved from 30% to 37%, 37% to 45.5%. Now we need to figure out how the next year is going to be. But yes, yes. But we are the market leaders in terms of acquisitions and in terms of GTVs. So we continue to steer aggressively in that direction.

Just last question on data keeping, if you can provide the active GPS revisals we have. I think because last year I think what you all have shared was 687,000 in at the time of RHP. Would it be possible to share?

No, I don't think that is possible to share.

390,000, I think you all had at the time of...

This information, I mean, we've stopped providing at the moment.

We'll take the next follow-up question from the line of Sachin Dixit from JM Financial.

Rajesh, a couple of housekeeping questions for me. The first one is that why do we have a negative ESOP expense for this quarter?

Yes. So there are some -- 2 things. One, if, let's say, an employee leaves, then that ESOP gets surrendered and then there is a reversal. Second, there are some change in estimates in terms of attrition, et cetera. These are the 2 reasons. But as we move forward, like we have shared in the earnings deck, assuming no further grant, what is the ESOP charge for the next 8 quarters will be provided in the annexure -- in the appendix.

Sure. And the second question is basically on discontinued operations, right? I believe we sold off that business. And last quarter, we did not have any numbers coming from discontinued operations in the P&L, but we again have this quarter. What is -- why is that coming? And how long do you think such an impact can last?

If you would have seen the note also on discontinued operation, there was a contingent receivable that was there. Now I mean we have cleared all of that out that obligation closed in February. So this is the last charge that we will have on this particular piece. It is just [indiscernible].

As there are no further questions, I'll now hand the conference over to Mr. Ankur Pant for closing comments.

So thank you, everyone, for joining the call. With this, we conclude the 4Q FY '25 call for Zinka Logistics Solutions Limited. Have a nice day.

Thank you very much. On behalf of IIFL Capital and Zinka Logistics Solutions Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.