Blue Dart Express Limited (526612) Earnings Call Transcript & Summary

Good afternoon, investors. So in order to provide some clarifications on our earnings and earnings results of quarter 1 performance, we have organized this call -- earnings call, investors call. And Mr. Alok Deora from Motilal Oswal is facilitating the call. I would request Alok to take it forward.

Thank you. Thank you so much to the Blue Dart team for giving us the opportunity to host this call. So without much ado, we would request the Blue Dart team to provide some opening remarks on the first quarter performance, and then we can start with the Q&A session. Now I leave the floor to the management. Please go ahead, sir.

Okay. Okay. This is Iyer from Blue Dart. The quarter as such has been in line with expectations, for us it has been a consolidation quarter, where our focus has been on the creation of infrastructure, investment in infrastructure, create capacity creation, and we have been focusing on that, so that when the growth -- when the volume start picking up in the second half, we are -- capacity is able to support that. So that has been this and our -- all our parameters are showing right trend, so we are quite happy with the performance. Ketan, you would want to say something on the market?

Yes, definitely. Hi. This is Ketan Kulkarni, the Chief Commercial Officer. I think my colleague and CFO, Vaidhyanathan, summed it up very well. Totally as per the expectations as we are coming out of the pandemic and entering kind of a normalized situation that was there before the pandemic struck, we are seeing sectors kind of coming back very strongly. Some of them supposedly to have come back strongly are also showing not such strong growth. But the best part of our business is that we are equally diversified across sectors. So that gives us a lot of leverage and strength. So that's how we have seen the quarter. And now as we have begun this quarter, our expectations also kind of in line of what we are expecting it to shape up. Thank you.

Alok, you can request investors to seek whatever queries and clarifications they would like to have.

Sure. Sure. So thank you for the opening remarks. [Operator Instructions] We take first question from Nirali Gopani.

Thanks for hosting the call. I hope we continue this every quarter or at least 6 months. Sir, my first question is that our margins were impacted for the few quarters because of the difference in the prices of Brent and ATF and our fuel surcharge mechanism was impacted. So any update that you could share on that part?

Yes. That happened in the third quarter -- second and third quarter of last year and continued in the first quarter. Since then, we -- as we updated in the last call also, we have been discussing with the oil companies, and they have passed on higher discount or reduced rates, which partially or to a large extent, address that, but we are still finding some gaps between the crude movement and the final landed price of ATF, which we are still in the discussion. But simultaneously, we had -- we have also on the approached customers outside of where we had given some concessional fuel surcharges to customers so that we can get some more recovery from the customer side. So between the two, we have been able to address the issue. And since March 2023, this issue has been fairly resolved, and it's going on fairly okay.

Ketan, in your view, this should not impact any of the coming quarters, right?

That's right.

Great. And sir, once this new aircraft will reach optimum utilization, what kind of sustainable margin do you see for the business?

The margins would be as a normalized way pre-pandemic, what was in the longer term, we will continue to be except for 1 or 2 quarters when the induction and stabilization of the additional capacity would happen; otherwise, we should be in that same range.

Right. So 15% at the stand-alone level, right?

It was -- there were 15% on a normalized. It will be more towards 12% kind of -- 11.5%, 12%.

On a stand-alone level?

That's right.

Okay. Perfect. And once we add this new capacity, you are optimistic about the overall environment, the competitive pricing pressure has eased out. So at a revenue level, can we see a growth of 15% over the next 2, 3 years?

Growth of 15%. See, the capacity induction will not determine the growth. The growth will determine the capacity requirement. Growth will determine. So we will grow in line with the market, maybe try to grow a little better than the market and try to improve our market share. But I think commercial would -- can add to that. We won't -- we don't generally give a forward-looking statement, but we can only say that as the market growth, we would always be trying to aim as better than the market growth.

Yes. Thank you, Vaidhyanathan, for specifying that. And yes, definitely, growth, Nirali, higher than the growth of the segments and markets we operate in. You know the logistics industry and especially Express Logistics where we operate works at a multiplier to the GDP. So the industry works at a 1.2% multiplier on the GDP, the entire express industry. And we will always grow faster than the market. We will improve our market shares. So those are the milestones that we measure ourselves against and kind of then -- we are very clear that we have grown much better than competition and in a space that we would always like to be.

Right, sir. So ground will be growing much faster than the air, right, because of the multiple additions that we have done, pin codes we have added, we're adding a lot of capacity on the ground side also. So is it right that the ground will be growing faster?

Nirali, if you look at any syndicated market research study, you will see that the ground express market will grow much faster than the air express market. The air express market will grow in single digit, whereas the ground market will grow in double digit. That's what every kind of analysis and study done on the express industry generates those kind of numbers. You've also seen the entire ecosystem for ground improve over the last half a decade, of course, with a little speed bump during the COVID, but we have improving infrastructure on road. So the trucks are moving faster. The average running time and productivity is improving. We have seamless flow-through of goods after the GST and the e-way bills have come in. The government's programs to seriously now put a lens on the logistics industry and acknowledge it as an enabler of growth and a facilitator of growth, both these areas, a lot of private and public investment. So I think on a very, very strong wicket, the entire express industry. And yes, Nirali within that ground faster than air.

We take the next question from Mr. Pramod.

Just a couple of questions. One is as you said that our ground express is going to grow faster than the air express. What is the composition as of now between the ground and air express for the last financial year?

Yes. See, we normally don't give breakup of the air and ground. We can only say that ground growing faster, the mix will keep improving between -- the ground -- mix will keep improving as compared to the air. So that's in the way it will be.

Okay. Okay. Sure, sir. And then the new capacity, which we had added, what is the utilization time line we have? Because earlier we have said that we already have 55% of the volume carried on the third-party capacity. So we already have that. So how our time line is there on the capacity utilization?

See, what we do normally before we put, we induct additional capacity, we start building the loads to commercial and that goes on to the -- to serve the additional capacity. Whatever the balance left out, we initially fill it with airport to airport, lesser premium cargo loads, and we keep building up our express loads, and that keeps replacing the airport to airport. So what essentially would happen is your utilization as such on -- in terms of tonnages will keep -- in the initial days itself, we will try to see no space is wasted and it is filled. And then you keep increasing the express load, so your revenue realization from the flight starts increasing. That's how it will move. And we expect that in 2 quarters, it should -- we should get the ideal mix we want.

Okay. 2 quarters for the ideal mix, right?

Yes.

Okay. Coming to this quarter's number, while we have seen a good growth in the shipment and that's commendable given that last year also, we had a very good recovery, almost 50% growth year-on-year in the shipment last year. On top of that, this year, we had a 9% shipment growth. Even our tonnage was positive, but our revenue went down by 4.5%. So is it because of the mix change? Is it because of some pass on of the lower ATF price? Or is it because of the competition?

No, there are a couple of things. I would start with and then I'll ask a commercial to handle the question. Last year, we had international charters because the pandemic was still on, so which in the current year, that international charters as a line of business has come down, now it's not there. The second part is when your mix of air to ground keeps changing ground growing faster, your revenue, if you look at revenue realization, it's a function of your yields and the component of ground being higher, you will see as if your overall revenue per unit coming down. But when you actually look at the breakup and each growing in a different manner, it's your overall revenue realization is in line with expectations. So do you want to add something?

Yes, I can add. I think Vaidhyanathan kind of covered it very well. Charters being sucked out. One charter is one shipment essentially for us, but a lot of revenue multiples of that shipment. Secondly, the sector profile also changed. We've seen tremendous growth in sectors that give us low weight shipment, such as e-commerce, BFSI. So that was the only reason. But as you rightly pointed out, Pramod, a strong shipment growth and positive tonnage growth. And with the results that are kind of coming out of the logistics industry, we just had one yesterday. You will see that this is a very, very strong performance. Thank you.

Okay. Okay. And despite -- as you said in the opening remarks, we have seen the correction of the ATF price in the last 3, 4 months. But our freight and handling costs and overall cost, especially the direct cost remain very high. And that is in line with what we have seen in the last 4 quarters. So is that -- there is any delay in -- so that is not making -- we are not able to understood there.

The freight handling and cost has got multiple components in that. One of the reasons would be the ATF. Though we are saying that our realization of fuel surcharge and the mechanism works fine, that part of it is handled on the revenue side. On the cost side, if the ATF price increases, the cost would increase. So you would have the cost side of it showing that increase because of the ATF increasing over the last year's similar quarter prices. Plus, when you have capacity creations for future, we would have some cost incurred -- being incurred possibly a little ahead for getting ready for the subsequent volume getting picking up. Plus, your aircraft induction, which we have inducted in this -- in the quarter, April to June, initially, it was -- the flight was in test runs because this is a new type of aircraft. And only towards the end of June, it became active with the loads being carried and all that. So those costs are sitting there. In the subsequent quarters, you will start getting the benefits.

Sir, we take the next question from Mr. Kashyap Jhaveri. Please go ahead.

Sir, one clarification I wanted to one of the earlier questions you replied that the margins would look -- will now trend towards the pre-COVID margins, which are about 12%, 12.5% kind of number. The margins that we were referring to were PBT margins or...

EBDIT.

And when you compare that with 12%, that's like pre-Ind AS kind of number, right, which is where the rent is before the -- or is included in operating costs rather than at the below operating profit line? Because last about -- let's say, post pandemic, our EBITDA number has been looking significantly higher.

Yes, because pandemic was a special occasion, where we -- this cannot be -- the pandemic period cannot be compared because the demand and the realizations were quite different. We had international charters. And so those are all one-off type of business. So that is why we are talking of pre-pandemic. You are right that there will be some changes because of the new standard of ROU asset and some of it going below the line. So there could be some difference, but it will be more in the range of 12% kind of.

So when you say pre-pandemic EBITDA, that's comparable to more like post-pandemic EBT margins, right? So that -- is that something that you're referring to because I just -- when I look at pre-COVID EBT margins, they were like about 12%, 12.5% kind of a number. This is why I'm asking.

No. Pre-COVID EBT margins will never -- it will not be 12%. It will be -- operating margins would be in that range.

Okay. Okay. And second question is on this quarter's -- this reduction of aircraft, in terms of our freight and related cost, which is about INR 700 crores, INR 720 crores kind of a number, would you be able to highlight what would be the number related to the new aircraft out of this for which there was no commensurate revenue?

See, the investment on the aircraft, since these are owned by us, it's about INR 450 crores. What would hit us as an operating would be the depreciation interest and of course, the...

I'm asking in this quarter, in the freight and other expenses of INR 720 crores, there will be overall charges and parking charges related to the new aircraft also, right?

That's what I'm trying to cover. See, so before you start operating, you would have to have the pilots in place, this being a new type of aircraft, the engineers are to be -- are in place. So those costs start ticking. Because it's a new type of aircraft, there were the regulatory -- required test flights for the -- for a longer time. And only by June 20, it was released for carrying live shipments. So the last 10 days, we did carry loads, which was what we were carrying in the commercial aircraft moved into this one, plus additional loads started traveling in this. So it was only a 10-day kind of a benefit we got on the capacity being available. When you start operating on live run, the operating cost increases as well as the benefit from operations flows through. So there will be some amount of fixed costs, which anyway we would incur. That happened -- that hit us in May and June, full month. The benefit started -- operating cost started hitting us in the last 10 days and benefit started getting -- we started getting the benefit in the last 10 days.

Sir, we take next question from Mr. Nilesh P.

So just to clarify, so basically, the newly inducted planes, the costs and the revenues are reflective of about 10 days, right, for the quarter. Okay. So that's clear. And just my question was more on the demand and the competitive environment. So though I understand that you have had a high base quarter, but broadly, when we see on a Y-o-Y basis, your volume trends, I think they have been decelerating. So what according to you is -- I mean, what is driving that? Is the demand environment weak? Or what is it?

Nilesh, Ketan Kulkarni here. I'll take that question. Yes, I don't quite know what numbers you're referring to in terms of volume growth becoming weak. If you kind of remove the 2 years of COVID, which is 2020 and 2021, you will see between -- for 2018 and 2019, we were operating at a revenue level of about INR 3,000 crores per year at an average between the 2 years and the PAT was about INR 114 crores at an average over the 2 years. We are coming out of the COVID and in '22, '23, my revenue has now gone up to INR 4,800 crores at an average between these 2 years, which is a 60% jump. And the PAT is at INR 371 crores, which is nearly 220% up without the COVID year. So I think we are on a very, very strong pitch. We moved about 1.2 million shipments a day, which is about -- in an 8-hour workday shift, that is about 30 shipments in a second. I think the Blue Dart performance, if you remove the 2 COVID years and compare against that, is really commendable as to how we have kind of fought against all those headwinds that we had. And as Iyer said in his opening remarks, very, very buoyant about the entire Express business. Hence, the investments in the aircraft to Boeing 737s with a new station Guwahati being added. We have recently come out of 2 very important projects with the large 4, one on tech and automation and the other on infrastructure and network governance in the country. So I think I've kind of answered you in terms of what you...

Partially, yes. So I completely agree that I think as compared to what your performance was about 3 years back, pre-pandemic normalized environment. From there, you have done phenomenally well. My point was, in the recent quarter, see, I'll tell you what number I'm referring to, the tonnage data which you give every quarter. So if I were to see on a Y-o-Y basis, the growth, growth in tonnage, okay? So that maybe say in Q2 FY '23, the growth was 26%. Then in Q3, it has become 16%. Q4, it has become 10% and the recent quarter, it has become 3%. So that is what I was asking about. There's been a deceleration from -- in the trend, and that is what I was referring to. Yes. So anything...

Yes, I entirely appreciate, Nilesh, what you're referring to. As we kind of covered earlier in the call that our business is split between air and ground. And we are seeing a lot of acceleration in certain sectors of the industry that kind of give us lightweight shipments, which would not convert into tonnage. So if you correlate the shipment growth versus the tonnage growth and triangulate that versus the revenue growth, you will see that the picture is a little different rather than just concentrating on one aspect.

Correct, correct. I agree. So shipment growth has been relatively better, no denying that. And it's a mix...

And again if you triangulate that against the revenue, the picture becomes much more holistic. And yes, that's how I would rather look at it, Nilesh. Very, very nice insight. Thank you.

Fair enough. And just one thing. So the current demand environment according to you, how is that vis-a-vis what you are seeing maybe a couple of quarters back, I mean, in terms of the e-com, the air documents, which you ship. I mean, any color -- broad color you could give on the demand environment as we stand?

Yes, the broad color we generally give basis a deep dive into data. Again, we do conduct a total market sizing exercise every year, again, with one of the top 4 that gives us directions over the short, medium and long term. And as I said earlier, air markets to grow in single digits and ground markets to grow in double. And basis that, then we plan our playbook on how we are going to strategize, how we are going to execute. and ultimately stay ahead of that growth that the market is kind of throwing up.

Okay. Okay. Fair point. And my second question was on the competitive environment. So we don't get to know much on the -- about the -- but from whatever we have been reading, we have heard that IndiGo has been inducting planes, dedicated planes for freight business. I think I presume they have about 2 currently. Amazon Air had also announced that they will be expanding their fleet, dedicated fleet in India. So in context of that, I mean, could you give us a sense on how the capacity for air freight related for the air industry has been on the freight side and the pricing discipline? I mean we would want to probably understand that a bit more.

Yes, sure. So if you look at the entire air freight cargo market in the country, that's been a little flat. But we are not in the air freight business, which IndiGo would operate through their belly space. We are in the air express market. The air express market means a door-to-door pickup and a door-to-door delivery. So that kind of differentiates us. We use the IndiGo aircraft for our shipments also when -- kind of when Iyer explained to you earlier in the call, about commercial uplift. These are the belly spaces of IndiGo, of Air India, of Air Akasa, Asia Air and everybody. Those are the belly spaces we will use. So it's a complementary to our business. And as and when we hear that the induction of higher belly space is going to happen in the industry over the next 5- or 10-year horizon, we hear the news that 500 more aircraft will come in, et cetera, et cetera. That only kind of encourages us that more belly will be available. Blue Dart with its express service can reach more Tier 2, Tier 3 towns. More airports will come into the realm of Air Express. So really very buoyant with that. Amazon Air aircraft essentially being used for the Amazon captive loads. Amazon is also working with us very closely. We've worked with Amazon since they have come into the country. So it's a very, very complementary kind of business, and we're kind of in a happy space there. In terms of pricing, again, as I told you, we are the air Express operator. The others are airport to airport. So there is a pricing differential that we have over all the others who operate airport to airport. The most -- the differentiating aspect or actor in Express is I pick up from door and I deliver to door. Air is just my middle mile.

Got it. Got it. fair. I mean that was well explained. And the last question was just the new planes from what we have been given to understand you would be deploying. I think Northeast is one of the routes, which you would have already deployed. So see, in this business, the return load economics also play an important part. So how are you assessing that aspect because -- especially from that corridor?

We've analyzed -- okay, this aircraft, additional aircraft will touch Guwahati as one station, which is the Northeast, but it also service the capacity requirements of growth for the other metro section. So it will be servicing both. As far as Guwahati is concerned, we believe that has got a good potential. Loads into Guwahati is not an issue at all. Gross -- growth loads out of Guwahati is also being developed. And for us, we feel that there's a good potential there. And we can -- once we start giving good quality transit times and good turnaround from there, the market is adequately there. Ketan can add that -- add further on it.

No, I think you covered it pretty decently well, Vaidhyanathan. And as Vaidhyanathan earlier said, we kind of balance it out with the commercial load that we currently carry in and out of Guwahati. Over the next 2 quarters, we reach the yield balance that we want to achieve. And I think we -- when we look at the numbers, we think we will be able to do that much earlier than what is planned in the books.

Sir, we take next question from Mr. Saurabh Patwa.

Sir, just harping on the same question which you clarified it on a bit especially on the margin part. See when you highlight that we should go to pre-COVID EBITDA numbers, but when we see that if we would have done that, then actually this quarter number should have been much weaker, right? Because this had a higher expense, still our PBT margin is 6.5%. So is that right number to see the PBT margin because after post-COVID -- post-Ind AS our lease -- due to lease rental, the interest part as depreciation has gone up at 3x. So rather we should continue to measure on the EBITDA margin, which was pre-COVID, because assuming that would have been the case, our -- this quarter numbers would have been much, much weaker if you go by the pre-Ind AS operating EBITDA margins. Is there something which we are missing?

No. When we talk about pre-COVID EBITDA margin, it is on the longer period, specifically...

Sir, I looked at from December to March '13, '14, '15, '16, '17, '18. So for like 5-year period, our PBT margins average were around 8%, right? And this quarter also -- I'm talking about the PBT margin. Why I'm talking PBT because I don't want the Ind AS has increased -- has made the interest as well [ depreciation ] 3x compared to that number. So that's the PBT margin is something where the interest -- whether it comes above EBITDA or below EBITDA, it makes no difference when we look at PBT. And this also coincides with the current quarter number despite being a higher cost due to the new induction of new airplanes, we still made PBT margin of 6.5%. So had it been the 12% EBITDA, then this number would have been much lower, sir. So I'm just trying to understand...

Okay. See, you're right that when you are looking at pre-COVID EBITDA at the old accounting where depreciation -- where it was lease rental and subsequently, it has come under the new Ind AS, puts it under depreciation. And so when you look at PBT per se, the PBT is in more or less 1% -- 1%, 1.5% here or there. And that's what we are saying. We will -- the performance has been good, and we will come back to the same percentage as pre-COVID.

That is for PBT, right?

Just at the PBT level. And as for the aircraft-related cost, the fixed cost of inducting the aircraft has been there since May and June. The operating cost, which is the larger part of the cost, is there only for 10 days. So the benefit of the capacity is also only for 10 days. So what would happen in the subsequent quarter is your operating cost will be for the -- for the full quarter. Your benefit of it -- of the capacity also will be for the full quarter. The challenge would be for us how we can turn around the low-yield airport-to-airport loads faster by replacing it with express loads, and that will give us a better margin and flow-through.

But once this -- at some point, like maybe like 2 quarters, 3 quarters, 4 quarters, the sustainable margin, which at PBT level would be something which was there pre-COVID on a normalized basis, whether it reaches to 10% or it stays at 8.5%, 9%, it's something that will depend on how we improve. But the PBT margin pre-COVID is something which we -- one should factor, right?

That's what we are saying.

Sir, we take next question from Mr. Nemish Shah. Please go ahead.

So sir, I had a question. You mentioned that ground will keep growing faster than the air. So just in terms of unit economics, so should we focus on absolute margins? And is it fair to say that absolute margins in both the segment will be similar for us? Because if I have to just extrapolate and just see the realizations per tonne basis, then it will distort the entire picture for us given that ground is a lower realization business for us. But is it fair to say on an absolute margin basis, they will both be making similar kind of profits for us?

See, the margins in all the products, in all the type of services will be in a similar range, maybe 100 basis points here or there, but it would be. The reason being we only focus on profitable growth. We don't go for volume gains. So our endeavor would be to protect the margins.

Right. So then -- so is it fair to say that our top line growth, that is revenue growth will be much -- going forward, revenue growth will lag our volume growth? Or we will kind of make up and when we say double-digit growth in the ground and single-digit growth in the air, it's on the revenue front and not on the volume front?

See, the volume versus revenue would always depend on the mix. If your ground is growing faster, so the revenue would grow -- as such, the resultant revenue would be -- growth would be lower than the volume growth because your ground is growing faster. So those are things which will -- is bound to happen unless, Ketan, you would want to add anything further on that?

No, I think, Vaidhyanathan, you covered it pretty well.

Sir, we take next question from Mr. Rakesh.

Sir, just wanted to know what is the average realization per shipment via air and via surface? In general, what is the difference -- price difference between if a product is shipped via air and via surface?

See, in air and surface also we have multiple kind of services, which are there. And each of the realization would be whether it's a document, a parcel, heavy parcel versus light parcel. So they are all different price bands and different realizations.

But any color further on that, like it is a 2x [indiscernible] what we have traded, the air express is 3x costlier than surface. Is that understanding correct?

You are saying air is 3x cost than the surface. Is that your question?

Yes.

Yes, yes. That would be -- more or less that should be.

And now in the earlier participant question, you mentioned the margins will be similar. So if the share of surface increases further, so maybe the revenue -- volume growth will be higher, but the average -- the total revenue growth will be lesser and the EBITDA will be lesser. Is that understanding correct?

See, if you -- when you talk about product mixes and EBITDA and all, it can be pretty confusing. But what we are saying is we would always try to grow profitability -- profitably and our margins would be as a percentage to revenue, the EBITDA or EBT margins, would be generally in a similar range, maybe 100 or 150 basis points here or there. But we will never be in the volume game where we will lower the prices and try to capture the market. That will not be our area.

Okay. Sir, the customer -- that the client that you have, have you seen the customers coming to you, those who were shipping earlier via air, but now because the road connectivity has improved, the time lag between -- the time lag has also come down, are they shifting to road before like air?

So Rakesh, as I kind of covered earlier in the call, if you compare over the years without the COVID, you will see the revenue growth at about 60%, which is essentially a mix of new customers that are coming to the business, which is current customers shipping more, which is a product mix change that is happening, a geographic mix change that is happening. So there are various kind of points. And within those, how we balance our business, as Vaidhyanathan said earlier, in terms of volume and revenue, how we balance our business in terms of going after customers and lanes and geographies that are more profitable, how we keep the mix so that all the areas of revenue growth, tonnage growth, shipment growth kind of result in a very strong EBITDA margin. All this has happened over the past many, many years, and we believe this will happen going ahead, too. That's -- and that's how, in fact, Blue Dart has been successful over the years in terms of understanding trends, being agile to those trends, reading trends much earlier than others can read them. And that's how we've been able to build a business that consistently delivers on top line, bottom line and all the metrics that kind of measure the performance on those, Rakesh.

Sir, one last question from my side. Recently, 2 companies have announced their foray into B2B Express. One is Ekart, one is Maersk. Globally, Maersk has also announced to enter into B2B Express. Just wanted to know your thoughts on the competition because Maersk has announced INR 80 per package, if I am not wrong, $1 per package anywhere in India. So your thoughts on that?

Rakesh, I will have my thoughts on that, but I would refrain from commenting on competition. You'll have to excuse me for that.

Sir, we take the next question from Sarika Thorat.

Sir, regarding the revision of the customer contract, we have -- you communicated last time that additional fuel charge as well as the annual hike has been taken after March. So what's the status on that? I mean it is pretty much accepted by the clients or it yet to reflect in our numbers in the subsequent quarters?

See, the price increases happen every year. So those are normal. What we spoke about was the fuel surcharge, some changes which we did that has been accepted. So it's already priced in the result.

Sir, we have a follow-up from Mr. Pramod Dangi.

So just wanted some clarification. As you said that this year's cost is including some aircraft induction cost for the May and June month. So if you can quantify that amount, give some sense on like how much would be that cost?

I don't think we can give you a number to that. But since in a large setup, this cost of the induction will not be very significant that it will distort the number. They are small because we already operate 6 aircraft. So that cost is already sitting there. This is only the fixed element of the depreciation and interest and the manpower is sitting. So that will not be a very large cost.

But I just noticed that the depreciation quarter-on-quarter and year-on-year is almost the same as earlier. So will the depreciation will go up going forward for the 2 aircraft or no?

See, we have 2 companies, the Blue Dart Express and then the subsidiary Aviation. The aircraft induction happens in the Aviation setup. So when you look at the consolidated results, you will find the stand-alone result. It will not sit as a depreciation. It will sit as an aircraft -- under freight handling and...

Handling cost, yes. No, I'm looking at the consolidated number only. That's why I'm saying.

There, you will see the depreciation impacts coming in, in the subsequent quarters.

Okay. Okay. Great. And just to -- although you're not giving the actual number, was there any price reduction in any like-to-like, if I look at whether it's air express or the ground Express, was there any price reduction or is that realization drop is just because of the product mix?

It's a product mix, primarily driven by the product mix.

No price reduction, compared to what product to product or service to service business.

I don't think we can make this general statement because what also happens within a product is different customers are at different price point in a particular business and lanes, so geography. So all that is a weighted average. So you can't make a sweeping comment like that, but primarily driven by the product mix.

Sir, we have some questions in the Q&A box. So I'll just quickly read out. Does the blended realization in 1Q reflect the Q-o-Q decline in ATF prices?

Can you repeat that, sorry?

Yes, yes. Does the blended realization in 1Q reflect the Q-o-Q decline in ATF prices?

Yes, it reflects Q-o-Q decline in ATF prices.

And also, I think this has already been answered. So I'll just quickly take some of the questions, which are there in the box of more questions. So what is the expectations of the e-commerce industry? Has Amazon choosing a dedicated freighter impacted Blue Dart volumes in any way?

Yes. So I think I kind of answered that. We work very, very closely with Amazon. You also know that Amazon has its own dedicated logistics service. And a major part of their shipments move through that service. A small part of their business is outsourced to players like Blue Dart and others. We are kind of in a position where we are not too kind of disturbed with what volumes we are getting from Amazon. And also, my portfolio is much, much more balanced than most others across sectors rather than being skewed towards a particular one to kind of eliminate any risk that we would have from a particular sector and more so from a particular customer.

Sir, one question is related to the first quarter performance. So the volume growth has been around 3%. So any sector which performed below par, any end segment, which performed below par during the quarter? And what's the outlook on some of the key segments we cater to for FY '24 and FY '25?

Yes. We -- I mean, rather than telling you which kind of underperformed, I would rather tell you which kind of performed well. So we had life sciences, health care, we had consumer electronics, durables, e-commerce, the banking and financial services, automotive performed very, very well. We are also, as you know, as I said earlier, a factor of the GDP is the express industry and so are these sectors. They have all kind of triangulated their growth also to how the GDP will grow. If you're in the services sector, it's a subset of the services GDP or the manufacturing GDP. The manufacturing GDP last quarter was in single digit. So when we kind of look at our numbers and do the algorithms versus the sectors, we see that our growth in sectors, the volumes and shipments that are coming from the sectors is in a very, very strong position as of today.

I think just last couple of questions in the box. I'll quickly read out. If the blended realization reflect ATF price movement, is Blue Dart getting kind of raw end of the deal, where pricing is dependent on crude movement based on fuel surcharge. But benefit of ATF has to be passed on immediately. So that's the kind of question where we are getting pricing based on fuel surcharge, but whatever the ATF price is coming down, we are passing it off immediately.

See that's a cycle. See, what happens is crude prices could reflect that in ATF in the subsequent month or 1 or 2 months later, depending on how the local suppliers import, refine and give it to the -- and price it in their products. So as a cycle, it will always reflect immediately or in the next 1 or 2 months. But one should not be bothered in the longer run. If it is -- the mechanism is working fine, and we are able to absorb the increases and by passing it on to the customer or give the benefit to the customers when the prices go down, the mechanism is working fine.

Sure. So sir, I'll just take the last question in the box. So I think this was asked previously, but I'll just a similar question. A leading competitor is running operations at around INR 65 per parcel for e-com shipment. So do you think this number is sustainable? And if not, then what would be the sustainable number here?

Leading competition -- sorry, I missed I'm it reading it out. Leading competition is running operations at INR 65 per parcel in ground logistics. Do you think this kind of number is sustainable? If not, what would be a good number? The anonymous attendee, if you're referring to Maersk, I believe that number is INR 80 per shipment. Is the anonymous attendee on the call?

Sir, I doubt we'll get that answer. If you could...

Sir, I will also remain anonymous.

Sure, sure. I think -- yes, I think we'll just take one last question because we are running out of time. So we'll just take one question in the Q&A from Mr. Saurabh Patwa.

Just on -- from the next 3 to 5 years, what kind of a blended growth you foresee? Obviously, there can be quarterly variation here and there. But given the kind of environment we are, the way manufacturing is growing in India and we have sort of an auto hub, where precision parts may be required, pharma parts may be required here and there, consumer demand is so strong. So given all these factors, what kind of a blended it may have happened to Express...

Saurav, of course Vaidhyanathan will definitely come in, but as I told you earlier, we are factored to GDP growth. If you have seen the global GDP, if it's growing at 3%. India's GDP generally grows at 6% or 7%. If the global GDP jumps up to 3% to 4%, India's GDP growth suddenly jumps up to 7% and 8%. And I told you we will always be a factor of the GDP, we will facilitate trade, and we will grow faster than how the market where we play gross. So I think...

That should be factors in nominal GDP or real GDP because your realization would be linked to nominal GDP, right, because inflation do factor in for your kind of business?

Yes, it will be nominal GDP.

So it will be nominal. So 13%, 14% is what one should factor in?

No, no, no...

The nominal GDP growth is -- India has been like for 30 years, 40 years has been in that industry? That's why I was asking.

What is the nominal GDP growth...

Sir, real growth plus inflation. That's...

Yes, excellent. So what is the growth that you have in mind this year...

That's I'm just asking, sir. What is the factor of that normal GDP growth you would grow from, whether it is 1x, whether it is...

Yes. So -- that's what I told you, the express industry is at a 1.2% factor on GDP.

1.2% factor...

That's the express industry.

That's the express industry.

Thank you. Thank you so much. So I think we are done with the Q&A session. I would like to thank the management from Blue Dart. So Mr. Iyer and Mr. Ketan Kulkarni for giving us opportunity to host the call. And for any follow-up questions, please reach out to the IR team. Thank you so much, sir, for letting us...

Thank you, Alok for organizing the call, and thank you, everybody, for your very directional questions. Over to you, Vaidhyanathan.

Yes, yes, thanks, and it was quite apt.

Thank you all. Have a good evening, everybody.