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

So good afternoon, everyone, and welcome to the interaction with the management of Blue Dart Express. Firstly, I would like to thank the management team of Blue Dart for giving us the opportunity to host this call. So today, we have with us Mr. V.N. Iyer, Group CFO; Mrs. Sudha Pai, CFO; Mr. Tushar Gunderia, Head of Legal and Compliance and Company Secretary. So I would now request the management team to provide some opening remarks on the Q3 performance, and then we can start with the Q&A session. Thank you, and over to you.

Yes. Good afternoon. I would request Sudha Pai, CFO; and Group CFO, Mr. V.N. Iyer, to brief the investors about our recent quarterly results.

Thank you. Good afternoon, everyone or rather good evening, everyone. Regarding our Q3 results, as is being published even on the website, like we have done better in terms of revenue on a quarter-on-quarter basis, which is Q2 versus Q3. And that's by 4%. And even in terms of our profit before taxes, compared to the previous quarter of -- sorry, I'm talking about the previous quarter of 2022. We are 4% up in terms of the total income. And in terms of profit before taxes, slightly lower compared to the previous quarter by 12%, but because we had extraordinary income in the previous quarter. But overall, on a Q2 basis, Q2 versus Q3, I would say that our shipments have grown by 6.3%. And overall volumes have increased versus the previous quarter by another 4.6%, both put together in B2B and B2C. V.N., would you like to add anything more?

No. Then we'll take the questions from somebody. Any questions we can take from the participants?

[Operator Instructions] So first question, we'll take from the question queue. Yes, please go ahead. The first question is from [ Unique PMS ].

This is [Nirali] here. So sir, if you can just briefly talk about the utilization levels after the 2 new aircrafts have been onboarded. Overall, how do we see them? Is it as per our plan? Or just briefly, if you can talk about that?

So as I mentioned, our volume compared to the December quarter last year versus this year, we have grown in the air business overall by -- between 2% to 5%. And this is the -- this is being in the very first year where the aircraft has been deployed. We are more or less in plan -- as per the plan as far as utilization of this aircraft is concerned. V.N. would you like to add more, please?

Yes. Further to what Sudha mentioned, as we had in the earlier quarters also, we need the loads before the aircraft comes in, so that when the aircraft comes in, at least some portion of the capacity is utilized straight away by the ones which are going commercial and gets into this. And then we build up the -- use it for the low premium and replace it by the higher premium over time. That's been the strategy, and we continue with that.

And in our experience, by when should we reach this optimum utilization of replacing the cargo also with a higher premium cargo?

It depends upon even the market dynamics. So, a, is that our intention is to ensure maximum optimization of the aircraft plus the profitable growth. That's always the business aims to, but you also have to take into consideration what's the situation outside like what's the market outlook as of like? So depending upon how the market develops, we would -- we continuously aim to ensure that we have a good strategy to have a profitable growth on a month-on-month basis, like that's always a part of our [few] mechanisms.

While you are on that, if you can talk about the market outlook. What kind of competition you are seeing? Because in the last call, we were of the view that Q3 being the festive season should show some good growth. I'm sure you meant something more than 2% or 4%. So what really changed? And why couldn't we deliver a higher growth in this quarter, but it being a festive season?

Versus the previous quarter, which is between September, Q2 versus Q3, I think we have delivered at least 5% plus in terms of our volume and that's mainly because it was a festive season. As you rightly said, it was a festive season and we could cash in on the festive occasion.

Also, one needs to keep in mind this time Diwali happened to be in October. So the shipping started in September itself. So the volumes actually got split into 2 quarters. The previous quarter, that is up to -- up to September. We had good loads and then carried forward into the current quarter also.

Our September PBT was INR 952 million. And for the month of -- for the quarter ended December 2023, it's at INR 1,050 million, respectively. So that way, you can see a [surge] in the income driven by this festive occasion. I hope this answers your query.

Yes. So -- but in that, some other contribution is from other income also, right, which you said was extraordinary, a part of it?

That was compared to the last year's quarter, last previous years. If I'm comparing December 2022 versus December 2023, there again, there is an increase in the revenue from operations from INR 13,370 million to INR 13,829 million in December. There is an increase of around 3.43%. And of that in December 2022, there was a one-off, which has not happened in this particular year.

So we'll take the next question from Mr. Pritesh.

Can you listen to me?

Yes, please.

Okay. Ma'am, just a couple of questions. One, we are still not clear why we are not growing on volumes now for the last 9 months, where any other indicator with respect to the economy, or logistics, or freight, or anything that we track hints at a higher single digit or a double-digit number? And yet for us -- forget this quarter, but yet for us, the volume growth rate number this year has been fairly low. That's my first question. And I have one more question with respect to margins. We have been continuously taking price hike. We have yet again announced a price hike to be effective January. But when it comes to the net realizations, it's not flowing. And when we look specifically at this quarter where a lot of your direct costs have come down, but we don't still see the expansion in margins. So is it that we have taken a round of -- or we have given the -- yes.

So I would like to answer your first question where you said on a 9-monthly basis, our volumes have not grown. Like I have in front of me April to December 2022 versus April to December 2023. And in terms of shipments growth, it's a 9% growth in terms of the overall shipments. And I feel that 9% is a decent percentage in terms of the overall volume growth for any particular business.

And ma'am, in tons? In tonnes, madam, in tonnes?

In terms of tonnages, it is 3.1% increase.

So that number is fairly smaller number versus any other...

What you have to keep in mind was the previous year, still had a COVID impact where we did a lot of international charters, which adds to the weight of the previous year. So you -- one has to do a like-to-like comparison by moving that tonnage out. And if you keep that tonnage out, then as Sudha says, we have -- our growth has been fairly in line with what our expectations would have been.

And also, you must say that it's a lightweight shipments that we are carrying, which is where helps us also to improve our profitability.

Okay. On the second question on the margin side, the realization side?

So margins, if you look at -- if you look at December '22 quarter versus December '23 quarter, we are from 8.8% to 7.47%. As I mentioned, in December 2022, there was an international charter element. And accordingly, the margins considered without that, it would be in the same range, or perhaps a lower range. From September '23 quarter from Q2 versus 3, the margins have increased from 7.11% to 7.47%. There is an increase in the margins on a quarter-on-quarter basis. And it also depends upon the product mix aspect, right. How the product has fared in ground and so on? So...

Which margin are you referring to, ma'am? Are you referring -- to which margin you're referring -- I think you're not referring to operating margins, right?

I'm referring to the margin percentages.

At the PBT level ma'am?

Yes, PBT level.

Yes, ma'am. But generally, at the operating level, that's how we tend to look at the operations and defer. The question was we -- there is a tailwind in cost. We were all expecting some margin expansion to flow in. It is not flowing. So is that something that we have to understand, number one? And number two, from a peak margins of whatever number, 15%, 16%, 17% number, on a stand-alone basis, we are at about 9% or 10%, 11% margin number. So where do we see the operating margins of your company? That question may also help us to understand, or you want to answer the other way. Why is it that the costs have come down and margins are not expanding? Whichever way you want to answer.

If you remember the last time also, we said that we have inducted 2 new aircraft into the system, and there would be a certain time of 2 quarters till the time it gets into an optimum optimization. So that time one has to -- so when you induct capacity, it can't be that you continuously improve this. The initial -- this would be -- our focus would be that the aircraft gets fully utilized with capacity lodging being fairly large, though with lower premium products. And as we keep addressing the mix part of it, the margins will come back to the earlier levels, which has been stated this, and I think that would continue to be in which we can move.

Okay. Lastly, any changes in the supply in the air cargo side? Supply in the industry, any major changes that you want to highlight?

See, we are only cargo airlines. So if you look at the passenger airline, they would be keeping on adding the capacity, but that will never be a compete for us because it's barely spaced with 1.5, 2 tons being fought between multiple players. So from the cargo -- express cargo side, I don't think anything has changed other than we introducing additional capacity into the market.

[Operator Instructions] So we take the next question from Mr. Pulkit.

Can you hear me, sir?

Yes.

Okay. Great. Sir, I think I'll come back to pretty much the same question the previous 2 participants asked because it seems you have added capacity. And despite that, your revenue has not grown. And it seems that the management thinks that this is a decent growth. So just trying to understand that what was the rationale of adding capacity when this growth of low single digit is something that as a company, we think is a decent performance? That would be my question number one.

For any business, there are certain months, or certain years, where you have to take a risk. And that's the call this was taken where we inducted 2 aircraft. And once you take -- inducted 2 new aircraft, it's not just one, like it's 2 new aircraft, then the gestation period to ensure that it's optimum, it gives the right amount of revenue and profits and so on. If you look at it, there is a volume growth. However, may not be reflecting so much in terms of margin, but there is an intention to build the capacity, to utilize the capacity. And then eventually, as V.N. also mentioned, then look at how to make it at a profitable growth, like. So this -- when this entire mega change happens, it will take some time like -- and I think by -- from a quarter-on-quarter result, it's been a very fair progress is the view like -- V.N., would you like to?

Yes. Also, when you -- the problem is a comparison of the previous year versus this year. The previous year had a lot of charters, international charters for the COVID. So the revenue base is higher. That is why you are not seeing the -- or you are seeing a muted growth, or a growth which is lower. So COVID was an abnormal time and you can't equalize that and say that. But under normal market scenario, we are -- our study from a third party also indicates that our market share is increasing on all the products. So that way, be assured -- rest assured that our volumes are growing, the revenue is growing. We are on track.

Sure, sir. Sir, and on that journey, which you said that 2 planes have been inducted and it will take time for the ramp-up and premiumize that. Where are we on that journey in terms of when will it start reflecting into better margins for us as a company?

The definition of a better margin in your mind and my mind could be different. But what we would say is that whatever we were in a normalized scenario before COVID, whatever margin levels were there, that be a normal margin. We should be at a similar level, maybe give a quarter, 2 quarter here or there.

No, absolutely. One thing at a time, we are trying to focus. One is to avoid ideal capacity. Second is to ensure to have a very profitable growth and trying to just balance this act.

Sure. And maybe one last question. I mean we've been seeing a lot of uptake in terms of electronic manufacturing in India. Companies like Apple are talking about big numbers when it comes to export and already shown in the last 2 years. Can you just talk about how you are looking at all this manufacturing optimism that's going around in the country? Are you seeing that in terms of volumes, or maybe at this stage in terms of inquiry, so that we get a sense of how the next few years could look for us as a company?

So for Blue Dart per se, it's the domestic demand. It's the domestic demand that matters a lot. It's the domestic movement. Intracity, interstate are the one which are the real trigger. But as you rightly said, with the increasing thrust in the exports and increasing thrust in the trade, we expect that the overall domestic demand in the B2B segment, as well as in the B2C segment, would continue to remain at an all-time high. There is a high level of optimism. And we do aspire for better numbers on a quarter-on-quarter, although Tushar has told us that there should not be any forward-looking statement.

No. I mean, we are not asking for forward-looking numbers, but at least since you are in the hot seat to give a sense of how you're seeing demand sort of built up for the future, that would be very helpful for us as analysts to understand.

Obviously, so many things, as you mentioned, the government is taking all those initiatives. From the organization also from that perspective, we are focusing on Tier 2, Tier 3 cities, where, interiors, there would be a lot of movements happening. So we are focusing on that. We are focusing on certain specific sectors, which could be a boom. We are focusing on channels for us to ensure that if the volumes would take a little time to grow, we don't input in infrastructure and start eating up the cost. But on a variable model, we try and start servicing and as the volumes go up, we start putting in our own infrastructure. So those plans are all there, and we would play into the government -- into the way in which the government's policies would -- and the manufacturing and other industries would progress, we would -- we are certainly playing into it and seeing how we can benefit from that.

Sir, we'll take the next question from Mr. [ Chirag Setalvad ].

A few questions from my side. The first is, what is the current utilization on the new aircraft added?

Like we said, we don't publish as such the utilization percentage. However, we had a festive quarter in Q3. And that's where we optimized on our -- the investment that we had done into these 2 airplanes, right?

So ma'am, let me ask the question a little bit differently. How long will it take for you to get to the optimal level of utilization, even at an adverse mix? So of course, you will improve the mix going forward. But just to get to the utilization, mix will keep improving. But just to get to that utilization, which you think is appropriate, how many quarters do you -- how far away are you from that?

Yes. If you take the revenue or the yield mix aside and you're only looking at the pure utilization of the aircraft, what happens is in bulk of the sectors where the movements are fairly good, we would be at a closer to optimum utilization, which could be 80%, 85% kind of a thing. But when it comes to the last sectors where there could be a one-way movement into a consumption center, but not the reverse because it's not a production center, those places, there will always be a challenge of -- in those sectors, the utilization may be a little -- which we call as weak sectors. It's a weak sector for us as well as any other player who would operate into that sector. So if you leave those aside, otherwise, we are -- on capacity utilization, we are fairly good, right from the initial stage itself.

Sure. The second question I have is, you spoke about getting back in a couple of quarters to normal levels of profitability, which you exhibited pre-COVID. And of course, we've seen some variability even pre-COVID. So I wanted to get this right in terms of what is, as you see it, the normal level of profitability?

See, you could take a 3-year kind of an average of pre-COVID and say that could be a benchmark level. Hello? Can't hear you.

Yes, Iyer sir, please go ahead.

[indiscernible]

Sorry, possibly, you were not able to hear me. We are saying that if you look at pre-COVID, keep the COVID aside on an average of 3 to 5 years, you take an average, and that could be -- it will even out the ups and downs, and that would be the level which would be a normalized level.

So we take next question from Mr. [ Harish Biyani ].

Yes. I just had a follow-up to Chirag's question on the margin part. So you alluded that you want to do a 3 or 5-year average of last 5 years, or pre-COVID numbers, but that is all over the place and it look fairly low in the context that you have set up -- taken additional capacities in place, right? There's always a variable between OpEx and CapEx. Done some CapEx and you are underutilized today, you'll have better utilization, you'll have better mix coming in place. So I'm like -- we can't fathom what's going on here. So I would love -- appreciate if you can kind of call out -- again, we're not looking at 2 quarters, 3 quarters. But is there an aspiration that the management has to achieve a certain level of margin, certain level of growth? We're all kind of struggling to get this answer. So I would appreciate that when you -- internally within the Board, or within the management committee, what is the kind of growth that you're looking at? What's the kind of margin that you're talking about? Maybe a range and not necessarily a particular number. It's all over the conversation that just happened over the last half an hour, I couldn't understand where we are heading to?

See, this is the same question which gets asked in the quarter-over-quarter. And I think in the past quarters also, we have mentioned that when you're looking at an operating margin, it would be at certainly a double-digit -- a lower double-digit kind of a margin is what we would be -- which we would call as a normalized margin. That's been -- and that's what we will be aspiring. And if things work out better, great for us.

So lower double digit in the context that where you are today, what we should assume is that this will even come down further from here on?

Means? Sorry?

The reported margins in this particular quarter and the aspiration of a lower double digit, lower double digit means 11%, 12%, right?

See, we wouldn't want to...

I'm like struggling, Mr. Iyer to understand.

We are not -- whether you call a 20% high or a 14% low.

We will look at the benchmark, today's benchmark. And the pre-COVID benchmark, as you pointed out. And we are trying to understand versus the pre-COVID benchmark, which you pointed, where are we heading? Are we moving upwards, or we are moving downwards, or it's static?

Certainly, we can't move downwards. We would always want to move upwards, and that's the direction we are moving.

And to reach an upward number, what is the growth that we should achieve to reach an upward number from here on? Is that going to be a 10% plus, or a 15% plus to reach a number? Obviously, there will be a mix impact. There will be some other impacts. But what is the number that at least we are targeting? And there'll always be -- every year, there will be some one-offs like last year, you called out for certain one-offs. There will always be certain one-offs in a particular year, right? So it's -- frankly, I'm like trying to grapple with where are we heading both in terms of growth and margin?

So it also -- the increase would also -- we aim to have it from our GPIs, by having more volumes. And as V.N. mentioned, it's by turning around to the most profitable growth. So that's a continuous discussions that we are having at this point in time. And certainly, it should be -- it should get better on better from quarter-to-quarter.

Yes, Harish, one more point. When you are talking of year-over-year, you will have abnormalities. Certainly, there would be, but those are normalized years. We are looking -- we are comparing a COVID year with a normalized year. And that is why that abnormalities takes impact. Otherwise, in a normalized year, it will not be mentioned as an abnormality and it is business as usual.

Sir, we'll take the next question from Mr. [Saurabh Patwa].

We've been attending this call for quite some time, and thanks for having these calls every quarter. Sir, just 2, 3 questions. One is like I think even in the previous interactions, there have always been confusion when we talk about margins. See, when you talk about pre-COVID margins, I think there is one big difference which has changed, which is if we look at pre-COVID EBITDA margin, which I'm not sure whether you're referring to pre-COVID PBT margin, or pre-COVID EBITDA margins? That is one. And secondly, if it is EBITDA margin, there has been an in-depth impact there then versus when we compare it now. So how do we remove that anomaly? Because we don't know how -- what would have been the normalized margins of current numbers? So -- and I think that is what is creating confusion among many analysts over the last 2 quarters. That is one. And second (sic) [third] because of the fall -- see, I think when you say you are having a volume growth, at the same time, there is also an impact of realization because of the oil price which has fallen down, which you would have passed on. So how much of this is impacting your operating deleverage? So if you can just throw some light on these 2 parts.

I'll possibly attempt to remove the confusion which is there. See, it all depends on whether you're looking at the operating or the PBT margin. When you're looking at the operating and the PBDIT level, yes, certainly, the accounting standard change has an impact on the year-over-year comparison because some of them were before the accounting standard changed. So you have an impact of that depreciation and all that coming in, okay. Lease versus depreciation and all that. But that's the reality. We can't -- in the published numbers, that is there. But as an organization, when we are looking at it, we are looking at a like-to-like comparison. We are saying -- we are not saying the benefit should -- because of the accounting standard change happening is benefiting the figures. It is more mathematical than business driven. So we are looking at how in a like-to-like scenario, our margins can keep improving by utilizing our assets better and better. That's one. Second is when you're talking of the realization, the published results have a mix of all the products put together. And when ground is growing faster than air because of the infrastructure movements and others, the overall yield would go down. It doesn't mean that it impacts profitability because for servicing the ground, the cost of servicing also goes -- is lower, okay? So there is very little relationship between the revenue increase and the profitability because it depends on what product increases -- which of the segment is increasing. And is that corresponding cost moving in a direction, which is those efficiencies coming in. In the earlier interaction also, we have been saying that the company will not go for volumes at the cost of profitability that is being in the volume game, trying to get market share from the competition. We are always looking at profitable growth. Keeping that in mind, it will always -- whether the top line shows a negative growth because the product mix has changed. And in each of the segments is growing and growing, but the overall is growing lesser because ground was growing higher, does not mean that it impacts the profitability because the cost of servicing will also be proportionately lower. Hope that clarifies.

It does, sir. It does, sir. So still, I'm just a bit confused when you say about operating margins, you see that -- I understand that when you look at -- you have the live numbers and you have the numbers, adjusted numbers, and that's why when you see that you can see those are improving. But when we are looking -- we go by the reported numbers, sir. So for us, what is the right comparison metric? When you say we should look at 3-year average of pre-COVID, we should look at PBT margins or we should look at operating -- EBIT margins? That's the precise question, sir.

See, as an analyst, what you look at and what makes sense is entirely driven by how you are seeing it. But for -- as a business, for us, PBT becomes important because that is whether it is a leased option or an asset addition, translating into depreciation, all that gets equalized at the PBT level.

Fair enough, sir. So does that mean, sir, when you say that low double-digit margins, you are referring to PBT margin? Is this a fair assumption?

We refer to operating margin because every time when we were looking at PBT, the analysts were coming that we are looking at operating margin. So that is why we are saying at the operating margin level.

So your EBITDA margins or EBIT -- so when you're saying 12 low double digit EBIT or EBITDA or PBT?

EBITDA.

Sir, we'll take our next question from Mr. Mukesh.

My first question is on the 2 new aircrafts. Could you give a sense if we have already broken even on the two new aircraft there? Or is there some more time left for breakeven there?

As we said -- he is asking if we have done a breakeven on the aircraft. And as we said in our earlier [this thing] that we have started the optimum utilization of the aircraft because of the festive quarter that we had in Q3. And hope that momentum in terms of volume continues to remain so that we can breakeven in our investment.

So I mean on the daily operations as such, we are breaking even given that our utilization rates are [Technical Difficulty] you say for these 2 new aircrafts?

Your voice is not clear. Somewhere, you have...

So what I was asking, sir, is for these 2 new aircrafts, you're saying that the utilization rates are now at optimal levels. And so we are breaking even there in our regular daily operations?

See, Mukesh, you need to understand there are profitability of 2 aircraft separately cannot be -- because it's a network. There are a lot of loads interchanging in that. So these -- if you don't add capacity, the whole premise of giving service quality to the customers gets questioned, or gets -- it becomes counterproductive. So these investments are required to keep the service quality at the level. And when you look at the cross utilization, so long as your overall utilization is in the desired level of whether it is 80% or 85%, it is serving the purpose. Then the question is, as we said earlier, that how you can yield -- maximize the yield of good moving into that? So it's a little tricky thing. And obviously, as a business person, we wouldn't want investments to drain on the existing -- be a drain on the existing business, which is making profit. So it will always be a time frame of 2 quarters, 3 quarters till the new investment comes in. Imagine if we don't do this investment, then customers will say, what is the difference between you and any other competition? Why should I pay you that kind of yield, which I'm paying? And it will be actually getting into -- overtime, getting into a larger problem for us than continuing the investment.

Got that. Absolutely. Understood that. Could you give some sense on the time lines it can take, say, can it take a year or so to kind of move to higher-yielding cargo? I mean, typically, does it take a year? Or is it more than that?

I think we already answered that somewhere in the next 1 or 2 quarters, we should be. Although we are not supposed to make any forward-looking statements, but I think that's what...

Understood. And again, a question on this. With what we are seeing from the other commercial airlines, there seems to be a concern of a larger grounding there, given they have some issues with patentability, et cetera. Do you think that can benefit Blue Dart given that belly cargo space might be lesser, say, in the coming year or so?

We look at our business, we don't drive on others getting into problems. For us, concentrating on our business is important.

No, no, I'm not saying others getting into problems. There'll just be a capacity constraint.

These are short-term advantage you get. So if it comes, it comes.

And on the pricing itself, I mean, the 10% price hike that we are taking, how much do you think we should expect will actually flow through to the revenue? Because it would not be a blanket kind of a 10%. What kind of a realization increase do you think can actually flow through?

We are aspiring to have the best of the realization. It could range between 5% to 6% depending upon the past trend that we have seen. That's the outlook we have currently on the GPI.

All right. And lastly -- and lastly, the growth rates of surface and air, any kind of a sense you can give us, say, first 9 months or this quarter? How the growth rates have been different between the surface business and the air business.

I would say that surface is extremely competitive versus the air where we have our dominance. And accordingly, we are taking a call in terms of how do we want to position ourselves in the surface business, which is why even if there is a volume growth there, you could see lesser profitability overall coming into the P&L versus any quarter that you would compare versus last year and so on. So that's the scenario that we are witnessing as of now. V.N., would you like to add anything on that?

No, no. Okay. The only -- this is that you have -- in the ground also, we have a variation of the ground, which is a speed ground, which is there, that is growing at a much -- because it's got a lower base that is more to cater to the B2C customers. It's got a lower base and it's growing pretty nicely. So overall, I think what Sudha said is it's fair.

So there is a some kind of a constraint on the pricing there is what basically I'm reading into it? That competition, et cetera, is leading to some kind of a pricing constraint for us on the surface business?

Not really. Not really. We -- as we said, we have stated this is that we don't move on volume gains to -- so long as it's a profitable business, we will continue to be in that. So even if it is at the cost of a lesser -- at a lower growth, we wouldn't want growth to be a reason for impacting profitability.

We'll take the next question from Mr. [Kashyap Zaveri].

Sir, I just wanted one clarification. Just one clarification. You said that you are aspiring to have operating margins, which is EBITDA earnings before depreciation, amortization, interest and tax at low single -- low double-digit number. If I look at particularly this quarter, our EBITDA margins, which is, again, earnings before depreciation, amortization, interest tax is already about 15%. So am I -- did I get anything wrong over here? Are we looking at that 15% going down to a low double-digit number?

No. We would not look at 15% going to a lower double digit. What we -- see, as a management, we are looking at -- always looking at the PBT. As an analyst, when you're looking at operating margin because you all have models to extrapolate and all that. We are saying that it will be in that range. That will not be whether it's 15%, 16%, 14%, it will be in that range. Because that's what we are saying.

So that when -- in the opening remarks or in respect to one of the questions, I think [ Pritesh ] had asked this question when you mentioned that we are already seeing an uptick in margin from 7.4% to 7.8%. We aspire that 7.8%, or 8% to go up to a low double-digit margin. Have I then understood this correctly?

No. See, what happens when you're looking at an operating margin? For us, we have to understand our model. When you look at a surface product or something, it is on a high variable model. So more -- all the expenses are coming on the operating cost. When you're looking at the air process, a lot of it comes at the depreciation level because your investment in the aircraft is translating to a depreciation. So this industry is a little specific, unique compared to any other [indiscernible] because we have a high fixed cost in the investments when you're putting -- when you're looking at the aircraft into consideration -- take into consideration. So it will get a little distorted, whether you're talking 14% or 16% or 17%, depending on which product is going at what level and whether we are [invested] in aircraft in the [United States], all those things. So don't get into too much of analytics on to that so long as we are able to deliver a good PBT level, because it is only a classification between operating and depreciation kind of.

Right. Understood. So not to hold on to that now that number of low double digit, but when I look at operating margins per se, without keeping that whatever 11%, 12%, 13%, let's leave that aside for the time being. But for the operating number, any amortization of right-to-use assets is something that we need to take into account?

Yes. You are on mute.

I think he's dropped off. So sir, there's a similar question in the chat box. So when you are referring to the lower double-digit margins ahead, are you referring to the stand-alone EBITDA margins or consolidated EBITDA margins?

See, it doesn't -- the consolidated really does not distort because the subsidiaries margin is very minimal. So if you look at the stand-alone versus the consolidated, the addition of the subsidiaries margin really does not -- at the PBT level. If you're talking about the operating level, yes, they have a high depreciation, all that matters.

Yes. No. Actually, the question is that when you're saying that the margins will be...

At the stand-alone level.

Yes. that you're referring to EBITDA margin at the stand-alone level?

Stand-alone level.

Okay. Okay. Because I think there was some sort of confusion that whether it's consolidated margins or stand-alone, you are referring to?

That is why I clarified that when you look at aviation, because of the high investments on the aircraft, the depreciation being high, you have which product growth is there besides the split between operating versus the PBT point.

Sure. So the 9.5%, 9.7% margin, which is there, that is the number which you are looking to bring it to close to lower double-digit margin by -- in the next couple of years?

No. If you are talking about the PBT, it would not be in the...

No, it's only about stand-alone EBITDA, which we are talking about?

Yes, that's right. That's right. Then it is fair.

Got it, sir. So we'll take another question from Mr. [ Vikas Khatri ].

So my question is, every year, we take GPI. Last year, definitely, we must have taken GPI, which would have given 4% to 5% increase in net realization. Y-o-Y, if I see Q3, my tonnage has increased by 3-point-something percent, revenue by 4%, and shipment by 6%, in spite of GPI. Does it mean my actual realization per kg or per piece has gone down? Or my product mix has changed drastically between air, e-commerce and surface? What's the -- what's driving this? 6% is a substantial hike in shipment.

Our GPI is driven -- starts from January 2024. So effectively, you would see the impact of GPI in the last quarter of '23, '24 years like.

No. Every year, we take GPI. Last year, as well as last to last year. So when I'm comparing Q-o-Q for quarter 3, definitely last year to this year, there is an impact of GPI of 4%, 5%.

The product mix certainly has a major impact because if your -- the ground is growing at a very high pace, that yields are lower than. So even if you're effectively getting good GPI product-wise, when your weightage of the surface is higher, your overall yield, it may not -- you won't be able to see that in the overall yield since you don't have visibility of the breakup between air and ground.

And is it ground only or e-commerce is growing?

E-commerce, if it is e-commerce, if it is air, then it will be having yield similar to your B2B product.

Okay. Another one more question regarding this new aircraft. We were already serving 8 airports with major old aircraft. New aircrafts have been deployed on which routes?

See, I mean, these are the core business information.

Earlier, we were operating on 7 stations. Due to aircrafts, we will service some of the existing stations, but we are adding Guwahati to the network. So what would happen is loads from all the stations into Guwahati and from Guwahati into all the stations will get capacity. And that's the main achievement from adding these two aircrafts, giving capacity to Northeast.

So due to time constraints, we will just take 2 more questions. So one we take from Mr. [ Ishaan Bhargav ].

So given the freighter addition recently, when I look at the net block from March '23 to September '23, it went up by 70%. However, the depreciation has increased nearly by 10% to 11% this quarter. So could you just help me understand why exactly is this happening? And what would the depreciation trend look like adjusting for this?

Could you repeat the question?

So when I look at March '23 to September '23, I see that my net block has gone up by 70%, but the depreciation has gone up only by 10% to 11%. So why is this the case?

Comparing December '23, which period you said?

March '23.

March '23.

See, the airport addition at the console level or the stand-alone level?

Console.

So the airport addition, which has gone into the block is a large portion.

Right. But why isn't the depreciation following suit with the net block?

Why isn't the depreciation following suit? It would be -- it will always depend on what is the life of the aircraft, which we are taking as against the other assets. Aircraft has a much larger life. So your depreciation spread is for the utilization of the aircraft is for a long period. So the depreciation will not be -- the hit of the depreciation will not happen like any technology or any other -- those kind of assets where it gets in 5 years, get depreciated. This is a longer period depreciation because the benefit of it is -- and the life of the asset is very fairly long.

Sure. Sir, but assuming a straight-line depreciation method, wouldn't the depreciation as a percentage of gross block -- wouldn't -- shouldn't that increase? That has actually gone down. So that is my real question over here.

See, depreciation, what happens is if some of the asset block is already fully depreciated, it will move out of the block. So all those dynamics, if you want a specific analysis to be done and drilling down, we can always do that. But generally, in this block, what happens is asset -- depreciated assets would always be there, which will move out. So -- and the new investments would come in. So we could always -- if you are very keen on finding that specific reason, we can, on a one-to-one basis, give you that response.

Sir, we'll take just one last question from Mr. [ Vipul Shah ].

Sir, between road, air and e-commerce and what was the same corresponding period, same quarter last year?

Your voice is very inaudible.

Your voice is not clear. Could you repeat?

What is the mix of e-commerce, road and air? And what was the same period last year?

What was the mix? Product mix?

Mix, product mix.

Yes, sir.

See, the product mix, we have a mix of air, ground, B2B, B2C kind of a classification. The -- when you compare year-over-year, your air lightweight shipments, which is the documents are growing about 7% to 8%. The larger growth is happening on the speed -- the ground product, which is lower base, which is because it has got -- it's an evolving -- this year-over-year growth is high. So as time goes by, the mix will keep changing where the ground will have a larger share of the overall -- this one, overall mix. The B2C is also growing. B2C air is expected to grow. So it depends on how -- what percentage that is growing, that will tilt again to some extent on the air side. So it's a little dynamic. So not sure whether what answer you're looking for, you have got it.

I was asking about current mix.

The current mix. So you're saying what percentage of each is in the current mix?

Yes, in this quarter, yes, sir.

Okay. So that, I think we have clarified last time also, your ground is about 25% to 30% of the overall business. Is that what you're looking for?

Ground, but what about the rest 2 segments, e-commerce and air?

So like we mentioned on a quarter-on-quarter basis, it's grown around...

No, he is not looking at the growth, he's saying what is the percent of each to the total. That's your question. So the air is 70%-75%, ground is 25%-30%.

Thank you so much. So we have completely run out of time now. Thanks so much, everyone, for joining in. So I'll just hand over the call to the management for any closing comments.

No, I think we have clarified. Nothing further queries, right? I mean, Alok?

Yes.

yes, so thank you so much.

Thank you.

Thank you so much. Thanks, everyone, for joining. Thank you.