Mahindra Logistics Limited (MAHLOG) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Mahindra Logistics Limited Q1 FY '27 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Mandar Chavan from SGA. Thank you, and over to you.

Thanks, Mandar. Good afternoon, everyone, and thank you for joining us for Mahindra Logistics Limited Q1 FY '27 Earnings Conference Call. We are pleased to have with us today Mr. Hemant Sikka, our Managing Director and CEO; Ms. Isha Dalal, CFO along with a member of the senior management team. I hope everyone had a chance to view our financial results and investor presentation, which were recently posted on the company's website and stock exchanges. We will begin the call with the opening remarks from management, followed by an open forum for question and answer. Before we begin, I would like to point out that some of the statements made during today's call may be forward-looking. A disclaimer to that effect was included in the earnings presentation. I would like to invite Mr. Sikka to share his remarks.

Thank you, Mandar. Good afternoon, everyone, and thank you for joining us today. We have started FY '27 on a very strong note. building on the momentum created over the last few quarters. The improvements that we are seeing reinforces a simple but very important fact. The actions we took to strengthen our operating model, sharpen our execution skills, bringing a lot of discipline and rigor, very strong focus on our customers and improve the quality of our growth are delivering tangible results. You can see that in our results. We delivered a significant step-up in profitability this quarter, moving from a PAT loss of INR 10.8 crores in quarter 1 of FY '26 to a PAT profit of INR 25.4 crores in Q1 of FY '27. Alongside this, our consolidated revenue grew by 23% Y-o-Y reflecting broad-based strength of our businesses. These results validate the effectiveness of our transformation efforts and demonstrate the power of disciplined execution, strong customer focus, improved customer level economics and a relentless focus on profitable growth. If I have to see there are 4 themes which capture our progress in this quarter, and I will take some time to go through each 1 of them. We are clearly entering our next phase with confidence and purpose. anchored by 4 strategic pillars who will drive profitable growth, build differentiated capabilities and cement Mahindra Logistics leadership in the logistics ecosystem of tomorrow. Let me talk about 3PL scale-up. Expanding the core. This is our core business, so expanding the core with higher quality growth remains a key strategic priority. Contract Logistics continues to be the cornerstore of our business as we strengthen our 3PL franchise through deeper customer partnerships, sector-focused solutions and efforts on high-growth consumption sectors, while maintaining discipline on margins, return on capital and operational excellence. B2B Express turnaround continues to be a very key focus area for us. We continue to drive a disciplined turnaround through network optimization, rigorous cost management and enhanced service reliability. This is laying the foundation for a very sustainable long-term value creation in our B2B Express business. We clearly want to be a leader in operational excellence. Operational excellence is embedded across our organization. This is not a flavor of a month or a quarter for us. This is embedded across our organization. Through disciplined execution process standardization and continuous productivity improvements, we are enhancing the customer experience while consistently delivering superior service levels. Technology as a differentiator is, again, a key strategic lever for us. LogiOne technology continues to be a strategic differentiator for Mahindra Logistics. LogiOne, our digital ecosystem, provide greater visibility, faster decision-making and data-driven insights, enabling us to build smarter and future-ready supply chain for our customers. Our e-commerce and quick commerce business continues its momentum, reinforcing our position in the fast-growing segments of the logistics ecosystem. As we have articulated previously, our objective is not to scale for the sake of scale only. Let me repeat this. Our objective is not to scale for the sake of scale only, but go for intelligent scale where every customer, every contract and every investment contributes meaningfully to our long-term profitable growth. Let me now turn to a few specific business updates. Starting with our Express business, which is MBSPL or Rivigo, as we call it, Our B2B Express Logistics business. In Q1, revenue grew by 58% Y-o-Y and the gross margin improved from negative INR 3.6 crores in quarter 1 of FY '26 to a positive of INR 9.2 crores in FY '27. The business continues its turnaround journey with uptick in volume and yield and disciplined cost control now firmly embedded in our system. Our focus remains on EBITDA breakeven with PAT progression to follow in a calibrated manner. The foundation of the business is far stronger today, and we are confident that this is a long-term business for us, and it will create long-term value for our stakeholders. In our contract logistics business, Q1 revenue grew by 26% Y-o-Y and our gross margins grew by 21% Y-o-Y, a clear indication that our focus on operational efficiencies and profitable customers is working. We continue to see new wins across business segments, reflecting stronger customer solutioning capability, very strong customer focus, improved service delivery and deeper customer engagement. We have been speaking about our white space for the last few quarters. So in white space, I'm very happy to inform you that we are firmly on our track to achieve our glide path on reducing our white space by 95% by September '26 to the point where we started in quarter 1 of last year. In quarter 1 of last year, we had said that whatever white space we had at that point in time, which was 1.6 million square feet we will reduce it by 95%. We are firmly on track to achieve that. In our Mobility business, quarter 1 revenue grew by 38% Y-o-Y and our gross margins grew by 2% Y-o-Y. Our focus is on acquiring new customers on the B2B side of the business. On the B2C side, we are focusing on stabilizing and building on the recently launched airport taxi business at the Noida International Airport. In our last mile delivery business, LMD, as we call it, revenue modulation, we had a degrowth of 16% Y-o-Y was a conscious strategic choice and we had called that out in our earlier communication that this is a conscious strategic choice to prioritize profitable business over low-margin business amid sustained pricing and cost pressures. This strategy has actually worked very well for us. and it has driven our gross margin in quarter 1, up by 62% Y-o-Y supported by improved business mix and disciplined cost management. In our freight forwarding business, revenue for quarter 1 FY '27 stood at INR 45 crores, reflecting the impact of customer attrition experienced during the recent transition phase of the business and the geopolitical crisis that we are currently facing. We have still strengthened the leadership team and are focused on expanding commercial coverage, rebuilding the customer pipeline and driving growth while maintaining strong service level and operational discipline. As we look ahead, our priorities remain unchanged. We will continue to scale our core business profitably, strengthen the Express Logistics network, improve asset utilization and leverage technology to drive productivity and customer experience. Operational excellence will remain the foundation of everything that we do. So in conclusion, the transformation journey we embarked on a year ago has now evolved into a growth journey. Our focus is firmly on building a stronger, more agile and future-ready Mahindra logistics, 1 that consistently delivers profitable growth, superior customer experience and sustainable value creation. In this journey, we will continue to see, number one, revenue and PAT growth; two, improved operational efficiency and excellence; and three, a growing base of highly satisfied customers who clearly see tangible value from our services. Transat vision is clear. We want to be India's #1 logistics service provider. delivering superior customer experience through technology-led solutions and led by a very passionate team. With that, I will now hand over to Isha, our CFO, to take you through the financials. Isha, over to you.

Thank you, Hemant. Good afternoon, everyone. Let me now give you a brief on the consolidated financial performance for Q1 F '27. Our revenue has increased by 23% year-on-year to INR 2,003 crores. As you will see in our segment results, supply chain management, which includes our 3PL and Network Services business, including freight forwarding Express and last file contributed 94% of overall revenue, and the Mobility business contributes 6% of our overall revenue. This revenue split remains more or less consistent with previous quarters. Gross margin on a fully consolidated basis stood at 9.7% in Q1 F '27 compared to 9.4% in Q1 F '26, which is an improvement of approximately 28 bps year-on-year. Our reported EBITDA for the quarter is INR 115 crores, up from INR 76 crores in Q1 F '26. As we have done starting last quarter, we will now also share the pre-Ind AS 116 or adjusted EBITDA numbers, which factor in the full impact of lease cost and EBITDA. At this adjusted EBITDA level, as you would have seen in our investor deck, EBITDA for the quarter stands at INR 57 crores, up 76% versus INR 32 crores in the same quarter last year. Our adjusted EBITDA percent is at 2.8%, improved by 85 bps year-on-year. Our PAT for this quarter is at INR 25.4 crores, which is INR 36 crores better versus Q1 F '26. In the same quarter last year, just to remind, our consolidated loss was INR 10.8 crores. I do want to call out that our patent this quarter includes INR 4 crores of interest on income tax refund. You will see that in the other income line, which is not expected to be recurring income in the subsequent quarters. If you remove that number, our operating PAT is approximately INR 21.4 crores. As Hemant has already mentioned, we will work towards continuing our trajectory of PAC positivity and improvement in operating performance. I will now move on to segment-wise performance. In the Contract Logistics business, our Q1 F '27 revenue was INR 1,623 crores as compared to INR 1,289 crores in Q1 F '26, up by 26%. One of the key drivers for this growth has been continued strong momentum in the M&M auto and farm businesses, as well as growth in our other CPL verticals, including e-commerce. In this segment, gross margin has diluted by 46 bps year-on-year. While efficiency and intrinsic operating performance improvement across the contract logistics business continued based on all the levers we have deployed and which Hemant spoke about a few minutes ago. The business has faced some headwinds driven by manpower shortages, site ramp-up and minimum base revisions resulting in some margin compression. These have been offset by our overhead efficiencies and operating leverage, leading to an EBITDA growth of 31% year-on-year and margin expansion from 6.6% to 6.9%. In the last mile delivery business, the network recalibration and focus on profitable site has led to a 16% year-on-year revenue decline. However, in line with our strategy, this business has witnessed GM expansion from 5% to 9% year-on-year and is EBITDA profitable -- continues to be EBITDA profitable. In the plate forwarding business, the business has faced challenges due to a combination of macro led disruptions and the impact of customer attrition experienced during the recent transition period of the business. This has led to a decline in volume from some key customers. Revenue for the quarter was INR 45 crores as compared to INR 74 crores in Q1 F '26, down by 39%. Despite these challenges, the freight forwarding business has continued to maintain healthy gross margin of 10%, in line with historical trends and witnessed efficiency in fixed cost, it has continued to remain positive at the EBITDA level. In our Express business, Q1 F '27 revenue was INR 152 crores as compared to INR 97 crores in Q1 F '26, up by 58%. Year-on-year improvement in both volume and yield has driven this revenue growth. Our gross margin stood at 6% compared to minus 3.8% in Q1 F '26. We continue to expand gross margin year-on-year and quarter-on-quarter, in line with our commitment to improved operating performance. EBITDA performance in this business also continues to improve with an EBITDA loss of INR 1.6 crores in this quarter versus INR 11.8 crore loss in the corresponding quarter last year. I'll come to the last segment, which is Mobility, where the revenue for this quarter is INR 111 crores as compared to INR 80 crores in Q1 F '26, up by 38% year-on-year. The revenue growth in this vertical was largely contributed by expansion of client pains in the B2B vertical. That brings me to the end of the commentary on segment results. And with this, I will now open the floor for question and answer.

[Operator Instructions] We have our first question from the line of Alok Deora from Motilal Oswal Financial Services.

Congratulations on pretty decent numbers. Just had a couple of questions. First is on the Express business. So if you can just indicate what has been the volumes for this particular quarter and yes, in tonnage terms. And also this improvement in the EBITDA, which we have seen in this quarter, so that we should be kind of breakeven now in the first quarter is that -- by the second quarter, is that the understanding correct? We are on that path? If you can just highlight on the Express business first?

Alok, we don't really disclose the volumes in the Express business. But as I mentioned, we are continuing our trajectory of improvement in both volumes and yield, and that journey is well underway, and we are satisfied with the progress. We have been indicating that just as we turned gross margin positive in this business last year, we will seek to be EBITDA positive or EBITDA breakeven this year. And again, we are well on the way to achieving that target. So we will continue to work towards that milestone. I would not like to indicate whether it would be in quarter 2 or 3 or 4. I think we have still a lot of work to do in this business, but I can tell you that, that continues to be our objective for this year.

Got it. Second question is on the Mobility business. Now we are clocking almost INR 100 crores -- plus INR 110 crores -- INR 110 crores per quarter of revenue. And the EBITDA margin is in the range of 2% to 3%, which has been there even when we were doing a very smallish number like INR 80 crores. So where can the margins go here in this business because I suppose if we continue to see this kind of run rate in revenue, so can -- is there any scope of margin improvement here? Or this would be like a 2%, 3% kind of a margin business?

Yes. Alok, so I think from a gross margin perspective, we have historically been between a 9%, 10% kind of gross margin business in the Mobility segment. And we will continue to work towards that kind of gross margin profile. As the business expands in top line, we will continue to see some operating leverage in this business. We also will make some commensurate investments in B2B and so on, which you will see. But eventually, as the business grows in scale, we should see some improvement in the percentage EBITDA profile of the business.

Got it. So this is -- just some clarification here. So this is almost entirely B2B?

We don't disclose the specific percentages, Alok, but the B2B business, which is employee transfer services as well as the B2C business, which is now branded Alyte are both within this segment.

Yes. But I mean...

Majority, Alok, is the B2B, a large majority.

Got it. Just last question related to this only. I mean I'm not directly comparing it in that sense, but we have another listed player who is into this sort of business. There, the margins we see are in the range of 10% to 12%, which is again mainly B2B and into the transportation services. So I just wanted to understand is this the margin because the mix is different or the customer profile is different? Or just if you could just spend a minute on this, it would be helpful.

Sure, Alok. Alok, there are various types of model even in the B2B business of mobility. One of them is the employee transport services business, which I was mentioning. And the other one is kind of an on-call business or a shopper car service business, right, which essentially just to kind of explain, it means when you go to another city, the car kind of is with you for the entire day and you get charged on that basis. Now that is a significantly more lucrative business from a margin profile perspective than the first business I mentioned, which is the employee transport services business. So the relative margin profile or the rather, I should say, the blended margin profile of the business will depend on the relative mix of these 2 segments. As MLL Mobility, we are heavily weighted towards the employee transport services business, and hence, our margin profile will be, therefore, slightly lower even from a gross margin perspective. Secondly, there is the question of scale and size of the business. So like I mentioned, from an operating leverage perspective, we probably don't have the kind of leverage yet that one would expect at 2 or 3x the scale.

We have our next question from the line of Krupashankar from Avendus Spark.

Congrats on great set of results. My first question is on the contract logistics business. Just want to get an indication on 2 aspects. First is on what would be Mahindra Logistics' wallet share with M&M this year? And then what is it in comparison to last year? And in continuation to that, I just wanted to get a sense around the growth, what would be the contribution of new clients this year to your overall growth because the growth has been quite solid in the contract logistics business. If you can give some color around that.

Thank you, Krupa. So on how much are we as a wallet share for Mahindra, I mean, we have a significant part of their business clearly. It's not that we are a preferred partner for them. We have a significant part of their business. That would be our comment. And we continue to win a large part of their business, which comes on stream. So we are pretty large with Mahindra. And on the new customers, we don't share that ratio of new customers, but I can only tell you that with our focus on customers a lot, bringing in technology, a very strong focus on our operational excellence, we are winning a lot of new customers. In fact, compared to our internal plan, which was a very aggressive plan, in quarter 1, we have surprised ourselves with wins more than what we had even planned as part of our stretch goal. So that means our customers are appreciating the kind of solutioning that we are doing, the kind of benefits we are bringing to them, and that gives us a lot of confidence that the kind of growth that we want for this business is looking good for us.

Understood. The reason why I'm further questioning on this aspect is that the momentum of growth, what you're seeing on the contract logistics business, is it going to be primarily a reflection of the underlying automotive growth, which is there at this point? Or do you also see that the segments like e-commerce, which we are talking about, continuing to keep this growth rate at north of 20% over the near term?

You're absolutely right, Krupa. Since we are a very significant part of Mahindra's logistics game, when Mahindra's auto and tractor business does so well, obviously, that has a very big tailwind for us. So we will benefit from that. And hopefully, that will continue through the year. Apart from that, let me also tell you that we are winning a lot of business from e-commerce customers. So we don't share that while -- but I can broadly tell you that we have done very good work on e-commerce. . Thirdly, I want to call out our manufacturing and telecom vertical, which is again doing exceptionally well since we have this core competence working with Mahindra as a large client on working with manufacturing clients, I think we are also a preferred kind of a logistic partner for all manufacturing companies, whether they are MSMEs or they are large companies. So we have also won a lot of business on that side. Again, we don't want to share our customer names here, but I can tell you that in the last quarter, we have won a couple of very large marquee clients in the manufacturing space also. So we are feeling good about that.

Understood. One last question on express business segment business. While I do appreciate that you don't want to share any information on volumes at volumes -- can you break up the growth between what would have been the volume growth and what would have been the yield growth this quarter? This gives us a reflection of...

So, Krupa, I'll give you more color. Let me tell you why we are not calling the number. We used to share that number if you see our previous communication, and then we stopped doing it a couple of quarters back, which was a very conscious decision because it is not the volume alone, which will drive our turnaround story. Let me tell you, I can pick up the volume as much as I want, if I don't care about the yield. And you remember in some of the calls with investors, we had shared that especially that there are certain lanes across the country where it is as much volume that you want to pick up, you can pick up if you don't care about per KG rates. That is not our objective. Our objective is not to maximize volume and make losses. Our objective is to turn around this business. So we are very focused on volume as well as yield. And that is why we said that we will not declare the volume because it doesn't give you any picture. A lot of the analysts were asking us at what volume will you become EBITDA positive. Let me tell you, there is no right answer for that because we can take as much volume and can never break EBITDA if we don't care about the rupee per kg. So it is exceptionally -- especially important for us that we focus on both, which is yield as well as volume. Now just to tell you better color on it as Isha said in her remarks, but I will add more weight to what chased, that our target is to become EBITDA positive in this year. But let me tell you that we are very confident of achieving this. So I think that should give you some indication of where we are.

We have our next question from the line of Rehan Saiyyed from Trinetra Asset Managers.

So first question is around like your sporting understanding regarding the customer additional economics wise could you help us understand the economics of the new custom addition during the quarter. So are we personally noted at margin about the portfolio average and how does along typically take for a new contract to be iterably.

Rehan, if I -- didn't understand very clearly, but just let me repeat what I understood as you asking that what is the margin profile of the new customers that we are adding. Is that what you want to know?

Yes, yes. Like -- and also, how long does it typically take for a new contract to reach statistic profitability level.

Okay. Okay. Okay. Fair point. So obviously, Ryan, we can't share you what is our margin profile for new customers. I can only tell you that we are very competitive. All these new wins that we are getting are very hard fought win. These are 1 against, I mean, national RFQs that our customers come up with and you know that we have a very competitive logistics industry in the country. So all these wins that we are getting are very hard fought. And these are done not only on pricing basis, but also on the quality, the solutioning that we bring for our customers, our reputation in terms of our execution ability and the governance, which the Mahindra Group brings for the customers. So this is a combination of several things that we are judged by our customers, and it's not only a pricing call that the customer will make for us. Having said that, I can only broadly tell you that we are very focused on making sure that while our teams work so hard, we don't want to work very hard and at the end of the month, give a check to our customers. That is not our objective. We want our teams to work very hard and then be also making profit for our company and also for our stakeholders. So that is our game plan here. I can't share you the profile, profit profile of our customers. Only I can tell you that these are very hard fought wins. And we, I mean, compete very aggressively in the marketplace for any good customer that is available in the market. On your second question on how quickly it becomes, Generally, we have seen that when you are coming up with a new site, if the site is small, it is a matter of a couple of weeks. But if we are also winning some very large sites there, it takes almost 3 to 4 months for a site to come fully normalized in operations. We have recently opened a very large site for a very marquee customer in Luhari, near Gurgaon. I mean just to give you an idea, it's almost like a 2 lakh square feet site. There, we are expecting that our operations will become normalized in about 3 to 4 months' time. So this is the journal time line, but we also have for last mile, very small sites like less than 1,000 square feet, where the sites become normalized during the first 10 days. So depending on 10 days to, let's say, 4 months, that's the kind of window that you can keep in mind.

Got it. Got it, sir. And sir, like in the last --, you have mentioned about Mahindra and Mahindra Group of companies -- so sir, Mahindra Group -- just wanted a clarification. Mahindra Group continues in meaningful contributor to revenue. So could you indicate where these shares stands today versus 3 years ago? And where you would elicitation to settle over on the same time. .

Yes. So we are very proud of our association with both the large businesses of Mahindra, which is automotive, a very large business in the country. as well as the tractor business, which is the world's largest tractor company by volume, We are very proud of our association. And obviously, Mahindra and Mahindra is our lead marquee customer. Three years back, this ratio was pretty high closer to the range of almost 70%. This over years came down to less than 50%. But again, because of happy news that both Mahindra business of auto and tractor have done better than the overall industry growth. And since they are doing so well, obviously, their share of our business has gone up. So we are now closer to 60% with them. We don't have a target to reduce that ratio at all. Our target is that we should win as much business from Mahindra and as much business from non-Mahindra.client. So we will keep giving our best foot forward. We don't want to lose any business from Mahindra, and we have won a lot of business in the last 12 months from Mahindra. And similarly, we are winning businesses for non-Mahindra clients, and that is, again, our very strong focus area. So we're continue to do well on both sides.

Got it. Got it, 1 more last question, if you can allow me to ask like for your parotitis wanted to know. So as you taocapacity has expanded meaningfully over the last few years. Could you disclose the current utilization level of the rehouse portfolio and at what utilization level like you have in any tracking metrics like at what utilization level does operating matrices.

So broadly, we had shared 2 numbers earlier, which we stopped sharing in every quarter, but I can still got that number. In the quarter 1, we had shared that we had 1.6 million of square feet in quarter 1 of last year, okay? And we had set a target that we will reduce this 1.6 million of white space by 95%, okay? I can share with you that we are on track for that. That target was to reduce it by 95% by September of this year, we are on target. okay? So that's what we'll share. We will not share what is our overall utilization. There are very high utilization levels currently. But we don't want to share that number because it is not good for when we are pitching for new businesses.

We have our next question from the line of Achal Lohade from Nuvama Institutional Equities.

Yes. First question is with respect to contract logistics, 26% revenue growth obviously, you attributed this to the M&M group as well as non M&M. The margins, despite such a strong growth, we have seen actually the margins kind of seen a contraction on both Y-o-Y and Q-o-Q. If you could clarify how much of that could get reversed like I think it was called out with respect to age revisions, et cetera. If you could call out a, part of this can get reversed? And b, if we are looking at a structurally lower margin like we were like 7.7% in Q4 FY '26. So is it fair to say that the new normal is 7%, and that's the starting point here from here on?

Achal, I'll come in first, and Isha will then come in to give you more color. So broadly, I can tell you that there are 3 areas which led to margin contraction. very big 1 was that we have a sales target for the year. Thankfully, again, happy to share that with the good work done by our teams, we have overextended our target in quarter 1, so that had led to a lot of new starting up cost because we were like opening a site almost every week, a new site every week kind of run rate. So since we were opening so many new sites, there are always start-up costs. And as I said in my previous answer, it takes 3 to 4 months for the site to normalize and then the profits to come back at the level where we had won the business. But first 3, 4 months are always more cost and revenues follows later. So some of that margin and Isha will share with you some numbers on that, that how much of -- I mean there is some start-up costs in this which obviously, since it is the first few months of the start-up costs, this will normalize. The other cost was that you know that there was all over the country, there was an issue of manpower availability in quarter 1 because of the various factors which were playing out in terms of LPG shortage, and there was some reverse migration happening to villages. That led to us hiring some additional manpower, which has more or less streamlined again. I think we are back to our normal labor thing. That led to some cost pressure. And the third was on the fuel price increase even though for us, the fuel is a pass-through, and we have been able to pass it down to our customers, but it doesn't happen on the same day because all these costs are actually to be discussed with the customers, the appeals have to be amended and also it takes some lag. So these were broadly the 3 factors, and Isha can share more details on it in her remarks.

Yes. Thanks, Hemant. Achal, nothing much to add from what Hemant has said. But just to give you sort of a broad sense, the start-up cost that Hemant spoke about, I would say about half of the year-on-year dilution at tea should have come from the start-up cost or the ramp-up cost that Hemant talked about. So that, of course, is a temporary sort of bunching up of cost in 1 quarter, that should normalize as the year goes on and we will seek to recover it. And the rest is on account of some of these other operational challenges, disruptions and cost escalations that we have faced. And I think you are aware that there is a lot of work ongoing on the ground to be able to sort of recover some of those efficiencies. I will also say that while there has been a gross margin dilution, it is also very noticeable that there has been work done on the overhead side through other cost efficiencies and optimization to try and recover some of that cost benefit -- recover some of that cost hit at an EBITDA level, right? So that work is ongoing, and we will continue to do that.

Just to clarify, when you mentioned half of that was to -- was on acccount of the start-up cost, you're talking at the gross margin, which is 40 bps down Y-o-Y.

Right.

Got it. The second question I had was with respect to the B2B Express with a 57% revenue growth, we have seen the EBITDA margins improving. How do you see -- in terms of the -- is this the run rate we should work with? Is there any significant seasonality out here, which we should kind of bake in? And see, if you could classify with respect to particular sector, which is driving this expense business?

No particular sector, I think we are doing well on a cross section of sectors. So I won't be able to call out a particular factor, but I'll just repeat our confidence that we are working very hard towards an EBITDA breakeven in this financial year, and we are very confident that, that should be -- that target should be achieved by us.

Got it. With respect to the run rate, is that -- what the seasonality if you clarity on that?

There'll be some seasonality. I have seen that during -- if the rains are very heavy, then it leads to some kind of business operating issues. So that can lead to some kind of small here and there in quarter 2. But generally, that gets covered in quarter 3 because the festive demand starts to kick in. So there is always some seasonality but nothing to like call out.

Got it. And just a clarification, if I may ask. Isha, if I add up all the segments, the numbers what you have given in terms of gross profit. There is some difference between the reported gross profit and this -- is there any classification difference? The EBITDA tally is exactly. Just the gross profit, if you could clarify on that? .

You're talking about the numbers in the segment-wise breakup versus the overall growth...

Yes.

There shouldn't be. There could be some intercompany elimination, et cetera, but I will check on that and come back to Achal. But that shouldn't be, INR 194.5 crores is the gross profit for the quarter.

We have our next question from the line of Jinesh Joshi from PL Capital.

I have 2, 3 business-specific questions not directly relating to numbers. So first, is that typically, when do the yield negotiations happen with our anchor client M&M. Historically, in the past, I mean, what kind of escalations have we seen? I understand the growth in contract logistics is driven by M&M and their volume growth has been really good, which is helping us. But I mean if you can help us understand how yield negotiations happen and how have the lead in the past.

Not understood the question because if M&M has come up with any new, let's say, warehouse in this month, that warehouse will get negotiated in that particular month. There is the process that if there is a fuel escalation beyond 5%, then with M&M, it happens within the first 24, 48 hours. So -- I mean it keeps going with no particular quarter or a particular month will be bunched together.