TCI Express Limited (TCIEXP) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the TCI Express Q4 FY '25 Earnings Call hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mohit Lohia. Thank you, and over to you, sir.

Yes. Hi. Good evening, everyone. Thank you for joining us today for the concluding FY '25 earnings call of TCI Express Limited. First of all, I would like to thank management for providing us the opportunity to host the call. From the management side, we have Mr. Chander Agarwal, Managing Director; Mr. Mukti Lal, Chief Financial Officer; Mr. Pabitra Mohan Panda, Senior Chief Sales and Marketing Officer. So without further delay, I would now hand over the call to Mr. Agarwal for opening remarks. Thank you, and over to you, sir. Yes. Good evening, everyone. Thank you for joining us today for the concluding FY '25 earnings call of TCI Express Limited. First of all, I would like to thank management for providing us the opportunity to host the call. From the management side, we have Mr. Chander Agarwal, Managing Director; Mr. Mukti Lal, Chief Financial Officer; Mr. Pabitra Mohan Panda, Senior Chief Sales and Marketing Officer. So without further delay, I would now hand over the call to Mr. Agarwal for opening remarks. Thank you, and over to you, sir.

Thank you. Good evening, and welcome, everyone, to Q4 and financial '25 Earnings Conference Call of TCI Express Limited. I would like to thank all of you for joining us here today. I hope you and your families are staying safe and healthy. We have already circulated our earnings presentation on our website and stock exchanges, and I hope you all had a chance to review it. To start with, I will give you an overview of the business trend and performance, and then we'll hand over the call to our CFO, Mr. Mukti, to brief on our financial performance for the quarter and financial year '25. Financial '25 marked continuous progress for TCI Express, underscoring the company's strategic focus on expanding its multimodal service portfolio with surface business continuing to remain the key contributor in the business performance. Operational efficiency improved through technology and customer reach was further strengthened. The Surface segment was supported by addition of 10 new branches and while the rail and domestic air segments expanded their service coverage with 25 new branches each during the year. In total, TCI Express opened about 60 branches. The logistics industry's evolving landscape and supportive government initiatives provided a favorable environment for sustained growth. TCI Express expanded its dedicated network for rail and air services, reflecting a clear commitment to multimodal growth. The Rail Express segment has introduced temperature-sensitive shipments, enhancing capabilities to serve specialized sectors with cost-efficient and environmentally sustainable solutions. In the domestic Air Express division, over 1,000 new PIN codes were added, improving airport-to-doorstep delivery coverage, while the international Air Express service demonstrated strong growth, further strengthening the company's global connectivity. During the year, all key verticals contributed to overall business performance. The surface, rail and air segments each played a significant role in supporting the company's operations. Continued investments in automation have supported improvements in operational efficiency and network flexibility, positioning TCI Express to address emerging opportunities within the logistics sector. Operational cost pressures persisted, primarily driven by increased toll fees and labor expenses alongside regulatory compliance costs. Nonetheless, the company's asset-light business model, combined with agile network management, enabled stable freight rates and consistent service levels. Demand across core sectors, including automotive and manufacturing, showed marginal volume growth, reflecting cautious optimism in the economic environment. The company also intensified workforce development efforts, particularly in strengthening key account management capabilities to foster long-term client partnership and capture emerging market opportunities. Additionally, TCI Express has been recognized as a Great Place to Work for 5 consecutive years, reflecting its commitment to create a supportive and engaging work environment. As part of our corporate social responsibility efforts, the company -- sorry, the TCI Express Foundation in collaboration with TCI Foundation organized a free artificial limbs camp at Prayagraj Maha Kumbh, supporting over 1,200 differently enabled individuals. The company also marked World Health Day and International Women's Day, underscoring its ongoing commitment to health, inclusivity and employee well-being. In view of the company's consistent operational and financial performance, the Board has recommended a final dividend of INR 2 per share. This brings the total dividend for financial '25 to INR 8 per share, representing an impressive payout of 400% on the face value of INR 2 per share, reaffirming its commitment to delivering value to shareholders. Looking ahead, the company is well positioned to capitalize on industry growth supported by government initiatives such as increased capital expenditure and planned development of 12 industrial parks, which are expected to enhance multimodal logistics infrastructure and reduce supply chain costs. Additionally, the Union Budget '25-'26 targeted tax relief measures are anticipated to both boost disposable incomes and consumer spending, stimulating industrial production and demand for logistics services. TCI Express remains focused on strengthening multimodal capabilities, expanding customer access and leveraging technology to drive operational excellence and differentiated service offerings. These strategic priorities will enable the company to sustain growth and create long-term value in financial '26 and beyond. With this, I'd like to now hand over the call to Mr. Mukti to talk about our financial performance for this quarter -- last quarter.

Thank you, sir, and good evening, everyone. Now I would like to discuss the financial performance of the company. Our Managing Director has already highlighted the development of development during the quarter, and I would like to delve into the financial aspects. During the quarter, our revenue from operations stood at INR 307 crores as compared to INR 296 crores in Q3 FY '25 and INR 317 crores in same quarter of last year by registering a growth of like 4% on a quarter-on-quarter basis and degrowth by like around 3% on a year-on-year basis. And income for total income quarter was INR 313 crores as compared to INR 299 crores in Q3 and INR 319 crores in Q4 of '24. EBITDA for the quarter stood at INR 34 crores with a margin of 10.8%. Our profit after tax for the quarter stood at INR 21 crores with a margin of 6.6%. Overall, on the FY 2025, our revenue from operation is INR 1,208 crores as compared to INR 1,254 crores same period last year. EBITDA for the period was INR 143 crores with a margin of 11.7% and profit after tax is INR 91 crores with a margin of 7.5%. We ended the fiscal year with generating a cash flow from operation of INR 118 crores and continue to generate solid cash flows to build our strategic growth plan. In FY 2025, the company invested INR 37 crores in capital expenditure, primarily focused on expanding our branch network, upgrading sorting centers and ramping up our IT infrastructure to enhance automation and operational efficiencies. These investments are aligned with our long-term vision to strengthen our multimodal service offerings and maintain a competitive edge in the logistics industry. Now I would also like to -- about some highlights on our multimodal offerings like we achieved some points on Air International. We grown on that business in almost 50% year-on-year basis, though it is a very small business in overall pie. First, second milestone, we also like touched in we transported almost 100 tonnes from the Delhi hub, which is also kind of like we -- from Delhi gateway, we transported almost 25% of overall international business. And that also like customer rate has also increased in this part around 30%. So this is the highlight for Air International. Air domestic, we also enhanced our network. And on that process, we added 1,000 new pin codes and mapped for the faster deliveries and pickups for this business. And we also like putting dedicated vehicles for the pickup and delivery. So that's why we -- this is also like investment we're putting in for air domestic. And same way, we're also putting separate vehicle and creating separate branch network for the Rail Express as well. So in Rail Express, also like done very well and the growth in this business is around 25%. And we also like increasing new repetitive customer in Rail Express, and that is like we are getting very good traction from the customer in this portfolio. So our commitment remains rooted in balanced growth and revenue quality with the additional automation unlocking greater efficiency and flexibility across our network. We remain confident in our ability to capitalize on opportunities and solidify our leadership position with industry-leading services. Thank you very much. And now I would like to open the floor for question and answer. Over to you, please.

[Operator Instructions] The first question is from the line of Rohit from Samatva Investments.

Sir, my first question is on your automated sorting centers. So in the presentation, you have mentioned that the sorting centers reduce the sorting time by 40%. It also improves your throughput time. But if I have to look at the overall picture, it is yet to contribute in terms of margins. So just wanted why are we -- why is the margins not coming through? And on both these automated centers, if you could provide some monetary metrics for us to understand the growth that has happened over the past year, maybe in terms of ROIs, in terms of throughput, in terms of capacity utilization, something in monetary terms also? So that's my first question.

So I think the important thing to understand is that 1 sorting center or 2 sorting center, the incremental saving can only be seen when we create a total mesh network of 10 sorting centers. Then the real savings is visible on a bigger scale. But if you look at it only from one area standpoint of view, it has definitely benefited. The cost of labor has come down. The throughput has become faster. So in all angles in that one particular location, the benefits can be seen. Now even if you look at our sorting center in Pune, that area used to be always and still is a big problem for labor, and that has been actually -- we have mitigated that risk by putting the automated machines. So of course, if you put 10 of these, you will see a much bigger impact than what -- and a bigger tangible saving versus what you can see with only 1 or 2 centers.

So what will be the time line for us to get the entire chain? So you speak about 10, so we -- maybe 8 more are required. So what sort of capital outlay is required? And what are your time lines in terms of getting the full network in place?

Yes. So basically, we're looking for 2 more centers in, I think, FY '27 because construction has been started at Ahmedabad and Kolkata. And 2 centers, I think we will be ready by FY '27. And then subsequently, we're looking for Chennai, Bangalore, Hyderabad, these kind of centers. So I think by 2030, we will be able to put all 10 in place with the fully automation. Second part, even in spite of -- in these 2 centers, we are able to reduce my overall direct cost. In overall terms, it is around 30 basis points. Though margin is not improving, the is a different task. I will be explaining that also subsequently. But on that front, we are really getting the advantage for the as we mentioned our throughput and then decrease in the labor and increase efficiency there and ultimately saving in a direct cost.

Sir, you spoke about margins not coming through. So what is the reason for that?

No. So this is like [indiscernible]. Second, because operating cost has increased, that is also having different reasons as we earlier also mentioned in different calls. So one is increase in air cost, second and increase in toll tax and labor cost. And then third, we also, as mentioned, created wide network for our multimodal services, which is rail and air services. Because as you know, we have the only one line of business. That is also sometimes a challenge. So that's why we also want to grow our this multimodal businesses simultaneously, so we can have -- whenever supposing we have some challenges in the surface, then these business can be support, supposing we have the multimodal business has some problem, then we can have the support from the surface. Like you've seen in industry-wise, people also like taking support on our different products. So that's why we also -- like we are also in that process where we're developing these different other products, which is a similar in nature for the express industry and suitable for that industry. So whatever -- wherever we are working, this is all like niche segment, specifically for our 2 services. One is rail and other one is C2C segment.

Got it. Sir, my second question is, so recently, a lot of the e-commerce players originally where they used to do a lot of in-sourcing have now started shifting towards outsourcing. So do you see any advantage? Have you seen any new business from the e-commerce segment? Because historically, we haven't been focusing a lot on the e-commerce part. So has there been any change in strategy for us to focus more on the e-commerce, maybe even quick commerce fulfillment centers, anything?

All these businesses are very unprofitable. And yes, so I would like to stay away from them. And they can give you top line, but forget the bottom line, even quick commerce and all that. So they're burning PE money, so it doesn't matter. And in real sense, they have not ever made a single cent or single rupee.

So going forward, we'll stay away from.

Yes, yes, absolutely. And I don't see it turning profitable in any way, even if you have like 200 million tonne volume or whatever, it's not going to turn profitable because they have themselves killed the market by lowering the prices. I remember that it used to be INR 45, INR 50 for e-commerce delivery. Now it's like INR 4, INR 5, where it's not practical to do it anymore by anyone.

Fair enough. Just one more question I had was, so historically, we have been focused -- our key focus area has been the SME segment, right? So I get it last 1, 2 years, SME has been underperforming manufacturing consumption has been a bit low. So what are our triggers? So I just want to know what are trigger points basically that you're tracking for our industry -- the SME part to come back? Because in one of your old calls, you had said we are focusing more on -- so historically, you said you want to focus on the relations and we are ready to take some lower pricing. So I just wanted to know how are you tracking the SME? And are you seeing any progress on that front?

Actually, that's a very good question because, unfortunately, the SME was the hardest hit last year. and that really affected our business. I was reading the data that the inflation had touched almost 9%. And I think the interest rates were about 8%. So the most affected group of people were the SMEs. And since our business also comes 50% from those guys, we saw -- we were quite surprised that this happened. And this was actually a side effect of the fact that it was also election year. People like we forget election year. And before that, in September of 2023, all the cash was withdrawn, the INR 2,000 notes were withdrawn. And then came the elections. And so basically, liquidity dried up in the market. And then there was high interest rates and then high inflation and then SMEs got very badly affected. And we -- it's very easy to lower the price, but it's 10x harder to bring it back up to that level that we want. So India is not -- it is a very sensitive market for pricing. Once you lower the price, it will be very hard to raise the price unless you're giving some sort of a discount in your billing or you're giving some sort of a -- you're doing some sort of a different kind of accounting or something that is benefiting the customer. Otherwise, increasing prices is one of the hardest things to do here in logistics, especially.

Got it. So just -- so what are our top 2 or 3 segments? Is it auto? Is it manufacturing? If you could just give me a broad split at least the top 3, how much does it contribute and which are those segments?

Yes. So consistently, these 5 top vertical is giving almost 55% revenue to us, and these are auto, pharma, engineering and -- yes, lifestyle products and electronics. These are the top 5 segments is giving revenue to that. And all that also like replicate in the SME customers also the same segment we are getting the business from them. So most affected one is the like lifestyle products companies and slightly is auto. So these companies is really affecting this SME business. Also of that, we also noticed Eastern part of India is also not like doing well, where we're like facing double challenge like movement from the other part of India is there in Eastern part of India, but there is an empty vehicle is coming. So one is less business. Second is also like increasing my weight loss or like you can say like utilization of truck is reduced. So this is like 2-way [ sword ] for that purpose.

Sir, so have we lost market share in the SME segment? Is it -- would that be the because if you...

No. So if you see overall basis, if you study the whole industry, this SME business is reduced for everyone. Tonnage has not increased for the like part load and LTL for everything. Different segment has been increased in a different manner. So if you see like third-party logistics increased because e-commerce has certainly increased for that purpose. FTL has increased for the different purposes. So that's why if you see overall basis, tonnage has decreased overall in part load and LTL basically. But it is a high value is a slightly low value, both has been reduced in this FY '25. So there is no matter to like lose market share. That is not the matter.

So are you seeing any recovery? Do you expect any recovery by the festive season? Are you seeing any signs of recovery?

So that is there. So we also taken a strategy to improve on, first, business and obviously, in Eastern part of India. So we can be, again, serve 2 purpose, obviously, reduction of cost and business improvement. Second, we highly focused on creating a team and hiring new people or like experienced people for our rail segment and air segment so that we can grab this high value -- sorry, high yield customer from that segment. So we're working on 2, 3 strategies, and that has already like plays very well in this year onwards, current year onwards.

The next question is from the line of Dhruv Kadakia from SKP Securities.

I just wanted to understand for this year and for this quarter, how has been our volume growth? And what has been our breakups in terms of our different segments, the Surface segment, Air International segment, et cetera. If you can just help me with those numbers.

Yes. So tonnage is almost 255,000 tonnes for this quarter and whole year is around 9.95 tonnes for the whole year. And like the other businesses other than surface business all put together is around 17% to 17.5% for the whole year. Major chunk is coming from air domestic and international put together. Second is like C2C and then followed by rail and e-commerce and then cold chain pharma. So this way, it is like we're splitting that.

The next question is from the line of Sonam Gupta from TCI Express.

You can take the next question, please.

The next question is from the line of Ravi Kumar Naredi from Naredi Investment Private Limited.

[Foreign Language]. So that is my question.

6 months. After 6 months.

Okay. Okay. [Foreign Language].

[Foreign Language] They cannot make their own network. They cannot hire people. [Foreign Language]. But nevertheless, we are no less or we will go ahead. [Foreign Language], we follow the market. [Foreign Language]. That's why we are like -- we go zig-zag. [Foreign Language] company, what I understand is showing straight up the arrow, so that is questionable also sometimes. So we are like an open book, everything is transparent. We know what is -- we are the lifeline of the market. We'll tell you exactly what is going on in the smaller village in Kerala to all the way to the Ladakh. So that way, we are feeling and sensing. So I think it's -- we have had our challenges as a country economically. And I think now we are coming out of it.

[Foreign Language]

The next question is from the line of Krupashankar NJ from Avendus Spark.

I was briefly not part of the call. So if at all you had mentioned what was the tonnage for the quarter and for the financial year?

So it is for quarter, it is 255,000 tonnes and for the whole year is 995,000 tonnes.

So while we have seen [indiscernible] coming in from [indiscernible].

Sir, your voice is cracking.

Is it better now?

Yes, sir, it's still cracking a little bit.

Okay. I'll try my best to ask the question. If it is challenging, I'll fall back in the queue. While you've seen a good growth in the rail business and [indiscernible]. While we understand that the inflationary pressures have always been there, why not take a price hike, which can help us support our growth at this point? Till what point are you waiting for that price hike to come through, sir?

Yes, Krupashankar, so basically, as people talking about price hikes because we did that exercise since last 4, 5 years, and we -- I think we are not struggling for the price hikes, we're struggling and we're like lacking in the tonnage. Pricing is not an issue for us. even profitability is not an issue for us because in spite of that reduction, we are, I think, in having the highest profitability levels. So I'm saying -- so pricing is not an issue for us because we have not taken because volumes are already less. So we don't want to lose further volumes, supposing a few customers is not ready to give that because we also -- in the industry, we've seen there, people has taken price hikes and then customer has gone away. So one quarter, they maybe have the profit, but in second quarter, they might not be like having that same profit level. So we are like consistent company. We will be take the obviously price hikes. But in like right time, I think in this year, we strategically thought and planned for to take the price hike almost 3% for the whole year.

But sir, the inflationary pressure has been much higher than 3%. Would it be suffice to cover your incremental costs if the underlying market itself is weaker, does it make sense to continue on this path because tonnage will be weaker?

Yes. So very good question you asked. So basically, what we've seen in last year, there is a cost pressure on front of toll tax and labor costs and air cost. So we strategically utilize that time to be analyze all the things, how we can rationalize the cost. So this is a good thing in this year, first task we've taken like now in this year, we have not given any hike for the on account of toll increase or labor increases. Second part, what we did, we started even rationalization of the cost because as you -- everybody is aware, tonnage would not be like much in this year as well, what like everybody is anticipating. So that's why we're also like rationalizing our costs. So certainly, our cost will be reduced from this current level. Third thing, we're also negotiating for the like air cost and all. So that will be also benefiting in this year. So various things or initiatives we have taken to control this first -- and then second part is to reduce that. Third thing, we will be like enhance the prices from the customers, obviously. So we certainly improve this margin level from the -- I think it's bottom out, like reduction of this compress this margin bottomed out. And might be like from the first quarter. Otherwise, in second quarter onwards, we will be start to improve our margin level. And for the whole year, certainly, we will be improve at least 150 basis points to 200 basis points in this whole year for sure.

One more question from my side is on the CapEx side. While the tonnage growth is a little bit weaker, can we slow down on the CapEx part? We have been -- because the capacities where you have expanded, it's still not picked up to a large degree. So can the macro factors push your CapEx to a certain degree?

So CapEx is completely for the long-term reason, where we're building up the sorting center for the next 20, 25 years. So profit is less or high does not matter. We -- because this is also depending upon the particular buying the land parcel also because after a long pursuance, we find the land. So whenever we found the land, we're buying that. So it is a little bit also like time, sometimes it maybe happen immediately or may not be happened like it take like 1, 1.5 years also. So that depends upon -- so it has really not impacted our CapEx plan at all. It will be go with as a strategically what we thought.

Last question from my side. Anything on branch expansion for FY '26 and '27? Any target in mind?

Same way. So we like we want to be increased 80 branches for the FY '26, same way 100 branches for the '27. Of that, out of that, like 50 -- half branch would be for the surface and half branch put together for the rail and air business because we're creating a separate team, separate network for this business. So that's slightly also like cost pressure because this cost coming under as a recurring expenditure. So this way, we will be expanding in FY '26 and '27.

The next question is from the line of Karan Shah from Emkay Global.

So I just wanted to...

Sir, your voice is very low.

Is it better now?

Yes, sir.

Yes. So can you just provide a guidance for the -- for FY '26, given that you are not planning for a price hike, so mainly on the volume front?

Can you come again, sorry? I just missed what you said.

Yes, I'm asking for the guidance for FY '26.

Yes. So '26, what we've seen and what we like discuss with our internally and make a strategy, I think we will be achieving a tonnage growth is around in the range of 7% to 8% and overall revenue growth in the 10% to 12% for this year.

Okay. And can you provide a mix of your SME and institutional business?

This time in FY '25, we completed with like 52% from the institutional and 48% from the SMEs. That ratio also, like we will be, again, try to bring back to like 50-50, which we have since last 2 decades, we're maintaining the same ratio. So we'll try to back to that normal one.

The next question is from the line of Priya Sharma from J&K Securities.

We have been an investor of this company for last 4 years, and we have followed the developments in the company and the industry in general. Sir, I regularly go through the financials of the company and of our investors also. I want to know why have we not been able to grow over the past 12 quarters, while one of your competitors, Delhivery Limited, has outgrown you by a distance. Sir, I see that our tonnage has been absolutely flat during the last 12 quarters. And at the same time, our realization has dropped sequentially from INR 13 to INR 12 quarter -- back to INR 12 in Q4 FY '25. At the same time, Delhivery's PTL tonnage has grown 92% during the same period, I think, with a growth in PTL realization simultaneously. So can you please share the reasons behind this?

So first of all, we don't want to comment on the competition here. We can give an answer on a one-to-one basis. Second part, our realization has not dropped what you just mentioned. Our realization is intact, even grown on FY '23, not growing in FY '24 and '25, but it has not declined.

[Operator Instructions] The next question is from the line of Manish Goyal from ThinkWise Wealth Managers.

I have 2 questions. On the new businesses, are we probably incurring losses? And what is the impact on the EBITDA margin from the new businesses? And second, when you guided for 100 and 150 basis improvement in margins, is it from the level from what we have seen in quarter 4? Or is it on the entire FY '25 basis you are expecting improvement in margins?

Yes. Thank you very much. So basically, new businesses, we are not incurring any losses. Rather, I'm saying because -- there is also like gross profit is in a similar way like in the range of 32% to 35%. What we are also earning in surface is in the range of 30% to 32% creating in a separate network. So it is an initial investment we're making because supposing one vehicle is going and it is half empty or 75% empty for a particular route. So it has to be there. We have to bear that cost for the time being. So we're strengthening this segment for the rail and air. Second part, what you asked for that for the whole year, we're targeting to improve this margin for the whole FY '25, not for the...

So what base we have of FY '25 on that entire year, you expect 100 to 150 basis points improvement.

Yes.

So that will be driven by both taking price hike of 3% and controlling cost. Basically, we are not passing on more cost.

Yes. So cost as we stopped to be like increased, this is down, we started rationalization of cost, as mentioned. Second, we started to ask for the price hikes. Third, we're making more focus on these high-yield businesses like rail and air. Fourth, we also focused on businesses like Eastern part of India where my emptiness of truck will be reduced subsequently, and that will be help to improve my utilization of trucks. So ultimately, it will be contribute to improve margins.

And this year, what is the CapEx plan? Because the presentation mentioned that we have a plan of INR 500 crores out of which we have spent roughly INR 200 crores in 3 years. So now the balance INR 300 crores, how do you intend to -- when do you intend to spend? And if you can broadly say how much would be going towards capacity creation and how much would go towards creating sorting centers?

So majorly for the capacity creation in terms of like branch network, we don't need much CapEx. Obviously, 1 branch hardly having CapEx of INR 1 lakh or INR 2 lakhs per branch. But major portion obviously going into sorting center creation. So that we -- in this year, we're planning for the like INR 80 crores to INR 100 crores, similar way of the next year also. Earlier, we've taken a target to finish this INR 500 crores by '27. I think now we need to be -- extend 1 more year. So we will be revised it. I think after quarter 2 by seeing this year's CapEx, how it is shaping because is slightly less deferring or due to that land purchase. So we are looking for land purchases in various places, supposing that strike, that deal, then we will be definitely in this year, maybe have around INR 100 crores plus kind of CapEx in this year. And next year, again, is INR 100 crores.

The next question is from the line of Kunal Bhatia from Dalal & Broacha Stock Broking Limited.

Sir, you mentioned in this year the issues regarding 3 specific things. One was the toll tax cost and labor cost, which went up. Could you elaborate a bit more on how much was our operational efficiency impacted because of these 3 elements? And if you could give us some sense on the quantum of the same?

So basically -- this is a very good question. So if you see like cost has increased by 250 basis points, of that 100 basis points is increasing due to labor cost increase and toll cost increase in an overall year basis, I'm saying. 100 basis point increase because due to low tonnage transportation, my utilization of trucks has been dropped from 83.5% to like 82.5% for the whole year for this FY '25. and 50 basis points due to other reasons of increase of the air cost and air network costs. So these are the contributing factors we have for the FY '25.

Okay. And sir, coming next year, you have given a guidance of 7% to 8% volume and 10% to 12% of overall revenue. So what are the key factors you are baking in to achieve this growth? Because, sir, there has been a lag in terms of the kind of growth achievement we have been having. So if you could give us a bit more insight into this kind of guidance?

So well, basically, in FY '25, we've also seen various uncertain kind of business in FY '25, where we like plan for some X business and that has happened like X minus anything. So -- and good month has also not played very well for all the whole industry players, as you've seen everywhere. So same way, we are confident and we plan and discuss with the customer. And as I said, we're more focusing on like eastern part of businesses. We're also adding new sales team to be focused more to get the new business. Obviously, we will get the combination of business from the existing customer as well as new customers. So we're focusing more into new businesses also. And as mentioned, it is also for the new -- this new high-yield business also like rail and air international or air businesses and C2C business.

Okay. And sir, in the current year in terms of the business from the SMEs, did we lose out in terms of market share to any other player from our existing customer? Have we sort of lost any market share there? Could you give some sense on that?

So SMEs businesses for every industry player is reduced actually because they are in a problem and they are weaker slightly. But I think now it is bottomed out, and that will be start to improve. So what we noticed from the everywhere and from the customer side, SME business itself is reduced actually. So it is not no matter of like losing market share and all. It is -- overall basis is reduced for the everyone.

Okay. So meaning my question was more towards -- are they trying to sort of downgrade to any other players in the industry, obviously, taking into account that even their business is impacted or they do have some cost issues. So have you observed that kind of a trend happening in the industry?

For -- you talking about SME customers?

SME and otherwise. So have people sort of downgraded to other logistics players?

Not really because in express industry, this is a good thing, as I have mentioned, we are not struggling for the like the rate price and all because it is hardly anything for the customers in terms of their product value. It is hardly 1.5% for their product value. So they're really not excited to be reduced the prices in express market.

The next question is from the line of Amit Kumar from Investments.

Sir, with respect to the -- in tonnage guide that you have given, 7%, 8%, what are you actually seeing? I mean, April and May, both are in May is almost over. So in the first 2 months, are you seeing any sort of green shoots of recovery in terms of that tonnage?

Yes, same, but not much. It is in a single low-digit growth we have seen in these 2 months. You rightly said it is May also like completing soon.

So when we are sort of looking at a high single-digit growth on an overall basis, I mean, then obviously, the second half of the year will probably contribute more to that. Any sort of driver or any sort of conversations with clients, which makes you believe why that is going to be the case?

So again, it's really very early to predict that. But obviously, we have taken that and we are planning for the same and taken discussion with the customers throughout across India. So by that, getting their feedback, we've taken this target. And obviously, like we started to grow -- so obviously, with the festival season and there is -- we are not seeing any kind of disruption due to like last year, election was there and all. So this year, we are not seeing hopefully nothing and will be fair year and the tonnage must be like increase in this year. And obviously, price hikes also would be there. So with that, revenue growth would be in a double digit for sure.

The next question is from the line of Pravesh from FourLion Capital.

Could you just briefly elaborate like what percentage of the growth that you're assuming is from the new 80 branches plus 60 branches this year that you have added versus from the existing ones for the 7%, 8% volume guide for next year?

Yes. So because as major branches added for these 2 products, rail and Air Express, so that is also growing very well in these 2 months. And subsequently, also like we increased the more utilization of these branches by putting more person on -- specific person for these 2 products. And surface business, as usual, like we added only 10 branches in last year, whole year. So it's like very -- it's not significant amount we're generating from these branches. As usually, whatever branch we're adding for like -- for these surface customer is for sundry businesses. So that's why it is not much significant on that. And obviously, like next year, we're planning to add 80 branches. So that also like on the -- over the period of full year. And again, I said 50% for these 2 products and 50% for the surface. So maybe like you rightly said it may be help to grow -- take on the like 2%, 3% total tonnage improvement in the overall year.

So the other segment mix, we have been mentioning on the calls at 17%, 17.5% for quite some time. So is there any particular portion in the other segment that's declining given that rail and air Express has been growing well for us?

Yes. Basically, we were earlier having this e-commerce around 4%. Now it is reduced to 2% because our focus on not on that e-commerce because earlier, we were also doing B2C deliveries for the small customer. Now it is not lucrative and also e-commerce players also expanded in the Tier 2, Tier 3 cities. So our -- that portion has compressed from 4 -- I think 2 or 3 years back, it was around 4%. Now it reduced to 2.25% only. So that's the percent. So whatever the increase in this year, it is compressed by this e-com business.

Understood. My second question is on the update on the ESOP policy. Could you please explain the rationale? And also what is the new vesting schedule?

No. So ESOP, we have not did anything. We just like changes some time limit like earlier, we given an option to be like vested within 2 months, which we I think increased to 4 months. and time period like we give an option in this year, we're allowing -- this has to be like exercisable in the next 3 years. This will be slightly flexible like we extended period, I think, from 3 to 5 years. So are these kind of like regulatory kind of things to giving more flexibility to our employees. So that's the only thing.

The next question is from the line of Rohit from Samatva Investments.

I just had a couple of follow-ups. So first, on the rail and the air segment, have we added any new personnel at the top management level?

No. So as you are aware, we already created at a top level, Mr. Ashok Pande is the COO of this multimodal business. And we're adding further also like Head of Air, Head of Rail business. So we're adding that, that we already did in last year. This year, we're creating like people on field, more people on the field, specifically in sell side that we're like hiring from the instrument all and we're putting that team. So upper top is already there, but now we're putting more people on the field.

Got it. Sir, my last question will be to set up a new automated plant, what will be the total CapEx for 1 plant?

Yes, it is around in the range of INR 20 crores to INR 25 crores for the -- alone for this sorting center -- sorter only. Means automation cost [indiscernible] and land and construction cost is different depending upon the location and -- yes.

Thank you very much. As there are no further questions from the participants, I now hand the conference over to Mr. Agarwal for closing comments.

Thank you, everyone, for joining us today. We have tried to address all your questions. If you have further inquiries, please connect with our Investor Relations team, and we will be happy to address the same. We look forward to meeting you in the next quarter. Please stay safe and healthy. Thank you.

Thank you very much to everyone.

Thank you very much. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.