Transport Corporation of India Limited ($TCI)

Good evening, ladies and gentlemen. I'm Simran, the moderator and I'd like to extend a warm welcome to everyone joining us for the Transport Corporation of India Limited Annual FY '26 Earnings Conference Call. On behalf of the management, we have with us Mr. Vineet Agarwal Managing Director; and Mr. Ashish Tiwari, Group CFO. [Operator Instructions] Please note that this call is being recorded. With that, I now invite Mr. Ashish Tiwari to begin with his opening remarks. Thank you, and over to you, sir.

Thank you, Simran, and good evening to all of you. Again, thank you for joining the call. I would like to make a disclaimer that some of the discussions segment would be forward-looking and may not contact with the actual performance. As part of plan, we will start with the presenation by Vineet Agarwal, MD and then questions. So I just hand over to Mr. Agarwal.

Thank you, Ashish. Your voice is cracking a little bit. So just check on that. And can you put this on full screen? I think everyone is quite aware of our business and the operations, et cetera. So I will try to keep my commentary a little brief and essentially, we'll take more questions. Let me just broadly say that -- if you go back to the previous slide, Ashish, broadly say that our diversified offerings are really helping us in this current marketplace. And essentially, what we are feeling is that if the -- as the diesel price has come about and the cost structure is increasing on the road transport side, the shift towards multimodal should happen more and more with road replacing rail -- sorry, rail replacing -- rail and sea replacing road and multimodal will definitely increase. Broadly speaking, post the war starting, the impact -- direct impact has come on essentially on the shipping business where the bunker prices went up by 100%, but we have been able to pass on a lot of that increase. Subsequently also, we are seeing that raw material prices have been up. And the impact of all of this would be that perhaps in the next few months, we should definitely see some pressure some increase in inflation, which would put pressure on demand. And some corrosion of demand could happen also -- we -- for example, we saw that there are some consumer durable sales that have become a little softer in -- because of the rate hikes that some companies have taken -- and this could be an indication of several other sectors also. Notwithstanding, I think the overall economy remains very strong. We are coming up from a higher base the 6%, 7% or $4 trillion is still a very large base, and we have a lot of room to grow and also moved us organized logistics. So let's go ahead, please. Let's just go to the -- go ahead, please. I would like to start with a case study. This case study is for a e-com retailer. Now the e-com retailer is essentially someone who buys a product of consumer durables in bulk from the major companies and then sells it to through the e-commerce platforms, whether it is Amazon, Flipkart or others. And this company was in need of a rapid scale-up across the country, and they wanted a complete designing of the solution. They wanted a whole warehouse network and the entire distribution setup. So we were able to provide an end-to-end solution where we got them 6 other warehouses for an all India distribution. And now they have been able to bring down their costs substantially with lower inventory holding costs as well as with any kind of spikes that can happen during festival seasons or just generally, they are able to respond better to market conditions. So this was -- this is the kind of pan-India logistics business that we are able to service our clients with. I think the logistics industry growth drivers are well known. We can go ahead as we have a wide range of services. And as you are aware, we continue to keep adding new services. Go ahead, please, this, I think everyone is aware of these -- over the year, the number of rigs that we moved increased from [ 2350 to about 2826. ] And this was for both container as well as auto logistics. So the thrust and the move towards multimodal continues from our side. Container movement also increased, of course, the number of cars that we hadn't have also increased. So some continuously the investment into our -- into the multimodal network essentially means that we are 1 of the only players who can provide this kind of end-to-end solution. Technology remains very strong. We have a center of excellence that is working on artificial intelligence projects. And perhaps in the next meeting, we will definitely show you some examples of what we are doing. Go ahead, please. So March quarter, the impact of the growth has been decent, at about 12%. However, we were anticipating a little bit more in terms of growth simply because when the war started on February 28, we lost out some of the business that happens in March, which, as you are aware, is 1 of the best months for us. So -- but notwithstanding, we've been able to grow faster than the other quarters. And we think that this momentum will not necessarily always be -- will not continue to that extent, but there will be some growth, of course, over the last quarter last year. Supply chain, as I've been saying, is now the largest business for us. And we've made investments of, I think that number is INR 370 crores, not INR 270. And most of -- a lot of that came from internal accurals. We are still cash surplus about INR 250-odd crores on the books. Let's go to the next slide, the next slide. So on the freight business, as I've been saying that we are close to the bottom, and we are there, I think now. Last quarter, we saw a 13% growth, which shows that there is some pullback that's starting to happen. Margins remain compressed because of the pressure -- competitive pressure as well as certain cost increases. And net result for the whole year has been that we have a 14% decline in EBIT and of course, the ROCEs are at the lowest level. This is -- these levels we've not seen in the last 6, 7 years. So the silver lining here is that the shift towards LTL has started again. And we have moved to about 63%. 1 percentage point has reduced in the FTL business. We've also had a leadership change. The CEO has changed in this business in the last few months. So going forward, we should definitely see some pullback in this business. We have to also remember that there could be some impact because of the Gulf war. But we are working very hard to see how we can mitigate some of it. But going forward, we are quite bullish that the turnaround will start now onwards. In terms of supply chain, the growth for the quarter was about 11% and full year growth was 14%. Some of it, as I said, tapered off also because of the March month itself, otherwise, we were anticipating more growth EBITDA is slightly flattish -- sorry, the EBIT levels are slightly flattish, but that is also because we have created a lot of bench strength. We have acquired a lot of clients like the example I showed you the time for it to be fully operational, that kind of operations takes a few months. So we do invest into the manpower, the infrastructure and the impact of that or the benefits of that takes a little while. We've also done a lot of CapEx in this business, especially trucks as well as warehouse equipment, et cetera. And hence, this margin seems to be slightly compressed rather ROCEs are a little lower. The other reason is also the other thing is that we are seeing a very good and strong pipeline in this business in the next few months and should mean that we'll continuously make more and more investments into this, be it more trucks. Not of that is replacement, but some also for new contracts and definitely more warehousing equipment because that's also a very high demand right now for large-scale warehouses. On the Seaways business, the quarter was good because we had no dry-docks as well as we were able to increase some of the pricing at wherever the bunker prices went up, which, as I said, was up by 100% in the last month -- in the month of March itself. The number of voyages also, as I said, was slightly higher. The business continues to do well, and EBITDA margins also -- EBIT margins are also decent. The concern around higher bunker pricing is that it will possibly start having an impact now onwards in the next few months a little bit more plus the year-end quarter 3, quarter 4 is when we have new ships start coming in. So there could be some operational compression or margin compression over the course of that period. So for full year, I think, again, depending upon when the ships come in, we anticipate the top line growth should be between 5% to 10% and bottom line should be about the possibly around the same or maybe some increase in that. The joint ventures have done well. Concord has grown by about 20% and although margins are a bit flattish, cold chain has grown by about 16%. It has come back to profitability and we see good growth opportunities there. Our automotive logistics joint venture has also Transystem has done reasonably well with the top line growth, but bottom line has compressed a little bit. So on the financial highlights, we missed our guidance by slightly when it on the console side, about 9.5% on the top line, which was about 10% to 12%, about -- and we are a little confident that we'll exceed around 12% to 15% on the bottom line. But I think the cost pressures have been a little bit much more higher than we anticipated. So on the bottom line growth has only been about 10.5% but notwithstanding, I think the challenges that are there currently in the system, the team has done relatively well to keep up these margins and keep growing despite these pressures. On an overall basis, our ROCEs are the 24%. 5 years, 6 years, we've given a console growth of about 25% CAGR. ROW is about 20-plus percent also. The dividend payout was slightly higher this year of about 100% more than last year. But again, the quantum of payout still remains in the 15% to 20% range. We did 17.3% as you can see in '22 and '23 was slightly higher also. But we've maintained it in this 15% to 20% range. We are using some green trucking where we're doing CNG, LNG transportation, and we are working very closely with companies on EV transportation also on the heavy-duty movement. So that's something is very actively we are doing. We also run a very large safety program, TCI save safar where we're engaging drivers on safety including now children. So we have an initiative of Safe safar Jr, which we are going to schools also and talking to them about safety. So it's a big effort for us, a national effort for us to get safety up in terms of something that is primary to our business. Go ahead. In terms of CapEx, I think -- we did about INR 370 crores, and that some of the investment that we ships was the advance for the ships. We were anticipating that the payout would have been higher, but the INR 135 crores versus what we paid INR 70 crores. The budget for this year for the ships is about INR 237 crores. This includes the possibility of another ship that we might order. So we are taking some CapEx for that in terms of advanced payment. But it also includes the payment for the ships that are going to come in the final payments for that ship -- those 2 ships. So I'm repeating, the 2 ships that are coming in, the final payments for that -- for those 2 ships will -- is accounted for as well as possibility of another ship that we placed on order for that, the advance for that is also taken in the budget. Budget for hub centers and all remains almost the same. The budget for trucks, et cetera, is the same, the warehouse equipment budget over what we took in FY '26, which is about INR 43 crores -- INR 43 crores was more than doubled in '26 in terms of actual expenditure. So we have now taken a higher budget also based on the anticipation of new contracts. These are some of the points that guidance remains at the 10% to 12%, again, because the first we anticipate, as I said, some -- perhaps some demand portion at the end of the year. So there could be some impact -- so we are moderating that outlook right now. There is a certain level of uncertainty in the market. And we think that it's better to keep protecting our margins versus chasing growth, which might not be that profitable. Thank you and look forward to questions, please.

Thank you, so for sharing your valuable insights. [Operator Instructions] Our first question is from Mr. Jainam Shah.

Sir, this question is related to the shipping segment mainly. May I know the exact timing of the tests, it was supposed to be the June and December or maybe July and January earlier at the time of 1 how we are expecting this 2 ship to come. It will be this financial year, both are coming together or how it is?

Both are coming in this financial year, Q3 and end of Q4. So the timings are not known exactly because there's actual construction that happens. So we think it will be closer to the end of the calendar year for both the ships, not necessarily together 1 after the other. .

Yes. So the fuel cost that has increased substantially in the month of March, you told that we have been able to pass on some of the costs. So how do we see these margins because we have been doing great margins in this particular segment over the last few years because of the lower depreciation as well. And you can say the fuel cost has been largely stable. Now it has gone up almost or read how it has been passed on like we have been able to pass on 50% more than that less than that . How do we see it going forward as well? And how it is going to embed a EBIT margin or, let's say, the profitability assuming that there is no ship addition as of now from the existing ships that we are having. .

Yes. So what typically happens is as the bunker prices went up, we passed on the price increase to our customers also. And it's a rate increase that happens. Obviously, there can be some customers who might see car don't want to do it, and they did not. Some customers might have said, okay, let me just move by road. -- versus rail, let's say, on the West Coast. Now that fuel prices have gone up on the road side as well, which means that costs will go up. I think the demand for the shipping business will continue to remain. Quarter 1 and quarter 2 is usually slightly lower than quarter 3 -- quarter 3 and 4. So maybe that moderation could happen on a little bit on the demand side from that perspective. But the pass-on has happened. And acceptance of the pass-on is also there. So we do want to anticipate any loss of business because the rates have gone up too much. .

Got it. Sir, on the road part that you told about, we are also having presence in the, let's say, FTL and LTL business along with, let's say, some of the part of the SCS also is moving through road. How do we see price increase over there because diesel prices also increased by around 7%, 8% in the last 50 days. Have we been able to pass it on the customer fully or how we are seeing those margins at least for these 2 segments with the road perspective. .

Yes. Both the businesses have a pass on through system where the contracts are there with a certain formula and the business, and we are passing it on the rate increases. Sometimes you might get a delay. It's not necessarily that it happens right away. It could have a lag. So which is also fine. I mean -- but we do get the increase. In the LTL business, the pass-on is not immediate. We increased the rates but maybe some customers accept it, or they do not there's some negotiation. So there's a little bit of a lag as well as maybe we do not end up passing on the entire increase. So -- so there also, we are careful on the cost side also to keep that moderated, and we balance the increase in customer prices with the increase in the vendor pricing so that we are able to keep up the margins. .

Got it, sir. And sir, just last 1 question from my side. The new ship that we are talking about will it be then although there a new ship or it would be some secondhand ship for which we will be giving the advance .

No, we are looking at a brand-new ship again because secondhand ships are just not available in the marketplace. So we are again trying for a brand-new ship. But as I said, it's work in progress. .

The next question is from Mr. Jaideep Ghosh.

Yes. Okay. Thank you. Vineet this is Jaideep, former KPMG partner. And my question is will broad beyond and besides the Iran-related conflict for the next couple of quarters. What risks are you seeing at the macro level, like you mentioned, inflation at the industry level and at the organization level, some of the highlights, if you can share, which will impact the business that's from that perspective. .

So actually, from the business perspective, we are domestic as a domestic company. We are, to some extent, insulated from the global impact if there are shipping rates that go up, et cetera. We don't necessarily have a direct impact. So the indirect impact is clearly -- or rather the direct impact is only on the fuel side, mostly, which I've already explained. . Of course, imports become more expensive. So our ships that we are buying have become more expensive. So that's again the direct impact. The other aspect is consumer customer demand might come down a bit -- so some of our businesses do transportation of, let's say, landed product from the ports on to the mainland to the interland and that happens -- that could come down a little bit if people are -- customers are not importing as much -- so that could be some impact. Then the other thing that's happening not beyond the Gulf war is the is that the wages -- minimum wages are also going up in the many states have announced minimum wage increases, which essentially means that we are -- we have, again, a pass-through there, but that's also a little bit of a cost increase that's happening. And labor movement has also become quite tough in the last few months post the -- where certain types of industries have completely shut down, for example, the tile industry in Morbi or certain hospitality industries, the MSME is definitely struggling, and some of the labor has also gone back to their hometowns also due to the elections. So that is also having a little bit of an impact on -- at various industry levels. So I think we will feel that in the next few months. A little bit on our side, but also on the industry side and hence, MSME business, we think might get affected to some extent. So those are broad risks. Of course, the mitigation for those risks that -- we have a large business diversification that is already there, and that should help us in capturing the various value -- all the segments that we see which are growing or which are not really so susceptible to these risks.

The next question is from Mr. Krupashankar.

Now my first question is on the supply chain business. I think it, you did mention in the morning in your media, I don't know when you speaking to the media, that the road-to-rail shift, we've seen some traction -- and I did notice that you were going to add about 2 rigs in the supply chain business this year. Just wanted to get a sense around what exactly are you seeing on the ground with respect to that shift. If you can talk about -- or is it just talk at this point and execution will probably happen over a later period? Something on those lines? And when are the rigs expected? If you can clarify that. .

Okay. So the -- what's happening on that side is that anyways, a lot of the hub-to-hub movement on the auto side has moved towards rail. And we maintain the 67, 70 yards across the country are essentially for getting in the automobiles there and stocking it and then doing the PDI, et cetera, billing and then delivering it to the dealers. So that is anyway shifted to a lot towards multi-model. Going forward, I think with the rate increases on the road side, the shift will remain. I think it will not come down. And the talk is there, but also I think the -- just the sheer convenience of moving it by rail now because you have a yard, so you can send it in bulk and you can stock it there. Has -- is it prompting a lot of our customers to keep looking at rail movement. . On the AFT rigs, those are also expected by the end of the calendar year, those 2 that we have. But notwithstanding, we are anyway using hiring rigs from the railways. And that, as you have seen that we are doing almost 6 to 7 rigs a day now. So -- that's the kind of volume handling currently.

Got it. So it has not Vineet with [indiscernible] the Commission on those lines were in stadia looking for shift -- is that something you ...

Well, yes, there's always some demand that keeps moving back and forth. So which is fine. I mean, we keep looking at those opportunities, and there's something that we always we always try out those things. .

The second question was on the CBS. Anything to highlight on the plan of dry docking this year, -- how are Satna -- just to help build the growth for over the year. .

Yes. I think Ashish there are 2 more -- 2 ships in this financial year. .

There are 2 dry-docks Krupashankar .

One is already underway as we speak.

Got it. Got it. Last question from my side. On the freight business the profitability just keeps on coming off. Any one-offs to call over here in this quarter? Or is it just as a function of the NGL proportion increasing, which is not...

Ashish you're not on mute. Ashish? Yes. Sorry, Krupashankar. Yes, I think it's not -- some of it is not one-off really in that sense that I think, as I said, the -- we are we are working on changing the shift and the business volume growth is a combination of both FTL as well as LTM. But I would not say that the growth has come because of I think it's just the overall structural issues that we are addressing. I think those are helping us build up growth. And once we are seeing this kind of growth, we should also see profitability improving. .

The next question is from Mr. Alok Deora. .

Congratulations on decent numbers. So sir, so just first on the supply chain business, actually. So there, if you look at the growth, it's being slightly slower than the run rate which we were typically doing. So just wanted to understand what has happened there. And on Seaways also, if you can just highlight what led to this kind of growth because this growth kind of -- I mean, we were not anticipating in terms of revenues. And what could be the growth outlook for FY '27 in series, particularly. .

Okay. So on supply chain side, the growth has been there. We are just coming off from slightly higher base in FY '25, the Q4 was also decent. So that's why the top line on Q4 slightly muted compared to the overall run rate. But some contracts have -- as we've acquired some contracts in Q4. So we'll see some of that benefit coming in Q1, Q2 and going forward now. And that remains extremely robust in terms of the growth opportunities. Of course, we have to be very careful about what kind of growth we do in supply chain also because there is a lot of potential to do large growth, but not necessarily get profitable growth. I think you see that with some of our competitors also. So in that context, we are looking at -- of course, automobile continues to be the large driver for us, but the kind of warehousing businesses that we are capturing large-scale businesses are very unique. We have also since we provide a multimodal solution, that also makes us unique. So amongst -- even in the supply chain business, we are -- we are building internally, we're building moats around the business so that we are able to capture all kinds of growth, that's something as well as be insulated from some of the things that happen either external exogenous shocks or because of competitive pressures. On the Seaway side, the growth has again come from -- 1 is that higher voyages because none of the ships were under dry dock. Secondly, some higher voyages means higher volumes. Also, the rates have gone up. So that has also resulted in higher revenue numbers. And going forward also, I think FY '27, we should remain at that 5-ish to 10% range because anyways, the container rates are now going to be elevated, given that the bunker prices are still high. If the bunker prices starts coming off, then we'll have will reduce the rates also. So assuming that there is -- the bunker prices remain high, means our container selling price remains high, which means that the revenue growth should be there.

Got it. So in your presentation, it mentioned that 3 ships were under dry dock during the period. So this is referring to which period? .

FY '26.

Okay, so in fourth quarter, nothing was there. .

Fourth quarter, no.

Okay. And just last question. So in FY'27 basically, you're saying that the growth could be more like a of 5% to 10% in Seaways and the margins could largely sustain at the current levels.

Yes. .

Got it. Yes. Just -- sorry, just 1 follow-up on the Seaways side only. So any update on the secondhand shape? Or are we in any discussion because I mean if we just look at it in hindsight, I mean, we have been speaking about the second-hand procurement since several quarters now and the prices have actually remained. I mean it could have maybe turned out to be a good margin generator for us had the ship been in place. So just wanted your sense on whether the prices take are elevated or whether we are okay to kind of look at buying more expensive ship if the outlook is pretty positive. .

Well, we've still not found the right ship because you can't just buy the ship because there is a ship available at a higher price. You also have to see several factors, including that how old is the ship how many useful -- how many years of useful life does it have? What kind of fuel does it use? What is the efficiency of that? What is the loading that you can do? Where is it built out or are the spares easily available? So there's lots of variables that are there when you buy a ship, it's not just the price. However, price has been higher and it continues to remain high. . And then again, you don't buy the ship only for the 4 years that we've been 3, 4 years that we've been talking about buying a secondhand ship. You basically buy it for 10, 15 years. And it's not necessary that the pricing that will remain going forward because shipping also sometimes goes through severe cycles. But we have been very cautious about this, and we continue to deliver margins, continue to deliver growth. And the in the future, also the -- we are keeping a watch on the secondhand market. But until that doesn't happen, we are continuing to expand using some fleet that is going to be used for specialized purposes and has a huge demand also in the Indian water. So that's the order for the 2 ships and a potential order for under third ship.

The next question is from Mr. Deepak.

Congrats on a good resilient performance. So first, my question is on the Seaways business. You mentioned that all the bunker prices have been passed on and you'll be able to maintain margins. So on the volume side, so the growth should be largely from the volume led. So in -- from our existing business, existing ships, how much volume growth do you think we can achieve from the existing ships we have considering dry docks this year? That's the first question. And the second 1 is the new ships that you plan to add, how much capacity will that be adding? And the third ship that you're talking about, which would be in the proposal how big could that opportunity be for us in terms of volume and also the CapEx, if at all, you go ahead with that third ship proposal?

Yes. Well, in terms of volume for the first quarter, that essentially or going forward, essentially, see, we have 1 ship that's under dry-dock right now. And I said, Q1, Q2 is not necessarily the best quarters for the shipping business. So I think there could be not much growth in that, maybe a little bit growth that could come in the first 2 quarters in terms of volumes. The second question around capacity addition, we are -- the ships would be adding about 15,000, 16,000 tonnes of capacity to the 77,000 tonnes that we have -- 78,000 tonnes we have. The third is a ship that we are looking at, again, it's undecided. We don't have -- I cannot share with you exactly on the type of ship on the quantum -- the quantum of the size, et cetera, right now, but it could be similar to the 1 that we've ordered, similar to the ones that we've ordered the 2 ships. .

And Vineet can I have no comments on the competition in the Seaways because we've spoken about competition coming back and also the anteprices which you've passed on or resulted in any demand implication. So what I wanted to hear from you is the margin outlook because you are sitting at very high margins. So the sustainability of it. I just wanted to check with you given competition and the higher inflation of Seaways prices. .

Yes. Well, I moderate everyone to say that we'll get to that lower range of profitability. But fortunately, the business keeps delivering good margins. But I will still keep saying that because there would be some quarters where we are going to hit that lower margin, not necessarily only because of competition, but because of the direct cost increase, which is fuel, which comprises so that, that has an impact directly on our business. . There is not much of a demand erosion that has happened because of the increase in pricing. So I think it's still stable. But I think some volumes are definitely going to fall off in the next few months because of, again, the reasons I've given. But we should also be able to get some volumes because diesel prices are going to affect road rates. So it's a balance. However, if you have to compare between Q1 of last year versus Q1 of this year, I think we will look at a very, very moderate growth.

That was for -- and on this next my question is on the supply chain business. See, you've taken about a good pipeline and you're building infrastructure for it in terms of warehouses and more people involved. So can I have a sense of what kind of growth of this pipeline promises to you? Which sectors? Is it existing clients, new clients? Are we gaining what kind of market share are we gaining? So that is 1 on the growth side. And Vineet, you've been speaking about margin expansion and supply chain for a long time, but us being on the expansionary phase, you're not able to see the margins going up. So how should 1 look at growth and margins for supply chains?

If you can just go to the slide, I think the growth that we've had in supply chain is about 14%. I think the anticipated growth is about the same range for this -- this year as well, closer to 14% -- the same 13%, 4%, 15% type of growth have been at 9.6%. We've been saying that, look, it will probably be -- it's always between -- always been between that 9% and 11% range. Some years of investment, we continue to see the margin is slightly lower, but it comes back also in a few years. So -- but we are in an expansion phase, which means a lot of investments, which means that CAPEX higher, trucks are there, depreciation is higher. So some of those impact is there. But I think this range will remain in this 9% to 11% with -- so -- there is a lot of business that we're going to -- we are looking to do over here at that higher margin range itself, not at the margin structure that some of our competitors are at. . So that automatically gives us a 300, 400 basis point kind of better realization of our competitors just because of the sheer quality of services we provide, and we are able to optimize it over our network.

Okay. Last question on your freight business, given that there's been a price hike and you mentioned that there will be a delay in passing it on. If you can guide us with the near-term margin compression that the business would see that has gone -- and long-term outlook on this business for the last 3 years, we've been struggling with competitive pressure, et cetera. So if you can share with -- share your sense on the long-term trajectory of this business? And what exactly you mentioned that what we have changed some internal strategies, et cetera. So if you can help with what has changed for the long term for the business? .

Well, in the long term, as I said, the focus first is that the focus has -- we've always been talking about LTL business and now the focus team has to the -- has increased quite very heavily at the field level. And as I said, the leadership change is also driving some of that aspect of the business. So some amount of margin compression might happen, but the growth is more reasonable and visible. So I think it might have an impact for a very short period because of the pass-through that it takes some time for it to happen. But I think it should -- we should -- we would not possibly go lower than what we have so far and we should see only positive growth going forward.

If you can share any other -- sir, the last question is on the Toyota JV that we have, that business has seen lower profitability this year. So if you can share what has been the revenue growth for that and the margins for that segment and follow it up with your outlook on the JV as well? .

We are -- I mean, the growth has been in the double digit and profitability came down slightly because of, again, some contracts, some division in some of the contracts that happened. But I think we look -- we are looking at better growth this year for sure and also margin should come back.

[Operator Instructions] Next question is from Mr. Sparsh Jain.

Sparsh from Equitas Investment. So I got 2 questions. So first 1 is on the LTL business itself. So you said that in the Intel business, you are able to pass on the cost fuel cost to the customers. So what is the time lag that we can see. It's 1 month or you can see 1 quarter that we can see. And furthermore, with regard to a dry dock. So currently, 1 ship is under the dry dock and 1 more will go in this year. So what is the cast that we can see? And what's the volume impact that we can see in that part?

The LTL business, you're right, it takes about a month or so for a full pass-through to happen. So I think that is unwind yes, so -- but the process has already started. And sorry, your other question was on?

It's on the dry dock CapEx size. What's the volume which we can see...

It's for the 2 ships 2 ships and I said volume should get a little -- I think I don't remember when it's the second write-off, Ashish is it in Q2 or Q3? .

Q3 but because we have 3 type last year or this year would be like the higher capacity would be available for running.

Okay. We can see more volume growth in this year as we compare it to the last year because we have the more ship, you can see that rate which is available to us right now. .

Yes, it looks like -- let's see. .

We have Ms. Riya Mehta also from Aequitas Investments. Please put your question?

So my first question is in terms of the Supply Chain Solution business, which we are having. So even when I have been tracking my and logistics, et cetera, -- so we are listening with some kind of slowdown happening in the auto sector and with the current inflationary environment, auto might see a little slump for some time. Are you witnessing some signs of those things happening in ground -- and do we enters growth lower than our normal last 2, 3 years' average of 15?

Well, I think there would be -- there could be some moderation going forward if interest rates are going up and the cost increases happen with some of the new model launches, et cetera. But I think between September and now after the GST cut, a lot of the inventory that was in the system has gone away. So a lot of production is happening. And we -- when we speak to our -- some of the OEMs we are seeing that the chopper block in terms of production. However, there is also some places we heard about labor shortages in the OEMs -- in the ancillary units. But notwithstanding, I think some product -- the production is going to continue -- the -- I think the seasonality aspect of the automobile industry will continue, which is that usually Q1 is slightly lesser and Q2 is also slightly lesser. So that might continue. But otherwise, I think the momentum still remains. EV requirement for EV is continuous and increasing quite rapidly. So the shift is there and perhaps the new additions that are happening, for example, in 2-wheelers, a lot of that is the EV side. So I think the demand for automobile -- and remember that we are quite diversified. We are not just into 4-wheeler and 2-wheeler. -- but we do 3 wheelers, we do commercial vehicles, we do tractors, we do work move equipment. And again, on that, we are diversified in the entire supply chain. We don't do just inbound logistics, but we do outbound logistics, spare parts, logistics, warehousing. So the breadth of the work that we do and the depth of work that we do in the auto industry is very large. So we think that we should be able to continue for the growth momentum. .

Got it. And my next question is in terms of the ships that you retire in a year or so. So I think Laxmi Express and Surya...

Not an extension until '29 now. So -- so yes, that is still time...

Okay. So while that would be a loss of around 35,000 deadweight. Are we anticipating and we have added around 1 -- are we planning another 20 to actually just stay stable with our capacity till FY '29?

As I said, we are still -- the capacity addition is underway, and we still have this capacity to '29. And the capacity can get added on as -- sorry, the same capacity can continue for 2 more years, according to the new shipping regulations. And if that happens, we still have more space orders ship cannot -- is not necessarily going to retire. And as I've said that we are looking to add capacity both on the new ships as well as on secondhand ships. .

So this can go up to FY '31 more 2 years also, we can gain an extension. .

Possibly. That's right. .

I can see Mr. Alok Deora has raised his hand again. So please put up your question. .

Yes. Thanks for the follow-up. Just wanted to understand, in the Freight segment, the margins have been pretty muted -- so what's the outlook there? Because now, especially with the diesel prices increasing now, -- could you just provide some sense on the competitive intensity would we be able to sustain margins or it could come under some pressure? Or because with this increasing scale, the margins seem to be pretty much around those current levels only since if you even compare it to Y-o-Y?

Yes. Some pressure will remain. It doesn't go away right away, but I think it's a matter of time that once the pass-through happens, we should be able to manage it. So yes. So I think it's a little bit of a tentative period right now, but I think the entire price hike has not necessarily happened I think there's still going to be more hikes that will come up. So we are passing it on as we speak on a regular basis with customers. And -- but some customers might delay a little bit but no 1 is going to deny it. That's for sure. .

Got it. And of -- this DC has been nonconnected till JNPT and Concor in their results call also mentioned about the commissioning starting from June onwards. So how do we see our JV performance getting positively impacted because of this. If you can just highlight something on that. .

Which specific JV? .

The JV with Concor, yes. .

No, I don't see any negative impact. I think the it's positive only because .

Yes, positively only I meant, yes. .

So it should positively keep growing. I anticipate that 15% type of growth in this business also. And margins should also stabilize to some extent. Again, since the shift, there is a little bit of a shift that happens during times like this. it should continue. So we are, again, bullish about it. And again, as I keep repeating, there is no other company in India that has all these capabilities under a single roof, and we are able to lift cargo between different modes of transport we have customers who come to us with that understanding also as well as we create a lot of fines. And you can see in the last decade also the kind of growth that we have had in all the businesses and a continuous and consistent level. So -- so again, that's the strength of the diversified offerings that we have. .

We have our last question from Mr. Deepak.

Sir, I wanted to check across our 3 segments, if you can specify how much of our business is in bought -- and how much will be contracted? And in the contracted, how long is the contract cycle for 3 months, 6 months, 9 months. What I wanted to gauge is what's the lag in passing on the price -- fuel price increase? And secondly, I wanted to check out of the fuel price increase of whatever has happened so far, -- how much have we passed on to our end customer?

We don't share exact numbers in terms of spot and long term, et cetera, but I can share broadly let's say, in the freight business, most of the contracts are about a year old, a year long. And again, barring the LTL business, almost all our yearly type of contracts. And the pass-on is based on the contract terms, which is a formula base. And when you trigger a certain percentage increase or percentage decrease the formula gets triggered and we -- the automatic pass-through gets triggered. Our billing has also changed accordingly. That's for the Freight business. On the supply chain business, the bulk of the contracts are in the excess of 2 years, 3 years, 4 years, even 3 plus 3 plus 3 kind of contracts. So again, the similar contract terms where the pass-through happens with certain triggers or in some cases, with even the -- any kind of smallest increase and decrease. So that is also continuous. On the Seaways business, we have a few contracts. A lot of that is also -- the bulk of the contracts particularly 1-year contracts and some contracts are a little longer, but mostly 1-year contracts. There also, the -- as I've talked about, the pass-through is also immediate with the bunker prices actually increased much earlier than the diesel price increases. So we passed it on right away.

Got it. And out of the cost inflation that you've seen so far, how much has the company passed on and how much is remaining, if you can roughly tell us across segments .

Difficult to say right now because you will ask for a certain increase, but it's not necessarily the customer will give you the entire increase. So it's too early right now. And secondly, I don't -- as I said, I don't think all the increases are yet. So we've had only a INR 7.5 increase in diesel, I think that's more expected. .

Sir. I just wanted to check with you on the behavior of other companies in our sector are -- is everyone looking for increasing pricing or the competition in the sector is leading to some sort of lead lag in passing it on. So just wanted to account the competitive spirit of the sector, amids this. .

Generally speaking, during this time, everyone increases the cost increases the rate. So because of the -- it's a common problem to everyone. I don't think anyone can absorb such kind of increased fuel being a higher component to cost. So I do not expect anyone to absorb these at all. And there's also an net impact on other aspects because fuel is 1 part and lubricant prices increase, driver wages have increased tolls have increased. So all the other input costs have also been increasing on a continuous basis. I think this is a great opportunity for the industry to raise pricing. .

There are no further questions. Now I'm handing over the floor to Mr. Ashish Tiwari for his closing comments.

Thank you on Simran and thank you everyone for joining us today. I hope we have answered all the questions. If you have left write back. And I have seen that most of you actually have been with us for all 4 quarters. Thank you so much and see you in the next, the next quarter 1. Thank you.

Thank you.