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Gati Ltd
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Ladies and gentlemen, good day, and welcome to the Allcargo Gati Limited Q2 and H1 FY '24 Results Conference Call hosted by Dolat Capital Markets Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Jain from Dolat Capital Markets Private Limited. Thank you, and over to you, sir.
Thank you, Lizan. Good morning, everyone. On behalf of Dolat Capital, I welcome you all to Q2 FY '24 Earnings Conference Call of Allcargo Gati Limited. We thank the management for providing us the opportunity to host the call. From the management side, we have with us Mr. Phil, Managing Director and CEO; and Mr. Anish Matthew, CFO of Allcargo Gati Limited. Now I hand over the call to Mr. Phil for opening remarks, followed by the question-and-answer session. Thank you, and over to you, sir.
Good afternoon, and thank you, Abhishek. Good afternoon, and a warm welcome to everyone on our quarter 2 and H1 FY '24 Earnings Conference call. We have uploaded our results and earnings presentation on the stock exchanges and company's website, and I hope everyone had an opportunity to go through the page. As mentioned, along with me, I have Mr. Anish Matthew, the Chief Financial Officer of Allcargo Gati Limited and our Investor Relations team. I will now share an overview of the economy, industry and business, after which we'll hand over the call to Anish to discuss the financial performance of the company for the quarter and half year ended September 2023. The IMF has projected that global real GDP growth will remain steady at 3% in 2023, although they have revised their 2024 forecast slightly downwards to 2.9% from the previous estimate of 3%. The total global output is estimated to be around 3.4%, which is still below the pre-pandemic projection. The global economy is limping along its path to post pandemic recovery. There are several factors that continue to raise concerns. These include the volatility of oil prices, sluggish productivity growth and ongoing geopolitical tensions such as the Israel-Palestine conflict. While China is grappling with its real estate crisis and diminished external demand, there is no respite for major economies like U.S. and U.K. too. Although the risks of banking and stability have softened, commodity prices would become volatile on the back of geopolitical tension. Turning our focus to India. It's worth noting that it currently holds the position of the fifth largest economy with robust growth projections, it is poised to attend to the position of the third largest economy by 2030. IMF has projected strong growth in India at 6.3% for both 2023 and 2024 with an upward revision of 0.2 percentage points for 2023. This upward revision is attributed to India's robust domestic demand and the increasing influx of foreign investment. In addition, the e-way volumes for the September 2023 totaled INR 9.2 crores and for August 23, they were at INR 9.3 crores. These figures signify resilient domestic trade and transportation activity, reflecting an overall improvement in demand. Furthermore, GST collection in September 2023 reached INR 1.6 lakh crore, marking a 10% year-on-year increase. Revenues from domestic transactions, including the import of services, saw a substantial 14% year-on-year growth. Moreover, the road logistics sector in India is anticipated to experience favorable growth supported by strong domestic consumption.On the company front, firstly, I would like to bring your attention to a recent update regarding change in the company's name. The change has been officially approved by the Board of Directors and the company is now known as Allcargo Gati Limited, formerly known as Gati Limited. We have applied for exchange approvals and name change on exchanges should happen in the next four to six weeks. Another update that I would like to share is that we have appointed Mr. Sandeep Kulkarni as the Chief Operating Officer at Gati Express Private Limited. Sandeep comes with 22-plus years of rich experience. He was in the Indian Navy from 2001 to 2011 and started a corporate career with Larsen & Toubro in 2012. His last stint was with Tata CLiQ as Chief Supply Chain officer.Now, let me provide you with updates on our initiatives across the pillars of growth, beginning with sales acceleration. We are reaping the benefits of this initiative with an 18% year-on-year increase in volume. Some of the new initiatives that we would be taking include yield management, collection drive and use of data plans. Under yield management, we have set a minimum selling price for all new business along with ancillary charges. We've also set up a dedicated tele sales team for MSME customers to provide the right support at the right time. We have appointed regional key account managers to promote faster resolution. Our focus remains on enhancing customer retention, capturing a greater wallet share, and expanding the customer base. Our dedicated sales force plays a pivotal role in identifying opportunities within existing territories and exploring new markets. Infrastructure amplification with Bangalore hub operational. We now have five operational super hubs. We are well on our way to complete Phase 1 of our infrastructure amplification. The Bangalore super hub is spread across 110,000 square feet with 68 days for loading and unloading of trucks. Large number of ways will enable faster loading and unloading and also shorten the cooling time. The Bangalore hub is a facility that we would like all of you analysts and investors to visit and will be happy to facilitate the same.Operational excellence, it is one of the key areas of focus for us. We embarked on a nationwide program to train Gati associates. I'm happy to share that we have successfully completed training of 783 Gati associates out of nearly 3,000 in the first phase. Furthermore, we are dedicated to elevating the quality of our service parameters, aiming to set new industry standards for excellence. I would also like to highlight here that we have converted an additional 26 spin codes in addition to the 1,000 that we had spoken about last time from ESS to Direct. On the technology front, we have rolled out the dimensional weighing and scanning machines across four of our locations. These DWS machines help in reducing revenue loss due to inaccurate dimension and weight capture. This is just the beginning and will help improve billing transparency, revenue collection and simplify the process. We have also deployed biometric attendance for handlers across nine locations. We have rolled out digital dockets for retail customers across India with 99% compliance. The dockets for MSME and strategic customers has been rolled out in 4 of our 20 EDC.In conclusion, at Allcargo Gati, our vision revolves around maximizing value creation for each stratum of the society. We are dedicated to making a positive impact on the communities in which we operate and create a more inclusive society. With this, I would like to hand over the call to Mr. Anish Matthew, our CFO, for financial highlights. Over to you, Anish. Thank you.
Thank you, Phil. Good afternoon, everyone, and a very warm welcome to our Q2 and H1 FY 2024 Earnings Call. I'll take you through the highlights of financial results for the second quarter and half year ended September 2023. I would like to start with the highlights of our expert business first. Your company has shown strong performance in terms of volume driven by pre-festive demand. Total tonnage handled for Q2 FY '24 stood at 333,000 metric tons as compared to 200,000 metric tons handled in Q2 FY '23, representing a remarkable growth of 18% year-on-year. Revenue from Express business stood at INR 385 crores in Q2 FY '24 as compared to INR 370 crores in Q2 FY '23, a year-on-year growth of 4%. Corresponding gross margin stood at 23.3% for the quarter ended September 2023 as compared to 28.8% in the same quarter last year. The EBITDA for the Express business stood at INR 15 crores in Q2 FY '24 as compared to INR 21 crores in Q2 FY '23.Plan mix for the quarter ended September 2023 for KA, SME and retail stood at 65%, 18% and 17%, respectively. For the half year ending September 2023, tonnage handled during H1 FY '24 stood at 625,000 metric tons, that's registering a growth of 11% as compared to H1 FY '23. Our revenue from operations from Express business stood at INR 752 crores, registering a growth of 2% and EBITDA stood at INR 31 crores, a decline of 20% as compared to H1 FY '23. I will now move to discuss the performance on a consolidated basis. Revenue for the quarter ended September 2023 stood at INR 442 crores as compared to INR 435 crores for the same period last year. The gross profit for Q2 FY '24 stood at INR 91 crores as compared to INR 108 crores for Q2 FY '23. The EBITDA for Q2 FY '24 stood at INR 15 crores as compared to INR 20 crores for Q2 FY '23.I would like to highlight here that our continued efforts in reducing the DSO resulted in change in estimate of provision required for bold detections and expected credit loss. The resulting margin impact on EBITDA is approximately 1.1%. With respect to the sale of noncore assets, I would like to bring to your notice that out of INR 81 crores of noncore assets identified for sale, we have as on 30th of September 23, received advance of INR 18 crores, and we expect the sales transactions to compete as in by Q3 and Q4 '23. We have been providing other key capacity financial performance indicators in our investor presentations, one can refer that for more details. With this, I would like to throw the floor open for Q&A.
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Amit Dixit from ICICI Securities.
I have a couple of questions. The first one is essentially on the margin profile. Now you had guided earlier that that EBITDA margin would improve to 7.5% or 6.5% by end of Q2 FY '24. But it looks like we are still far away from that level. And another question is that since our super hubs are also operational now, volume uptick is quite visible. Then what is inhibiting the margin expansion? And what would be the realistic time frame in which we would see us going to 7.5% EBITDA margin?
Thanks. I was sure that this question will be the first question this time. So let me give you a couple of reasons why you see that in this month, our margins are low. The most important reason is that our yield has dropped during this quarter. And the reason for yield drop are quite a few. So let me start with the first one being the mix. If you see our mix, it has now changed to 65% large and 35% between MSME and retail. And there are reasons for this. #1 is, if you remember, we have in our retail business introduced the E-docket. And whenever you introduce technology, a lot of transparency comes into the picture, and you get an initial dip in your numbers because of that. But it stabilizes and we get to know what exactly is your business, and we have now learned this, and we know how and where to get our retail business going up by #1. Point #2 is after completion of two years and talking to a lot of our larger customers, we realized that a lot of the business, which is intrastate business, which we call within Zone business that the customers have was not really coming to Gati because Gati's pricing was not attractive for that intra-zone business. You have to understand that most of our business that we were doing earlier was between zones, which means Bombay to Delhi or Bangalore to Kolkata, et cetera. But more and more, the supply chains of specifically e-commerce and retail industries are moving to intra zone because more and more warehouses are coming closer to the customer.So when you start pricing for Intrazone business, your yield does fall but corresponding costs have to improve. And that is something that we'll be looking at, and we have already started doing now in this quarter that the product '23, which we have, which is an intra-zone product, the costing for that product has to be far, far more lower than the costing for the '24 products that we have. The third one is, as more and more customers kept telling us that our direct spin codes were lesser than those of competition and that we were not getting business because of that. So we have increased over 1,000 pin codes to direct, and the effect on the volume has come in now in this quarter. However, the cost corresponding to that, which we were incurring needs to also be looked at, which we have started looking at now. So a combination of these three and a few more is what has got our volumes up, and we are very happy that we've been able to get our volumes up because we have identified all the areas why the volumes were not up. It is now up to us how to kind of increase the yield and optimize the cost to get that gross margin increase that we are looking at. So that's a little long answer, but I thought it's important to give it because I'm sure out of the 100-odd participants on this call, everybody would be wanting to ask that question, and I hope I have answered it to your satisfaction.
That was quite an elaborate answer. I just wanted to get a little bit of more milestones that we have in mind. So, I understand that this takes time, of course it doesn't happen overnight. But just in terms of milestones, let us say, end of FY '24, what kind of exit rate can we expect in terms of EBITDA margin?
So I will stick to one thing that all of this will culminate to what we have said 10% to 12% by '26.
10% to 12% by '26, okay. The second question, it's more of a bookkeeping question. This quarter, we saw operating expense declining significantly for the other expense declining significantly, both on Q-o-Q and Y-o-Y basis. So just wanted to understand whether there is some sort of provision that was written back or I mean there is some one-off factor here because volumes have gone up, but other expenses have come off significantly?
Anish, you may want to answer that?
Yes. So I mentioned in my speech that there is some estimate in the provisioning requirement as basically based on our collection drive. So that has resulted in an additional provisioning in the revenue line item and the corresponding reversal of ECL provision is reflecting in the other operating expenditure. So that is the reason why you see quarter-on-quarter as well as on a year-on-year decline actually in the operating expenditure.
I missed the opening remarks, actually. So what could be the quantum of that, if you can repeat?
Well, approximately 3.5% came back to the revenue line item on account of this change in estimate and correspondingly around 1.5% impact is coming as a credit to the operating expenditure on account of ECL reversal.
[Operator Instructions] The next question is from the line of Dhwanil Desai from Turtle Capital.
Sir, my first question is that you elaborated on the reasons why the realization from yield has gone down and it has a consequent impact on margins. My question is that I'm sure such kind of initiatives, you would have planned out three, six months in advance. So was there any incoming of first things coming in? And as you scale up your intrastate business, how should we look at average yield? You know it has dropped significantly Y-o-Y and Q-o-Q. So how should we look at that going forward? That's the first question.
So I think our key accounts who were already doing business with us and who had a lot of intrastate business, once we revised the pricing for them, the volume started flowing in and therefore, it was like during this last three months that we really [indiscernible] volume uptake from them on the intrastate. When you look at intrastate, while the yield is lower than interstate, the cost also becomes lower because the linehaul that you incur, which is your one single largest cost reduced. And because of that, your margins should get better. And that is what I spoke in my first answer over there. While volumes came in, we have started looking at cost. There is a little lag between the two, and therefore, that will be seen in this quarter.
Second question is I think we have talked about reductions in the past, and we also indicated that should kind of almost scraper by Q2. So first of all, was there any significant impact of that on our realizations and margins? And how should we look at it in the H2?
Anish, would you like to answer this question?
Yes. I think that's reckoned in the last earnings call and our multiple discussions at Dolat, we did mention that we are or address really pushing to kind of, I mean get better thus clean it down. And they kind of almost completed that exercise, almost completed last year, exercise in Q2. And that is what is kind of reflected in the current quarter's performance there because of -- as a result of this cleanup, we had to kind of increase our direction as to maintain which is reflected in the revenue. And since that has an impact on the ECL provision, we have made us a corresponding reversal of ECL provision. And this is reflecting in our operating expenditure. So the net impact of this change in estimate because of this additional provision required in the reductions as to the reversal of ECL is almost 1.1% of revenue in terms of EBITDA impact.
Right. So should we assume that net of this reduction, the yield would have gone up by what about 3.5% that you reduced from the revenue? Is that a right way to look at it?
Yes. The right way to look at is basically in terms of absolute terms, the reported EBITDA for the quarter is 15 CR. So, if they really kind of not take the impact of this one, ideally, your profitability for this quarter should have been INR 19.8 crores, so the margin of 3.9% would have been 5%.
Sir, the second question is, so let's say, we are at 23%, 24% gross margin, and we were at 29%, 30%. So with all these things kicking in and you are relooking at your cost items, what is the time line that we're looking to go back to, let's say, 28%, 29%, 30%? Is it a couple of quarters or slightly longer than that?
So I said this earlier, and I'll repeat this. All these measures that we are taking are towards our committed and goal of 10% to 12% EBITDA margin by 2026. So it's a step-by-step approach, and we will see a little up and down in between, but we are making the foundation such that we hit our 10% to 12% in '26.
The only concern is that we had guided a part. And now I think because of various reasons, we are kind of going backwards. So when will we come on the right direction? Directionally, when can we start growing again? That's the question.
The direction of growth that you're already seeing, if I'm growing my volume at 18% year-over-year and 14% over the previous quarter, that's directional growth.
Lancing EBITDA.
Sorry?
I'm talking about most on margin perspective?
Yes. So like I said, once you have a certain volume, the margins will come with that by looking at various measures of both yield improvement and cost optimization on those volumes.
And last question, sir. I think we have been focusing on MSME for some time now. And that proportion keeps on shrinking. So I think you talked about impact of dockets, introducing dockets on the retail head of it. So was MSME also impacted because of that? And in your opinion, is the growth on the MSME side lower than what you anticipated given all the efforts that you are putting?
So I think the growth on the large accounts is what makes the percentage differential. It's not the degrowth on the MSME side in that respect. So while MSME growth has not been as much as we wanted it to be, but I think the growth on the large accounts has been a lot more. So that is one. The second is I think last quarter, we had announced that we have now got a digital marketing head and his focus with his team is going to be on acquisition of MSME customers. We have just recently set up a separate MSME sell under him. And this particularly, will be doing a combination of digital marketing and calling to the MSME to get more MSME business into the organization.
The next question is from the line of Viraj Mehta from Equirus PMS.
Yes. Sir, my first question -- and of course, I'm happy on the same thing. Sir, how much was your intrastate in volume this quarter as a percentage? If you can give a ballpark number that we took, which was lower margin business for us?
Ladies and gentlemen, the lines of the management has got disconnected. Please take a moment while we reconnect the management.[Break] Ladies and gentlemen, thank you for patiently holding. We now have the lines of the management reconnected. Over to you, sir.
Yes. I'm not sure whether the management heard my question. Should I repeat?
Yes, please.
So sir, my question was you mentioned that the realization was lower because of the interest rate business that we took because our rates were not competitive. Can you talk a little bit about how much was that business for us? And how much did it grow? Like what is the quantum of that business for us this quarter?
So let me just correct you when you say because our rates were not competitive. So what I'm trying to say is because for that product, the rates were not competitive, okay? When we are looking at the growth of the large customers that has come in by way of a percentage share. That is where we have got more of the zonal business as I call it. For example, with one single large customer, more than 50% of the business growth has been through just the zonal business that we got from them. So it has been a good increase of business for us, and that is how we have kind of grown our volumes also.
No, I understand that, sir. What I'm failing to understand is that even if, let's say, it has suddenly become 15%, 20% of our overall business, how can it shrink the realization by 8.5% for our entire company, which is where my struggle is?
So like I said, there is not a single reason. There were many reasons. I gave you two, three reasons. One was our retail business has shrunk, which is a high-yield business, because of the office that we put in. And I gave you another reason that the zonal business had also not been there in our portfolio, which has come in. So I just gave you those as examples of why our yield has fallen.
And sir, my last question is, so now is it fair to assume that we are scrapping all our intermediate guidance and going directly to FY '26 guidance? And there is no road map towards achieving that guidance because you say it's a step process quarter-by-quarter. But we are only talking about FY '26 guidance. Is that fair?
On a guidance principle, yes.
The next question is from the line of Hemesh Desai from Dolat Capital.
I just have a couple of questions. One is on the hub perspective. You have operationalized new hubs like the Bangalore hub recently. So what is your utilization level of these hubs?
So Bangalore hub has not even completed one month still. We are still operating dual from the new hub and a little bit from the old hub. I think we need to give a hub at least a quarter before we talk on the utilization. Having said that because the volumes have gone up overall, for us, our utilizations overall of all our hubs have increased for sure.
Okay. And so in the investor presentation, you mentioned that the indoor hub will be operational, like the estimated operational time line would be quarter 3 of this year. So are you in line with that? And what will be the capacity that will hold that hub?
So yes, we are on time with that. We will get the indoor hub. And from a capacity perspective, if you get in touch with our Investor Relations, they will give you all the details on that.
And my second question is when can we expect the synergy benefit from the contract logistics?
So the synergies have already started kicking in. We already see that the cross sales effect that we have done, both Gati selling warehousing business for all cargo supply chain, and all cargo supply chain selling Express business to their existing customers has given us a lot of new business also. So it has already started.
The next question is from the line of Nirav Savai from Abakkus.
So my question is about the deal differential. If I were to look at intrastate, what would be the yield differential on a blended basis?
So for our large customers, the differential would be to the tune of about 20%.
So 20% in the sense if you make gross margins, so let's say --
Yield. That means that if the large customers yield is 100%, then the yield of the interzone would be 80%.
So for the large customers, only will largely do this intrastate, right? Or what are you doing for smaller customers as well?
No. So right now, that is where we identified and that is where we got our growth from. But now that we have done it, we will also go to the smaller customers to do the same.
All right. And the second thing is about this rental cost, which flows down below the EBITDA level. Once we are done with the large part of the expansion, let's say, by FY '25, how do we see this '26 onwards because you have given this time depreciation in RVUs is about INR 25 crores, and interest is about INR 10 crores. So cumulative INR 34 crores. So how do we see this stabilizing once all the hubs are stock commissions, let's say, by FY '26 onwards?
I'll let Anish answer this question. Anish, please answer this question.
There is no question of stabilization because as and when we kind of open new hubs. So we will have this lease coming in, and you will have the index impact coming in. So this is a continuing process, right? It will never end. Now we have started Bangalore. So that impact is going to come in and as we kind of keep doing that, then we will have those kind of flow-through coming in both in the EBITDA line as well as the depreciation on the finance cost line.
I'm just trying to understand in the first half, it's about INR 34 crores. For the first half of FY '24. So, how do we see this once the current expansion plan, what we have, is over? And '26 onwards, obviously, this expansion will continue. But from a given set of new hubs which we are planning to add, let's say, [indiscernible]. How do we see this number on an annual basis? To get a sense on pre-index kind of EBITDA number?
Okay. I need to work it out also specifically to kind of give you the correct picture as well. We will come back to you. I don't remember or have shared this one to a couple of investors in the last meeting. I'm not sure whether you were part of that one, but I can provide this information separately. This will enable you take on the real end of the thing in terms of your project sense. I can give you a kind of enormous in terms of -- for a specific warehousing space, what was the end and then what would be the impact of yours between both EBITDA line as well as depreciation on the finance cost.
Right. Because if we adjust this number, the index EBITDA margins are very low compared to other industry peers. So I just wanted to get a sense when volume actually starts kicking in, how will you see this pre-EBITDA number, once their expansion is over.
Well, I'll just hand to give one addition to what you said. There is a comparative analysis. I don't know which is the competition you're referring to. The purpose of the base is basically to kind of have a like-to-like comparison. Do you kind of have an asset-light model maybe have a competition which you're referring to us in the asset-light model. So you cannot compare like-to-like basis for an NBP, which is following two different approaches to kind the full investment. So in my view, okay, I believe you would need to kind of do a comparison based on what we are showing versus what others are showing. We cannot really discount that one. But if you want to kind of look at the real cash flow, that's a different perspective altogether.
Right. So just wanted to get a sense that if this kind of volume growth continues, what can be a pre-EBITDA number, assuming all the end cost are there? And then what kind of EBITDA and cash flow we can make?
Yes. So we have, for this quarter, for this September ended, we published our balance sheet as well as the cash flow. And our cash flow kind of clearly state what is the pure cash flow and what is the pure index impact. So you can refer the back, you'll get a very good indicative of the pure cash flow. Are you respectively there still further need any clarifications or inputs now? We can provide you actually with those information.
Sure, sir, look at it, and maybe we can take it offline later.
Sure.
[Operator Instructions] The next question is from the line of Jainam Shah from Equity Securities Private Limited.
Sir, my question relates to the top line. So basically, if we see our consolidated top line for 1H versus 1H, it has been largely stable despite some 10% of volume growth in Express business. And we believe that Express will be the major growth driver for us going forward, not the fuel business. And we are just like two years over from our targeted FY '26, INR 3,000 crores of revenue. So how we are looking to grow to this INR 3,000 crores number given that the growth rates would be somewhere around 20%, 25% in total, which would be like 2x of the industry growth. So how we are looking at it?
So clearly, growth for our business comes from two, three areas. One is volume growth and the other is yield growth, right? We already have shown volume growth over year-on-year as well as over last quarter. Then as we apply a yield growth to that incremental volume, the revenue growth comes in by itself. So it's a very good situation to be in where your volume has grown and now you have to apply the yield growth to that volume, and that's exactly what our sales and marketing team will be engaging with the customers and doing for us.
The next question is from the line of Riya Mehta from Aequitas Investments.
My first question is in regards to you were just saying that, now we are seeing a trend where intrastate orders are more in the way the commerce is working. However, the yields are lower in that segment. So could you elaborate how going forward, this would entail us to reach our guidance of FY '26? Because if we reduce the realization to become more cost competitive, that would have an impact on our margin.
So it doesn't work that way. When you do intrastate business, your cost also reduces dramatically because your distances that you're moving, which is your main line haul and feeder cost reduces. In the transportation business, as your distances go larger, your cost per kilometer also increases. And therefore, as distances grow shorter, our cost per kilometer reduces. So basically, lower yield due to the product change does not necessitate a reduction in gross margin.
But as you mentioned, the yield at almost 20% lower than the normal large clients, right? Intrastate.
So the cost has to be more than that lower.
Okay. So it is more profitable than intrastate?
Yes, thank you.
Yes. My next question is in regards to the 3.5% charge you said, which is on account of provision. So could you elaborate on what accounts are these provisions? And is it a one-off or it can be a recurring thing?
Well, that is not a recurring thing. As we said, this is basically in a provision -- the provision of the estimates which you have done basically based on the cleanup exercise which we have done. So with a result in an incremental provision of around 3.5% in Asia. That also resilient kind of having a much better quality titers that result in kind of a requirement for us to kind of make a lesser provisioning. So that impact is coming in the operating expenditure. Very simple to your question, the 3.5% is basically a one-off. We don't expect this to kind of come in as a recurring expenditure in the coming quarters.
All right. And in terms of our entire IT system and software, we had done a tie-up with Tech Mahindra. So what kind of investments are we seeing there? And how will it come up cross?
We haven't put out the number in the public domain yet, but it is definitely a very large investment. The process has started. It is going to be done in approximately four to five waves over 18 months. We have completed Wave 1, and we are pretty happy with what Tec hem has brought to the table so far.
Okay. And are you depreciating it after the entire thing is commissioned or as and when the wave gets commissioned?
Most likely, it will be after the end project is completed because then that time only, we can account as an amortization expenditure.
And are we taking any debt for the sales?
As of now, no. If you look at the balance sheet, look at the total debt for the -- the net debt for Allcargo Gati stands at INR 41 crores. So we have an external borrowing of around INR 140 crores and approximately INR 103 crores. So cash-and cash equaled, and we still have a pretty good amount of asset held wholesale. I mean I'm saying pretty good amounts almost like INR 80 crores of funds that help for sale. And that relation also, we would be able to kind of get that realization by Q3, Q4. And I think we believe that, that is sufficient enough to kind of fund for the capital requirement.
Okay. So we won't take an external debt?
Yes. As of now, we don't have any plan to take an external debt.
[Operator Instructions] The next question is from the line of Rushabh Shah from RBS Investment Managers.
And just one clarification, sir, when you're talking about the INR 3,000 crore revenue target, are we including any revenue coming from the fuel station business, if it is not divested by then? Or is it only for the Express business?
Right now, when we talk about any figure, we talk about the existing businesses put together, right? We don't know as and when the fuel business will go away. Irrespective whether it is with or without, we will touch INR 3,000 crores.
In terms of the cost differential in the intrastates are much lower. Do you want to mention how much lower are the intrastate?
I already mentioned that it is about 20% lower than interstate, the yield.
I'm asking about the cost. You said the cost is much lower, so there must be the cost percentage.
So it is a lot more lower than the differential yield.
The next question is from the line of Ronald Siyoni from Sharekhan Limited.
Sir, just on the volume trend, the strong volume growth, which we have reported. Can you touch upon the segments or sectors which have led to such a high growth? Also, this volume growth has been from the new clients or this was just taken back the reversal of volumes, which has happened and this has led to high growth?
Majority of this volume has come from our existing clients, although we have added new large clients also to our portfolio.
Okay. And some of the sectors, which has been there because we --
Primarily, I would say it has come from retail and consumer develops.
Thank you, ladies and gentlemen, that is the last question. I now hand the conference over to the management for the closing comments.
Thank you, everyone, for attending this call. If you have any further questions, please reach out to our Investor Relations team, and we look forward to meeting with you all in the next quarter too. Thank you.
Thank you, members of the management team. Ladies and gentlemen, on behalf of Dolat Capital Markets Private Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.