Transport Corporation of India Ltd

NSE:TCI

Earnings Call Transcript 2023-Q2

[Operator]

Good evening, ladies and gentlemen. I am Simran, moderator for this conference call. Before we begin with, I would like to exchange my warm welcome for joining us today for this quarterly earnings call. On board, we have with us today, Mr. Vineet Agarwal, Managing Director; and Mr. Ashish Tiwari, Group CFO.

[Operator Instructions] Please note that this conference is being recorded. I would now request Mr. Ashish Tiwari, Group CFO, to mark on this meeting. Thank you, and over to you, sir.

[Ashish Tiwari, executive]

Thank you, Simran, and good evening to all of you again. Welcome to our quarterly earnings call. To start with, I would request Mr. Agarwal for a presentation on business performance in region. Thank you, and over to you, sir.

[Vineet Agarwal, executive]

Thank you, Ashish. We are putting up the presentation. So thank you, and good evening, everyone. Thank you for joining us today on the quarterly call. We've had a decent quarter in the second quarter. We've reached an all-time high in terms of our turnover. Some impact on the bottom line, but again it's more or less normalized as we speak right now.

So some of these -- most of these slides will be available online later on, but I want to highlight 1 or 2 points in the -- specifically related to the growth drivers. Between the last meeting and this meeting, the National Logistics Policy was introduced. And broadly speaking, the intent of the National Logistics Policy is to reduce logistics costs. And what we have sort of taken out of that is 3 main themes. The first one being that there is a disproportionate share of road transport. So the modal mix will help to reduce cost as well as reduce greenhouse gas emissions.

The second is digitization. As more and more organizations become part of the digital network, we will also see a great deal of formalization. The third, of course, is standardization, which means that there will be more uniform assets that are there, which would possibly lead to better productivity, efficiency and reduce losses, et cetera, in the system. So all of that will definitely help the growth of the logistics sector, and we are very well positioned to take advantage of all these 3 major themes around the National Logistics Policy.

Notwithstanding all the infrastructure development that's happening related to the PM Gati Shakti program, be it building terminals or ports or the railway corridors, et cetera, are all going to help in these specific goals of a modal mix change that we are seeing. Clearly, the other things are also activated from a customer perspective, from a consumer perspective and, of course, from the regulatory perspective. All of these things are really making the logistics sector very, very attractive as we speak.

Our company strategy continues to remain the same of everything logistics. This has played out quite well in our -- with our customers as well, and they recognize the next slide, which is the wide range of services that we are providing today, which is unmatched in today's -- in the Indian marketplace and specifically covering a large range of verticals also with customized solutions.

We have been investing very heavily into our multimodal network in anticipation of all the activities that have started to happen and will continue to happen going forward in terms of the country developing its multimodal network and business. So as you know -- Ashish, stay on the slide, please, previous slide. So on the rail side, we have continued to grow the business, both on the container transport as well as on the train automotive transport.

Here, the number of rigs that we are moving has increased over the last year with close to close 3 or 4 -- close to 4 rigs per day is what we are now loading across the system. Our ships are -- the 6 ships are still in -- are all there, and they are also operating in the East and the West Coast. Container handles, you might find it to be slightly lower than last year, but this is also because in our CONCOR business, things were a little slower in the first half as there was some shift towards road transport. The number of yards that we manage and terminals have remained same, but we're in the process of adding a few more going forward.

So the multimodal network has become quite strong, and the assets whether own or lease rented, et cetera, in this space has also grown tremendously in the last 5 to 7 years. We've been also able to incubate several new areas like chemicals or even the SAARC business. We do move a lot of trains to Bangladesh and Nepal, for example. So we are using the verticals and the horizontals across the businesses very, very strategically.

So even with SAARC, it's not just road but it's road and rail. Even with cold chain, it is not just transportation but also warehousing. And also with chemicals, they're using all 3 modes: road, rail and sea for our transportation. So it's a very, very diversified operations. And the whole idea is how can we create more strategic boundaries around our businesses so that it creates a long-term stickiness for our clients.

The operations has been -- always been technology driven and one we continue to rely very strongly on that because, again, the businesses today cannot be run with scale if we do not have all these factors related to operations related to technology, very, very easy available not just to our team members, but also to our clients.

And one of the examples here, if you see the next slide, is essentially what we've created for a large heavy electrical goods company, where we have acquired a contract where we are handling more than -- from more than 25 locations on a monthly basis, 300 to 400 trucks as well as providing both FTL and LTL solutions to them. So the problem statement was since the volume was so large, how could you really create manual -- how could you move away from the manual order processing system.

So we came out with a bot solution, where the bot reads the e-mails that come or the WhatsApp, and it translates into the orders so that we are able to then reach up to the KPI of delivering of -- actually providing a truck on time. And then subsequently, the tracking starts, that's the creating more transparency and visibility, whether it is related to the on-time delivery, on-time submission of bills, PODs, et cetera, proof of delivery. So that is available to both the team as well as to customers on a dashboard as the control tower. There is also built in areas where there are alerts for exceptions or any kind of over in the next few months, develop some amount of machine learning.

There is also the element of estimating the ETA, which is the estimated time of arrival. That is on a small journey, let's say when you've ordered something online from a QSR or a food company, Zomato, et cetera, can give you a good ETA because the journey time is very short. But when it's a long journey time, let's say, if it's a 3-day, 4-day, 5-day, giving an ETA is quite complicated. There is a lot of variables that come in from traffic conditions to road conditions to weather conditions to any kind of other disruptions that can happen can delay the trucks or the movement. So we have written several algorithms around that, and we are trying to capture the variables in a better way so that we can predict the ETA as close as possible to the actual delivery time. This has also led to a great amount of improvement in terms of predictability, and we also geofence the route of the trucks so that if there's any deviation, it is very easily known.

Now a lot of these things existed in the past, and we just increased the element of interaction that we're doing with our clients and creating these digital control towers as we speak. And we've done this for several clients across the board.

As I mentioned, this has been a strong quarter for us from a revenue perspective. It is the highest ever revenue that we've achieved in a quarter level. The overall growth remains very strong across the board and, of course, the liquidity position. Though in the market seems to be a little bit tighter, but we are very comfortable. Our net borrowing remains 0, net cash positive. We are net cash positive, and overall, the trends also look quite stable.

I'll take now specific divisions. TCI Freight has grown in the last quarter by about 16% from the last year. On a half yearly basis, the growth is slightly more. The margins are maintained at the same level, a little bit up and down. First half of the year, typically, the margins are slightly lower, but they tend to pick up. Our LTL and FTL mix is coming back to track, though it is still not picked up, but it's coming back to the same levels as it was previously. And we do expect the performance to remain stable. We are at this 23%, 24% ROCE, which we expected to continue. As we've moved above the 20% mark, it is -- the business remains quite robust even after the festive season with high volumes and stable freight rates.

On the supply chain side, this is the highest ever quarter that we've achieved in terms of revenues, and the business has grown by 27% over quarter over the previous year and about much higher than the -- much higher than was estimated because of a very strong push towards automobile transportation. And we've seen the auto sector really come back. The 2-wheeler segment has not really come back to that extent, but the other segments from earthmoving equipment, 4 wheelers to even tractors have started to show a positive uptrend.

The EBIT margins are better than last year and, of course, up by 37%. EBITDA is slightly lower, but this is just a pickup time that we are seeing, and we will catch up in the next 2 quarters in terms of the margins. The overall ROCE is about 20%. And from last year, we'll definitely see a much better growth in this coming year.

In terms of the Seaways business, so the Seaways business had some issues related to the dry docks. So the dry docks took a little longer. And since 3 ships went on for dry docking, we saw that some amount of costs have increased here, including the depreciation, which has been -- which has also gone up. Apart from that, the ships were not available for operations in this period, which also affected the top line as well as the bottom line, since a lot of the bottom line is also -- some of the bottom line is also fixed in nature. So that had an impact on the overall margins of the division.

Again, as we said in the past that what we were getting in the few months before was a little unusual. We think we are now sliding back to the normal. Now that normal could be between 35% to 40% -- between 30% and 40%, I think, in terms of EBITDA margins. And the second quarter -- second half of the year, since all the ships will be available, we think it should be much better.

International operations are not there yet to that extent as it was last year. The movement from Myanmar has reduced to some extent. Fuel prices have come off a little bit, but it still remains quite high over the last year. It's still almost 60% up above the previous quarter -- previous year the same quarter.

In essence, the business remains still very strong, and we are quite confident of definitely looking at last year's numbers in terms of at least revenue. And maybe a little bit sharing might happen on the bottom line, but overall, it still looks very positive.

The joint ventures have had a mixed bag. The CONCOR joint venture has had only a marginal growth of 1.7% and the cold chain business has grown about 13.5% in the half yearly. Some amount is seasonal and some of the new businesses that are coming in cold chain will get added on in the next few months. So we are quite positive that we are going to grow much -- we will exceed last year's numbers for sure, and perhaps 20% to 30% top line on the cold chain in terms of growth and about a 5%, 10% growth on the CONCOR joint venture.

The Transystem joint venture has done exceptionally well, with a 76% growth and profitability is also quite robust here. This is in line with the automobile growth that is happening across.

In terms of the financial highlights, from a revenue perspective, as I said, it was one of the best quarters that we've had so far. Half yearly also, the business has grown by about 21% at the consol level. And even the profit after tax has also grown by 22%. So overall, in some areas, the margins have come off a bit on the stand-alone side with the PAT coming down by about 15-odd percent from last year. But as I said, some of it is based on the Seaways margin, which were unusually higher in the last year as well.

All our ratios are in order. Again, the ROCE is above 20%. We will maintain that. The RONW, et cetera, is also above 20%. Again, this is something that we should be able to maintain.

We have given a dividend of 125% in this half year. And the cash reserves, as I was mentioning, remain. We are still net positive in terms of cash minus some amount of -- very small amount of debt overall. The ratings remain the same.

In terms of future outlook, we have a lot -- the CapEx plan remains as it is. However, the ship acquisition, which is the big item [Audio Gap]. Though container rates have come down by 30%, 40% globally, ship prices have not come down by that much. So we are still waiting and watching. We are hopeful that Q4, we are able to get a ship. But if that doesn't happen, it will get pushed to the next year.

The other aspects of the construction, et cetera, hub centers, all that will pick up in this quarter and the next quarter. So on a reasonable basis, without the ships, I think we should possibly hit INR 125 crores to INR 150 crores of CapEx. If the ship gets added, then the CapEx will certainly go up.

We are retaining our guidance of 10% to 15% on the top line and bottom line. Q3 and Q4 of last year were quite strong. So we will be with a higher base. But to be slightly on the conservative side, we want to maintain at this level.

Thank you so much for joining us today, and happy to take any questions.

[Operator]

[Operator Instructions] So the first question is from Alok Deora.

[Vineet Agarwal, executive]

Alok, we can't hear you. He just dropped out. So we take the next question.

[Operator]

Next question is from Krupashankar.

[Krupashankar NJ, analyst]

One question from my side. First on the guidance. I know that 10% to 15% looks really considerative. If I look at the last year second half, if I assume a flattish number as well, that is the only way you will achieve a 10% growth. But then again, you've typically seen the second half is much better for the logistics sector vis-a-vis the first half. Any reason why you don't want to update your guidance on revenue as well as profitability?

[Ashish Tiwari, executive]

Well, revenue, I can -- I think we can look at a 15-plus percent also. But on the profitability, I think that 10% to 15% seems more reasonable with the Seaways margins coming off a bit. So -- but yes, your point is right, we can definitely look at a higher revenue growth for the quarter -- for the next 2 months -- 2 quarters.

[Krupashankar NJ, analyst]

Sure. So one more question on the shipping side. While I do understand that addition of new ship is due to multiple aspects, macro-related predominantly. What I wanted to also grasp is that what would be the typical decision period for addition of new ship? Because Vineet, you've clearly highlighted earlier that the new ship will be much larger in size vis-a-vis our existing fleet. And with respect to that, even if you add, let's say, a ship in fourth quarter or towards first quarter of next financial year, what could be a typical time range wherein we could see that ship will run at optimal capacity?

Because I'm just trying to factor in the extent of margin impact, if I were to see in the second half of this year, if you're not getting more and more Myanmar routes, then, of course, naturally, we are going to see that profitability going back to your usual levels, and there can be a further impact on Seaways margins if a newer ship also comes in and it's underutilized. Just wanted to get your viewpoint there.

[Vineet Agarwal, executive]

So one is that the ship capacity that we are looking at, the largest tonnage that we have today, I think is about 26,000 tonnes, right, Ashish?

[Ashish Tiwari, executive]

Yes.

[Vineet Agarwal, executive]

So we're looking at about 30,000, 35,000 tonnage ship, which is not extremely large compared to what we have today. But I think what we have to observe is that there is definitely some amount of shortage on the sectors that we operate. Also, what will happen next year is that some more ships will go for dry dock, maybe 1 or 2 ships. I think one ship is planned for dry dock next year. So once that happens, there would be some capacity that will come up for some time. So this will cover it. We've seen that typically within a month or 2 is when we are able to really utilize it to full capacity. I mean we already have enough cargo that we are currently telling our customers that we cannot carry. We have more than enough cargo available. So I don't think it will be so difficult to really get cargo later on as well.

[Krupashankar NJ, analyst]

Got it. That's good. And last from my side, regarding the automotive train services, the trades which are operating for the supply chain segment, which is for finished goods predominantly to the end market. It looks like a very strong proposition. I think you have adding trains and they have been running at quite a good optimal capacity utilization, if I were to put it. Is there any further addition likely with respect to it? And do you see perhaps other sectors using more and more on the domestic front with respect to especially using trains on -- especially after DFC comes through? Is there some indicative things you have seen in the industry?

[Vineet Agarwal, executive]

So what I can say [Audio Gap] seeing this with the auto sector, it happened -- started happening in -- just before COVID and it accelerated during COVID. And now we can see a lot of the finished good movement is through trains. And this will continue, whether it is this sector or some other sectors. In fact, now we are -- in the past, we were not moving tractors, but we're moving tractors also by rail. We are moving earth moving equipment, the big backhoes and all those other things by rail as well.

So slowly and steadily, we are seeing a lot of this shifting towards rail. And it will mean that we will continue to invest into basically a hub-and-spoke system for the finished goods, where we move the bulk of -- the bulk movement happens by rail and then the spoke movement happens by road or in some cases, the dealers themselves pick up the vehicles wherever they are. So that has helped us, and I think we'll continue to invest into it.

Now we might add a few more automotive rates in the next year or 2. There is some design change that is happening at the DRDO. And once that is in place, we might look at new trains. These design changes help in getting the higher -- the SUV kind of vehicles easily onto the trains. Right now, it will be challenging to get them because of -- rates might hike of these cars. And we are seeing that the market is also moving towards from the smaller type of vehicles to more of the larger type of vehicles. So yes, I think this business will continue to grow for us.

[Operator]

The next question is from Prit Nagersheth.

[Prit Nagersheth, analyst]

Sir, one question I wanted to ask you, Vineet, is that we recently saw a warning given by Blue Dart on the next 6 months in terms of the business environment. There may be more on the B2C side and on the e-com delivery side. But how are you seeing the overall industry from that point of view?

[Vineet Agarwal, executive]

We are not seeing any specific kind of issues in terms of the B2B side of businesses. We are not seeing that any inflation impact is very high yet on certain sectors and affecting those sectors. As you know, FMCG sector, you've heard that the volume growth is not too high, that's true. On the consumer durables, we've seen a decent amount of movement during the festival season as well as ongoing and automobile is quite robust. So I think the next 2, 3 quarters seems to be quite okay.

There could be some impact in maybe Q1 or Q2 next year, but it's not yet completely visible. Clearly, inflation does have an impact. We have to see how and where that impact will flow, into which sectors most. Typically, low-hanging, low-value items we're not seeing -- we have had an impact like the 2-wheeler sector or the FMCG sector in the rural areas. So -- but let's see how things progress in the next few quarters.

[Prit Nagersheth, analyst]

Okay. The other question I wanted to understand is that the any -- the National Logistics Policy, along with the Gati Shakti part right now. Now do these policies give any kind of incentives for companies to follow a multimodal path?

[Vineet Agarwal, executive]

No, there's no incentive given. There's no fiscal incentives given.

[Prit Nagersheth, analyst]

So it's more a directional and infrastructural and enabling systems kind of a policy and hoping that companies start utilizing more of these multimodal options because of the linkages that happen or so on and so forth? But there's nothing on the fiscal side to drive companies to adopt multimodal?

[Vineet Agarwal, executive]

That's right. So there's no fiscal incentive, but as there could be some infrastructure development incentives that might come in. That's more specific to the infrastructure sector per se, not to the -- not directly to companies. So overall, not really any direct fiscal benefits. But you're right that it is more directional in nature. But I think some things like ULIP, which is the Unified Logistics Interface Platform are areas where we will definitely see -- I'm not saying it's a directive incentive. It's an indirect incentive in the sense that it is prompting companies to use that more and more, and the government provides those interfaces, the APIs, et cetera, and that will help us. So a lot of the development around the ULIP has being done by the government.

[Prit Nagersheth, analyst]

Okay. Lastly, are you looking to do any kind of acquisition on the rail side, given that the thrust of the government is quite visible on the rail side, and so many policies are structured around that. Do you see any specific area on that ground that you would want to acquire capability?

[Vineet Agarwal, executive]

No, not really. We keep identifying areas of -- such areas where there could be potential acquisition targets, but we've not found anything specifically, yes.

[Operator]

[Operator Instructions] The next question is from Ravi Naredi.

[Ravi Naredi;Naredi Investment;Analyst, analyst]

My name is Ravi Naredi from Naredi Investment Bhilwara. Sir, I'm a very long shareholder of the company of TCI and TCI Express. Sir, how much aggressive CapEx you do, please update in how many years you do aggressive CapEx, which you had tell in your financial -- PowerPoint program?

[Vineet Agarwal, executive]

In the last few years, we've done about INR 600 crores of CapEx and the plan for this year is about INR 300 crores. Out of which, some of it will go into buying a ship, some containers, trucks and some strategic warehousing assets. Those are underway. As I said, if we're not able to acquire the ship, we should reach between INR 125 crores to INR 150 crores in terms of CapEx. And most of this will be self-funded, unless there are some areas like the buying ships, et cetera, where we will definitely think about taking a certain amount of -- trucks and ships, we will certainly think about taking some loan. Otherwise, it is quite self-funding.

[Ravi Naredi;Naredi Investment;Analyst, analyst]

And on Page #24, you had given a financial year '23 budget, hub center and a small warehouse 700 and financial year '23, 6-month actually 93. What is this figure, sir?

[Vineet Agarwal, executive]

This is in millions, so INR 70 crores and INR 9.3 crores.

[Ravi Naredi;Naredi Investment;Analyst, analyst]

INR 9.3 crores. And ship you have written 900 and 0?

[Vineet Agarwal, executive]

Yes, we've not acquired a ship yet.

[Ravi Naredi;Naredi Investment;Analyst, analyst]

Okay. And sir, last, is TCI Express gave 5-year period margin expansion can be in a similar way give some view for next 5 years? I'm not asking you next 6 months or 1 year or 2 years. Can you give some reason?

[Vineet Agarwal, executive]

No, we cannot -- I think from a forward-looking statement, we would like to stick to this financial year, which is a 10% to 15% on the bottom line.

[Ravi Naredi;Naredi Investment;Analyst, analyst]

But sir, already, you are 25% higher than last year -- last year's 6 months. And still you are telling...

[Vineet Agarwal, executive]

Yes. The next 2 quarters were quite strong for us, were very strong last year. So there could be some moderation in terms of profitability.

[Operator]

The next question is from [ Sunil Kothari ].

[Unknown Analyst]

Sir, just one thing I would like to clarify is out of 6, 3 ships were in dry docking. And so I think you must expended on those dry docking. Can you provide those numbers if possible?

[Ashish Tiwari, executive]

The number -- the drydocking costs are typically capitalized and some amount of costs are -- so most of the costs related to -- all the costs related to drydocking is always capitalized. So it reflects on the depreciation numbers but not directly on the expenses numbers always.

[Unknown Analyst]

And second thing that the margin which has come down, EBIT margin of Seaways in Q2 is roughly 26%, [ after release ] 29%. So what we should consider as a normalized margin on the 6 ships are in operation?

[Ashish Tiwari, executive]

As I said, between the 30% and 40% EBITDA margin is more on the stable side. If you saw FY '21, we were 31% EBITDA margin. This is before the increase in shipping rates, et cetera. So I think this 30% to 40% type of EBITDA should be the more reasonable number.

[Unknown Analyst]

Sir, last question is on -- little bit volume positioning. In terms of, say, growth if it is there, it is there. What type of volume growth we will be able to handle if given business?

[Vineet Agarwal, executive]

In which business?

[Unknown Analyst]

Maybe over for next 2, 3 years across TCI, what type of volume growth is possible, which we can handle if there is a demand?

[Ashish Tiwari, executive]

Well, handling growth is not a problem at all. I think what happens is the business works on a variable model where we can easily add on capacity since we don't need to create capacity in some of our businesses like our Express --sorry, like our supply chain or freight business. In the Seaways business for volume growth, you definitely need to add more ships. And that, as I said, is part of the plan. But in the other businesses, it's not very difficult to handle the volume growth.

[Operator]

The next question is from Alok Deora.

[Alok Deora, analyst]

Sorry for the network issue earlier. Sir, just wanted to understand on the ship purchase, because we have been talking about it in some time. So any discussions we have had or -- and how confident are we? Because if the ship does not come through in this year, then the growth in '24 could be slightly different on the top line as well as on the bottom line side, considering it's the highest margin segment for us. So just your thoughts on that?

[Vineet Agarwal, executive]

Yes. I mean the growth is -- yes, it has some impact on it, but I would say that we are very strongly looking at the opportunity of acquiring. Clearly, it doesn't make sense to acquire it at a price which is just not going to -- I mean, you acquire it, but you're not going to get any returns out of it, what's the point. So it's better that you get it at the right price and at the right timing. So trust us that we are really, really working very hard to find the right ship. It's been quite tough, the market has just become very, very -- it still remains quite tight as it has been for the last 1 year.

Now whether it will affect growth, maybe a very little impact in the future. Mostly, I think we are -- we'll be able to capitalize on some of the less dry docks that would be there, plus a certain amount of continuous running of these ships and also continuously looking at more value-added cargo. But other than that, the other businesses will definitely pick up.

As you've seen, our supply chain business pickup, which was not happening in the previous year or in the previous quarters. That is exactly the kind of hedge we want to create in our businesses, where if there is an issue with one, we are able to utilize the other division is able to then capitalize on the opportunity. So then you essentially get a steady state growth versus a very up and down kind of growth trajectory for many of our competitors. So I'm confident that the other businesses will also play the role in the next few quarters to keep up the growth momentum.

[Alok Deora, analyst]

Sure. And also, sir, just wanted to understand in terms of like in ships, what would be the capacity utilization for us? I mean, we understand that the revenues were increasing because of the freight rates as well. But how is the -- so at the peak capacity, how much revenue we can clock in with the 6 ships assuming the current freight rates?

[Vineet Agarwal, executive]

I don't have an exact number because what happens is that if you get some voyages to Myanmar or to any of the neighboring countries, also that changes some of the revenue mix, right? So overall, I think we are looking to hit the same numbers as last year and slightly more than last year comparatively.

[Alok Deora, analyst]

Sure. Just one last question. So how is the freight rates been? And also, the Myanmar thing is now kind of done with, or it just paused for one quarter? How is -- just some light on that, sir?

[Vineet Agarwal, executive]

No, it's not done with. It is still on and off. I think sometimes you see things tend to open up, sometimes they don't. So it can come back again. Also typically the monsoon season, which is now all getting over is when things slow down also. So now I think the Q3, Q4, we see some pickup and maybe some voyages to Myanmar.

[Alok Deora, analyst]

And on the freight rate, sir, how is the freight rates been off late in the Seaways segment?

[Vineet Agarwal, executive]

It's come off, clearly. Some of it has come down because of the overall sectorally globally when things start to come down. It has some impact, a little bit, not too much, but fuel prices came down a little bit. So that has had some impact in the domestic rates coming down a little.

[Operator]

The next question is from Prit Nagersheth.

[Prit Nagersheth, analyst]

Sir, just one last thing. Will we see a significant change in the promoter holding? I think there has been quite a bit of stock, I think that you guys may have picked up, you on your family. Is this an internal transfer? Or is it like -- because I'm not seeing any notification in terms of who sold.

[Vineet Agarwal, executive]

No, this is the internal gift that came. Ashish, what is the exact terminology we can...

[Ashish Tiwari, executive]

Basically, this is an internal transfer policy, which is from a promoter or the related...

[Vineet Agarwal, executive]

From the promoter family, it came as a gift to the promoters directly. So they were not classified under promoters and that was a gift actually.

[Operator]

The next question is from Vikash Khatri.

[Vikash Khatri;Aviral Consulting;Founder, analyst]

This is Vikash from Aviral Consulting. Sir, on the cold chain side, last year, we had an investment from Global Partner. So what's the capacity expansion plan, because that market is again growing very rapidly, especially in terms of fleet as well as we on warehousing front.

[Vineet Agarwal, executive]

The market is quite strong for us there. We have some good contracts. We have some contracts with QSR companies. We have contracts with some now new companies as well. So it's quite robust. We see some changes up and down based on what happens with certain contracts. Some of the dark store type of contracts have its own challenges because, as I said, many guys don't really are changing their business model quite frequently. So I think going forward, we are still very confident that we continue to grow, and we should be -- we'll not -- definitely not grow at the same pace as we grew last year. But definitely, we'll see a positive growth trend.

[Vikash Khatri;Aviral Consulting;Founder, analyst]

And then CapEx in cold chain?

[Vineet Agarwal, executive]

It's ongoing. There's a certain amount of CapEx that happens in terms of new trucks and new facilities that will keep coming up based on contracts.

[Operator]

The next question is from Aejas Lakhani. I guess he has left the session. We will take the next question from [ Nidhi Babaria ].

[Unknown Analyst]

Can you quantify what's the dry docking expenses for the quarter? It would be better if you can quantify it?

[Vineet Agarwal, executive]

Ashish, will you be able to quantify?

[Ashish Tiwari, executive]

Dry dock -- basically dry dock is kind of capital acquisition and it has been amortized over 30 months. So exactly, I do not have a number right now, but within the quarter, it would be up to INR 2 crore, INR 1.5 crores to INR 2 crores kind of number, if you talk about the quarter.

[Unknown Analyst]

Okay. So if it's being capitalized and taken depreciation, my quarter-on-quarter depreciation has been increased by only INR 1 crores from INR 29 crores to roughly INR 30 crores. So like can we consider that part of it has come in on depreciation and part of it has come in other expense side?

[Ashish Tiwari, executive]

So last year we had kind of some reassessment of life of ship as well. So it was not in the Q2 last year. But it happened in Q3 -- half of the Q3 and Q4. So that way, if you compare, I think the numbers would be okay.

[Unknown Analyst]

Okay. And our total operating margins on a consolidated basis also margins have dropped down on a Y-o-Y and Q-on-Q basis. So would you like to give any guidance how it would look for the next 2 quarters?

[Ashish Tiwari, executive]

Yes. So if you see the numbers on the EBITDA side, you would see that numbers are still 40-ish percent last year as well for this year as well. It is only kind of EBIT margins, which is because of the depreciation, it has impacted. As we talk about the normalization of the margin, the EBITDA level itself would be hovering from 30% to 40%. And so the EBIT margin as well. And some impact of the dry dock, which the new dry dock would also be there.

[Operator]

The next question is from Aejas Lakhani. This is the last question.

[Aejas Lakhani;Unifi Capital;Equity Analyst, analyst]

Aejas here from Unifi Capital. A couple of questions. One is you recorded very good growth in freight. So could you just call out how much was volume-led and how much was price-led from the 16...

[Vineet Agarwal, executive]

Again, we don't quantify those numbers because for us, it's mostly value growth only. What happens in our business is that if you're carrying more LTL cargo, you're really not carrying by the weight. So it has an impact on the volume that you're carrying. So -- and typically, the value addition that we provide, as I showed with one of the examples, is much higher. So we don't really call out the volume.

[Aejas Lakhani;Unifi Capital;Equity Analyst, analyst]

Okay. And any change in that FTL, LTL mix between 2/3, 1/3? Any skew was higher towards...?

[Vineet Agarwal, executive]

No. Unfortunately, we've not been able to grow it as -- but we've got it back to the same levels as last year, but it is -- in the quarter Q3 and Q4, we should definitely see some pickup. But I think we're quite confident of reaching target in '25.

[Aejas Lakhani;Unifi Capital;Equity Analyst, analyst]

Got it. And the third one is -- I mean it's a more fundamental question on Seaways. So when the ship goes for dry docking, do you know the exact tenure for which the ship will be in dry dock? Or is it that once it goes, it could get delayed by a few months here or there? Or I just want more color on that dry-docking period.

[Vineet Agarwal, executive]

So we get an estimate from the shipyards, et cetera, based on the survey that we do of the ships, and they give us an estimate. And that estimate, based on once they start opening the ship, once you open -- you check up the hull and all those things, when you start doing all of that, then you see what could be the additional work or if there's less work required. Typically, it's -- whatever estimate we get is typically 10% to 20% more time that it takes. But it's not that it takes months and months extra. So if it's like -- if they give us a tentative period of, say, 50 days or 60 days, then it could be another -- it could be other 10, 15 days more.

[Aejas Lakhani;Unifi Capital;Equity Analyst, analyst]

Got it. And all the 6 ships require dry-docking once in what time period?

[Vineet Agarwal, executive]

I think it's 30 months, right, Ashish?

[Ashish Tiwari, executive]

Yes. So basically, it is in the 5 years' time. So within 5 years, you have to have one major dry dock, some kind of a higher grade. And in 25 months, it would be kind of a moderate grade dry dock.

[Aejas Lakhani;Unifi Capital;Equity Analyst, analyst]

Okay. Got it. And currently, all the -- I mean, I remember this year, 3 ships have gone. Last year, if I recollect, 2 ships had gone. So is it fair to assume that for the full year next year, most of the ships would rather be available for revenues? Or there is a plan that 1 more or 2 more ships may go?

[Vineet Agarwal, executive]

I think there could be one ship or there might be...

[Aejas Lakhani;Unifi Capital;Equity Analyst, analyst]

One ship, okay. Got it. And sorry, I think I missed when you -- could you call out how are freight rates right now? I don't think I could capture that bit.

[Vineet Agarwal, executive]

On where? On the shipping side?

[Aejas Lakhani;Unifi Capital;Equity Analyst, analyst]

Yes, on the shipping side.

[Vineet Agarwal, executive]

Yes, it's come off a bit from -- but fuel prices have come up also. So that's why it's slightly lower. There's also typically monsoon time also things tend to be a little lower.

[Aejas Lakhani;Unifi Capital;Equity Analyst, analyst]

Got it. And no incremental competition is coming up in shipping, right?

[Vineet Agarwal, executive]

No, nothing specific that we've heard yet.

[Operator]

There are no further questions. Now I hand over the floor to Mr. Ashish Tiwari for closing comments.

[Ashish Tiwari, executive]

Thank you, Simran, for monitoring the call. And again, my sincere thanks to all of you for participating in this call out of your busy schedule. See you in the next call. Thank you so much.

[Vineet Agarwal, executive]

Thank you.