TCI Express Ltd
NSE:TCIEXP
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TCI Express Ltd
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Ladies and gentlemen, good day, and welcome to TCI Express Q2 FY '22 Results Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Abhijit Mitra from ICICI Securities. Thank you, and over to you, sir.
Yes. Thanks, operator, and good evening to all the participants. So we have with us today the management of TCI Express to discuss Q2 FY '22 results. We have representing the management: Mr. Chander Agarwal, Managing Director; Mr. Pabitra Panda, COO; and Mr. Mukti Lal, CFO.So without further ado, handing it over to Mr. Chander for his opening remarks. Over to you.
Thank you, Abhijit. Good evening, everyone, and welcome to Q2 Financial '22 Earnings Call of TCI Express Limited. I would like to thank you all for joining us here today. I hope you and your loved ones are staying safe and healthy.I will first start with the industrial and business overview for the quarter, and then we'll hand over the call to CFO, Mr. Mukti, to discuss the financial performance of the company for the quarter. Our earnings presentation has been uploaded on our website and stock exchange, and I hope you've had a chance to review it.The overall macroeconomic scenario improved in the second quarter and business was able to recover quickly from the initial shocks of the second wave in the first quarter. In Q2 financial '22, we saw a pickup in the economic activity and broad-based recovery was visible. Recovery trend was visible in both the data of our index for industrial production and E-way bill generation. During the quarter, we saw overall improvement in the output for the month of July and marginal decline in August. The manufacturing index was up by 10.5% in July and 10% in August on year-on-year basis.Another factor which helps us engaging the performance of the logistics sector is the generation of the E-way bills which, after a decline in previous quarter demonstrated significant growth during the quarter. Overall, the E-way bill generation was up by 41% Q-on-Q, 19% Y-o-Y. July registering INR 6.4 crores, growing respectively to INR 6.6 crores in August.The overall economic recovery had a direct impact on the performance of the logistics industry. And as a result, after having a subdued first quarter logistics industry, the logistics industry recovered quickly in the second quarter. TCI Express being the market leader in Express Logistics continues to deliver strong performance during the quarter, with total income of INR 276 crores, registering a growth of 29% year-on-year and 23% sequential basis. The top line growth was primarily driven by the SME customers.Our EBITDA was INR 48 crores, with margins increasing to 17.3% as compared to 15.9% in Q2 financial '21 and 15% in the previous quarter. The EBITDA and margin growth was primarily on account of: one, higher capacity utilization of 85.5% in the quarter as compared to 83.5% in Q1 financial '22 due to the growth in key service areas of our company. Secondly, improvement in overall operational efficiencies as well as higher demand on account of festive season. Thirdly, also, we've been able to continue our footprint, increase our footprint by opening 15 new branches during the quarter, mainly in the South and West region to crater to the growing business demand from the SME customers.During the first half of the year, we have incurred a total CapEx of INR 46 crores, which has been really spent towards construction and automation of sorting center in Gurgaon and Pune. The construction of Gurgaon sorting center is going as per planned schedule and will be operational by the end of Q3 financial '22. Our Pune sorting center, which has improved the operation since July -- since June 21, is helping us in reducing the time in the region.From a balance sheet perspective, we continue to maintain strong capital structure with our cash and investments increasing to INR 100 crores at the end of September 21. In view of our strong performance in the first half of the year. I'm pleased to announce that the Board of Directors have recommended an interim dividend of INR 3 per share with a payout of 150% on the face value.Our recently launched Pharma Cold Chain Express and C2C Express services are going strength to strength. We have been able to deliver 105 -- 1 crore vaccines in the end of September 21 through our Pharma Cold Chain service offerings. We expect both the service offerings to contribute meaningfully to the top line in the forthcoming quarters.We at TCI Express strongly believe in working towards providing more value-added service to our customers in a cost-effective manner. As Air Cargo is on a decline due to it's higher cost, and which is not sustainable in income, we see a vast opportunity to fill the gap at a lower cost service with the effective service offering of the Rail Cargo. With this in mind, I'm delighted to announce that we have launched our new offering called Rail Express, which is a unique service offering to provide a high-value service at a lower cost, and it is already gaining enough traction amongst our customers. Now I can proudly say that TCI Express is the fastest-growing multimodal express delivery company in India.Looking ahead, the logistics industry is going through a lot of transformation as the government has identified it to be a key factor contributing to the growth of the country's GDP. Recently launched PM Gati Shakti National Master Plan, launched by our PM is a testament to it and is aimed at seamless movement of goods in the country. And overall infrastructure development as well as improve the quality and ease of doing business. I strongly believe such initiative act as a catalyst in driving demand to the remotest corners of the country. As the economy gathers pace on the back of various government initiatives in mass vaccinations, ongoing festive season, and strong rural demand. This is expected to drive in the near term.We remain confident of our superior value-added service offerings as well as leadership position, capitalize ongoing opportunities and deliver sustainable growth consistently in the upcoming quarters. With this, I would like to hand over the call to Mr. Mukti to discuss the financial performance of the quarter.
Yes. Thank you, Chander. And now I would like to discuss the financial performance of the company. So during this quarter, our revenue from operations stood at INR 274 crore and for Q2 and as compared to INR 223 crores in last quarter and INR 213 crores in Q2 of last year, and transiting into a sequential growth of 23% and 29%, 29% year-on-year basis. This significant growth can be attributed to multiple factors like growth in demand from SMEs, higher capital utilization, increased demand from rural areas and festive season. Overall, the total income for the first half of the year stood at INR 500 crore as compared to INR 305 crores last year, posting a significant year-on-year growth of 64%.So we witnessed a significant -- we also witnessed a significant improvement in EBITDA and margin as well. And EBITDA is [ INR 2 ] INR 48 crores with a margin percentage of 17% and it is surpassing the full year of FY '21 margins. Sequentially, the EBITDA growth was 41%. And on a year-on-year basis, it is 40%. This improvement can be attributed to robust growth in top line as well as improvement in overall efficiency. I am happy to report that for the first half of the year, our EBITDA was INR 81 crore as compared to INR 37.5 crores for the same period last year. And we have now been able to surpass pre-COVID levels.The net profit for the company in Q2 was INR 34 crores with a margin of 12% plus as compared to INR 24 crores as a margin of 10.5% in Q1 of FY 2022 and INR 23.5 crores and margin of 11% in Q2 of last year. Overall, the net profit for the first half was INR 58 crores with a margin level of 11.6% despite challenging condition in Q1 of this current year. For the first half of the year, we have incurred a CapEx of INR 46 crores towards construction and automation of our new sorting center at Gurgaon as well as towards ramping up our IT infrastructure. I'm happy to report that we are completely on schedule to make the sorting center fully operational by the Q3 end, which will result in improving the turnaround time in this north region and further improve the operational efficiency to drive growth and profitability.Our Pune sorting center, which is already operational since June 2021. And as we communicated earlier, we are keen to take the learning of our Gurgaon sorting center and then we'll go for automation at our Pune center. So our key strength is our satellite model. And as a result, we continue to maintain a strong capital structure and a strong balance sheet. I would like to highlight that for the first half of the year, our cash and investments stood at INR 100 crores. And going by the improvement in macroeconomic scenario of the country, improving demand trends and active participation of the government in improving the overall connectivity across the country and ongoing festive season. I'm highly optimistic of further improvement in our capacity utilization, higher contribution from our new offerings like Pharma Cold Chain, C2C Express and Rail Express as well as overall operational efficiency, which will be reflected in our financial performance in the forthcoming quarters.Thank you very much. And now I would like to open the floor for question and answer. Over to you.
[Operator Instructions] We have the first question from the line of Alok Deora from Motilal Oswal.
Congratulations on great set of numbers. Just a few questions. If you could just highlight that in the growth of around 28%, how much would that be through volumes?
Yes. So it is -- through volumes is around 26%.
Okay. And what would be the sort of absolute volume figure for this quarter?
So this quarter, volume figures are 2.2 lakh ton.
Sure.
And for the H1, it is 4 lakh ton.
Got it. Got it. And sir the margins have improved to nearly 17% now 16.6% of core EBITDA margin. So what's the outlook there now? Because we have seen a sharp increase in diesel prices, especially after September. So how are we viewing the -- I understand that the volumes may be higher due to the festive season. But how are we looking at the margin picture now from a 2, 3-quarter perspective?
So government has given a guideline already that for this quarter, the GST collection will be more than 1 lakh. So it clearly -- that is a very positive factor. So I think looking at that, I see that the business should be robust, and we would be able to pass on the pricing quite effectively, the diesel hike very effectively.
Sure, sir. And sir, in the presentation also, it is mentioned you briefly mentioned about this Rail Express. Could you just elaborate a little bit on that, what is the business like and how much it could contribute and what exactly we are doing here? And is any other player also doing anything of this sort?
So the kind that the business that we usually do is Express, which means that -- and it's not full truck or it's not -- it's LTL going in rail, which means that it's time definite and it's a sure delivery and in a short time. So this what it's done is that we managed to convert a lot of the Air Cargo customers into the Rail Express business. And this is something that nobody else has been able to do. And this has been -- has a good following and a good coming in good acceptance in the market, which I feel in the long term will play out very well. The way Air Cargo is going ahead in today's time, it's not going to have a very bright future in times to come. It may have had in the year when there was no highways, there were no road traffic because of the lockdowns. But that was just a one-off thing. And in time to come, if the crude price hits 100 barrels, $100 a barrel or more, it will not be sustainable for Air Cargo. So I think that market, it really shows us that it's the new -- that business can be converted to rail quite easily because the rail speed is faster than surface. However, the pricing is not high as high as Air Cargo.
Sure. Sir, just one last question from my side. So we have been giving guidance of around a 35% to 40% growth in FY '22. So any changes in that or we would kind of retain that number?
No, no change in that.
Next question is from the line of Rajesh Kothari from AlfAccurate.
Congratulations for a great set of numbers. Chander ji and your team and Mr. Mukti. Just 2 questions from my side. Can you bit more color on in terms of the new initiatives, which you talked earlier during the last couple of conference calls in terms of the pharma as well as many of the subsectors. And how are you seeing traction on that side? That's number one. And number two, the consolidation in the industry, are you seeing -- are you experiencing the consolidation in the industry -- That's number two. And number 3 question is primarily on the digital initiative side because I keep seeing a lot of advertisements on the various social media platforms. So if you can give a little bit more update on that, that how we are further gaining the market share using the digital as an initiative?
Thank you, Rajeshji. Pleasure speaking to you again. So answering your question, Pharma, the new business, Pharma Cold Chain and all the new initiatives, they are going pretty strong. I mean the way we have positioned it and the way we are driving a -- It is actually showing a very good traction. And since we are also in a way, first movers, we got that advantage. Consolidation in the industry, I think it's happening. It's such a large industry. It's not visible the way it should be. It's very hard to say because 95% is unorganized. And with that notion, real visibility is difficult. But I can tell you 1 thing that our tough time in this environment. Third question, digitization. See, we were the first company in India to come out with the usage of ERP and having in-house IT team and all of that. So we are well versed and well equipped with all that is required. This is something we don't have as a moment for our business. Our business is more of -- the real, is more than the IT that is -- that we are using. IT is the backbone, is the pillar of the operations and everything. But it's not something, which I will use it as a tool to project the company being different or better or something.
Great, sir. And over the period of, say, next 2, 3 years, how do you see the new segments contribution to your -- the current revenue?
If you see the investor presentation, it is mentioned that they will contribute about INR 1 crore.
Your voice is breaking. Chanderji your voice is breaking actually.
Then 1/4 would be, I think, if you see the investor presentation on the website.
The next question is from the line of Ravi Naredi from Naredi Investments.
Chander, thank you very much for nice results. Will you tell what is the rent service? Will you describe how this work and everything?
Mukti.
Sorry come again, please?
What is Rail services, which we are going to start or we have started?
Okay. Yes. So this is -- again, is a small cargo, we will be carried through these rail services. And it is, again, point to point. Supposing my 1 branch in North [indiscernible] Cargo and deliver in East India. So we will pick from customer door then connect with this passenger train basically and then deliver to their door. So it is basically substitute of this high cost of Air Cargo into rail and in a very cheaper rate.
Okay. So it will be like B2C, right?
So it is again B2B.
No B2B Only.
Okay. Okay. Okay. Chander, suppose the Indian GDP is double in next 5 years. Then what is our target for our industry, how it will grow?
So our industry will be $1 trillion by 2030. So $1 trillion and road will be 70%, which means it will be a $700 billion opportunity. I think it is going to be massive. That is why we have to expand our branches. We are lean, we are -- we have the speed. We are putting all this automation to capture all the business. So we are planting the seed now to capture that.
And out of $700 billion, how much we are targeting at TCI Express?
We'll be at least we'll do about 15%, 20% of that. So already, our market share has gone up by almost 3%, 2%, 3%. So definitely, yes, we will look at that 20%, 25% for sure.
Next question is from the line of Prit from Wealth Finvisor.
So just a couple of follow-up questions. One is what is the price increase taken in this quarter?
Yes. In this quarter, we had taken almost 1% price hike only because, again, this price hike depends on the how much contract come for -- So that way, we have taken is 1%.
Right. And what is the outlook for October given the kind of high business growth we are seeing across verticals?
Yes. So this -- even -- if you see the track record of last 5 or 7 years, usually, our H2 is much robust than the H1. So this whole quarter would be fantastic given H2 also.
The reason I asked is that I was reading the recent reports at [indiscernible], for example, I say that they are increasing the network by 15, 20 percentage and so on and so forth. So has there been a requirement for TCI Express to also increase network?
That statement itself shows that they are in trouble because they are not even prepared that they are expanding their networks now. So it means that the -- they are in trouble and they have to do investment and they don't have the money. So I think it's a -- yes, obviously, it's opposite -- totally opposite of where we are.
Right. So you basically you're fully prepared to take advantage of this growth that is going on or increase in business coming on?
Absolutely. And we have not invested anything in capacity expansion or rail or open network and all that, which they are doing now.
Phenomenal.
They are serious trouble because they don't have the know-how anymore.
Can there be on 1 other thing the Rail Express that you are saying, would this compete against the LTM of TCI?
Not at all.
There is a differentiator here is going to be the package size.
Yes. This is expressed. So very different. And TCI does FTL. I mean full rates.
Next question is from the line of [ Jitark ] Shah from GMFO.
Am I audible?
Yes.
Yes. First of all, many congratulations on the great set of numbers. I just had like 2 questions on competitive side. So I have been observing in the startup space also, a lot of companies are entering into trying to enter the full vertical segment of last month as well as fulfillment and first mile. So do you see them as a threat in terms of taking any share of your customers? That's going to be my first question. And second is going to be like, how do you intend, like in terms of your strategy on onboarding newer and newer set of customers and who -- and what profile will that be like? Will it be more on the MSME front, which accounts for your 3%? Or will it be the rest of them?
So let me say that we don't have any new entrant coming in the B2B segment. B2C there could be. And so we are not really concerned about that. Second question, Will they take market share? Sorry, the -- will we have -- how are we going to grow our business? Yes, it will be through MSMEs and it will be through the top 1,000 customers of India. Manufacturing company yes.
Next question is from the line of Krupashankar NJ from Spark Capital.
Just a couple of questions from my side. One, on your guidance for FY '23. Does it still hold that about 18% to 20% growth? Or would you like to revise that number upwards?
No, we are strict with those numbers, yes, 18%, 20%.
So just taking it a little bit forward, how are you seeing -- what are the key sectors where you are seeing this growth would come in, not speaking specific to the MSMEs. It's more on sector on automotive or textiles and other large sectors which we cater to. So which are the key sectors, which is going to contribute to this growth?
I think in all, if you see that we are very well discified. We don't have any prevalence in 1 sector. So all sectors will be contributing. And I don't see any 1 sector like last year where pharma was contributing more. So nothing like of that sort is going to happen this year.
The reason why I asked this question is because you're also expanding your branch network quite -- for quite some time. And therein, you would have targeted specific subsectors. So in respect to that, I just wanted to check if...
No, we don't target subsectors or something like that. We target our main verticals that we are in. And most manufacturing is happening in those verticals only.
Right. Just to add on to that question on competitive intensity. So the recent acquisition of spot on logistics by delivery. How have you seen the competitive pressure in terms of pricing and in this space? And do you believe that it's going to be a threat given that Spot on was most likely the fifth largest surface express player in the country. So I just wanted to take your opinion on that.
I'm sorry, what is the last sentence?
Spot on is close to about fifth largest surface express player in the country. So just wanted to take your opinion on how you are seeing the competitive intensity in this...
You have to study the competition or any company in detail and not by what they are announcing in the news. So if you go in detail and see they do not have any hub-and-spoke network. They don't have any infrastructure. They don't have any manpower. So I think you have to -- and also see that it was sold off in 2005 by TNT to a bunch of investors, which the investors have now sold again. So who is the head? Who is the deposit figure of that business? No one. So with the company, which is operating in India in such a dynamic environment, we have to have stability. And most of these companies will not show stability. And if you look at the pricing that they have, they're competing with FTL and FTL players and very low unorganized player. So of course they're doing that.
All right. Okay. And in guidance on the margin side, where are you expecting margins to hover in FY '22 and '23?
Yes. So in '22, we will be -- again, have an aspiration to be increased at least 150 basis points for '22. And by 2025, we want to be cross around 22% in EBITDA level.
The next question is from the line of Rahul Sony from SMIFS Limited.
Sir, my question is related to the Gati Shakti program. I want to understand, like in last few years, railways has lost it's share to -- compared to this road transports -- because road transport offer a better service in terms of shorter delivery time, while the railways there used to be higher waiting period some time for these wagons. So going forward, like government is focusing on increasing the railway share. So I want to understand how this is going to impact the TCI Express or other companies who were mostly running on road transport before?
Road transport will always remain #1 mode of transportation in India. Rail Cargo will be a very good substitute to Air Cargo. We are seeing that Air Cargo is being substituted by rail already, and we are the first company to do that in a big way. So there is where our strength lies.
And regarding the price hike which you have taken, 1%, so was that sufficient to cover the dual cost hike during the quarter?
Yes, of course. You have seen that our operating margins are maintained or even increased sequential basis also and quarter on year-on-year basis also.
The next question is from the line of Alok Deshpande from Edelweiss Financial Services.
Yes. Two questions. One, if I heard you correctly, you said the volume growth year-on-year was 27%, right?
Yes, correct.
Yes. I just wanted to understand this a little better because if you look at the diesel prices, -- If you compare the Q2 of this year to the Q2 of last year, the diesel prices are up about 20% average for the quarter. So I just wanted to understand this break up a little better because the sales are up about 28% and you're saying that 27% of that is volume. So how should we think about this?
Yes. So again, because this is also composition of various aspects of like how what are the lead distances we covered in this quarter? What kind of -- which sector we have done the more business like pharma or like engineering or auto. So various dynamic factor is here actually. So we are just giving whatever we have improved on our realization per unit. And also some time depends how much business we have done like intrastate or interstate. And another aspect you also see diesel is part of our cost. And we usually -- so it is not impacted like other companies has impacted by that because we have a vendor management. And we have our own system to pass on to vendors with the time line. So we are not passing on to immediately even, again, earlier, we also said, this is sometimes a very good positive arbitrage for that. In terms of that, we're delaying some time to passing on the diesel hikes to my vendors and immediately passing on to customers. So various combination and permutation is there in this aspect, yes.
Sure, sir. And my second question is on the slide that you have in the presentation regarding the strategic goals that you have set out for the next 5 years. These 4 new businesses that you have mentioned, Pharma Cold Chain and Rail Express and a couple of others. Can I -- I mean, what would be the share of these businesses right now in the top line?
So if you put together fare is around 15% right now. And after 4 years or 3 years, we want to make it like as mentioned by Mr. Chander, we want to be 1/4 of total revenue.
Okay. So if your INR 1,000 crore revenue goes to INR 2,000 crores, you're saying that this will be about INR 500-odd crores, roughly that goal, right?
Right understanding.
Okay. Okay. And just 1 last question on -- specifically these 2 businesses of Pharma, Cold Chain and Rail Express. Now currently, you have this model where your return on capital is exceptional, margins are great because operating leverage kicks in. I just wanted to understand the dynamics of these 2 segments. Are these -- will these businesses require capital? What are the general margin range? And what is the return on capital on these specific businesses?
Yes. So basically, if you see our DNA to make it always everything has to be asset light. In these 2 segments, we are also following the same rule, and we will keep ourselves as a asset light. So we don't need to put any additional capital here. You can see also our balance sheet of this quarter or this half year. We have nothing changed on a part of assets or current assets and current liabilities. And second thing, margin level in the rail and Pharma Cold Chain in both are very high. Because why I'm saying because this is a substitute of air, like rail is substitute of AR1. So everybody is willing to pay higher. And even with the kind of what kind of service they get up, we are also able to provide them through rail also. So this way is both margin level are very high, even more than surface right now we have. And that's why we have an aspiration to be have around 22% margin level by 25%.
Okay. Okay. So to summarize, so you're saying that because these businesses are higher margin, when your share of these businesses go up from 15% to 25%, and actually, the blend will change and your margins will benefit from that, right?
Yes.
The next question is from the line of Kunal Bhatia from Dalal & Broacha.
Congratulations on a very good set of numbers. Sir, you did mention about the opportunity size of about $1 trillion by 2030. Sir, currently, looking at the opportunity size, which is at about $360 billion odd in [ Jasso ] Logistics where we are about 5% market share. So do you refer to that same kind of a graph or is there something you can missing on? Because you mentioned the capture about 15% to 20% on that thing.
Yes. So that is correct. And we've inched up from 5 also. Now I think we are at about 8%. And I think as the business grows, we keep capturing more market share to
Okay. And sir, when you talk about the market share, you mean to say the value carried by TCI Express.
Correct. Correct. Always. Yes.
Okay. Okay. Sir, my next question would be in regards to the new launch of this Rail Express business, -- You did mention in case of the other -- the Cold Chain business and the C2C Express, we have about 20% plus kind of EBITDA margins. Does that also hold true for Rail Express?
Correct.
Okay. Okay. And so just wanted to confirm, sir, last year same time, the volume was 1.8 lakh tons if I'm not wrong.
Just a hold on, yes, I need to see that. So you can confirm me on a one-to-one basis. I will be confirmed, please. You send an e-mail to me.
Okay. Okay. And sir, for the current year, what would be your after this, there is expectation of no third wave. So what would be your guidance for this year? Any change on that?
No, we don't have any change on that. And when we are on the right path, and we will achieve what we have said in initial inception of this current year.
Okay. So that would be about 25% to 30% kind of growth for the...
Even more than that, the revenue growth and margin profit would be also, again, kind of 40-plus kind of percentage.
The next question the line of from Pratik Singhania from SageOne Investments.
Sir, my first question would be with respect to the difference in the level of efficiency and turnaround time between a nonautomated and automated sorting center. So if you can compare it with Pune with the Gurgaon sorting center once it gets automated.
Chander sir.
So basically, what we are working on is the different scenarios. It's something which is -- to work out the modeling, we're doing the modeling currently. As to in north India all the vehicles come at a certain time or all the vehicles from rest of India come at a certain time. So it's a lot of modeling, which is going on. Our aim is to cut down the latent time by almost 8 hours. So looking at that, are we able to give you a better answer by January of this year -- or next year?
Okay. So 8 hours on a base of what -- how many hours?
Yes. From -- so from currently, it is around 15 hours, so which we want to be just half of that.
Okay. That was 15.
The time in sorting center, cargo is in and out in sorting center. And this is complete took around 15 to 16 hours, which we want to be cut half. And this way, what happened by truck trip will be increased because then we will be engaged them very fast. We will be a pretty fast and then load fast. Ultimately, they will be able to make a more trips in a particular month. And obviously, then we will get a benefit off here.
Okay. And secondly, with respect to the Rail Express, so in terms of, say, if I could decide from 1 route to another route, I have to send it via Air versus Rails Express using PCA service. So how much will be the difference with respect to the time taken to deliver it? And how much would be the difference in the cost for the same like-to-like route?
Yes. I think cost would be less than 1/3 of that, what air services is providing. And time gap is not there, even supposing we are offering service of 48 hour for air. We can be max, 2 max is given in -- within 72 hours or in some cases, even in 48 hours because rail is also -- we have very good flexibility and number of trends are very high, and they are also on -- right now is very -- they follow a complete tight schedule. So that's why this opportunity has come out, and we are grabbing that and enhancing our branch network because branch network is also supporting to get the customers across India. Yes.
Okay. So 1/3 of the air freight is what we charge. And sir, last question. With respect to the new value-added services, you said that currently, it is 15% of the total turnover, right?
Yes.
So with 85% balance like-for-like Y-o-Y growth, how much was it? The balance, 85% the traditional business that we bill. The growth for that like-to-like...
Y-o-Y, this is around 25%, and new services are growing with faster pace.
Okay. 25% -- So this is what value growth?
Yes. On Y-o-Y basis.
Next question is from the line of Depesh from Equirus.
Sir, just a clarity on the Rail Express services. Did you say that you will be using the passenger rail for this cargo transportation?
Majorly, yes.
Okay. So passenger rail, you'll be [indiscernible] a small-sized cargo along with the passenger time rate. And that is how it is going to...
We have 1 or 2 rack in this -- every passenger train, and we are majorly using that, wherever is cargo train is available, we are also using that.
Okay. Okay. So any plans to leverage the existing the group company JV with Concor or you will be like tuning doing it separately?
No leverage with them, and it is -- we are doing separately. Because the touch point is also completely different. Supposing we want to be sent from south particular city Madurai to like Chandigarh, we have to be using different model and different train and everything like from Mumbai to Patna supposing we want to be send, it is completely different. And what our other group company is doing, they are differently in a different segment.
Got it. And sir, what are the margin differences in the Air Express and the Rail Express, as you said, like most of the demand will be like transfer from air to rail, right? So what is the margin difference in these two.
So margin is slightly higher in Rail Express in comparison to air because customer is willing to pay in rail because still it is a cheaper of like 2/3 of that.
Okay. So any number like how much is it 25% like...
A range of 20% to 25%.
Got it, sir. And then lastly, your CapEx, you've already done INR 46 crores till the first half. So what is the CapEx had in the full year?
Yes. So we are in line with that. We have planned for around INR 80 crores to INR 100 crores, and we will be incurred that.
But mainly towards the Gurgaon sorting center only or anything else is also planned.
So anything other acquisition of land in we are planning to acquire the land in Kolkata and Mumbai. So I think this will be -- Kolkata land will be very soon, it will be metalized. So we will acquire that. And we will start the construction like we mentioned on last call also, we will start the construction at Nagpur and Chennai soon.
Sure. Okay. So in terms of Gurgaon, how much is left, CapEx, how much is left still?
So I think it is hardly on some automation part we have left, I think, INR 15 crores more and yes.
Next question is from the line of Ravi Naredi from Naredi Investments.
Sir, Chanderji, just I would like to know TCI Express carrying USD 10 billion business. So how you calculate the value?
So we get the value from the customer. We get the invoices. So what kind of amount of these invoices we're carrying in a year, we are calculating that way.
$10 billion value of the goods
Correct.
Next question is from the line of Rahul Agarwal from L&T Mutual Fund.
Sir, my question is more to understand what the industry growth has been because when I look at your sales number, it is pretty much the same what you had in FY '20 second quarter. So should we assume that industry was also flattish at that -- from that level and you have retained your market share or how?
Chander, sir?
We have actually -- if you see comparison, we have not retained -- we've actually grown it also, not just retained it. And last year, most of the companies are very -- they were negative at top line. And this year also, okay, companies may not show a top line negative in a large way. But I do not see them showing a very high growth also. So I think in all where the kind of performance that we have done this year is something, which it will happen when the economy improves. You will always show that. So yes, that's exactly what's happening.
So in summary, what you're saying is that industry has degrown from those last couple of years back? and gain market share?
Absolutely. If you even see the -- I was reading that our India's per capita GDP has reduced from $1,900 to $1,500 because of the lockdown and stuff. So in all, there has been degrowth everywhere, not just in logistics.
And going ahead, when you say that this industry per se, you are seeing much better growth than GDP. So then you are -- there's a change in the trend that we have seen.
That is not a trend -- that is not a change in the trend because this virus and all that was just a -- and how many companies have managed to not deteriorate their balance sheet and come out stronger, that has to be seen. So a blip, if you can survive when 1 gets survived that, that means that it's a good going and enough -- sorry, go ahead.
Sir, my second question was for the operating expense part. So like 2 years back, you were at somewhere around 71%. Today, you are at 68%. So this benefit, where has it come from? And how much of it is sustainable?
Mukti?
Summary, I can give you a price increase, operational efficiency, better asset utilization. So I think all of these factors remain the same for us. There has never been any change.
So we should -- so this number should be sustainable?
Absolutely. We've made it sustainable for 5 years and grow only. So I think yes.
The next question is from the line of Radha from B&K Securities.
I just wanted to ask what kind of market size are we targeting for these value-added services of Cold Chain, Rail Express and CTP business?
We have yet to get the market size of these businesses. But if you look at the investor presentation, the main component Rail Cargo if you see is the next biggest chunk of mode of transportation in India. So if 70% is it's surface. -- Rail Cargo, I think, is about maybe almost another 20% or something, 25%. So if you compute the GDP from that, we have to further dissect it and see what is the cargo volume going on it. So looking at that, I think I should be able to put that in the presentation next time. I don't have the complete data on my hands right now.
Okay. Okay, sir. Sir, just 1 more question. What is the number of owned and leased sorting centers as of now? And how would you -- And what would it be in the next 3 years?
Yes. So right now...
Go ahead. Go ahead, Mukti.
Yes. So right now, we had a total number is 28 sorting center out of that 10 we owned right now and 18 are on a lease basis. And I think in next 3-year at least we want to convert major [ 5-1 ] like in Kolkata, Nagpur, Chennai and 1 or 2 more cities.
Yes. So those 5 will be owned?
Yes. So then this number become 15 is owned one and 13 is leased one.
Okay. Okay. So the total number of sorting centers remain same, but owned.
The next question is from the line of Mukesh Saraf from Spark Capital.
My question is again on the rail business. So while you're mentioning that you are right now targeting the Air Cargo business, is this the Air Cargo business that you are right now handling because I think you do still generate about 5% of revenues on Air Cargo?
No, this is the competition business that we are capturing.
Okay. So the kind of transit as on the because you're talking about, say, 48 hours, 72 hours kind of transit time on rail. But Air Cargo currently, like someone like what Blue Dart does is probably less than a day probably 12 hours or 16 hours, it is less than a day. So how are we going to compete with Air Cargo like someone like what Blue Dart is doing?
Mr. Manoj right? Mukesh. So you have to break up the segment B2B or B2C. What Air Cargo moves nowadays maximum is B2C. Well, I'm not sure also how much of that is going and also courier documents and all that. So we are not focusing that business. We are focusing not the same way all that. We are focusing on B2B, which easily be substituted. We are already doing it. It's a good good development that has happened. So I think it should not be a -- I'll see good growth next year for sure.
Okay. Okay. Got it. Got it. And so currently, the way it works is you're saying that you're going to be kind of booking a wagon for like a dedicated as on the rail and...
No, no, no. Mukti.
Yes. So we are not looking for the complete wagon. And rather, we are buying that space from the railway and other vendors and then putting our material in that.
Okay. Okay. Okay. Got it. So I mean, could you give some sense on how many routes you already started now on this Rail Express business and probably how many routes you want to add, say, in the next year or 2 years?
Yes, it is very good question. So almost, I think we have already crossed 35 routes in India. And we have a plan to have at least 100 to reach [ 100 ] by this year end. And that's why this is a very, very good business, and it is across India, like we are doing in surface because there is no challenge like in India, we don't have the airport everywhere, but we have a rail connection everywhere. And that's why Chanderji rightly mentioned, it is a business of B2B, which is you are targeting and from here. And with the transit time is, customer happy with that. because we have to be connection from door to door. What you are talking like 12-hour or 16-hour or 18-hour services is just like a airport-to-airport for metro cities.
Next question is from the line of Ankit, individual investor.
So I just wanted to ask like at peak utilization, what can be like total revenue, say, for the full year annually, what revenue can we achieve?
Yes. So this is not like this. Whatever capacity we have, this is our vendor management managed capacity in terms of trust I'm talking about. So right now, with utilization level of 85.5%. Maximum we can be reached on 90%. But yes, revenue, once gradually revenue will increase, we will be keep adding our truck capacity as well. So this is not on any hindrance of that. Actually, it is increasing once businesses is also increasing.
The next question is from the line of Abhijit from ICICI Securities.
Congrats to the team on starting Rail Express. It looks very impressive from the outside, especially with the advent of DFC and the increasing share that trade is supposed to take. Just 1 short clarification. What about the loading and unloading infra and how does that fit into your overall aim of [ serving ] these passengers in time to time manner?
Let me explain you 1 thing. This Rail Express will not be piggybacking on the DFC. DFC is for container load, which is for EXIM and for commodities. So we are going to be using the passenger traffic, which are all across India. Passenger traffic trains, which are all across India. So our value proposition is very different, number one. Number two, what was your question?
Yes. So I was asking that given the existing loading and unloading infra, how does that plan of...
We have a -- Yes. We have a very clear-cut system of how we do this. We have branch offices, whichever is near the railway station does the pickup and delivery. And that the rail itself, when you're going to the railway station, it's a direct -- they have a separate entrance for the cargo loading and unloading and our trucks was straight to that platform. So we don't need to really even touch the passenger platform. And the beauty is that because we are in this express segment, we can do from any of the railway stations in the city. If there are 3 or 4 railways stations, we can use any of those, unlike the container cargo, where the -- you have to do only from that particular railway station. So we have clearly identified that the advantages of this is humongous, is massive, and we will definitely capture it.
The next question is from the line of Lokesh Manik from Vallum Capital.
My question was again, Rail Express front. In your experience, has there been any barrier that prevented us or any other player in the past from exploring the service offering? Passenger trains are there since decades now. Were there any barriers to entry in the sense of operational -- in terms of operations, in terms of processing documents or trains -- delay in the train arrivals and all those things. So has anything changed since the past?
So I'll explain you. So we are actually -- we have bypassed the bureaucracy in landing the containers. There is more bureaucracy in when you are putting your containers or when you're using like Concor or anything like that. It's very good static. But in our case, it's straightforward. So we have identified that opportunity. And moreover, one of the biggest reason of doing this -- studying this was the fact that conversion of Air Cargo into Rail Cargo. Now this is something, which is going to be very important for long-term sustainability. We all know that Air Cargo is not going to increase in India because till now with all the new airports coming up and all cargo facilities are still at the back end. There is never any mention of that. If you look at Delhi Airport also, you look at Bombay is a new -- now airport coming up or Chennai or anywhere else, there is no provision for Air Cargo. Therefore, I do see the massive shift happening and the demand for the Rail Express also coming up.
All right. Have you guys been able to crack the bureaucratic system, which can create a barrier for someone else to do this?
I'm sorry, can you repeat.
Have you -- in the sense that have you been able to figure out how to implementing this service offering. And at the same time, it can be a barrier for someone else to start rail offering in there?
I guess, see, India is a country where it's a cut copy-paste country. We are doing something, tomorrow, there will be somebody announcing the same thing, okay? So how much of that they will be able to do is up to them. They'll do it, but they'll do it in a very dirty manner, and maybe free cost or something. Tomorrow you will hear 3, 4 other companies are saying we are also doing it. But for that, you need to have a team, you need to have people on the ground, you need to have branch offices. All that, I think, will be a barrier to entry till some extent for a long time. I think if we play our cards right, which we are, we will be the preferred choice of partner for most companies.
Okay. And you would be exploring to integrate this into your other offerings like door-to-door?
Door-to-door.
Okay. So you can alternate between road and railway depending on the...
No, we don't do it that way. We would approach our road customer for going to rail because the pricing is different. We are clear cut in our strategy. We'll only look for a very large Air Cargo company customers. That's all we're going to be doing.
No, what I meant about this service offering will remain independent of other service offerings.
Absolutely. All see every model, every mode it cannot mix and match. There's pricing, and there is also operational issues in all of that and compete to the customer. So from that point of view, it's important to note that substitution is not a possibility. You already what is there is -- can be done. Okay, 1 more thing. You can go from high price to low price. You can go from air cargo to rail cargo. But no customer will want to go from low price to high price.
Correct.
From road to rail.
Correct. Correct. correct. Okay. And just 1 last question. The Air Cargo space. So you would be having any idea in terms of distribution between B2B and B2C?
No, we don't have the data yet. I'll get it out. And also, we will target all these airlines also with the companies which are giving belly space and all that. We are going to target all that in a big way. And also -- and there are no other players, there are no players in Air Cargo markets. So it is on the decline. And so better to grab these customers and ship them to Rail Cargo.
Thank you. Ladies and gentlemen, that was the last question that we took. I'll now hand the conference over to the management for their closing comments.
Thank you, everyone, for joining us here today. I would like to conclude by saying that we are witnessing improved economic activities and life returning to normalcy with the vaccinations, increased awareness and better preparedness of the markets and the businesses. We remain optimistic of the economic scenario of the country and confident in our strong value proposition to deliver sustainable, operational and financial performance. I look forward to meeting you again next quarter. Please stay safe and healthy. And feel free to reach out in case any questions remain unanswered. Thank you.
Thank you, everyone.
Thank you very much, members of the management. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.