TCI Express Ltd
NSE:TCIEXP
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TCI Express Ltd
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Ladies and gentlemen, good day, and welcome to the Q3 and 9 Months FY 2022 Results Conference Call of TCI Express Limited, hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Abhijit Mitra from ICICI Securities Limited. Thank you, and over to you, sir.
Yes. Thanks, operator, and good evening to all the participants for joining in. We are here to discuss Q3 FY '22 results of TCI Express. From the management we have today Mr. Chander Agarwal, MD; and Mr. Mukti Lal, CFO. So without further ado, I hand it over to Mr. Chander for his opening remarks.Over to you, Chander. Hello, Chander, are you there? Operator?
Mr. Chander Agarwal? Ladies and gentlemen, we seem to have lost the connection for Mr. Chander Agarwal. Please stay connected while we reconnect him.
Yes, can you hear us? Can you hear us?
I'm so sorry, sir, we are not able to hear you.
Can you hear me now?
Much better. Please go ahead.
Okay. Sorry.Good evening, everyone, and welcome to Q3 Financial '22 earnings call of TCI Express Limited. I would like to thank all of you for joining us here today. I hope you and your loved ones are staying safe and healthy.I -- we'll first start with industry and business overview for the quarter, and will then hand over the call to CFO, Mr. Mukti, to discuss the financial performance of the company of the quarter. Our earnings presentation has been uploaded on the website and stock exchange, and I hope you've had a chance to review it.Q3 financial '22 started on a positive note, with strong economic activity in October ahead of festive season and broad-based recovery visible across industries. The recovery trend was visible in both the data for index, for industrial production and E-way bill generation in October. However, in November, the E-way bills declined to 5 months' low as demand migrated after the festivities. But recovery was again visible in the month of December. As a result, the third quarter for logistics industry remained mixed.In this background, the company delivered highest ever quarterly revenue from operations of INR 287 crore, registering a growth of 9% year-on-year and 5% on sequential basis. The top line growth was primarily driven by both SME customers and corporates. EBITDA for the quarter stood at INR 49 crore, registering a sequential growth of 5% with margin of 17%. Margins remained stable, backed by higher capacity utilization and operational efficiencies. Our profit after tax stood at INR 35 crore, with a margin of 12.2%.On a year-to-year basis, the company has delivered a stellar performance with the revenue from operations at INR 783 crore, a growth of 39%. EBITDA grew by 55% to INR 131 crore and PAT grew by 60% to INR 93 crore.In the light of strong performance during the first 9 months of the year, the Board of Directors has recommended a second quarterly dividend of INR 3 per share, taking total dividend to INR 6 per share for 9 months financial '22, representing a payout of 300% on the face value and 25% on the EPS.To give you an update on the construction of Gurgaon sorting center, I would like to inform all of you that it is going as per plan, the construction is completed and we're in the process of applying automation. It will be fully operational next month by -- in the first week of February '22. TCI Express will become the first B2B express delivery company in India to install a conveyor belt system for heavy cargo at the sorting center.Now, this will help in reducing trucking halting time by around 40% which will improve overall operation efficiency. We will be carefully evaluating the success of this automation center -- this automation at this sorting center and subsequently implementing the complete automation strategy at the other sorting centers.During the quarter, we have also added 5 new branches, mainly in South and North region to penetrate deeper in the key growing markets. In addition, our recently announced new offerings are getting good traction among the customers. Especially Rail Express, where we continue to see new customer acquisitions every month.Looking ahead, the threat arising from Omicron variant is expected to be temporary and weak, and the time restriction in certain states has impacted the movement of goods. However, we are expecting a quick recovery in coming months.Overall, logistics industry is an integral part of country's economic growth and the government's increased focus and spending on developing road and railway infrastructure will set a course for rapid growth for logistics sector in India.In addition, the demand for logistics services is poised to grow with the increase in manufacturing activity under the government initiative of Make in India and also lead to increase in SME customer base engaged in the building of goods. TCI Express, with its asset-light model and comprehensive business, express service offerings is well positioned to capitalize on the growing market opportunities and deliver long-term sustainable growth.With this, I would like to now hand over the call to Mr. Mukti to discuss the financial performance of the quarter.
Thank you, Chander sir. And now I would like to discuss the financial performance of the company.During the quarter, our revenue from operation is INR 287 crore for Q3 as compared to INR 273 crore in Q2 of FY 2022, and INR 262 crore in Q3 of last year. The total income for the quarter was INR 289 crore as compared to INR 276 crore in Q2 FY '22 and INR 264 crore in Q3 of last year, registering a sequential growth of around 5% and 9.4% year-on-year basis.This growth can be attributed to multiple factors like growth in demand from SME customers, higher capacity utilization, increased demand from rural areas and festive season. Overall, the total income for the 9 months of the year stood at INR 789 crore as compared to INR 569 crore last year, registering a significant year-on-year growth of 39%.Our EBITDA stood at INR 49 crore, with margin of 17%. Sequentially, the EBITDA has grown by 3.5% and 5% on a year-on-year basis. This improvement can be attributed to growth in top line as well as improvement in overall operational efficiency. I am happy to report that for the first 9 months of this year, our EBITDA was INR 131 crore as compared to INR 85 crore for the same period last year.So we -- in this, the net profit for the company in Q3 was INR 35 crore with a margin of 12.2%. And net profit for the first 9 months was INR 93 crore with a margin of 11.8%, registering a growth of -- stable growth of 60%.We have incurred a CapEx of INR 65 crore towards construction and automation of our new sorting center at Gurgaon and Pune. I am happy to report that we have complete -- we're on schedule to make this sorting center fully operational by February, and which will enhance overall operational efficiency and ultimately drive profitability further.Thank you very much. And now I would like to open the floor for question and answer. Over to you, please.
[Operator Instructions] The first question is from the line of Alok Deora from Motilal Oswal.
Congratulations on decent set of numbers. Sir, just wanted to understand how much would have been the contribution from these newer segments, new segments like C2C Express and Cold Chain in our total revenue during the quarter?
Yes. So it is -- in total, it is around 12% to overall revenue of our -- this quarter in these other services.
Okay. Okay. And also, there was a very strong -- as in a massive cut off -- cut in diesel prices in November. So since the margins have been largely flat, should we understand that it was completely passed on like immediately, or we didn't really get any benefit out of that?
No. So if you see this year, interesting thing has happened because in October, there is a sharp increase happened in diesel prices, and that was the peak month. So we -- time to -- that time, we just hold -- passing on to customer. And then subsequently, this on Deepavali day, it has been reduced. So rather it impacted our margin level and diesel is a flat one. So that was a temporary one. Yes.
Sure. And also -- so I just wanted to understand, once this Gurgaon facility gets operational by February or, say, by March. So how much can we see improvement in efficiency or some color on that, if you can just highlight? Because if we are doing this first-of-a-kind company in doing B2B automation, so just wanted some insights in terms of how much it could reflect in the margins if any significant number there.
Yes. So theoretically, we have done on everything on Excel fee because we are yet to start. So it's very early to say something on a practical way. But what we have planned -- so we will be ultimately able to reduce our truck halting time on this center almost 40%, and then it will be ultimately improve my operational efficiency. And we expect it to reduce the direct cost by at least 50 basis points to 70 basis points in our overall direct costs in a 1-year time.
Sure. Sure. And then after this, it will happen in Pune.
Yes. After implement -- successful implementation of that and taking that experience, then we will be implementing in the next in Pune. Because this will also involve a lot of the reorganizing of the routes, the short routes and the long routes and all of that. So once we get this going, I believe that the first month will be trial and error. And then we will be going ahead and implementing. So the real benefit would probably come in about a 1 month, 1.5 months' time. And that would be the clear-cut learning point. And possibly by April also, if everything is in order, we can place for the automation Pune also in the first quarter of next financial year.
Sure, sir. Sir, just one last quick question. Sir, how is the competition now in the B2B side, if you could just throw some color on that? In the Express B2B segment?
So it is still very, very largely unorganized, and I'm not seeing any major shift happening in any direction. The problem is that operating efficiently, profitably and delivering consistently to customer in these challenging times requires the company to be very solid, have a very solid operation. So there isn't any company like that at the moment.So if you would see all the -- if we do an industry analysis on the ground, it's a totally different picture than versus what is -- what has been reflected, say, in a con call or and even the -- ultimately, the results decide what's really going on. So if it's the same on the ground as the result, then you know that the company is moving in the right direction. But if things are not good on the ground, then immediately, it will not reflect in the balance sheet. So saying that there are -- competition is facing a lot of challenge, a lot of competition has kind of, like, has really bear the brunt of this unexpected fuel price. And I think that has impacted -- that will impact the overall yearly performance.
[Operator Instructions] The next question is from the line of Depesh from Equirus Securities.
So just continuing on the competition part post the spot on acquisition, any changes you're seeing? I understand the market is fairly unorganized, but in the organized space, you are the 4 bigger guys right now. And any change in the pricing strategy of the other companies that you're seeing and the movement of the wallet share of the client? And I think even...
What are the 4 companies you're talking about. I only know 2, so -- but amongst the 2 companies that I know of, our pricing has been increased, and it would be -- I will not be able to talk about the other competition.
Sure. But the Safexpress, Gati and Spoton are bigger than you in terms of revenue, isn't that right, sir?
I cannot say because they are not -- I don't have their balance sheets. So I have not seen it, and I don't know what it is because each one has their own set of different businesses in those companies. We are nothing but a pure-play express company. We only do express. We don't add this, that, warehousing drama all that, we don't do any of that. Very hard to say on those companies.
But sir, within your clients, you are not facing any pressure on the pricing, right? Because those guys are being more aggressive now?
No, we have actually increased the pricing and very effectively, and there has been no resistance. And I think what matters is that with the price increase, we're also giving a decent level of servicing also. Other companies are not able to pay their vendors, whatever. They're not able to pay their truck drivers. So with that cash crunch, I don't think they're able to give good service at all and they are not able to even make these advises.
Got it. And sir, given the 9-month results and the restrictions that you are seeing in this quarter. Sir, what will be your growth guidance for the full year? I think you started the year, you gave some guidance, but how will you revise that now?
So we will be finished in the range of 30% to 35%, and profit margin will also be like 35% to 40%.
Profit margin in the sense growth you're telling.
Yes, growth in PAT.
Understood, sir. And sir, if you can give the total tonnage that you handled in this quarter?
This quarter, we have around 230,000 tonnes, tonnage we handled in this quarter.
Got it.
And in the last 9 months -- and in last 9 months in total, we have handled almost 630,000 tonnes. Yes.
Got it. And lastly, sir, post this Gurgaon automation center being completed, what is the CapEx plan for the next year? Because you have given the guidance of INR 400 crores for 5 years. But any particular city that you're targeting for the sortation center next year?
Yes. So we, again, have the same INR 100 crore CapEx plan for the FY '23, and we will spend the money basically for Chennai, where we want to be construct that sorting center, Chennai and Nagpur, and we want to be automation in Pune sorting center.
The next question is from the line of Sandeep Agarwal from Naredi Investment Private Limited.
Sir, Ravi Naredi here. Chander-ji, you are doing fantastic and fantastic. After INR 400 crores CapEx, what is our next plan in financial year '24 onwards?
So sir maybe we will do the same thing of -- first of all, thank you for your encouragement. We will do the same investment of INR 500 crore in the next tranche. And this will involve -- this will involve -- implement -- automation of the remainder of the sorting centers, large ones. That itself will pick up INR 300 crore. And of course, expansion of the existing sorting centers where the business has outgrown that size. So that is something is -- and of course, IT and all of that. So in general, plan is quite straightforward. We're not doing anything which is totally extraordinary.
Right, right. And sir, this air cargo business, how much turnover in quarter 3? In INR 287 crore, share of air cargo?
So it is around...
So the air business is almost 7% to 8% in this turnover.
7% to 8%, okay. All the best sir. Keep it up.
Okay.
The next question is from the line of Krupashankar NJ from Spark Capital.
I had a question relating to the new segment contribution. So Mukti-ji, you had mentioned that it's about 12%. Can you be -- specify on what will be the contribution of Rail Express and the other 2 ones, the Cold Chain and C2C?
Sorry, I could not get your point clearly. Can you repeat please?
Sorry, I was asking that on the contribution of the newer segments, you had mentioned that it was about 12% of our revenues in this quarter. Can you break it up between Rail Express and the other 2, C2C and Cold Chain?
So basically, if you see this 2 products we recently launched in 2Q around pharma, cold chain and rail, that is not having any significant size right now. And C2C, maybe have around 4% or like.
Okay. Okay. Yes. Got it, sir. And my second question is relating to your new volume growth. So sir, what are the sectors which had contributed to the growth at least on the volume side in this particular quarter? And where were the key misses, if you can highlight on that? Sectors like retail and textiles, et cetera.
Almost -- the volume growth would be approximately, I would say -- so in 9 months, volume growth is around 36%. And in this quarter, it's almost around 7.5% growth we have on volume side. And that's basically coming from the mix of, again, existing customers and newer customers. And as our endeavor is always to keep the balance in between SME and big customers, that we want to be maintained. And that is also maintained in this quarter as well.
Right. So what I was inquiring more on was respect to the sectors. For example, the automotive sector or the textile or retail sector. How -- which are the sectors which are relatively contributing higher vis-a-vis others which are lagging behind because of perhaps a lower offtake in volume?
So this is actually -- this is a -- this quarter is interesting because earlier in last quarter, slightly, textile sector was lagging behind. But in this quarter, that also come up due to this all festival season and all. SO this -- in this quarter, every quarter has -- every segment has contributed well. So no, basically, no segment has been lagging behind in this quarter.
The next question is from the line of Rahul Sony from SMIFS Limited.
Sir, a couple of questions from my side. First is, what was your utilization rate for December quarter and for -- during the last corresponding quarter of FY '21?
Yes. So our utilization level of this quarter was in around 85%. And in last quarter, we had 85.5% -- sorry, 83% kind of. So this quarter is 85% we have.
Okay. And sir, apart from doing adjustment in your pricing related to changes due to fuel price decrease, have you seen any revision in rates? Any upward or downward revision?
So this quarter is -- on term of fuel, it's flat basically because in October, prices has been increased sharply and then come down on November month. So usually, there is no impact on on-site of diesel basically. It's flat.
Okay. So sir, one last question. Like this Chennai and Nagpur sorting center, these are the new sorting centers. And are we also planning to do automation of any existing auto center -- sorting center, like both the expansion or automation?
No. So we will be -- yes, so we will make it -- automation in existing one in Pune only. And then whatever automation we will be doing in the future will be on a new one, like Chennai will be also proposed for that. Nagpur is also proposed for that. So, whenever we will be add on the new one, we will be make it fully automated.
The next question is from the line of Alok Deshpande from Edelweiss Financial Services.
Yes. Chander, Mukti-ji. Two questions, sir. I just wanted to understand your outlook on margins. I'm sorry if you would have commented on it earlier in the call, but any outlook that you can give for this current quarter? And going forward, how we plan to expand the margins? Also in the near term, the pressure on -- pressure because of the fuel prices.
Yes. So in this quarter, we maintained a 17% EBITDA level. And in Q4, we are also intend to have that kind of like in the range of 17%, 18%. And for the full year, we will be increased by from over last year, we will improve almost 50 basis points. And same in the next 2, 3 years, we also have an endeavor to be increased almost like 100 basis points in each year. That is our planning and strategy to be improved.
Okay. And Chander, you briefly mentioned about once this phase of CapEx gets over, you briefly mentioned about another INR 400 crores to INR 500 crores of CapEx in sort of a new 3, 4 years' phase. So what is the timeline of that sort of phase? Is it from FY '23 onwards or even after that?
So Alok-ji, it will be start from FY '24, like we launched this INR 400 crore in -- 4-year back. And hopefully, by 2022, we will be seeing this INR 300 crores CapEx. The remainder INR 100 crore will be spent on FY '23. And in next year, we will be launched for the next 4-year again, and that would be also inside of like INR 400 crore or max INR 500-crore plan. And again, it is very simple. We will be adding our sorting center and replace with the, like, existing or these are on a lease, we will be adding on our own one. And we intend to be higher like every automated one. So this way is a simple one.
So Mukti-ji, so this phase, which is -- which will get over in FY '23, the capacities that would have got added in this current phase, that should last us for the next 3 to 4 years as the revenue growth comes in. Is that a fair assumption?
So even in whatever capacity we are creating, that is actually having 2 advantage. It will be last even more than 15 years. Because once site is just like in a 3x of existing one, and another one is a kind of automation we are doing. That will also reduce my idle time there. So ultimately, it will be used for the 15 to 20-year even.
Okay. So sir, that was my question, sir. Then the later CapEx that you're talking about, that is also for capacity expansion or just new locations?
No, no. It is, again, a capacity expansion only. Location would be the -- location may be changed, but in the same area, so number would be the same, right. Right now, we have 28 sorting centers, and number would be the same. We are not increasing the number. We just add that capacity and we also want to be automated.
Okay, sir. So I'll take more details from you on the -- separately, sir. Okay.
Always welcome.
The next question is from the line of Prit from Wealth Finvisor.
Congratulations on very good numbers. Sir I think one question I had is that how much time would it take for you guys to set up the Pune automation, given your learnings from Gurgaon?
Sorry, come again?
How much time would it take you to set up the sorting center in Pune -- the automation in Pune?
Yes, yes. So it will be taken around 6 months.
Okay. 6 months from...
So we will start to that putting automation and then to make a final, like, full run. 6 months.
You mentioned there will be a 50, 75 basis points improvement in terms of direct costs. But could this also lead to additional revenue? Because if your turnaround time decreases, then your service levels will increase. And would that then make TCI Express even better solution for many clients?
Absolutely. That is the whole idea, that is the whole point that we bring the customer experience of goods faster to be where they want. And I think this would be a very strong competitive advantage against all competition and even air cargo, for that matter. So going forward, with the enhancement of service levels, with the enhancement of capacity utilization, point-to-point customer delivery also becoming faster, we could also see gradual, much higher increase in pricing. So I think the end -- the effect of that, the domino effect of that will be quite strong and that is what we have planned. We are making the company future ready.
Right. So regard -- so in connection to that, Chander, wouldn't it make sense to fasten your CapEx, and say, automate more centers rather than say doing them separately?
Faster and doing like INR 10,000 crores worth of projects and all that is not viable here in logistics industry. Everything -- first of all, we are all self-funded. We don't need any loans of the bank, and doing anything faster is of not much value. Because ultimately, the -- anything that is beyond the norm in India, the price point is almost 50x more and -- for doing that. So I don't think it's at all economic sense to make something which is -- which can be done gradually over time. And anyone attempting to set up several facilities without trial and error is definitely going to go into major hiccups. So it's better to be cautious.
Right. So Chander, what I was referring it to is that once your Gurgaon center is tried out and tested and you see the benefits on the ground, and say, the model gets proven, then would it make sense to say, in parallel, set up automation at other centers?
So once the -- once this is -- the next one is already ready, right? We already started working in Pune, and we just have to plug and play then. So that is the whole idea. Plug-and-play will be then everywhere. So the main learning would be coming from this Gurgaon center.
Okay. One other comment on sorting centers is that Delhivery is mentioning that all their centers are automated. So would we kind of be in similar lines? Or is there any difference of how...
We must see their balance sheet, their business is only B2C deliveries, right? So we are not in comparison. They have container size which are maybe 5 feet like long or 10 feet long. Here, we are talking about 100,000 square feet, 150,000 square feet of automation of conveyor belts running around. So it is a totally different scale.
Got you. Lastly, on Rail Express, you're saying there's more traction there. So could you share any color in terms of how that's taking up, how the offering is doing with customers?
Sorry, can you come again kindly?
On the Rail Express side, you mentioned that you're seeing more traction on the -- on that offering, right? So could you share some color in terms of, say, how has it grown quarter-on-quarter? And what is the kind of feedback? And do you see this becoming a major revenue stream?
Yes. So this is basically -- rail is growing very well, though it is in very inception space, and we are now expanding our coverage to city-on-city basis. Like we started with 10 cities and now we almost reached on 60 cities, and that is the plan to be reached by year-end to develop that, like 100 at least.So this way we are expanding. Business is low, obviously, that will be increased in time to come. And customers are very excited to be convert their air cargo, which is basically has with the competition that we are targeting to be converted into this business, and that is also going very well. So I think in next year, we are planning to have at least 3%, 4% of our revenue in FY '23 to make this business.
The next question is from the line of Radha from B&K Securities.
Congratulations on the results. Just wanted to know that this quarter, as per the presentation, we have seen that there is a stretch in working capital days and you also have to take short-term loans for a short period of time. So is there a particular reason for that?
No, no, no. So if you see whatever we have submitted as cash, in last 9 months, we have CapEx of INR 65 crore, and we increase the business. So slightly, our receivable in base are the same, but in amount, they are increase almost INR 20 crore with lower margin. And that's why there's -- I've started telling you temporary increase on that capital working department that has already come down in this January month. It will be at the same level what we had in March '21. In FY '22, it will be the same. So there's been a no, any pressure on working capital side. Payable days, it is the same one.
No. But in the working capital days that has been calculated, it's only on the basis of receivable and payable days. So that excludes the short-term debt that you're talking about. Sir, I was asking mainly on the basis of receivable and payable days.
So payable days is also same. That's what I'm saying, you see increase of whatever we earn in a 9-month time, that has been put on to CapEx plan. And whatever increase we have in debt, that has been funded through the short-term loans.
My next question would be that on a Q-on-Q basis, we have seen that the utilizations have reduced.
Please speak a bit louder, please.
Yes. So on a Q-o-Q basis, the utilizations have reduced from 85.5% to 85%. However, the employee expenses as a percentage of sales have improved for the company. So was this reflecting the higher automation, I mean, automation due to sorting centers?
No, no. So actually, utilization level is [Technical Difficulty] 85%. And you know over the period, we added the capacity like [Technical Difficulty] and all. So that's why -- this business is almost INR 289 crore business we have generated. Once volume will be increased, then we will be further get that benefit of utilization level, like, we can reach 86% or 87%.
Just one last question.
Sorry to interrupt. Radha, there's a lot of disturbance from your line.
Yes. Is it better?
Much better.
Yes. So just one last question. What is the addressable market for these value-added businesses?
What is the what?
Addressable market. That means how much market is available for these 3 businesses, which is C2C, Cold Chain and the Rail Express?
You mean the market size?
Yes, market. Yes, yes.
The market size, if you look at through your quantum of logistics on the signal that and the cold chain as well as the C2C, possibly, it's about almost 15% of the -- sorry, almost over 20%, 20% to 25% of these trucking part -- roads part trucking in the economy. And cold chain express is possibly not more than 3%, 4%.
The next question is from the line of Aejas Lakhani from Unifi Capital.
Congratulations on the numbers. Mr. Mukti, I just have one question. In the 9-month period, what is the price increase that we would have taken as a whole on the business?
Yes. So as a whole in 9 months, we have taken 2.5% improvement in pricing.
Okay. And that's been largely on account of the diesel pass-through, right?
No, no. Diesel is actually differently. We have diesel high flows that has been passed into customer, and this is just like in a price hikes, annual price hikes we are getting from customers, yes.
Got it. Got it. And how do you see -- so is it fair to say that every year, we can take anywhere between 3% to 4% kind of price hike?
Yes. That is our target to be achieved almost at least 3%. Because last year, what happened, there has been a sharp increase in diesel prices also, then coupled with that to get the annual price hike That is sometimes a very problematic or sometimes you can say it's a challenging one. Customer is not allowing to both kind of pricing. It all depends. But our end to end, at least get 3%, 4% on annual hikes.
Okay. And this is a reset that you do at the start of every year, or is it through the year? Could you just speak about when the reset takes place?
So it is always actually throughout the year because whenever they make the agreement, then it is get renewed each year.
Got it. Okay. So with different customers is different, so it takes place through the year. Okay. Got it.
Over the period, yes.
The next question is from the line of Vikash Khatri from Aviral.
Chander, first, congratulations for setting up such a beautiful automated sorting center. My question is related to B2B surface. When quarter 3, usually the festive quarter for the industry. When normally industry grows by 10% to 12% sequentially, we have grown by 4%. Have we lost some share because of the new comer or aggression of players like Delhivery or Spoton?Second question is my related to the rate. The rate growth, just as Mr. Mukti said, that is 7.5% quarter-on-quarter. While revenue growth is 4%, has our realization per KG gone down? And if gone down, then how is our outlook in maintaining operating margin at the 16% or 17% labor?
So thank you for your encouragement. The market share, you know, has not really -- has not been touched at all. In fact, the industry has not grown 10% to 12% this quarter. I have not seen any company or anyone not growing more than 1%, 2%. So of course, if you have companies which can lower pricing and then grow substantially. But if you look at all sectors, especially auto sectors and the other sector and in general, FMCG, and all of the other segments have not grown the way they grew in the first half. So I don't think we have new growth or not growing as per the industry standard.Second question, realization.
Just to clarify on realization side, we had given a number of 7.5% growth on 9 months. In quarter, we have just grown on 4% on volume side on a sequential basis.
Okay.
So pricing has not come down actually. Yes.
And what's our outlook on the operating margin, which is hovering at currently at 16%? Previous quarter, it was 16.5% and last year it was 16.9%.
Yes. So we will be improved almost 50 basis points by FY '22 end, and again, subsequently 100 basis points in each year.
The next question is from the line of Pratik Singhania from SageOne Investment Advisors.
Sir, my first question is with respect to the automation in the sorting center. So sir, can you illustrate what will benefit in terms of the learnings that you have got into the Gurgaon sorting center?
Can you be slightly louder, please?
Better now, sir?
Yes, please, please.
Yes, sir. Sir, my question was with respect to the learnings that we have got from the Gurgaon sorting centers implementation in terms of cost, like when we had started it with what cost we had envisaged and then ended with what cost? And going forward, per square feet basis based on the automation like -- to, like, automation for Pune or other sorting centers, what will be the reduction in the cost, if any?
So because this is the first one, and whatever cost we have fixed that is there, and we are implementing that. Once we implement that and see the results, practical results, see how we can further compress, improvement, anything, then we will be seeing, I think, in quarter one of next year. Then we will be able to comment on that on cost path. On even equipment cost path, how we can be -- whether we can be stool it or how they will be going through.
Okay. Okay. So execution, like once it gets operationalized, the learning will flow in much more than what it is as on date?
Exactly, yes.
And sir, in terms of CapEx, like because you are saying that the capacities that you are creating is good enough for 15, 20 years. So when does this CapEx, like, plan actually stops. Like, after this CapEx, you are saying you are going for another INR 400 crore to INR 500 crore. So when will this exactly complete? Like, how much crores you will be required to, like -- like, do the entire envisage CapEx as you desire?
If you are asking a question 10 years down the line, I do not think I have an answer for that yet.
The next question is from the line of Aman Vij from Astute Investment Management.
Chander sir and Mukti sir. Yes, first question is on the Q4 visibility which you are seeing in the month of January, specifically. So given we have a very high base for Q4 last year, where we did around INR 280 crore of sales. And if you have to maintain that 30% growth for the full year, which Mukti sir is also talking about, we have to grow on that very high base. So are you seeing demand coming back? What are your initial thoughts on the same for Q4?
Yes. So we are seeing very good demand in -- because always, if you see trend of last 5 years or 7 years, Q4 is always best month. And that way it's subject to this third-wave, if it is not impacting like we are not seeing much impact of this third wave. I think it will be gone very well, and we will be surpassed the number of Q4 numbers very much. And we will be finished by year that's 30% plus kind of growth for the whole FY 2022.
Sure, sir. And the second question is for now, assuming we will get that 35%, 40% profitability growth for the full year. So sir, we will be ending up like INR 130 crore, INR 140 crore of PAT. And then we have depreciation also, so we have very good cash flows versus -- so we will be spending like INR 100 crore a year if you even include the next set of CapEx. So sir, any plans of higher dividend or buyback or what are your thoughts on the extra cash flows, which the business will be generating?
Yes. This is very good question. So you rightly said, we will have kind of like INR 200 crore kind of cash flow from next year onwards. In this year, so I think we will be finished with the CapEx of around INR 90 crore to INR 100 crore, and then we also announced our dividend in this time. So we -- almost INR 30 crore we will be given as a disbursement of dividends. And I think that will be finished with that. And whatever access we have, we will be putting into an investment in short term.Next year onwards, yes. Once we will be, again, keep growing our cash flow, we maybe give a dividend in a slightly on higher side. Like if you cover -- you checked from the last year, last year, we had given only INR 4 per share as a dividend. We disbursed that. And this year, we already done is INR 6. So this way, we will keep growing on that way.
Sure, sir. The final question I have is on the value-added services. So we have like 4 segments, Rail Express, C2C, Pharma. So sir, which segment do you think will reach say INR 150 crore, INR 200 crore number first? And maybe if you can talk about order. Based on the current visibility, where you are seeing the maximum growth, which can fill the fastest?
It's again very early to comment on that. So firstly, C2C will be growing very fast. Then second would be like Rail Express, and then third will be the Pharma Express, you know, Pharma Cold Chain Express.
The next question is from the line of Rajesh Kothari from AlfAccurate.
A few questions from my side. With reference to -- if I look at the hub-and-spoke model of Delhivery and if I compare it with TCI Express, so they have a mesh network versus what is our network. So can you just explain what is basically -- which probably business model is better, particularly in express, logistics, B2B business? That's my first question.
No. So firstly, express delivery and express pickup is only possible in hub-and-spoke model. Now, hub-and-spoke model is not possible for B2C. And B2B, hub-and-spoke model is possible if you have your own branches across the country and you have your own sorting centers. So the competition that you had mentioned, I don't think they have their own sorting centers or their branches. So I'm not sure what B2B express service they are providing.
Okay. So including this, but -- Spoton provides B2B, right?
Spoton provides and Spoton is trying to -- if you see their sorting centers, they are mini sorting centers or they are like probably little godowns, which have been kind of manifested into the called hubs or whatever. But hub-and-spoke model requires substantial investment. And if you see their balance sheet, they do not have any investments of such sort. So saying something and doing something are very different, where these new age companies are more about saying than doing.
The next question is from the line of Prit from Wealth Finvisor.
Right. Just one small thing. The EBITDA margin for Q4 last year was pretty high. Do you see any chance of getting to that number this quarter?
Yes, I think we will be seeing that kind of EBITDA margin this Q4, but slightly, our manpower is slightly -- cost is slightly higher. So we may be like -- it may be flat off like last year, we may be achieve 19% or 20%, yes.
The next question is from the line of Rahul Sony from SMIFS Limited.
Sir, just one more question from my side related to your utilization rate. Sir if we see the data of last 4, 5 quarters, we have achieved a utilization rate of around 85% on an average. So my question is, is it practically possible to have a utilization rate of like 90% or 95%? And what are we doing to achieve that kind of utilization rate apart from automation of the sorting centers? Are we -- my indication is towards increasing your business share to SME segment, so I think increasing of the business share from SME, which is now like 50-50 between SME and corporates, so are we focusing that to increase our utilization rate?
Yes. So you have a very good question on that. So utilization level beyond 90% is not possible in this industry. So firstly, we want to be reached on a 88% to 90% first. Second thing, even if still on 85% or 86%, this utilization level is very dynamic, which I had also explained in last call. Supposing like in one route, we have 9 tonnes truck capacity right now, and we have a cargo of like 8 tonnes. Supposing tomorrow, we have 11-tonne cargo, then we will not add another truck of 9 tonnes. Rather, we will replace that truck with the kind of higher capacity of 14 tonnes. So this is always a dynamic capacity. That is not a static kind of thing or fixed kind of thing. Like wherever we use like 6 tonnes, then we will increase up to 9 tonnes. If we are using 9 tonnes and it is reached on such a complete utilization, then we will be put into in 14 tonnes. So it is a very dynamic one. And we will always have a scope to improve this utilization level.
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 joining us here today. I would like to conclude by saying that we remain optimistic of the quicker economy -- economic recovery. And with our strong value proposition, we will achieve our targets. We look forward to meeting you in the next quarter, please stay safe and healthy, and feel free to reach us in case any questions remain unanswered. Thank you.
Thank you. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.