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TCI Express Ltd
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Ladies and gentlemen, good day, and welcome to the TCI Express Limited Q3 FY '23 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. Amit Dixit. Thank you, and over to you, sir. .
Thank you so much. Good evening, everyone. On behalf of ICICI Securities, I welcome you all for TCI Express Q3 FY '23 Post Earnings Call. At the outset, I would like to thank the management for giving us an opportunity to host this call. From management side, we have Mr. Chander Agarwal, Managing Director; Mr. Mukti Lal, CFO; and Mr. Pabitra Mohan Panda, COO, on the call. We will start with the opening remarks from the management and then open the floor for Q&A. Without much ado, I would like to pass on the control to Mr. Mukti Lal. Over to you, sir.
So Mr. Chander would be giving this presentation, please.
Good evening, everyone, and welcome to Q3 financial '23 earnings call of TCI Express. I would like to thank everyone for joining us here today. To start with, I will give you an overview of the industry and business for the quarter, then we'll hand over the call to our CFO, Mr. Mukti, to brief on the financial performance for the quarter. Our earnings presentation has been uploaded on our website and stock exchange, and I hope you had a chance to see it.
Q3 financial '23 ended on a strong note with sustained growth in industrial activities and strong -- not so strong demand from festive season. The growth trend was visible in the e-Way bill generation, which ended at north of INR 8.1 crores, and the IRP, which rose to 7% in the month of November '22.
With the growth in industries, I'm pleased to announce that TCI Express recorded another quarter of stellar performance with highest quarterly revenue of INR 315 crores, registering growth of 9% year-on-year and 1% on a sequential basis. The growth was primarily driven by increased demand and strong contribution from SME and corporate customers. EBITDA for the quarter was INR 47 crores, registering a margin of 15% profit. And our profit after tax stood at INR 32 crores with a margin of 10%. The margin during the quarter was slightly impacted by a drop in utilization levels during the festive season and -- as well as an increase in -- slightly increased expenses due to the administrative and advertisement expenses.
On year-to-year basis, the company has delivered exceptional performance with revenue from operations of INR 923 crores, a growth of 16.6%. EBITDA grew by 12% to INR 146 crores, PAT grew by 8.5% to INR 101 crores. In light of strong performance during the 9 months of financial '23, the Board of Directors has recommended a second quarterly dividend, interim dividend of INR 3 per share taking the total dividend to INR 6 per share for the 9 months financial '23, representing a payout of 300% on the face value and 23% on the EPS.
Furthermore, as of 31st December '22, we have successfully completed the buyback of 182,500 shares amounting to INR 41 crores, including taxes. This reflects our unwavering commitment to deliver long-term value to our shareholders.
More on the quarterly developments. During the 9 months financial '23, we incurred a CapEx of INR 99 crores primarily towards the land purchase for setting up automated sorting center in Kolkata and for the new corporate office in Gurgaon. Furthermore, we expanded our footprint by adding 28 new branches in West and South region to cater to the growing demand with unparalleled services. TCI Express has demonstrated agility in embracing cutting-edge technology by making significant investments in automation in the sorting center.
We are making constant developments to enhance operation efficiency by implementing our learnings from Gurgaon Center to streamline the process in other sorting centers. The automation in Pune sorting center will be finalized by financial year '24. These investments in automation backed by our asset-light business structure, will result in faster to nonprime increased capacity and reduce labor and direct costs, ultimately driving the margin growth.
Our newly launched services are delivering very well, especially the Rail Express service revenue expanded our customer base and presence from 10 routes to 125 routes to cater with growing demand. All the other products are doing fairly well in light of the nominal economic growth. Looking ahead, the logistics industry is undergoing significant transformation, as government recognizes importance in driving the growth of the company's GDP. As India continues to grow as a major player in global economy, the demand for logistics services is expected to continue to grow.
Now I would like to hand over to Mr. Mukti to talk about the financial performance of the quarter.
Thank you, Mr. Chander. And now I would like to discuss the financial performance of the company. During the quarter, our revenues from operations stood at INR 314 crores for Q3 FY '23 as compared to INR 310 crores in Q2 and INR 287 crores in Q3 FY '22. The total income for the quarter was INR 316 crores as compared to INR 312 crores in Q2 and INR 289 crores in Q3. Translating into a growth of around 2% and 9% in sequential and on a year-on-year basis, respectively.
This revenue growth is attributed to increased demand from festive season and strong contribution from SMEs and corporate customers. And on the 9-month basis, we have delivered -- revenue from operation of INR 915 crores, a growth of 16.8%. EBITDA grew by 12% to INR 146 crores and profit after tax has grown by 8.5% to INR 100 crores. So as a result of continued focus on revenue quality and profit growth, we generated strong cash flow of INR 95 crores, and we have productive investment with CapEx of INR 99 crores in 9 months of this year.
The government initiative for the seamless movement of goods, overcoming transport-related challenges and encouraging digitalization along with significant reduction in time and cost, August 12 for the logistics sector with major policy puts aided by strong economic development. We remain confident in our ability to capitalize the opportunities and to solidify our leadership position with industry-leading services. So thank you very much. And now I would like to open the floor for question-and-answer. Over to you, moderator, please.
[Operator Instructions] We take our first question from the line of Mr. Ravi from Naredi Investment.
Sir, I could not understand this time the result as the margin is down, and we have acquired TCI Express Pte Limited. So first, the reason for works?
So this is not acquiring anything. It is an opening of subsidiaries.
And the margins are down, this is cyclical. It's not a constant basis. The economic situation in India, as you know, it is not very strong at the moment. This is temporary result.
I understand but your management is so nice. I never see dip in the margins. It's the first time I surprised why this happened, that's why I'm asking you this, sir.
No problem. It's a good question. It's a valid question. And in fact, we were surprised also. What has happened is that Diwali, first of all, was not very strong. And it fell in the 4 days of holidays. So pretty much 1 week of business was missing in the month of October, more than that. So in general, yes -- so it was a big surprise for us also. And unfortunately, even what I understand is that the overall economic growth in Q3 was very poor. So looking at that, we have that, but we have to look at the future always, and you can see that...
Right, right, right. Definitely. Definitely, I agree.
And sir, who is our Tier 1 and 2, can you give the name or will you skip that question?
So I think Gati and second one is Blue Dart.
Gati and Blue Dart. And sir, our sorting center, Pune, Gurgaon, Kolkata, Chennai, any more in line?
Yes. So on that, we already launched. Gurgaon is fully automated one.
Yes. This is number one?
That is the number one. And second, we already built up at Pune, but we are not automated yet. We will be automated in FY '24 -- by '24, and then subsequently we'll be automatized all Chennai, Kolkata, Bangalore and then all subsequently.
Chennai, Kolkata, Bangalore?
And Mumbai.
Bangalore and Mumbai. Okay. And all will be in 1 year or a different, different portion?
So it is a long-term strategy of like 3, 4 years. So we are targeting to be at least making an average like 3 in 2 years' time. See, we don't want to be also doing too much beforehand -- before like too fast. We want to go with the flow of the economy of the business also. .
And how is the Rail Express working? And can you tell -- the railway had changed in the last few years -- working has been changed in few years.
So railway, what services we are giving, this is a rail service through passenger tr.
No, that I knew. That I knew.
That improved a lot on that. Efficiency has improved a lot. All trains are on time now. Schedule is maintained. They are very aggressive on to be giving the space to us and all. So that's very fantastic.
Because without railway -- help of railway, we can't run this railway, right?
Yes.
And sir, what will be the CapEx in Gurgaon office -- our corporate office?
So CapEx -- the land we just bought, and CapEx may be take like INR 20 crores, INR 25 crores. We will be -- it will be -- maybe take like 2 years to construct.
We take the next question from the line of Mr. [ Rakesh Wadhwani ] from Monarch AIF.
Sir, I have one question. Can you please share the volume tonnage for the 9 months and for the FY '22?
Yes. So in this 9 months, we have a total volume of 730,000 tonnes for that 9 months. And last year, it was 630,000 tonnes for 9 months. And for this quarter, we have achieved 253,000 tonnes and same quarter of last year was 230,000 tonnes. .
Sir, I have a second question. We have given the guidance like we want to double our revenue and the EBITDA 20%. So just wanted -- in the last 2 years, because of the COVID, business were impacted, so we did not witness our tonnage growth. But in the coming years, what kind of tonnage growth you are witnessing? Because are you [indiscernible]
So tonnage growth will be -- again, it will depend on the business growth also. Therefore, if everything is in order, we know that we are still under the impact of -- the economic impact of COVID this year, not because there is COVID but of the left over problems. So if all in all, things are in order next year, then you will definitely see higher volume growth also.
Sir, so in order to achieve a INR 2,000 crore revenue by FY '25, so some growth will come from the tonnage and some growth will be coming from the improvement and efficiency that we have done in last 2 years that we have -- that the company has shown. So just want to understand now the growth will be coming from both, tonnage growth as well as the improvement in efficiency. So I just want to understand if you can put more color on that like volume, how you're saying that will be very helpful.
So that part, like, in this year, we were not able to take any price hike, not much price hike. We have taken like 0.5% or 1% price hike on this. So volume growth and revenue growth is more or less same in this year. Otherwise, in each year, we would like to take like 2%, 3%, at least a difference in our price hikes. And that will be continued in the next year and next year onwards. Like we've also done in the past also the same way. So next year onwards, we are also targeting volume growth in 18% kind of and then revenue growth like 20%, 21%. And also like in the next year as well.
So like we've taken a target of INR 2,000 crores. We may be reached in the range of like INR 1,900 crores with the EBITDA margin -- still, we are hopefully to achieve this 19%, 20% EBITDA margin by 2025.
Okay. Sir, that was very helpful. Just one last data point. So you mentioned for the 9 months, the volume was 7.3 lakh tonnes and -- versus 6.3 lakhs for the full FY '22 or for the 9 months?
9 months, I'm talking.
Okay. Sir, can you please give the number for the full FY '22?
That was -- I think, it was 8.65 lakhs tonnes. .
[Operator Instructions] We take the next question from the line of Bhavya Gandhi from Dalal & Broacha Stock Broking.
Yes. So is it possible to say the current utilization level and the utilization level for previous quarter as well?
Yes. So utilization level in this quarter is reduced to 83%, and that was impact of like in the Diwali time. That was a long weekend of almost 5 days. And that's why on that one, our utilization level has dropped from 84%, 85% to 75% to 76% and average of this quarter is reached to 83%. .
Okay. And the previous quarter?
The previous quarter, it was 85%.
85%, right. And also wanted to understand on the Rail Express, what would be our margin, if at all, you can share that? And how much revenue does it contribute as of now?
So revenue is -- we are not divulging that because it's not a big amount. And again, we are in a long-term strategy. By FY 2025, we will be reached on a 25% service overall revenue on our part of that. So by 25% like including all C2C, Rail Express, Cold Chain, Pharma, air domestic and -- these all put together. .
Right. I understand that, but rail would be a major chunk of it, right? And as of now, how much does it contribute? Less than 5%, if I'm not wrong? .
No, it is not -- rail is not the biggest one. Right now surface and followed by the C2C services...
Okay, sir. Possible to share the margins for Rail Express?
Yes. So margin level is always around 18% to 20% on this. .
We take the next question from the line of Krupashankar NJ from Avendus Spark.
A couple of questions from my side. First is on the competition side. So are you seeing any increase or change in the competitive dynamics of the industry over the last quarter? And if so, does it -- are you looking at -- given that outlook was looking tougher, pricing-wise, it's going to be a challenge to increase for going ahead? .
So I don't think the competition is giving any sort of a problem because most of the competition is not focusing on SME, like the way we do, number one. Number two, the -- what is happening is that the pricing is a factor of not how we want to take, but also a big reason of how the economy is doing. If the economy is doing well, if manufacturing is going well, if things are moving in the right direction, will give a price hike. We know they will take a price hike.
But the fact is that fuel price in India has been stable. And then there is no reason as such to have an incur higher cost. Therefore, 2 factors that played in was the fuel was normal. It did not increase. And secondly, their own manufacturing was impacted severely or rather still they are under the duress of the COVID. So I think it's only a matter of time when all these things will start cleaning out and our price mechanism will start again.
We took a very price -- good price hike even during COVID. And when things like other modes -- air and sea cargo, when their prices have already started coming down big time. And once that also starts rationalizing, the demand for air cargo is also going to grow very high -- sorry, for road cargo is also going to go very high. So that -- saying that, it's, I think, only a matter of maybe a quarter or more when -- from next year, we will start to see things going well for the road sector.
Great. So your branch addition plants, that continues to remain at the steady pace. So right now, what you're seeing is that's about 28 new branches added for 9 months. So the expectation would be about at least -- the previous commentary was about 50 branches plus. Are you continuing to hold on to that sort of addition going well?
Yes. So branch, we will keep adding. And we are not adding a branch just to add because we're seeing branch at least has to be in a breakeven point within 2 months' time and that strategy we are going on. And so each year, we have a target of 100 branches. I think in this year, we will reach around 40-plus.
[Operator Instructions] We'll take the next question from the line of Ms. Nidhi Babaria from Envision Capital.
Sir, what would be the new business contribution in this quarter on the railways -- C2C or these segments come? .
Sorry, can you repeat your question? I did not...
New business contribution in this quarter?
New business contribution? Okay. So actually, other than surface, it's almost around 18% business we have, put together. Like air international and all, C2C, rail and Cold Chain Pharma together. That we increase to 25% by 2025.
Okay. And how much was this contributing last year same quarter? .
So last year -- because we just launched these services. So there were around -- it, I think, is 15%.
Okay. Okay, sir. And sir, I just wanted to understand, like our 9-month revenue for CAGR is roughly around 5%, which is like mid-single-digit. And we are -- like we are targeting some 18% to 20% kind of revenue growth from here onwards. So what is going to contribute the overall growth apart from the industry growth -- apart from the net economic growth which India is facing?
So you talked about 9 months CAGR?
Yes, yes.
For how much here -- you just checked?
[Foreign Language]
For how much time you have taken that CAGR? What are the period?
4 years, which is FY '19 to FY '23.
So that's the only main reason because in '21, the revenue was dropped actually. Otherwise, if you see after the merger, we have grown almost 15%, 16% up to FY '20. And then it's -- '21 is dropped. And last year, we've grown 28% in FY '22. And in this year, we will be finishing around 16%. So that's why you can't compare like 9 months because that was only 1 reason because revenue was dropped on that year. Otherwise, it's directly linked with the GDP growth rate and government is also targeting in the next year 7.5% to 8%, and we are just doing 2x of that. So a good example of that this quarter, I think GDP will be growing 5% or 5.5%, and we grow on 10%. So usually, we go on a 2x of GDP growth rate. GDP will be grown good. We will be grown good. So this is, again, as Mr. Chander has mentioned, it is all depend on the manufacturing and GDP situation. So we, hopefully -- like if GDP is growing 8%, hopefully, growing at 16% to 18% on the volume side.
[Operator Instructions] We'll take the next question from the line from Mr. Deepak Lalwani from Unifi Capital.
Sir, on your admin and administrative expenditure, is this onetime or any one-off in the cost line happens? And on that question I had a further clarification. So you had mentioned in your guidance that we would be expanding our margin by 50 bps year. So the ask rate for about -- for the next quarter becomes higher. So I just wanted to clarify if we are on track to achieve that?
Yes. So thank you. So basically, for admin costs, it is a 2 type cost of involved here. Like now everything is opened up and our traveling costs and convenience cost has also increased. And one time of advertisement cost is also there. So that would -- may not be coming next year, but other side, if you see these admin cost still is below to pre-COVID levels. Of like we have the cost on FY '20. And we are running in '23, still cost is there. And that will be -- so there is -- no high increase will happen over the period in the next 2, 3 years also. It will be keep continuing on the same pace.
And another aspect like you ask for the increase in 50 basis point margin announcement for this year, I think it will be -- it looks tough for this year. I think we will be finishing the same margin level of last year. But yes, obviously, next year onward, we will make an effort to, again, achieve in the range of 50 to 100 basis point improvement in each year, like we did in the last 6 years. There's only exceptional 1 year, which we are, I think, not able to achieve that.
Understood, sir. Sir, on the onetime advertisement cost, if you can quantify that, what percentage of revenue is that? Is that coming in the next quarter as well?
So if you see, there is also not significant increase in admin cost. It's like 10% increase on that. So amount of advertisement is not so much significant of that.
Okay. Yes. Okay. Got it. So on the gross margin side, we'll be at this 31% or so?
Yes. 31% for this quarter. And for the whole year -- for 9 months, it is 32%.
Got it. And if you can give a sense of how January has been -- how the pickup has been pushed the October month post-Diwali?
Sorry, come again?
If you can give a sense of how January is looking like. You said that October was a bit slow because of the long weekend and lower festive season. So if you can just give us a sense of how activity has picked up post that?
I think it is -- again, we have seen that this quarter, the activity was not that strong compared to last year. And we were expecting that manufacturing and consumption will be at an all-time high, but I think the inflation did play its part. There was pretty much no rural demand. There was not much manufacturing happening. So in general, we saw that the overall growth that is expected in the -- as we say Q3 Diwali quarter did not happen.
We take the next question from the line of Radha from B&K Securities.
Just one question on my end. So you mentioned about muted demand. So could you tell us the industry from where we have seen a bit of slowdown and where there is limited with stable demand?
See, we already did the Q3 with growth in terms of revenue. It's not like it was null demand. Definitely, B2C was hit big time. And thankfully, we are not in B2C. B2B, again, it is -- we grew at what we are -- about almost 5%. And GDP, I think, is what we are targeting -- is what the numbers will come out. And we've grown a double of that. So in general, we are in line with what the economy holds to, and there has been no change in that. It's just that the consumption stocks, B2C, where we are not present, is impacted heavily.
We take our next question from the line of as Aejas Lakhani from Unifi Capital.
Sir, my first question, is that you mentioned that we -- given the fourth quarter, we close in at the same margins that we have done last year. If that is a base case, that would imply that you have to do about 18% to 19% margin in the fourth quarter from an exit perspective. So number one, is that really possible?
Yes, for in Q4?
Yes. Yes, sir. So if you have to maintain that 16.2% for the full year, it would imply that you would do about 18% to 19% in the fourth quarter.
Yes, that is true. So last year, we also see 17%, and that is -- what we said like in Q3, the impact was only a drop in utilization level, nothing else. So in this year -- in this quarter, we hopefully -- again, we will achieve the highest quarterly revenue for the Q4. And accordingly, revenues grow revenue. So actually, it will be converted to higher utilization of trucks. And then ultimately, we will achieve the kind of hopefully 17.5% to 18% EBITDA margin in this Q4.
Got it. And sir, could you just quantify what is the actual associated increased expense for the admin and advertising. Could you just quantify that number in this quarter?
So increase is hardly 10% on that. Like it has increased from INR 17 crores to INR 19 crores only. So it's a INR 2 crore increase there. So if you want to like advertisement expenditure only INR 1 crore and other costs like increase in revenue costs and convince costs and then other physical training, we also started. We are using hybrid model, but we are doing the physical meetings also. That's why it has increased by almost INR 1 crore in that.
Okay. So sir, basically, then this -- the expenses that we've incurred this quarter, that's the new normal, right, that we should be assuming for the year -- the times ahead?
Yes. So that will be the right run rate of this admin expenditure, which is also not so high, it would be in the range of INR 18 crores, INR 19 crores per quarter.
Got it. Got it. And sir -- got it. Okay. And sir, then one other point. You mentioned earlier was that you've not taken a price growth this year. So were you talking about this quarter or for the 9 months?
I'm talking about for 9 months.
Okay. So basically, this year, whatever growth has been, it's all the volume-based this year?
Yes, that is true.
Any reason because you've explained to us in the past several times that this 2% to 3% is almost like a given that you have this kind of a pricing power and your fragmented customers all across, lots of SMEs. So why was this 2% to 3% loss? Is this year? Or what is the reason for that?
Only 1 reason because our customers also like taking that due to high inflation in their other costs. That's why -- and another one was sluggish demand now. So that's why they don't want to be -- take other hit, and we are also not pursuing so high for that. That's the only reason.
Okay. But did the strategy help you in gaining incremental market share or so?
Sorry, I couldn't get? What you said?
Sir, you did not -- you chose to hold back on this 2% to 3% price gains which you take. And that's a fair point, I understand. But have you gained anything that you can quantify? Like did you gain market share by having the strategy of not increasing the price or anything -- did you gain anything in exchange of not taking the price hike?
So we were able to also maintain our operation costs quite well. And looking at that point of view, we were able to show the 10% growth in 9 months in profit. If we became more greedy, then it would mean that the competition would possibly lower their price even further. And then -- and they would have not a very good -- I don't think they will have very good numbers anyway. So I did not want the loss of business happening in any way. And there could be a possibility of a shift also.
So in order to have all aspects well taken care of, we had to manage this in this way.
Got it. I hear you loud and clear. If competition decrease in rates by any chance to gain business...
I'm sorry to interrupt you, Mr. Aejas, may we request you to join the question queue, sir. We are several participants waiting for the turn. [Operator Instructions] We take the next question from the line of Harsh Shah from Jefferies.
Firstly, can you just provide the split of the MSME and the corporates for the quarter?
So share of this 2 category of customers? It is almost 50%, 50%. And intentionally, actually, we want to keep that. We always try to -- that business is getting very fast on the big customer and very slow from that small customer. But we always maintained that since last 1 decade. And we will keep continuing with that way only. And that's why we also have growth with profitability. Whatever increase in profitability has also happened because of the SME customers. Well, 1 year could be bad, but -- if you look at -- if you rewind and look at 2020, it was the SMEs that really topped up faster than anyone else for us.
Sure. And secondly, on the revenue growth guidance, which we had given 18% to 20% earlier. So what's your revised number for the FY '23.
It would be in the range of 16% to 17% now.
Okay. And lastly, just a clarification, this 28-odd branches, which we have added, that is on a 9-month basis, right?
Yes, true.
Right. And this volume growth, which you mentioned that 10% volume growth for the third quarter and if we see there's a revenue growth of 10%. So naturally, it means that there was no price hike during the quarter, correct?
No price hike on during the quarter, yes.
We take next question from the line of Mr. Shreyas Bhukhanwala from Canara Robeco Mutual Funds.
Sir, I have a question again for the growth rate. So just wanted to get your sense, we have some new lines of business, which are now contributing 18%. They are growing at a much faster rate. And then we have our base business, which is compared to your listed tier is not going -- growing at that rate at which these guys are growing. So you mentioned that the market has kind of taken -- like seeing a slowdown, but somehow the underlying business drivers for all the companies, which are there, they are showing a growth. So what is it like, which is kind of driving this less revenue growth relative to prior years?
What is the main idea about India business in logistics is that if you want volume, if you want poor quality volume -- what I mean by poor quality is no margin or 1%, 2% margin volume -- profit margin volume, that is available, but I'm not in that business. So you have to please be very clear what sort of business I am in, okay? If you compare me to FTN, if you compare to an organized segment, if you compare me to supply chain company, if you compare me to trade holding company, I'm not in that business. Therefore, please understand the line of business I'm in.
Got it, sir. Got it. And sir, incrementally, now that you have also cut the revenue guidance and given the demand environment, are you confident enough of like kind of growing at like 20-odd percent rate to achieve the 5 years target going ahead?
Which -- I want to add to that, which express trucking company is giving a 9-month INR 100 crores, listed company or unlisted company, you can tell me. Listed company, definitely you can show me if any other company is giving around. No one is giving. Continue, sir.
So incrementally, it is possible because we, again, will keep the same strategy. So we have a price hike of 2%, 3% and volume growth in the range of 16% to 17%. And obviously, like new services or this line of series we had launched only last year. So this also started to be contributing in a good manner. So there is a base of that. And again, we will keep adding our branch network to be catered to SME customers.
Again, it is very easy to get the business from the like subdued rates and from the low rate or low margin, which is not in our DNA, and we want to be the business is profitable one only and want to combination of big customers and small customers. We don't want to get diluted from the like 50-50. And we also don't want to be diluted on our credit terms also. Like we also -- you see my consistent receivable days are in the range of 50 days since last 1 decade. So these -- if you see on a -- if you watch, our quality is consistent actually. And we will keep growing at that path only.
We take the next question from the line of Mr. Aman Vij from Astute Investment Management.
My first question is in the announcement, we have mentioned that we are opening up a new corporate office also. So if you can talk about the same, what will be the cost? Why are we doing it? And how long it will take for us to move in? .
So we bought the land and construction will be started in the next year. And I think it will take at least 2 to 3 years to construct. And cost would be -- construction would be no more than, I think, INR 25 crores.
Sorry, the question was also how it will help us and what is the area?
So actually -- existing office now is just like becoming short. We are like -- we are already in a TCI corporate office that has already built up in 25 years back, and now the employment has increased. So that's why we want on a second corporate office. And that's the only way.
So sir, that office will contribute in its addition. We won't shift totally to this new office.
No, no, totally shift.
Okay. So we'll leave that and we shift to this office with all.
Yes.
Yes.
Okay. Okay. And my second question is, Mukti, sir, you talked about that December month. Utilization was quite low at 75%, 76%. But we still did like 83% utilization for the Q3. If you can talk about both of the utilization in November and December as well as for, say, January and going forward, what kind of utilization we are seeing?
Yes. So consistently, it is in the range of 84% to 85% or in each quarter, average was around 85%. Sometimes also increases of 86% also. So only that October month was our problem only that we -- our utilization was dropped from average of 84%, 85% to 75% to 76%. And November and December was, again, is a normal one, and January is also going normal one. So there is no challenge on that. And that would happen only because if you see you mean -- I think you might be noticed that Deepawali was on Monday. So factories and everything was start to close on by Friday only so Friday, Saturday, Sunday, Monday, Tuesday, Wednesday. So that was of almost closed for the 5, 6 days. And we decided not to be deterred any services to customers, and that's why we were rather hit on that utilization level, and that is the only matters for that particular month. Otherwise, a consistent one.
There's no challenge on a capital utilization at all.
[Operator Instructions] We take our next question from the line of Mr. Krupashankar from Avendus Spark.
Just wanted to check what is the key reason for setting up a subsidiary and what sort of business we are trying to do from Singapore?
Well, the -- what we understand is that the natural course of expansion has to be domestic and overseas. So we are still exploring and it's an exploratory stage. And we keep updating as to what the progress is happening.
All right. So you're not planning into freight forwarding or anything?
No, no. any business less than 20% margin we're not doing.
We take our next question from the line of Kunal Bhatia from Dalal & Broacha Stock Broking Limited.
I just had one question, sir, how has been the month of Jan because we are almost at the end. So because there is a big leg room, which is wanted for the growth for the entire year. So how was Jan panned out? And what has been the utilization in Jan?
So we don't want to give a figure in that way. But yes, it is -- again, we will be done the double-digit growth in Q4 as well and margin target, we are taking like 18% EBITDA level for that Q4. Yes.
Okay. And sir, this -- we saw quarter-on-quarter rise in the operating expenses. Sir, yes, I know many people asked, but could you give the quantum of one-off in that expenses, which would not come in Q4 or the going quarters ahead?
So you talked about like admin expenses?
Yes, sir. So meaning our operating expenses were on a higher base in this quarter. So could you give us any one-off either admin or advertisement, what for the total quantum, which would not get repeated?
No, no. So that was only one reason of that because utilization level of truck was less on October month, and that will not be happened in this quarter. That's why -- our gross profit again will be reached to a level of like 32% to 33%. It was in this -- quarter was around 31%, 30.5% to 31%.
We take our next question from the line of [indiscernible] from Equirus Securities.
Just one quick confirmation. So sir, what is the cost of the land that you've acquired? I understand the INR 25 crore would be the construction cost, if you can quantify the cost of the land as well?
So cost of land actually we acquired in auction in Gurgaon. So cost is INR 45 crores for that land.
We take our next question from the line of Ronald Siyoni from Sharekhan Limited.
I just have one question regarding the road infrastructure [indiscernible] over the past few years, you have been seeing significant improvement in this space. And further going ahead, you're going to see Western Corridor, will it be Mumbai kind of highway, but not the greenfield long stretches, which will essentially -- will be used to reduce the travel time. So what kind of growth that should drive? Has this infra improvement in the past improved -- improvement in utilization level? And this would be -- again, there is a possibility with this kind of infrastructure the utilization levels will be further improved.
So, if you remember my -- on the last con call, I had said that 2 things. the highways are good, but the quality of the trucks are not that great. Therefore, we will be offsetting the speed and the high quality -- and the low quality of trucks with automation. That's point 1. Point 2, the big challenge remains what the government will now be focusing on, is that manufacturing units in large cities or within the city, which have a problem of no entry. So that needs to be also addressed equally because until the factories are inside the cities, there will be a problem of pickup and collection or in general and logistics.
And those factories will be difficult to be taken out of the city over ever, unless there's a big change in the city infrastructure. So that's why highways are great. Sure, no doubt. Delhi, Bombay, 2 hours -- I mean 8 hours, sure. But what kind of vehicles will go on that, that can do it in 8 hours is a question that I've always asked. So we have to be always wary of the fact that there are multiple roads that play in deciding how and what will be the ultimate outcome. Because in India, we don't have 1 single -- it's not a single input for a single output. You have multiple inputs. And what you get is multiple output. So I think we should just wait and see how this grows out as we go along.
Just one thing that -- can this manufacturing inside the city hub-and-spoke model cannot resolve this thing? Or it's not that easily you can resolve that...
Sorry, I missed out what?
The hub-and-spoke in the cities. You normally go to outskirts and thereafter you travel a little faster in highways. Hub-and-spoke in cities. Yes. So that cannot be used?
Sorry?
That cannot resolve the problem of high -- only the truck quality will remain, right?
Now the question is like, if you have -- I mean, just think hypothetically, if you have these beautiful highways, and if you have Fiat Padminis or Ambassadors, that is a state of a trucks, can we go in 4 -- in 8 hours? No, we cannot. So then we have to -- now government has to work on all angles.
We take the next question from the line of Harsh Shah from Jefferies.
Just on this CapEx number, which you have done of INR 99 crores in 9M. So I just wanted to understand what is the breakup of this. Basically, you just mentioned INR 45-odd crores is the cost of land and what is the balance? I just missed out.
I mean like another land in Kolkata, which was, I think, INR 20 crore. Another part of like we have given the advance for another land for Ahmedabad.
Okay. And what about this office, the new corporate office?
It's a land only, land only, which we have just mentioned. Construction will be started in the next year onwards.
The next question from the line of Rikesh Parikh from Rockstud Capital.
Most of my question has been answered. Just one thing I wanted to understand about this Gurgaon center, which we have upgraded. Sir, can we have some quantifiable numbers or benefit we received from this center for automation?
So there'll be -- Rikesh, there's 2 kind of things happened like my turnover time of track has been reduced from either time like from 16 or to 8 hours. Like they've taken total time of 24 hours. Now this -- we get reduced to 8 hours. Another aspect, we're also able to reduce my labor component and dependence on labor on a peak time or festival season has been drastically reduced. So that's why the quantification number, I think the separately, we can be discussed on that. But yes, these are the visible benefits we have taken out of this.
But another aspect, I think last time, we also mentioned, once we will become 1 more, 2, 3 sorting centers, then we have to get a more benefit of that because we are creating the efficiency here in Gurgaon, but not able to the destination center. So this way, we need to do a lot of work, and that's where we want to be faster in this process to be [indiscernible] and that we are in process.
Extension is that hypothetically once we achieve the automation 3, 4 centers, probably we can get an additional margin of roughly 150 to 200 basis points, hypothetically?
From 1 center, we're targeting to be at least -- get the benefit of overall like 50 basis points.
The next question is from the line of [ Keshav Bagri ] from VT Capital.
My first line of question will be, have we initiated our revenue guidance to INR 1,900 crores from INR 2,000 for FY '25. And the second question would be on the EBITDA margin side. We had targeted the margin of beyond 23%, 22% in the range, and now we have reinitiated it to 20%, have I got it right?
Sorry, can you ask one by one what you said? First question, please? Can you repeat?
I heard you saying that you have reinitiated our revenue guidance from INR 2,000 crores, which we have targeted for FY '25 to INR 1,900 crores, given the current run-off. And the second part would be on the EBITDA margin front, like we are adding new verticals because of the fact that they are high margin trends, and we are expecting margins to be beyond 20%. But like in the call, we have initiated it to 20%. So have I got it right? Like for FY '25, we are targeting INR 1,900 crores of revenue and 20% EBITDA margins?
Yes.
Okay. My second question would be on the fact that we have -- if I could see the realization per KG, it has been hovering around 12 -- INR 11 to INR 12. So are we compromising on the profitability front to get the volume and the tonnage because that has managed in the strategy for TCI, which sets it apart from all the other listed players. Like I have been following the company for like...
We are not doing anything of that sort.
Okay. And the last question would be on the branches front. Can you please break up the branches for quarter 1, quarter 2 and quarter 3? How much branch addition will be in Q1, Q2 and Q3 of FY '23?
I think H1 -- until H1, we have done 21 branches and now 7 branches in this quarter. That is a breakup.
Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to the management for closing comments. Thank you, and over to you, sir.
Thank you, everyone, for joining us today. I would like to conclude by saying that the leading logistics provider, TCI Express with the PAN India presence, we are well positioned to capitalize on the India's growth story and very optimistic on the growth trajectory that we are on. We look forward to meeting you again next quarter. Please be healthy and safe. And feel free to reach us for any questions remain unanswered. Thank you once again.
Thank you. Thanks, everyone.
Thank you. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.