VRL Logistics Ltd
NSE:VRLLOG
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Ladies and gentlemen, good day, and welcome to the VRL Logistics Limited Q2 FY '19 Earnings Conference Call 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. Thank you, and over to you Mr. Mitra.
Okay, thanks, operator, and good evening to all the participants. So we have today Mr. Sunil Nalavadi, CFO of VRL Logistics, to discuss Q2 FY '19 results of VRL Logistics. Without further delay, I would hand it over to Mr. Nalavadi for his opening remarks. Thanks.
Yes, thank you, Abhijit. Good evening to all. I'm Sunil Nalavadi, CFO of the company. This is a new call of VRL Logistics of our quarter 2 for the financial year 2018/'19. Let's take over some brief financials for the half year ended, half year-to-half year, then we can move on to quarter-on-quarter.In terms of half year-to-half year, the total income of the company increased by around 10.3% from INR 952 crores to INR 1,050 crores. And the EBITDA of the company decreased by around 12.68% from INR 136 crores to INR 119 crores, and percentage to total income decreased from 14% to 11.34%.The PBT of the company decreased by 18.31% from INR 81 crores to INR 66 crores. And percentage to total income decreased from 8.47% to 6.27%.The PAT of the company decreased by 19% from INR 55 crores to INR 45 crores. And percentage to total income decreased from 5.8% to 4.27%.The growth in revenue mainly contributed by the goods transportation segment. The goods transportation segment revenues increased by 13% from INR 733 crores to INR 829 crores. And the growth in GT business is on account of increase in tonnage by around 8% and increase in realization by around 5%. The increase in tonnage is on account of increase in business from the existing customers as well as we added some good number of new customers also.The EBITDA of goods transport business decreased by 5.4% from INR 97 crores to INR 92 crores. And percentage to total income decreased from 13.26% to 11.09%. The decrease in EBITDA margin is mainly on account of increase in fuel cost. The percentage of fuel cost to the revenues increased from 23.6% to 26% of GT revenue.As compared to the last year, the diesel prices increased from INR 59 to INR 75 per liter, but then our procurement cost has increased from INR 55 to INR 65. We try to control on fuel cost by procurement of more biodiesel quantity as compared to last year, and the quantity of biodiesel has increased from 12.46% in H1 '18 to 22.71% in H1 '19 for the total quantity of diesel consumed. The rest of the expenses are in control and increased more or less in proportion to the revenue and not impacted on the margin.With respect to passenger segment is concerned, the passenger segment total number of buses are reduced by 21 number as compared to last year. But in spite of that, the revenue has increased from INR 181 crores to INR 188 crores, from -- by around 3.8%.The increase in bus mainly is on account increase in number of passengers, increase in occupancy level and increase in realization per passenger since the diesel cost has increased from INR 59 to INR 75 per liter, which is beyond increase in realization as well as increase in of occupancy levels. And same has resulted in lesser EBITDA margins of passenger segment.The EBITDA of bus segment has decreased by around 42% from INR 28 crores to INR 16 crores. And percentage to total income decreased from 15% to 8.6%.And with respect to wind power business, it is consistent in revenue. When we compare the results of quarter to -- stand-alone quarter 2 with last year, the total income of the company is increased by around 14.24% from INR 454 crores to INR 519 crores.The increase in revenue is mainly contributed by the goods transportation segment. The goods transport segment revenue increased by 17% from INR 358 crores to INR 419 crores. The growth in GT business, goods transport business, is on account of increase in tonnage by 10.5% and increase in realization per ton by almost 7%. The increase in tonnage is on account of, again, increase in the business from the existing customers. Also, we added some good number of new customers during the period.The EBITDA of the goods transport business is increased by 7.74% in absolute number from INR 46 crores to INR 49.8 crores. And percentage to total income decreased from 12.9% to 11.88%. The decrease in EBITDA margin is mainly on account of increase in fuel cost. The percentage of fuel cost to the revenue is increased from 23.75% to 26.22% of GT revenue. As compared to the last year of the same quarter, the diesel prices increased from INR 57 to INR 75, whereas our procurement cost is increased from INR 55 to INR 65. Again, we try to control on fuel cost by procurement of more biodiesel quantity as compared to same quarter of last year and is increased from 6.33% to 27.5% of the total quantity of diesel consumed. Overall, we are in control of the rest of the expenses, and some of the operational expenses, such as lorry hire charges, vehicle repairs and maintenance cost and employee cost, are decreased as a percentage to the revenue. Since the growth in revenue is more than increase in these costs, hence the EBITDA margin declined by 1% even though the impact of increase in diesel cost is by 2.5% on the margin.Again, on -- in the PT segment, because of the increase in diesel cost is not completely passed on to the passenger, again the margins in PT segment have been impacted.When we compare our results quarter 1 to quarter 4 to current year, the total income of the company is decreased by 2% from INR 531 crores to INR 519, and the changes in revenue is mainly on account of decrease in the passenger revenue on account of seasonality as well as increase in GT revenue by 2.28%. The EBITDA of the company has decreased by around 10% from INR 63 crores to INR 56 crores. And PBT of the company decreased by around -- from INR 36 crores to INR 29 crores, and same has resulted in decreased impact from INR 24 crores to INR 20 crores. With respect to goods transport segment is concerned, the revenues increased by around 2.28% from INR 410 crores to 420 crores. And growth in GT business is on account of increase in realization per ton by around 6.5% and decrease in tonnage by around 4%. The decrease in tonnage is on account of seasonal variance as well as delaying of some festival seasons in the current year, and also due to long truck strike during the current quarter, especially in the month of July, started from July 20 to almost 8 to 10 days.And the EBITDA of the GT business in absolute terms, it has increased by around 18% from INR 42 crores to INR 50 crores. And percentage to the GT revenue increased by around 1.6% from 10.28% to 11.88% in spite of increase in diesel cost.The percentage of fuel expenses remains constant at 26% in spite of increase in diesel rate from INR 68 to INR 75. So we pass on most of the increase in fuel expenses in there by increasing the rates. And the lorry hire charges especially has declined as compared to the total percentage to the revenue. This is on account of lesser kilometers we operated through hired vehicles. And overall, rest of the expenses are in line with the increase in the turnover. And the same has been translated into improvement in EBITDA margin by 1.6% in GT segment.When we come to passenger segment, again it is mainly on account of seasonality as well as the increase in fuel cost; resulted into a decline in the EBITDA margin in passenger segment.And the rest -- entire -- we consider -- the board has considered to pay the interim dividend of INR 3.5 per share. And also, with respect to the increase in capacity of the vehicles, we are in the process of this -- increasing the actual load increase, and almost around 80 vehicles have been already processed and the rest of the vehicles are in progress. Due to this, we may do some modification in the CapEx plan, what we announced earlier. With this, I conclude my initial remarks. Now I request to the participants to ask questions.
[Operator Instructions] The first question is from the line of Sandeep Matthew from SBICAP Securities.
Sir, the first question I had was on your tonnage decline that we have seen on a sequential basis. So between last quarter and this quarter, as you had indicated in your opening remarks, our tonnage kilometers are down. Can you explain why this has been the case, sir?
You're asking about the tonnage?
Yes, between 1Q and 2Q this year, yes.
Yes. As I told you, this is on account of -- one is the truck strike, which was there in the month of July, which started from July 28 to almost -- continue 8 to 10 days. So there -- during that period, the operations were completely halted. And subsequently, what we expected, that some of the new tonnage have not been accumulated. That's one. And apart from that, there are some delayed festivals also in the current year. See normally, what will happen in quarter 2, quarter 3, 3 or 4 festivals come early, the -- some of the tonnage will add in quarter 2. Now that means you shift to quarter 3.
Right, sir, but I think it is early part of quarter 3 that the festivals are coming, right? I mean, to -- would -- have you already started seeing a pickup in Q3 in your tonnage kilometer, sir, or?
No, that's more impact with that in -- there are more festivals again in the month of October, but the festivals fall in the month of November.
Okay. Right. Sir, the second one is on your EBIT margins for the goods transport segment again on 1Q versus 2Q. It's encouraging to see that you've actually improved your EBIT margin. Could you -- I mean, what more specifically have you done on the cost side to kind of help this improvement?
As I told you, one is the realization has improved in spite of decrease in the tonnage. So on account of that, the margins have been improved in the second quarter.
And sir -- but you are -- ideally speaking on your cost base, since your fuel prices on a sequential basis are also up pretty significantly, you should have actually had higher expenses as well. So there have been other expenses outside of fuel that you might have saved on in this quarter to actually bring in a slightly better margin. So I'm just trying to understand, what is the -- you've got a very similar revenue run rate. You have been able to improve margins. So what is the cost base that has actually helped you offset of fuel this quarter?
No basically, the lorry hire expenses is decreased compared to the first quarter.
Okay. So lorry hire has been the key, decreasing expenses.
And there are minor changes in the other expenses. But more or less, plus or minus, it remained the same. Lorry hire has not declined on account of lesser kilometer we operated through outside vehicles because tonnage is also restricted.
Right, okay, sir. And...
And again, what happened, the realization per tonnage improved.
Okay, sir. So sir, the third question I had was on your total CapEx plan. Now with the revised axle load now coming into play, that you're actually getting better clarity. Well, have you bumped up our plans in terms of how much is it that we intend to spend on acquisition of new cars and trucks? And the other question I had on CapEx was how many of our passenger vehicles are up for renewal next year? And what is the plan over there?
Yes. The first one, with respect to this axle load, we are modifying the order, that is, the order in the process. Basically, what we are thinking is rather than adding the higher-capacity vehicles, say 14-wheeler vehicles, we are thinking to add more of our 12-wheeler and 10-wheeler. The reason is, if you want to -- if you add a 14-wheeler vehicle, the size of the body will remain same as compared to 12-wheeler and 10-wheeler. So that's the reason. Now whatever 14-wheeler vehicle we purchase, they're on the 70 we have already purchased and some 30 vehicles are in the pipeline. But whatever the next supply will be there, those vehicles will be 12-wheeler and 10-wheeler. See basically, payload, how it will change, in 14-wheeler our earlier payload is to -- we used to get there 24 tons. Now they will come to around to 29 tons. But in case of 12-wheeler, we used to make around 19 to 20 tons payload earlier. Now we'll come to around 23, 24 payloaded ton. That's the reason, right, to considering the fuel efficiency as well as considering our nature of the goods and other things. [Technical Difficulty]
Ladies and gentlemen, there seems to be a disconnection from the management line. We request you to please stay connected while we reconnect the management. Thank you.[Technical Difficulty]
Ladies and gentlemen, thank you for bring on hold. We have the management reconnected to the conference call. Over to you, sir. And we also have Sandeep Matthew from SBI Capital with a question here. Thank you.
Yes. So you were explaining. If you could just quantify how much is it finally going to result in terms of your costs coming down for CapEx on the goods side? And also on the passenger side, how many vehicles are due for renewal next year? And what are the plans on that side?
Now in terms of -- in goods transportation, instead of 1,200 vehicles, will be in the range of around 680 to 700 vehicles, what we are planning. But that is we announced shortly with what capacity along with deposit and everything. And in terms of passenger, yes, some of the vehicles are expiring the permit, but we can extend those permits for another 4 years. That is permitted in some of the states. So we actually think some of the vehicles to extend to 4 years. And if we are unable to extend the permit, we will scrap those vehicles. And as of now we are not thinking to add any further vehicles or to incur any additional capital in that shipment.
[Operator Instructions] The next question is from the line of Ankit Panchmatia from B&K Securities.
Good set of numbers on goods transportation. Sir, my question is regarding this. So I -- regarding the number, 17 are already purchased, the 14-wheeler. And...
7,0
And -- 7, 0, 70?
Yes.
And 30 are in pipeline?
Yes.
Okay, okay. And sir, regarding our visibility in terms of how the e-way bill has been panning out, how strictly it's been implemented, any comments? Or any qualitative comments from your end would be very helpful, sir.
Yes, really, the e-way bill -- it was helping to the -- especially we are less than 70 -- helping to us. The reason is based on some of the feedback from the customers earlier days who now operate with some of the different customers in transport really in different route. Now they are consolidating their operations, and such kind of business is coming to us. Apart from that, we are hearing from the market that some of the -- these smaller operators, they've got -- use penalty notices and all, but -- and because of noncompliance overall or because of non-following the procedures. But that kind of incidents are not in our complete because we are capturing most of the information at the time of booking, which is -- unless those things are complied, the booking itself will not occur in our system. So that's the reason of such incidents. Hardly 1 or 2. And overall, we end up with paying penalty of probably around INR 3 crores to INR 4 crores -- 3 lakhs to 4 lakhs, sorry. So that's the situation. So our systems are more efficient to handle this e-way bill process entirely.
Okay, okay. Sir, regarding lead distances, if I can get kilometers traveled for the quarter, the numbers for this quarter as well as the earlier quarter as well.
Yes, there's discount on an overall basis. So there is improvement in kilometers probably owned vehicles. It has improved by almost around 2%.
Okay. Okay.
And in the current quarter, there is a decline on depend on the vehicle also. And that was to the percentage to the revenue. It has come down.
The next question is from the line of Mukesh Saraf from Spark Capital.
Yes, sir. Sir, firstly is on pricing. You did mention that you have taken -- and there is a realization jump of 7% this quarter vis-à-vis last year same quarter. Could you give some sense on how much more pricing hike would be required, let's say, to offset the entire diesel hike? Also, you have some long-term contracts. So you said that the earlier hike that you've taken will only material in subsequent quarters. So what is the situation with respect to the entire pricing?
In terms of diesel, if you compare to last year, which is the current period, it is our most seasonally higher sales at around 2% to the revenue.So one is we have already increased, and we are reading some sense that the prices are also coming down, diesel prices. So on a periodical review, again, we will take a call.
So as of now, like you said, 2%. Do we expect this 2% to kind of -- I mean, to see that reduction in that -- diesel as a percent of revenue in this third quarter itself? Or do you think it'll stay like this for some more time before you can say that...
Actually, it will come. And moreover, the -- apart from -- the more -- another important thing here is apart from depending on this normal fuel, we increased the biofuel quantity. So you can see out there basically so it has increased by almost to 23%. But quarter-on-quarter, for instance, in second quarter, we reached up to 28%, 29%.
Right, right. So either by way of biodiesel or by way of pass-throughs, do you think, maybe not immediately in the third quarter but by the end of the year, we'll be done with -- if you assume diesel stays where it is, you'll be done and you'll be back to the earlier levels in terms of fuel prices and passengers revenue, sir?
Yes, that's our internal target. Actually, we want to come back to the original margins. But again, now since new customers are coming and the volumes are also picking up, so we have to concentrate on that as well rather than simply concentrating on the margin side. But there are improvements. There were -- and when we went to all of that improved again. So earlier, employee cost was almost -- it was increased. Now because of an increase in volume and other things, same with the fixed costs, it is coming down as a percentage to the revenue. So that's the reason internally, not only the fuel costs, where you see the momentum in other expenses also. Accordingly, we will take a call.
Right. And so my second question is again with respect to the new customers. Could you quantify by any means new customers' contribution to the overall tonnage either -- in some way, that could -- or revenues or anything like that, could you quantify, sir?
Currently, it's very difficult because our customer numbers are as I said were very reasonable except some of the corporate clients or our own customers. In the rest of the business, actually it's a cash and carry business. Either they will pay at their booking time or delivery time. Yes we can, but we have to quantify based on the GST number. Right now we don't have that information, then we can forward it on a later date. How many -- the most recent number we had, I don't have it available with me. We can do that.
And then, sir -- and just lastly, on the trucks that you're adding, could you give some sense on what will be the key markets that you're going to be plying them on? Any new regions like, say, Delhi or maybe you're already there in Delhi? But any new areas that you're looking to -- in term of these new trucks that they're going to start and by when that can happen?
Yes. Last time also, we maintained the whole project, where it'll exactly be. Now recently last week, we got it registered. The land is already -- we purchased, the -- whatever land portion expenses were there, that much of investment has been already done. And the building is also in the process. So we are expecting -- by this year-end, we are expecting the sales facility make it operationalized. So once it is done, we require then we book a number of vehicles over there. So we are concentrating more from Surat and surrounding area to rest of the routes. That area is highly concentrating right now.
Right, but, sir, I mean, you're seeing like a huge 700-odd vehicles. I mean, majority of these will be around Surat, sir?
Yes, Surat demand currently, like you say, with most of the routes, currently what we're handling from Surat right now within only Surat to the South Indian route or from the North end, Northeast. We're very selective of routes we are operating. And once we have our own facility and our own booking -- right now, we are depending on our franchise holder. So once we shift to our own facilities, definitely we are expecting good growth into this area.
Right, right, right. So next year, we should start seeing this materialize?
Yes, yes.
The next question is from the line of Rajarshi Maitra from CIMB.
So just wanted to ask you about this revised axle load. Now this has been completely implemented, right? And in this quarter, did we see the full impact during the quarter? Or has it come in only towards the end?
No, out of the total vehicles, we got a -- permitted to carry additional load for 82 vehicles. Rest of the vehicles, still we are in the process because these vehicles have to be certified by the IPO.
Okay. So should we see...
And we have the application.
Okay. So should we see the full impact in Q3? Or will it take another quarter beyond that, for the full impact?
Well, it will take some more time.
Okay. And if you could give us a sense, how much would it help in your margins? How much -- because as I understand, obviously, the -- increasing the load by over 20% should have a positive impact on your margins as well, right?
Sure.
So can you give us a sense how much should we consider going forward?
Look, considering our nature of goods and the kind of customers, what we're handling, we may not use the entire benefit into our vehicles because they have increased at full load, but they have not increased the sale of the vehicles. Sale of the vehicle will remain the same. So we have to do some you know improvement in our mixing of the goods, we are to carry more -- we are to mix in with it with a more weighted goods along with the lighter vehicle like this. We have to do some load impact and where to change. And right now, see, we don't have specific number on this, how much is going to improve and all. And whatever vehicles we are getting now, so to vehicles, so there is an improvement of around 12% to 15% are made in these vehicles.
The next question is from the line of Vikram Suryavanshi from PhillipCapital.
How is the working capital now? Is there any material change?
Yes. About working capital, there are no material changes, except some incremental. It will certainly improve, increased in that part of changing the load. The reason is we bought some of the commodities or some of the goods which we require to build of all these for the vehicles. But because of this notification about the change in the actual load, so some of the spare parts, steel or whatever handles we have purchased, we are gradually -- we are losing those good materials in there. So currently, we are losing gradually. So that's the reason some -- there is increase in inventory level. But apart from that, the rest of the inventories and other receivable from this wind power, the sale of power, that is also outstanding quite a long time. That is another reason why the debt was here was also increased. But on an overall basis, about the main reason boost in the position, there are no much changes in terms of letters.
Okay. And just a housekeeping, what was the outside vehicle purchase as a percentage of?
It's around 8% to 9%.
In this quarter?
Yes.
And compared to what was it in the last year, same quarter?
Just one second. It's around 8% in the current quarter. And in first quarter, it was around 11% to 12%.
11% to 12%?
Yes.
All right, sir.Okay. There, we are seeing pretty much.So our new capacity, what we're adding in terms of trucks, they are full utilized basically, again, which we're replacing outside vehicles.
Yes, it is.
The next question is from the line of Bhavin Gandhi from B&K Securities.
So first, so if you can just give us a differential between conventional diesel and biodiesel, the pricing?
Pricing?
Pricing of the biodiesel fuel.
It's around INR 5 per liter.
INR 5 per liter?
Yes.
And to the extent you have already gone up to about 28%, 29%, how much more can this increase? Or is it the maximum...
The max that we can go. And again, because of all this winter season within this period, this percentage may come down in quarter 3.
Okay, okay. Taking this devolvement of almost about INR 3.5, so bulk of the current profit, totally first half, has been paid out. So has been there -- are you looking at a material cut down on your CapEx numbers or there's no indication of that?
No, CapEx number, as I told you, it's in terms of -- the [ INR 200 crores ] was what we planned earlier. That will be an overall purchasing 700 vehicles, out of this 1,200 vehicles. So just -- we are working on which category of the vehicle to be ordered and all these things.
Sure. Sir, if you can just highlight, what's the cost differential between a 14-wheeler and a 12-wheeler approximately?
Around 3 to 4 lakhs.
3 to 4 lakhs, okay. And sir, the guidance that you had given out at the beginning of the year of about 10% growth, are you trying -- are you looking to revise that or remains unchanged?
Yes. Half year, we issued around 8% in volumes. At least, we will achieve this in the coming days. That's what I am hoping. But in our business, giving guidance is really difficult. There's more impact to the our sales in that last second quarter, suddenly, the first strike has come. We never expect it, almost 10 to 12 days deliveries were halted.
Sure. And sir, just one final thing regarding the CapEx saved, let's say that we -- when we had announced, we had some price locking advantage for those trucks. So if you were to renew that order now, was those price locking, et cetera, work or it will also change?
It will continue.
The next question is from the line of Shrinidhi Karlekar from HSBC.
Sir, your test upon going back to your original margin levels in the GT business by cutting down some of the costs and all. So may I ask you what number are you referring to when you say original margins and by what period?
More around 12% to 13%
That's EBITDA margin?
In the GT segment, what I'm saying.
And is that EBIT margin, sir, or EBITDA margin?
EBITDA. EBITDA.
Okay. But sir, traditionally, we did something in higher of 15%. So those kind of a margin, you don't think are kind of realistic in today's price environment, the current price environment?
Frankly, there's very tough. One is fuel, we can monitor. We are having the option of biodiesel in all -- this quarter, the employee cost headwind increased over the last 2 years -- 2, 3 years. That is -- already, a higher percentage is there. But since the volumes are picking up a little bit, it is coming down as a percentage to the revenue. So still able to grow. But by that time, again, we will need to give some small increment or these things will come up. That's the reason -- the fix want to go beyond their limit. And actually, the percentage of the fixed expenses will come down as -- to the revenue. So on that schedule the margins will increase.
So this 12% to 13% margin is -- you are referring to kind of volume growth environment kind of 8% to 10% volume for that?
Well, our growth -- diesel price will be under control, so always. Right now whatever measures we have taken. [ Technical Difficulty ] in spite of increasing the fuel cost.
So my second question is if I look at the branches and agencies combined, it has actually come down by 9 branches to something like 905. And sir, if I was -- I was under the impression that under GST, you are getting an opportunity to expand your branch network. So how should we see -- look at it?
So we are working on this, but these -- whatever agencies or branches have been cut down, these are very small branches, there were not much contribution from these businesses, like smaller towns and all. There actually, we closed some of the places, some of the branches we closed. But in, you know, the expansion to the newer route, newer locations, 3 we are examining, still, we need some more improvement in the compliances, then we can explore such opportunity.
But sir, if I look at -- you have like kind of announced of a big CapEx on the vehicle side, so I suppose you need to add branches as well. So have you kind of roughly worked out plans to increase your branch networks here by next 2 to 3 years? Because I presume, capacity planning, you have done considering 2 to 3 years. But I'm presuming you might have done on branch side as well, branch and trans-shipment side.
Not the -- CapEx, is considered in multiple reasons Sunil. One is -- say I mentioned about the [indiscernible]. Now currently, for the rest of the players, we are operating on a selected route. Now we can explore that opportunity to other routes, that's one. And second thing, about the change in the government policies. There, basically, the government is thinking to increase this -- the enrollment numbers. On account of that, by 2020, there are shipping in more kind of vehicles which we need to get in addition. So there, actually, again, we can save some of the cost over there. Then apart from that, they are talking about these vehicle scrappage long term, so. So considering all these, actually, we have a lot -- we were -- not all these things, and we decided to have some good kind of CapEx.
Fair enough, sir. And then last one, if I may. Sir, I just wanted to understand the efficiency increment that you have seen because of GST. So would it be able to quantify how much of increase in average kilometer is run by our typical truck on a daily basis, that is pre-GST and post-GST? A ballpark number would help.
When initially GST has entered over there, at that time, actually, all the trade rules have been abolished. There was an improvement of around 5%, 6% during that period. But subsequently, now again, since the vehicles are stopping for verification and all, there is an improvement not like the previous, but there are improvements and effectively around 2% to 3%, that is the improvement.
Okay. So that's it, it's not like significant like in the range of 10% to 15% that media tends to report? You are not experiencing that?
And moreover, in our operation, again, we need to operate through hub and spoke with some loading, unloading activities in the day.
The next question is from the line of Jayakanth Kasthuri from Dolat Capital.
I missed out on the realization. You said there was an increase Q-o-Q, how much was it?
6.61%.
Sir, what were the CapEx for this quarter or the first half of this year, if you can pull that number?
Yes. In first half, we incurred rupee CapEx of -- rupees around INR 67 crores. Part of that, goods transport CapEx is around INR 58 crores. And majority is for the vehicles is at around INR 43 crores. And we purchased one of the lands in Mangalore. And about land and building overall, we invested around INR 14 crores, and there are some other expenses that is around INR 1 crores. And for Passenger segment, we input a capital of around INR 1 crores, especially we -- where some of the vehicles, their permit expired, we extended to another 5 years.
Okay. Sir, in terms of like new customers, like if you can give some kind of a qualitative color like who -- and like which kind of a segment they are in, in terms of new customers? Are they into like more of SM, CG, textile, those kinds of industries? Can give some color on that?
No, more of our customers related to SME, you can say in all segments.
Okay, okay. Sir, in terms of CapEx for this financial year, how much you are seeing it likely to be?
So that, we will give you shortly. We will file an exchange filing, we are working on some of the -- that modification, the order and we will announce soon.
The next question is from the line of Mukesh Saraf from Spark Capital.
My question is on the SCM and RCM, sir. I mean, we are seeing some of the supply chain. There is APL express transportation guys. 70% to 80% of their billing now is on SCM. What is our plans? I mean, I know this year, we had an RCM, but do we think next year, we'll do SCM at all?
No, right now we are not thinking that. We will continue the RCM only.
Okay. There's quite a -- and it's still beneficial for us given that we can get some import credit. And like I said, we have seen the express segment move to that to that. I mean, you don't see LTL movement, LTM transportation [indiscernible]?
No, right now the segment processes we continue as it is, unless there is a change in government policy. Or if any changes, then appropriately, we'll commit it.
Okay. And my second question is -- I mean, when you had planned the earlier CapEx of 1,200 trucks, then probably, the financing rates would have been different. Now I mean, how much do you think you know we -- will the incremental interest expense because of the hike that you are seeing, because of the liquidity issues that we are seeing within VFCs?
No, earlier, we used rate at 8.4%, 8.5%. Now it is in the range of around 8.6%, 8.75%, like that earlier.
Okay, okay. And so now we are locked in...
[indiscernible] they want to funnel it out of coverage...
[indiscernible]
Okay, okay, okay. So it will not be a major headwind in terms of interest expense on these...
No, no.
The next question is from the line of Ravi Mehta from Deep Financial.
Just one question. You are already at the peak of biodiesel blending in Q2. So when we plan to get back to our earlier margins, obviously, have you seen any freight rate hikes to be taken in this quarter?
We are periodically, we will decide. Based on the movement of distances.
[indiscernible] since we took in more the cost of...
[Operator Instructions]
When was the last freight rate hike and quantum, if you can specify?
Members of the management, are we connected to the call? [Operator Instructions] [ Technical Difficulty ]Ladies and gentlemen, thank you for being on hold. We have the management reconnected to the conference call. And sir, we also have Ravi Mehta.
Yes. Okay, just to reframe, in the last call, you mentioned that from first onwards, you were taking a phase wise freight hikes.
Yes.
And I think that was on 60%, 70%. So how has that panned out? And what was the recent hike, if you can just quantify?
No, we obviously -- we do a lot of changes on a route basis, customer basis and all these things. But [indiscernible] basis. Is it audible, please?
Yes, you're audible, sir.
So that's 70% what we -- initiatives. Have we done on the entire customer base? Or we are still yet...
Yes, we've done for all -- the entire, this one. That's the reason even the relation is improved in the current quarter.
Okay, okay. And given where the fuel prices are and maybe the blending mix, where we are, so do you foresee any hikes to be taken in the current quarter? Or you see more of cost-cutting measures and other things to help you get back to the earlier margins?
So right now, we are not taking any hike. The reason is -- one is the diesel price, in the current quarter especially, it is under control right now. And some of the states have reduced their fuel price also. And our overall business who run the overall fuel supply from diesel to -- keep raising the diesel price. So at this juncture, we have not increased the rates.
Okay. And if you -- one more question was, if you have to modify your vehicles, if you get those permits of high axle load carrying capacity, so what kind of spend that could be?
No, there are no modifications required.
Okay. So whatever that 82 vehicles, you've got the...
That is without any modifications.
The next question is from the line of Ankita Shah from Elara Capital.
Sir, the new vehicle addition that we've highlighted, now that 680 to 700 vehicles, this would be done over what time frame, sir?
It's scheduled next financial year through December '20.
Up to next December?
Yes.
Okay, okay, okay. Got it. And secondly, sir, have we taken any rate hike post September as well?
As I told you, right now, we have not increased because we have to see the moment of expenses now. Based on that, we can stay the course.
Okay, okay. And just -- I mean, I know I'm repeating this question. But in the past, you've seen biodiesel consumption has gone up as high as 35% of your total fuel consumption, I know our total fuel consumption would have also increased now. But is there not more room to increase the consumption of biodiesel? And if not, what would stop us from increasing that ratio?
Basically, you see the supply is from one place. Over there, we are preferring the diesel. If we extend and applied to another location also, then we have to incur more cancellation charges. So it will not made sense as compared to the normal fuel. Although that's the reason, this is, I know, the highest mix level actually what we can reach up to, say, 29%, 30% max. It's not beyond that.
The next question is a follow-up from the line of Rajarshi Maitra from CIMB.
Just wanted to check this. You spoke about the trucker strike for 8 days during the quarter. So were your operations also halted for 8 days during the phase or what was it?
Completely halted this time. Earlier, some sites used to happen, some of the locations, some of the roads and some of the routes we can operate. But this time, most our vehicles have been completely halted.
The next question is a follow-up from the line of Shrinidhi Karlekar from HSBC.
Sir, would it be possible to quantify a ballpark, how much volume would you have lost because of, say, the strike? And festival season been getting pushed to next quarter, just in your guess, how much will be the quantum?
Actually, we expected similar line of tonnage what we have do in quarter 1. Yes, but we are unable to reach that.
And sir, I just wanted to understand this unique truck economics better. So may I know how much like a typical freight revenue you can earn from the recently-acquired diesel [ shopliland 3600 ] trucks? Like how much revenue a truck can earn on an annual basis in current pricing environment?
Normally, around 2 to 2.5x of the investment what we are investing on the vehicles. Well, actually, it's around 2, 2.5x.
So if these -- the trucks are coming at INR 30 lakhs, you can typically expect more than INR 60 lakhs, is that correct, my understanding?
Yes.
The next question is a follow-up from the line of Jayakanth Kasthuri from Dolat Capital.
Sir, you said there was an increase in terms of important of passenger segment, increase in passenger, your occupancy and the realization level. Like if you can quantify that like year-on-year, like if you can give me that number.
Yes, half year to half year, the increase in passenger is by 2%. And the increase in realization per passenger we're around 1.7%. And the increase in average fees of operation, occupancy levels by 3.5x -- 3.5%, sorry, it is in percentage.
3.5%?
Yes.
Sir, and in terms of the quarter, like quarter-on-quarter if you can...
Yes. Year-on-year, typically, the last quarter, the number of passengers increased by around 4%. And the realization, 4% is almost the same, there is no increase. And the occupancy levels are increased, were around 4%. And in terms of quarter-on-quarter, there is a decrease in number of passenger by 14% and decrease in realization by around 12%. And the decrease in average vehicle occupation by around 4.5%.
Mr. Kasthuri, does that answer your question?
Yes.
[Operator Instructions] As there are no further questions from the participants, I now hand the conference over to Mr. Vijay Sankeshwar for his closing comments. Over to you, sir.
[indiscernible] for hosting the call and for -- also [indiscernible] Nalavadi to -- would like to give any closing comment before we end it.
Yes. Thanks for all the participants. [indiscernible] Thank you.