VRL Logistics Ltd
NSE:VRLLOG
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Ladies and gentlemen, good day, and welcome to VRL Logistics Q2 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded. I now hand the conference over to Mr. Alok Deora from Motilal Oswal. Thank you, and over to you, sir.
Thank you, Sean. Good morning, everyone, and welcome to the Q2 FY '25 Earnings Conference Call of VRL Logistics. So we have with us today Mr. Sunil Nalavadi, the CFO of the company. So I'll now hand over the call to Mr. Nalavadi to give some opening remarks and discuss some of the performance, and then we can pick up the Q&A session. Thank you, and over to you, sir.
Yes. Thank you, Mr. Alok. Good morning to all participants. I'm Sunil Nalavadi, CFO of VRL Logistics. I welcome all of you once again for the earning conference call for the quarter 2 of the financial year 2025.
This is a strong quarter marked by substantial revenue growth, improved profit margins and robust cash flow, demonstrating effective cost management and strategic execution in all the assets by the management of the company.
As communicated during the last call about the increase in freight rates, we have successfully implemented the freight rate hikes across all the sectors and geography. We believe that this exercise is great success to us to bring back our operational margin at optimum level along with maintaining growth in volumes. And please note that this is the first time we increase the rates without increasing freight rates and created a new trend in the industry.
Our operations were normal during the quarter and overcome from the disturbances such as labor shortage, driver use, et cetera, due to the general elections and heat we have faced during the quarter 1. This has resulted into improvement in our operational efficiencies, such as increasing kilometers covered by our own vehicles, improving in turnaround time of the vehicles increase in load factor of the vehicles, control on dependency on higher vehicles, et cetera.
Due to the improvement in our own vehicle utilization, the vehicle higher tariff is drastically reduced as a percentage to the revenue in spite of increase in tonnage and slower addition of our old vehicle capacity. Further, we established better control on the fuel cost by increasing the pulp purchase quantity with the discounted rates. On a year-on-year basis, for the quarter, the revenues increased from INR 715 crores to INR 802 crores with a growth of 12%. The growth in revenue is mainly on account of increase in freight rates across all the sectors and geographies during the quarter.
Due to reach, the realization freight for tonnage increased by almost 8% from INR 6,681 per tonne to INR 7,241 per tonne. The growth in revenue is also on account of growth in vol by almost 4% from 1,048,000 metric tonnes to 1,093,000 metric tonnes. The growth in volumes is from enhancement in our branch network in good transport business. Year-on-year basis, we added around 82 branches, and these branches contributed around 2.5% to the tonnage.
We continued our initiative to increase the number of branches in the current quarter also and added around 12 new branches. The remaining growth in tonnages from the existing market, predominantly by increasing contribution from the existing customers. Even though we saw muted growth in quarter 2 by most of the companies across the sectors we are still in a position to show growth in volumes. This is mainly on account of well-established branch network across the country and improvement in service levels by route optimization in key routes and hub connections.
The EBITDA has increased by 39% from INR 98 crores to INR 135 crores, and percentage to revenues increased from 14% to 17%. We reached an EBITDA at our optimum level again, and this is mainly on account of increase in freight rates by passing all incremental costs, which were impacting the margins in the past.
Further, the margin improvement is also due to good control on fuel expenses, which is a major cost of operation in our business. We further increased the bulk purchase quantity in the current quarter from 30% to 35% to the total quantity consume. The fuel procurement cost per liter is reduced from INR 87 to INR 86.
On overall basis, the fuel cost as a percentage to the revenue is reduced from 31% to 28% in spite of increase in quantity. The improvement in the operational efficiencies in the current quarter also leads to improvement in EBITDA margins. We saw major efficiency improvement in vehicle aviation by improving kilometers per vehicle and the increase in turnaround time of the vehicles and the load factor. This has resulted in to have a control on dependency on the higher vehicles due to which the area tariff reduced from [indiscernible] 5.5% to the revenue, even though lower addition of own vehicle capacity in the current quarter.
The rest of the expenses, given the increase in absolute terms, the percentage to the revenue reduced due to increase in freight relations.
The improvement in EBITDA leads to increase in EBIT and PAT margins in the current quarter. The back of the company increased from INR 19 crores to INR 36 crores, and percentage to the revenues increased from 2.7% to 4.5%.
On a sequential basis also, we have seen drastic improvements in the terms in terms of revenue growth and improvement in margins. The operational revenues increased from INR 727 crores to around INR 800 crores. And with other income, the revenues increase were around 8% from INR 742 crores to INR 802.2 crores. The growth in [indiscernible] is contributed by increase in frac rates. And the realizations have improved from INR 6,723 to INR 7,241 per tonne and increased by almost 8%, along with a growth in volume by around 2%.
The EBITDA margin has improved from 13% to 17%, mainly driven by increase in freight rates and improvement in efficiency in operations from the [indiscernible] space in quarter 1.
With this, we reached a revenue of around INR 1,544 crores for the first 6 months in the financial year '25, with a growth of around 10% on a year-on-year basis, with a net profit close to around INR 50 crores. With the improvement in profitability and having good control on working capital, our post tax net cash generated from the operating activities has been increased from INR 209 crores to INR 217 crores. Further, our business is B2B focused LTL business, the less than [indiscernible] business, with a customer base of around 9 lakh customers covering with a wide range of sectors.
Our key strength is having the different mode of collections from the customers, and 85% of our lean petrol business is on paid on 2 basis, collecting the freight on spot from the customers immediately after the booking or completion of the service. Our receivable days from the customers is hardly around 12 days, and which is lowest in the industry. Considering the improvement in turnaround time of the vehicles and control on ease of higher vehicles we moved slower on the vehicle CapEx during the quarter and invested around INR 18 crores in the current quarter.
We also invested around INR 43 crores to expand our own transshipment hub set in Bangalore, and we are planning to have similar over facilities in Maipu and Bauru in coming days. With the improvement in cash flow and lowering CapEx, the net debt of the company reduced to INR 259 crores.
Considering to revive to the shareholders, the Board of Directors approved an interim dividend of INR 5 per equity shares. Sample experienced a strong quarter with a robust increase in freight relations, along with the support of growth in volumes and notable improvement in profit margins supported by operational efficiencies. The cash flow from operations remain robust, positioning the company well for future growth and investments. With these achievements and the positive outlook, we are confident in maintaining momentum moving forward, both in terms of growth in volumes as well as the realization.
With this, I will conclude my initial remarks. Now I request participants to open for question and answers.
[Operator Instructions] Our first question is from the line of Amit Ditransit from ICICI.
Congratulations for a good set of numbers in a very tough quarter. I have 2 questions. The first 1 is on CapEx. So if we look at CapEx, it is down 40%, if you look on H1 to H1 basis. Now with margins improving, it's a normalized quarter cost efficiencies coming in and 2 new transshipments you have alluded to in the presentation being set up. How do we see the CapEx trajectory in H2 and maybe FY '26?
Yes. Basically, see, about cash flow -- about the capital expenditures. See, one, the vehicle addition is going to continue based on the utilization level. So every quarter, see, we are expecting around INR 30 crores to INR 40 crores investment in the vehicles. And apart from that, the 2 facilities, what we are planning in Mysuru and Bangalore, for Mysuru, there will be investment of around INR 20 crores, INR 22 crores. And for Bangalore, actually, the total investment will be in the range of around INR 240 crores to INR 250 crores.
And predominantly, the plan of the investment of these facilities. So basically, we are having a good cash flows. And in next half year, if you see, the generation from the operational activity will be in the range of at least around INR 240 crores, INR 250 crores, that is one. And the second thing is we also declared a dividend of INR 5.
So based on this, the investment will be one around INR 44 crores will go for a dividend and around INR 240 crores, INR 250 crores goes for the Bangalore facility, and around Micron INR 21 crores to INR 22 crores. And vehicles, we can say around INR 40 crores to INR 50 crores. With that, the total investment in next half year, i.e. for these projects, are going to be invested, then total investment will be around INR 350 crores.
Against that, our -- the cash flow will be around INR 240 crores. So the net debt addition will be around INR 100 crores by end of 31st March.
Okay. That's very comprehensive. In FY '26, what kind of CapEx we can estimate?
In 2016, again, the predominantly the CapEx will be towards vehicle itself. Based on the quantity improvements, we will decide on the investment into the vehicles. See, always, if you see as and when we grow, say, 4% to 5% in finance, then our capacity will be improved by around 3%, 4% in that way.
Okay. So just wanted to understand, the buying Bangalore, the CapEx is high INR 240 crores to INR 250 crores compared to Masud and the other one?
Yes. The Bangalore is -- currently, we are using that facility. The total area of that facility is spread across around 25 acres. And Currently, we are paying rent for the same facility, almost around, say, INR 1.5 crores per month.
We are reaching that facility. And since the owner is willing to sell that property and it is -- we have decided to buy the -- invest in that property. And basically, how it is going to benefit one is we will say in the rental cost itself almost around INR 17 crores, INR 18 crores per annum. And apart from that, we have kept deposit of INR 9 crores as of today, and we are losing almost around INR 1 crore of benefit out of that also.
And the net effective savings to the company will be in the range of around INR 19 crores to INR 20 crores per annum. Against that, if you calculate interest even at 8% to 8.15%, we are getting a loan proposal at that rate. So definitely, the company is not going to lose even a, single rupee by investing into that property.
And basically, we can add some more added facility to that 1 facility like workshop, maintenance facilities and all these things. And apart from that, the incremental rental cost over a period of time, actually we can stop it. So one time, if we invest and after the repayment of the loan, the burden of the interest liability will come down. And moreover, there will not be any threat of shifting to the new premises or look at into the other premises that continuously that property is going to give benefit to us.
Okay. Understood, sir. The second question is on the procurement cost from refineries. Now we have already reached 35.51% this quarter. So do you think that this is the upper limit or how far we can stretch in terms of procurement of fuel from refinery? And associated question here is that what is the proponent cost differential between refinery and retail?
Yes. The refinery is now we can say it is at the optimum level. There are 1% or 2% changes will be there. So considering the spread in network, we cannot increase this quantities. Wherever we are consuming more quantity only in those places, we have established our own funds and purchasing from the refineries. And in terms of the price difference, it is between around INR 2, INR 2.5 per liter difference between the refinery price versus the retail price.
Our next question is from the line of Krupashankar NJ from Avendus Spark.
Sir, my first question is on the price lines, what you have already taken at the moment. You were indicating about 5% to 6%, but it has come in at around 8%. Just wanted to get a sense that was there any benefit of mix with a higher lead distance in this quarter due to which the realization is higher? Or has there been an entire price hike of about 8% or so?
Yes. This 8% increase in the realization is completely increase in the price. And what exercise we did in the rate excesses also. One, we did increase in the basic freight rate. And apart from that, we collect some of the other cases from the customers in the same invoices.
It may be told channels. It may be like last service, and [indiscernible]. Actually, we revised in those rates also. So considering the revision in those [indiscernible] and the basic freight, the overall realization has been improved by 8%, and this is purely increase in freight rates.
Okay. So is it fair to assume, sir, that given that you have broken down the breakup across toll chargers and so on. Any increment in toll rates going ahead on an annual basis, whatever we see, will automatically get passed through? Or is it like we will continue to take a call on pricing depending on how customers react to it? Something you can throw some light on?
Yes. Basically, see, always, we take a call not only toll charters, we will see the movement in all the expenses as and when we'll revise the prices. Total service is 1 of the part of it.
Even in the historical, whenever the tool [indiscernible] increased, actually, we have not increased only the portion of the total service. Because again, whenever we wish to face the customers, we go with increasing all the aspects of the rates rather than 1 element of the rates are like that. Again, it will become the same exercise to convince the customers.
Right, right. And on the point of coming to customers, I think you have role about [indiscernible] has grown at about 4%. Just wanted to get a sense, sir. Sir, last conference call, you had mentioned that in the July month, the group was close to about 7%. So what -- as then we are gearing up for festive season. What changed after that? Why has it come down quite drastically? Can you throw some light on that also?
No, basically, see, we indicated a growth of around 12% in revenue, but we did more than that, almost around 13% growth in the overall revenue on a year-on-year basis. And moreover, the tonnage increase as you are reclosing from the market that many companies are announcing the results now.
So most of the companies are declared a muted growth or negative growth across all the sectors. So basically, the across industry, there is a lower demand. But we are doing additional effort by opening the new branches, new geography, and we are continuously trying to add the new customers.
So because of that, actually, we are in a position to reach at least around 4% growth in the tonnage. And apart from that, even if we see some of the logistic companies, we have already announced the results. But most of the companies have declared muted growth in the tonnage.
Got it. Got it. In second half, any expectations or any guidance on how you are seeing the tonnage growth coming through?
Yes, definitely, we will maintain some of the tonnage growth. Obviously, we have to put additional efforts by opening up new branches and new geographies. That effort continuously we are doing.
And definitely, there will be growth in the tonnage on a year-on-year basis. And apart from that, the relation, definitely, we will maintain this whatever hike in the rates are there. These rates have been already accepted by the customers, and this will be maintained even in the future.
Right. Sir, 1 more question, if I may. On the tonnage growth side. So just while I appreciate that given the branch, what was the contribution of the incremental branch addition over the last 1 year in the presentation. Can you throw some light on -- because we have been adding branches over the last 3 years, throw some light on what has been the contribution if I were to take a cumulative basis over the last 3 years, what would have been the new branches contribution to our overall tonnage?
We opened almost around close to around 250 plus branches in the last 2 years. And definitely, the branches are contributing almost around 8% to 10% to the total finance on a booking basis.
Understood, sir. Understood. Okay. And also if your -- if the tonnage outlook is going to be relatively muted, are we hurrying up with respect to vehicle addition? Or could we wait for some more time before adding these incremental capacities on vehicles?
Sorry?
So with respect to the tonnage growth overall. We had anticipated earlier the starting of the year about 12%, 13%, then we turn cautious with respect to truck addition based on the underlying tonnage growth. Is it fair to assume that given that commentary also is quite weak across macro, will you take a very cautious approach to fleet addition? Or is it going to be like you're committed to spending that INR 40 crores to INR 50 crores per quarter towards vehicles?
No, basically, it will be a cautious decision. See always what we do, we add the vehicle only if the vehicles are required for our operations.
So depending on the growth in tonnage and the substitute is always available, we can switch over to the outright vehicle on an immediate basis. If there is continuous demand, then we can add our own vehicle capacity. So that cautious step will always be there. And with that, actually, we are expecting the additional tonnage growth. And accordingly, we have to incur CapEx.
Our next question is from Achal Lohade from Nuvama Institutional Equities.
Sir, the first question I had was with respect to you have taken the price hike of 8%. Has the competition also followed a similar increase? If not, what is the price difference between us and the competition now?
Yes. Basically, after our announcement, even many companies have announced the increase in the rate. And is [indiscernible] that again, other operators thought also following the increase in the rates.
And for this period, there was a gap. But depending on our service level and the safety of the confinement, and the -- basically, the overall efficiencies in the service then definitely, we can -- we are the first movers in the market to increase the rates.
So whatever we thought on that, actually, it has been accepted by the customers, and we are in a position to increase the rate along with the maintenance of growth in tonnage. But considering this fact, even many other operators also following this step, and we have already announced some of the rate increase.
Is that a similar quantum? Or if it is just 1, 2, 3 types?
So depending on their nature of customers, actually, they are taking the call.
Okay. Sir, I mean, just a related question. What we had in the past is that we found it were to increase the price in the past. So what has changed according to you? Where is that conviction coming from that this price increase will go through? And when was the last time we have taken this kind of a price increase and what was the experience? So how it is different and why it has changed, if you could elaborate a little bit?
No. Basically, in the past, we used to increase the freight rates only when there is an increase in the diesel price. And the whole industry used to work towards that. Whenever fuel price increase only during that time, they used to increase the price rates. But this is the first time considering the increase in other expenses. It may be sold shares, it will be employee cost, it will be rental expenditures.
So considering increasing these costs, actually, we have taken a call to increase the rates, and we are in a position to convince the customers on this aspect. And the same trend is also following by the other operators. See, we are the first movers on the rate increase, you can say.
Correct. Where I'm coming from is that, is there a change in the industry structure, what you're seeing? Is there less competitive intensity have the unorganized segment kind of seen a reduction for whatever reason. If you could throw some light on that aspect as well?
Yes. Obviously, you see the customers need a service. If you provide a good service, then definitely, we can charge rates or increase the rates. And moreover, even in some of the rules, wherever we established or we have entered into in the last 2 years, especially in the Eastern, Northeast market, even the Northern side, there, actually, we have given very competitive rates initially.
So considering those assets also now continue depending on the attachment of the customers in those areas, again, we have taken a call on increase in rates.
Understood. In terms of the branch addition, you mentioned 250 branches we have added in the last 2 years, and that contributed to 10%, 10% of the volume. Now wanted to understand your thought process going forward from, let's say, 2-, 3-year perspective? How many branches do you think need to add where are these like where are the white spaces left in a particular region, district, any segment?
Yes. Basically, see, in the next 5 months, again, we are going to add another 40, 45 branches. On a full year basis, we are planning to add at least around 80 to 100 branches even going forward. That is what the thought process is. And it is completely into the untapped market, especially in the Eastern North and Northeast markets.
There, actually, even the Indian have what we presented in the presentation, you see the number of branches state-wise, we are having still very low presence in UP, Bihar [indiscernible] and Rajasthan [indiscernible]. So we are planning to add more number of branches in these areas.
Right. And any experience you could share, how easy or difficult it is to move from South to non-South? Because we hear in the other industry, the experience has been a bit more painful, a bit more difficult one. So any color on that?
We have to compete with the local competitors. And they are very strong in that particular route. But thanks to the increase in the compliance level by introducing with GST, vehicle and nice. Because of that now across India, there are paying prices. earlier, there were a lot of differences between the compliances between for each state.
Now the difference is not there. All the states, every vehicle owners or every operator in the country has to follow the same rules and regulations. So that is giving more comfort for us to bring players scale, we can open up branches in those areas.
Got it. Sir, just last question, if I may. With respect to industry mix. Let's say, for first half of last year, what is the industry mix in terms of our customer segment? Like I remember textile is a large market for us.
Larger product [indiscernible] the cloud and textile, which is majorly contributing to our tonnage almost around 16% to 18%. And nextly followed by agriculture commodities. That is in the range of around 9% to 10%. And remaining all pharma industrial groups, the hardware, those are all in the range of around 5% to 6%.
Our next question is from the line of Jainam Shah from Equirus Securities.
Just wanted to reach on the CapEx part. Are we doing around INR 240 crores for Bangalore, INR 20 crores for [indiscernible] other facility and around INR 30 crores, INR 40 crores, INR 50 crores for the older in the second half. Is this understanding correct?
Around INR 350 crores, yes.
Okay. So I just wanted to share on the cash flow.
Including dividend [indiscernible], the total cash outlook.
Okay. So just wanted to check on the cash flow as you told that we'll be increasing our net debt by INR 100 crores, whereas FCC as 1 cash flow. You have been INR 40 crores, INR 50 crores cash from operation. But that rental cost, which is of our interest and depreciation is almost, sir, more than INR 95 crores. That interest is also [indiscernible]. So overall, we are seeing INR 105 crores into this cost. If you [indiscernible] our cash flow portion will be around INR 100 crores to INR 110 crores even after INR 350 crores. So our net debt would be creating double from INR 250 to INR 500 crores or something is missing over here?
So the index impact is, yes, definitely around INR 40 crores to INR 50 crores impact will be there. And even after removing that, definitely, as future cash flow, what we are expecting at least around INR 200-plus crores, we are expecting in the next 6 months.
Okay. So INR 150 crores, there will be an increment in [indiscernible].
Yes, the debt increase will be in the range of around INR 100 crores, INR 100 crores, INR 120 crores overall.
Okay. Sir, just reaching like, I just wanted to have your understanding on this, of course, it's business decision to have a particular parcel on our books alerting on our end if you see capital bodies at around 1,000 shares as you have been this much capstoning increased by INR 300 crores. Of course, we'll be seeing it from an interest rate perspective, what market would be seeing it from a written ratio perspective. So is it matching of paying, let's say, INR 250 crores and benefit of INR 18 crore on a yearly, which is where our overall generalized return ratio will be more than 12%, 13%?
Will you repeat your question, please?
So basically, our capital loans around plan [indiscernible].
Your voice is not clear.
Yes. I'm just saying that our capital in September 30 is around INR 1,000 cores. We are paying these facilities, getting increase of around 25%, and we are seeing around 18% -- INR 18 crores rent on a yearly basis. So just wanted to have a have your thinking of the same that, of course, we are saving on the interest by of course, we are sitting on the right ground that it will be paying on the interest reunites would be dilutive going forward as much of high CapEx. So of course, you are seeing that your outflow from the rent will be decreased. But net effect is coming similar and our net debt is getting increased. So it is it will be dilutive. So what's your thought on debt perspective? Because we are waiting 13%, 14% or this saving would be somewhere around 8%?
No, for the shorter period of time, yes, definitely, there will be impact on the return ratios. But if you see the long term, there will not be further spend on these assets. And moreover, we and when we repay the loan when the car employed will come down.
Got it, sir. And sir, this facility would be like -- will be getting benefit from, let's say, medium to long term. It will not be adding up any other thing at the Bangalore because this would be enough for an exciting year something?
Yes, definitely. See, just I want to clarify on this. See, currently, anyway, it is on the lease property. So based on the Indian adjustment, we are already creating [indiscernible] for the interest and depreciation. Basically, it is a part of the rent only. So going forward, what can happen purely, the interest cost will be there. There is a small amount of depreciation.
A majority of the portion of this area is the land portion is this, there will not be depreciation and always, there will be appreciation in the revenue. And moreover, there is always threat that there is an increment in higher rental costs because the new airport towards it is very closer to this facility. And it is more -- since we are operating in more than 10-plus year, where the hands-on experience using this facility for our business, and being the Bangalore is 1 of the key market for us. That's the reason this investment is very much necessary for us, and it will make good return ratio or good returns even going forward.
The reason is, one, on the [indiscernible] that on the increase in differential cost. And moreover, we can keep on -- we can create some additional facility about the maintenance and other facilities in the same premises.
And definitely about -- see, basically, other infrastructure we can invest and we can create more value in the same premises. That's what I'm saying. So that's the reason, definitely, we create good value in the company going forward.
[Operator Instructions] Our next question is from line of Priyam from JB Capital.
Sir, I have 2 questions. [indiscernible] your in-source stocking provides like control and flexibility advantages. But do you think it ability scale? Like I would imagine that operation complexity would be very hgih with [indiscernible] employee can ask this.
Will you ask again, Madame. Your voice is not clear.
Hello. Is it clear now?
Yes.
So I understand that your in-source trucking order provides control and flexibility advantages. Do you think it hampers the ability to scale? I would imagine that operational complexity have such a number of employees in [indiscernible].
Yes. But even if you take other for the word infrastructure, this kind of employee strength is necessary. And basically, all drivers, we are giving permanent employment status to the drivers.
Basically, in India, what is happening, most of the operators are depending on the outside vehicles and the availability of the drivers is acute problem in the industry.
But we are masters in management of the drivers. Basically, we are giving full-time employment to the drivers along with all statutory benefits. So because of the retention of the drivers and other labor actually were in a position to run our operations very smoothly.
Okay. Got it. Okay. I got it. And sir, next is, would you think your direct competitors, which is local competitors or any other companies?
Yes. Considering, see, our nature of business, the less than 10 crores market and the area and widespread market, what we're in. We are having competition both from the local operators as well as some regional players and national players also.
So depending on nature and depending on the customers, we are having different kind of marketing structure different kind of the persons to be marketing in smaller towns and all, actually, our branch managers themselves will do a marketing activity.
And similarly, we have the ARM manager structure. So they are responsible for a particular area to do marketing and retention of the customers also their responsibility. And in metro cities, we're having an exclusive marketing team. They do the corporate marketing team, especially in Mumbai, Deli, Chennai, Bangalore, in around 8 to 10 cities, we have a market team. They do exclusive marketing to take care of the corporate trends.
So there, actually, the competition will be the national players. For the local branches and area managers level, there are regional players and local players, they are the competitors.
And at national level, who is your direct competitor?
It is not a direct competitor. It is 1 small leg of operations actually. Seen, in the contractual customer, what we disclosed in our presentation, the account customers, which is contributing around 15% to the tonnage. There, actually, we are having the competition with the international operators. But in their case, actually, the 100% of revenue is contractual customers.
Our next question is from the line of Vikram from PhillipCapital.
Sir, when you say that the improvement in service level and route optimization, can you give some examples because I think we have been already being great work in that area. So is there any further?
Basically just, I want to give some highlights about how the kilometers per vehicle increased on a quarter-on-quarter basis. See, in the first quarter, if you see 10 to 15 tonnage capacity vehicle, we used to do around 175 kilometers per day. Now that has been improved by around 194 kilometers.
And similarly, in 15 to 20 tonnage capacity, we used to do around 222 kilometers per day. Now it has been increased to 250 kilometers. These are the main segments, more number of vehicles we are having. There, actually, we have seen around 8% to 10% increase in the kilometers covered by per vehicle per day.
And similarly, what exercise we are doing basically, we are working towards a minimum TPT concept. In the sense, wherever the consignments are reaching around 3 to 4 transhipment have to reach end destination. We are planning how to reduce it to 2 tranship.
And wherever 2 transhipment the continents are reaching how to make it direct from branch to branch like this. This continuous exercise actually giving good result on your turnaround time of the vehicles are improving. And basically, we are avoiding the time which vehicles are waiting for the loading and unloading activities on a multiple times.
Okay. Now understood. And how would be your share of express parcel business?
No, Express, we do not have. Actually, we call it as a door-to-door service. Basically, almost around 35% to 38% of our total business is door to door in the sense we pick up from the door and deliver to the door of the customer. That is similar to like express cargo.
Our next question is from the line of Pranay Utagi from Berman Capital.
So my question is with respect to your volume growth. So in the first half, we saw about 5.5% growth. How do you see the festive month of October? How has it been for you? And after festive month, do you see demand having completely fallen off or remaining steady? Like just in terms of growth, should we expect similar performance in the festive? Or has it been weaker than expected?
Yes. Festival, see, we did some good tonnage in the month of October. And the good thing is about -- with the increase in freight rates. So that will give you a further enhancement on the margin side. That's what we are expecting.
And similarly, in the next half year, the tonnage growth will be similar to what we did in the first quarter with the increase in debt. So that will give a lot of boost to our margins.
Got it, sir. Sir, my last question is, you gave a broad state of your sectors with clothing and textiles and agricultural commodities being your key segments. So is it possible to split your end factors into those which are actually showing healthy growth, those who are flat and those who are actually declining? Or is it like broad-based muted demand?
Yes. Now actually, the growth in all the sectors, all the commodities, the growth is there. But key thing is on the geography side, actually, since we opened more branches in North Eastern Northeast market there, actually, the growth credits are very high in terms of percentage. Because the base itself is smaller and in percentage terms, definitely, the growth is in the range of around 17%, 18% compared to, say, around 3%, 4% growth in the established market in The southern and Western markets.
Okay. So let me understand it this way. So you pointed out that the new brand addition has contributed to about [indiscernible].
This time, it Will clarify on the product side again. So the product side, actually, we are not targeting a particular product or a particular commodity. So basically, whenever we go into a particular market, say, for example, we entered into the [indiscernible]. Whatever materials are.
Available in that area, actually, we will target. It may be agriculture product. It will be pharma product, anything. So unless we go with the product available in that particular area rather than having some planning for only agriculture commodity or textile market, we will not do that. We will understand the local market and accordingly, we concentrate on the products.
Got it, sir. That's perfectly clear. Just a follow-up on this. You mentioned that there was a 2.5% contribution from the new branches to your tonnage growth, right? So -- and your overall tonnage growth was mid-single digit, right? So like the retail industry discloses something like same-store sales growth, which is basically how much growth on your assets, which you had only last year and excluding the growth of [indiscernible]. So is it fair to say.
Your same branch growth, like the branches you had last year, those have actually remained flat and the entire growth is only from new branch addition. Is that a fair statement?
Yes, the new brand addition is around 2.5% in the current year, I'm saying, in the last 1-year growth. But if you take overall in the last 2 years expansion in the branches, then definitely, whatever new addition is coming because of the new branches, the whatever additional tonnages coming.
Okay. So is there any signs that you see that which says that growth is actually coming back in some of your existing assets, like you might actually grow without branch additions. Is there time anywhere in sight? Or we are still yet to see that?
Look, there is -- again, it will completely depend on how the industry moves. And basically, you see in the current market, if you are seeing a lot of many companies, if you see the product is a key manufacturing or it may be consumer delivers and refine product. The listed NPD data is immediately available and most of the companies are having a muted growth.
[Operator Instructions] Our next question is from the line of Alok Deora from Motilal Oswal Financial Services.
So my questions on the volume have been asked in different ways. Just wanted to understand with this price hike now undertaken, what kind of volume growth we are expecting for 2H of '25, FY '25 and in FY '26? And further price hikes we can take in FY '26?
Yes. Just I want to clarify about the tonnage and the realization. Basically, we did say almost 5% plus in the half year in terms of the tonnage growth. Going forward, also in next half year, we're expecting at least around 4% to 5% growth in the tonnage with the current realizations, what we are having.
So by doing this, what will happen, definitely, our margins will improve further. The reason is the portion of the fixed expenses as a percentage to the revenue will come down. And moreover, since we are doing a lot of efforts on the increase in the efficiency within the organization, definitely, that we give additional boost to the margins. That's one.
And in '26, by that time, rates will be completely absorbed in the market. We can definitely expect better tonnage growth in FY '26 from the current level.
So in FY '26, could it be like 8% to 10% growth or even higher coverage growth?
Yes. Again, it depends on the industry, it is possible. But definitely, we can expect better tonnage from the current year.
Got it. But sir, this price hike impact has already come in this year. Now next year, the pace will also get on the higher side in terms of relation, right? So if we don't take any price hike for the next year, then is it -- could it be a case where next year, our revenue growth would largely be whatever is the volume growth of 8% to 10%?
So basically, rate increase, it depends on limiting the cost structure. And depending on the moment in costs, we will decide on the rates. See, if you're having the optimum level of EBITDA, then definitely instead of going for a rate increase, we will concentrate more on increase in volumes.
Got it. Got it. So the price hike could come through. But if it does not come through, the volume growth could be that. So on a blended basis, it could be more like a 10%, 13% revenue growth could continue in FY '26 as well?
Yes, definitely. Yes.
Got it. Just 1 last question. This margin is 16-plus percent in this quarter. So is there any sort of one-off also or this margin could continue in 3Q, 4Q as well?
No. This is a sustainable EBITDA margin. Basically, the reason is this is already -- we achieved based on the increase in rates as well as increase in the tonnage. And the increase in rates has been already accepted by the customers, and we are going forward. Further there will not be any concern thing that actually we may offer a discount or something like that.
So that's the reason we are very clear that these realizations are going to be continued. And if these realizations are continued, then definitely, our EBITDA margins would be at a current level. The 16% EBITDA is going to be continued even in the current going forward.
Next was a follow-up question from the line of Achal Lohade from Nuvama Institutional Equities.
Sir, just 2 questions. First, on the fixed expense, if you could tell us of the current cost, excluding if we have to see what is the fixed expense per month for us?
See, almost around 30%, 35% of our costs are fixed in nature, especially the employee cost is fixed in nature. The rental expenses, which is almost around 8% to 9% to the revenue, it is fixed in nature. And the vehicle insurance, the vehicle taxes, what we are paying, these are all fixed in nature. See, totally around 30% of the revenue is fixed in nature.
Understood. And that typically will grow at 7%, right? Or could that be even lower than that?
Sometimes around 8% or so.
Understood. The second question I had, you mentioned about 35% to 38% of the volumes are door-to-door deliveries, right, the Express parcel, right? So is it like -- exactly like an Express parcel business? Or is there any further difference? And what is the price difference between us and the, let's say, the RTC Express realization for that particular segment?
Door-to-door service always our rates and expense car rates are similar. There will not be much difference. Because in all the cases, what will happen in Express cargo, there will be additional cost of both pickup and both delivery. Normally, it is at least around INR 2 per kg higher than the normal rates. That INR 2 is nothing, but it is an additional cost for those pickup and door delivery.
Understood. And what is typically the normal rate for [indiscernible]?
I want to clarify. I think you mentioned the other Express cargo company. But the difference between them and us is they are highly depending on the corporate. But in our case, even on door-to-door delivery, noncorporate business other than contractual business. For example, to corporate business itself is 15%. The other 15%, 20% door-to-door delivery other than contractual business for us. The reason here is whenever we wish to increase the rate or wherever we want to pass on the customer cost to the customers, we can do it easily. That is not possible in other companies who are completely depending on the contract customers.
Understood. And what's the split in LTL, FTL, for us, sir?
Yes, LTL is around 90%. FTL is around 10%.
And has that changed over last year, last 2, 3 years?
No, it is very similar mix. And FTL is, again, it is not our core activity. So wherever actually, we do not have a return load, whatever vehicle needs to be, reach to the original destination. Only in those cases, we are doing FTLs.
Understood. And just last question, if I may, with respect to whatever the initiatives the government is taking from a regulation perspective, specifically for the logistics industry, whether it is [indiscernible] terminals and so on so forth, right, warehouses, et cetera. Does that benefit us? Or it's really no significant change for us?
For us, see, we are into LTL market, [indiscernible]. See, we are not into the bulk commodities. But on the compliance side or whatever rate more and more modifications are coming actually, those are supporting to us. And on the bulk of transportation side, whatever moderation the government is doing, it will support on the there, but not directly to us.
Not for us. Understood. And just LNG truck, what is your thought on this particular like is there any thing we have in terms of LNG fleet? And any plans to get there?
No. See, as and when the new product commodities comes up, we analyze it very closely. And if it is going to benefit to us, then only we invest into those products. And good thing in our case is we are very clearly working with OEMs. Since we're having a direct count [indiscernible] OEMs, especially for supply of vehicle, supply of spare parts. See, basically, we are into bulk purchase for them. We are the bigger customers for all OEMs.
So that's the reason we are working very closely with them. And when [indiscernible] any development in the -- on this aspect, definitely, we are the first people to -- if it is beneficial to the operator, then we are the first people to invest into those projects.
As there are no further questions, I would now like to hand the conference over to Mr. Sunil Nalavadi for closing comments.
Yes. Thank you very much for all the participants and all your patience herein. Definitely, we are confident to maintain our growth level along with increasing the rates. So our margins are very intact as of today.
And definitely, we are going to continue these margins even going forward. So with these closing remarks, I would conclude this call.
On behalf of Motilal Oswal Financial Services, that concludes this conference. We thank you for joining us, and you may now disconnect your lines.