VRL Logistics Ltd
NSE:VRLLOG
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Ladies and gentlemen, good day, and welcome to the Q3 FY '18 Earnings Conference Call of VRL Logistics Limited hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Abhijit Mitra from ICICI Securities Limited. Thank you, and over to you, sir.
Yes. Good afternoon, ladies and gentlemen. So we are hosting Q3 FY '18 results conference call of VRL Logistics. From the management, we have today for opening remarks, Mr. Vijay Sankeshwar, Chairman and Managing Director; and Mr. Sunil Nalavadi, who will take the discussion forward after that, Chief Financial Officer of the firm.So without further ado, over to you, sir.
Yes, sir. Good evening to you all. I am Vijay Sankeshwar, Chairman and Managing Director of VRL Logistics Limited. Since 4, 5 years, we are under a lot of pressure that market was not stable and a lot of changes, demonetization, recently GST and all, lot of people were under confusion and all. And we were not in a position to go to market or marketing executives since last 5, 6 years, because hundreds of my competitors who are in mid-size, they are carrying so many illegal bill and without bill and all that. Now the situation is changed, and many customers are flowing to our company. And there is a sign of sure-shot 10% increase in the tonnage this year and next year. Keeping in that mind -- and also already we are hiring outside vehicles in spite of having over 4,300 vehicles. Hiring of outside vehicles payment is more than INR 100 crores. That is why we are buying 1,200 vehicles from Ashok Leyland Limited. We have placed a firm order of 600 31-tonner and 600 37-tonner. That will cost -- the invoice cost will be about INR 360 crores. Above that, we have to spend about INR 5 crore each vehicle for building our body, insurance, registration, et cetera, et cetera. So all it will come to about INR 410 crores.Apart from these vehicles, small vehicles also sometimes we are buying. This year also, we have bought about 40 vehicles for local deliveries and all, and some replacement vehicles also about 40. That we are paying from our equity, total money. For these 1,200 vehicles, we are taking a loan from the banks, or the NBFCs, to the tune of INR 400 crores.So the total purchase of vehicles may be about INR 450 crores to INR 500 crores in '18 and '19 calendar year, 2-year. Thereafter, we are buying area and office, almost nearing INR 100 crores in Surat, and we are expanding a building at Bellary, INR 4 crores. And recently, about 4, 5 days back, we have signed an agreement with Tata Coffee, purchase of 1 land at Mangalore for INR 15 crores.All put together, in '18 and '19, our investment in the property will be about nearing INR 150 crores. This purchase of vehicles for INR 50 crores and this INR 150 crores put together will be about INR 600 crores, will be the CapEx in '18 and '19 calendar years. In out of this INR 600 crores, about INR 200 crores from the internal cash accruals we'll pay -- make the payment. The remaining INR 400 crores we are borrowing approximately at the cost of 8% interest per annum. And we are hoping 10% growth year-on-year on tonnage.Mr. Nalavadi, our CFO, will talk further.
Good evening to all. Welcome to the quarter 3 financial results of our company. The revenue of the company has increased by -- from INR 451 crores to INR 490 crores, has increased by around 8.28%. Including other income, the growth rate has increased to 8.45% from INR 455 crores to INR 493 crores. This is quarter-on-quarter.And the revenue -- increase in revenue comprised of increase in tonnage by 12% and decrease in realization by 3%. The decrease in realization is mainly on account of pass on some benefit of this abolition of check posts and other things to some selective customers and in selective routes. The Passenger segment revenue increased from INR 78 crores to INR 94 crores and increased by around 20% quarter-on-quarter. This is on account of increase in total number of passengers traveled in the bus as well as increase in occupancy rate as well as increase in realization per passenger.The overall EBITDA of the company increased from INR 58 crores to INR 65 crores. The EBITDA of GT business has increased from INR 46 crores to INR 49 crores, and EBITDA of -- the margin of the GT business is almost same from 12.9% to 12.6%. The EBITDA of PT segment has increased from INR 5.24 crores to INR 15 crores, the increase in EBITDA is on account of increase in number of passengers by 12%, increase in realization per passenger by 7% and increase in average seat occupancy by 4%.This increase in total EBITDA resulted into increase in EBIT margin of the company as well as EBIT of the company increased from INR 34 crores to INR 41 crores. And further, on account of reduction in net-to-debt from INR 76 crores to INR 46 crores, the interest expense has reduced from INR 3 crores to INR 2 crores. On account of this development, the PBT of the company has increased by around 26% from INR 31 crores to INR 39 crores, and PAT of the company has increased from INR 21 crores to INR 25 crores.When we compare the performance from 9 months year-to-date, the revenue of the company has increased from INR 1,360 crores to INR 1,433 crores, has increased by around 5.36%. And including other income, the growth rate has increased too by 5.69% from INR 1,367 crores to INR 1,445 crores. The increase in revenue comprised of, again, increase in realization, the Goods Transport unit contributed from INR 1,068 crores to INR 1,120 crores, it has increased by around 4.84%. And increase in realization per ton by around 6.5%, whereas, there is a small decrease in tonnage by 1.29%.The PT segment revenue has increased by -- from INR 250 crores to INR 275 crores, by 10%, and this is on account of increase in total number of passengers, increase in occupancy rate as well as increase in realization per passenger. The overall EBITDA of the company has increased from INR 184 crores to INR 202 crores, and the EBITDA of GT business has increased from INR 134 crores to INR 146 crores and EBITDA margin has increased from INR 12.56 crores to -- 12.56% to 13.06%.The EBITDA of PT segment has increased from INR 35 crores to INR 43 crores, and margin has improved by around 1.49% from 14% to 15.56%. The increase in EBITDA is on account of, again, increase in number of passengers by 3%, increase in realization per passenger is around 6.84% from INR 945 to INR 1,010 and increase in average seat occupation by 0.14%.So then, this has further resulted into increase in EBIT level of the company. EBIT of the company has increased from INR 109 crores to INR 129 crores, and GT EBIT has increased from INR 99 crores to INR 108 crores, and PT, the Passenger segment EBIT margin has increased from INR 16.30 crores to INR 23.84 crores.Further, on account of reduction in debt from INR 150 crores to INR 46 crores, the interest and finance cost has reduced from INR 19 crores to INR 9 crores, and the reduction in debt as well as improvement in the EBITDA resulted into higher PBT. The PBT has been increased by around 32% from INR 90 crores to INR 120 crores. And this has been resulted into increase in tax from INR 62 crores to INR 81 crores.When we compare the quarter-on-quarter of earlier year, the revenue of the company has increased from INR 452 crores to INR 489 crores, increased by around 8.37%. When we include the other income, the growth rate has increased by around 8.58% from INR 454 crores to INR 493 crores.The GT business revenue has increased from INR 354 crores to INR 387 crores. It has almost increased by around 9%. And increase in revenue is comprising of increase in tonnage by around 6.8% and realization -- increase in realization by around 3%.The PT segment revenue has increased from INR 86 crores to INR 94 crores, it has almost increased by 9%. The overall EBITDA of the company has increased from INR 62 crores to INR 65 crores, and the EBITDA of the GT business has increased from INR 46 crores to INR 49 crores, and the EBITDA margin is little bit comprised of from 13% to 12.6%.The increase in total EBITDA resulted into increase in EBIT from INR 38 crores to INR 41 crores, and the Goods Transport EBIT has increased from INR 35 crores to INR 36 crores, and Passenger segment EBIT has increased from INR 6 crores to INR 6.6 crores.Further, the debt. On account of reduction in debt, there is a savings in finance cost from INR 5 crores to INR 2 crores. The PBT of the company has increased by around 16% from INR 32 crores to INR 39 crores, and PAT of the company has increased from INR 22 crores to INR 25 crores.In summary, now I request the session to open for question and answer.
[Operator Instructions] We'll take the first question from the line of Mukesh Saraf from Spark Capital.
Sir, first thing is on the CapEx itself. So given that you're going to be adding trucks and there was an option given under GST in terms of the input tax credit. And until last quarter, you were saying that it was still -- you were kind of figuring it out as to, you want to be under the RCM mechanism of 5% or under the 12% GST within credit. So with higher CapEx now, could you give us some sense on how that could change and how much of that...
Sorry to interrupt, Mr. Saraf. Sir, you're sounding quite softer. Can you speak a bit louder?
Yes, sure. Is this better now? Yes. So my question is regarding the input tax credits are with respect to the CapEx now. How much of a benefit or how much of a net impact could this have with respect to the input tax credit you will get on the trucks itself?
Now presently, the GST rate is applicable at 28% on the chassis. But considering the rest of the transport operators in India, most of the guys, actually, they are under 5% in a RCM method. So considering overall market, we are expecting presently 5% with a reverse charge mechanism only.
Despite the significant increase in CapEx you'll be doing, you think it will still not be beneficial for you to move to the 12% with input tax credits?
No. Basically, see, the difference between 12% and 5% is around 7%, that we have to collect an additional amount from the customers. And yes, we can use the input tax credit, but considering the current environment in the -- across the country with different operators, so still we are continuing with 5% under reverse charge. So there will be unnecessary -- again, there will be suddenly increase in cost by almost, say, 7% to the customers. Then again, we have to justify them why we are changing from 5% to 12%. So instead of creating all the mess in the market -- again, we may see some dip in the overall business and all this. Rather than giving opportunity to such kind of things, since lot of GST laws and lot of amendments happening at this stage, we want to stick to 5% under reverse charge.
Right, right. And secondly, you had mentioned about last quarter having an impact of INR 4.5 crores, INR 1.5 crore per month impact because of a lot of these services that you're taking from unregistered vendors. Does that impact continue this quarter as well, sir?
No. It has been discontinued from October. In October, there is a notification from the GST Council. They have withdrawn GST on the unregistered purchases as well as services till March. So that's why in this quarter, that expenses is not there. And another development in the current quarter is, we have given a certain increment to our employees from -- with effect from November. It was a long due actually. So we gave that benefit to the employees from November. So that is -- that impact is around -- additional impact of around INR 1 crores and INR 1.2 crores, additional increase in employee cost.
Okay, okay. Sir, despite this INR 4.5 crores not being there this quarter, our sequential EBITDA margins in the Goods segment or even overall doesn't seem to have improved too much even if you account for this extra employee costs. So, I mean, is there some pass-through of diesel that we have not been able to do?
Yes. So in the initial remark only I told you the tonnage has increased by 12% and realization has decreased by 3%.
Right, right. So -- no, so the question here is that when will you be -- will you -- do you see a sign of being able to pass-through these costs easily, especially now that you're expecting next 2 years of 10% tonnage growth? Would this come at the cost of realizations, especially [indiscernible]?
Yes, definitely. See, in the last quarter, the -- there is lot of increase in the diesel price. It has increased by almost around INR 4 in the 1 quarter itself compared to the previous quarter, yes, around -- so considering that, in spite of that we have not increased the rate, but still we are maintaining the EBITDA level because of increase in tonnage. So this is the strategy of the company as of today to have more concentration on growth with a maintenance of EBITDA at existing level.
Right, right, right, right. And just last question from my side. These trucks that you're adding , they are primarily 31 tonners and 37 tonners. So do you see utilization of these trucks -- I mean, do you see visibility of utilization of these trucks? Because you're seeing a 10% growth in overall tonnage, but obviously, the supply from your side will go up much higher given the addition of trucks and all are higher-tonnage trucks. So is there -- or do you see that you'll be able to utilize back the fill factors of these trucks? Do you see them to be quite high despite being higher-tonnage trucks?
So basically, what will happen, these vehicles will not come at a 1 single day. On a periodical basis -- actually, on a monthly basis, we'll get these vehicles. And if you see there quarter-on-quarter, we -- our tonnage has been grown by almost around 12%. So considering this growth, if we maintain the same level of growth in the coming days, definitely these vehicles will be utilized effectively. And temporarily, if any additional capacity on account of purchase, then we can reduce dependency on the outside vehicle further.
We'll move onto the next question that is from the line of Abhishek Ghosh from Motilal Oswal Securities.
Sir, just wanted to confirm the figure. So on a Y-o-Y basis, tonnage has increased by 12% and there's a 3% decline in realization, is that correct?
It is on quarter-on-quarter basis.
On quarter-on-quarter basis. So tonnage has increased by 12% and there's a drop in realization by 3%.
Correct. On year-on-year basis, the tonnage has increased by around 7% and realization has increased by around 2.8%.
2.8% of realization increase on Y-o-Y. Sir, just to get it right, so there's a 3% decline in realization on a Q-on-Q basis despite diesel prices moving up?
Yes.
Yes. So basically -- and we've still been able to maintain margins, effectively it has all come at the cost of the efficiency gains that we have seen because of the free-er movements, is that right?
Correct. See, despite of increase in diesel rate, as a percentage to the revenue, still we maintain at a same percentage. If we see the last quarter, it was around 23.75% to the revenue, increase of GT business, Goods Transportation. Whereas in the current quarter, the diesel cost to the revenue is around 23.96%.
Okay.
Earlier around 0.21%, it has increased.
Okay, okay. Because just wanted to understand one thing in terms of this increase or the decline in realizations, has that also resulted in some amount of per tonnage growth rate and -- or what is the amount of pricing power that you will have in subsequent quarters? Can you take up realization? Because diesel prices seem to be firming up even further. So is that pricing power with you? And also with e-way bill coming in now from 1st February, will some of these benefits, efficiency gains that you have seen, can that reverse?
Now basically, see, what happened this realization is on a selective basis, actually whoever which are long associated with the company on selective routes we have taken a call, but this is not -- this will not continue. And apart from that, see, now because of GST, now a lot of interaction and distribution channel have been changed. And actually, we are getting a lot of new customers. Then according to the interaction with the customers, again, by introduction of e-way bill, we may add further new customers into our foray.
Sure. Okay, okay.
Because that will bring further -- a lot of movement from unorganized sector to organized sector.
So you think that realization improvement can come in subsequent quarter as we go by?
Yes, definitely. But production will not happen. Yes, the call what we have taken in the last quarter, such kind of decrease in prices will not continue.
Sure, okay. And sir, just one -- to get one thing right, you mentioned there's a INR 1 crores, INR 1.5 crores kind of an impact because of the employee cost increase that happened in November, right?
Yes.
But if I look at on a sequential basis, you're employee cost has increased by almost about INR 7 crores to INR 8 crores on a quarterly basis. What would you attribute that to?
No. Even that I have explained in the last quarter call also. See, because of increase in minimum wages a lot of expenses have been shifted from operating cost to employee's cost.
Sure. [indiscernible].
So that's why if you see the operating cost percentage, it has been dipped -- maintained almost similar percentage, whereas employee's cost has been increased.
It's just an adjustment, nothing else.
Yes.
Okay, fair. And sir, just one last thing.
Sorry to interrupt. Mr. Ghosh, may we request that you return to the question queue for a follow-up question.
Sure.
The next question is from the line of Bhavin Gandhi from B&K Securities.
Just one question, sir. Just wanted to understand the existing neat profile of 31 and 37 tonners that we have in the fleet. So just wanted to get a sense of how much of this new orders that we have placed will be replacement and how many will be incremental capacity?
Look, this is all incremental capacity only. See, the replacement is early around 40 to 50 vehicles every year we scrap it. Yes, even sometimes it will go to around 70 to 80 vehicles. But this additional capacity is not for replacement, this is for the new opportunity what we are getting from the market. And that scrap of vehicle on account of major accident or even some of the models will be outdated, in such scenario, we will scrap the vehicle. Those numbers will be around 70 to 80 vehicles in a year.
Sure. So this -- most of this is kind of incremental capacity that we're seeing?
Yes.
And -- yes, so that's about it for my side. Sir, I'll...
So another thing is about scrap vehicle, see, in next 2 years, another 150 vehicles we may scrap.
'18, '19.
For 2 years period.
150. Sir, these are predominantly high-end trucks as in larger trucks that we are getting or is this just...
No, no, no. These are all old vehicles. But if any major -- recognized vehicle, if any major accident which are unrepairable or something given higher ton capacity vehicles also may be scrapped.
Okay, got it. And sir, over the years, over the last few years, whatever tonnage addition we have seen has predominantly happened on the larger tonnage, so I am presuming that the larger tonnage category will be relatively young, if I'm not mistaken, for us?
Yes. Because the new -- the capacity of higher capacity vehicles have been introduced recently, so that's why all the higher ton capacity are returned vehicles.
We'll move onto the next question that is from the line of Prateek Kumar from Antique Stockbroking.
Sir, my first question is regarding the tonnage growth, which you said, around 10% expectation. So this is for Q4 and FY '19 or an FY '19, FY '20?
So on an average basis for FY '19 and FY '20.
FY '19 and '20.
See, because of seasonality and all, some variation will be there.
Correct, yes.
But it's the average growth what we are discussing.
Okay. And sir, just to get numbers correct, again, because a lot of numbers were said in the opening remarks. Sir, Passenger side 9% year-on-year growth was led by how much for the passenger volume growth and realization per passenger growth?
Just to clarify on this Passenger numbers. Yes, if it is a quarter 3 or quarter 2...
No -- yes.
No, I'll tell all the period.
Okay.
So increase in number of passenger is around 12.28%, and increase in realization per passenger by around 7% from INR 954 to INR 1,023. And increase in average seat occupancy only for running buses is 4.05% from 79.6% to 83.65%. And increase in average seat occupancy and including idle and idle vehicles, it is around 7.67% from 55.8% to 63.47%. When we compare last year same quarter versus current quarter, increase in number of passenger traveled by around 5.54%, and increase in realization per passenger by around 3.42% from INR 989 to INR 1,023. And increase in average seat occupation only for running buses by 1.23% from 82% to 83.6%. And increase in average seat occupation, including idle vehicles, has increased by around 4.5% from 59% to 63.4%. When we compare 9 months increase, it has increased in number of passenger by around 3%, increase in realization per passenger by around 7% from INR 945 to INR 1,011. And increase in average seat occupation only for running buses is almost same by 82%, a 0.14 percentage increase from 82% to near to 83%. And increase in seat occupation, including the idle vehicle, is around 1.32 percentage increase from 61% to 62.47%.
Sure, sir. That's very helpful. And my next question is regarding, sir, CapEx. You mentioned one -- some CapEx over and above INR 410 crores, sir -- Vijay sir mentioned about incremental CapEx above INR 150 crores to INR 100 crores, over and above INR 410 crores. Sir, is this largely on warehousing or -- I mean, some business beyond transportation?
No, no, no. It is only for transportation business. So basically, one is, the increase in the -- for new vehicles CapEx will be in the range of around INR 400 crores to INR 410 crores. And that we have already announced Surat facility for INR 450 crores. Yes, the CapEx for 1,200 vehicle will be around INR 410 crores.
INR 410 crores, remaining on...
And we had some smaller vehicles that will be another around INR 30 crores.
INR 30 crores, INR 40 crores. Just one for 40 -- INR 450 crores.
Yes. Around INR 450 crores will be for vehicles. And Surat facility, we have already informed to you during the last quarter or even in earlier period, that CapEx will be nearly around INR 100 crores. Then apart from that, there will be, yes, small addition of some of the small properties.
Bellary, Rajasthan or Koti.
Yes, it will be another around INR 40 crores. INR 40 crores, INR 50 crores.
Okay. And sir, this CapEx, as sir mentioned, is on FY '19 or split over FY '19, '20?
Yes, it is -- it'll start from April 2018 now and ends by December 2019.
Okay. So it's spread probably equally in the 2 years.
Yes [indiscernible].Yes, including current quarter.
Okay. And then my last question is regarding, sir, this e-way bill rollout there from tomorrow, at least on intrastate basis. So how are things expected to change in terms of, I mean, general industry? Maybe for you, competition? In general, I'm asking regarding the movement. I mean, we saw a lot of stagnation in volumes, when GST got rolled out in June, July last year. So there is something of that sort of expectation this time around? Or is it very smooth this time?
No. We are completely ready for whatever changes our government wants to bring in. And basically, see, the initial issues will be there will be some software issue at the government end. See if that is the issue, then immediately, they will address. But apart from that, there will not be much confusion in the operators, especially the organized operators, immediately, they can shift it to the new bill enrollment. But for unorganized people, since they have to have a registration and all these things for every state, and even, they have to enable for e-way bill because they have amend each and every e-way bill the moment the vehicle changes or the moment vehicle has been loaded. Such kind of facilities, they have to implement. But in our case, we are completely ready with whatever changes are required.
Sir, some of the industry users who use the vehicles of unorganized players will have to completely shift their volumes, I mean, if they are not compliant. Or they will still...
Ground level, we are getting some of the interactions. Earlier, they used to use some middlemen or some small transporter. Such people, some of the guys are shifting to us. That is happening at a ground level, but substantial increase may not be acceptable -- expected at the managed level. But in the days to come, with the government-side verification process and all, definitely, the shift is going to happen.
Okay. And then my last question on biodiesel. So is the availability or pricing attractive now versus diesel, which has been going up?
Still, we are using around 18% of total quantity.
[indiscernible]
Around 12% of the quantity as a biodiesel. And there is some implication of GST on the biodiesel as well. Again, initially, they have put 18% category biodiesel. Now it has been reduced to 12%. But we are maintaining around 12% of the requirement as biodiesel on a 9 months of the year for that.
But it doesn't turn attractive despite the diesel increase?
No. Again, availability also, since cold season, especially winter season, there will be issue with the biodiesel. So in the coming quarter, after decreasing this GST rate and all, we may see some increase in the quantity.
The next question is from the line of Sandeep Mathew from SBICAP Securities.
Sir, just on the demand side, so if I remember correctly, you mentioned that...
Please be loudly, little bit.
Yes. On the demand side, so tonnage kilometer growth, if I heard correctly, you mentioned the year-on-year growth was about 7%. Now is this a number that you are satisfied with, considering that we came off -- on a year-on-year basis you compare last year, we had demonetization effect, and obviously, volumes were weaker there. So is this, on a year-on-year basis, a satisfactory growth number? Or would you think that this is something that can incrementally trend upwards going forward?
No. Basically, even in the last year same quarter, our performance was better in spite of the demonetization because of, again see, our service has not been hampered during that time. So that's the reason. Considering that development, it is a good development as of today. And compared to last quarter, the increase is tremendous, around 12%.
Right, sir. Sir -- and how does the company view this trend between pricing and volumes? I mean -- so there has been...
Little louder, please.
Yes. How do you view the trade off between volumes and pricing, sir? So the reason I ask this is that while we are expanding our fleet size by about 30% from 4,000 trucks, if we are adding about 1,200-odd, but our available carrying capacity will be significantly higher, like, because we -- our existing fleet has a significant number of smaller-tonnage vehicles as well. So there will be almost, if I remember correctly, close to 50%, 60% increase in available carrying capacity. So if we are targeting just a 10% growth in tonnage kilometers, wouldn't it hurt utilization? And hence, my question was also, as how would you view pricing going forward. Would you be more competitive on the pricing front to gain more volume growth?
No. Basically, this reduction in realization is a onetime exercise. So see, people were significantly considered about this abolition of check post and improvement in the kilometers and all these things. So that's why, on selective basis, we pass on that benefit to them. And on a macro level, we have not increased any freight rates in the last quarter. But this kind of environment or this kind of process will not continue future. It is a onetime exercise, what we did. But apart from this, this CapEx what we are planning, it is -- it'll add on every -- on a monthly basis. See, the entire capacity will not come at one go and, again further, there will be idle capacity or something. On a periodical basis, actually, we can change the vehicle numbers as well. So considering that over a period of next 2 years, we are targeting around 10%. But apart from that, there will be lot of -- interstate movement is going to increase. On account of that, there will be improvement in the realization also. Since GST, what is happening, rather than from state warehouse to distribution of last mile, now anybody can sell his goods sitting at anywhere in India. So we are hoping that the journey time or journey kilometers from one place to other place, that may -- that will going to increase in GST enrollment in the coming days. Basically, the interstate transactions are improving.
Right, sir. So if I look at tonnage kilometers, which is a function of lead distance and increase in tonnage growth. So if you're telling that there is going to be an obvious increase in lead distance, then shouldn't tonnage kilometers actually increase at a much more higher rate than 10%, sir?
Exactly. 10% is only the growth in tonnage, not a 10 kilometer.
We move on to the next question from the line of Pravin Yeolekar from CIMB India.
So Pramod here. A couple of questions. One, congrats for this largest-ever CapEx which you are taking up. But don't you think the smaller trucks will be now available at a lower price, and hence, you can attach more vehicles at attractive margins? One. Second, do you -- does sir Sankeshwar think that there can be a position opportunity in the trucking business, in a lump sum basis since they are not able to transform to the organized sector?
No. Basically, see, the one is, in terms of availability of the hire vehicles, the maintenance of these vehicles, even the requirement of the vehicles what we need, basically, the bigger size vehicle, and each will be covered with full body, because...
Long-distance.
Long-distance vehicle should be available with all the suitable permits and all. Basically, what will happen if we engage more number of outside vehicle, then we will end up with -- paying of more claims, more damages, more tariff and all these things. And we can't...
Maintenance...
Yes, we cannot -- we can't maintain the time of service. There will be delay in service. And we'll not have proper control on these vehicles.
On tonnage carrying, will be less.
Yes. Tonnage carrying, because of mix of our vehicles, what are we -- what used to service. So there will be lesser tonnage carried in those vehicles compared to our vehicles because more space is available.
Also special [indiscernible].
Yes. These are all special vehicle made for this LTL segment. That's why we don't want to engage more of outside vehicle, that's one. And in terms of acquisition, see, there are not real considerable players in the industry to acquire their businesses. See, basically, we don't want to mix their wrong practices into our business.
We are capable of increasing beyond.
Sure. And sir, follow-up to the same. If you can give us some sense, which new segments you are seeing more traction, on any client wins you have, to give this amount of a confidence in terms of adding capacity?
No. Basically, based on the interaction with customers, some of the customers earlier, they used to give only selective route service to us and some of the routes to other operators. And now actually, since because compliance percentage is increased, now the complete solution, they are asking us to provide the service for their -- all their segments. And apart from that, earlier, the movement toward has shifted from each state warehouse to the last mile, there were not much of a interstate movement, especially for our less than truckload category. Since our model is more suitable for less than truckload for interstate transactions, there are direct movement of goods subsequent of interactions, or changes are happening at the customer's level. So for that purpose, actually, they don't want to depend on a small transporter or unorganized people. Because again, for every interstate movement, e-way bill is required. Again, GST compliance is required. All these things.
We move onto the next question, that is from the line of Abhishek Ghosh from Motilal Oswal Securities.
Sir, just one thing. We have mentioned that we have added about 47 new locations. So is that in the existing region where we predominantly have -- so are we strengthening our network there? Or are we going into new locations or new region?
These are predominantly in our existing area of operation.
[indiscernible]
And especially it is, like, places like Mumbai and all. Earlier, there was operator restriction. Now the [ operate ] has been abolished. That's the reason, actually, people are directly booking coming from Mumbai and to Mumbai. So just I'm giving one example. Like, there are lot of local taxes changes were -- have happened post-GST. So considering these changes, we open new branches. But it is not under a purely new area of operation.
Okay. Sir, also with respect to the CapEx that we're going to incur for those 400 trucks -- 1,200 trucks, which is almost something like in excess of 30% of our current fleet. So will that also mean that we will venture out into new region? Or we will typically stick to our core operation regions as whatever we have?
That analysis is going on. Basically, see, earlier, we have not expanded to the newer area because of their practices.
Sure.
[indiscernible]
Yes, they are wrong practices. Now under GST, see, everybody has to work under same platform. So we are analyzing such opportunities in newer areas. So we may open -- expand our business to these...
East and northeast.
East and northeast places.
Actually, we have moved on. Because of the better taxes, now we are [indiscernible].
Okay, okay. And sir, just one more thing with respect to this 1,200 trucks that we have ordered. In case if there is a downturn, say, 8 months, 12 months down the lane and you see that the tonnage load is not as expected as we had estimated earlier, is there a way where we can change in the order of the incremental trucks that will come in? Or is there a provision there? Or there is no provision there?
Yes. It is -- see, one is there is completely price protection agreement, that's one. And second thing, the order will be, on every month, we will place our order.
Okay. So there's a provision for you to upsize or downsize your order to that extent?
Yes, it is.
We'll take the next question from the line of Keyur Pandya from Prabhudas Lilladher.
The question is, sir, you have seen growth in passenger vehicles...
Be loudly, please, little bit.
Sorry. So we have seen growth in Passenger side, Passenger transport this quarter as well as the profitability. So since we have good visibility in the Goods Transport, can you give some visibility for the bus transport as well, probably for the next year or so? I mean, since we are not adding vehicles, are we seeing -- will we see better utilization or better realization? What is the -- your outlook on the bus transport segment?
Basically, see, this quarter, yes, we did better realization, bus segment. And when considering 1-quarter result, we will not decide on expansion or something. We will be very conservative on this segment. And moreover, we are waiting for a lot of policy changes at the government level also. So considering those developments, we will defer expansion plan.
Okay. But any outlook for this segment, the way you target out for goods...
Apparently, see, we will maintain the same number of vehicles. If any replacement of anything is required for the existing vehicles...
[indiscernible]
Yes, those vehicles will be reduced. But we will maintain the same level of vehicles.
The next question is from the line of [ Jay Adhoora ] from Birchwood Capital.
Sir, I just wanted to know in transportation, people -- which are companies face a lot of problem relating to the availability of the drivers. And I think almost on all VRL trucks, there is a big mentioning wanted drivers. I wanted to know, what is the current status? Do we face problems relating to the availability of the drivers? And because coming forward, we are increasing our -- we are adding 1,200 more trucks to our fleet, so...
[indiscernible] we had 4,300 vehicles. We average 200 vehicles we use to hard for want of drivers. In India, actually, there is shortage of drivers, more than 20%. Even who are having 10 vehicles, 4 or 5 vehicles will be standing in want of drivers. Because, of course, a lot of incentives and policy, we are getting now these good drivers. As of today, we are having 4,500 vehicles. And for all the vehicles, we have a driver. And we have made so many changes in our policy, like appointment of drivers, appointment of drivers for restricted in a few locations like Bangalore, Hubli and Delhi and all. Now we are spread across the country. Any vehicle we are allotting to any new area or any branch required, that person should manage to get a vehicle. We are sending the vehicle there, he is to manage to get the driver. This policy is clicked very well. And even if we add 2,000 vehicles also, there will be no problem in adding the drivers, particularly, we are not for other transporters.
Okay. And secondly, are we targeting more towards a full load division? Or we are mostly confining ourselves to...
No. Our goal is, all the time, partial only. For one side, we have to carry some full loads sometimes, that is continue to grow. As the number of peoples grow, that also will grow little.
Okay. Sir, and the…
Sorry to interrupt, [ Mr. Adhoora ].Sir, may we request that you return to the question queue that, there are participants waiting for their turn. The next question is from the line of Vikram Suryavanshi from PhillipCapital.
So what was total CapEx done for 9-month or full year expected?
In the current year for 9 months, we hit a total CapEx of around INR 31 crores. And for GT segment, it is around INR 22 crores. In that vehicles -- for vehicles, around INR 14 crores. And some land and building, around INR 5.5 crores. And others, like, forklift, pallets and all, it's another INR 2.5 crores.
Okay. And what would be estimate for fourth quarter?
There will not much there in CapEx.
Okay. Last question, sir, on the -- sorry.
In whatever vehicles we plan, if they start early delivery, then that additional CapEx will be there.
Okay. And last question, sir. Can you share the -- what was fuel -- average fuel cost for this quarter as well as 9 months, rupees per liter?
It was around INR 58.
For quarter?
Yes, quarter-on-quarter. But our [indiscernible] cost is increased from INR 55 to INR 56.5, because of biodiesel and all these things.
Okay. This is for quarter or 9-month?
Quarter. Quarter-to-quarter.
We'll move on to the next question, that is from the line of Prateek Kumar from Antique Stockbroking.
Sir, my question is on the employee cost. You mentioned there have been some revision. So have been there more employees, which are bought on roles? Or I mean, in terms of total number of employees of company, have they remain similar to FY '17 levels?
No. It is almost similar. Basically, the change in structure has been done. See, all year, we have used to say -- see, most of the employees supposed to be, in terms of labors and drivers, they are on variable pay. But out of their payment, some of the amount will be classified as salary. Since due to increase in minimum wages by many states in the last year, so that portion of variable, as the salary portion, has been shifted from operating cost to salary cost, employee cost.
Sure. And sir, one question on your -- can you repeat your net debt figure for the 9-month ending period?
As of now, around INR 45 crores.
INR 45 crore.
Yes.
The Next question is from the line of Rakesh Vyas from HDFC Mutual Fund.
My first question relates to the employee cost. So based on the raise that we have done from November, what is the impact on full year basis on the overall employee cost?
Full year basis, monthly, around INR 1.2 crores increase from November.
Okay. So almost INR 12 crore to INR 13 crore on a full year basis. And so we...
No, no, no. INR 15 crores.
Sorry. Yes. Sorry, sorry. Yes. I got you, okay, INR 15 crores. My second question relates to the lorry hire charges. So what is the total lorry hire charges this quarter?
This quarter, total lorry hire charges is INR 31 crores. And last quarter, it was around INR 25 crores.
Okay. And if you can also clarify as to what is the growth in GT kilometers for own vehicle versus hired vehicles year-on-year.
Year-on-year, you want? Yes, year-on-year, the hired vehicle kilometer decreased by around 16%. And own vehicle kilometers, just 1 minute. Yes, own vehicle is decreased by around 2.6%.
So I just wanted to check. Last year also, the lorry hire charges were almost similar in last quarter.
Yes.
Whereas, the GT kilometers from them has declined by 16%. So we have seen a significant increase in the general charges per kilometer basis.
Correct.
Whereas the diesel price on year-on-year basis had not increased that much.
No. Basically, sometimes, it depends on the route also, for the availability of vehicles and all seasonality. Still, in second and third quarter, especially the vehicles from Surat, we used to pay the higher lorry hire charges, because it will be always one-side-loaded. And the Goods Transport kilometers for our own vehicles compared to last quarter and this quarter, it has been increased by around 7%.
Yes. But I'm just wondering, and sorry to keep harping on this point, but your volume growth year-on-year on Goods Transport is 7%.
Quarter-to-quarter, right?
No, no, year-on-year, sir. 12% was quarter-on-quarter, right? So 7%, you said, was close to year-on-year.
Year-on-year. Yes, compared to last year, same quarter versus this quarter.
Yes, sir. It was 7%. Check?
For 9 months, it is decrease of around 2% -- or 1.29%.
Yes. Whereas we have seen the own vehicle GT kilometers actually declining by 3%, 2.6%, as you said. So I'm just slightly concerned as to what is happening here. See, despite seeing the volume growth on year-on-year basis in third quarter, the total running has actually come down. And if we are targeting a 10% kind of volume growth for next 2 years, would this lead to a lower than 10% kind of GT kilometer growth?
No. Basically, see, we are pushing the utilization of the own vehicle. And even if we see the compare to last quarter versus this quarter, the kilometers have been increased by almost 6%. One is on account of the abolition of check post and all these things.
We will take the next question from the line of Jayakanth Kasthuri from Dolat Capital.
This is just -- I was just wondering, once you have said that announced you would be buying 1,200 vehicles. So I was just wondering, is it possible to, like, [indiscernible]
Please speak loudly.
Hello, sir? Hello. Yes. Hello, can you hear me, sir? Hello?
Be a little bit loud.
Hello, sir?
Yes.
Yes. So I was just thinking, is it possible for your -- or from your end to hire vehicles, around 600-odd vehicles, rather than buying it out from the market? So I was just wondering because we can...
No. As explained, the outside vehicles will not be much suitable for our operation, for less than truckload operation and especially this hub-and-spoke model. So considering a lot of advantage, what we are having from our own vehicles.
We will take the next question from the line of [ Jay Adhoora ] from Birchwood Capital.
Sir, I just wanted to know, is there anything we can do about the availability of the biodiesels? So -- and to what extent can we increase our percentage [indiscernible] 11% to 12%. How fast can we increase this?
No. We are pushing very hard to get even biodiesel. See, because of nonavailability and because of, again, the in between the GST has been impure, put on biodiesel also at 18%, again, they reduced to 12%. See sometimes, we increase it up to 26%, 27% of our requirement. So depending on the availability, depending on the climate, definitely, we are more compelled to use biodiesel. But it's completely not in our hand.
Okay. We are procuring this from small vendors? Or from big organizations, like [ RSV ] and something like that?
No, no. They will not supply any biodiesel. This is generating by some suppliers from [indiscernible]. And we judge that based on our technical verification and all, that biodiesel is more suitable for us, as compared to -- some of the people, they are supplying biodiesel and all. So that may not be up to the -- quality will not be good, and it will not be suitable for trucks or buses. So sometimes, we will not accept such kind of things. So we verify technically. And if it is suitable, then only we buy such diesel. So we identified such suppliers, and we are buying only from them.
Okay. 2 last questions from my side. Sir Surat that you are doing of around INR 100 crores, are you developing or will it be...
Yes. It will be the transshipment hub as well as we will have some booking office, booking and delivery offices also.
Okay, okay. And lastly, are we...
Moreover Surat, it is not exactly only for Surat, anyway, we are having good business. But we want to connect the Surat up to Rajkot and even moment to Ahmedabad, all these things. So totally, we want to increase much of our service level in that area. Hello?
Sir, the lines of the current participant has dropped off queue. And that was the last question.
Okay.
Ladies and gentlemen, on behalf of ICICI Securities, this concludes today's conference. Thank you for joining for now, and you may now disconnect your lines. Thank you.