VRL Logistics Ltd
NSE:VRLLOG
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Ladies and gentlemen, good day, and welcome to VRL Logistics Limited Q4 FY '18 Earnings Conference Call 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. Thank you. And over to you, sir.
Yes. Thanks, operator. We are pleased to host Mr. Sunil Nalavadi, the CFO of VRL Logistics, to discuss the results of Q4 FY '18. Post the brief opening remarks from Mr. Nalavadi, we will open the floor for questions and answers.So without further ado, it's over to you, Mr. Nalavadi, for the opening remarks.
Yes, thank you, Mr. Mitra. Good evening to all. This is the earning call of VRL Logistics. I'm Sunil Nalavadi, CFO of VRL Logistics.To summarize -- first I'll summarize the annual numbers of FY '18. During the financial year, the total revenue of the company increased from INR 1,812 crores to INR 1,936 crores, which is a growth rate of around 6.85%. This growth is mainly contributed by Goods Transport business segment, which has grown by around 6.39% from INR 1,426 crores to INR 1,517 crores. And our Passenger segment achieved a growth of close to around 10% from INR 326 crores to INR 359 crores. And the overall EBITDA of the company increased from around INR 227 crores to INR 247 crores, with a growth of around 9%. And percentage to total income has increased from 12.4% to [ 12.83% ]. The Goods Transport segment, basically, the growth is mainly on account of an increase in the freight rates. And in terms of tonnage, we maintained most of the [ high incremental ] tonnage that we built last year. And in the current year, on account of demonetization and drive to impose GST implementation, the growth tonnage was badly impacted, and in some of the months, it was negative growth in the range of around [ 3% to 21% ] in the Good Transportation segment. However, after complete implementation of the GST, the tonnage growth was really picked up well from September '17 onwards. And we are showing some good growth in tonnage afterwards.We believe that this change in tax regime to GST One Nation, One Tax is going to benefit the organizations strength [ for vehicles ]. And considering this major change in the tax regime, we are in a position to maintain the tonnage almost equivalent to the last year.Further, after continued implementation of the e-way bill, this growth will improve further. And the EBITDA -- the changes in EBITDA for Goods Transportation is mainly on account of changes in the fuel cost. The average dealer price is increased from INR 59 to INR 66 as compared to from April '17 to March '18. However, we counter this increasing fuel cost by increasing the procurement of biodiesel by 2.5% as compared to last year. And in addition to this, we got a cash back, which is offered by the government, which was around INR 2.5 crores as compared to last year which was hardly around [ INR 70 lakhs ]. And also, we got additional financial benefit from LTL to the tune of around INR 505 crores as compared to last year. In result of this fuel procurement cost per liter, in our case it increased by around INR 55 to INR 57 as compared to average increased surge in the market around INR 58 to INR 61.Further, in the current year, the Lorry hire charges also declined almost around 1% to the revenue, which is on account of increasing the kilometers covered by our own vehicles. And another major cost variant is around toll surcharges, which is increased around from INR 88 crores to INR 95 crores. However, percentage to the revenue remain constant.In spite of increasing Toll Charges in our own vehicles, we have implemented [indiscernible] for all our vehicles. Because of this benefit, we got a cash back of around INR 5 crores in the year, compared to INR 2 crores in the last year.Another major change is the employee cost, which is overall increased by around INR 266 crores to INR 346 crores, and in GT segment, the increase is from INR 223 crores to INR 293 crores. This increase is around 3.64% of the revenue. The increase in employee cost is mainly on account of increasing minimum wages, that has been resulting in increasing provident fund and welfare contribution as well as bonus and gratuity valuation. And also, from November onwards, we have given a small increment to our employees. The rest of the expenses are in control. This has been resulting into maintenance of our EBITDA of Goods Transport segment from INR 176 crores to INR 186 crores and similar margin percentage as compared to the last year.Increases to Passenger segment during the year, around INR 23, have been reduced.
[Operator Instructions][Technical Difficulty]
Ladies and gentlemen, thank you for patiently waiting. We have the line for the management reconnected. Sir, you may go ahead.
[ I think I ] was talking about the fuel cost during the year, the fuel cost increased a substantial increase in the fuel cost -- we conquered increase in fuel cost by incurring -- by increasing the procurement of biodiesel as well as we got from good cash back the government [indiscernible] and as well as some redemption benefits from agri team. And in the last year, even the lorry hire tariff had been reduced by almost 1% of the revenue compared to last year, which is on account of increasing kilometers for the [ new owned ] vehicles.And the major change in other expenses is about the employee cost. It increased in the -- from INR 88 crores to INR 95 crores. However, the percentage to revenue remained solid. The employee cost for all increased from INR 226 to INR 346 crores. And in GT segment, this increased from INR 223 crores to INR 293 crores, increased by around 31%, and percentage to income increased by around 3.64%. The increase in employee cost is on account of increase in minimum wages, resulted into increasing Provident Fund [indiscernible] and gratuity valuation and the amendment to the gratuity act, increasing the limit of INR 10 lakhs to INR 20 lakhs. And we provided a small increment to the employees from November 17 onwards. We're having a good control on other expenses. This has resulted into increasing EBITDA for Goods Transport segment from INR 176 to INR 186 crores, with a similar margin percentage as compared to last year.With respect to passenger travel segment is concerned, in spite of continuing numbers decline in the number of [indiscernible] compared to last year, the revenue of Passenger segment is increased from INR 326 crores to INR 359 crores. This is mainly on account of increase in the occupancy level as well as increase in the realization per passenger. This has been resulted into increase in EBITDA of this segment from INR 37 crores to INR 46 crores and in percentage to revenue from INR 11 crores to INR 14 crores. With this, the overall EBITDA presented increased from INR 227 crores to INR 236 crores, with a growth of around 9%, and percentage to total income will increase from 12.5% to 12.83%. With respect to changes in the depreciation since there is normal CapEx in the current year, there are no much changes in depreciation expenses also. And with respect to the interest cost, there are substantial savings in the finance cost in the current year. It is mainly on account of reduction of net debt from INR 174 crores to INR 63 crores.And another important note to be looked at here, as of now, all our vehicles are debt-free. We don't have any debt in our vehicles. And further, considering our implementing the gearing ratio as well as debt-equity ratio, our debt rating is improved from A minus to A [indiscernible] positive outlook. The resulted from this the PBT of the company has increased from INR 105 crores to INR 139 crores, with a growth of around 32%. And percentage to total income has increased from 5.8% to 7.2%. Resulting to this, the profit of the year is increased from INR 70 crores to INR 93 crores with a growth of -- at the rate of 31% and percentage to total income is increased from 3.89% to 4.78%.When we compare the quarter-on-quarter, year-on-year basis, there are -- the Goods Transport segment is -- the revenue of Goods Transport segment is increased by 11%, this is mainly of increase of tonnage by 7% and increase in realization by 4%. This has then resulted into [indiscernible] of the expenses. And with respect to PT segment, there is a good improvement as compared to the quarter previous year versus current year. Now with this, I request the participant to open the question-and-answer session.
[Operator Instructions] The first question is from the line of Shrinidhi Karlekar from HSBC.
On this, GT business margin have -- sequentially margins have corrected quite a lot. So it is like fuel price hikes is passed on immediately or despite the big 7% volume growth. So [indiscernible] I mean, how is the -- how do you see competition intensity on the market that you need to pass on increasing fuel cost to your consumers? I just wanted to have help to understand.
Well, definitely, considering development, we have already taken a call to increase our freight rate, which are effective already in the our freight rate after this March.
Okay. And how much are we looking, in ballpark? And would it sufficient to pass on entire fuel hike that has happened in recent times?
Yes. Periodically, we are increasing the rate. And considering out route wise analysis, we are taking it all. And basically, from May 1, we have already become increasing -- we have increased the freight rate. As well, we are reconsidering some of the -- which are the route, which are the segments, which are left over in the month of May. Yes, we are thinking to increase further in the days to come from the -- from the June 1, we are working on that.
As in last couple of quarters, you achieved a 17% kind of volume growth. How do you see volume growth in FY '19 volume growth outlook?
Just as we shared even during the last call with our Chairman, we are very much comfortable to increase our turnover growth rate. We are expecting around 10% year-on-year.
Okay. And last one, if I may. I just wanted to know the number, how many of your vehicles are currently more than 10 years old and 15 years now, both in terms of absolute number as well as tonnage capacity?
It was a number we covered in the presentation. Just a minute. There are now around 1,076 vehicles, which are more than 5 years, and around 2,100 vehicles, which are seating at the book value of INR 1. These are all across 9 years, because we are depreciating these vehicles over a period of 9 years in our books.
As well in tonnage terms, it would be a lower number, right? Or...
Currently, it's a lower number.
And will you be reporting to share a ballpark how much will be the capacity? Because I am -- this question is really coming from scrappage policy. If it all comes, how many vehicles needs to be replaced?
Vehicles, especially the cabinet, now they are planning to announce this scrappage policy from April 1, 2020. Basically, the idea is, prior to [indiscernible] planning to move of the group. But in our case, the total number of vehicles [indiscernible] will be hardly around 700 to 800 vehicles. But in terms of percentage of capacity-wise, [indiscernible]. It will not be more than around 1%.
Considering the overall capacity?
Oh, sorry, 10%.
[Operator Instructions] The next question is from the line of Mukesh Saraf from Spark Capital.
Sir, just going back to the Goods Transformation segment, you said you have taken a price hike in May. Or have you taken a price hike in April and May, sir?
No, no, May, we have already taken.
On April you have not taken anything?
No, no, no.
Okay. So the first hike you have taken was in May?
Yes, 1st of May on certain segment, almost around 60% of the Goods Transport we have increase.
Okay. And the increased quantity will be sufficient to cover the hike in diesel [indiscernible].
Yes, definitely, they're sufficient, considering the increase in fuel cost as well as increase in other expenses like employee cost we have taken discount. And whatever is around, let's say, 20% of the segment of Goods Transport business, that we were able to increase from 1st June we are working [indiscernible].
And just going back from previous quarters, sir, you have mentioned that there was certain routes and certain, say, customers that you are pricing lower on that, give some discounts because of some older car, they're ending in the third quarter. So that is -- nothing of that sort is there in the fourth quarter, sir?
Fourth quarter, again, overall, Good Transport segment the revenue increased around 2%. But the overall tonnage increased by 4% and around 1%, 1.5% we gave discount to the customers.
we have given further discount in the 4Q also, sir?
Result of that the EBITDA percentage little bit constrained, as compared to last year as well as compared to quarter 3.
So why is it, sir, because you said by third quarter most of those deals -- contracts should end?
Yes, that was true. But actually, what happened, some of the big customers, considering the moment abolishment of check post and other things, actually they demanded to decrease the rates. But keeping in mind growth in tonnage we actually will take call to give concession to freighters.
So these discounts then continue further, at least until [indiscernible]?
That is already over in quarter 4, but in this quarter as I told you we already increase the rates. Further, we are going to increase in some segment from June onwards.
Okay. And secondly, are the time line for the additions of these new trucks, the announced 1,200, those still impact?
Yes, some of the vehicles are in pipeline now.
Okay, and that is -- you start adding about 50 trucks a month [indiscernible].
Even the manufacturer is facing some supply issue, but [ not a problem ] based on whatever terms we agreed with them. They are in the pipeline [indiscernible], not an issue.
Okay. And just one more thing on the Surat facility. Could you give some kind of time line of when could that start and what kind of new business that can bring in terms of whether it's channels or any new segment that you are entering there?
Basically, in Surat, we have not tapped the market as we covered in the Southern India, basically. [indiscernible] Gujarat and rest of the [indiscernible] we are planning to tap the [indiscernible] or even at a district level [indiscernible]. And Surat facility is basically to improve more of our business from Surat to rest of the country. Currently, we are in a position to -- because of lack of infrastructure, we are unable to do much in the Surat to rest of India. We are [ now ] concentrating on the Surat [indiscernible]. Now after this facility, actually we want to open up the market from within the [ west ], to west to north, west to east, like that. That's how the Surat facility is going to benefit us.
And then...
[indiscernible] everything is done [indiscernible].
Okay. So around -- any time line you can give on that, sir?
It may take around 2 to 3 months to initiate our initiative, but completion may take another year or so.
Another year, okay, okay. And just finally, so we are getting a lot of rumors on, I don't know, but rumors on fuel coming under GST given that the fuel has hiked so much. Are you getting into [indiscernible]?
[indiscernible]
Okay, okay, right, sir. So we continue with the 5% GST that we had in [ March numbers ]?
Yes, yes, yes.
[Operator Instructions] The next question is from the line of Vikram Suryavanshi from PhillipCapital.
Sir, basically, I wanted to get clarity on this quarterly number. What are the volume growth in the GT segment on Y-o-Y basis in this quarter?
Y-o-Y, the total increase is around -- the increase in revenue is around 11%.
And the volume growth or tonnage growth?
Increase in tonnage is by around 7%. And increase in [ realization ] per tonnage is around 4%.
All right. And in case of passenger, how was the passenger total Y-o-Y basis in the fourth quarter?
In passenger segment, again, the revenue increased about around 10% from INR 76 crores to INR 83 crores.
And how much of that was due to Passenger's growth?
The increase in passenger travel increased around 5% and increase in realization by around 6%.
Okay. That number you gave is a Y-o-Y number?
Yes.
Okay. And how about the load -- passenger load factor?
That increased around 5%.
Okay. But in terms of percentage, something [indiscernible]?
In terms of numbers of passengers?
No, no. Passenger load factor, in both segments?
Occupancy level?
Occupancy level, yes.
Yes, occupancy level increased by 5%.
Okay. Yes, I know that, but in terms of percentage, how much [ it is] is it 80%, 70% or 90%?
It increased from 80% to 85%.
Okay, fair enough. And any biodiesel share during this quarter?
With respect to biodiesel, normally, the fourth quarter EBIT is a bit lesser, but anyway I'll share you the number. Yes, I mean, year-on-year basis, the overall quantity increased around 33% in biodiesel. Last year, there was certain issues.
Okay. So percentage of fuel consumption, how much is that?
In terms of percentage to fuel cost, let's say up to around 4.5%.
4.5%. And now the prices for diesel has increased so that has improved [ our visibility ] or availability for biodiesel. And are you seeing more availability or still, there is concern?
Yes, we are working with fuel suppliers. I don't know how much is it. But currently, we are maintaining around, let's say, 13% to 15% of the total quantity required. We are building in biodiesel. [indiscernible] percentage increase.
Okay, got it. And my next follow-up question, to clarify. Average diesel price in the fourth quarter was around INR 57 or different?
Yes, it was, quarter-on-quarter, actually...
Yes.
It is increased from INR 58 it was there in Q3. The pricing increased to around [ INR 61.8 ].
Okay, got it. For fourth quarter?
Yes, under fourth quarter.
The next question comes from Abhijit Mitra from ICICI Securities.
Quickly, some more data question. On the Goods Transportation segment, can you highlight what's GT kilometers, both owned and hired and how that's moved in the quarter, on a Y-o-Y basis?
Sure. Yes, that's still -- on a quarter-on-quarter basis, the GT kilometers increased around 4.7%, and owned vehicle kilometer increased around 4.2%, and hired vehicle kilometer increased around 9.5%. And when you compare to last year same quarter, the total GT kilometer increased around 5%. And owned vehicle kilometer increased around 4%, and hired vehicle kilometer increased around [ 16% ]. On a full year basis, GT kilometers is almost similar compared to last year, and owned kilometers increased by hardly around 0.5%. and hired vehicle kilometers decreased by around 9%.
Decreased, you say?
Yes.
Basically, in the second half, you have seen more...
Yes, more kilometers [indiscernible] vehicle. And the hired vehicle kilometer also increased, but in percentage to overall kilometers operated, it is -- I'm not sure. And in first half, what happened, most of the kilometers were covered by owned vehicles because of lesser demand and everything.
All right. All right. And what about this lorry hire charges as a percentage of revenue, that is how much in this quarter?
Yes. In this quarter, it is almost the same compared to last year. Hardly [indiscernible] [ 4 ] percentage increase in spite of increasing the kilometers. On year-on-year basis, it is, again, similar, [ 0.27% ] increase. And full year basis, it is decreased by around 1%.
Right. So last quarter, you said it was INR 30 crores and it's supposed to stay around the same levels?
Yes.
The next question is from the line of [ Anubhav Kumar ] from Antique Finance.
This is Prateek from Antique. Sir, my first question is regarding the price hike. I don't know if this was discussed previously in the call. But have you taken any price hikes during Q4 [indiscernible]?
No, Q4, we have not taken any increase. In fact, we have no [indiscernible]. There hasn't been any room to decrease in the overall chain [indiscernible] by around 1%, 1.5%. But in the current year, we have [indiscernible].
[Operator Instructions] We take the question from the line of Prateek Kumar from Antique.
My call was disconnected. Sir, my question is regarding price hikes during Q4. Did you take any price hikes or, as you said, you're doing more discounting and that's primarily the reason are not able to pass through the higher diesel costs?
No, no. On exception basis, in Q4, again, we extended the -- some discount facility to some of the [ existing ] customers. And so as a result, there's been a decrease in realization by around 1%, 1.5%. But overall, tonnage has increased by around 4% in this business. But that trend, current year, it will not continue, and we have already taken a call on the rate increase.
So Q-on-Q, our realized revenues have increased by around 3% in GT segment. So backlog is driven by, I mean...
Yes, increased by tonnage by around 4% and decrease in realization by around 1%.
Okay, okay, yes, that answers my question. And sir, similarly, in Passenger segment, what was the Q-on-Q realization gain?
Passenger overall is decreased by around 11% compared to the quarter 3, which is a off season. And in terms of realization, yes, it is a decrease in realization by around 6%.
By 6%. Okay. And sir, regarding employee costs, now we've closed the year at around INR 345 crores, INR 346 crores. What is the now next leg of employee cost increase like we had in Q1 FY '18? Should expect similar hike from Q1 '19?
No. Basically, it is -- last year, we have already effected the increments from November 2017, and there are no new plans to increase the employee -- increment to the employees in the current scenario. But in the last year, apart from the increment, because of change in the regulations, one is around [indiscernible] minimum wages that had been resulted into increase in provident fund [indiscernible]. And apart from that, there have been no [indiscernible] in '17. And these are the changes effected to increase in employee costs apart from whatever increment we provided to the employees.
So sir, like cases, there are shift from operating cost to the employee cost.
The moment minimum wages is increased, so completely we are not increasing the pay scale. Some of the expenses, certainly, we have shifted from their incentives to their salaries. The burden on the company is only with respect to statutory contribution, not on the increase in the salaries. [indiscernible] increase in minimum wages. Earlier it was [ INR 6,000 ] normal waged employee, that has been increased to around INR 11,000 t0 INR 12,000, which is almost double. But our salary is not increased, our employee cost is not increased [indiscernible] which is most of the expenses being shifted from operating expenses to the employee costs. Only with respect to statutory contribution, that has become [indiscernible] in the company.
Okay. So we should have, like, a general 6% to 7% increase over INR 346 crores in the next year?
Yes, on an overall basis, at least around 8% to 10% increase in the year because this effect has been taken in the month of November. So now the full year basis, that increment will continue.
Okay. And sir, what was the exit, like, number of employees in FY '18 versus FY '17?
There are not much changes. The total number of employees are in the range of around 19,000 to 20,000.
19,000 to 20,000?
Yes.
Okay. And just, sir, one last question. Have I heard right earlier comment in the call that when the scrappage policy comes, we will have to scrap around 10% of our total fleet size in the segment?
No. It is 10% of the capacity. But in terms of number of vehicle, it will be more because those actually will need to operate with the smaller vehicles.
So in terms of vehicle, how much it would be?
Vehicles is in the range of around 800, 700. But in terms of capacity, it is around 10%.
The next question is from the line of Vikram Suryavanshi from PhillipCapital.
Just wanted to get your views on e-way bill. How is your experience in terms of any reduction in turnaround time or operating cost? And how is the compliance of this implementation?
Yes. Basically, the government initially taken that in order to implement this e-way bill from April. But because of -- earlier they have taken in the last year itself, but they were not able to provide the most sufficient to clear the backlogs or there were lot of issues in the implementation. But in the next year review of implementation, the system is very -- working very fluently. There are certain operational issues. Basically, we are also very open. Even anybody can put a query on the e-way bill [ and get a ] reply -- they are replying to the queries. And when there are changes in the software or something is required, immediately they are approving. In terms of generation, in terms of -- about delay in the generation, absolutely, there are no [ cuts being made ]. There is a very [ clear ability ] in the operation, and this leads to [indiscernible] need more training to our people. They are getting training -- already we can give this training only on-job training that is already in force. And apart from that, initially, there were certain hiccups only with respect to operational issues, not with respect to any software facility or something like that. Now most of our people have been trained, and even system is working very smoothly. And I think coming from June onwards, almost the entire country, both within state, outside state, the e-way billing will come into force. But one good thing is because of this, the movement through unorganized people, they -- it may be difficulty for the customers who are depending on the unorganized people because a lot of compliance clearly needs to be done here. So with respect to expiry date is concerned, with respect to filling up of details in the e-way bill, all this and that things. So once we train our people, definitely we will have [ it easier ] compared to other operators in [ this field ].
Okay. And in case of turnaround time, are we seeing any significant reduction or it's not that material?
No, turnaround time, see, after this abolition of check post, almost the turnaround time is improved. But during this GST to e-way bill period, absolutely, there were no verifications. But now the authorities are getting started with verifications in some of the routes. That may delay into the service, but not like what the check post scenario was. Compared to that, there are lot of improvements. But in e-way bill also, the people in authority have started already verification process. That will lead to some delay in turnaround time, but not substantially as compared to the check post period.
And in terms of customers, are they open to move to the, like, 12% forward mechanism or still will continue with 5% only?
No, basically, based on the interaction with our customer segment, we've decided to continue with the 5%. But going forward, definitely, the reverse charge may not be continued, but definitely forward charge is a -- even government may push to convert into forward charge with a little bit GST rate.
The next question is from the line of Jay Kakkad from Haitong.
So first is on the scrappage policy what you mentioned, it is for more than 15 years, right?
No, 20 years. Now cabinet has proposed a plan to implement this scrappage policy from 2020 onwards. [ The response onwards ] if they are registered prior to 2000, those vehicles should not be on the road.
So it is for more than 20 years. And which -- number that you talked about, 10% capacity, that will be as on 2020 10% capacity.
As on 2020.
Okay, okay. So you, basically, will prepare to replenish little bit smaller vehicles, which will be last book [ half-page ] kind of vehicles.
Yes, yes. We are not depending much on these vehicles. And moreover, these are all older vehicles. We are operating in very small routes, and in predominantly between hub-to-spoke and spoke-to-hub. So there eventually, it's not an issue to take an alternative vehicle or even to add some smaller vehicles.
Sir, one question is again on the e-way bill side. There are some states like Karnataka and all, they have already implemented intrastate movement, also e-way bill.
Now except for Tamil Nadu, rest of the country is having intrastate also.
Right, right. So the situation that we saw immediately after GST, there are a lot of unorganized players where charges are a little bit higher, but carry the goods without bill. Has that situation changed after bills? And have you seen some unorganized player -- any unorganized player shutdown or change model? Any more color on change in tendency after implementation of this e-way bill?
Yes. Definitely, changes are happening, but it is a process. See, overnight, these changes will not happen, when people will try to find out some weakness in the system and to operate it. But now authorities have already started verification process. In some of the states, actually, the verification process is stringent. So obviously, it will convert -- it is a process, basically. Over a period of 1 or 2 years, definitely, a lot of changes are going to take place.
So any initial time -- any players stopped working or any player [indiscernible].
There are a lot of such examples. Even some of the people, literally, they are unable to operate, and they are giving their vehicles to -- on a hire basis to the large operators.
Okay, okay. So in future, do you see that buying these vehicles or maybe consolidating these kind of operators into your own business, is that possible in your business model?
No, we don't want to put more number of outside vehicles in our service -- in our network. Predominantly, we are having a lot of advantages for when [ there are leakages ]. That's the reason we'll try to reduce depending came outside vehicle [ customer ].
But any option to buy such vehicles when [indiscernible]?
We'll never buy the secondhand vehicles because maintenance [indiscernible] everything is different compared to...
Okay, okay. And like making partnerships, is it some players, any -- is that possible maybe in the future, maybe some player [indiscernible] making partnerships [indiscernible].
Nothing like that.
The next question is from the line of Mukesh Saraf from Spark Capital.
Sir, just going back to the Goods segment margins. So if I see the third quarter margins, it's about 12.7%, and that's the range we were in the first 9 months and this -- we are at 10.1% in this quarter. So there's a big 250, 260 basis points fall. So one impact is fuel cost. So what would be third quarter average fuel cost, I mean, including diesel, biofuel, everything, what was the average -- the percentage of sales or something like that, if you can give?
Yes. Procurement cost in the last quarter is up by around -- yes, now in Q4, they're up by around 6.67%, from INR 58 to INR 62.
So this is Q-o-Q no sir, versus third quarter?
Q3 to Q4.
Right, right. Okay. INR 58 to INR 62?
Yes. Overall, it is around 6.6%, whereas our revenues increased around 4%. That additional 2% has become the remainder on margin.
Yes. So that -- majority of that is explained only by fuel costs?
Yes, yes, yes.
Okay. And so in this coming -- going forward, say, this first quarter, second quarter, do you -- I mean, you said you have taken 60% and 20 more percent you will take, do you think you'll go back to that 12.7%, 13%, sir? And this is just an addition [ that probably is ] not impossible?
We are changing a lot of changes in the credit in terms of wherever opportunity is there, which we want to pass it on to the customers.
Right. No, but like, you are seeing that you will be able to go back because in third quarter, you said you are passing it over, but you are, obviously, forced to give some more discount in the fourth quarter. So any such situations which might arise...
In quarter -- this quarter [indiscernible] even as of now, there are no such events. And on the other side, actually, we are increasing the freight rates. And last year, there was a confrontation on [indiscernible] and all that has been already done. Now considering the e-way bill requirement and GST requirement, actually, we are hoping a good growth on tenants, and this is the time for us to increase it [ not reduce it ].
The next question is from the line of Ankit Panchmatia from B&K Securities.
Sir, just to get your view on the lead distances because the old [ figures ] were around that the FTL cargo would shift to the LTL side of it post GST or post e-way. E-way would be too early to call, but post GST, the general lead distances, is that increase playing out that the bigger size trucks are now getting filled into the LTL side of it. Are you seeing that kind of shift?
Yes. Definitely, even in hire movement, we are looking -- we are seeing a lot of increase in the interest rate movement compared to interest rate movement earlier. And it is very early to comment, again. Still some more days to come. And even some of the big players, they don't want to disturb their distribution network as of now. So initially, the GST [indiscernible] e-way bill. Now definitely, they are in the process and some of the customers have changed. And in GST, there are -- there's a lot of comfort. Comfort in the sense, even the person can travel in the future anywhere to anywhere having one registration. That is enough. And even now in the GST, another additional facility has been provided, Bill to Ship to. Say, for example, if I'm sitting in Bombay, if I want to send material from, say, Tamil Nadu to, say, Delhi, sitting at Bombay, I can do a 3-way billing and I can send the material rather than bringing those material from Tamil Nadu to Bombay and send it to Delhi. So these kind of facilities or flexibility has been given in the GST as well as e-way bill. So I've seen lot of suppliers or customers, they are examining their [indiscernible] equipment [indiscernible]. Once it's targeted for clear implementation, definitely, the interstate movement is going to improve.
Okay, okay. And sir, the lead distances, although Y-o-Y, it was flattish, but the increase in these versus the other quarter, the increase is due to the new lines or new routes, which you have started? Or this is just [ we are now ] realizing this increased on the back of higher kilometers covered or faster kilometers covered?
No, these realizations, actually, it is the mix of higher realization as well as increase in the freight rate.
And sir, any clue on -- is there any oversupply in the trucking side of it? Are we being able to hire the trucks at a lower rate? Your views are quite [indiscernible] on that.
That trend is there in the market post GST to till date, even e-way bill. The small shippers, they are unable to operate in a flexible way what they operated earlier. That's the reason the lorry hire charges -- compared to the increasing fuel costs and all, proportionately the lorry hiring charges have not been increased. That's the reason the people who are depending on hired vehicle, they have shown some good improvement in the margins. But that trend will not continue in the future.
Okay. And sir, do we foresee these cash backs to continue in the next year as well? Or -- because -- or we'll see some kind of moderation into it?
No, I don't know how to comment on it. Well, it is a government policy. We don't know when they will change. So probably at least, the moment it will change, again it will increase in fuel cost, again we have to look into how to pass it on to the customers.
The next question is from the line of Jayakanth Kasthuri from Dolat Capital.
Sir, I had missed out on the lead distance included post GST, that is on second half, if you compare it Y-o-Y and Q-o-Q number for that, if you can give a Y-o-Y and Q-o-Q number.
You want increase in the kilometers...
Yes, yes, sir. Yes, sir.
Yes, I told you, the overall GT kilometers increased by around 4.7%. This is quarter-on-quarter. And Y-o-Y, it has increased by around 5%. And full year basis, it is almost similar as compared to last year.
Okay. Sir, in terms of going forward for the first half, what do you see in terms of freight rates? How would it be like in terms of increase now that you are planning to pass...
We have already taken a call. That didn't result into increase in realization.
Okay. Sir, and in terms of your Q4, what is the biodiesel cost like in terms of rupees [indiscernible] Y-o-Y increase...
Bio, always, it will be lesser than around INR 6 to INR 7 compared to ordinary fuel cost.
Our next question is from the line of Prateek Kumar from Antique.
Sir, regarding this e-way bill, you mentioned about some states have started checking by tax officers. Sir, which states definitely they would be?
UP, they have [indiscernible] verification, and one is Gujarat, the verification process is started and -- as well as in Karnataka.
Okay. So UP, Gujarat and Karnataka would be the states.
Yes. Now the more verification process they have already initiated compared to other states.
Okay. And sir, regarding the INR 600 crore CapEx we had, sir, how much of that would be like FY '19 now as we are now into FY '19?
Yes, around INR 250 crores, we'll incur CapEx in this year.
How much?
INR 250 crores.
INR 250 crores?
Yes. The total CapEx we announced around INR 400 crores for vehicles and another INR 100 crores for [indiscernible]. Overall, around INR 500 crores to INR 550 crores. Out of that, around INR 250 crores will be incurred in the current year.
So total CapEx is INR 500 crores to INR 550 crores, not INR 600 crores?
No.
Okay, okay. And sir, anything we are looking to do in Passenger segment in terms of CapEx? Or we're restricting our...
We want to continue with the same capacity. We are not looking for any expansion in capacity in that segment.
Okay. And sir, in this post-GST level, how has the growth panned out for FTL and LTL segment in general for industries?
There is a good growth scenario for LTL segment compared to FTL.
LTL segment is still growing faster than FTL?
Yes.
Sir, any ballpark numbers if it is possible to guide?
No. As we announced even in the last call, we are expecting around 10% greater in tonnage on a year-on-year basis.
So that would be LTL industry. And FTL would be growing, according to you?
FTL is not a core segment in our [ case ]. So almost around 90%, 92% of our operations is LTL. FTL, we'll do whatever we are not getting a return on the [indiscernible].
But how would that industry be growing, if you would have any idea?
We expect similar, not exactly this number in terms of tonnage and all, but it will constitute around 8% to 9% of the revenue.
No, no. Sir, I'm asking that how would FTL industry would be growing in general versus LTL industry?
There is a good growth scenario for LTL, again. Currently, I don't have precise number to comment on it.
Okay. And sir, just one question on this. You said about and the presentation also has the data. So what would be the gross debt for FY '18, including current maturity on a long-term basis?
Yes. Gross debt, now it is around INR 62 crores net debt is there. In addition to that, we'll -- we are having a cash balance -- cash and bank balance of around INR 13 crores to INR 15 crores.
Okay. And sir, just one last question on Passenger segment. You said the [indiscernible] 11% decline in Passenger segment revenue Q-on-Q, of which 6% is related to realization and 5% related to Passenger number.
Correct.
The next question is from the line of Keyur Pandya from Prabhudas Lilladher.
My question is on fuel price hike. As you mentioned, you have increased the price in [indiscernible] to pass on the entire price increase till that time?
Yes, that's what we are planning. Again, we are taking a call of another segment to increase the rates. So on [indiscernible] basis, we will try to pass it on to the customers, whatever increase in the price.
Is it -- are you [indiscernible] that in June also you are thinking of increasing the price again. So after that, will it be still passed on [indiscernible]?
Yes, definitely. Even in last year, if you see, definitely consumers [indiscernible] increasing so much, we will pass it on to the customer. If it is a fuel cost, it will not increase as a percentage of the revenue. Compared to that, I think periodically, we will review the prices, and we'll try to pass it on to the customers. But good thing is now, again, tonnage is also growing. They'll have more flexibility.
Okay, okay. Second question is on the Passenger transport. So as we've not added any vehicle in that segment, so with increased occupancy, should we see some increase in the margin in that segment? Or this is the [indiscernible] there is still struggle in increasing the volume? Or how do you see that segment?
Now it has already reported good numbers in the current year, considering increase in fuel cost and other kind of stuff. And even number of vehicles on an overall basis declined around 23 numbers. In spite of that, that segment has resulted in good numbers. Also, considering the current scenario, it will continue like this. But growth will not be there in the range of -- year-on-year growth will not be in the range of around 10%. Because occupancy, now it is on a peak level. So whatever growth is going to come, it may come by increasing more [indiscernible] there.
Okay. But despite almost full occupancy, you're already improving the fleet as of now.
Yes. Currently, there are certain regulation changes now we are expecting. Once it happens, then we have to think on this segment. Up to that...
And that would be?
Yes?
And [Audio Gap]
So these vehicles are belonging to particular states. For any interstate movement, again, we have to have a permit of every state and with additional tax rate and other things [ of sort ]. And even the certification of other vehicles to move from one state to other state. So all these issues are there. So government is bringing some new transport bill. That bill has not yet come, and we don't know whether it will come soon.
We take the next question from the line of Jayakanth Kasthuri from Dolat Capital.
Just one question in terms of hired vehicles for this quarter, how much was in terms of percentage to the total vehicles? And going forward, what do you see the trend?
Yes.
Hello?
Yes, yes.
Yes, sir, in terms of hired vehicles for this quarter, in terms of percentage of total vehicles, how much it was and what do you see, going forward, the trend regarding hired vehicles.
Percentage to the kilometers, it's around 11% to 12% mark. It will continue in that range. And once we start adding new vehicles, again, this percentage may come down.
Okay, okay. So -- and in terms of additional vehicles for this year, how much do you see?
Yes, according to our plan, we are planning to add around [ 1,200 ] vehicles over a period of next 2 years. So we may receive around 600 vehicles in this year.
Thank you. Ladies and gentlemen, as there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments.
Yes. Thank you all.
Thank you very much, sir. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.