VRL Logistics Ltd
NSE:VRLLOG
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Ladies and gentlemen, good day, and welcome to the VRL Logistics Limited Q4 FY '19 Earnings Conference Call hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Abhijit Mitra from ICICI Securities Limited. Thank you, and over to you, Mr. Mitra.
Yes. Thanks, Bert, and good morning to all the participants. We have with us today Mr. Sunil Nalavadi, CFO of VRL Logistics, to discuss Q4 and FY '19 results for the company. So without further ado, I hand it over to Mr. Nalavadi for the opening remarks, and then we can take the Q&A. Over to you, Mr. Nalavadi.
Yes. Thank you, Mr. Abhijit. Hi. Good morning to all. I'm Sunil Nalavadi, CFO of VRL Logistics. This is the quarterly call for the year ended 31st March 2019 as well as Q4 numbers. First, I'll start with the year-on-year comparison for a full year basis. Then later on, I will explain some detail about the quarterly financials. When it comes to the total year performance, the total revenue of the company increased by around 9% from INR 1,936 crores to INR 2,117 crores. So this is the first time actually our company is crossing the revenue of INR 2,000 crores. The growth in revenue is mainly contributing by our Goods Transportation segment. The revenue of Goods Transportation segment has increased by almost 11% from INR 1,517 crores to INR 1,686 crores. And our Passenger segment revenue increased by around 6%, from INR 358 crores to INR 380 crores. When it comes to EBITDA margin of the company, it has increased by 1.39% from INR 248 crores to INR 251 crores. And percentage to total income, it has slightly decreased by around 0.93% from 12.83% to 11.9%. The PBT of the company has increased from INR 139 crores to INR 140 crores. And the PAT of the company we maintained from INR 92 crores to -- and more or less to INR 92 crores. When it comes to the Goods Transport segment. The growth in Goods Transport business is only on account of -- mainly on account of increasing tonnage as well as increasing realization per ton. The increase in tonnage is around 5.5%, and increase in realization per ton is around close to 6%. The EBITDA for the Goods Transport segment has increased by around 10.06% from INR 186 crores to INR 205 crores. And percentage to total income is almost maintained at around 12%.And as you're aware, in first and second quarter, the margins have been mainly impacted in the Goods Transport segment on account of increasing fuel cost. The same is recovered in the second half of the year on account of 2 reason. One is the diesel price is a little bit decreased and as well as because of this increase in the safe axle load factor for the commercial vehicle. In our case, since we are having a good kind of quantity or the capacity, the benefit of that has been the most in the second half of the year. The Passenger segment overall, the number of buses have been reduced by around 15 numbers, in spite of that, the revenue has increased by around 6%. And this percent -- this increase in revenue is on account of increase in passenger as well as increase in the occupancy level and realization per passenger also. Since the realization per passenger is not in line with the increase in diesel price, the margin in this segment has been impacted in the current year. On an overall basis, debt level of the company is a little bit increased. This is on account of a good kind of CapEx expenditure in the current year. And considering the cash flows of the company and profitability, again, the Board has decided for an additional INR 2 dividend per share. When it comes to the quarter-on-quarter of Q4 of last year versus Q4 of current year, the total income of the company has increased by around 5% from INR 491 crores to INR 514 crores (sic) [ INR 515 crores ]. Again, the growth in the revenue is mainly contributed by the Goods Transport segment. It has increased by close to around 5% from INR 396 crores to INR 416 crores. The Passenger segment revenue has increased by around 6.5% from INR 833 crores to INR 887 crores. The EBITDA of the company is increased by around 33%, from INR 47 crores to INR 62 crores. And percentage to income has increased 2.5 -- 2.55% from 9.47% to 12.02%. And because of increase in EBITDA, the profit before tax of the company has increased by around 65% from INR 20 crores to INR 33 crores. And percentage to total income has increased by around 2.3%. On account of this, the PAT of the company has also increased by around 71% from INR 12 crores to INR 21 crores. And percentage to total income has increased by 1.5% from 2.45% to close to 4%.Again, in this quarter, the Goods Transport business tonnage has increased by around close to 2%, and the realization per ton has increased by around 4%. And the key benefit in this quarter compared to last year is the axle load factor. On account of that, given the expenses of percentage to the revenue have been not increased and in terms of the fixed expenses as well as some of the variable costs have been reduced because of axle load factor, that's the reason the margins have been tremendously increased in this quarter.And when it comes to quarter 3 versus quarter 4 of the year, again, the major changes, one is the decrease in the fuel price that has been eased out. On account of that, there is a lesser -- there was a lesser pressure on the margins. And the additional benefit is on account of this increasing axle load factor. So these 2 things again have been helped to maintain the margins compared to quarter 3 versus quarter 4. So this is a brief summary. Now I request participants to ask questions.
[Operator Instructions] The first question is from the line of Niteen Dharmawat from Aurum Capital.
I have 2 questions. The first one is about the GST implementation. So when the GST was getting implemented, there was a lot of talk about how it could -- yes?
Sir, I'm sorry to interrupt. Sir, your voice is actually too airy, which means you're talking very close to the phone.
Okay. Am I audible now?
Yes, sir, loud and clear. Thank you.
Yes, thank you. So I have 2 questions. The first one is about, when the GST was getting implemented, there was a lot of talk about how it could benefit the logistics company. So now it's almost 7, 8 quarters already gone, so just wanted to understand how it is now and what you see in the future post-GST implementation for the logistics company. Has it clearly benefited? Because I don't see that happening in the numbers. So what is your opinion on that in general, not only about VRL but in general about the market, the industry, how it has behaved? And the second question is about the sustainability of the margin. The margins have gone up because of a variety of reasons that you cited. So are they sustainable going forward in the coming quarters?
Sure. The one is about GST is concerned, the real impact of GST on transport segment actually started from April 2018. The reason is even though the law came and took place from July 2017, yes, the industry, transport sector, basically from July onwards, what happened it was down in all sectors, and suddenly, there was improvement in the kilometers. But in terms of regulation is still concerned, as you're aware, the Indian transport sector is highly contributing from the unorganized sector. Now many people have taken advantage of there are no monitoring authorities from July to, say, December. So considering those advantages, being an organized player, the impact was not much. But when it comes to from April onwards, the e-way bill interest and every transporter has to generate an e-way bill, its containment value is 50,000 and above. And for interstate movement, that in term of the state, that limited increase to 1 lakh. Now even though e-way bill law started from April, but the true verification process and implementation and other things, still it is taking the time. And even if the GST Council -- and they are sequentially changing the requirements, even currently, they have made one more change. The kilometer has to be taken based on the pin codes what the consignor will enter at the time of generation of the e-way bill, based on the invoice detail or based on the details entered in the e-way bill. Now this one -- on account of this one requirement, many people have taken an advantage. So it is in implementation stage. So once the government will come at full force, then if once the verification process starts at the full force, definitely it is going to help to the organized players.And when it comes to the margin side, yes, definitely, the margins are sustainable. As you're aware, even in -- if you see the earlier performance, our EBITDA margins were much higher than what we have been currently. But as the trend decrease in EBITDA level, which is on account of a lot of disturbances in terms of increasing fuel price and other things and even changing the labor laws, everything I have explained during the calls. If these things are under control, and the another advantage was we are getting recently is from increasing the safe axle load, and definitely considering these things, we believe that the margins are sustainable.
The next question is from the line of Bhavin Gandhi from B&K Securities.
Congratulations on a good set of numbers. Sir, to start with, if you can just explain how axle load actually helps in terms of margins or in terms of what line items does it help, if you could just elaborate on that part.
Yes. Basically, if we see this, I give an example of, say, one 20-tonner vehicle, how it was operating in an earlier period versus today, the load factor. Now earlier, the 20-tonner load actually is the maximum actual capacity, or actual tonnage we can load up to 20 tons. But considering the variety of goods made and considering the number rose for consignment in a single vehicle, we used to carry in that vehicle around, say, 19 to 19.5 tons in terms of actual rate. When it comes to charged rate, the price relation rate, we used to carry up to, say, 21, 22 tons, because the [ tanker ] rules we used to charge is on the volume basis rather than the actual load basis. So now what is happening after the change in axle load, the 20-tonner capacity has been increased to, say, 24 tons. Now with one axle load, we can carry up to 24 tons in the same vehicle. But considering those performance [ metrics ], we can't use the entire benefit. Definitely, we can use not less than, say, around 8% to 10% of the additional load. On account of this, the per-trip basis definitely, the realization will increase around 8% to 10%. And against that, there'll be a little bit increase in expenses. There'll not be any proportionate increase in the expenses. The expenses will increase on a little bit basis in terms of diesel or in terms of maintenance, wear and tear of tires, like this. So definitely, this will help to increase in margins.
Sure. So sir, as far the retrofitting was concerned, the full impact of this is there now in the numbers? And since then, when did it start coming into the numbers?
About?
The retrofitting -- I mean the -- we had upgraded some of our vehicles to meet the standards, right? So the benefit started coming in only in the fourth quarter, is it?
Yes. The total quarter, we did around 1,700 vehicle or so, but most of the vehicles we did in the month of December. Now all high-yield HCV vehicles almost, except around 150 vehicles, in terms of all HCV vehicles, we got the approval from the [ authority ] to carry additional load. And the impact -- so the partial impact has then already come in Q3, only a small -- to a small extent. And the major impact of the benefit has came in, in Q4, but full impact will come henceforth.
Sure. Got it, sir. And sir, any change in CapEx plans now with -- now we have clarity on the -- what the benefits are we getting from the axle load, any change in the CapEx plan that we'll announce for the trucking side?
Yes. Definitely, you see, whatever we earlier announced about CapEx plan prior to this increase in axle load, we'll -- the moment that this law came into force, actually, we stop -- they'll stop in the sense we hold the debt [ over the long haul. ] And out of that, already some of the vehicles have been purchased in the current year. And in the coming years, in FY '20 also, again, there will be a slowdown on the CapEx on the vehicle front.
Okay. So what is the revised CapEx number that we are looking at now?
Revised CapEx, so now it is difficult to mention in terms of numbers and amount, but there'll be substantial reduction in the CapEx. So on a full year basis last year, see, we did the total CapEx of INR 211 crores. Out of that, the CapEx for vehicle expenses was around INR 84 crores. Now it's roughly INR 82 crores -- INR 84 crores. Then we'll say even around INR 25 crores, INR 30 crores actually we may invest in vehicles, not more than that.
The next question is from the line of Sandeep Matthew from SBICAP Securities.
Sir, my first question is actually on our tonnage growth. See, I mean the problem that you had is that for the last 7 years or so, we're not really seeing tonnage growth pick up, right? I mean it's been sub-5% probably closer to 2%, 3% if you look at the CAGR basis, which is very surprising given that the economy has done reasonably well over a 7-year time frame, if I may put it. So what exactly explains this anomaly, sir? I mean why is it that our tonnage growth is probably not that growing versus, let's say, the expectation in the underlying market? I mean is it because we are losing market share somewhere? Or are there any other attributable reasons to those as such? Because I'm not looking at it on just 1-year or 2-year basis. I'm saying this is -- this trend is quite concerning that even for a 7- to 8-year period, we've not really done that well on the tonnage front.
No, I will defer with -- I'll be deferring with whatever you are explaining. See, the tonnage growth, which is, so just 3 years back or so, we used to grow tonnage in the range of around 7%, 8%. But in the last 3 years, there is stagnant growth in tonnage. But in the current year again, we increased -- the tonnage has increased around 5%, 6%. Now last, say -- yes?
Yes. No, go on, go on, sir.
About last 2, 3 years is concerned, we explained how the industry has behaved and what were the difficulties during that time since we are unable to grow in tonnage. But considering the GST benefit, with some of the GST benefit in the current year and adding up our new customer base, and they were kind of 7%, their tonnage has been increasing around 6% in the current year. Now going forward, again, as we said -- as I said in my earlier conversation, if GST made further standard, then definitely that is going to help to the organized players. And in terms of axle load factor also, we have given some good concession in the rate. In the last Q4 itself, we reduced our rate almost by around 5%, 6% decrease in the realization. But -- and if is entirely passed into the customers, through that, definitely, it will support to increase in tonnage in the days to come.
All right. So I understand the fact that you're being competitive on pricing because of the efficiency gains you're having. But I think the larger concern, sir, has been that we've been guiding every year, let's say, at the start of the year, we start with an expectation of about 8% to 10% sort of tonnage-kilometer growth. But somehow, at the end of the year, that number kind of tends to go lower. Now obviously, the other thing that could be at play here is lead distance is coming down as well on average. So is that something that you are seeing that is happening in the market with that GST and all and the hub-and-spoke model becoming probably more [ the limit ], do you think our lead distances could go up or down? And really, it should go up, but again, the numbers, if you could just indicate something different, which is why I'm asking this question.
No, if the lead distance is weakening, then definitely, there'll not be increase in tonnage. See now we are communicating on our overall tonnage here in terms of the distance. Now if the lead distance is increased herewith, with the same kind of a tonnage, definitely the realization will improve. Now definitely, GST enrollment and lead distance is going to improve. The reason is the hassle-free transactions across all the states.
Right. So I mean coming back to my point of when will we start seeing this in the numbers because at least that if we look at the general overall top line growth basis, if I just adjust for, let's say, whatever pricing increase you have said that you have done, which would essentially leave me this tonnage-kilometer growth, if I subtract from our overall revenue, your ASP increase. That number is somehow not moving up meaningfully is what I was trying to get at, sir, so is there any particular reason to this?
No, there are no specific reason. If we see, let's say, in the last quarter, in some of the industry [ take like a total of their model, ] the performance has been impacted. And again, there's an impact on ourselves to some extent, not at a larger portion. And see, again I'll provide example. Once the GST, say, for example, again, there are still visible improvements are required. And now the specific exemption is even less than [ 50,000 ] or some of the states, 1 lakh. Within state 1 lakh, the impact will be much lower but for a lead distance. To increase the lead distance and it's 50,000 [ will depend on ] some of the people what they do, [ they take rate ] and all these things. Those are all possibilities. But in some of the cases, actually, people are generating e-way bill even less than 50,000. Across, say, all investors, they are generating e-way bill. So this kind of the other [ basic situation, price ] and other things, those things help restock. And then not only that, the government has to bring some more real stringent verification process in the system. So on account of that, the people will come forward, and the compliance levels will increase. Then that is going to help to us.
Right. Okay. sir. Just quickly also on the Passenger segment, if I may ask. So what is our -- now given that this year, we might see some of those older buses go out of the fleet, I mean do we have plans to do additional capital expenditure on the passenger bus segment? Or will we be running with the current fleet? Is it expected to go down or up? Can you give some color on that, sir?
Yes. Currently, it will be maintained at the same level. If any replacement needs and that currently we need, replacements kind of whatever vehicles will come down, so the number of vehicles we may have, but considering again the performance of that segment in the coming days. We don't have any fixed plan as of today.
Right. So largely, we should assume that the current fleet will essentially remain at around similar levels?
The same level.
The next question is from the line of Mukesh Saraf from Spark Capital.
So the first thing is, so just going back to our earlier -- maybe about a year back or so, when you had earlier plan to about -- add about 1,200 trucks. Yes, at that time, maybe on a base of about 4,000 trucks, we said we'll add 1,200 trucks. And then we scaled it down to 600 trucks. And now we are scaling it down further. So just trying to understand, the axle load norms, probably it would have added maybe -- I mean given that we also carry a lot of volumetric goods, it would've probably added about 10% extra trucks. I mean net-net, maybe it would've added, 400, 450 trucks for us. So from 1,200 trucks, we've basically brought down our growth in capacity to about 450, 500 trucks because we are not adding any further trucks as such. So trying to understand why have we scaled it down so much, even factoring it for the axle load norms. So could you just give some sense on that?
Even in the current year, in terms of the number of goods transport vehicles that are added, there were around 421 numbers. Out of that...
421?
Yes. Out of that, the smaller tonnage capacity are around 181. But rest of all, vehicles are not exactly high but midsized as well as the high-capacity vehicles.
Right. So no, what I'm doing is I'm comparing it to the earlier plan of 1,200 trucks, sir. So the only reason we are scaling down that 1,200...
[ There are 2 reasons. ] Yes, again, 1,200 vehicles, yes, almost around 300 vehicles, [ 13% ] in the current year. And even if with 10% increase in capacity, that will lead to 700-odd vehicles.
Okay, okay, okay. So net-net, we have added about 700-odd trucks against our earlier 1,200-truck plan?
Yes.
Right. So even that is lower than the earlier plan. So what has actually driven this on the...
[ What I said, ] whatever the newly added vehicles, again, these are all high-capacity vehicles. These are all vehicles that are with the new capacity.
Right. So you'll get about 10% higher capacity on these new 300-odd trucks that you've added as well?
Exactly.
Right, right. Understood. So -- okay. In continuation with this, sir, how is the Surat expansion? Because I thought that was one area where we would have required a lot of new trucks. And I think we have started -- earlier, when we have planned the Surat facility, you said it should be operational by end of 2018. Now that we are probably at midway in 2019, what are we seeing? I mean there are some delays there, but what are we seeing now? And what's the plan there with Surat?
In our plan, the original plan is to get it commercial by the end of FY '19. There was a plan. But then because of some small new projects going on, definitely within -- next quarter, definitely, it will come -- commercial operations will start in the second -- Q2. This is the kind of plan the commercial operations will start.
Okay, okay, okay. And so whatever requirement of trucks, all that will be taken care of by our current capacity and...
Usually, we want to use the existing capacity. And how the -- after the real performance, once it starts increasing, accordingly, we'll supply the vehicles. And another thing is, say, about the CapEx plan and the other things in terms of vehicles, this will not require any long-term plan or something like that. See, always we grow by need basis. And the need -- the requirement of the vehicles we can analyze at a very short term. So for example, in Surat, we start, then we will come to know how the actual real tonnage is needed ] and how we are to supply the vehicles. So even if we -- let's say, today, it will increase the vehicle, even within month's time, the vehicle will be on the road. Definitely, we can use those vehicles in our operation. So that's the reason always we do it on need basis rather than creating the exact capacity, which should not be idle.
Right, sir. So generally, that is true. The reason why I'm focusing this time around is also because probably next year, by April, obviously, the prices of trucks will go up. And it's expected to go up by 10% to 12% because of the FX. So that's the reason I'm trying to kind of figure out if we'll end up adding the trucks later at a higher cost or we are confident that we can manage with the current number of trucks. So that's the question here. And sir, also the other thing is on this -- you said 8% to 10% higher realization we get per vehicle because of the axle load norms. So basically, you're saying we are passing on a good portion of that to the end customer...
Yes.
Because we are not seeing that kind of improvement in either -- and then margins has improved but not so much on realization. Are we passing through most of it?
Yes, the final calculation is on increase in tonnage.
Right, right. So what do you expect this year, sir, in terms of increase? And last year, we said about 10%, but then we ended at about 5%, 6%. So this year, are you still expecting double-digit tonnage growth and kind of maintaining realizations, at least? Or what do you see?
Yes. Considering the basics, what we are giving to the customer today in terms of rates and everything, definitely, we are getting the good kind of tonnage number in the next year. And we mentioned here, again, some of the benefits have been passed on to the customers, so we'll maintain the existing realization. And what -- fuel price continues with increases beyond our expectations, that certainly means that we will increase our rates.
Yes, yes, yes. And, sir, just last thing that's on your outside vehicles, the contract vehicles. How is that situation now? Have you reduced a lot of those? Because -- I mean they're not adding trucks anyway or are we okay with a certain threshold of the outside vehicles out of that?
Since we are having a good capacity of old vehicles, that will be dependent on our [ inventory of the vehicles. ]
Okay. How much is it, sir, now? Say, fourth quarter, how much was it of the overall, generally, given number?
Yes. Around 8% to 9%.
Of the total [ inventory? ]
Yes.
Right. And so we can expect that to be maintained at that 8% to 9%?
Yes, yes. Absolutely, 8% to 9% or 9% to 10%, we can maintain.
10%? Okay, okay, okay.
[Operator Instructions] The next question is from the line of Prateek Kumar from Antique Stockbroking.
Sir, a few questions. First question is -- so this higher growth was like around 2% in terms of tonnage growth in Q4. Sir, how is this, I mean, during first quarter, is it dipping to negative because, generally, things are slow and across the board and elections also were there. So is this -- I mean, how was the trend in, like, Q1 '20 until like past 50 days?
There is a growth, actually.
So the growth number has improved versus Q4 growth?
Yes, yes.
Okay, okay. And, sir, regarding the CapEx, you mentioned around INR 25 crores, INR 30 crores would be spent on vehicle. So the remaining -- I mean, Surat CapEx is precisely over -- or I mean, what is the I mean total CapEx for the company you expected, assuming INR 25 crores, INR 30 crores spent on vehicles?
This is on a normal basis. So basically, it's different, so difficult to comment on the CapEx plan about vehicles. The reason is, see, again, if tonnage growth are much better than the expected level, again, we may require vehicles. Then again, we may...
But what is our internal expectation of tonnage, I mean...
Yes. Again, that Surat turn out actually is the greater side of the operations and we're expecting a good growth over that. But if it really happens, then, definitely, we may require additional vehicles. But considering the current yield of existing capacity, in that sense, it definitely, will be lower on the CapEx plan in the current year. And in terms of others -- see, apart from Surat, we don't have just now any building or any [ underlying capacity there. ]
Okay. So full year CapEx might end up like around INR 50 crores for the company?
Maybe, yes, to that level.
Okay. And, sir, I mean our realization, as you mentioned, you look to maintain realizations, which means you don't look to grow realizations. Sir, but realizations, historically, have grown at like, generally, every year, our realizations grew by 5% for some other reasons. So I mean, I'm sure there's a lot more -- so that means fuel is not the reason. I think employee cost and some other costs are also the reason. So -- but this time, we are anticipating that realizations might not grow? I mean, we might not look to...
If the government continues, because of the input of axle load, the realizations will not improve. But I assume that the fuel increase or something, this will take place, definitely, again, we'll have to increase the range.
So I mean...
Increasing the range and then, incidentally, fuel price will be maintained at the current level. There will not be increase in realization. And again, because of this axle load, there will be further benefit in the coming days. In Q4, the parties we thought would benefit of this axle load. They will always [ weight ] it on a month-on-month basis we've got the approval. Now for this quarter, on a full quarter basis, actually, all the vehicles are having different additional capacity confirmation. So that benefit, further, we are expecting to come in the current quarter.So in view of this, the realization will not increase in the present condition. But I assume that the fuel prices increase and the fuel price increase beyond our expectations, say, beyond the benefit [ currently ] what we are waiting from this extra load, then, definitely, we will increase the rate. In that scenario, again, realizations will improve. Hello?
Sir, I'm sorry, but his line has just got dropped. We move to the next question, which is from line of [ Vreet Nagasheed ] from [ Wealth Advisor. ]
Sir, could you shed some light on the kind of slowdown that's going on? And how is that impacting the tonnage growth or the reduction in growth that could happen for the Q1 or Q2?
Yes, reduction in growth will not be good. So definitely, we will maintain the growth. And I said the, rather typically, again, in Q4, because of the impact of cost slowdown in the other sector and other kind of things, again, its impact [ will be ] on our tonnage also. And even if it is a [ greater ] number, the production numbers are not improving much. Can we say, post election or something, will I think major economic development take place? Definitely. It will impact on our tonnage and we can grow in a better level.
Okay. So what you are you saying that you are not seeing any reduction as of now? And if a further economic activity grows, it would see increase in...
Yes, definitely, better than any return or reduction in the tonnage.
I see. And, sir, could you shed some light? When your parcel service is about 60%, 69% of your overall profile this year, sir, this is -- what is changing with parcel, what's the definition of it?
Which definition?
Meaning, there is possibility they are limited to a certain kg type?
Sorry?
Am I audible?
Yes, yes, please.
Okay. So we are in this mostly into parcel logistics services, right? Is my understanding correct?
Yes, yes.
Okay. So this would mean that you would be making -- doing parcels of a certain size in terms of kg, right? Like 50 kg, 100 kg or even lower?
Yes, yes.
So what are these limit that you -- that would qualify to be a parcel or beyond which you would not do?
Normally, what will happen, the parcel means that each area of consignment should not be less than around 20, 25 kg. If it is -- if somebody wants to carry, say, 10, 20, 30 kg, we'll accept the goods, but which has 25 kg, minimum weight.
Okay, okay. And there is no -- so the minimum is 25. On the upside, it should be whatever that leads to.
Whatever, whatever. There's no limit on that.
The next question is from the line of Achal Lohade from JM Financial.
Sir, can you help us with the FY '19 CapEx? How much was that? And if you could broadly help us with the breakup, where exactly it is spent?
Yes, the CapEx, based on the current dip, meaning it's, let's say, around INR 50 crores to INR 60 crores CapEx in the next year. Out of that, 50%, 60%, say, around, INR 30 crores, INR 35 crores for the vehicle and balance CapEx for some other costs.
I think you are talking about FY '20. I was trying to understand, sir, FY '19. How much have you spent and...
FY '19 CapEx is total INR 212 crores. Out of that, the CapEx for the group should be, I would say, around INR 190 crores. And within the goods transportation, for the vehicles, it is INR 84 crores.
INR 84 crores?
And -- yes. For land, [ I mentioned ] we invested around INR 106 crores.
I understood, I understood. Sir, second question I had is with respect to the diesel cost. What is the increase or decrease Y-o-Y in terms of the price? Like you are typically mentioned in the quarter, how much is the average diesel cost and the percentage of Goods Transport business for fourth quarter FY '19?
One second. Yes the whole full year versus -- for the increase were almost 17.71% in Goods Transportation. And when it comes to percentage of the revenue, it has increased by around 1.44%, from 24.34% to 25.78%.
This is for the full year FY '19?
Full year. On year-on-year, it is a decrease of around 1.21%, percentage of the revenue. From 26 point...
Is it also percentage of Goods Transport or the total, sir?
Yes, it is only a percentage of Goods Transport.
Okay, okay. Sorry, you were mentioning about fourth quarter, sir? Sorry, please go ahead.
Yes, it decreased around [ 1.14% ], from 26% to 24.86%.
Understood. And lastly...
And Q3 to Q4, it has again decreased around 1%, from 25.88% to 24.86%.
Understood. Sir, in terms of the mix, is it possible to understand what are the, broadly, the products which are like -- do we track what kind of products are we transporting?
No. It's a variety of products, variety of products and there is no -- there are no, again, different contributions from transport goods. There is a cost to what we are carrying, the taxes, in cost, these are mostly around 15% to 18% of the total tonnage. And first of all, p2p for mobile, the general goods and all this industrial goods are at normal levels. Sorry?
Agri as well?
Yes, agri products, agri -- all agri chemicals and even the pesticides and everything. It is our major contribution. You understand? This is all in the range of, say around 7%, 8%, like that.
Understood. Why I'm asking sir is because...
Mr. Lohade, I'm sorry to interrupt. I would request you to come back to the queue. [Operator Instructions] The next question is from the line of Alok Deshpande from Edelweiss Financial.
Most of my question was -- this -- you spoke about this axle load norms and how it has added capacity, which would have led to the higher realization. Now one question is has this positive effect completely reflected in Q4? Or this margin that you've seen in the Goods Transport, between 13.3%, 13.4%, is that something which is likely to go up as we go into this first half of the year?
Yes. The full effect will come in Q1, but the benefit will be given to the customers again.
Okay, okay. So margin-wise, this 13.5%, what you've seen is -- basically, reflects then that realization gain that comes?
Yes. We will maintain this kind of margins.
Okay. Sir, and -- sir, the second question was more sort of on the industry, and I think a couple of participants earlier has already sort of discussed this. But what is the sense on the demand scenario on the ground, because what we have seen in the last 5, 6 months most specifically is a foreseeable slowdown in goods movement and that has sort of coincided with the capacity additions that has happened in the trucking industry over the last 4, 5 years. So how is this combination sort of working out in terms of freight rates or in terms of -- or your general view on what's happening on the demand side?
Yes, growth industries. There are no increase in the freight rates. The PPR maintaining the existing freight rates. And in last quarter, what happened again, the diesel prices decreased. Again, people had some kind of [ movement, then passed it ] to the customers. When it comes to the volumes are concerned, yes, there are certain concerns in the overall economy. And, definitely, we may overcome in the coming days, post election or something like that. There should be some good economic development and, definitely, that is going to help us.
Okay. And just one last question on the investment plan, the CapEx plan. So you mentioned that, roughly, if you take what you've added this year and plus the capacity additions, so the axle load norms, roughly, about 700-odd or 800-odd vehicles have got added to your fleet. Now this sort of cautious stance that you've taken on the CapEx, is that more for this year or is that something which you're sort of looking at for a 2- or 3-year perspective that you will just sort out these assets that you have? Or will you be again going back on a CapEx -- sort of a more aggressive CapEx starting next year? I just wanted to understand your thought process on capital allocation.
Yes. There will be growth in the tonnage, then definitely, again, there will be a CapEx. But as of today, this will -- it is a cycle. If the moment we start aggregating or increasing the tonnage, then we will see that how the replacements are happening across the board. If for -- there will not -- there will be more pressure on the existing vehicles in terms of ventilation and capacity, then definitely, at that time of year, we will plan for some CapEx. If you all agree, we can design that in advance that this year [ we are reporting on ] this.
The next question is from the line of Ankita Shah from Elara Capital.
Sir, just wanted to check, sir, how many vehicles we can add this year. So I understand we've lowered down our CapEx for the GT segment. We've added a net of 391 vehicles this year. Could it go down to half next year or what is your sense on new vehicle addition?
No, that's what I told you. In terms of amount, it's not going to be more than, say, around 30 -- INR 30 crores, INR 35 crores.
Sir, I understand, but in terms of number of...
The numbers, real term, we do see around 100-odd vehicles.
Around 100-odd vehicles?
Yes. And some of the vehicles we added in the current quarter 1 also, in the month of April and to date.
Sir, how much did you add?
These are very small numbers.
Okay, okay. And, sir, average diesel price for us for the year FY '19?
In terms of average cost, post reduction is around INR 65.
For the full year?
Yes, full year.
Okay. And for the quarter, sir?
For the quarter, it is INR 52.
Okay, okay. And sir, biodiesel consumption has remained stable?
Yes. Biodiesel, on a full year basis, around 14% -- say, 19.4% on a full year basis. And then in the last quarter, the volume stayed at around 15%.
15%. Okay.
The next question is from the line of Yusuf Inamdar from Antique Stockbroking.
This is Prateek. My line was cut. Just a couple of follow-up questions. So when you maintain your margins -- look to maintain margins, so we have the margins that make 15%, 17% also again the GT segment. So we had, I mean, the last 2 quarters, we have now almost INR 10 crores, like 13%. But we don't -- I mean we don't foresee margin going to 14% or 15%. I mean because we look 2 parts to that to, I mean, gain more volumes. Is that the right part?
Yes. The more content, if any, are increasing the volumes because we're having good capacity as of today in terms of, let's say, on the vehicles. [ On the ] content really on the realization and increase on the margin side, this year, content is more on the addition of -- that increasing tonnage. Increasing tonnage, say, for example, you increase -- the moment you increase the rate, that will impact on the margin. But increasing tonnage will happen on a slow basis. So, listen, gradually it will happen, not at a one go. So there is improvement in the margin over a period of time, not on a yearly basis.
Okay. And when this quarter our margins improve when you say, I mean, benefit of axle load is gained, so our volume growth will improve by around 2% year-on-year, Q-on-Q. So the operating leverage doesn't look -- the right -- I mean, the right impact. But how did it, I mean, slow down to your EBITDA because only 2% growth was there in terms of volume? I mean, your cost might have remained the same, but 2% growth probably would not have trickled down to your EBITDA level.
No, I agree. Let's say we review the rates, right? The rates are driven almost by around 3% to 5% maybe last year. What has happened [ for these ] there will not be reduction in the rates, for example. The EBITDA margin is really much better. Or if -- on account of this reduction in the price deals, the EBITDA level could have been decreased at the time same industry level. But in spite of that, the EBITDA level is maintained because the parts of the business -- or we think there are parts of the business, the vehicle remained [ the same. ] On account of more tonnage, we're carrying in the same vehicle.
Okay. And then just last question, on your employee cost. So last year was very normal in terms of employee cost, it was around 6%. The earlier employee cost growth over past many years have been much higher. So now, for FY '20, so -- I mean, FY '20, '19 will be added -- did we not add any major employees? And how do you see FY '20 now in terms of employee cost book?
Yes. FY '20, [ what we see, ] there will be some incremental projects in the various sites that's impacting the year. Again, considering the total impact of -- then we have to see -- think how much we have to increase the rate if it is required or if the rates can be -- or the rates will be in a range of a [ level that can distribute and would be ] benefit of the employee cost. These are all taking process [ because of what we are doing. ]
But we are looking at 6% to 8% of like -- I mean, or we'll start to make the volumes increase to -- I mean, what kind of increase? [ Total because it's... ]
We can cost it on the part of change in the government laws. It's about increased importance from the levels of vehicle, the maturity, we have an increase. But as of now, the minimum vehicle are also increased. Now there are no such increases that are happening. That's why, in the last year, overall employee cost is under control. But in the current year, again, we have to look on the incremental of the employees. So on account of the rupee increasing the cost, but whether that cost will be adjusted to the benefit of whatever it is that we are carrying on the vehicles or we have increased in the rate this year, too. Increases it around the subsequent year.
The next question is from the line of Mukesh Saraf from Spark Capital.
Sir, just have one question on the passenger business. Could you give the details on the number of passengers carried and the fuel factors, et cetera, that you usually give?
The number of passenger, on a full year basis -- for the number of passenger is increased around 1.87%. And increase in realization per passenger is around 4.12%.
4.5%?
4.12%.
Okay. 4.12%. Okay. okay.
And the increase in average seat occupation is increased around 3.1%.
Okay, okay. The seat occupation. Okay, okay. Right, right.
And Y-o-Y, Q4, Q1, then the overall number of passenger travel is increased around 1.8%. This is in spite of reduction in number of [ passenger affecting the ] numbers. And then the realization is improved by around 4.68%, and our occupation level -- occupancy level is increased around 3.33%. Yes.
Okay, okay, okay. Right, sir, sorry, sir, you were telling vis à vis Q3?
Q3 to Q4, the total number of passengers has decreased around 5.37% and there has been a decrease in the realization by around 9%.
Okay. But it's a seasonal reduction?
Yes, diesel reduction. And the [ rate at the current ] level is maintained.
[Operator Instructions] The next question is from the line of Ankit Panchmatia from B&K Securities.
Sir, this is regarding our priority segment. Has that segment continue to inch up to the overall revenue by -- or how are we are pleased to capture a higher portion in this priority segment by the passenger?
Well, now priority segment, there is one change actually what we are -- we have already changed certain things on this priority. Basically, what we're creating, rather than calling it the priority or general parcel, now we want to go 2 categories. One is about the door delivery consignment and other than door delivery consignment. So door delivery consignment, again, the rates will be on a higher side than, definitely, it is -- it is advertised as priority segment. This was a sector that segment is separate and completed on a timing of the books. And if we have we go deliver it, then we call it a delivery parcel. So it's not a general parcel, now there will be only 2 segments. One is the door delivery or the vendor delivery. So what will basically happen, there will be more volume in the door delivery consignment compared to what priority segment used to be or we used to call prepaid. Let's say, [ for example, conditions ] will be there on both consignment and see that the delivery should happen on a parcel mode.
All right. And just door delivery, so what percentage currently we are doing in door delivery?
Door deliveries, it is almost around, say, 25%, 30%.
25%, 30% of the total volume is door delivery?
Yes.
Okay, okay. And sir, regarding this company is starting the consolidation of bus operations. But as far as still now your commentary goes, i.e., sort of -- [ in some of the ] goods from that, what do we mean by saying consolidation in the bus operations? Is there such...
It's always in the sense of the [ annual events. ] Basically, we are looking for some change in the law. Earlier, the government has implemented a new transport bill that were not implemented. And we knew what will happen now after this decision and everything. If a new transport bill comes, so again, there will be more scope for the passenger segment also. But until that, we can't decide anything at all.
Okay. But if this -- if the law is positive in nature, we will be expanding this segment as well. Is this understanding right?
Yes. Until that time, there will not be much investments in that segment.
Ladies and gentlemen, that was the last question for today. I will now hand the conference over to the line of management for closing comments.
Yes, really, I'm thankful to all the participants for their questions here in the question-and-answer session. Thank you, one and all.
Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.