Transport Corporation of India Ltd
NSE:TCI
Transport Corporation of India Ltd
NSE:TCI
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Good evening, ladies and gentlemen. I am Simran, the moderator, and I'd like to extend a warm welcome to everyone joining us for the TCIL Q3 and 9 Months FY '25 Earnings Conference Call.
On behalf of the management, we have with us Mr. Vineet Agarwal, Managing Director; and Mr. Ashish Tiwari, Group CFO. [Operator Instructions] Please note that this call is being recorded. With that, I now invite Mr. Ashish Tiwari to begin with his opening remarks. Thank you, and over to you, sir.
Sorry, sorry for that. Thank you, Simran, for joining -- for moderating this call. Good evening to all of you again. I hope, you would have got agenda copy, earning presentations as well. The same is also available on the website, and also on the stock exchange.
Before we begin this earnings call, I would like to make a disclaimer that some of the statements may be forward-looking and eventually may not coincide with the actual performance. Now I'm inviting Mr. Vineet Agarwal for his opening comments and earnings presentation. Over to you, sir. Thank you.
Thank you, Ashish. As he puts up the presentation for the quarter, I'd like to -- we would like to report a good quarter for us in this quarter 3. I like some of the gloom and doom that we've been hearing of the economy. Some sectors are still doing relatively well. I think we should keep in cognizance that the economy is still growing. Of course, the services growth is higher than manufacturing growth. But even at that pace of growth, there is some movement that is going to continue to happen.
We have been -- we are fortunate that we are looking at industries which are high-growth and industries, which are able to withstand even the GDP pressures or the GDP's fluctuations, so that we are able to deliver performance. Some sectors are weak, as we know. MSME is still quite weak. Industrial activities is moderated, but there are some sectors that are coming off cycles, for example, the chemical sector and so on.
So we are looking at from the full year perspective to maintain our guidance and to exceed some of that also. I'll talk about it in a little bit, going forward. Ashish, put it on full slide, yes, please.
The strength of the group of the company is well known. We have subsidized TCI Chem Log as a new entity. And that entity will -- is already operational, and we have started business in that. I will not dwell much into some of these slides, which are essentially about the industry, how the growth drivers are still intact and continue to help us in terms of our strategy, which is essentially being a complete logistics integrated multimodal logistics provider.
The range of services that we offer today from road, rail, sea and all the other services in between are -- ad specific to many verticals is very, very unique. We are confident that we've been able to build a distinctive moat around many of our businesses and across sectors and areas. We are providing customized solutions also. And going forward, next slide, -- this is -- I will just -- sorry, just go ahead, Ashish.
Yes. So again, the multimodal network is very strong. The rail movement in the last nine months has also increased by about 5-odd percent. And so as the cargo, the TUs handle health also increased. The -- these are some of the capabilities that are quite unique where we are able to provide a complete integrated solution. Technology is at the forefront of what we're doing. Again, dashboards, our control towers for our clients and customers is something that we have created across the board for all -- for the large customers as well as multi-locational customers.
We are present in all the new sectors, not just these that you see, but even things like renewables, where we do a lot of work for, let's say, solar manufacturers, solar plant companies where they have plants that have come up now, all they're importing, the solar equipment and we pack them into containers and we take them by road, rail and sea to various destinations where we -- those terminals are also managed by us. And then finally, we are delivering it to the site as and when they are required. So this kind of integrated solution is, again, very unique for the -- in the country, and we are providing one of those.
So going back to the case study, this is for a warehousing for a client, which is looking at a very high volume and low throughput of certain spare parts. And we have been able to design a solution where we've been able to add more space for them by going vertical. And you can see all this design, the CAD/CAM buying and everything is designed in-house. We have engineers and solution experts who work at this. They look at SKU-wise movement and see how -- what number of SKUs need a fast movement, what needs a slower movement. And accordingly, we are able to bring in the specific design so that we are able to use less space, but also simultaneously increase productivity.
We are happy to report that we've had 18 consecutive quarters of high growth or higher growth over the previous year-on-year. This is quite unique to our industry, and we've been able to deliver this because of our continuous effort to keep diversifying into new areas, and also keep looking at other areas that we can drop off also.
The growth momentum is maintained. I think we are resilient in terms of many sectors, many verticals, the customer base, et cetera. The company remains at -- we have about INR 260 crores, INR 70 crores of cash and about INR 100-odd crores of debt. So we still remain at -- the net borrowing remains 0. Now I'll move to the freight business.
Next slide. The freight business, as you know, we have 25 hubs across the country, control towers are operating for some of our customers. The growth here has been low. And as I've been indicating also, we've been indicating that there is a definitive slowdown that impacts this business. Top-line growth has been there in the quarter, but bottom-line growth has not been there. That shift towards the LTL business is not moving as at that speed, branch opening has also stagnated a little bit because we're seeing that the MSME growth is still weak.
We will look at this more carefully end quarter next financial year to see how we can recalibrate this better. But with the new strategic planning that we have put in place, we are confident that we should be able to achieve the 40% in the next financial year of LTL business. But generally, the business remains weak on the back of MSME growth has been weak.
On the supply chain side, the business remains robust. We have a very strong pipeline in place for warehousing as well as for transportation. We have grown at 12%, 13% for the quarter. And EBIT growth is also, though a little moderate, but still remains on the positive side. The CapEx has increased. We've added new trucks in this, as well as increased manpower. There are several contracts that are right now playing out and underway, which essentially means that there is some bench strength that has been created. And those will get more monetized over the course of this quarter -- sorry, quarter 4 as well as FY '26.
So we are seeing a nice pipeline here in warehousing as well. The Seaways business remains strong, and much to our delight, the business has contributed substantially even with the moderate top line growth. The bottom line improved significantly because of fuel prices remaining stable or slightly lower. All our ships were under operationals. So we were able to get -- deliver the kind of margins a little bit more than what we had expected.
For quarter 4, also, we expect that to continue as well. On the joint venture side, our CONCOR business has grown well, about 37%, 38% in the 9 months with decent growth in profitability as well almost in line -- almost as much as the last financial year. The Cold Chain business has grown about 20%. The margins are a little weaker here because, again, the CapEx that happened last year, some of that is getting monetized. So it will take a few more quarters for it to be on the positive side. But the negative is not too much. It's just very moderate, INR 19 lakhs of loss for the last 9 months. It is cash positive, of course.
Our transition to joint venture has grown about 20-odd percent top line; Bottom line is also quite healthy. For the full quarter, 9 months, if you see the growth has been about 10.8% at the stand-alone level and about 12% on the [indiscernible] level, because this includes the CONCOR joint venture turnover as well. Similarly, the bottom line at the PAT level has gone up by 25%.
We've also included some -- the dividend that we received from our joint venture companies that came into the PAT figure. But of course, that had to be subtracted from the share of profits in the consolidated numbers. So that's why the consolidated numbers is slightly lower than the PAT numbers for the standard alone. The financial numbers indicators are all looking positive. EV EBITDA at 15x, and we've been delivering a 20% CAGR on the PAT as well, all ROCE numbers are also positive at 25 -- it's 27%.
No specific change here. The Board take a decision to really give a second -- a higher second interim dividend to really not give a final dividend. But of course, that is, have to be seen at the end of the year. But this is essentially looking at total 400% as the total dividend for the full year at this point in time. But let's see what the Board decides in the quarter 4 meeting.
ESG goals from an environment perspective, we started looking at our electric trucks. You've added a few electric trucks to our fleet, which will come in soon. Some LNG trucks also been acquired. And we have, of course, several CNG trucks that are already operating. The CapEx for the full year was INR 375 crores. We've done about INR 200-odd crores. We think we should end between INR 250 crores and INR 275 crores in this financial year. The miss has, of course, been a little bit on the hub center, where we've not been able to increase the land purchases that we had planned as rapidly. On the shipping side, the INR 80 crores was the planned advanced payment for the ship, for which we've already done the first payment of INR 65-odd crores.
Some of these trucks et cetera will get added on. So I think we'll get to that -- we'll miss a few numbers, but we get to about INR 250-ish plus crores of CapEx. The trends remain favorable. The top line growth, we're maintaining at 10% to 15% from a guidance for the full year. And for the bottom line, we're already exceeding this number. So yes, we would recalibrate that to the extent of 20% bottom line growth. We're happy to answer any questions.
Thank you, sir, for your valuable insights. [Operator Instructions] Our first question is from Mr. Alok Deora.
And congratulations on the great set of numbers. So first question is on rate dividend. From margins, if we see that it has been coming down, in fact, it's a multiyear low. So how do we see that because even growth is pretty subdued and so is the margin performance.
Any reversal expected anytime soon or how do we see that sat now for us, because the share of LTL is not increasing, and it seems to be a problem for the industry as a whole. If you could just indicate on the freight division, what's happening there? And how do we see it going ahead?
Certainly, if you see the quarter 3 growth has been about almost 9% as well as for the full year, it has -- for the first 9 months, it's only been 7%. Now which means, quarter 1 and 2 are of course very weak. Quarter 3, the pullback -- I mean, the pullback has happened as well as quarter 4, we should see that also. So that will start reflecting on the margins also. Some volume growth definitely helps simultaneously.
Notwithstanding, we know that there are certain sectors in the economy that are quite still weak, even some industrials are weak as well as certain consumption, whether it's paints or whether it's plywoods or some electrical equipment and something, that's also pretty weak. So it would play out for the next 2 quarters, at least, barring quarter 4 should be decent then quarter 1 and 2 of the next financial year should be slightly on the weaker side, but it should start picking up because of the expected good festival season in next financial year.
So we are quite positive, and I think the numbers are, yes, on the weaker side. But looking up positively from the top line sector and which will hopefully start reflecting on the bottom line as well.
And on the Seaways, I mean, now you know quarter-by-quarter continues to surprise as far as margins are concerned. So just some color on that. And also any update on the secondhand ship, which you were counting since some time now, because the freight rates have also started to come off, from what it was maybe a couple of months back. So any -- even -- are we in any discussions with prospects regarding the purchase of the secondhand ship? And if not, then what do you see how the growth could pan out for the Seaways for next year? Also, since you already had 3 quarters down the line, if you could just provide overall revenue guidance for next year as well.
Ashish, can you put this on full slide, please? So the secondhand ship is, of course, a challenge. We just were evaluating very recently about one of the ships that we bought in 2019, '18, '19. And that same ship that we bought is now still available, a sister ship at 3x the price.
So the prices of secondary ships have not really come down, and it is still not making economic sense to really look at that yet. Notwithstanding, we will look at it in the next financial year. We are budgeting between INR 125 crores to INR 150 crores next year for this, which would be possibly looking at quarter 3, quarter 4 of next financial year. Now, again, mid of 2026 is when the two ships that we've already ordered in China should start coming in. So they will not have an impact on FY '26, unfortunately, but FY '27, we will see that impact.
So right now, we will spread these assets as much as possible and keep a look out for the secondhand ship. We're also hoping with the possibility of some of these wars reducing, the ship prices will come down. Plus there is, of course, talk about a little bit of a global recession. So some of that might also depress shipping prices. And new capacity addition. I think that is also coming about with the orders that were placed 2, 3 years ago.
So all of these factors would mean that, hopefully, next quarter -- or sorry, quarter 1, 2, FY '26, we should see some prices coming down and we can acquire.
On the full year guidance for next financial year for the whole company, well, we are budgeting about 10% to 15%. I know this sounds like a broken record, and we keep saying it. But if you see what we've been predicting, we've been -- it's been on that line with certain assumptions. But the idea here is that, consistency of growth is important, which means that there are some businesses we let go very often, if the -- are not coming up, and I have repeated that many times. So the top line should remain there, bottom line should be also better on the -- perhaps on the higher range -- higher teens.
That's all for s -- thank you, all the best.
The next question is from Mr. Jainam Shah.
Congratulations on a good set of numbers. So starting with the freight division as, of course, you've highlighted that the top line growth has not been that great and which is eventually leading or hurting our margins. Just wanted to check any kind of a competitive pressure letting down our -- you can say the realization or something to have a kind of growth and eventually, our bottom line is not increasing? Or we are still holding the price or even increasing as and when required?
No. As and when required, we increased the pricing. There is, of course, competitive pressure. There has never been less pressure in that business ever in the last 30-odd years that I have been working in the company, but the price increases are only taken if the industry is quite strong.
But since the LTL business is mostly done with MSMEs, A lot of it is MSMEs. They are still on a weaker footing. So that has an impact on the overall capacity for them to really use services like us. So they tend to go to more regional players or cheaper players if they have movement. But I think I mentioned this last time also, there is some pressure from express companies. But again, we're not seeing it that much, it comes on and off from a capacity perspective. But yes, competitive pressure remains.
Noted sir. On the Seaways side, if you can provide the data, like out of 6 ships, any ships will be going out of the operation after completing 30 years, say, next 2, 3 years? Or it is this capacity getting added in FY '27 would be like addition and there will not be a reduction at least for the next 2, 3 years from the existing ships.
No, there will be reduction for sure. But the thing is that there are some ships that -- we believe that there is a discussion that is underway with the government where some of these ships can perhaps get extended. There was some -- the Bill -- the rule that came out might be reviewed again, is what we are hearing. So it is still tentative. But we have planned that, yes, if those ships do go away, we will lose a little bit of business, but hopefully, we can substitute it with the secondhand ship planned for FY '26 and then the new ships in FY '27. We might even consider buying more new ships so that can also be part of the agenda to explore larger vessels of new build, which would come in FY '28 or something like that. So we're keeping all our options open.
Got it. Got it, sir. Sir, just one thing from the Supply Chain Solutions segment as you have been quite confident on the pipeline from the warehousing and transportation part. Just wanted to check what could be the realistic growth that we can do is the growth that we have done over the last 7, 8 quarters. Is it the same thing that we can expect for the next few quarters or years? The pipeline is very much strong. And of course, we have done good amount of CapEx over there as well.
Yes, we do expect that to remain consistent, that 10% to 15% growth on supply chain on quarter-on-quarter is what we're expecting.
Got it. Sir, just last one thing from my side. I have been reviewing the financial of the Transystem as well. And I believe largely, the supply chain segment of ours and the Transystem will be doing were largely similar. Of course, the client base would be different. In that particular financials, I was viewing the EBITDA margin and EBIT margin quite higher than what we are reporting in TCI. So is it the pricing power that transition is having because of the client? Or there is something that we can also catch up to that margin going forward?
No, I think it's not competitive, the business, because that business is mostly with one or two clients -- rather very few clients there, specifically automotive logistics. Whereas we -- whereas in supply chain solutions, we are doing a lot of warehousing as well as multi-verticals, multiple verticals, not just the four-wheeler segment, but also two-wheeler, [indiscernible] equipment, tractors, et cetera. So certainly, it's a little bit more different. So I think very difficult to compare.
Okay. But the EBITDA has been in the double digit in that particular company, whereas we are having 6% on an average, of course, this has been a trend for the years. But we are not expecting any EBIT margin growth in that segment. Is this correct? -- maybe 50 basis points or something could be there, but nothing large at all?
That's right. Yes, that is right. Because there's also an investment phase in that business, which is essentially trying to ensure that we have enough capacity that gets created for the new contracts that are coming in, and some capacity gets created over the course of the next few months, which -- sorry, the contracts have started, but that the monetization of those contracts are not there completely.
The next question is from Mr. Amit Dixit.
Congrats for a good set of numbers. A couple of questions from my side. If I see the performance of CONCOR JV, I mean, that has been growing from its strength to strength in an otherwise very weak logistics market. So, just wanted to understand the key drivers over there, and how we see it going ahead?
Well, the CONCOR business that we have is essentially a business where we are using multimodal logistics and we are getting clients that want both road and rail solutions, and that the first mile and last mile is using road services. And the middle mile is clearly the rail services.
So there is also some conversion that happened with a few clients in the last months -- that has helped the business. Some areas like growth -- high-growth areas like renewables, et cetera, are areas that we've also caught up. There, we've seen growth. And generally, when we go to some clients and talk to them about shifting from road to rail, I think that also helps.
So overall, the business has been robust, and we expect it to continue for the next few quarters.
Okay. The second one, again, going back to freight division. So -- if I look at the performance, there has been revenue growth. However, margin has contracted and EBITDA growth is not -- in fact, EBITDA decline is there. So is it a function of higher costs or the product mix between LTL and FTL in this quarter? And have we hit the bottom as far as the margins are concerned for this division?
Yes, I would think so. I think the margin expansion or rather continuation of retaining the same level has not happened, because the growth in the LTL business has been much weaker. And we are diligently looking at increasing that. And this year, we should not be able to increase it, unfortunately. However, we are -- we have recalibrated and we've had strategic discussions around as to see how we can increase this going forward.
So I would think, yes, we are possibly at the bottom right now on this.
The next question is from Mr. Krupashankar.
We can take the question of Mr. Pinaki Bannerji.
Yes. Okay, sir. Sir, a couple of questions. So first, the -- in the freight division, actually, you are basically on that there is a weakness in infra and capital goods sector. So basically, in an interview last month to outlook business, you stated that given that the government is spending much on infrastructure, the election-related issues. There is a slowdown in -- there is a slowdown in spending. So do you think in the coming months once the budget gets through and other things, the situation is going to improve.
I do believe so. I think the government has realized and I'm sure in the economy we can -- we all realize that there is an urgent need to keep up the government CapEx, government spending, because that will ultimately trigger private CapEx as well. And the budget that the government had fixed for the infrastructure this year, they will not be able to complete it. So there will be some carry forward for in the upcoming budget as well as new targets as well.
And we know that infrastructure spend has a triple sort of a 3x, 4x kind of an impact on economy, and impacts both in 15 industries also. So I think any such increase or even the continuation of this expense will definitely have on our sector. I mean we have a direct impact. One is that the locations that get set up, where the ports are being set up or highways are being set up. They all help us in ensuring that we have better connectivity, better speeds, intermodal movement is seamless.
All that helps in where there's infrastructure. And then the other industries that are impacted, we are doing transportation for them. So if a metro line is being built, we are doing transportation from the engineering side, from the electrical side or metro coaches or equipment around that. So from a logistics sector, infrastructure growth is just fantastic. So we do expect this is going to be very positive.
Sir, you are harping more on this renewable and chemical sector for the future of opportunities. So please can you elaborate on this?
Well, this is one of the few sectors. We, of course, do work in many, many sectors. And I'm just telling you about higher growth sectors, chemicals or these other areas that are coming up now.
See, what's going to happen is there are -- if you look at 20 years ago, 25 years ago or 25, 30 years ago, there was no telecom industry. Now we have a massive telecom industry. Similarly, EMS as a business opportunity never existed a few -- a few years ago. Now that has become a big business. Similarly, chemicals is a large industry, but it's not formalized in terms of logistics. So we expect that to be a big industry also. So like this, there are shifts that are taking place in the Indian industry ecosystem, which would mean that organized players like us with the diversified portfolio, multimodal portfolio, should get benefited.
Okay. So that's all for my head. Thanks, all the best.
We have Krupashankar back with us. Sir please proceed with your question.
A couple of questions. First on the supply chain business. Just wanted to get a sense on the pipeline. We did mention that there are a few contracts which will come on stream, starting in from second half in the previous conference call. So just wanted to get some check around, what is picking traction? Which of these sectors you're seeing where contracts are growing or adding more value to our operations.
Well, we have acquired several contracts in the quick commerce, in the FMCG sector, in the e-commerce business as well as in automobile spare parts, as well as some -- and there are several underway in the consumer durables and other sectors as well, including some of the ones that we already named. So yes, the traction is good.
As I said in the last call, some of them have come on stream this quarter. And going forward, Q4, we will see better results from some of those and some will be translated in the next few quarters because it's not -- these contracts take much, much longer time to mature. And once you -- once we win the contracts also, there's typically between 2 and 4, 5-month time for it to be implemented because these are very large contracts. It means organization of people, resources and so on. So there is a lag between even winning the contract and finally, the revenue is flowing through. But yes, the pipeline is robust.
Why I was asking this is also related to the fact that pre FY '22, '21 or so, we had margins of close to 10.5%. Given that these are segments -- or these are end user industries, where warehousing proportion will be relatively higher, does it translate into a better margin profile for the segment as a whole over the medium term?
Well, our margin profile is still better than almost every competitor in this segment if you see that. Because we are quite selective in the type of work that we do with some types of customers. There are some customers who squeeze you, and there is a tendency and propensity for customers to squeeze right now since corporate profits are not growing as much. So supply chains are getting squeezed as we speak -- supply chain costs.
So there we are cautiously maintaining the right clientele so that we are able to maintain this profitable margin. So there will be some pressure plus/minus this 100 basis point movement is there. But it's not dramatic. It's not -- we've lost more numbers there compared to our competitors.
Lastly, on the freight business, I wanted to get a sense. While I do understand the efforts are in full swing to improve the LTL proportion to 40%. Taking a step back, given if this is quite hypercompetitive, we are not able to pass the incremental cost to end customers because of specific challenges in the end market. Is it better to take a step back and just focus on FTL until things evolve? Or is it we want to take a step in that direction of -- to capture on future growth on FTL? What is the thought process there with respect to LTLs?
So I think you cannot let off your -- let the pedal off on things like LTL, because then you can just dramatically drop the market. You want to be present there even though there could be some pricing pressure and so on. Because it's important to be available to the customer. Now today, he could look at alternatives because he's looking at price. But when he's looking at service, always looking at the network, looking at stability, insurance, reliability, then it comes to us also. So there are these times, I would be too worried about dropping something like this, but it is an ongoing thing. It's not going to stop.
So is there any targets relating to branch network addition probably over the next year or 2.
I think 100 branch network expansion will possibly continue for the next year. I think we might end up with around 50s fiscal. And maybe the next fiscal, we look at it in the 50, 60 or so.
The next question is from Mr. Tufin Karakia.
Tufin Karakia from SKP Securities. I just had one question to ask. I just wanted to understand what is the total planned CapEx that you have for FY '25, '26, '27, including ship acquisition?
If you go to that slide, Ashish, we had a plan of INR 375 crores for this fiscal. And I think we -- the Board is working on a budget, which will be about the same for next fiscal. And I think FY '27 should be also the same. [ INR 250-ish ] crores of CapEx year-on-year. That's the -- that's the plan. I would think that it will moderate up and down based on that year, as to what gets delivered and what doesn't get delivered.
The next question is from Mr. Amitabh.
I'm asking this question on behalf of someone else. Just three small questions.
I'm sorry, where are you from?
I'm from Mumbai.
But are you representing a firm or...
No, no. my brother.
I'm sorry, we would not like to take individual questions here, please. Please write to us and we'll take those questions.
Thank you, question is from Riya Mehta.
My first question is in regard to the freight business. So I think overall in the express logistics also, we are seeing some pains out there with a other commentary from the sector rise. So what do you think needs to change for us to see incremental growth coming from this particular division. What sectors are doing good and what sectors are lagging behind?
Well, consumption sectors are definitely lagging behind. And I think some of that has an impact. And the MSME sector is weak, as I've mentioned.
How much for us, as a percentage if we have to have just broad directional outlook.
I'd say, 36% of our freight business is coming from LTL. And a lot of that is MSME. So that gets impacted, and that's the Express business as well, where they focus on the higher end of value versus the LTL business focus a little bit on the lower end of the value chain.
But industrials, let's say, some pump manufacturers there, the volumes are slightly slower or some small equipment manufacturers that there the volumes are lower. So generally speaking, it's across the board. It's not very specific. I think there are industrial barometers that you can read about also, which are talking about them, but it's across the board.
Got it. And for us, is it as a function of volumes? Like if our volumes of LTL business increases, the margin will increase, right?
Correct. You're right.
So 1% increase in share of LTL would lead to any ball park number for increase in margins?
See the -- it's marginal, but let's say the ratio is 20% gross margin is the LTL business, and 10% gross margin is the FTL business. There will be a corresponding increase. We are at 36% of the overall business in freight is LTL.
My second question is the supply chain management. So for a large part of it, we are doing auto. So since auto is weak, maybe this last couple of months, not the entire quarter. But however, it seems pickup coming forward. So what is it a view on auto in that particular segment? And how do you see it panning across?
Well, auto for us has been decent tactfully, because we don't do only four-wheelers. Four-wheelers growth has been moderate as we know, two-wheelers growth has been good. So that has helped us. Of course, commercial vehicle, earthing equipment as well as the tractor growth has been moderate. So -- but generally speaking, we are quite positive. We've had decent growth in the automotive space also. There are some customers that we work with have done reasonably well. We are seeing a shift towards EV in both 4-wheeler, 3-wheeler, 2-wheeler and that has helped some growth for us.
So yes, I think for us, the growth has been okay on the positive side versus the general feel in the industry.
So auto from how much percent and when you said 10% to 15% growth Q-o-Q are kind of directional outlook? Where do we see this growth coming from?
Well, it's -- auto is about 80% of our supply chain solutions business, and the growth is coming from -- there are various areas where growth comes in the automotive sector.
First is that there is that existing plant, which goes for capacity addition. So you get some additional business there. Then that company itself opens up a new plant somewhere else so that is another possibility of expansion of business. And the third is, where there is a completely new company that comes in, sets up a new plant. So all these three things are happening in the Indian economy as we know. And that essentially means there is a growth opportunity for logistics providers like us.
So we are confident of 10% to 15% growth on a Q-o-Q basis coming from auto?
Auto as well, yes.
What other sectors do we see as the [indiscernible]?
We'd work with chemicals, consumer durables, FMCG on the warehousing side, on some of the transportation side as well and industrial gases. And -- so all these high-growth sectors.
So on a sequential basis, we would see better growth in this segments, because auto is doing well in my -- is my understanding right.
Well, sometimes you see auto not doing too well. For example, a slowdown that happens once in a while, but I think sequentially, we are seeing a 10%-plus increase on the top line, at least on the supply chain business on our next few quarters at least.
Got it. And Seaways business basically, how is the freight rate impacting us? And could you elaborate on the business model over there?
We are not impacted by international freight rates directly but indirectly in the sense that if international freight rate is going up, then some ships moved to the other waters which creates capacity shortage in the sectors that we operate, which is essentially on the West Coast from Kandla to Cochin, and on the East Coast from Chennai, Visak to port player, which essentially helps us in terms of increasing our revenue as well as margins.
Got it. So on now in Seaways business, what is your outlook going forward? And those ships which we have taken for assembling our own by, when will they come?
Outlook is -- right now, the growth that we have had in the quarter, gone by, will continue. We have one ship that will go for dry dock in the second half of March, which is the last 10 days or so. So we will lose some capacity there. But otherwise, it will come back in early April -- mid-April or so. And the new ships will come in mid-'26. So FY '27 -- '26, yes.
Mid FY '26 or calendar year '26.
Calendar.
Calendar year, mid 26, but the revenue will occur only in FY '27.
And we do have two dry docks next year also, FY '26.
FY '26, we have two dry dock. That would be what capacity around.
They have the smaller capacity, two small ships.
And the current March to April would be what capacity dry dock?
This current is 350, yes, not very large. 350 to 400.
And what would be total capacity?
Total capacity is 78,000 DWT, this ship is 10,000 DWT, which is going for dry dock.
[Operator Instructions] So we have next question from Mr. Chinmay Nima.
Sir, my name is Chinma, I support calsun company. A few questions on the freight business. So on the LTM and FTL side, where do we lie in terms of pricing? So are they a more premium end player? Or are we more on the economical side.
Definitely more premium, because we do not compete so much with the regional payers. We have national presence and with our offices across the country. So we are able to provide some -- I mean, better services to our clients.
Got it. And from a long-term perspective, should one think of growth in this business are the function of growth in the underlying industry? Or are there any additional levers on growth, maybe gaining more market share or pricing power or [indiscernible]?
Well, I think the growth is going to come from -- comes from various areas. Of course, the industry growth is one straightforward growth, which comes by the business market size growing. And the other is, of course, impact of network. And the third is quality of services.
So all of these three factors help in overall growth. And the fourth for us has been a factor that we offer both services, both FTL and LTL for many of our customers. And that is really useful, because there are some -- our competitors are only either in LTL or only in FTL. There are very, very few players that are national presence with both FTL and LTL. So that is the other benefit that we have from a USP perspective.
Got it, sir. And I think you've highlighted that, you are also facing some competitive pressure from express companies. Could you give some color on how their operations and operating costs differ from how you run the business?
I would not be able to comment specifically on the express company's operating leverages, but I think the way that they operate is essentially a fixed capacity that needs to be monetized as it is perishable. In our case of LTL business also, some of it is there, but we also try to manage it with loads that we can delay a little bit, because time is not a major sensitive factor -- where expressed time is an important factor. So it is not as fast as an express business. So hence, we are able to optimize some of the loads a little bit more. So yes, that's one of the main reasons. I think, main differential in the second is, of course, GST rates are different. The LTL business operates at a much lower GST versus our Express business.
Got it. And sir, lastly, on the supply chain division. Typically, do all customers offer the end-to-end service of planning and execution or is it limited to certain customers and others offer more basic services like warehouse and some color on that.
Yes. I mean not everyone wants the same thing. It is different customers wanting different services.
So would it be possible to share the revenue split?
No, we don't do it that way, because there could be one customer that could start with something, but they could end up with something else or they could keep adding what they want over the course of the year. You might start up with a warehousing then say don't do the transportation, then it's okay, do the inbound also, do this. So it's very difficult to really split it that way.
The next question is from Mr. Vikram Suryavanshi.
Will currency be concerned in an acquisition of Stina?
Slightly, yes, the depreciation impacts our cost structure a little bit. But it's not substantially.
Okay. And how is...
We'll also look at the hedging strategy as well going forward if it is required.
Understood. And how was the return load? And if you can give some outlook on that side as well as the situation in Red sea, how it can impact going ahead?
Return cargo is still moderate. It's not that much. So we don't have much traction on that per se. Red Sea is our bet is as good as yours, what is going to happen. Let's hope for the best, if that -- well, for some companies that crisis is helping them. But net-net, it doesn't help anyone, right?
Right. And would it be possible to give what was the profit number for 9 months in Transystem as well as the TCI CONCOR.
I think Ashish can share with you separately.
The next question is from Mr. Jainam Shah.
Are we following forward charge GST or reverse charge GST in our freight segment or in LTL segment?
Ashish?
LTL is a reverse charge.
Okay. So by any chance, any discussion on the changing the registration from, let's RCM to forward charge? Like there has been a deadline of maybe 15 Feb or 15 March when one can change. So any industry discussion or a company specific discussion to change this because you'll be getting the credits in that case.
So there's no -- like -- so that is the deadline for choosing the option of it. So we are in constant touch with the various customers. And as and when it suits the contract, we do try to charge that of forward charge. And we do have some business which is also on the forward charge in the freight change.
We have next question from Mr. Sandeep Wawal.
Just a question -- just with regards to -- are you not planning to preserve cash for a rainy day. This is actually in the relation to the distribution cash in the form of buyback that you have done recently and also the higher dividend payout. So it's good that you're paying dividend higher, okay, that's that you see be paying higher dividend, but are you not trying to preserve cash.
Well, no, we already have INR 250 crores of plus of cash on our books, and we -- debt-to-equity ratio is $0.09 or 0.08. So not leveraged at all. We have no working capital limits that we have used. We have enough assets on our books. And the business is robust. We're generating of INR 450 -- INR 500 crores of -- INR 550 crores of EBITDA yearly. So in that sense, just return on capital gets severely suppressed with so much cash. So our philosophy has been keep it moderated and balance it out. We are not going all out. Also, We are not going completely rather we're not going -- holding on too much cash also and holding on to nothing else.
The other one was with regards to the asset led model that we are heavily focused on. And we are planning to buy ships, right? In fact, we also are cleared for 2 already. Are you not looking at leasing ships? Or is leasing is not a good proposition versus having own ships to run the kind of business model that we have.
Our business model is not asset-light. Our business, unlike our competitors, we are a medium asset company, which is that we don't go heavily into assets also or we don't go completely lack of assets.
It's a medium strategy where we've seen that has worked for us because in certain areas, for example, shipping, having our own ships has been very positive. So if you would have chartered ships, the rates would have fluctuated like anything, and we would have not got the benefit that we're getting today. Literally, everything goes away into cost. Notwithstanding, we keep looking at chartering options also and for sectoral or for short-term purposes, et cetera.
But right now, buying ships has been very profitable for us, and we intend to keep up that as well as keep up the idea for chartering.
And one final one. Having been tested by some of our competitors, are we exploring drone technology or we have a strategy where as seen on previous occasion, right? We don't want to be the first mover. We watch the market and then we take steps, right? Is also a good strategy? And also one of the way that we do it is that if a customer comes asking for us for that particular service, then we follow through.
For us, we don't do customer deliveries. We don't direct to customer as in a singular.
Not customer, sorry. Yes, not singular.
B2B deliveries don't require drones right now. It could be only for specific -- right now, we are seeing maybe in the cold storage type of business where medicines or any blood et cetera needs to go, that can require some kind of delivery. But no B2B customer is really requiring any kind of drone type of delivery so far. We have not seen that elsewhere in the world also. So it's mostly on to singular customers, singular consumer, and we don't do that.
We have Ms. Riya Mehta back with us.
I would just like to reiterate for the full year, do we still maintain 10% to 15% profitability growth for FY '26?
No, we are upping it to 20-plus percent as we already achieved most of the...
Sorry, I've been asking for FY '26.
Yes, 15% to 20%.
15 to 20% PAT level growth, right?
Yes.
There are no further questions. I'm handing over the floor to Mr. Ashish Tiwari for closing comments.
Thank you again for joining the call. I think that we have answered all your questions. And those who are the first timer, I am seeing that they would have a better idea of the company. In case you would need any further clarification, please write us back. And thank you very much for joining the call again. Thank you. Take care.
Thank you.