Skyways Air Services Limited (SKYWAYS) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to SkyWay's Air Services Limited Q1-FI27 Earnings Conference Call hosted by Dollop Capital Markets Private Limited. As a reminder, all participant lines will be in the lesson only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchdown phone. Please note that this conference is being recorded. In our hand, the conference, over to Mr. Kapal Yadav from Dollars Capital Markets Private Limited. Thank you, and over to you, Mr. Yadav.

Thank you, Niro. Thank you very much. Good afternoon, everyone, and welcome to the Q1 FY27 earnings conference call of Skyways Air Services Limited, hosted by Dollars Capital. We are pleased to host the company's first earnings conference call following its recent listing. From the management side, we have with us Mr. Yashpal Sharma, C&D Skyways Group, and Mr. Himanshu Chhabra. I would like to hand over the call to the management for their opening remarks, following which we will be open for the Q&A session.

Thank you, over to you, Mr. Sharma.

Thank you, Kapil, and thank you, Nirav, for positioning this call. Good afternoon, everyone. On behalf of Skywayway Services Limited, I would like to warmly welcome you to the first earnings call. On the call with us today, I have our Group CFO and World Time Director, Mr. Himachu Chhabra here. We are the team of Gallup Capital and our Investor Relations Advisors, AdFactors team as well. This is a very important milestone for us. The listing marks surely a beginning of a new chapter in our engagement with the capital markets. Our journey in the logistics industry, of course, goes back four decades. Since our establishment in 1984, we have progressively built capabilities across air freight forwarding and broader logistics value chain, while investing in technology, people, and an increasing global operating footprint. We look forward to using this platform and communicating our performance with greater transparency and to build a long-term relationship with you, our investors. I would like to start by setting some context in terms of our industry and operating environment before getting into our business. So, ladies and gentlemen, the industry and market environment, the global logistics and air freight industry continues to operate in a very, very dynamic environment. Freight flows are being influenced by changes in global trade patterns, geopolitical developments, fuel costs, supply chains, realignments, and evolving customer needs. At the same time, we see structural opportunities arising from growth of cross-border trade, e-commerce, time-sensitive business, and increasing integrated supply chain solutions. Customers are looking for logistics partners who can provide reliability, visibility, speed, and most importantly, carrier capacity in access, especially in difficult times like what we saw in the Middle East work scenario recently. What they also need is a broader range of services today, which go across the means of transportation, stocking, or distribution options at diverse geographies of the trade, rather than just a simple point-to-point movement of goods. We believe this environment creates an opportunity for someone like Skyways, who has established technology-enabled logistics solutions with capabilities of handling scale.

So, sorry to interrupt you.

We lost your address in ERS. Part of the sentence, please stay connected. We have lost the line for the management. Ladies and gentlemen, thank you for your patience. We have the line for the management. We connected.

So, Neeraj, I assume that I was heard till when I was starting to talk about industry and market environment.

Yes, sir.

Okay, so what I would just do is I'll just reposition what I had just mentioned just to make sure that there is continuity to what I spoke. The global logistics environment today is very, very dynamic. The logistics freight flows have been influenced by changes in global trade patterns, a lot of geopolitical developments, fuel costs, supply chain realignments, and constant customers' evolving needs. At this time, we see structural opportunities arising from the growth of cross-border business, e-commerce, even time-sensitive cargo, and increasing integrated supply chains. Customers are actually looking today for logistics partners who can provide reliability, visibility, speed, and most importantly, the carrier capacity, which gets very difficult to access in difficult times like the Middle East war that we just saw. What the customer also needs is a broader range of services which go across the means of transportation, stocking, and distributing options also across diverse geographies on the globe rather than just a point-to-point movement of goods. We believe this environment creates an opportunity for someone like Skyways who has established technology and able to logistic solutions with capabilities of handling scale, global tarry relationships, and a diversified service capability. The Indian logistics industry across the means of transportation is also expected to grow by 40% to 50% over the next five years, opening huge opportunities for art, trucking, ocean, express, and other logistics solutions. This industry is to about by 2031. Taiwan has built a strong position in India's air cargo freight market. According to the World ACD market data for chargeable volumes, we have retained our position as the number one air freight forwarder in India and are now ranked 44th globally as well in the air cargo for the Q1 of this financial year. Our Indian market share has also strengthened from a 5.9% to 6.2% on quarter to quarter basis. We see the position not simply as a market shared milestone, but as a reflection of the trust we have built with customers, airline partners, and our wider logistics ecosystem. We successfully navigated the West Asia crisis by creating alternate airline capacities for our valued customers. This not just strengthened our position with our current customers, but also has helped us to acquire some new customers as well. The Ministry of Civilization has set out a very strong vision of getting to 10 million metric tons from last year's 3.96 million metric tons over the next five years. As the air cargo segment continues to grow on the back of new airports, enhance capacities, and at current airports, even bringing in new aircrafts by the airlines through a very strong order book, very sizable, ample growth in India's aviation. This, ladies and gentlemen, will mean huge opportunities for us to also get a higher and a bigger slice of the enlarged air cargo cake. SkyWay has always outgrown the market growth over the last 10 years by a fair distance, and we feel confident the trend will continue in times ahead too. Importantly, our ambition extends beyond air freight alone. Though, through our group company's subsidiaries, we have developed capabilities across ocean freight, warehousing, trucking, express cargo, cold chain solutions, Cross-border custom brokerage, and also specialized logistics solutions. This gives us ability to increasingly serve customers through a more integrated logistics proposition. Technology is an important part of this evolution for Skyways. Not just since inception, but especially over the last 7-8 years, We have developed some excellent technological capabilities to improve operational efficiency, shipment visibility, pricing, and customer experiences. Our technology platforms like SLS Hike, Cargo Dash, SLS 100X are designed to digitize and streamline logistics life cycles. While our multimodal platform is intended to bring air freight, ocean freight, and courier express together through a unified interface, We believe technology will increasingly allow us to improve productivity, provide greater transparency to customers, and scale our operations without a proportionate increase in complexity. Our objective is to create the strengths of a traditional logistics network with the speed, visibility, and scalability of a technology-enabled logistics platform. We are soon launching one of its kind platform called ASAP, which will tremendously enhance our customer acquisition and will bring huge ease of transacting for customers across the country, especially in Tier 2 and Tier 3 markets, where customers currently have limited access to competitive pricing and carrier capacities. Our international footprint expansion remains as one important element of our future growth strategy. We have established subsidiaries and operating relationships across key markets in Asia, Europe, and Middle East, and some of the other international locations. These relationships allow us to provide customers with coordinated logistic solutions across geographies and strengthening our ability to support cross-border business. At the same time, we continue to diversify into specialized cargo and value-added logistics services. Our focus is not diversification for its own sake, for building complementary capabilities around our core freight franchise and deepening our share of customer logistics requirements. Our key focus shall remain towards building our volume scale in times ahead too. Our focus on staying diversified across commodities remains the ethos of the organization. We will keep the energy fully set towards strong and emerging commodities like pharmaceuticals, textiles, consumer electronics, automotive, defense equipment, and more. Our technology continues to API-integrate carriers, vendors, and customers to Skyrim's logistics ecosystem, bringing ease of moving goods from one point of the globe to another with utmost ease. Ladies and gentlemen, I would like to put a pause to myself here. I would like to hand over this call to our CFO, Mr. Imanshu Chhabra, to take you through the financial performance, and we'll be here for the Q&A after this financial performance is done by him. Thank you. Good evening, ladies and gentlemen.

I welcome you again on the maiden earnings call after the Q1 results of the current financial year FI27. Before I start the Q1 result analysis, I would like to spend one minute on you to take the growth journey of SkyMaze since 2004 till the financial year, 2024 till the financial year 26. So, the revenues, operating revenues grew from 1289 crores in FI24 to 2812 crores in FI26, which was a stagger of 48% in the two-year audited numbers, the full-year audited numbers that were also part of the RHV. Now, coming on the quarter one analysis, it has been a stellar quarter on all the counts for the company. If we talk about the realizations, the realizations have improved. There has been a volume growth of 23% in our main revenue segment, which is air cargo operation. In ocean freight, there is a realization growth of more than 64% and a volume growth of 18%. So, you know, the ability of the group to pass on the cost or the cost increases in the trade segment is very, very evident, and the realization increase, substantiate a very stellar performance in terms of the operating capability and passing on the cost and making money, the margins on the overall revenue. On the express side also, we have delivered a significant growth of 64% in the revenue to 63 crores and delivered 59,750 across 31 locations. Coming back to the air cargo number, so the overall volume growth has been 23%, and the number of customers have remained stable with no loss of customers in the overall portfolio. The profitability on the EBITDA, operating EBITDA, has improved from 27.31 crores on a consolidated basis to 15.12 crores, which is an increase of 83.5% year-on-year basis if you compare the two quarters. On the revenue side, the operating revenue has increased from 639 crores to 1216.53 crores, which is a seller performance increase of 90.4%. The profitability has increased from 11.01 crores to 26.79 crores. A number which I also want to highlight is as regards the employee benefit expense as a percentage of revenue quarter on quarter, if you compare on the year-on basis, has reduced from a 4.41% to 2.94%, and the other expenses have also gone down as a percentage of revenue from 2.5% to 1.76%, which has helped in increasing our margins, the PAT margins, from a 1.72% quarter 1 FY26 to 2.2% quarter 1 FY27. In the Q2 also, we are expecting a decent, the trend of increase in the volumes is reflecting in the quarter 2 as well. So we are very happy to announce that on the operating side, the company's performance is improving quarter-on-quarter as well, and the year-on-year performance of 23% is already to be seen and analyzed by all of you. On the growth opportunities going forward, the management has already approved, as for the board meeting which was conducted yesterday, the board has already approved the expansion into five new geographies in Asia, and we hope these offices shall also add substantial volumes once the initial stabilization period is over. I thank you everyone again for your time, and appreciate any questions that you would have on the financials. We will be very happy to answer the same. I will again hand over the mic to Nirav for taking the call forward.

Thank you very much.

Thank you very much.

We will now begin the question and answer session. Anyone who wishes to ask the question, may press start and 1 on the test on telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

Participants, you may press star and 1 to ask the question. Ladies and gentlemen, you may press star and 1 to ask the question.

First question is from the line of Uttakarsh Maheshwari from Anderson General Insurance Company. Please, go ahead.

Good afternoon, sir. Am I audible?

Yes, go ahead.

Yeah, am I audible, sir? Hello, am I audible?

Yes, it's better.

Yes, Akash, you're audible. Go ahead.

Yeah, yeah, yeah. Thanks for the opportunity, and I think congratulations on a good set of numbers. Just want to understand what should be our steady state, I mean, revenue run rate, because, I mean, as we compare with the last quarter, it was almost doubled on a Y-O-Y basis. Even on a Q-on-Q basis, there has been a significant growth. So, how do we should focus this number on a steady-state consistent basis?

So, Mr. Maheshvi, thank you for your question. Firstly, you know, as you can see that we've had a very consistent growth in our volumes over the years. Even in this quarter, we've had a very significant growth in the volumes across all our products. And there has also been, due to the fuel increase, fuel index increase in this period, There has also been an increase in the per unit cost, whether it is air or ocean, etc. So, the whole bucket of the way you look at the revenue, almost 23 to 25% of that comes through the volumes, and the rest is coming through the increase in the per unit cost for the logistics.

I think there was some change in the presentation. You have highlighted some improvement in the yield. So, I mean, this improvement in the yield is sustainable, I mean, for the air, what we have mentioned.

The yield increase, if we talk about the air cargo, which was at about 259 in Q126, and it's gone to about 416 now. And like I said, you know, if you look at the significant increase in the fuel index, which was, you know, in January this year itself, was at around $61 a barrel. And if you look at May numbers, that was about $110 a barrel. All right. So there has been a very significant increase. So a lot of this yield increase is basically the per unit cost increase for us, for the freight. And a significant part of this is the fuel index. So the fuel increase cost is actually factored in this.

Okay. So is this cost to be kept here only or I mean if there is a decline in crude so we have to come back lower?

So, the fuel index, fuel is a pass-through from us. So, whatever the fuel index, which is globally available, the indexes are very easily available and practical across the world.

So, if I want to understand how much of the overall growth, what we have seen, it should be like, well, if I see if the price of Brent comes down, so what should be our steady-state growth rates? That is what I am trying to understand. You have mentioned 23% is the volume growth. So, what should be the price growth over and above other than the fuel side? I mean, or is it like it will be, it will remain like this in the

freight cost and the fuel cost always remain very dynamic and they can be tracked to, you know, various sources that are available. If you want, I can share a couple of sources with you as well. And, you know, what we can control, a controllable factor from our side is the volumes. And that is what we always continue to focus on. So even if there is a, you know, there has been a small revenue per yield decline at any time, even in the historical times, our volumes are generally compensated for the increase of that. So, we are continuing to focus towards the volume increase across our products. And, you know, like I said, the yield is generally very dynamic and remains market-driven.

Okay.

That is understandable.

If you want, I can share a couple of links with you if you want, and you can probably track the freight indexes on those.

Yeah, that will be really helpful. I mean, I assume the similar should be the case for the Oshio Freight also, right?

Yes, yes, absolutely. It's just the same. And these, you know, these trackers that are available are tracking air and ocean both.

Okay, fair point. Thanks a lot. Thank you.

Thank you very much. Participants, you may press star and one to ask the question.

Next question is from land of Shabanu Bangal from Three Head Capital.

Please go ahead.

Yeah, I hope I'm audible, sir. Can you help me?

Yes, sir, go ahead.

Yeah, sir, as per your previous conversation, as you mentioned, this volume growth is sustainable, but the realization growth is not sustainable because it's completely dependent on fuel price. Am I right?

So the yield remains dynamic. We are not saying that the growth in revenue is not going to happen in times ahead, but the yield per unit always remains dynamic. It goes up and down. The, the, the controllables are the volumes.

Okay. Then what kind of volume would, yeah, I would like to add, please continue.

The focus from the management is also from, you know, focusing on the higher trade lanes, which yield, where the yield is slightly, you know, higher. And, you know, the volume growth, obviously, is the first and foremost priority for, for the organization. But also in terms of the revenue management, focus is always being there on, you know, increasing the yield by focusing on the higher trade lanes or the longer trade lanes, both on the ocean freight and the air freight side as well. So that conscious effort of the commodity mix and the trade land mix is always there apart, you know, as Mr. Yes mentioned, the overall nature of the freight and the fuel is depending upon the global macro situation and not an exact controllable for us.

That means, can I assume this 25-30% kind of volume growth is sustainable going forward?

Yes, we feel that, you know, the way we see the trends currently, we feel that we are very confident of sustaining some of the volume growth and the endeavor is actually to improve them.

Do you see any tailoring kind of things due to this work situation?

So, we always, like I mentioned in my opening address, when the market gets tough, you know, what it does is it separates the people who have larger capacity controls from the rest of the market, so the rest of the competition. And Skyways has had a very, very strong capacity control in the market. We have had global contracts with airlines and shipping lines, and these airlines and shipping lines have specially helped us in these difficult times to give us more capacity than what they do otherwise, which enables us to service all our existing customers and their growing needs, and also helps us to acquire certain more customers in these times, actually.

Good. Got it. And my next question on the Ocean Trade Meek. What kind of Ocean... Hello?

Yes, yes, please continue.

Yeah, what kind of ocean fed mix are you targeting for next two to three years?

When you say what kind of mix, is that a commodity you want to know or a trade lane that you want to know?

Yes, ocean fed, ocean business.

In the ocean also, when you say what kind of mix, your question is directed towards what kind of commodities we will focus on or what kind of trade lane?

No, no, revenue mix.

So, if you look at our revenue, it's also grown 63% in this quarter, in the ocean trade segment as well. Even our volumes have gone up considerably. You know, we've had a substantial increase in the volumes in the ocean trade segment as well. We've gone almost 18% above the same quarter previous year. So, we feel that, you know, the ocean business, which obviously did have a little bit of impact in the Middle East, But the other trade lanes are compensating for us and actually adding a lot of business towards the organization.

Okay. Okay. Thank you. Just a block, sir.

Thank you, Ji. Thank you.

Thank you. Next question is from the line of Rohit Mehra from SK Securities. Please go ahead.

Hi, sir. Good evening, and thank you for the opportunity and congratulations on good set of numbers. My question is regarding the international expansion. So, basically, if I'm right, the Board has authorized some amount for offices in Malaysia, China, Singapore, and how much other countries. So, I just want to know what are the endeavors right now there, and what is the gesturing period, break-even timelines, and CAPEX schedule for coming in next year?

So, Mr. Mehra, you're very right that the Board has approved expansion into some of the other Paris markets. Skyways is already existing in five markets on the east of India. We are in Hong Kong, Thailand, Vietnam, Cambodia, and Bangladesh. And Skyways has strongly positioned itself as somebody who has created its footprint close to the point of production. And most of these new markets that you have just mentioned, China, Philippines, Malaysia, etc., all these are very strong manufacturing markets. And we are intending to get into these markets and create a stronger footprint for us, which will enable us to do a larger customer acquisition. And we have big contracts with us. We have global contracts of airlines and shipping lines, which will always also help us to enhance and create our presence in these markets. So, the second part of your question was the gestation period. So, usually what we've seen historically is that anything between two to four years is what a new international market takes for us to make it a good, solid base for us in those markets. And we feel that we will be able to definitely improve that and maybe do it in two to three years. Each of these markets will become a very significant market for us.

Correct. So, are there a capex schedule for these markets?

Out of the 30 crores that we are going to invest over a period of time, generally the KPEX in our industry is very low. Around 10 to 15 percent out of the 30 crores will be the KPEX, which will be the initial setting up cost of the offices and smaller warehouses that may be required. So generally 15 percent of this amount is towards the KPEX, and rest is towards the initial setup cost, working capital, and other requirements.

Got it, got it, sir. So, just in addition to this, that incremental capital inflation was there by for, I think, 20 crores was approved for overseas subsidiaries. Which specific international markets will receive this?

So, this is basically for our subsidiaries in the UAE, in Saudi Arabia, these are the commodities, and Vietnam.

So, we are seeing significant growth in the market, and also with, you know, whatever is happening in West Asia currently, we see a lot of opportunity actually in time there, once the WOTS situation comes to a little control, we see a huge amount of opportunity in the Middle East for the organization to expand its solutions, because there will be a lot of infrastructure buildup that will be required in that region, and, you know, KSA has been expanding in a very, very big way in the last five to six years, and we feel very bullish about that market. UAE continues to be the gateway to the entire Middle East market. And Vietnam has been growing very, very significantly as well. And we have a very strong presence in Vietnam already. And we feel that all these three markets in the next two to three years will add a substantial value to us as an organization.

Correct. Right. So that answers my question. One last question. Just, I think you have acquired a WinDrop logistic 100%, right, for 1.8 crores for Phantom Road Express. So I just want to know the strategic capabilities and what this acquisition adds to scavenge capabilities. Just your thoughts.

WinDrop is not exactly an acquisition. It is a ground-up entity that has been created as a greenfield project.

Okay, okay. Got it, sir. That's it from my side. Thank you.

Technically, it is an acquisition if we talk about it, but there is very less investment that has gone into the acquisition quarter.

Okay, got it, got it, sir. Thank you.

Thank you.

Hello.

I had one question regarding, like, what are the plans on the capex for the warehouse and the freight, like commercial vehicles, for end-to-end delivery? Thank you. You have added any fleet on that side and have you considered any of the warehouses like for the Capex thing?

So the generic Capex plan, you know, every year for the group is around 5 to 40 crores per And this is how we have been growing, barring the cold chain warehouse project which is going to be operational during the next quarter. And other than that, the operating or the generic effects for the group, including the warehouses and our offices, everything is generally in the nature of, to the tune of 35 to 40 crores per annum.

Okay, understood. And apart from that, what is the status of the tech platform, which was almost ready, like for booking the consignment? So, is it in the progress or is it already ready? What's the status on that?

So, as I mentioned in my opening address, that we have building this platform and it's right in the final stages of it closing now. I think we should be able to put it in operation over the next 30 to 60 days. We are just finalizing the, we are just doing the piloting of this across three products, and the fourth product is, the development is in the final stages. Okay, so most likely. Near Ocean, Express, and Trucking, all four elements, so the three of these transportation mediums are in the pilot testing stage currently, and the fourth one is in the final stages of development. So, we are very hopeful that in the next 30 to 60 days, we should be able to launch it.

Okay, okay. Thank you so much. Good luck.

Thank you very much.

Thank you very much. Participants, you may press star and one to ask the question. Next question is from Manosav Yusparag from Dalit Capital. Please, go ahead.

Hi, am I audible?

Yes, go ahead.

Right. Conversations for a good number, sir. A couple of questions. Sir, how has been, you know, pharma doing as a contribution of the total revenues, which was actually scaled up because of the Odyssey acquisitions? So, how do you, what is the organic SkyWay business as plus how this Odyssey has, you know, helped in the pharma division? That would be great if you can throw some light on that.

Pharmaceutical as an industry has been of huge interest to us over the last five to six years, and the ODC acquisition was also part of this strategy, and, you know, we've been significantly being able to up our mix of the product ever since ODC came in. Before ODC had come into our portfolio, we were about 8-9% of our business was pharmaceutical, and which grew to 23% last year. We've actually managed to sustain the volumes and the percentage of pharmaceuticals even in this difficult period, and we feel that in times ahead, pharmaceuticals will continue to consolidate for us.

Even on the ODC, the number that you asked about, there has been significant growth in the standalone business of ODC as well. And from a 130 crore on revenue, quarter on quarter, it is now to 182 crores.

Okay. Thank you. And can you also throw light on the margins that you make with the farmers, especially it's above the growth average or how is it?

The gross margins are higher than the overall gross margin profile of the business, which include all kinds of commodities. And, you know, that is where the acquisition of Odyssey was very synergic to the overall, you know, pharma expansion strategy that we had developed since the COVID period. So this acquisition has also helped us in consolidating a lot of businesses, which is helping Skyway standalone businesses as well, and also, you know, we are bringing growth to Odyssey's financials.

Okay. Okay, so to the next question, whether, I mean, how you're looking for the acquisitions, like your board has approved a good amount, so can you just throw some light what you're looking for, what kind of acquisitions is actually something which is missing in the portfolio, or you're looking for enhancing your portfolio towards that, and generally what kind of rose threshold or something like that, or, you know, capital commitment restrictions that you have. If you can collide on those things, it will be great.

So the board has approved, you know, as of now, 30 crores expansion for the international offices, which will have, you know, creation of fully owned subsidiaries or joint venture subsidiaries, depending upon, you know, country to country situation on the regulatory side as well, and also on the business negotiations that we are able to do with the partners We are in the process of finalizing. So, there is no above non-nuclear approval for the acquisitions per se, other than this 30 crores in the new offices and 20 crores investment into the existing offices. But, you know, the world is very dynamic and if any exciting opportunity comes along, you know, going forward at the right valuation and it sits in, you know, with the overall expansion strategy of the group and the synergy. We feel that is very, very, you know, important for the group. Only if there are mature acquisitions, we will look at. Otherwise, we are, you know, focusing on organic growth as of now.

Okay, okay. And also, if I can ask for more questions, sir, regarding that, any updates on the Swissport International, AG, has some development been there?

You know, the Swissport, the bid that we had given for the project, we were the second highest bidder for the project. So that is not obviously materialized. And going forward, other projects, we will be bidding with the alliance that we have created with Swissport.

Also, there is a decent bit of talk in the Calcutta market of a second airport. So, even there is, as of now, very, very mixed reactions that we are getting from that market, because that being not a very large airport cannot sustain, that city cannot really sustain two airports. So, we are also waiting to see how Calcutta as a market will evolve from here, and the governments stand on building the second airport in the city.

Okay, okay. Thank you. Thank you so much, sir. Yeah.

Thank you very much.

Thank you. Parasabhan, you may press start and want to ask the question. Next question is from Lanofjasmin from TVC. Please, go ahead.

Hi. Are you able to hear me?

Yes, ma'am. Go ahead.

Okay, perfect. Great. So, congratulations on the performance this quarter. Things are looking promising. I have a question on the legal disclosures. Could you please help us understand the current status of the EOW matter that was mentioned in the prospectors? And based on the legal advice that you've received, does management anticipate any material, financial, or operational impact on SkyWays of this matter? And what are your next steps towards resolution?

So, you know, the matter is still for today's and under investigation in its final stages. And currently, as we see it, we don't see any possible impact on us financially on this case.

Okay, understood.

Jasmine, do you have any follow-up question?

No, I just want to understand one thing. Is there anything in particular that we're doing towards the resolution of this? Or we're just, it's a wait-and-watch kind of a situation?

Towards the same case, you mean?

Yes.

So we've given all the necessary representations to the department, And once they conclude their investigation, will we be taking any further steps towards whichever way we need to direct our next force of action? We feel we are on a strong ground. Once the investigation report gets concluded, we are very, very positive and very confident of India's legal system and how every investigation will be done on its merit. And we have a very, we have a strong case on our merits. So, we are very, very confident that things will move on towards a very positive side for us.

Okay, that's good to know. Is there a timeline that we have in mind, potentially, when this could close?

Well, you know, the departments don't necessarily give you a timeline, so we have to work along with them and just work with the kind of timelines because I think there are multiple parties involved there, so probably they will need to just, you know, do all their necessary checks and balances and do the closure as they feel everything is well looked into by them.

Understood. Thank you for your answer.

Thank you.

Thank you. Okay. Next question is from Rano Zverev, individual investor. Please go ahead.

Yeah, hi, sir. Am I audible to you? Yes, sir. Yeah, hi. First of all, congratulations on the good side of numbers, sir. So, I have a couple of questions. Yeah. So, you know, our cost of service business is around 1100 CRs, which comes to 91% of our total revenue. So, what are the initiatives are we taking to, you know, improve our gross margin per shipment? And also, how are your airline capacity agreements structured to protect our margin from the, you know, fluctuation in the freight price?

So, I'll take up the capacity question, and then I'll let Iman Suji take over the financial part of it. So, you know, Skyrim does a very strong positioning of itself with the carriers, and we do get to sign PLI contracts with airlines, And through these, we get to access various strong capacities of all the major carriers operating in India and overseas. And this has always been a very strong area for us. Even in, like I said, even if you look at the challenging times of, you know, the Middle East crisis, we were able to navigate and get capacities from other carriers and, in fact, gain volume when the markets were very, very challenging. And there was almost like a 20-odd percent of capacity had gone out of the market. We still were able to consolidate our volumes because the other carrier capacities we were able to enhance and bring alternate solutions for our clients. So from the capacity standpoint, we are only enhancing our capacities, which is a very constant. And year on year, we've been able to grow our contract, grow our capacity access, and this ultimately also benefits us in terms of better customer acquisitions. I'll let Manchuri take over the financial question.

So, on the gross margin side also, you know, our endeavor is always to, you know, have a consistent growth profile. But, you know, the kind of situations like the war where there is a sudden increase in the, you know, the fuel cost, which is technically a path through, a full path through to the customer, which overall raises the freight cost for the customer. You know, we as an organization always want to maximize the opportunity in terms of passing and, you know, making gross margin accordingly on the increased cost. But, you know, at the same time, you have to be very, you know, customer-centric also and try to absorb little bit of the cost increase wherever possible on the increased gross margin percentage at the incremental fuel cost.

My second question is, you know, I missed out what you mentioned for the proposed investment previously. So, we have a proposed investment of around 30 CRs across China, Malaysia, Indonesia. So, could you please give some visibility on the expected gestation period for this new operation and the KPEX deployment timeline? And what do you expect this investment to reach the break-even point, sir?

So, the break-even point, as Mr. Yash mentioned, on the profitability at the PAT level is a cycle of, you know, two to three years. But on the EBITDA break-even side, you know, it generally happens in a scenario of, you know, 15 to 18 months is what we look at. But we are looking at these investments from a very, very long perspective in terms of these geographies contributing very significantly to our revenue portfolio going forward. As we have seen in the past, our Vietnam office performing very well for us in the last four or five years. We feel that similar kind of, you know, opportunity exists in these markets, and China World Trade Line being the largest, you know, we are going by the historical, you know, the break-even point that we have witnessed on business, but the scale, if we are able to scale up, you know, faster than what we have done in the previous geography, there is a possibility of an early break-even in all these geographies.

Okay, okay. And one more question on the finance cost. So, it is increased to, you know, 17.7 CR during the quarter. So, could you please give us the update on the company's current net debt position post our IPO and how the working capital cycle has evolved over the quarter, sir?

So, there has been an absolute increase in the finance cost. But if you do a percentage, there has been a reduction overall in the percentage cost. Similar to the previous quarter. And also, utilization of proceeds towards the debt reduction will help us in relative easing out on the finance cost. So, as of date, we have already, you know, kind of repaid around 140 crores of approximate borrowings to the financial institution and the banks, which will obviously have an effect in the Q3 and the Q4 numbers on the interest cost.

Okay, and so keeping in mind the current West Asia conflict, so how has the industry performed in this quarter, and how was our performance as compared to the industry, sir?

So I'll talk to you about the air cargo industry in India. So India in this quarter versus the Q1 One of 2026, India's air export market was 294,000 metric tons in Q126. In Q127, it's gone to about 3.06 lakh metric tons, which is about a 3.8% increase. Okay. And Skyways in the same period, actually on the air export side has grown 19%. So we are like a six times Okay.

And by any chance, do you also give, you know, margin breakups to our different services, like what is the margin breakup for air cargo, then ocean cargo, then express cargo?

So, the margin profile of all the products are, you know, very similar, right? And, you know, all are categorized into the logistic services overall basis. So, you know, we as an organization are not doing, you know, separate EBITDA-wise analysis and because the margins overall profile is quite similar.

Okay, and are we also targeting the same kind of revenue mix for FI27 as well, for the various services that we have?

Yeah, so, you know, as you would have seen in the quarter one performance, the air cargo business is approximately 81%, which has 377% in overall FI26 number. So, you know, all the products are, you know, are scaling up very, very nicely for us. There is significant growth, their cargo business per se, you know, the ocean freight business, the trucking, all the cylinders of the group are, you know, firing very nicely for us. And we are really hope, you know, we believe that this volume growth trend should continue in the quarter two as well.

Okay. And by any chance, do you also provide some guidance for our FY27?

So, I mentioned a bit about the quarter two. So, as a company, we don't give, you know, the revenue guidance on an overall basis, but, you know, on a quarterly basis, we will have the earnings call, and, you know, the visibility of the next quarter is, you know, available to us as we close a particular quarter. So, we will be trying to give volume guidance every quarter once we are doing this earnings call for the next quarter.

Okay. Understood, sir. Understood. And just last question, this last thing. So, this West Asia conflict or all other conflicts, this is not impacting our FY27 guidance, right? Whatever we are planning, it is still in the line, right?

The beauty of our business is we are a very asset-light business model. And we are able to pivot between markets very, very quickly because we are not asset owners. So we don't have a challenge of positioning our customers' business or if, for example, we run an asset from point A to point B in the world. And if there is any impact, it doesn't affect us. So that is the beauty of our business. And we are able to, you know, very, very quickly navigate into different trade lanes, different markets. So as customers are able to pivot into different markets, we are able to pivot with them. And even across commodities, we can always, you know, go and reach out to customers in different markets. And like I just mentioned, you know, even with the Middle East crisis, we were able to create extra solutions, whether there were air and ocean. And we created solutions not just across the world, but we were able to even create solutions for the Middle East market. So our customers in the Middle East also, we managed to service them, even by creating alternate routes, which are probably not in the affected zones. Our business has actually grown, so the volumes have also grown, as you can see. We feel that even in the times ahead, we feel that the volumes will continue to rise significantly for us.

Okay, okay. Thank you, sir. Thank you for answering all of my questions, and best of luck for the future, sir.

Thank you very much. Thank you.

Thank you. Participants do my press star and want to ask a question. Next question is from line of Amit Kishore Purya from TradeView Consulting. Please go ahead.

Yeah, hi, good evening. Congratulations for the nice set of numbers. I have three questions. Number one, as you cannot give any future-looking guidance, if I can ask you for a broad number of, say, three years, aspirational number, a broad revenue you'd like to hit, a broad goalpost number, if you can please guide us. Not a year-on-year, but a three-year aspirational number, if you have in mind, in terms of revenue.

So, see, we would not want to focus so much so and talk about how the three to five-year projections are there in terms of revenues, but our volumes are consistent. And that is our key focus. And, you know, when we get into newer markets, that gives us access into some of our customers who are actually procuring for multiple markets in Asia. And there are existing customers who are in multiple markets already. So we are able to, you know, participate and work with them and handle their logistics from these new markets. And that will add a lot of business, plus we will acquire more customers as we go along. If you look at the trends in the last, say, even 10 years for us, we've had a very consistent growth in our new customer acquisition and we've had a consistent growth in our volumes. Every year, we have been growing our volumes. And that is what we want to remain and create a strategy going forward as well, whether it is air, ocean, trucking, express, and like Imanchuji just mentioned, that the trade lanes that we work on. So, you know, historically, there were certain trade lanes, whether the yield per kilo or yield per tu was slightly less. And we have now started to, you know, focus more on the higher yield trade lanes. So, that helps us on the revenue side and, you know, it helps us also on the profitability side. So, in terms of volume, we see a very consistent growth in the next three to five years, similar to what we've been seeing in the last three.

The last two years, you had 48% CAGR growth like in terms of revenue. So do we expect similar runs or I mean, if we can give a ballpark figure, not any guidance per se, but any first ballpark benchmark you have or goalpost you have in mind?

You know, maybe we'll come back to you on this question and probably give you, we've not created something for three to five years as an exact Goal post for us, but we feel that, you know, what we have been growing, say, for example, this year in this quarter, we see that as a very possible growth for us in the quarter ahead, and which itself on the compounding basis means a very decent number from where Okay, fair enough.

My second question would be in regard to Q1 ROE number, if you have with you, return on equity for Q1, if you have or your CFSR has. What is the ROE for this quarter?

So, the ROE historically has been, you know, 14 to 15 percent, and we would have, you know, as the capital base has gone, you know, increased in the month of September post-listing, there is a capital increase. So, the ROE analysis would be better if we do at the September end quarter.

Why I'm asking you this question? Because bulk of the primary fund you have raised, no, that has gone towards retiring of working capital, right? And working capital loan comes at 9%. So ROE, you are making 15 and the equity investors have an expectation of 24% IRR. So going forward, where is the ROE you are targeting like? I mean, if you can help me understand this part.

Yes, the current quarter ROE is better as the profitability has improved in the, you know, and the equity base has remained the same as the March number. But, you know, once the, as we close the September quarter, the ROE will, you know, depend on the profitability that is achieved and the capitalization that is, the capital increase that has happened. So, you know, it will have a marginal, you know, correction, obviously, because of the expanded capital base. But as we grow along towards the year closure, and the years ahead, you know, the targeted range will always be around 15% that we would ideally want to remain on.

No, but what I am trying to ask, sir, is because the loan has been repaid or about to be repaid, which was at 9%, don't you think it will drag the ROE number to a much lesser number?

No, sir. You know, the reduction of this debt is strategic in nature, right? And if it has an effect on the ROE, a temporary effect of the ROE, going forward, our overall realizations will, you know, the profitability will take care of the ROE. as we expand in the years ahead.

Okay. And as we got my last query, it regards your other subsidiary called Baseport. So since it's listing, there has been a shareholder wealth erosion. So I mean, what do you say for that? Because that's a listed entity already. So that can you please put some light on that as to what the company is about what is the thought in that regard is although it is not really directly related to this company, but because it is a group company and a subsidiary, So, what do you highlight on that?

So, you know, obviously on the stock price, you know, these are, you know, the market-driven and we would not want to comment on those aspects. But fundamentally, the company's, you know, growth has been decent on the profitability. Although year on year, there was a correction in the last year because of the realization pressure, Especially that company is focusing on the ocean-fed business, and the realizations last year were, you know, slightly less. But, you know, the performance in the quarters that has been consolidated into the current SkyWay consolidation, we feel that the current quarter and the next quarter will have a good fundamental, you know, growth in the business of base foot as well.

Okay, thank you so much. That's all from my side. Thank you. Thank you.

Thank you. Harusabins, you may press TARN1 to ask a question. Next follow-up question is from Lanos Sumanju Bangal, from 3A Capital. Please go ahead.

Yeah, thank you for follow-up. Sir, which of the industry is doing great for us as for Q2?

So, the business trends that we have been seeing, pharmaceutical continues to remain a good sector for us. The other sectors that have been also significantly growing for us are the textiles and ready-made garments, plus automotive, and also consumer electronics. These are some of the sectors which have been doing well for us. And apart from that, you know, we do a lot of auto parts, and we do fruits and vegetables. So, the focus of the only commodity we don't handle is non-vegetarian. We don't handle non-vege, we don't store and we don't move non-vege. Apart from that, all commodities have got a decent kind of portfolio for us. But the larger commodities is what I mentioned to you.

Great. My second question on the realization, are you seeing same kind of realization in Q2? Or any correction? Because the war is still continuing.

So, currently, the trends of the fuel index, which has started to go down slightly, has again come up, if you look at the fuel index. And like I mentioned, I can share certain indexes with you, where you can track the trends in the last two, two, and a half months to get you a better picture. I'm happy to speak them out here, if you want to note them down, or otherwise, you know, we'll have Dollar Team or Ad Factor to release them to you. You know, indexes like worldacd.com, freetos.com, or webcargonet.com, you know, they track the air and ocean pricing, I mean, except World ACD, which does air only, the freetos and webcargo.com, both of them are tracking air and ocean trends in terms of per unit, trade lane-wise, so you can get all various different mixes from there, and, you know, we hope that the fuel indexes remain in check, which is good for the trade overall.

Yeah, it will be good for investors also. Thank you. Thank you, sir. Best of luck.

Thank you.

Thank you. As there are no further questions, I would now like to hand the conference. Over to Mr. Rohan Gupta from Dolat Capital for closing comments.

Yeah, thank you. So, thank you Mr. Sharma and Mr. Chhabra for taking the time to interact with the investor community and for sharing your perspectives on the business and its outlook. I would also like to thank all the participants for joining the call and for their questions. On behalf of Dollars Capital, we wish the management and the entire SkyWash team all the very best for the future. With that, we conclude today's conference call. Thank you, everyone, and have a great evening.

Thank you, Rohan. Thank you, everybody. We look forward to engaging with you in the future as well. Thank you very much. Have a good evening.

Thank you so much, and we look forward for the second quarter ending and the conference call thereafter. Thank you so much, everyone.

Thank you very much. Thank you all. On behalf of Dollar Capital Markets Private Limited, that concludes this conference. Thank you all for joining us and you may now disconnect your lines. Thank you.