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Earnings call · FY2027 Q1

Transport Corporation of India Limited (TCI) Q1 2027 Earnings Call Transcript

Concluded Aug 3, 2026 Audio replay
Aug 3, 2026 56:45 116 turns
Period
FY2027 Q1
Runtime
56:45
Sources
2 artifacts
Revenue 12.48B INR +9.6% YoY
Diluted EPS 13.75 INR/shares -0.9% YoY
Net income 1.07B INR +0.1% YoY

Transcript & audio

56:45 Audio
Simran Head of Investor Relations

With the session and three minutes.

Piyush Chandra Analyst — Newmark Capital

Hello. Hi, I'll see you.

Simran Head of Investor Relations

Hello.

Piyush Chandra Analyst — Newmark Capital

Hello? Hello?

Simran Head of Investor Relations

Yes sir? Hello, Mr. Nathan. Good evening, ladies and gentlemen. I'm Simran, the moderator, and I'd like to extend a warm welcome to everyone joining us for the Transport Corporation of India Limited Quarter 1 FY27 Earnings Conference Call. On behalf of the management, we have with us Mr. Vineet Agrawal, Managing Director, and Mr. Ashish Dewari, Group CFO. All participants are in listen-only mood. 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.

Thank you, Simran, and good evening to all of you. Thank you for joining the call. My apology for rescheduling the call because of some unavoidable situations with us. Before we begin the call, I just wanted to put a disclaimer that some of the discussions and statements from our side might be forward-looking. So, we would start with the opening remarks of Mr. Agarwal and presentation, and then we would have a question and answer session. So, thank you, and over to you, sir.

Agrawal CEO

Thank you, Archish. Thank you, Simran. So, let me start off by giving some broad outlook. I think in the last quarter gone by, of course, top of mind has been the impact of the West Asia crisis. That has had an impact, of course, you are aware of the increase in diesel price. Of course, things had come down when there was a cessation of the hostilities, and then it again has accelerated. So this has also had an impact on the bunker pricing. So, hence, we have seen that the impact, the bunker prices came down, and then they've again started climbing up in the last, in this month, actually, not in the month of July, and not so much in the first quarter, April, May, June. So, but there was in the initial part of the April, May, we did see the bunker prices being higher. Of course, the impact of diesel price hikes have just started to be shown. Some of our growth has also captured some of the value increase and some value volume increase. Of course, there is a large backlog of containers in both JNPT as well as Munra is what we're hearing. Almost 10,000, 12,000 containers at JNPT. Rail movements are also very slow across the country. It's also the monsoon season. So container repo, that is repositioning, has also been a challenge. Of course, international container prices have also gone up substantially, as you're aware, and that is also putting pressure on exports. What we saw as an inventory buildup last year in quarter two, also we are seeing some of that possibly happening in quarter two as well. Some of the companies that were affected and that is in line with the festival season and just general restocking. The companies that were affected by the gas shortage have restarted in June, though we are fearing that some of them might shut shop in the next few months, next few weeks, in case the prices remain high. We've seen some places export production getting affected, specifically some engine manufacturers, the sector that was sending products to West Asia. I think that has been slightly affected. Barring all of that, we have seen robust growth in the auto sector and some other areas. We're seeing a little bit of a revival or rather not revival, but I would say some impact on the MSME side, on the positive side. So that is a good, that's positive. Apart from that, consumer trends are more or less similar. Quick commerce is accelerating, and we are seeing that a lot of supply chains are getting rejigged because of that also. So that's broadly some opening comments. Let me take you to the presentation. I'm sure all of you are mostly aware of it, but let me go through some of the basics. Thanks. I think all of you are aware of these integrated strengths. Again, we continue to remain a strong player in the multimodal segment. In fact, the only player with an integrated approach. And these are some of our services. We continue to add something or the other on the basic services side. Go ahead. Let me share a quick case study. This is a case study for an apparel brand, where we run their entire warehouse. It's about a 37,000, 38,000 square feet facility, which has about more than 30,000 bins, and the throughput is almost about 80,000 SKUs. The. The problem has always been that there is to be volume surges during the month end, as well as there used to be delays in the return management, as well as the picking system used to be quite outdated. So we came in with a proper facility where we have integrated the multi-channel that they are supplying to not just their own stores, but the different other channels as well as the e-commerce platform that they have set up. So, this way the replenishment is very quick and also the reverse management has improved substantially for them and they are able to reduce the wastage that is in the system. So, this is an operation that is quite scalable for many companies and we continue to provide these kind of solutions to them. From a technology perspective, things are quite strong. We have various layers where we are able to provide a holistic approach, not just to our operations, but also to our customers. In terms of the last quarter movement, we did about 623 rigs, 24 rigs, which is almost the same as last year. We, as you're aware, we own three rakes of our own. The tonnage handled, the TU's handled last year versus last year is almost the same as this year in terms of the numbers also. And of course, the yards that we manage about 67 odd yards across the country. We are present in all major sectors, and especially in the high growth sectors, we have a strong presence. For example, we built in very deep capabilities on the renewable side, where we manage the, for companies which are manufacturing solar products, we move in bulk from the factory, by road, as well as by rail. There are also some companies that are providing, are doing warehousing specifically where they want a solution where they are able to kit various solar products that go into a home. You know, with the Pradhan Mantri, Yojana of providing solar power to homes, we are providing a kitting facility and then delivery to homes also in some cases out of that warehouse for some clients. On the quarter gone by, it's a consecutive quarter, 24th consecutive quarter of growth. We grew at about 9% on the top line, console level. We have close to 160 crores in cash. Of course, some of that has been used because of the continuous investments that we are doing. The investment in the first quarter has been about 167 crores. As you're aware, last year we did about 370 crores. Our care rating has also been enhanced to double A+. On the freight business side, the... The margin has been slightly, there's been slight improvement, but top line has also grown by about 10-11%. As I said, some of it has come because of volume growth, and some of it has come because of slight value growth. The percentage of FTL to LTL remains the same, but we are seeing a good traction and good pipeline in our LTL business as well. Good morning, everyone. The guidance for this year, as we've indicated, about 10 to 12% on the top line should also apply to this business, and our profitability should improve from the last year. On the supply chain side, growth has been a little moderated. We are coming off from a higher base from the previous year. But we have seen that margins also are slightly improved on the EBITDA level because of the investments that we have made. However, the EBITDA level is almost the same. The investments that we're doing in this business are quite continuous from new warehouses as well as the equipment that goes inside the warehouses. So there is a little bit of lag always with the kind of returns that we start getting immediately. It takes a few months for the business to stabilize. We also have a decent amount of bench strength that we've created as well as some warehousing space that we have that we are going to utilize in this. In that we're utilizing this business. As you've seen that the capital employed has gone up quite a lot is also because of the number of trucks that we are adding here based on the new contracts we are getting. So again, I think this business should grow in the higher teens 12 to 15% for the top line. On the seaway side, as I mentioned about bunker pricing, bunker pricing, as you can see by the graph, really shot up in end of February, March, because the Mideast crisis, it came down a little bit in the first few months, but now again, it is ramped up to. But I think till last week, about 86,000 rupees per ton. So this continues to have an impact on the costing. We did increase our rates with our customers. But the number of voyages that we had were almost similar to last year because of the dry dock that we had of one of the ships. The increase in top line is because of the similar voyages, but maybe some increase in the in the revenue side with the pricing increase that we've had. Margins have been flat. On the JV side, Concord joint ventures grown about 8-ish percent. Gold chain has grown quite well at about 48 percent. On the Concord side, the business remains stable. We are seeing continuous inquiries. Of course, our expectation was that That the if diesel prices increase on the roadside and hence freight rates increase on the roadside, we should see some shift towards rail. We didn't see much of that happen. I think also because quarter one is a little bit of a lean season on the logistics side. So not much shift happened to the rail side. Also railway congestion has been pretty high, especially in the east, etc. is the feedback that we've got. A lot of standing has also been there of rakes as well as engines. On the coal chain side, we've acquired some decent contracts in Q3, Q4 of last year, which has started to play out in this year. Trans system has grown at about 11.5% also on the top line, about the same kind of percentage growth. We are expecting this growth to be similar as with the growth of some of our Japanese clients here. On the console side, it's about a nine-odd percent growth. On the standalone, about seven percent. EBITDA is about nine percent. And PAT is also at about. I'm sorry, EBITDA is about 1.6% is a flat on the bottom, on the standalone, as well as about 5-ish percent on the console level. PAT is slightly negative on the quarter one for the standalone. Our dividend that we received from the JVs also was slightly lower in the first quarter. So that has had a little bit of an impact on the profitability. But at the console level, it's almost the same. All the other numbers are more or less the same with ROC at about 23% and RNW at about 20%. No change on the other, on the performance side. Again, on the outlook, we are at about 600 crore budget, 550 to 600 crore budget, out of which we've done about 167 crores. The new ship is expected in September end of this year, the next two months, and the next ship should be, well, actually probably October, September, October, and again October, November for the second ship. So somewhat in that line that we're looking at, Q3 is when we see that they both get inducted in, and that's what the payment for the ship will be. In case we order another new ship, which we're exploring right now, some advance payment will go for that as well. The other expenditure on the on the other rakes and on the trucks, etc. are ongoing. The expectation is that we are cautiously optimistic. There is some uncertainty because of the Middle East, but with the possibility of increased sales during the festival season, we are seeing that restocking starting, and we do expect that to continue in the next few months. We are happy to answer any questions. Thank you.

Simran Head of Investor Relations

Thank you, sir, for sharing your valuable insights. Ladies and gentlemen, we will now begin the question and answer session. If you have any questions, please use the raise hand feature. When called on, kindly start by stating your name and organization before asking you a question. Our first question is from Mr. Kripa Shankar, so please go ahead.

Kripa Shankar Analyst

Yeah, good afternoon, and thank you for the opportunity. Hope I'm out of here. Yes, hi. Hi, Vini. Three questions from my side. First is on the supply chain business, given the pace of growth has slowed down a bit, and just wanted to get a sense around… So, looking at the outlook on second half with respect to automotive sector having a high base and potential slowdown with respect to YY growth, your guidance on 12 to 15% puts a lot of ask on the second half. So, just want to get a sense around where exactly are you expecting the growth to come in the supply chain business? And is there any element of the new rake addition which comes into play? First on that, please.

Agrawal CEO

Right. Well, There is a lot of pipeline contracts that we are working on in the supply chain business. So we do expect the growth to pick up in the latter half of the year. We are also seeing that already in quarter two going forward. And so some of that will start playing out for us. The investments that we're doing to new trucks, etc., is also going to help us in terms of acquiring, we've acquired some new contracts, and those will start coming into play as well. Also, the trends towards, you know, of course, you'll also get a little bit of a value increase because of diesel price increase that also will start kicking in because we have submitted supplementary bills, etc. to our clients, and those will come in this quarter and subsequent So, yes, I think we are quite confident from a pipeline perspective that we should be able to get to that 12% percent growth for the quarter, for the year.

Kripa Shankar Analyst

Good. So, would you be able to quantify what would have been the diesel price-led growth in the first quarter in the supply chain business coming from these price heights?

Agrawal CEO

Not much from the first quarter because typically… The price hikes, I think, came in mid-May or so, and after that, subsequently, we saw the submission of bills, etc. So some of that realization, once it happens, we'll know. But most of this has been volume increase.

Kripa Shankar Analyst

The second one is on the CVS business. Just wanted to get a sense around the bunker prices at this point and how much of an impact it can further have on your profitability. Or do you see that the profitability will improve for the price hikes in the second quarter onwards?

Agrawal CEO

Well, you know, we were on the track to get better profitability because we had increased the prices and the costs had started to come down. But again, in this quarter, it's going to be a mixed bag. If the hostilities stop in the Middle East, then, you know, the prices tend to come down quite rapidly also. So let's see how it happens. So it's a lot of uncertainty, as you can imagine. And that has a direct impact because the fuel prices are dynamic. In this case, it's not like the diesel pump prices. And every day is a different price. So even the discounts that the fuel companies were giving in the past has also come down, or in fact, it's not there anymore. So that way, we are keeping a very close watch. So it's very difficult to give you a prediction that what's going to happen because, you know, it can go either way. We still have almost two months left in the quarter. So let's see how things progress. But as we are speaking, the bunker prices are again up. And so, yes, margin does get compressed then.

Kripa Shankar Analyst

Any change to the dry docking of ships, the schedule? Any specific change in comparison to what you had mentioned earlier?

Agrawal CEO

No, no specific change. I think we have plans for two ships, right, Ashish?

Yeah, two dry docks. One already happened and one would be the end of this escalator, in the March.

Kripa Shankar Analyst

Understood. Last question from my side on the freight business. Just wanted to get a sense. You mentioned that EBITDA margins will see some improvement in the coming year, 527. Any direction in which you can say that this can be the expectation in this? And what are the key drivers for this margin improvement? Is it just a mix or anything else?

Agrawal CEO

Well, certainly the volume increase is helping to some extent. That's one. Secondly, the mix is also, as we've committed, that will also keep changing. As I mentioned in the last call, that we have a leadership change as well. So some of these things are starting to play out. It's a slow process. It's a big shift to turn around, and it's taking its time. We've opened 30 new branches also. Sorry, 30 new are planned. We've opened 10 already this quarter. So that our network expansion as well as the mix change and some volume growth are all essentially going to help us.

Kripa Shankar Analyst

Thank you for answering my question. I'll get back in the queue. Thank you. Thank you.

Simran Head of Investor Relations

Thank you, sir. The next question is from Mr. Raghunath. So, please go ahead.

Raghunath Analyst

Yeah. Good afternoon, sir. Sir, my question is related to the growth of the company. If we see the new age logistics companies, they are growing at a much faster rate than TCI. A few of the new logistics companies are growing at around about 25%. For example? For example, delivery is growing at 24% CAGR from last five years. But our guidance is always 10 to 12%. Is there any market share loss that we are seeing?

Agrawal CEO

We don't compete with the delivery in most areas. So it's not a direct comparison. So there's no market share loss in that case.

Raghunath Analyst

Okay. Okay, sure, thanks. Thank you.

Simran Head of Investor Relations

Thank you, Sam. The next question is from Mr. Divyash Gupta. Sir, please go ahead.

Divyash Gupta Analyst

Hey, Vineet. Hopefully, I'm audible. The first question is, if I just read all the commentary of auto players, right, across four-wheeler, two-wheeler, CB, everyone has mentioned that, let's say, the Q1 has been great, even though, well, take a much. Q4 is a higher base always, but even Q1 is higher. But somehow, and for us, auto sector, I'm not saying only PV, but combined as a It's a decent share of our business, right? But it's not showing up in our P&L. Is there any particular reason or maybe Otto is there, but the others didn't fire up to that expectation? So how should we understand that part?

Agrawal CEO

Yeah. So for us, as I said, you know, auto sector is all kinds of auto. We do four wheeler, three wheeler, two wheeler, as well as earth moon equipment, tractors. So we play in all spaces and all types of services, which is first mile, last mile, sorry, inbound, outbound, yard management, spare parts management, etc. So, we see that some customers have fired in the last quarter, some customers have not. Also, in some places, we've seen that a lot of inventory that was there in the pipeline. For example, we were holding a lot of inventory in the yards. So, those got delivered. So, some of that was captured in the previous quarter because the primary movement happened from there to the yards. For example, if there's a plant company, there is a plant based in Chennai. So, a lot of that primary movement happened in Q4 and it is in the yard in, let's say, an NCR. So, the last mile delivery is probably what happened in Q1 more and more. Now, we are seeing again more movement on the long legs because inventory replenishment has started to happen again. So in the last six, nine months, post the GST cuts, we've seen that there is a lot of inventory that was there. And I was, you know, a little afraid before the GST cuts happened that there's way too much inventory because our customers were saying that, why don't you give us more yards? We need more space. We need more space. So, that has diminished quite a lot. So, one is that. So, I think on the supply chain side, a lot of the inventory at the far end has been used up. Now, more replenishment is happening. Hence, the longer distance revenues that we are going to get will come in subsequent quarters. That's one. Secondly, some of the customers that have grown, we don't work with also all the time. For example, Mahindra's we don't work with because they work with Mahindra Logistics. And have you seen that the growth of Mahindra Logistics has been good because of more than 60% of their business is just one customer, which is Mahindra. So that has, you know, some we lose some amount of growth. But the other customers that we work with have shown decent growth and we are continuing to grow there. Thank you very much, everyone, and welcome to the call.

Divyash Gupta Analyst

Understood. Understood. The second question was on the fuel pass-through. So if you can take across all the three business verticals, right? So freight can be MSME, which might not be long contracts. So there we would have passed in some, we would have some longer term contracts where let's say the pass-through is yet to happen, right? So if let's say the volumes, how much of, let's say. Fuel, price, hike, either you can say loss this quarter or benefit that assuming the pass-throughs get approved. So what was either the lag or the hit?

Agrawal CEO

You know, it's very difficult to give you percentages because, you know, those things, those numbers come out much later as well as and the impact is not really extremely large. Also, I mean, some of it, some impact happens on the spot higher basis as it is, because if diesel prices go up, spot rates go up, and we pass it on right away to our customers, some cases, the contract customers, it has a little bit of a lag. But the impact, see, I think diesel price hike has been totally about 6% to 7% odd. The impact should be about 1% to 2%, 3% max. So I think that's where we are waiting to see how things are going to play out. But maybe 1-2% is the kind of increase we'll see.

Divyash Gupta Analyst

Understood. The next question was regard to the opening committee that you mentioned that a lot of containers are stuck at JNPT and other terminals. Replenishment, I understand that containers are stuck so you can't replenish. But you mentioned something on the export side. So the two part question is Is our shipping more toward, my understanding was more domestic shipping, right? So how does the export part affect us?

Agrawal CEO

It doesn't really. Export on the shipping side is not affecting us. But I was just giving a general commentary. Sometimes, you know, because if there's a deep congestion, then we can, our ships might not birth on time. But we've not had that issue yet.

Divyash Gupta Analyst

Understood. And let's say two more questions. You mentioned new ship. So is it a new new ship or it's a new old ship?

Agrawal CEO

New new ship is a two brand new ship.

Divyash Gupta Analyst

Those two, I understand. But you mentioned that you are looking also at a new ship. If it happens, then some maintenance payments.

Agrawal CEO

So that's a new ship also. And of course, we're keeping an eye on secondhand ships.

Divyash Gupta Analyst

You got it. And just the last question, because of all this Middle East crisis and let's say any demand that might have spilled or we were not able to deliver, was there any loss of business that we could have done, but just because of all this? Let's say, ad hocishness of the war and economic uncertainties that revenue didn't happen?

Agrawal CEO

No, not really. We did not lose because domestically, it doesn't affect, it's not a direct impact because we are mostly, we don't do any exports, right? So we did not lose any kind of business because of that.

Divyash Gupta Analyst

But it can be that our clients, let's say, example-wise, Maruti will manufacture, send from Gujarat to the port, and then it will go for exports. While you are handling the export leg, but ultimately, Maruti might not send because your exports are not happening because of the shippage reason. So that's why I was...

Agrawal CEO

Yeah, I mean, basically, the domestic leg of the export. So we have, in some cases, there is an impact, but it's very miniscule. It's not so much.

Divyash Gupta Analyst

Understood. Got it. Thank you. That's all. Thank you, sir.

Simran Head of Investor Relations

I would request all participants to kindly start by your organization name before your question. So the next question is from Mr. Pinaki Banerjee. Sir, please go ahead.

Pinaki Banerjee Analyst — Aurum Capital

Hello, sir. Am I on the mic?

Agrawal CEO

You are not audible. Now you've gone on mute, please.

Pinaki Banerjee Analyst — Aurum Capital

Yeah, hello. So am I audible now?

Agrawal CEO

Yes, yes.

Pinaki Banerjee Analyst — Aurum Capital

Yeah, so normally your receivable days are normally 55 to 60 days. So looking at this current situation, do you think there is going to be some pressure on your receivable days in the coming times?

Ashish?

Yeah, so our

receivable days are, working capital days rather, 55 to 56 days. And we do feel that there might be some pressure on the working capital because of the rate hikes and things like that. But we are having our own credit policies that are fully implemented, and we would try to kind of put more

efforts to control that.

But as such, we are not seeing it as a real challenge so far. Simran, there is some noise on some numbers. Can you just see it?

Thank you.

Pinaki Banerjee Analyst — Aurum Capital

Hello. Sir, can I ask the second question, please? Yeah, please. Yeah, sir, Norman, sir, you have outlined a capex of around 1,000 to 1,200 cores for the coming three years. So, could you please outline it in which, in 527, how much will it be sanctioned in the following financial years, and on which segment are you laying the thrust on more?

Agrawal CEO

So, what we are doing as you, Ashish just move that slide please, Apex slide. So, you know, most of in this budget for this FY27, expenditure of our 237 crores is essentially on ships. So we are looking to buy the two ships that we've ordered. We are going to pay the final amounts for those ships. And maybe in case if there's a third ship that we decide to buy, maybe some advance payment for that. And then about 100-odd crores in warehouses, about 120-ish crores on trucks and new rakes that we're adding, and about 100-odd crores in warehousing, equipment, and IT services, etc. So that's about the extent of the budget for this year, the 600-odd crores. But I'm estimating, depending upon how things go, between 500 and 600 crores for this year.

Pinaki Banerjee Analyst — Aurum Capital

Okay, sir. That's all for my end. Thanks and all the best for the future. Thank you.

Simran Head of Investor Relations

Thank you, sir. The next question is from Ms. Vanshika Jain. Ma'am, please go ahead.

Vanshika Jain Analyst

Hi, I had a few questions. First was, out of like the Anand, Vijay and Express, out of the three dry dock ships, which ships would go to dry dock this year? If you could.

Ashish? This year, so we have two ships in the dry dock. One is already completed and these are all not the ships. There are different ships. Shipping which we have completed, dry docks completed last year, they would again schedule for dry dock in FY28. Uh, and later. So the dry dock actually is after 26 months.

Vanshika Jain Analyst

Okay. So no dry docks as of now.

Yeah. So this year, no dry dock. One ship, as I told you, would be scheduled at the end of the March, maybe, uh, the last week of March also.

Vanshika Jain Analyst

Okay, and what is generally the schedule for this dry docking? If you could check some later.

Schedule is, so you're talking about the duration, right?

Vanshika Jain Analyst

Yeah, duration.

Yeah, so duration is roughly kind of depending on the size of the ship, probably 25 to 30 days. Even it can also extend to 35 days types.

Vanshika Jain Analyst

Oh, okay. My next question was, what are the throughput or volumes that we are seeing in the seaways business and the margins that we are estimating for the seaways business?

Agrawal CEO

Well, throughput is more or less, you know, capacity is not increasing, right? So it's basically, if you are able to either increase more voyages, or secondly, increase the selling price of our containers, so only then can we increase the value of that or the revenues. So, some of that keeps us a regular process on how we can increase that. Typically, monsoon season, the ships slow down a little bit because of the weather. Typically, you have lesser voyages at this period. But with the fuel prices, bunker prices going up, we've increased the rates also in some cases. So, some impact will come from that side. But we have limited room to increase the revenues.

Vanshika Jain Analyst

And no room to increase the margins.

Agrawal CEO

The margins at a decent level, I think 40-ish plus percent EBITDA. So I think, you know, if the prices remain as is in terms of the fuel, it will probably come down a little bit. It has come down if you see from the quarter on quarter basis. So we will possibly, you know, 30 to 40 percent type of EBITDA is a little bit more reasonable.

Vanshika Jain Analyst

Okay. So my next question was that we, you forecasted that the LTL business, the mix would go from about 35 to 30%, 37% currently to about 40%. So can I get a ballpark idea of how much every 1% increase in LTL would impact our margins?

Agrawal CEO

It's a slower process. I think, you know, the LTL business has a higher double the gross margin at about 20% to 10% for FTL business. So certainly there is some change that happens in the margin structure, but it's more gradual rather than straightforward. So there will be some few basis point improvement with every 1% increase in share of the LTL business.

Vanshika Jain Analyst

Okay, got it. Another question was, what is the PV and CV mix, if you could shed some light on that and the expectation going forward?

Agrawal CEO

The PV and CV mix in what?

Vanshika Jain Analyst

In the supply chain business.

Agrawal CEO

As in the ownership of trucks?

Vanshika Jain Analyst

No, the customers.

Agrawal CEO

Oh, no, it's a, we don't share that specific number in terms of PV, CV, etc. It's a broad, about 75 to 80% of the business comes from auto sector.

Vanshika Jain Analyst

Okay. And like I could see that the run rate in our JVR associate business is usually 20 to 22 CR. And this quarter, it has fallen to about 18 CR. So, was it because of the Toyota JV or the Concorde JV?

Agrawal CEO

A run rate in terms of what? In terms of the margins?

Vanshika Jain Analyst

Revenue.

Agrawal CEO

Yeah, some of it is dividend income, right? Sorry, revenues. Revenues on the, it's about a little bit moderated on the Concord side compared to last quarter. But the cold chain business grew much faster. However, it is, but the cold chain business, as you know, is a much smaller quantum business right now. So that has been a little bit of an impact. So yes, it's a little bit lower, but not substantially.

Vanshika Jain Analyst

Okay, that's all the questions from my side.

Simran Head of Investor Relations

Thank you.

Agrawal CEO

Thank you.

Simran Head of Investor Relations

Thank you, ma'am. The next question is from Mr. Piyush Chanda. So, please go ahead.

Piyush Chandra Analyst — Newmark Capital

Thank you. Hi, this is Piyush from Newmark Capital. Vineet, in the trans system business, we see margins have come down from around 14-15% circa to around 12% and then now around 9%. This has also resulted in profits from that business coming from, let's say, 40-42 crores to around 30-odd crores run rate. What's happening over there? Could you just shed some light on that?

Agrawal CEO

Well, in that business itself, we are, of course, a lot of that business is Japanese clients and specifically Toyota, etc. So there is a lot of investment that is now going in the business also because of the expansion that these companies are doing. There is also some pricing pressure, as has always been with the fragmentation element of logistics per se. So it is a little bit of production cuts that we've seen in some areas. We have seen some amount of business that we actually did not. We will renew also because the pricing was quite low, so but I think, you know, we will, the growth is there and we should start catching up with some of the margins. I do not think we'll get back to that 11-12% type of range because that seems to be always a little bit on the higher side. Probably I think about 10% is more reasonable.

Piyush Chandra Analyst — Newmark Capital

I would have assumed that given this is a JV, we would have benefited from slightly better pricing, right? Given Toyota also owns half the business.

Agrawal CEO

No, no, Toyota doesn't own the business at all. It's Mitsui and company is a JV part.

Piyush Chandra Analyst — Newmark Capital

Sorry, yeah, Mitsui.

Agrawal CEO

So there is no correlation between Toyota, you know, pricing. Okay. Yeah. And in fact, if Toyota was there, then it would become a cost center, like, you know, for some of our competitors.

Piyush Chandra Analyst — Newmark Capital

Okay, okay. Got it. So, this is from me. Thank you.

Agrawal CEO

Thanks.

Simran Head of Investor Relations

Thank you, So. The next question is from Mr. Deepak. So, please go ahead.

Deepak Analyst — Sundaram Mutual Fund

No, I'm audible. I just wanted to touch upon the supply chain operation with this portal. If you can elaborate a bit, because you're doing quite well before this at about 20% growth. You know, then the standalone growth has been on the lower side, while the consolidated supply chain has been on the higher side. So the standalone piece, if you can just remember it as to what's the reason for this low growth. And your outlook sounds a bit encouraging. So, you know, any thoughts on the outlook, if you can elaborate on what's the strategy on the growth side of supply chain?

Agrawal CEO

So, on the standalone side, of course, it's just the supply chain business. On the consult side, we also add a chemical logistics business for that also. Is in the cold chain as well. And cold chain as well. Sorry. So there you're seeing slightly better growth. But yes, you know, the demand outlook is good. We're doing work for quick commerce people. There's demand from that side. Some large warehouses that we acquired in Q2, Q3 of last year. Some of that has started to play out in terms of volumes as well as increase in revenue. So we will start seeing some of these benefits in the next few quarters in terms of growth as well. So I think the margin structure should also keep improving with the investments that we are making over here. It is a challenging business today in some areas because there is also a demand for manpower, especially when you're running large warehouses. And manpower is a little bit of a challenge in the system because, as you know, post the Middle East crisis, a lot of labor moved out of cities and towns, etc. because there's no LPG for cooking. So... And there itself, you know, you have to hire at whatever cost so that you are able to replenish. And some of that pressure comes, but we are pretty sure that some of that will start easing out as the LPG crisis is better and as well as more and more automation starts coming. So we are also playing on the tech side, where we are looking at a lot of automation for really improving manpower productivity, as well as greater visibility to both ourselves as well as to our clients. And that should, over time, not happening right away, but over time should give us margins, better improved margins also.

Deepak Analyst — Sundaram Mutual Fund

Okay, so you didn't seem to be concerned about any of it. Client loss or business loss with an existing client. So this slow growth should be considered a one-off and the company seems to be confident of growing at double digits, say 14-15% in the next quarter itself, right? Should we read that?

Agrawal CEO

Full year is 12-15% is what we are maintaining. I think some of that we'll start seeing in the next few months.

Deepak Analyst — Sundaram Mutual Fund

Yeah, sure. And I think my next question was on the seaways business. So if you can tell us as to what kind of growth and margin profile we should expect in Q2 because growth will be a function of our utilization and also the prices. So if you can touch upon the near term in the seaways and for the new ships, if you can spell out the inflow of orders and, you know, the pipeline that you have for the new business. New ship utilization as to how many quarters will it take for you to get to break even there and what kind of pipeline that you have for the new ships to get utilized quickly. So that's on the CBS side.

Agrawal CEO

So, firstly, on the quarter two side, as I said, is very unpredictable based on the bunker prices. It has been oscillating quite a lot. Only last week was about, as I said, 82,000, 83,000, 85,000, something like that. And it had touched 1,05,000 rupees also, and then it came down to about 72,000. So, it's been moving in very rapid ranges, large ranges and rapidly also. So, it is very unpredictable and very difficult to give you a basic margin, basic changes, but the margin profile of the business is such that you will definitely should achieve a 25-30% kind of EBITDA irrespective of, you know, we absorb some of the cost also and some revenue increase might happen also. So, that's on the quarter. On the new ships. Typically, utilization happens in the first few months, maybe four to six months, we should see full utilization. So, once they start coming in from the first quarter three, beginning of quarter three, we should see improvement. We should see that impact. It will take some time, of course, but then, you know, for the full year, you will see that the seaways, EBITDA might go up because you'll have higher depreciation, and revenues will also go up slightly, but profitability might subdue a little bit because of the new ships for one or two quarters.

Deepak Analyst — Sundaram Mutual Fund

Okay. My last question is on the JV profits that we get from the Toyota JV. So that's been, you know, in that range of about 18 to 19 crore. So although we're seeing revenue growth, and in the last call, we spoke about growth on the Toyota business, but it's not, you know, peculating down to the earnings. So what kind of earnings growth? That one should expect for the JV that we have. I reckon that you are investing in cost, so if you can elaborate on the cost side into what all costs are being incurred in the JV and until when are we going to incur those costs as well? Thanks.

Agrawal CEO

So, there is a capex plan also in the JV. We are investing into new facilities as well as new trucks, etc. There's also, as you're aware, that Toyota is coming with a new plant in Aurangabad. So, at some point in time, not this fiscal, but next fiscal, there will be investment into that facility as well. So going forward, you know, there is a CapEx plan in the next four or five years. And based on the free cash flows is what we are looking at in terms of dividend income. So I think the guidance for that business is more or less a similar kind of profitability as last year. And perhaps a similar kind of dividend payout also as last year. I think it will not increase in the next few year or two because of the CapEx, as I'm saying. But let's see how the cash flow remains with the business. And then we can take a call. It's a debt-free company. So, you know, if there's a need to take any debt because of the CapEx, we can always do that. And the dividend payout is more or less 100% of the profits. So, yeah, we will see towards the end of the year.

Deepak Analyst — Sundaram Mutual Fund

I was actually talking about the JV line item where the actual earnings of the company shows up, you know, I don't know if that's related to the dividend.

Agrawal CEO

It is because the dividend payout coming from that company.

Deepak Analyst — Sundaram Mutual Fund

Okay, so, okay, fine. I'll probably connect with Ashree, sir, to get more clarity on this. And thank you. Thank you all the best. Okay, thank you so much.

Simran Head of Investor Relations

Thank you, sir. The next question is from Mr. Kripa Shankar. He's back with us.

Kripa Shankar Analyst

Yeah, hi. Just one follow-up question. Look, Concore has provided an inspiration with respect to its domestic business, and this year also they are talking about a lot of their existing operations having a very integrated solution, the first mile and last mile solutions also with their mid-mile rail haul. I just wanted to get a sense around what sort of benefits are expected, what sort of a flow-through can come to Transport Corp, either with this partnership or outside of it. Do you see benefits flowing through?

Agrawal CEO

Yeah, you know, I think what happens with Concord is that we, there is a lot of discussion that happens, but we have to see a lot of action first on the ground. So it takes a little longer for that action to happen being a PSU. But we are closely aligned with them. We work with them on several projects on a regular basis. And for example, first mile, last mile is one of the areas or in areas they want to, first mile, last mile is basically an integrated solution where, you know, You know, we are responsible for the first mile, last mile, and they are responsible for the middle leg, but the customer interface remains at one place, which is with us, which is with us. So, yes, so I think it's always... It's always great to be working with Concord when we are able to, when there is a certain solution that we are able to sell to our clients. But it's not always that we'll see those solutions emerging right away. Also, you know, there's a leadership change right now at Concord, so it might take a few months for things to settle down.

Kripa Shankar Analyst

Got it. And one question on the financials. You know, the other income has come up quite materially on a consolidated basis. So, just wanted to get a sense around research, any specific reason why it has happened?

That is because of the lesser amount of dividend. We just talked about it. That is...

Kripa Shankar Analyst

No, sir, but... Yeah, okay. Go ahead, please.

Yeah. So, this quarter, we had a less amount of dividend. So, the other income got reduced.

Kripa Shankar Analyst

On a consoled basis, I'm referring to, that also has, but that would net off the dividend income received by the standalone entity, right?

Yeah, so then if we talk about the console figure, then the profit numbers are also less than the last part. I will probably take this offline. Thanks. Thanks a lot.

Simran Head of Investor Relations

Thank you, sir. There are no further questions. Now I am handing over the floor to Mr. Ashish Tevari for his closing comments.

Yeah, thank you very much for joining this call. I think you would have got all the answers. If it is not, then you can write me back as well. So, we will meet in quarter to call in the middle of the festival season. So, our best wishes for the upcoming festival season. Thank you very much. Take care.

Agrawal CEO

Thank you.

Analyst Q&A · 8 questions
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