TVS Supply Chain Solutions Limited (TVSSCS) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the TVS Supply Chain Solutions Ltd. Q1 FY27 Earnings Conference Call, hosted by Philip Capital India Private Ltd. As a reminder, all participant lines will remain in the listen-only mode, and there will be an opportunity for you to ask questions after the management's opening remarks. Should you need assistance during the conference call, please signal the operator by pressing star, then zero on your touchstone telephone. Please note that this conference is being recorded. Before we begin, a brief disclaimer. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantee of future performance of the company, and it may involve risk and uncertainties that are difficult to predict. I will now hand the conference over to Mr. Vikram Suryavanshi from Phillip Capital, India Private Limited. Thank you, and over to you.

Thank you. Good morning and very warm welcome to everyone. On behalf of Phillip Capital, I am pleased to welcome you all on

the earnings call of TVS Supply Chain Solutions Limited.

We are happy to have the management with us here today for question and answer session with the investment community. The management is represented by Mr. Vikar Chendha, Managing Director, Mr. R. Vadyanathan, Global Chief Financial Officer, and Mr. Karthik Venkatraman, Aid Investor Relations. We'll begin call with opening comments from the management, followed by interactive questions and answers. With this, I hand over call to Mr. Karthik for opening comments. Go to yourself.

Thank you, Vikram. Kastik here. Good morning, and welcome all to TVS Supply Chain Solutions Earning Calls for the quarter ended June 30, 2026. I hope everyone had a chance to look at the financial results which were posted on the company's website and on the stock exchange. We have with us today Mr. Vikas Chedda, Managing Director, Mr. R. Vaginagan, Global CFO. We commence the call now with opening remarks from our management along with the business performance update. It will be followed by an open forum for questions and answers. Before we begin, a customary remark, I would like to point out that some of the statements made during this call may be forward-looking in nature and must be viewed in conjunction with the risks that the company faces. A disclaimer to this effect has been included in the investor presentation, and I request and hand over to Mr. Vikas Chedda, Managing Director of the company, to make the opening remarks. Over to you, Vikas.

Good morning to all of you. Firstly, let me welcome all of you once again to our earnings call to discuss, as I would say, the robust performance for Quarter 1 FI27. For the benefit of those participants who might be joining this analyst call for the first time, please note that TVS Supply Chain Solutions is a tech-led and asset-light supply chain solutions provider. We have two main business segments, namely the Integrated Supply Chain Solutions, or ISCS as we call it, and Global Forwarding Solutions, or the GFS segment. We operate across four continents, Asia, Europe, North America, and Oceania, where we offer customer-specific solutions in the 3PL space and also offer 4PL services in select markets. For the company, you may please refer to our website, www.ts.com slash InvestorRelations. Performance for us. We have 14 TVLs at the end. Thank you. There has been a sustained upward trajectory on year-on-year basis across regions and segments. In the ISCS, segment revenue from operation grew by 22% over last year. Moving to the... 50.6% over last year, fueled by significant growth in volumes and new business wins. Team GFS did exceptionally well on ocean volumes and especially in India. We will do 10% on a sequential basis. to state that both the segments delivered double digits Nine percent.

Thank you. Material-related costs increased from $484 crores in Q1FI26 and $653 crores in Q4FI26 to $666 crores in Q1FI27, primarily due to the new businesses in India and increasing the volumes in North America and the Europe market. The movement in material costs and other related costs are in line with the change in the business groups in the ISCS segment. Now, moving to the cost structure, freight clearing, forwarding, and handling expenses increased from 680 crores in Q1 FI 26 and 813 crores in Q4 FI 26 to 991 crores in Q1 FI 27, which is in line with the volume growth in the GFS segment. Employee cost on a year-on-year basis, employee cost increased from 619 crores in Q1 FI 26 to 676 crores in Q1 FI 27 due to the cost inflation and in line with the revenue growth. The cost increase was also partially observed by the savings to the cost takeout initiatives. On a sequential basis, the employee cost was 641 crores in Q4 FI 26. Sub-contracting costs increased from 381 crores in Q1 FI 26 and 407 crores in Q4 FI 26 to 444 crores in Q1 FI 27. This is in line with the revenue growth from the new customers. Other expenses moved from 257 crores in Q1 FI 26 and 297 crores in Q4 FI 26 to 329 crores in Q1 FI 27. This rise was primarily driven by the higher rental charges due to the increase in the short-term lease rentals. The proportion of right-of-use assets under India's 116 increased year-on-year, with depreciation increasing from 93 crores in Q1 FI 26 and 108 crores in Q4 FI 26 to 114 crores in Q1 FI 27. Interest costs on lease viabilities under India's 116 increased from 20 crores in Q1 FI 26 and 25 crores in Q4 FI 26 to 26 crores in Q1 FI 27. The increase in depreciation on leased assets and interest on leased liability is an account of the additional space taken for the new business means. On the profitability front, our adjusted EBITDA grew by 34% year-on-year, with margins expanding by 30 pips to 7%. Sequentially as well, adjusted EBITDA grew by 4.6%, demonstrating the consistency of the underlying earnings trajectory. Thank you. Thank you. Thank you. We just said PBT of 32.1 crores in Q1-FI27 compared to 18.8 crores in Q1 last year and 13.9 crores in Q4-FI26, reflecting the results of growth and the operating leverage. Pat for Q1-FI27 was 22.5 crores as compared to 71.1 crores in Q1-FI26. Can we note that Q1-FI26 included an inward gain from previous ILP. Excluding the inward gain and the exceptional items in Q1FI26, operational pad was 8.8 crores, recording a year-on-year growth of 156% in Q1FI27. With this, I will hand it over to Vikas for the business updates. Thank you.

Thank you, Vaidhi, for the detailed analysis. I'd like to briefly touch upon our business development performance and pipeline strength, which reinforces our growth outlook. In quarter one, we recorded new business wins, which is an all-time high in a quarter of 543 crore, which represents 21% of our quarterly revenue. A clear sign of traction across key geographies. At 7,500 crores plus, giving us a view of the road ahead for the coming quarters. Across both IRCS and GFS, we saw wins from several marquee customers. On the IRCS side, we secured mandates from India and major international markets, including a leading Asia-based renewable energy provider, a specialist clean energy solution organization, a leading kitchen appliances manufacturer, A leading Indian consumer beverages company, a glassware and consumer product specialist in India, a premium motorcycle manufacturer in Europe. It's company in Europe. The strength in our tech-enabled execution and the trust our customers continue to place in TVS, SES, which acts as a testimonial of our delivery capabilities. Particularly, India continue to deliver exceptionally well on new business development with multiple large strategic wins across automobile, consumer products, and industrial. These wins will drive revenue growth in the quarters ahead, especially in the ISCS business, where our positioning continues to strengthen across production, aftermarket, and distribution-led supply chains. On the GFR side, we added several customers, including Global Sustainable Packaging Solutions Company, a multinational telecom equipment provider, a top engineering and technology expert, a leading industrial automation and robotics player, Appliance is wholesaler. Thanks, everyone for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Sukrit D. Bartil from iSight Venture Private Limited. Please go ahead.

Good morning, team. I have two questions. The first question is to Mr. Chadda. Beyond the regular outlook, what are the top two to three execution varieties you are focusing on in the next few quarters? And alongside that, what do you see as the biggest risk and demand shifts, global competition or regulatory changes? And how are you preparing to manage them while strengthening TBS supply chain's position in the logistics and integrated supply chain services? I just want to understand a forward guidance on this. That's my first question. I'll ask my second question after this. Thank you.

Thank you. First of all, very good question, and let me answer it in both the parts. The first part that you asked was, what are our top priorities in the next two, three quarters? So I would say our top two, three priorities, the number one priority is growth. Thank you. Inventory, etc. We continue to work on this.

Thank you. My second question is to Mr. Vaidyanasani. Again, along the similar lines, I just want to understand from a financial point of view, what key risks or challenges do you anticipate in the coming quarters, and what specific measures have been taken to manage margins, cash flow, and strengthen the balance sheet, especially in areas like fuel cost volatility, receivables, and compliance. Thank you.

Thanks, Sukhra. I think the question that you raised with respect to the margins and the risk to the margins, I think we would talk about, you know, let's take example of the fuel cost. I think the way we do the contracting with the customer is that as and when there is a fuel cost increase, it is passed on to the customers. I think that is how the contractings are done, not just in India, but across all these geographies, I think that is how the contracting is done with the customers. So whatever is the increase in the fuel cost, it is passed on to the customers. Of course, there could be some time lag in terms of making a claim, but ultimately it gets passed on to the customers. So, the other risk, I would say, is more in terms of the manpower availability. I think this is probably a full year phenomenon, not just a particular season. Each geography has a different risk in terms of manpower availability, and we focus on that in terms of having dedicated teams which ensure that, you know, the manpowers are available at the right time, and any increase in the cost is also passed down to the customers. I think that is how we manage the risk. Of course, there are other risks. The risk in terms of interest rates are risk and forests, which we manage it from a tertiary point of view, but at operationally, these are the risks and that is how we manage it.

Thank you, and best wishes. Thank you, Sukhrib.

Thank you, Sukhrib.

Thank you. Participants who wish to ask a question, please press star and one. We take the next question from the line of Somal Shah from Paris Investment. Please go ahead.

Yes, hi, Dean. Good morning. I wanted to ask on the ISCS side because our revenues had increased quarter on quarter, year on year, but when we look at our EBITDA, it was down. So what was the reason for such lower EBITDAs for this quarter, and how shall we look at the remaining quarter of this year?

Okay, I will take this for me. This is YD here. I will take this. I think the revenue came in very strongly for me. Because of the new contract that we onboarded both in Q4 as well as in Q1, we obviously have to incur new implementation costs or transition costs, you know, initially when we onboard this. Thank you.

And going forward, I don't think this will have any reflection on our future margins. It will be...

When we are guiding, I mean, we have been guiding for a few quarters that we shall be reaching at 4% PBT level by Q4 of this year. So, how shall we look at it? Because we are still at around 1% PBT for this quarter. So, for the balanced quarters, will it gradually increase towards the 4% PBT margin by Q4?

Look, let me answer that question. One percent.

Okay, and on the partnership with ALA Group for Defence and Aerospace, so how are we looking at this? Has the revenue started kicking in, or what could be the revenue potential?

Look, we aspire to reach almost 2,000 crores in year 5 of the operations. At this moment, aerospace and defence are highly regulated and certified vertical. So, at this step of what we are trying to do is, or what we are doing is, that we have finalized our way. Education of the warehouse. Thank you.

What did you say? By year 5, we can have 2,000 roads. What did you say? I didn't understand.

We, yeah, we believe that the potential of this particular joint venture is to

From the EBITDA side, will it be EBITDA accretive, or it will be on the similar lines as of now?

This industry being regulated and, you know, entry barriers are very high. This will definitely be margin accretive. ALA group as such was listed some time back, and you can look at their financials, their PBT levels were almost in high single digits. So this will be margin accretive for us.

I may ask the last question. A few days back, there was some amalgamation update between a few of our companies with TVS supply chain. So, how shall we look at it? As a shareholder, what kind of equity dilution we can have? Or, I mean, what kind of benefits we can accrue through that?

Okay. So, all these things are already 100% subsidiaries of TVS supply chain solutions, and we are only merging these entities into a single entity. One is two, three things. One is... There will be a lot of reduction in the compliance cost, right? Because today, each of these are separate legal entities. We have a separate audit cost, other compliance cost. Once we merge into a single entity, I think there will be some savings on the compliance cost. The second thing is obviously, you know, at the operational level, today we go to the customer that has different legal entities. Once the merger happens, I think we'll be able to go to the customer as a single legal entity to the supply chain solutions. Operationally, as well, there could be a lot of ease of doing business. But at an overall level, there will be no dilution because all these things are 100% subsidies of DBA supply chain solutions.

Correct. Correct. Okay. That's it from my side. Thank you and all the best.

Thank you so much. Thank you so much.

Thank you. We take the next question from the line of Ankur Khodar from Swan Investments. Please go ahead.

Hi, sir. Congrats on a good set of numbers. Most of my questions have been answered. Just one thing I wanted to understand is as you mentioned that there were a couple of new contracts in the last couple of quarters in the ISCS business because of which the margins were impacted as the

costs are upfront and as we scale up, the margins should normalize.

So just wanted to understand what are the timelines by which whenever a new contract is added, how many quarters does it take for it to give stable margins?

Thanks, Ankur. Let me answer that question. Look, we are a speciality supply chain, integrated supply chain solution provider. Our contracts that we sign with our customers are to solve their problems and, you know, deliver the value that they seek from this partnership. are a bit unique in nature, because some may have more implant work to be done, more sub-assembly work to be done, which could have a little longer gestation period, like maybe, you know, two quarters. Some contracts are... The gestation period is just... So, our trade volumes, you know, grew all across, you know, in India, as well as In the rest of the world, we saw more volumes grow on the ocean side, but air also saw substantial volume growth. Wins that we have had with our customers, and a lot of this has been incremental in nature. Also, remember, our margin is not only reflection of the new business that we are doing, but also all the cost optimization work that we have been doing in terms of consolidating our vendor base, etc. So, while the growth may not be so high going forward, I am still confident of a very high double-digit number, but I would expect the margins to buy and Understood.

That's all for my side. Thank you and all the best.

Thanks, Ankur.

Thank you. We take the next question from the line of Kunal Subness from Nine Rivers Capital. Please go ahead.

Hi, thanks a lot. Sorry to hop on the same ICS margin. I mean, you have been adding new business each quarter, and that has been – you will have certain startup costs every quarter, right? It's a little surprising to see that sequentially, even with revenue growth, your EBITDA margins are down by about from 9.3 to about 8.1. That's a huge – if it's only related to startup costs, that's a big startup cost, right? I mean, could you explain what's the one-off here?

Yeah, thanks so much. I mean, thanks Kunal. See, I think what happens in Q4 normally happens in Q4 is we also get the benefit of the price correction that we get from the customers. That is why typically the Q4 will also have the...

And, you know, Some of the contracts, we are required to do more, you know, initial work to make it, you know, make deliver the SMAs that we have for the customers. So, it is not something that I'm worried about. It is not something that anybody should be worried about because as these projects start rolling up and delivering the customer volumes,

To 9%, is it like that should happen in, say, quarter two, or it's more like year-end phenomenon?

No, we will sequentially improve the margin, and I am fairly confident that in quarter two itself, we will achieve 9%.

As you said, we are seeing it sequentially going up, and our plan is to take it about 9.5% to 10% by Q4.

Sure. Sir, the other thing is on growth. Both your businesses, ISCS and GFS, have grown much faster than what the previous guidance or discussions have been, and that's very heartening. How do you see this, the compact between growth versus margins? Are we now gunning more for growth and margins will sort of be a byproduct which sort of eventually will come through? Or, I mean, what are your thoughts on that?

We very firmly believe in profitable growth. We are not a company that will run after growth, ignoring the profits. All our projects that we win and that we pick up are accretive to our existing margins.

We take the next question from the line of the NHS, well, from Vazir Capital. Please go ahead.

Hello, sir. Hello, sir. Am I audible? Yes, sir. I'm audible.

Yes, go ahead.

Okay, sir. Like the previous participant asked that we are aiming for 4% PBT margins, that will be 3% PAT margins, right?

Yes, sir. At 25% effective PATs, it will be about 3% PAT, yeah.

And this delayed in that margins are due to macro-advents like the U.S. around war, I'm assuming?

It is a combination of factors. One is the geopolitical things where, you know, I think, as Vikas mentioned in terms of overall recession, geopolitical risk, and as well as, you know, in terms of the GFS. I think GFS, we saw a 4% EBITDA margin, and, you know, ideally we would expect this to be about 4.5% to 5%. And we want to hit that, you know, at least a 5% EBITDA margin in GFS for us to reach. I think it is a combination of multiple factors. Okay, and just to add, if you look at the trajectory, you know, where we have been moving, I think, if you look at last year's Q1, I think our PBT was, you can go to the P&L, you will see our PAT margin and PBT margin as completely, you know, interchanged, you know, because of the improvement in the trajectory between the PAT and the PBT. So, you can see the improvement, and, you know, we will improve this trajectory in FI 27 as we move towards the 4% PBT.

That's really helpful. And I was looking at an interview of Mr. Ravi Vishwanathan with ETNOW, and it was stated that we are looking to expand into Africa and Middle East markets. So, is this still on?

Yeah, let me answer that question. So, as you know that we've got a very diversified portfolio, we are already present in 26. We are in discussions with... We firmly believe that for the Middle East and Africa, and if I'm asking, Thank you.

Moving towards that target, not like...

And Q2 have been very positive. And that we are mentioning.

Thank you. We take the next question from the line of Rohit Ori from Progressive Share Brokers, Private Limited. Please go ahead.

Hi, team. A couple of questions on this new business engine. We see that the business development pipeline increased from 6,100 crore to 7,500.

My question is that what percentage of this pipeline

can realistically be converted over the next 12 months or maybe 24 months or so?

Yeah, thanks. Look... We have had has been between 20 to 25 percent. Now, recently we have had a lot of sales effort in increasing the pipeline, and the pipeline has gone up. So I would say that in the 12 to 15 or 18-month period, definitely a similar conversion of 20 to, you know, 25 percent would be, we should be able to achieve.

On this new order bins that we have around 543 crores, if you can guide us through how much of this is from the new business or if we were supposed to compare it with the historical average, what is the average contract size over here?

So, first of all, the entire 543 is new business only. That's the first thing. It is a combination of... Business, new business that we are winning with our existing customers, and also new business that we are winning with completely new customers. So all of this is new business only. You know, what happens in our industry, in our business is that we might be doing for one customer, let's say, one warehouse, and... Because it is an existing customer, but a new business. So, and, you know, you will see that we have given the number of the new business, how it has gone.

What percentage would be a new logo addition versus the ones from where we must be taking the new wallet share?

I will answer the idea here. Probably, I would say roughly about two-thirds would be from the existing customers where we get new contracts, and one-third is probably the new logos, you know. I mean, I would, probably, I can give you the exact number, but at a broad level, I think this is, the direction is the number, two-thirds.

And steady state EBITDA margin for these new ones, if you could share that over the next three years or so.

As I said, ISCS is something we always aspect of about 8.5-9%, and that is what we keep targeting when we get into the new contracts. Obviously, if it's an existing contract, the margins could be slightly higher because we have the benefit of the existing team managing it, but if it's a new contract, it will be almost 8.5-9%.

Also, you should look at the operational leverage, right? As we grow our business, some of the costs that are administrative in nature will get spread over a larger base. So I think the... The growth in the Vidra margin will continue as we are growing the top line.

Makes sense. Thanks, Jim. Thank you for answering my question. Thank you.

Thank you.

Thank you. We take the next question from the line of Bharat Chait from Quest Investment Managers Private Limited. Please go ahead.

Hi, Tim. Congratulations and thanks for the opportunity. Sir, I have a first question on GFS side. If I understand that GFS, we are particularly operating in 627 major line, which is the busiest route in the global. So, are we looking for any expanding the line? Second key, recently, post-war, we have seen that there is a huge increase in the Container cost, container availability, and share container availability is also going down. So how much our revenue growth is because of this increase in containers? Cost and how much we are able to pass and what are we really doing to mitigate that availability so that customer shipments are not delayed. So if you can give, and is it, and our link is in foreign currency, then what is the constant currency growth rate?

So, we have asked a lot of questions. Let me try and answer, and if I miss something, Vaithi will jump in. So, are... In GFS, we are present in multiple countries, and obviously we engage with customers. Many of our customers have been long-time customers for us. And we meet their requirements. So if it means that for meeting their requirement, if we have to add a line or go to another line, we definitely consider that. So our expansion of the line is not determined by us going into a line first, but it is more determined by the requirements of our customers and how do we engage with them, what is their requirement, et cetera. In terms of the costing, yes, the container cost, et cetera, you know, even on the air side also, you know, definitely went up. The way our contracts are structured is that we pass on these costs to the customer, and eventually it is borne by the customer. And I think it is pretty much visible in the way we have been able to deliver 4.1% EBITDA margins in this particular quarter. So the situation, the unavailability, and all of that, we see this as an opportunity also because the team works very hard with the customers to find out opportunities to meet their requirements, and this has led to such high revenue growth in this particular quarter. I think the last question perhaps you had was on FX. I would like to say that since we operate in those local countries, Our procurement also happens in those particular markets. So FX doesn't at such play a major role.

Okay, great, sir. And how do we see that managing this availability of container challenges, which is already there?

Yes, so look, the challenge is, all I would say is that trade has become a daily business at this particular moment. Because of the fluctuation changes that are there, the team has to fight on a daily basis to figure out how do we get capacity and how do we serve our customers. And the job has become tougher, and more hours have got added, but I think our team is doing a fantastic job in terms of meeting the necessary requirements of meeting the customer needs with the suppliers. And I'm very proud of what the team has been able to achieve in quarter one, and even in quarter two, the initial signs that we have in the first 45 days continue to be very, very promising. So, yes, I understand. There is a challenge out there, but I'm a very firm believer. Every challenge, there is an opportunity also.

And on things, since we have presence in so many countries, are we looking, say, less than container, pray, wait, I mean, a kind of container which is there are specialized services. So are we evaluating that at this moment?

Our focus is on, as I said, meeting our customers' demands. Now, and if that particular customer has a specific need, then definitely we go out and try and meet any such requirement. But it is also... And for those, if there is a requirement of a partial container or air shipment or whatever,

Your permission, last question, sir, we were not present in the last mile connectivity and after acquisition last year, that company, we also remain present. So how do you see what is if you can give some color on the total level market opportunity and how we are really engaging our tech stack in those business to really make it more successful? And where do you see this business over next three years?

Yeah, so first of all, you know, TVA Supply Chain Solutions is a B2B company. So anything which is to do with delivery, et cetera, on the customer side, consumer side, we are not present there. And in the value chain, the supply chain value chain that is there for B2B customers, we see more value in in-plant manufacturing, finished goods, warehousing, and aftermarket. And those are the focus areas for us. I'm not saying that last mile delivery for B2B is not something that is off our radar, but at this moment, we see enough opportunity in the existing value chains that we are playing, and we are focused on those. However, having said that, we also believe in delivering end-to-end solutions for our customers, and if last mile is a part of that end-to-end solution, we have our respective vendors with whom we work, and we deliver an end-to-end solution. But this is a, the last mile in B2B is something that, you know, we keep on debating internally about, and as soon as something we see more clear on this, we will...

Thank you, everyone.

Thank you.

Thank you. We take the next question from the line of Skynethic from Crystal Ratings. Please go ahead.

Good morning, sir. So, this is particularly regarding the amalgamation and mergers that were announced for our subsidiaries. I could say a few of the subsidiaries names were listed, but Fit3PL Warehousing Private Limited, which was announced on September 2023, after that there was no major updates for the merger. So, is there plans to merge Fit3PL with the TVSF or is the plan called up?

I'll take this question, Sai. I think Fit3PL, I think we want to keep it as a separate entity, because of some GST reasons, we operate on a different GST mechanism for some of our FMCG customers. So, we would like to offer those services to Fit3PL, and that is why we would like to keep it as a separate entity instead of merging it with a parent company.

Understood, sir. So, the merger plan has been called up. So, no, merging is not going to happen.

It was not at all announced to us, right? Even in the original plan, the retail was not part of the commercial, yeah.

Understood, understood. Thank you, sir. Thank you.

Thank you. We take the next question from the line of Somal Shah from Paris Investments. Please go ahead.

Yeah, hi. Thanks for allowing me a follow-up. As of now on the warehousing, we have about 25 million square feet capacity. So what could be the capacity utilization of this warehouses? The reason I'm asking is wanting to know on the same warehouse, how much more business can we do? Because, you know, if we want to increase our PBT, this depreciation cost also has to be cut in, right? So if you could give me your views on the same.

Yeah. So, first of all, you'll have to understand our business model a little bit. We are not a company that will first go and search for a warehouse, set it up, and then search for customers. Many of our warehouses, majority of our warehouses are driven by a project and driven by a customer requirement. So, by and large, when we enter into a contract for a warehouse, it is backed by a customer contract. And if the volumes of that particular warehouse are going down, then we would typically cover it in the contract with the customer to ensure that we are not at this disadvantage. Having said that, we also have warehouses where multi-customer locations are there. I would say by and large, our warehouses are fairly well utilized and in the vicinity of 85%, but there is definitely a room to improve, and we continue to explore. and automation for the warehouse so that we can increase the capacity of the warehouse.

So, as and when we will have more customers, more revenues coming in, this depreciation cost will also increase simultaneously.

If it's a large project, it will increase sommel. Otherwise, it will be, you know, we don't do typical warehousing alone. You know, we also do a lot of value-added activities apart from warehousing. So, normally, as a percentage of revenue, the warehousing cost will keep, you know, going down. And as Vikas mentioned, when the utilization also increases, there will be a benefit of that aspect.

Sure, sure, sure. And generally in our kind of business, what, second half is generally stronger than the first half, or is it, how is it quarter-on-quarter?

Normally the second, H2 is normally a strong quarter, especially Q4 will definitely be a strong quarter for us, in terms of increasing. Because we have presented multiple geographies, so each geography has got a different thing. But at the overall level, H2 will be better than H1.

And, sir, just one request. I think yesterday the presentation was uploaded post 7 p.m., and morning 9 o'clock we have a con call. So, if you could either delay the con call or maybe we could post the presentation earlier, it would be better.

I think that's a very fair feedback. You definitely need more time to digest the information. So, we will take this into consideration going forward.

Yeah, that's it from my side. Thank you.

Thank you, Zonald. Thank you.

Thank you. Participants who wish to ask the question, please press star and one. As there are no further questions from the participants, I now hand the conference over to the management for their closing comments.

Thank you all for your time and intelligent questions and your continued interest in our journey. We believe a very strong and reliable growth trajectory has been set for FY27. On top of that, we continue to see further opportunities to strengthen our market position, enhancing operational resilience and building deep relationships with our customers. Our focus remains clear, flawless execution on our customer conversion, retaining and growing our existing customer business, continuing the discipline implementation of our cost and productivity initiatives that we have set in motion. I would like to personally thank all participants.

Thank you, sir. On behalf of the LibCapital India Private Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.