LEAP India Limited (LEAPIND) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Leap India Limited Q1 and FI27 only conference call hosted by GoIndiaAdvisor. As a reminder, all participant lines will be in the listen-only mode and there will be opportunities for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Soumya Chajir from Go India Advice. Thank you, and over to you, Soumya.

Good morning, everyone, and welcome to Maiden Earnings Call of Leap India Ltd. We have on call with us Mr. Sunu Matthew, the Chairman, MD, and CEO, Mr. Rishi Gandhi, the Chief Growth Officer, and Mr. Rajasham Ale, the Chief Financial Officer. Please be reminded that discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risk pertaining to the business. I now request the management to take us to the same and provide some more insight on the quarter and year gone by. For that, we open the floor to Q&A. Thank you and over to you, sir.

So, thank you. This is Sunu Matthew here, MD Channel CEO. And first of all, a big namaste to all the investors and whosoever there is in the call. So, and I welcome all of you to Leap Engine Limited's Median Earnings Conference Call. Let me talk something about FY26. It was an excellent year for Leap, and our stock market listing actually marked an important milestone in our journey. As this is our first interaction with the investor community after listing, I would like to begin by explaining our business in very, very simple terms. We are a supply chain asset pooling company, and these assets basically connect all four pillars of supply chain, namely supplier, manufacturer, third-party logistics, and the retailer. So, everybody needs to understand that we are not a conventional transportation company or any kind of a warehousing company. Our pooling assets form the physical backbone of the supply chain. For the supply chain, if pallets are not there, then supply chain is not there. Whenever any kind of finished products, raw material, or packing material actually moves between warehouses, fulfillment center, and distribution, Plastic containers, pallets, energy equipments actually enable safer, faster, cost-effective, and standardized handling of the same. This is also actually called as unit load. Our assets enable companies to handle higher volumes by reducing loading and unloading time by up to 80 to 90%. It supports automation through conveyors, robotics, AGVs, thus improving space utilization and the efficiency of the goods which are moving between all four pillars of supply chain. Now, let me give a few real-life examples which we experience in our company. So, I would like to take a moment to give an example of two industries. So, where pallets have actually helped business scale substantially and created significant cost savings. So, first example I would like to quote is a leading global beverage company, which was able to move only 50 to 60 trucks in a day from one plant, using the conventional method of loading everything into the truck through labor by hand. And post-use of our pallets and forklifts, the number of trucks released from the plant has gone to 300 plus per day. Second example is a global noodle manufacturing company. It has been able to reduce its damages, pilferages, and hence improve profitability using our pallets across its location in India, thereby supporting circular economy and creating stronger stakeholder value. These developments are creating strong opportunity for us with other companies in the same sector. Now, a punchline statement, if I would like to give, is like, as supply chain becomes complex and more automated, a reliable and standardized palette is no longer an optional thing. It actually becomes an integral part of the operating system. Coming to LEAP, we are India's largest on-demand asset pooling company with a 90% market share. We manage approximately 14.9 million assets with an asset base exceeding Rs. 1690 crores. We serve more than 1,000 customers across 10,500 test points, supported by 28 fulfillment centers, basically warehouses. Our portfolio extends beyond pallet to containers, trays, foldable large containers, and material handling equipment. We believe we are absolutely positioned to capitalize on a multi-decadal structural opportunity driven by rising palletization in the country, formalization, and the shift from ownership to pooling of pallets. To put the opportunity into perspective, paratization in India remains significantly underpenetrated at just 14% to 17% versus 89% to 94% across developed markets such as North America, Europe, Americas, US, Australia, and New Zealand. Let me take a moment to explain movement hire, which is the core value and the services that we provide to our customers. Asset pooling in the country is at a very nascent stage. Globally, each pallet travels 4x on average per annum compared with just 0.4x in India. So, you can truly imagine what is the runway which is lying ahead of us that from 0.4, we have the opportunity to convert this into 4X. Of India's estimated 106 million pallets, 82 million pallets are low quality one-way pallets and largely unsuitable for pooling. Only 18 million pallets are actually pooling grade, of which 10 million are currently pooled. And that is the reason we say 9 million pallet is with us, so we have 90% market share. Pooling converts asset ownership into on-demand service. Customer access the assets they need, where and when they need them, without having to invest in ownership or manage tracking, maintenance, retrieval, or reposition. Leap takes responsibility for the entire asset lifecycle. When supplier, manufacturer, 3PL, retailer are connected, this entire asset lifecycle like availability, quality deployment, tracking, recovery, repair, and redeployment across its network. When we talk about network, this is actually the real mode for us, wherein from A to B and B to A locations, we have enough load to actually pool our assets. Leap owns approximately 9 million of these pooled assets, representing market share of 90%. We are absolutely sector agnostic. Let me explain that. As organized supply chain expands and customers increasingly focus on automation, we expect pallet adoption to broaden across industries. We are sector agnostic and our assets are being deployed across diversified industries and serve 1,000 plus customers. So, over and all, when we look at our nearly 1,100 customers which are there with us, we see that we cover to the tune of 38 sectors put together. Our business is also very sticky as we have not lost any customers since inception. Well, but we might have decided not to service the customer due to various reasons, but otherwise we have not lost a single customer. As we have demonstrated in the past that we take nearly 5% to 9% price increase every year, and this is based on the Wood Price Index, which is listed on German Stock Exchange. So for the next couple of years, we could easily beat the inflation with price increase. Given the better changes in countries' infrastructure, better roads, better facility centers, automation, our asset position is going to get further stronger. With labor market getting tighter, as we have seen, labor is actually very difficult to find in India. Our forklift loading of pallet is much in demand. We believe that adoption will take off, and we are at the forefront in increasing our footprint into various other sectors. Being a market leader, we always strive to develop new industries from palletization. Recently, industries such as dairy, paints, textiles have migrated from traditional methods to pallet pool. Now, let me talk a bit about the entry barrier into this business. While we own the asset pool, our deeper competitive advantage lies in the 10,500 locations, which are our touch points, our fulfillment centers, technology-led tracking, technology-led repair and maintenance capabilities, Customer integration, because we connect supplier, manufacturer, 3PL, retailer. So it cannot happen that four different type or colors of pallets are used in one integrated supply chain. And ability to retrieve and redeploy assets efficiently at scale. This combination of assets, technology, and network density gives us a unique advantage. We always say that we are champions to the sustainability criteria. Sustainability is actually embedded in how we operate. Our wooden assets are manufactured using timber source from sustainably harvested forests, where every tree is cut, is actually replenished with three more new trees. We own India as one of the largest fleet of 400 mx lithium-ion electric battery-focused. Let me come to a kind of business financials which will actually talk about that how our quarter one has gone vis-a-vis the last quarter of 25-26. So, I'm very happy to actually announce that we have done customer acquisition at a great speed in the first quarter. We signed 48 new customers from 11 sectors, which is considerably higher than the normal customer acquisition rate. Normally, in a quarter, we actually get 18 to 20 customers. This time, we have got nearly 48 new customers. This gives us additional 100,000 pallet opportunity in this financial year. Due to extended summer season, I believe the demand from the existing beverages and pre-formed segment persisted in quarter one, along with the wave of opportunities brought by the entry of major player in cola segment. Again, growth of e-com and consumer goods reflected in 3PL customers, such as DP World, DHL, User Logistics, which added another 30,000 pallets. E-com and quick-com wave continues to see rise with 25,000 pallet addition, basically in Zomato and Blinkit. The e-commerce and consumer goods demand, I believe, will continue to rise in quarter two and quarter three with upcoming Big Billion Day, Ganpati, Durga Puja, Diwali, and all the first season. Let's come to agro companies like Garud Nandi Seeds, Kaveri Seeds, and Global Blanc such as Corteva Agri Science have added further 20,000 more pallets. Yes. When I'm talking about that these are the industries which are actually performed well, the performance in textile was subdued on account of supply shortages due to the work, and the cost has also increased. So there had been subdued performance in textiles in the first quarter. Movement Hire business has been signed with marquee customers like a major cola company, Gulf Oil, Milosa Textile, Fuelatex, Bicalol Synthetix. In automotive, we have won the business with Autolive and Wash. Movement Hire, last year, we have actually moved 711,000 pallets, and this year, we have increased it by 8% to 766,000 pallets. Let's come and talk about a bit of energy business. In energy business, Teron has added 174 new machines in the first quarter, and we did a revenue of 35.3 crores with 33% growth over last year. Let me talk about something which is the pillar of our business, which is the supply chain that runs our company. So we are an execution-driven business, and our transportation cost as percentage per revenue has reduced from 11% to 10%, and our repair cost has reduced from 6% to 4.7%. Our warehouse cost definitely has gone up by 7% because of one-time settlement for closing down three warehouses. But you have to understand that our volume in S&CG and automotive has increased by 20%. A few new technological developments that we are doing, one I can bring to the point that we are going to introduce 3D printing solution for inserts, which we develop for automotive companies, textile companies, etc. And by next quarter, we will automate our crate cleaning system also. Also, after giving a brief on the business front, definitely Rajeshem will be able to talk more about the numbers. Let me talk about a bit of corporate governance. As a listed company, our focus is firmly on long-term value creation, strong governance, and discipline growth. We are supported by the experienced board and a very, very strong leadership team, which we call Mancom, which is Management Committee. Our growth priorities are absolutely clear, deepen existing customer relations to new industries, participate across a wider range of supply chain movements, broaden our product portfolio, and selectively enter new markets. We will pursue these opportunities with continued discipline around asset utilization, return on capital, and balance sheet strength. With that, I will now hand over to Mr. Rishi Gandhi to explain the multiple growth opportunities available to LEED and how we intend to translate them into the next phase of value creation.

Thank you, Mr. Matthew, and very good morning to all the participants. I think Mr. Matthew has given a very comprehensive background about the palatization, pulling industry, and now in my speech, I would like to take you through our growth story, how we have evolved over a period of time. So I would like to start my discussion with one statement that no nation can move from a developing nation to a developed nation unless and until there is an adoption of pallet part of supply chain ecosystem. And LEAP is taking, you know, that particular LEAP in introducing pooling of pallet and to reduce the overall supply chain cost. So, I'll explain the growth story in two points, that how this entire pooling solution is expanding within the supply chain ecosystem, and what are the multiple growth opportunities that we are pursuing. So, in the year 2013, it's a focused pooling offering. We started this thing, and over a period of time, we have expanded the territories also. We have expanded the product portfolio to plastic access and to MEG also. Our growth has been supported by steady expansion of our operating network. We have diversified our customer base and we have diversified to now 38 plus industries also. Some of the key operating parameters where I would like to draw in that as compared to last year, Q1, where we were operating at 13.65 million assets, we have added 1.26 million assets. And now we have closed the Q1 with 14.9 million assets. A lot of corporates are struggling with growth. However, at quarter on quarter, we are adding assets and we are penetrating into the market into pooling of assets. Our assets utilization has also improved from 88.6% to 89.2%. So mind well, our constant effort and endeavors to improve asset utilization. And we expect in a quarter to come, we will cross this 991%, and in the next couple of years, it may go up to 92% plus also. Always our focus at LEAP is to diversify customer base. So last year, Q1, we had 900 plus customers from varied industry, and now we have improved to 1,000 plus customers. And concept is to add newer and newer industries, newer and newer customer base. At Leap, our biggest strength is our network infrastructure. So, we have now moved to 10,000 plus touch points. So, you hire from anywhere, customer can be hired from anywhere. And this is the biggest strength, if at all any player wants to get into. In fact, if at all the competition decides to get into this particular business, they will take a couple of decades to build this 10,500 plus touchpoint. Let me share some of the phases of how this cooling ecosystem evolves. So, it evolves over three cycles. One is education phase, static hire phase, and the movement hire phase. Now, the way it has evolved, this polling business in India, we have crossed the phase of education phase, educating industries about supply chain automation, advantages of polling, cost reduction, and various other aspects. Then the static hire adoption takes place. And from that on, when the client starts hiring pilots inside the factories warehouse and they see the advantage, then the moment hire business picks up. And we can see the advantage of moment hire business for the last couple of years. And the journey has begun and the same will continue. And every year, we improve upon our moment hire business. So, for any customer, we start first with static hire business. So, they take the pallet for using inside the factory for either storage or continuous production or storage of finished product. And then, over a period of time, the same evolves to movement hire business. So, here I would like to share two examples. Okay. So, one leading daily company, which is a brand in their presence, they are very caching, but then there was a resistance in terms of migration towards automation. But over a period of time, we explained then the advantages of ASRS, which is automated sorting and retrieval system. And now, they have adopted that. And initially, with one location, it started with some few thousand pallets. Now, after seeing the advantages in terms of storage of cargo, evacuation of among us among the cargo, safety aspects, less damage to the product, and the cost reduction, and the environment advantages and all that thing, now they are pushing to the sister dairies. They are asking all the dealerships to take the palletized cargo, and we have reached out to 86 depots of that. And with the success of this daily company, our business has gone to age-fold last two years' time, and the other dairies, the smaller dairies also has started approaching us in terms of adoption of talent. Another example I would like to share with you all is about the textile industry. Textile industry is a very conventional industry. So over there, tech adoption, there was a great amount of resistance. But now with the, you know, joining of new age promoters and all the things, they're also, they are exploring adoption of AFRS automation system. It took some time for us to convince one of the leading textile manufacturers in terms of adoption of pallets, adoption of women hire. But now the entire system is working very well, and they can see the great amount of saving into logistics cost, great amount of saving in terms of damage to the raw material. And as Mr. Matthew has mentioned, there are another five, six new textile entities have approached, and we would like to replicate the success of that. Okay. So, we integrate with raw metal, packing metal supplier, manufacturer, 3PL, and to the retailers. That is how we start working it over there. Now, we have broadly five strategies for our future growth. So, deep mining of the existing relationship. So, if we are successful with one large player into e-commerce, the success stories will replicate with the other e-commerce players or quick-commerce players into that. We replicate the success stories with other players into that. Something similarly, we always work towards development of newer and newer industries, newer and newer territories also. So, we take pride that we are one of the largest logistics engineering team. The focus of that team is to provide solution to the newer and newer industries for adoption of starlight, advantages of that, and successfully implementation of starlightization. Now, after capturing this 95% market share, we are also exploring, and as we have mentioned in our DRHP and RHP, we are pursuing our growth opportunities outside India. We have established our entities in Gulf countries, and due to Western conflict, we have adopted a cautious approach. However, we have established a core infrastructure over there, and very soon we will go live with our own business over there, and customer has rolled out great carpet welcome for us. Before I wrap up, you know, my presentation to the group, I would like to, you know, provide one clarity about this recent marketing commentary of the related party transaction. So I would like to assure all our investor friends The lead remains committed to transformed communication and high standards of corporate governance. All related party transactions are at arm's length and have been audited and disclosed in our RHP and in accounts also. With that clarification, let me hand over this to our CFO, Mr. Rajeshwar Malik, who will provide the background about the financial performance. Mr. Rajeshwar Malik.

Thank you, Rishi, and good morning, everyone. I will take you through our Q1 FI27 performance, where we continue to deliver growth in revenue, EBITDA, and cash earnings while maintaining high-asset utilization. For quarter one, FY27, our total income increased 19% to $2,134 million. EBITDA grew at 21% year-on-year to $1,141 million, with EBITDA margin expanding by approximately 118 basis points to 53.5%. This improvement was supported by higher income, cost optimization, and operating synergies. At the bottom line, PAD outpaced the revenue growth by growing up 30% to $247 million with a PAD margin of 12% up by 114 BIPs points, While cash pack increased to 23% year-on-year to approximately 812 million, supported by strong EBITDA and operating leverage. We believe this reflects the core financial characteristic we want to preserve as we grow, scale the pool, keep the asset productive, and translate operating growth into stronger capital efficiency. With that, I will hand the call back to the moderator for the question-answer session. Thank you.

Thank you so much, sir. Ladies and gentlemen, we will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone 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'll wait for a moment while the question co-assembles.

Our first question comes from the line of Akshay Jain with Sixth Sense.

Please go ahead.

Good morning. Congratulations to the entire LEAP team on a successful listing and excited to see LEAP's journey from here on as a listed company. I just had a couple of questions. So we've noticed that in the first quarter, assets have grown by 9%, but the revenue has grown by 19%. So, going forward, how do we expect the revenue growth to be split between the asset growth and the higher throughput per asset deployed?

So, if you look at it, we have grown by, say, 9% to 12%, and our growth eventually actually comes from churning of our assets. So say last year, we have moved nearly 2.8 million pallets plus. So this year, we will be moving somewhere around about 3.7 million pallets. So in the first quarter, you will see that as compared to the last quarter of last year, first quarter of last year, we did 711,000 moments, moment higher. And this year, we have done in the first quarter, 766,000 pallets movement.

So, so, so, if.

So, just hold on.

So, that is one of the probable, oh my gosh, that could be probably, that is one of the reasons that say suppose in bandwidth sector we are getting a particular, Transfer higher pricing. This time, we have been able to move more pallets into textile industries and other industries that have given a growth of 19%. Looking at the same terms, if you look at our MSE business, MSE business actually has done nearly 35.3 crore turnover, which actually has put in 174 new machines, and it has also actually grown by 33%. So, it is upon the value of the assets that we put in, and that leads to the growth of our business. But technically, there is no much correlation between the number of assets that we are adding and the growth that we are getting.

Okay. Sure. Thank you.

Thank you. Our next question comes from the line of Vijay Shah with Insightful Investment. Please, correct. Yeah, Vijay.

Good morning. Am I audible?

Yeah, absolutely audible.

Perfect. Thank you, and congratulations on the new listing. So, I had a couple of questions, sir. One, can we get any kind of guidance in respect to margins for the rest of the year, especially EBITDA margins?

Okay. Now, if you look at our EBITDA margin, since last six to seven years, we have hovered around 47% to 56%. This business is also such that as you keep growing the business, the cost actually comes down. For that, I will give you a small example that if there is a warehouse, it was storing 5,000 pallets, it can go vertical and store 50,000 pallets and 250,000 pallets. And what cost actually gets incurred is the salary of the warehouse people who are actually managing it. So there are definitely great chances for us to improve the EBITDA and which we have demonstrated. If you look at our last full year EBITDA margin, that was somewhere around 50.5%. This first quarter, it has actually jumped to 53.5%. So we very clearly say that 100 to 200 BIPs on EBITDA margin can be added. And this is also a bit varied about the seasonal business. You can see that our volume growth has happened between 18 to 20% in both FMCG and automotive. But still, we have been able to control our repair costs, warehouse costs, and transportation costs. And thus, we have been able to increase the margin. But you should not be thinking that every quarter we will be able to increase EBITDA margin by 3% to 5%. That is basically not possible. Say, suppose if MSE is doing a bigger business and better business, then there the Rossi is very good, Pat is very good, but EBITDA is a bit subdued in MSE business. So it will be a combination of pallets, automotive, and MSE business. But one thing I can very clearly tell you that it will hover around 47% to 56% margin for next couple of quarters.

Okay. And second, sir, if we could get some guidance on top line growth, and I would like to see if you could give us a little sense on the organic growth, and also from new geographies, what we can get and how do we look at this opportunity at Middle East? What kind of revenues do you estimate can come in FI 27, 28, or even three years down the line?

Okay. So, first, let me answer to your question about the top-line growth. See, the guidance that we have given is that quarter-on-quarter, we will be clearly going ahead 20% plus growth as far as our revenues are concerned. So that is what we have told investors during our roadshows also. And as far as our new geography is concerned, now you can see that in the last quarter, in the last year, same quarter, we have spent around about 110 crores on our assets. But this year, first quarter, we have only spent 76 crores. So what this talks about is that in the Middle East, currently the turmoil has increased a bit. So we are very, very cautious. So we are not deploying that kind of an asset right now. But we believe that it is a very natural extension of our business because GCC is a completely importing country. And there are thousands and lakhs of pallets which goes to GCC on the higher model. Currently, it is on the sales model. So we are converting customers so that we can give the pallets over here and we can actually collect the pallets in GCC. So, this will actually increase our margins in India also. And as and when this war actually stabilizes, I believe it's a great opportunity for us to actually get bigger, better revenues from GCC because of the one important factor. Nobody actually loads product into the truck. So everything is pallet in and pallet out. All the trucks in GCCs are absolutely operating on palletized mode. So there is nothing which is ignorance that we have to deal with in GCC. So once the business actually starts, we will be able to see good inroads into the business because our model is that first we give as a static use, as Mr. Rishi Gandhi has explained, and then we get into the pooling. So pooling is the value that we provide, which is already persisting in the GCC model. So, we will be doing a handsome amount of turnover from GCC, but we have many levers within India if the war persists. We have many levers in India to compensate that growth within the growth of India.

Sure. Sir, just one small clarification on this and just to, you know, summarize that I understand this correctly. Sir, you said we will see quarter on quarter 20% growth. I believe you mean to say why or why, right?

Yes. By the way, yes. Yes. Got it. By the way, quarter on quarter. Yeah.

And sir, if I look at on, if I don't look at very on quarter on quarter basis, but I look at year on year basis, if our top line growth theoretically will be 20% plus, would you agree that the EBITDA growth should be higher than that?

Absolutely. EBITDA growth will be absolutely higher on that. And I can.

I understand there might be quarterly variations as you I have to explain depending on the mix and the seasonality of the business. But if I look at it on a full year basis, the EBITDA margin should tend to go northwards if we have a 20% plus growth, you know, given us.

Yeah. See, our split of the business is like 22% in quarter 1, 24% in quarter 2, 25% in quarter 3, and major chunk comes from quarter 4, which is 29%. So, 1 or 2% here and there, variation will be there. But on a yearly basis, and for a long period of time, we are definitely anticipating 20% plus growth.

Got it.

And, sir, all this, when we are saying 20%, this is all largely India business. Middle East will be an over and above opportunity. This is it.

Middle East will be over and above business. So, that is what we are expecting.

And, sir, if I may, three years down the line, if you were to estimate what kind of revenues can we get from Middle East?

See, three years down the line, we believe that it should be somewhere to the tune of 150 to 200 crores. Sure.

Thank you so much, sir, and all the best. Thank you, Vijay.

Thanks a lot.

Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address all the questions from the participant, We request you to kindly limit your question to three questions per participant. If you have a follow-up question, you may rejoin the line. Our next question comes from the line of Vishal Mehta from IFL Capital. Please go ahead.

Hello. Hi, Sunu, Rishi. Congratulations on a very successful listing. A decent set of numbers, I would say. Just a few, you know, questions on specifics. So firstly, on the container side, the revenue growth has been relatively modest, right, at 13% vis-a-vis the growth we've seen in other assets. In FY26 also, if you see our growth over FY25 pro forma was in container was around 8 odd percent times. The asset addition here is also in the range of 3% to 4% kind of a growth. So, any slowdown that we are witnessing here in this segment, what is the outlook here?

As far as business is concerned, Vishal, we are not anticipating a slowdown, but we are anticipating and we are seeing a huge growth in the container pooling business, wherein we have internally also given a very high number of targets to our internal teams. For example, if component manufacturing companies are asking for four units of crate, we are able to just deliver one and a half to two units. Why? Because the cost of raw material has tremendously gone up since last so many months. Yes. So, if I'm getting a crate for 650 rupees, now it is costing 1,200, 1,000. So, my entire ROSI goes for a toss if I acquire new assets. So, we are going slow on that and that is one of the reasons that in the first quarter also you will see that as compared to 110 crores investment vis-a-vis last year, this year we have just done 76 crores. So, we are just going slow on that. We are asking our asset management team to retrieve it faster so that we can actually hold it. These are unprecedented times. So, we really want to be cautious and not put too much of money into buying the assets at double the cost.

So, this is just to do with the RM inflation that we have seen from the containers. Otherwise, you know, business is normal. Absolutely.

Business is doing well.

Okay. On the pallet side, you know, I wanted a clarification. You know, from the COGS, if we were to infer the trading revenue, you know, it's almost up 3X, YOY. So, adjusting for that, then pallet revenue growth would be in the region of 12% to 13%, right? So, would that be a correct inference?

No, no, no. See, what happens is that we are not into selling of pallets, okay? At least in India, we are not into selling of pallets. What happens is that we pick and choose our customers, A, wherein they are ready to take quality pallets, which we make, okay? And B, we look at a certain margins that we can get it from them. But the most important criteria that we select to sell pallets is that over a period of time, this should come back to us as a cooling thing. Because you see, 1100 companies, 1000 companies as customers that we have, some or the other company gets this idea that why not I purchase the pallet and then do this business, you know. So, we never actually demotivate them. We say that, okay, you want to go purchase the pallet, no problem. You better purchase it from us so that we give you a quality pallet. And when people get tired of handling it and they keep losing the assets because asset management is the most integral part, so then they come back to us in six months to one year time. So, this has happened actually with 10-12 companies in the past. And this time a very big company has also started that we will buy pallets. And after four to six months, they have come back and said that it's very difficult to manage it across 88 locations, Pan-India. So that is the reason you can see an inflated selling number. But otherwise, our focus is absolutely on pooling of pallets. And pooling of pallets also, you can very easily contain that as 17% to 18% growth year on year. Okay, okay.

Just one more on MHE. You know, the count of MHE's in the prospectus FY26 end was 4,700 odd. In 1Q, the presentation states 4,500. So, is there a reduction here, and do we also include batteries here? Are batteries charged separately from the customers?

Yes, you are right. That is a charge separately from the customer. That also comes into the asset. But as far as the machine and the forklift is concerned, we have said that it is 1,440 forklifts that we have in totality. And Teron has actually added 174 new machines into the system. So you need to understand that when we talk about 174 new machines, there are a few old machines which actually comes back to us also. So the important point that you need to note is that our average turnover from the pooling revenue of MHC was 9.6 crore, which has actually gone up to 11.6 crore. That is the average that we are doing every month, and that is the reason we have done somewhere around 35.3 pros in the first quarter, which is actually a 33% jump from the last year, first quarter. So, that is how batteries keep fluctuating. Say, suppose we have called for certain machines, and we call for two batteries, you know, and then we look at the certain number of machines, which on the basis of the number of years that it has spent in the market, we say that we need to keep a spare battery, you know, or a controller. So, all that actually is being taken in our asset pool.

Okay, okay. So, the reduction would be mainly because of these controllers and batteries and not on machines per se. Yes, yes. Not on 4,700 to 4,500.

No, no, no. Okay.

Okay. I'll join back in the question queue. I have few more probably.

Okay. Thank you.

Thanks, sir. Thank you. Our next question comes from the line of Malik Shah with Bivaldi. Please quit.

Hi, Sunu, sir. This is Malik. Good morning. Congratulations on the successful IPO. Thank you. I just wanted to understand this in the entire world, this business has been considered the most complex business. So can you just help us to simplify this that how this complexity has helped you to turn around this entire story of growth? And can you please help us to understand how can it how it is run by you?

Okay. See, Morik, thank you. This is a very generic question, but I can tell you that I always wanted to do business which is a bit difficult to replicate. And for that very reason, there are only five companies in the world which has done this business. There is only one company which is listed, that is Brambles, and that is also listed in Australian Stock Exchange. I was a part of Brambles for six and a half years in India from 2008 to 2013. And all the offshoots in the world, if you look at it, have actually come out from CHEP. So, India needed a different kind of customer servicing. So, first I started with the automotive business, and when I got the funding, then only I entered into a capex-driven business, which is into pallets. And if you look at it, the moat which revolves around this is that how quickly you are able to create your network. Once you create your network, then it is very easy for you to move the assets. So see, this is a very, very execution driven job. So 365 days, 24 by sevens, you have to be absolutely on the foot in order to do this business. And this is not a very charming business for companies to actually take because once the load is being delivered, pallet is being considered as nothing. So, we have to tell the customers that this is not your pallet and you cannot grow it. We have an SRC model called sorting, repairing, conditioning. We go plant to plant. We have a repair mobile van. If they even break 20 pallets, we go to each and every location. We repair those pallets. So it is a very cumbersome kind of a business. But I believe that my team is absolutely adept. Slowly and steadily we have grown. And they are the ones who are running this business. And once we have created this moat, that from Chakan to Chinnai, we take our load, we take it back, give it to the customer, to the OEM, then again we clean it, again give it to somebody in Chinnai and bring it back to Chakan. So if we do not have this moat, then this is a bad business to do. But if you create your network, so it actually took us nearly one and a half decade to actually create it. And we believe that we will go from strength to strength from here. And there is a great team which is backing me, my Mancom and all the top managers. So this is a very different level of skill set because nobody understands asset management in the country. So we have to recruit people from Premier Institute and actually put them into the water, explaining them how actually we trace and track our assets. So this is my generic answer to your question, Maliki.

Thank you, sir. Thank you for highlighting, and all the best to the team.

Thank you. Thanks a lot.

Thank you. Our next question comes from the line of Mukesh Saraf with Evidence Park Institutional Equities. Please wait.

Yes, good morning, and thank you for the opportunity. Congrats to Sino and team. Sir, my first question is on the pallet addition. I think this quarter, we are standing at about 9.2 million pallets in the quarter, just trying to understand how, what's the target there in terms of this year, where would we want to end the pallet count?

Okay, so Mukesh, since last six years, we are continuously adding 700,000 pallets to 1 million pallets into our pool. So this is the same target that we have taken, that we will be adding somewhere around about 850,000 pallets net addition into this financial year. So normally, if you look at the first quarter, Mukesh, suppose we were at 9 million pallets. So, we used to be negative 100,000 pallets. So, we will come to 8.9 million pallets. But this is the first time because of the Adikmas and because of the extension of rainy season. So, there was an extension into the beverage sector, beer sector, water sector. So, that has actually moved from March to April new. So, that is one of the reasons you will see positive addition of pallets. Now, as our season starts with Dhrugapuja, Grapati, and Diwali, and New Year, so from here, the pallet cooling actually gets a kickstart, and if I can tell you something which is related to the current month also, we are ahead of our numbers. So, these are some of the points.

Got it. And just in relation to this, like you mentioned about your crates, the cost of acquisition going up, the material costs going up there, here as well, we're noticing that number costs are going up, plus the INR depreciating would also impact your cost of acquisition. How is that playing out right now? Is it significantly higher, the cost per pallet, and will that impact your addition of pallets?

Okay, so I would like to bring you to the point that as compared to last year, we have done 25 floor less deployment in assets. So that is the point of pallets also. GCC also, the war is intensifying. So there also we are not putting too much of assets and also the automotive part. So what we are trying to do, as I have already explained in my previous roadshows, you see, we have already got a buffer of 900,000 pallets. So, if you look at our utilization, our utilization was 88%. Now, this time it has gone to 89.8%. So, 1.5% utilization increase is actually 70,000 to 80,000 pallets which we have not bought. Okay, so what we have said, so we repaired round about 12 lakh pallets in the first quarter. This year, we have repaired round about 14 lakh pallets in the first quarter. So we said that we will repair more and we will purchase less. So having said that, the container cost has increased, but you will see that since last one month, the cost of timber has actually reduced.

Okay. And my second question is, in your, please, you have mentioned about the continuous integration with CHEP. So, we did notice that a couple of your fulfillment centers have now gone down to 28. I'm assuming that is also part of the integration. What more is there in terms of integration, sir? You know, is there more to be squeezed out of, say, some of the cost elements or, say, on the business side of it? What can we expect with more integration here with Jeff?

So, I think a very good question on future, Mukesh. I believe we have the opportunity to close two more warehouses, which are like 300,000 square feet warehouses. And that can be integrated in the second to third quarter. That is one point. Second point is that we may open up also small warehouses. So what is happening, say, we have got Sanatan Textile, we have got Reliance, we have got Sevadi, we have got Bilosa, Alok Inductible. So this comes into, I am just giving an example, this comes into the part of Silvazi. So, there is a possibility in order to service them faster and not take the pallets from Vivendi to that location, we may start a 40,000 pallet pool out there. So, these numbers will keep fluctuating, but as far as CHEP's utilization is concerned, we really believe that, and we are having the plans to actually close down nearly 250,000 square little warehouses, two warehouses.

Okay, okay, okay, got it, got it. And just last question from my side is on working capital. How does that stand in end of 1Q, if any sense you can read us?

The working capital, we are currently into a comfortable kind of a situation. So, our DSO basically has reduced from 131 days to 119 days. I'm not saying that it is great as far as loop is concerned. Pairon is continuing to do well at 62-63 days. So, we believe that every quarter we will be able to reduce 10-15 days into our DSO. So, in the next 2-3 quarters, we will be up to date with our working capital side.

Got it. Got it. Thanks a lot for this. Thank you.

Thank you. Thank you.

Our next question comes from the line of Agam with Agam Capital Limited. Please go ahead.

Hi sir. Thanks for the opportunity. Sir, two, three questions quick. So, first question, in the GCC region, on the EBITDA front, when you said, so, else of all the costs and all has been incurred, or yet any more costs we have to incur to set up the GCC business? On the one comment you said, for the revenue growth of more than 20%, EBITDA growth should be more. But you said the margin will keep on fluctuating. So, these two things don't match up. I mean, if the revenue growth comes up and if EBITDA has to outperform, the margin also percentage also has to increase, right? Great.

Okay, Agam, so first let me talk about the GCC, and then I will talk about one second, Abit Tawar. So first, GCC, yes, the cost has been actually incurred. Most of the cost, we have got the MISA license in Saudi, we have got the business to do license in ADGM, and also in Dubai entity. So, previously, we felt that we will keep one company under one umbrella, but geopolitics is continuously changing. So, Saudi is talking their tune and UAE is talking their tune. So, we have separated that and two companies will be operating in that very region. Our recruitment is not in full phase, but technically we have five people. We have completed around about 20 discussions with our customers, and we will start to move ahead. So as far as money is concerned to set up the business, it is not further required. Now, whatever will be required will be something to create asset base out there. Now, as far as the data is concerned, now you see, this is not a mathematical connection, you know. Say, suppose one quarter I get order from somebody to supply 100,000 pallet. Business will grow, but EBITDA will be less, but PAT will increase. Say, suppose one quarter from 15% contribution, MHE business contributes to, say, 17%. Say, I get an order from, say, Coca-Cola for 200 machines or from Valco or from Vedanta or for somebody else. If that happens, the ROSI is fantastic. ROSI improves, but EBITDA gets subdued. So, we have three different lines of business. Yes, like we have done 711,000 pallet pooling last year in the same quarter. This year, we have done 766. So, if you look at the growth opportunity, which we are talking 20%, if pooling has happened to an extent of, say, only 8%, then EBITDA margin will not go to that extent. Say, suppose I get repairing of pallets. Say, this time we have repaired pallet, which is called T1 board. So, when 1.4 ton is kept on the pallet and four clip comes and hits it, the first board which breaks is T1 board. So, we spend X amount on repair. Say, suppose in a quarter, I get two pallets which is breaking, which has been broken from the connector board. If a connector board is broken, I have to cut first all the 11 planks which is on top, and then I have to repair. So, repair cost goes high and EBITDA comes down. So, there are many levers on how this fluctuates. So, we cannot put a mathematical calculation that if you are growing by 24-25%, our value in EBITDA will definitely increase. But our margin can be, say, 50%, 51%, but the value will go up. So, this is my answer.

The actual term, the growth will look, you are saying, right?

Yes, yes, yes, very much. And always, Agam, we, since last six years, you look at our numbers, it is between 47% to 56%. I cannot tell Vedanta, I will not be, this is bringing my EBITDA down. So, it's all different.

But broadly, you expect the mix to remain the same or you can't say?

Yeah, it will remain the same. What has been remaining the same for the last six to seven years, we have grown further, along from pillar to post, you know, like slowly and steadily we have now, we have got the largest pool of lithium and battery in the country. Why? Because if you ask anybody to give a lithium-ion battery first, they will take 50% advance and then they will go to source it. We have 140 machines standing ready to be delivered anywhere. We have 800,000 pallets ready to be given to any company. Now, automotive, yes, I understand that the cost is humongous right now. So, we are not buying too much of crates. So, there is a bit of slowdown, but we actually work on 38 sectors. Yes. So, one or two sectors going down actually does not move our EBITDA margins to a great extent.

Also, on the growth front, Q4B is the highest for us, right? As you said.

Pardon? Yeah, Q4.

Q4. So, for the Q1, you have almost smashed Q4, and we have grown 19%. So, is 20% being on a very much conservative side? Because the way the run rate is showing, Q4 being a way, we should cross it, right?

So, Q1 basically contributes 21 to 22%. We have grown by somewhere around about 21.5%. So, what I am saying is the market is going in the same direction. See, because of Adikmas, all our festivals have got stretched by one month. But for us, the season for the beverage industry also got stressed because of less rain. So whether it is beer industry, whether it is water industry, whether it is cola industry, from March, it has actually come to June, March to April, May, you know. So that has actually helped us to actually over-deliver on whatever numbers. But yes, the guidance that we have given to the market is 20%, But we are trying our level best to absolutely outperform and give great, create great value for the shareholders.

Thank you. Thank you.

Thank you. Our next question comes from the line of Ajit Motwani with Diamond Asia. Please go ahead.

Good afternoon, Tim, and congratulations for a good set of numbers. I just wanted to understand two aspects. One was the traction on the movement higher, as well as the rate increases on the total asset side. Okay.

So, good question. See, movement higher, as I have told, that last year, we moved around about 711,000 pallets, and this year, we have moved 766,000 pallets, which is basically an 8% increase into as quarter on quarter, even though we have grown by 21% on our overall revenue. This is not a desirable area. This has actually happened because of slow performance in the textile industry. See, all the raw material costs, whether it is for plastic trade, textile, has gone over the roof. So, companies which were into this kind of industries actually did not do too much of transfer hire movement, which actually contributes 4 to 5% of our overall movement hire turnover. So, this is probably one of the reasons why movement hire was less. But we work on a sales force management and Miller-Hyman theory. We absolutely believe that the numbers that we have put in for the entire year, which is 3.7 million pallets, we will add around about 800,000 to 900,000 pallets into our pooling model. So we are in just to the target of that. Now, so in future times to come, in future quarters, we will definitely keep improving our numbers for a moment higher. As far as the price increase is concerned, we have taken a 5% to 6% price increase as compared to last year. What you need to understand is that last year, same quarter, we were at a per pallet yield of 1 rupee 45 paisa, and this quarter, we are at a per pallet yield of 1 rupee 54 paisa. That is a fantastic jump, and this is how we actually look at our business. So, we have, yes, taken price increase of 5% to 6%. And since this is a very, very sticky business, Ajita, and we have not lost a single customer since we have formed this company, yes, we might not have serviced the customer due to various reasons, but per se, we have not lost a single customer. So, since this pallet creates utility boxes, foldable large containers, MHE business, MHE material handling equipment, belts and wedges, everything is provided by us. So, we have a solid ground to take 5% to 6% price increase year on year, which will absolutely beat the inflation. And this is on a very fantastic method on the basis of the stock exchange price of wood, which fluctuates, and the base we take is the German Wood Price Index. And price increase, price increase we definitely take. And all the agreements that we have is a three-year to five-year contract. And this price increase is already mentioned in that. You know, it is not that we have to go and renegotiate price every now and then. So, this price increase is already mentioned.

Good. So, as we move into the balance part of the years and also going forward, do we, you know, in the stronger, you know, half of the years, do we see, you will, you will see, you are saying you will see better movement higher, and that typically is very highly margin effective, right? Yes, yes, absolutely, absolutely.

Okay. So, that is the right thing.

And typically, you know, our price increases are, as I said, you know, kind of linked to the index. And so, do we take the price increases for the balance nine months as well? Is there a fair enough cost?

Yeah, yeah, yeah. See, see. So, we have renewed 24 contracts in the first quarter, you know. So, by default in the 24 contracts, the price increase will come.

Got it, sir. So, you will have both these coming in the balance of, you know, both the most higher and the price increase.

Very much, very much, very much. It all depends upon when the contract is going to come to an end. If the contract is coming to an end in the month of July, so we start six months in advance for the pricing negotiations and few points that we add on to the contract. We want to add on to the contract, and once July comes, we sign the contract much before that, and we take a price increase and move on. So, technically, we may not be getting the full price increase of 12 months, but at least for the next 7 months, we will be able to get that.

Okay, and the pricing increase would be the prevailing prices then, right?

Yes, prevailing prices are the base for that.

Got it. Sure. Thanks, sir.

Thanks a lot. Thank you, Ajit. Thanks, sir.

Thank you.

Ladies and gentlemen, just a reminder that ensure that the management will be able to address all the questions from the participant. We request you to kindly limit the question to two questions only per participant. Our next question comes from the line of Mayang Jha with First Bridge Fund. Please go ahead.

Hi, Simu. Thanks for this call. So, just wanted to understand, is there any estimate for the synergies that we have got from the CHEP acquisition that we have?

Yeah. So, Mayank, the synergies that we have got is on automotive sector. So, you will see that previously, before CHEP, we used to, the overall automotive business used to contribute around about 13.5% to 14% to the total turnover. Now, this has gone to 20%. And we have given targets internally to actually take it to 22% to 25%. So, we were number one in two pallet pooling at that point in time, and CHEP was at 20%, we were at 80%. So, the consolidation that has happened has actually put us pallet number one and also automotive pooling number one. Second very important point was that they were very good with their system. So we have integrated a lot of stuff with their system. And third very important thing was that they had few molds, few crates, which is very, very difficult to replicate. You know, so we have got hold of the mold also. And that is how we have actually gained great amount of strength into our automotive folding. So, I believe that component manufacturing is growing places in India. They are doing so very well. Mali, Deir, Vistion, Lucas, Sundaram Fasteners, Minda. So, these guys have found, after COVID, these guys have found even exports and all other businesses. So, we can say that component manufacturing has gone to the next level in India, and it is growing strength to strength, and that is one of the reasons we are totally focused on everything which is related to battery vehicle. So, whether it is a boot or a shaft or a hose or a sheet belt, so Autolive absolutely makes sheet belts. We have just won a business with Autolive and Wash. So, we are focusing a bit on that. So, A, the mold, B, the concentration of our business into automotive, and C, the 1.4 million pallets, which they were having in different customers have also come to us. So, actually, Mayang, this has also helped us to tell us that the depreciation that we take for pallets is 15 years, but actually the life of the pallet is perpetual, 40, 50, 55 years. How we are demonstrating it? Check was started in 2006, 2008. It's been 20 years that their pallets are into the system, and they are still generating revenue. Like 1.4, 1.5 million pallets have come to us, and it is still used by the customers and they are paying the rent. We keep repairing it, and it keeps getting new. So, this is a very important point for all investors to know. When you look at a PE kind of a model that what is the PE of this company, then the depreciated value is actually the life of the asset of the product. But in our case, why we say that there is not a single company wherein you can actually compare it and say that it is a P, that multiple that you should put in, we say that the life is, say, 15 years, but it actually runs for 45 to 50 years. We can give international example of Brambles, wherein they have 422 million pallets in 56 countries, and carte blanche, they have not changed the pallets anywhere in the world. But in India, also to our local investors, we want to prove that we have taken a company which is having a 20-year-old pallet and still we are generating revenue out of that. So the moment this business is like 15-year-old pallet can work for 15 years, good business, the moment it becomes 20-year-old pallet, 25-year-old pallet, 30-year-old pallet, then from good, this business moves to great.

Thank you. And second question, and last second and last question that I have, what is the, so in the investor presentation, you talk about moving from static to movement higher. What is the kind of revenue uplift that we can expect from this, like if a pallet is on static higher model, if it earns 500 rupees a year, then what is the kind of revenue uplift just for the sake of numbers? But what is the kind of revenue uplift it can earn from a movement higher?

See, it depends on the sector that we are going. There are a few parameters. The sector that we are going, the value of the product which is kept on the pallet, the distance that the pallet is going to travel. Do we have a pooling business when it reaches the next location? So there are roundabout 16 parameters on which we judge that what is the kind of movement higher charges we should apply on this business. At the same time, we say that if there is any conventional method which is being used by the customer, we should give at least 20 to 30% cost benefit analysis. We give cost benefit to them. Having put all of these together, everything boils down to our per pallet yield. So if we say that our per pallet yield is 1.54 Pesha today, so we are generating around about 552 rupees per annum. So as this pooling increases, say we have 9 million pallets, and out of 9 million pallets, we have moved 2.9 million pallets, movement half. So we will go to, say, 9.6 million pallets or 9.5 million pallets, but we will move 3.7 million pallets. So from 0.3, we will move to 0.4, 0.5. The moment this point, moment increases, this actually brings in great amount of value which sits on our PDR, which is per day rental, which is a static hire. So it can happen that we may end the year at say 1.62. So this 560 rupees will go to 600 rupees, this can go to 650 rupees, 650 to 712 rupees. So, this all depends on how fast we are able to actually pull pallets within our system and take this 0.3 into 0.5 and 0.6. So, asset remains the same. We need not have to put a new asset. So, with the same base, first we enter as static hire and then we start to move the pallet. And then there are various parameters on which we will be able to build it to the customers.

Thank you.

Thanks, man.

Thank you. Ladies and gentlemen, we request you to please limit your question to one question only per part. Our next question comes from the line of Nikhil Agarwal with TVS Capital. Please go ahead.

Hey, hi, Mr. Matthew. Good afternoon. Like you described on the movement higher, going up from 0.3 to 0.6, right now 0.3 seems very low for a country like India, Whereas the global peers like KEP is at almost four times or is higher in most developed countries. So what are the challenges that you see in the movement higher picking up? And let's say in the next three to five years, how do you see the movement ratio picking up from 0.5 towards higher numbers? And how can that change the return on capital for the business? Okay.

So, Nikhil, I can very well say that since last four years, like our movement has started with, say, 250,000 pallets to 500,000 pallets, then it went to 1100,000 pallets, then it went to 2.1 million, and last year we have done 2.8, 2.9 million. So every year we are adding somewhere around about 800,000 to 900,000 pallets into pooling arena. So I believe that this is not a great scenario, but this is still an okay scenario. And say suppose if I would have stopped myself at 8 million pallets, then this would have gone to 0.5. But static higher growth is also rampant. So, if you look at that, in this first quarter, we have signed around about 48 new customers, like Layer Automotive, Minda Instrument, Hexaloc Logistics, Woodpepper, Greenagery, Sriram Foods. So, these are a few of the marquee names. So, normally, we sign 15 to 20 customers in a quarter. This time, in this quarter itself, we have signed 48 customers. So, this is going to bring in additional 120,000 static hire pool. So, my static higher pallet is also expanding. So, it is actually looked at as 0.3, 0.4. The reason why it is not happening is because of a very, very fragmented transportation system that we have. We have to the tune of 1,000 different sizes of truck. You know, if we have to standardize it, we have given a few recommendations to the body that it should be at least curtailed to 10. Then the palletization and the movement actually becomes very, very feasible. And then you will be able to cut down your supply chain cost by 5% to 6% onto the GDP. See, any developed country, if you look at it, it is not that they can do anything with the body of the truck. In India, you can actually go and do anything with the body of the truck. But now we are talking to the OEMs also. They are also understanding that one size kind of a container is the name of the game in future. And that is one of the reasons why our supply chain costs will come down. So, I believe that this is a bit of ignorance into the supply chain network. People are not even aware about a few of the things which can be automized into warehouses, which can actually look at the efficacy of palletization. But we are, as a nation, very low experimenters. We will go with what is actually going on. So suppose one cola company gets into pooling, so rest everybody joins. For example, one paint company we cracked. Now all paint companies are our customers. We just cracked one company as far as textile is concerned. Now, everybody has, from textile, from Sanatan Textile to Bilosa to Alok Investor to Rilansh, everybody has started working with that. So, it takes time in India, but then the growth is rock solid.

Thank you. A next question comes from the line of Sunny Vishay with PL Capital. Please quit.

Yeah, thanks for taking my question. Most of those have been answered, and I think we are short on time, so I'll just ask for a couple of clarifications. One thing is you said that the India market is much more underpenetrated compared to other markets, including GCC. So I just wanted to understand why not continue focusing on India markets other than going into GCC. I completely understand you explained the growth potential, but do you think it is better to stick to within India compared to GCC? And secondly, what is the targeted revenue mix?

Because I see that the MHE business has outpaced the other businesses, and that has a bearing on your margins and ROC. So just wanted to understand how much, how higher can it go? So, okay. So, Stani, as far as VCC is concerned, look, I am a brand guy. So, I look at all businesses from the PLC model, you know, product life cycle model. So, there is an introduction stage. Today, we are on a hockey stick growth stage, you know, and in, say, two to three years, when our three plus years, if our growth actually comes down or it becomes from hockey stick, It goes into a linear growth. I need another market which will pick up the pace from there. Probably maybe two years down the line, we will look at another niche, another product, another market, wherein when we will say that, okay, 5 million pallets or 4 million pallets in GCC is actually moving 10 million times, then it is the time for us to go and invest in something else. Because you see, this business is something that it takes time to build this business. It is not that you will go tomorrow and you will start selling the product. Because I can get into any website and I will say that I offer this product and I will do my turnover in next one month. I just cannot increase one rupee turnover or I cannot give a scheme like SNCG to anybody and they take 12 plus 1 scheme and they will let my target get completed. So, I really need to prepare two to three years in advance that what I am looking at. So, GCC is one of the levers. Few product introductions which we are going to do, say, suppose tomorrow we may rent AGVs, you know, automated guided vehicles. So, we are already into experimenting of that. So, we should have five, six levers so that this growth for our shareholders actually continue. So this is one of the reasons. And staying only in India actually limits the thought process of my people. So we have not seen a great amount of supply chain revolution in the country. But if you go to GCC, they are more inclined towards West and typically Europe and US. So, if you talk about ASRS, Automated Supply Chain Relatable System, everything is already there. So, the people whom I sent from here, from logistics engineering and all those, so they learn 10 things from there, come back, and they try to implement that in India. So these are few of the reasons because the cost is very less and the movement higher is very more. So one pallet technically moves three to three and a half times in GCC. So nobody handballs anything into the truck. So that is a great business for me to actually explain it to my own people within the company that see this is how palletization happens. So, for those reasons, we are going to GCC. Plus, as I explained, Sunny, this is the, GCC is the importing country, you know. So, there are so many pallets which people take from here, they break it and throw it there. So, we will bring a lot of value to our own current customers. I will just take an example of PGP glass, Pyramal glass. They supply 40,000 pallets to Javlali and Ratal Pema every month. So, if they are spending 1200, 1300 rupees, we will be able to cut down the cost by 30% and give them the pallet and then collect it over there and then pull it out there. So, if you think about it, a 1750 rupees pallet, I actually take out the complete money in 2.9 years, I will be able to, I will be taking just half the time to actually recover the entire money from GCP. So, that is one thing. Second, you asked about Teron and how fast this business can grow. See, Teron will always remain within a bracket of 14% to 17%, even though it is growing very fast, but palletization and automotive creating and everything is growing on a long-term basis will grow much faster than that. So, I believe that even if Taron has grown by 33% this time, but you will see in the future quarters that automotive and FNCG business picks up the pace with them.

Base is very small, Tani, for Taron, actually.

Thank you, sir. Thank you, sir.

Ladies and gentlemen, due to the time constant, we'll take the last question from Devesh Chainani from Equities Wealth Advisory Service Limited. Please go ahead.

Hello. Good afternoon, sir. Thanks for taking my question. So, sir, most of the questions have been answered for me. So, I just had one question on the GULF expansion that you are doing. So, the revenue guidance which you have given of about 20% in the further year. So, is that inclusive of the GULF expansion or like how is it?

Yes, it is included, but we understand that there is a situation which is there in the Gulf. So we have another three, four levers which can compensate this. Say, suppose we have said that X will be X revenue will be generated out of GCC. And as we wanted to go in August and August, the war has actually intensified. So we are planning for September mid. So we have leavers within India, you know, so it is just a small fraction that we have budgeted for for GCC. See, and we will be, yeah, got four or five more viewers that, if that doesn't happen, we will be able to gain that number from within India.

And are we looking for further acquisitions of the company in the Jitsi region to expand our base over there in the portfolio?

See, in our last board meeting, which was being conducted yesterday only, in few other matters to be taken, we have actually informed our shareholders and board members, which is now in public also, that we have looked at a few acquisition opportunities. We are just at the nascent stage, and we are looking at it in India and elsewhere also. So, as you have seen that we grow organically also and inorganically also. So, we have certain acquisitions in mind, which maybe in the second, third quarter, we'll see more colors, and we will inform investors and our board members as and when we move forward on that.

Okay, so we can see the acquisition coming in the light at the quarter quarter, right? Yes, yes, yes, yes, there is. That's very helpful. So, thank you.

Thanks a lot. Thank you so much, sir. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the Managing Director for the closing remarks. Thank you, and over to you, sir.

Thank you, everyone, for joining us on our median earnings call as a listed company. This is an important milestone for Lee, but more importantly, it marks the beginning of a new phase of growth and long-term value creation for all the shareholders. We are grateful to our customers, employees, partners, and shareholders for their trust and great support. We look forward to building this business thoughtfully and creating sustainable value. Thank you. For any additional queries or follow-up discussions that you may have, please feel free to reach to our Investor Relations Advisors, GoIndia Advisors. We look forward to engaging with you again. A big Namaskar and thank you to you all.

Thank you so much, sir. Ladies and gentlemen, on behalf of GoIndia Advisors, that continues to this call. Thank you for joining us and you may now disconnect your line.