Western Carriers (India) Limited (WCIL) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good afternoon, and welcome to the Western Carriers India Limited Q4F526 Earnings Conference Call, hosted by MUFG. 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 presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing star, then zero on your touch-tone telephone. Please note that this conference is being recorded. I will now hand the content over to Ms. Nidhi Vijaywargea from MUFT for opening remarks. Thank you, and over to you.

Thank you. Good afternoon, everyone. I welcome you all to the Q4 and full year FY26 earnings conference call for Western carriers in LMLS. To discuss the business performance we have from the management, Mr. Kanishk Setia, CEO, CFO, and Whole Time Director. Before we proceed with the call, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risks and ascendancies. For more details, I kindly refer to the investor presentation and other filings that can be found on the company's website and on the stock exchanges. Without further ado, I would like to hand over the call to the management for their opening remarks, and then we can open the floor for Q&A. Thank you, and over to you, sir.

Thank you, Nidhi. Thank you so much for your kind introduction. I hope I am audible to everyone.

Yes, sir. Please go ahead. Thank you.

So good afternoon, everyone, and welcome to the Q4 and full year FY26 earnings call of Western Carriers India Limited. I am joined today by my excellent colleagues, Ashish, Sapna, Jitender, and Surya. Thank you for taking the time out to join the call and for your continued engagement with us. Let me start with the broader macro environment and discuss its relevance to our company side by side as we go along. As you will appreciate and agree, we are in the middle of the Middle East crisis, the daily changing news cycle, and no exact end or solution in sight. Subsequently, over the last quarter, the global outlook has weakened. The International Monetary Fund, IMF, in its April 26th World Economic Outlook, titled Global Economy in the Shadow of War, has revised global growth down to 3.1%. The IMF and World Bank attribute a meaningful part of this change to the Middle East conflict, obviously, that began on 28 February and the disruptions ensuing around the state of Hormuz because of this. The IMF expects global headline inflation to rise to about 4.4% before easing again. Advanced economies are projected to grow between 1.5% to 2% range, and emerging markets have also seen a reduction projection to 3.9% from 4.2% in the January projection. The Financial Stability Board has flagged increased financial instability risks, including market volatility and higher financial conditions. In the IMF adverse scenario, global growth slips to 2.5% with inflation of around 5.4%, and in severe scenario, growth is only at 2% with inflation above 6%. So, overall, the near-term operating environment remains extremely fragile and sensitive to further escalation. Moving to India, India's growth expectation remains higher than many other major economies and remains the one true bright spot and beacon of hope in the global economy, even though the outlook is not without risks, particularly from energy prices and global trade conditions. The IMF has revised India's FY27 GDP projections upwards to 6.5, citing carryover from FY26 and changes in tariff conditions. The Reserve Bank of India's latest projection is 6.9% for FY27, both of which always really well for us. The domestic agencies are also in a similar range with variations depending on crude assumptions and the impact of West Asia developments. On inflation, CPI inflation for April 26 was 3.48% provisional compared to 3.4 in March 2026, marking multiple months below the RBI's 4% target. However, agencies, including Chrysler, note that if rent crude remains elevated in the USD 90 to 95 range, inflation should move higher over FY25. The RBI has retained its inflation target framework 4% with a 2 to 6% ban for April to March 2031. On the fiscal and revenue side, gross GST collections for April 26th was reported at 2.42,000 crores, up 8.7% year-on-year. Now, coming specifically to the logistics industry, the sector continues to evolve towards an integrated, complex cross-border coordination and technology-enabled execution scenario. At the same time, this quarter has shown that geopolitical shocks can quickly disrupt flows. Raise costs and reduce capacity availability. Industry estimates, including Research Nestor, placed the global 4PL market at around $75 to $80 billion in 2026 with projected growth over the long term. In India, IDES and other sources estimate a large and expanding logistics market supported by infra build-out and policy initiatives. However, execution constraints, cost inflation, and volatility in extreme lanes remains a near-term reality. Government programs such as the National Logistics Policy, the PM Gatti Shakti, and the platform initiatives aimed at visibility and integration are ongoing and showing extreme positive results on the ground. The mid-term intent is to improve efficiency and model mix, including increase rail share and freight, and reduce overall logistics costs to bring it in line with the most developed economies of the world. Now, turning specifically to the geopolitical situation, which has been a defining variable for our industry and our company in this quarter. As everyone knows, the state of Hormuz has been completely blocked since 28 February, thereby disrupting global supply chains, which were already very fragile, after the Israel-Palestinian and the Russian-Ukraine crisis. To put it in perspective, the pre-conflict traffic averaged around 3,000 vessels per month, which is down to around 5% of pre-war levels now for the Western trade. Obviously, the effect on trade and commerce has been huge, and I would like to address this in some detail now. The effect on trade and commerce has been expectedly huge. India's merchandise export 4% year-on-year in March to $38.92 billion, with shipments to the West Asian region particularly down 58%, both largely given by the Middle East crisis. Normally, monthly exports to the region are around $6 billion, but this March, only $2.5 billion worth of exports have gone. However, with import particularly oil and gas also declining by 6.5% to 59.5 billion in the month. India's overall foreign trade in goods compares, resulting in a relatively low trade deficit of $20.7 billion. A concerning point is that though the shipments have been tepid in recent months, to begin with, exports of goods have contracted for the first time since October 2026, a clear sign of collateral damage in large parts to the ongoing Middle East crisis. For our part, we as a large logistics service provider have been cleanly taking proactive steps from day one to limit disruptions from the worsening Middle East conflict by closely tracking our shipping carriers, planning our consignments as early as possible, and exploring alternate routes in conjunction with our clients, even as freight rates, insurance premiums, and transit times rise sharply among uncertainty around the state of Hormuz. Our goal through the entire crisis has been singular to ensure minimal disruption and delays to our client supply chains and ensure transparency throughout this difficult period. At the same time, our clients have also responded urgently with most businesses adjusting inventories, contracts, and delivery schedules to build in flexibility as the conflict threatens cargo movement and supply chain. To give a picture of the situation, as of March end, around 40,000 to 45,000 Indian containers were stranded, either in transit or at international ports, and the future of export cargo worth around a billion and a half is already under cloud. Starting at, you know, staring at either a diversion in routes in some cases and even a U-turn to India and others, leading to unavoidable cost escalation. Of these 40,000, 45,000 containers that we speak of, nearly 80% of them are already in waters in transit and standard. Adding to this, several contingency surcharges by shipping energy are causing an additional three-to-five-fold increase in per-container costs in some cases. All these together are leading to cascading costs, a possible container crisis, and particularly for perishable goods exporters, they may even be hefty losses due to non- or delayed shipments and deliveries. For example, according to sources, a good share of these stuck confines are basmati rice, which is 4 lakh tons plus. Hence, just like the Israel crisis last year, the shipping lines are having to reroute confinements around the Cape of Good Hope, circling Africa to avoid the state of Hormuz and the Red Sea. These diversions, obviously, Add almost 3,500 nautical miles to voyages, delay shipments by 10 to 15 days, and significantly increase fuel and insurance expenses, making deliveries to key markets like the U.S. and Europe more expensive and more time-taking. The risk of is that these longer voyages will tighten vessels and container availability further pushing up rates in coming weeks and months. Should the situation not start improving shortly? Due to all of this, the capacity currently on key routes to U.S. and Europe is about 30-35% of normal levels, putting extreme pressure on the exempt rate. It is to be noted that these two markets, Europe and U.S. markets, account for $195 billion of the projected $437 billion goods export in 24-25, as per a report in Financial Express. This becomes all the more important as key export markets of Middle East have seen shipments almost completely stopping. The war has resulted in insurance premium going up by 1200 US dollars for 20 feeters and 2400 US dollars for 40 feeters in some cases. Add to that the shipping line imposing war risk surcharges in cargo, which in many cases are nearly doubling. The office also has created logistical bottleneck. Thank you. Another fallout of this, should the situation persist, is the imbalance being created by stranded ships, which will reduce availability of containers at Indian ports, potentially affecting new export bookings even further. Similarly, exempt boxes are getting stuck at ports waiting for exports, and import boxes are coming in a bunch in spurts, leading to detention and damages across the ports. Stability in this region is key for competitiveness of shipments bound for Europe, Middle East, and Africa, particularly as they rely on Gulf transshipment hubs. This conflict obviously impacts us as a company as well as the rest of India's container rail logistics sector. With weaker exports to the West, there is a sharp rise in stabling or parking of brakes for want of cargo and, at several instances, running off empty wagons to source for lack of return of reverse-direction cargo. This obviously impacts the turnarounds, the tax, the timelines, the schedules, and profitability. For instance, per industry estimate, the requirements for stabling of rakes, idling for want of cargo in the month of March, has already crossed 50 rakes, 50 trains, which is a dramatic increase from an industry standard of 4-5 rakes that are stabled on a normal situation to deal with cargo fluctuations. So that's a 10x. Empty wagon running has also seen a steep increase due to reduction in cargo volumes, with an estimated 15 to 20 percent of wagons being moved empty, a sharp increase from the normal 5 percent, which is usual industry factors, which is a 4x. The import-export volumes for the logistics industry are said to have shrunk by about 40 percent in the month of March, with reductions in heavy fluctuations in both export and import volumes. Luckily for our company, we have been very resilient in this regard, with our Exim container movement dropping less than 11% compared to the 40% overall. There is a slight dip in the Exim lead by 2% due to lesser demand in North India, but container detention and damage remains an issue with the rescheduling and rerouting of the global ships. But I will discuss the container numbers a bit later in greater detail as we go along. Let me talk after the exam about the domestic transport, where the domestic transport volumes, especially in the tiles and steel industry with heavy reliance on imports of raw materials, have seen drops. These two industries directly affect our MML LP operations in Moorby, which is located at the heart of the tiles industry, as well as caters to a sizable portion of steel business from West India. Despite this... Other industries like industrial chemicals, FMCG, aggregates, etc., your company has managed to keep its domestic volume steady with a minimal decline of less than 1% quarter-on-quarter. Your company has shown remarkable resilience despite these trying conditions and a tough year and grown overall 6% in container movement year-on-year. More on this later when we delve into the container numbers in detail shortly. From our side, like I previously mentioned, the operating response has focused on extreme execution discipline under very constrained conditions, closer monitoring of carrier schedules, earlier planning wherever possible, alternate routing evaluation, and contract and delivery schedule adjustment in real time in coordination with our customers. In an extremely difficult global geopolitical situation like this, the priority for us has been continuity of service, extreme cost control, resource optimization, and risk management. Let me briefly cover our multimodal cargo terminal at Devalia, which I earlier mentioned, near Morbi, for the ones listening to us for the first time. The facility is spread over 32 acres and services industries in the Morbi cluster, including tiles, chemicals, ceramics, agri- and food-grade products. Our MNCT is at the literal heart of the tiles industry, which accounts for 80-90% of India's ceramic production and so obviously draws a large clientele from them naturally. In the current environment, tiles industry is staring at an unprecedented fuel crisis triggered by the conflict. 700 units are facing propane and natural gas supply shortages. As most of you know, almost 70% of Moorbi ceramics units run on propane. SNMCP throughput of tiles has been impacted majorly for the month of March. Thank you. Again, I have fixed services connecting Devalia to north in CMLK, Bangalore and Chennai in south, and Calcutta and Guwahati in east continue to regularly operate, albeit at lower frequency given the demand cycle. Our service offerings are expected to increase this FI across the country for the domestic cargo and expected to penetrate new clients and new industries. Our state-of-the-art MMCT gives us a lot of scope on growing our businesses from Western India, which fits extremely well with our long-term vision. Now, looking at the global scenario, some prompt and much-needed relief has been provided by the government agencies in these tough geopolitical situations, and I would do this in my duties if I didn't briefly touch upon these. GOI has launched 1.5 billion Bharat maritime insurance pool to shield shipping from global risks. BMIP will provide coverage across key segments of maritime risks, including hull and machinery, cargo protection and indemnity, P&I, and war-related risks for Indian flag vessels and those with India linkages. BMIP is intended to reduce India's reliance on overseas reinsurance market, which will lead to great financial resilience and autonomy in a sector that carries 90% of India's trade-by volume. Customs has also jumped in and permitted return of exports back to origin under a back-to-town circular wherever required. The DG of Maritime Administration has issued a notice to shipping lines to maintain transparency and avoid any type of predatory pricing for cargo owners. The Jawaharlal Lairu Port Authority has issued a circular ordering 100% waiver on ground rent and 80% relief on reefer plug-in costs. While on the subject of GNPP, I also want to note an important infrastructural milestone. On 31st, March 26th. The FCCIL announced the completion and commissioning of the Western Dedicated Trade Corridor, including the final 102 kilometers which were pending from JNPT to New Rafale stretch. This is expected to give us a very big boost to Exim Trade going forward. For our business, Corridor availability is relevant to long-term customer movements, including mandates previously disclosed, such as the Vedanta work order and the Jindal stainless steel engagement, and the use of specialized assets deployed during the year. Both the Western and Eastern State Corridor is a wonderful opportunity for its company to deepen relationships with existing customers, as well as grow our client pool on which your company is deeply focused. I would like to get into the numbers in detail before opening the flow for Q&A. First, coming to container volumes for this quarter and this financial year. So the comparative numbers quarter to quarter, quarter 4, 25, 26, and comparing to quarter 4, 24, 25, the domestic numbers. Have increased to 23,350 from 19,824, an absolute increase of 3,526 containers, percentage-wise 17.79%. Exit numbers are 34,404 compared to 35,532, an absolute reduction of 1,128 containers and a dip of 3.17%. Overall, for the quarter, if we see, our numbers are 57,754 containers compared to 55,356 containers in Q4 of last year, This is an absolute increase of 2398 containers and 4.3% increase. But if we compare it to our Q3 numbers, the 34,404 EXIM numbers are compared to the 38,638 containers in Q3 of this year, which shows a reduction of 4,234 containers, an absolute reduction of 10.96%. Fortunately, in domestic, like I mentioned, we've been able to retain by pivoting to other industries, so our numbers are 23,350 compared to 23,565, an absolute decrease of just 215 containers, which is less than 1%. In fact, what is pertinent here is that the total numbers for Q4 is 57,754 containers compared to 62,203 in quarter three, which is a 7% reduction. In fact, Exim volumes had gone up 14% in quarter three, and we were on a strong growth trail till the latest crisis cropped up. Mostly in the month of March, this number has come down. Similarly, domestic was up 15% in quarter three, but almost same due to lower demand, but due to production issues in key clusters as discussed. Our strong pivot has helped us ensure that we've not seen any decline in our domestic numbers, which speaks for the tough work my team has done. Now, if we look at holistically for the whole year, I am happy to announce that our numbers have gone up more than 6% for the whole year. Our domestic numbers are 86,353 compared to 79,840, an absolute increase of 6,513 containers and a percentage increase of 8.16. Similarly, remarkably, our exit numbers have also gone up to 1,40,225 compared to 1,635 last year, an absolute increase of 6,519 and a percentage increase of almost 5%. In overall numbers, 2,26,578 boxes, compared to 2,13,475 the year before, an absolute increase of 13,103 containers, and a percentage increase of 6.14. I would like to point out that this would have been double-digit volume growth, but for the month of March, which again is citrus periverse. You know, global geopolitical situation, which is well outside our control. We are already seeing very good demand in domestic stream for our specialized containers. Your company produced 161, procured 161 specialized containers during FY26, and we have similar orders in pipelines for FY27 as well. I'll talk about CAPEX a bit. The financials of Q4 and FY26, revenues from operations was INR 496 crores, climbing steadily further up by about 4% from 478 crores in Q3, recording a fourth-state growth quarter-on-quarter. This shows the company's resilience even in the toughest of geopolitical situations well beyond our control. However, due to the current situation as discussed above, there was a small dip in profitability wherein EBITDA decreased from 27 to 25 crores, and EBITDA margin showed a slight decline from 5.6 to 5%. Similarly, the FAT decreased slightly from 10.8 crores in Q3 to 8.3 crores in Q4, and the margin decline was minimal from 2.3 to 1.7. We are seeing a lot of demand, and hence a major capex was planned and done in the last financial year. Total capex deployed in FY26 was over 70 crores, including in specialized reuse, handling equipment such as reach stackers, commercial vehicles, all completely aligned to our customers' requirements and operating needs. Our own fleet of specialized containers now stands at over 1,000, making it one of the largest specialized container fleets in the country in the private sector. Seeing better opportunities, our intention is a further capex of 100 crores in this FY27, which remains linked to strong customer demand and will be calibrated to market conditions as year goes on, including the pace of exit normalization. All capex is always driven by long-term commitments with larger customers, as discussed in earlier calls, and we do not build before we have orders. On working capital, intensity has increased alongside scale and operating cycles in this segment. The timing of operating cash flow improvements will depend on realizations, collecting cycles, and pace of volume recovery, particularly in the exim-linked activity. To close FY26 ended with a challenging Q4 driven by external disruption, but your company managed not only to survive but thrive, delivering customer trust and expectations to the team. Your company has a very strong order book with pedigreed customers for the rest of the year, giving us additional confidence. Realizations which have been impacted due to geopolitical reasons is also expected to improve as we grow back our Exim business in the coming months and quarters, particularly backed by a strong Exim business from the East Coast. Our emphasis, as always, remains on execution, risk management, and maintaining customer service levels through uncertainty. We feel extremely happy at the efforts put in by our team during these tough geopolitical situations, which remains out of our control, and we feel extremely confident about our prospects going forward in the near future. We feel we are poised for greater trajectories ahead as the situation starts normalizing. In conclusion, thank you again for taking your time out on a Monday morning and joining our call for which I am eternally grateful. We will now open the floor for Q&A.

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 touchstone 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.

Ladies and gentlemen, a reminder, if you wish to ask a question, please press star and 1.

We take the first question from the line of Pinaki Banerjee from AUM Capital Private Limited. Please go ahead.

Good afternoon, sir. Thanks for the opportunity. Sir, my first question is, when you conducted the IPO, I think you raised a net process of about Rs.363 cost, for which you think you have spent about Rs.163 cost for debt repayment. Sir, but in comparing from FY25 to 26, your debt has gone up from 172 to 117. So, sir, can you please explain this?

Thank you. Thank you, Pinaki ji, for your question. The working capital requirements have been constantly going up as we have operationalized our new multimodal cargo terminal. And so, the working capital requirements we have taken has gone into our working capital requirements, sir.

Okay, sir. Sir, can you just give a break-up of your revenue between rail, road and water transport?

Sir, we do not salami slice our revenues per se, since we are a supply chain company and, you know, end-to-end logistics. We do not salami slice our numbers because if we do that, the real picture will not come. For example, sometimes if we are moving, say, 2,800 tons by rake, and there is a spillover of 100 tons, that 100 tons will go by road. But if you look at the, it's all actually multimodal, and whatever road we... was what was left out. So, if I segregate that as 20-100, 28-100 tons multimode and 100 tons in road, you know, the numbers will not actually be correct. Hence, we do not calamify our numbers. We look at ourselves as a consolidated logistics supplier.

Okay. So, and last question, sir, any update on that Diwali MMCT? How is it progressing?

So, we are... I'm professional now, sir, and, you know, the Devalia MMCT is right outside Moorbi, sir. We are smack in the middle of the tiles industry, and the tiles industry is a natural customer for us. Unfortunately, the tiles industry is quite badly impacted by the lack of supply thereof of propane. Thank you. Et cetera, to, you know, operations that the volumes are lower than what it would have been had the tile industry been there. Obviously, that's the answer for us. And we hope that, you know, sooner than later, the tiles and the steel manufacturing activity is there. We'll go back to normal. Okay, sir.

Okay, sir. That's all for my end. Thanks, and all the rest for the future.

Thank you, sir. Thank you for your question.

Thank you. We take the next question from the line of Vivek Gupta from Star Group. Please go ahead.

Yeah, thank you. Sir, given the structural tailwinds such as the dedicated freight corridor, the trade normalization, and supply chain formalization, alongside the near-term geopolitical risk like potential disruption in the state of formulas, how should investors think about your steady-state business over the next two to three years in terms of growth, margins, and cash flow generation?

It's an excellent question, sir. I feel, and, you know, maybe I'm harping on my own tune, but I feel that we are very, very strongly poised, sir, even in these extremely tough situations. We went through the Russia-Ukraine crisis, followed by the Israel-Palestine crisis, and now we find ourselves in the Iran crisis. Despite all of this, your company has been resilient, your company has been growing, and we are poised for a major jump once the situation starts normalizing, not only in terms of a top line, but also a greater and more. A major improvement in the bottom line as well. We've been quite constrained by these tough geopolitical situations. For example, I was talking, let me give you guys an idea. The numbers, if you are tracking us, quarter three, you know, I was extremely robust. And in quarter three, we had delivered almost a 14% increase in exit numbers after a long time. And we were very hopeful that, you know, the trend is going to continue. We had delivered similarly 15% growth in our domestic numbers. So we're looking very, very good and positive in our business scenario. And January also was a stellar month for us. February was extremely good. And then for 28th of February, this whole situation exploded, which led to a major reduction in both the domestic as well as Exim volumes, especially on the West Coast. So what it did was it eroded a lot of good that we had done for the rest of the year. Despite that, despite, you know, taking a 11% hit on our exam numbers compared to a 40% hit that the industry has taken and taking a hit of almost. Close to 4,500 containers in the quarter 4 compared to quarter 3. We still managed to finish the year on a robust 6% positive number for containers, which shows the strength with which we operate. And we feel that sooner than later, these situations have to sort of… Settle down. It's an interest of the entire world. And when we do, I think we are poised for a quantum leap. I strongly feel that the rest of the decade belongs to the logistics industry. And I think we are primed and in a prime position to actually get a large chunk of benefit out of that. So that's what I would suggest. That's what I would say, that we feel that we are, you know, in a very good position to actually have stellar growth. I don't believe in giving, you know, future projections or future numbers, but I feel very, very confident that we'll be able to perform extremely well despite the situation that we are in. We grew quarter to quarter, every quarter, despite the situation, and we are looking at doing the same in this quarter and going forward as well, sir. The order books remain very strong. The domestic pipelines are good, and the Exim pipelines, especially on the East Coast, are very robust. We've been able to increase our business on the East Coast, and we look forward to growing our businesses, both in Exim as well as domestic, in this quarter and going forward as well.

Okay, okay, sir. Sir, in periods of stress, do customers prioritize cost-efficiency or integrated reliability? Like, where do we position ourselves in this spectrum?

That's a very pertinent question, sir. I think in supply chain, especially multi-mode, you always have to be cost-effective. But at the same time, depending on the level of service that you can provide, I don't think the cost remains the only factor for our large customers to decide on a multimodal complex supply chain. It's sort of different from Plain Mustard road transport in the sense that you bring in a lot of optimization, efficiencies, and cost-benefits overall. So the idea is that customers, especially the bigger customers, always look at a mix of both economic as well as efficiency.

So, how do margins differ between the domestic and existing segments, and what would be the impact on overall profitability from a shift in business mix?

Margins, actually, they don't, they again, not salami slice like this. Some domestic businesses are extremely profitable. Some Exim businesses are extremely profitable. Vice versa, some domestic are not so profitable. So it's hard to really say what are the margins in, you know, domestic movements compared to Exim. But, you know, overall, the idea is that we try to do business only profitably. We don't do business just, you know, the top line is for sure. So we don't try to push only the top line. We only try to do businesses which we can do profitably, provided that we add value to our customers. So our first port of call always remains that we must be adding significant value to our customer's supply chain. If we are not adding value to our customer's supply chain, we do not try to get that business. If I am going to try to do the same thing that others are already doing, and it's only an incremental benefit to my customer, I do not look at those businesses at all, sir. So the idea is to make my customers' supply chains more robust and profitable, and at the same time, do the business profitably. We do not believe in doing the business for the sake of doing business.

Okay, sir. Thank you. That really helps, and all the best.

Thank you, sir. Thank you for your questions.

Thank you. We take the next question from the line of Kostav Babna from BMSPL. Please go ahead. Hi, Kanesh. How are you?

Very well, Kostav. How are you?

I'm doing good. I'm doing good. So, Kanesh, just wanted to get some more clarity. You know, I speak openly about... You're incrementally rising receivables over a long period of time now. So even though the industry is going through a bad time, we all understand that. You know, from a layman's perspective, I'd like to understand why aren't you being able to collect the money from the end parties that you are already engaged in business with? So, you know, who are these end parties who owe 600 plus crore in receivables? Is there any way you could break it down to whatever extent you're willing to?

Good question, Kostar. Actually, this is something that we as an industry have been all struggling with, maybe slightly more than others. But our data days have definitely not been coming to the target that we would like. We are targeting to bring our data days to below 120 in this current financial. What has happened is that we have seen a lot of demand. And a lot of new customers have been added, especially our MMCT, which are retail customers. That's a business which we started only this financial. And so it is taking time for us to actually absorb that into our books and start getting the payment cycle. A lot of it is new businesses that we have done, new cycles that we have started, new areas of businesses that we have done. So we started with the West Coast to the East Coast, then we started services to North India, to CMLK, which is outside Delhi, and then to South India, which is Bangalore and Chennai. So since our service offerings have gone up, also our receivables have gone up. We expect to start seeing that stabilizing, forced this current geopolitical crisis, because the more the material we can send, the more the cycles we can start reducing. Right now, since there's not dispatches, you know, the funds are getting stuck up from the clients who are waiting for the next lot before releasing the payments, as is the want in the retail side of the business. So since we've grown our retail side of the business from corporate in the last two years, almost, I would say, 25-30% year on year, the funds have gotten stuck up. But we have internally kept a target of trying to bring our debtors down to about 120 days in this financial.

Also, added to that, Kedish, I wanted to understand, let's just take FI25 and FI26 in question. Your operating cash flow has been negative in both these years, right? Now, you had some cash in your balance sheet, which is also, I mean, almost fully used, almost fully used, and your working capital debt is increasing. I'm saying, while you have negative operating cash flow, and while... S-527 also seems to be a bleak year because of all the external issues going on, right, which is not in your or my control. And we don't know when the situation will end, although hoping it will end sooner rather than later. So, I mean, I find this concerning also, you know, given that we are, you were saying you're targeting 100 crores plus CAPEX this year. So keeping in mind, you know, negative cash flow at 100 crores CAPEX. Rising debt, lesser cash. I mean, can you help me understand how concerned are you about the situation and why so? I mean, if you could give some logic on your concern.

Yeah, so Kostav, we have actually from our IPO funds. Just under 100 crores still with us to be deployed. Our plan was always to deploy our IPO funds, you know, what came into the company over three years. So we've actually deployed more or less in cycle with that. We reduced our capex from the planned 100 crores last year to about 74 odd crores this year. We are seeing the variation in the eczema. We use the CAPEX mostly for domestic, and this year also the eczema that we have planned is 100 crores. Of which we have 92 from our IPO fund still to be deployed, so that's not of an immediate concern for us. The cash flow remains negative, like I said, due to the increasing working capital requirements, but we expect it to improve as realization increases, especially on our Exim side. So that is something that we are very hopeful will start reflecting from this year. We've pivoted on our Exim side more to our East Coast export. To sort of buffer the hits that are happening on the West, that's something that we cannot control. But obviously, that's a highly profitable business that, you know, that we can't do. We are a derived industry, Kostav, so only if my principals are able to export to the West Coast and to West, that is, Europe and U.S., can we see that improving. Anyway, in my gut feel is that the situation, especially in the exit side, should start. Improving or rationalizing itself within this quarter. We had the area, you know, the Russia crisis followed by the Iran-Palestine crisis. But they all, even before they were resolved, the situation had started working itself through the system, maybe through the longer transits through the Cape of Good Hope, the longer transits of 3,500 critical miles. So all of that basically... It figures into the market because the work goes on, life goes on. All of that gets factored in. This has just happened in the month of March. We are two months into it, but I'm hopeful that from this month onwards, we'll be able to see green shoots off. I'm very confident that we should be able to see, you know, realizations also improve and working capital cycles also improve from this year onwards.

Thank you. Due to time constraint, we take the next question from the line of Deesha from Sapphire Capital. Please go ahead.

Hello. More audible, sir?

Yes, Deesha. Please go ahead.

So, my first question is again on our EBITDA margins. We've seen a decline given the geopolitical situation. What sort of, how do you look? So, I understand for you, it'll be difficult to give up a range or something, but what sort of further pressures are we seeing on our EBITDA margins given the price impact that has started coming in from April onwards?

Anything like that? Yeah, Dishar, though I don't want to make any forward-looking kind of statement, but I feel that, you know, from here, our EBITDA margin should sequentially keep improving because we've seen, you know, three wars back-to-back in the last year and a half, and so these have been really tough times for, you know, Eximpset. We used to go. We have a substantially large part of our balance sheet from the exhibit rate, which we have now pivoted hard into domestic in the last year, year and a half. But it still plays a very large part of our business cycle, despite the amount of, you know, change that we've done. To give you an idea, our, you know, FY26 numbers is 140, 1.4 lakh containers in domestic, high in exit, compared to 87,000 in domestic. It will be an hour. Seeing our domestic go up year and year and, you know, increasing our footprints in the domestic side more, but, you know, the exempt rate remains a very large part of our business even now, and we are very hopeful that from here we should be in a position to actually improve. We've had three global wars in the last, I would say, one and a half years or so, and that really affects. You know, global exit trade. And it affects me, Disha, what I really want my listeners to understand is that I'm a derived industry. If my principals are able to export more, my business sequentially goes up. You know, I have large contracts with marketing customers. If they're not in a position to export, for example, if they're not in a position to manufacture because they don't have raw materials like propane and gas, there's not much a derived industry can do. So I think this is a tough call for the industry. In entirety, but I feel that where we are now, from here we can only continuously improve. It cannot, I do not foresee it not improving from here.

Going further down, yeah, going further down, you know.

I see it improving dramatically from this quarter itself, actually, because we have done whatever needed to do to pivot more into domestic and to ensure that our empty holidays is reduced, our linkages are made stronger, whatever reverse logistics we needed to do. We've done all of that planning. We've worked round the clock. I would say for the last almost five to six weeks as a team, as a company, and we are seeing, you know, a very steady kind of situation now. I don't think we are much in a crisis mode now, and I think we are in a cusp of some really good things. I don't want to give future projections, but I feel fairly confident that from here, both the top and the bottom line should start showing a sequential improvement.

Okay, fair enough, sir. And so just to follow up on that, so in terms of a domestic volume, what do you see as the key growth drivers for driving this domestic market share for us? And in terms of CAPEX, you mentioned we're planning a 100-class CAPEX. Would you please elaborate a bit more on where are you planning to utilize this amount?

That's a very nice question, Disha. So basically, though our name is Western Carriers, we have not historically drawn a lot of business from the western side as much as we do from the east and south. So our focus has been on growing our rest and trade, you know, which aligns very well with the reason why our first multimodal logistics part we set up in Morbi. We dominate, you know, the retail part of the rail business on the Saurashtra side, and that's why we came up with this, you know, our own multimodal logistics part there, and it's fully up and running. I feel that once, and the locational advantage that we have, Disha, is that we are smack in the middle of the tiles industry. It's tiles industry central. We're smack there. We don't have to travel even a mile to get to our customers. It gives us the benefit of proximity, which brings down the first mile cost for our customers, which makes us profitable. So, once the volumes of tiles, which is now almost zero in the month of March, starts improving with propane supplies, I think the domestic play is going to... Rotate largely around our multimodal cargo park. We are rising from this month onward.

Okay, and just so on the case, where exactly will we be utilizing that?

So, the CAPEX is going to be, again, a mix of specialized containers, commercial vehicles, heavy equipment, etc. For example, we did a 161 container specialized. These are all, you know, built-to-suit kind of containers. These are not your standard shipping line containers. We have an order of almost the same size under production right now, which comes into operations from the end of this month and beginning of next month over the next one, one-and-a-half quarter. So that's where it is going. We have some CAPEX plan for replenishment of our commercial vehicle fleet. We try to keep our fleet up and tidy, and so we have a requirement of replenishment of our fleet on a pan-India basis. As well as we have some equipment requirements in terms of reach stackers, industrial-sized forklifts, large-sized cranes, etc. So these are all assets and equipment that we need to deploy in our businesses and which are not very standard. These are very specialized to our needs, and that's where most of the bulk of the APEX is going.

Okay. That is it. All the best. Thank you.

Thank you, Dusha. Thank you for your questions, please.

Thank you. We take the next question from the line of Priyanka Nagalia from Azitya Villa, Sun Life Insurance. Please go ahead.

Hello. So, this is regarding your margins and your ROC and ROE profiles. For the last two years, we've seen a significant decline from FY24, we were at 8.7%, 10% EBITDA margin, which after 26, we have ended at 4.6%. The ROE and ROC, which is about 20%, has now come down to single digits. So, how do we see the next two years from here?

A fair question, Priyanka, like I was saying, we expect these numbers to actually more than the top line we see are bottom line. Seeing a large improvement, the EBITDA margins, which are 4.6, 4.7, we hope to bring it back to where we were starting at 5.25, which is around almost 7%, and even higher the year earlier. These were the times when, you know, the supply chains were running very robustly. We didn't have any empty haulages, detention damages. Thank you. Similarly, we should see the ROEs and ROCs go back to where they were in strong double-digit numbers. You know, the debt numbers are obviously quite under control, and we've been now working on improving the ROEs, the ROCs back to where they were, and take it back to the EBITDA margin numbers as well. So, overall percentage increase as well as the quantum increase is what I expect this year in a very strong way.

Any guidance on what can be the increase this year and next year in terms of margin expansion?

Don't want to give any future forward guidance, Sri Lanka, but I feel very extremely confident in my bones that both the top line and bottom line are headed in the right direction, especially the bottom line. I'm looking at it being very robust because, like I said, in the last six weeks. Also, we've burned the midnight oil in making our supply chains as lean as possible. The devil is in the detail, and we've gone down as granular as we can be to ensure that we make our supply chains as lean as we can. And I think the results are showing I'm quite comfortable with where we are in the month of May, about another month and a half to go in this quarter, and it's looking quite, quite comfortable. I see, you know, my top lines are extremely... Extremely better than what it was last year-on-year, and I see my bottom line hopefully will also be in a position to recuperate from where we are. Like I said, Priyanka, I think we've hit the rock bottom, and from here, bottom line-wise, we should start seeing an incremental improvement now.

Okay, thank you.

Thank you, Priyanka.

Thank you. Ladies and gentlemen, with this we conclude the question and answer session. I now have the conference over to Ms. Nidhi Videwargia from MUFT for closing comments.

I would like to thank the management for taking the time out and to all the participants for their questions. If you have any further queries, feel free to contact us. We are MUFJ In Time and Western Relations Advisors to Western Carriers India Limited. Thank you.

Thank you. On behalf of Western Carriers India Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.