LEAP India (NSE:LEAPIND) Q2 2026 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the LEAP India Limited Q2 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in a listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now have the conference over to miss Sonia Chathit, from the adviser. Thank you, and over to you, ma'am. Good day, everyone, and welcome to q two and f one FY twenty seven earnings call of LEAP India Limited. We have a we have mister the chief growth officer and mister 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 provide more insight and forward that to your.

1:05 Thank you. Good morning, everyone, and welcome to LEAP India Limited's earning conference call for the second quarter and first half of FY twenty seven. I would like to start with the business overview. For those joining us for the first time, LEAP is India's largest on demand asset pooling company with around 90, 92% share of the organized pallet pooling market. We provide pallets, plastic containers, and material handling equipment on a pay per use basis. We take full care of the full asset life cycle, which means deployment, tracking, retrieval, repair, and redeployment.

1:54 Today, we manage a pool of 15,500,000 assets valued at over 1,820 crores. We serve roundabout 1,100 plus customers across 11,000 touch points through 27 fulfillment centers. A detailed overview of the business and the industry opportunity is available in our investor presentation. So today, I will focus on what has changed during this quarter, which is the second quarter. So one of the most important announcement that I would like to make is the acquisition of Winpro Tech and Tips. The most important development this quarter is our agreement to acquire a 100% of the business of Winpro Tech and Tips for an equity value of 142 cross.

2:44 Both are being acquired through some sales into newly incorporated wholly owned subsidiaries. Winprotect into Winprotect Limited, which will be our manufacturing arm, and TIPS into total integrated packaging solutions that means TIPS private linter, which will be our cooling arm. WindProtect is into plastic manufacturing providing end to end solution and in house designing, mold making, and production of vacuum forming and injection molding across its two plants in Puducherry and Tamil Nadu. It is a crate and tray pulling business, predominantly very strong in the automotive sector with an asset pool of point two five million crates and trays.

3:31 Together with a robust customer base of 200 plus, they have reported f y twenty six revenue at 51.7 cross at an EBITDA margin of 28% with the revenue growing up to 44% CAGR over the last three years. The strategic logic is straightforward. First, it gives us backward integration into plastics, boosting our innovation and building newer capabilities. This will result in reducing our dependence on outside vendors, improving turnaround time, quality control, and cost. Second, it increases our portfolio and leverages our customer base to cross sell. Third, it adds a strong Southern footprint that we can scale through our existing network in the West and North. And you understand that 30 to 40% of the business of automobile is in the South part of the country.

4:30 On an f y twenty six pro form a basis, the transaction is effective to revenue, EBITDA, and tax and includes our net debt to EBITDA. We are pleased to announce that we have already signed the BPA on October 26. The key managerial person will continue to be associated with us, ensuring leadership continuity and a seamless transition. I understand that there has been lot of question on GCC expansion. So we have set up a wholly owned subsidiaries in Saudi Arabia and The UAE. The GCC is a natural extension of our platform. Parrotization levels are already high, automation and ASR adoption are rising, and the moment hire model is very well understood.

5:23 We continue to take a measured phase approach to this market. We are contemplating certain acquisitions also in the GCC market. A stronger balance sheet is the third point that I want to put forward. From our IPO press issue of 480 crores, 360 crores have been used to repay debt. On a post IPO basis, our debt to equity is about point five, and our net debt to EBITDA is about 1.9 with around 110 crore held as investment. This gives us the flexibility to pursue value equity opportunities such as this acquisition while staying disciplined disciplined on the leverage.

6:09 I am very happy to announce that in the month of October, India Ratings and Research of Fitch Group company upgraded LEAP's long term rating from a to a plus, and same has happened for add on business, which is our energy business that has also moved from a to a plus. This is our third upgrade in about three and a half years. We now have a leaner balance sheet, our top tier short term rating, and a clear runway to fund the next leg of growth, including value equity opportunities such as this acquisition while staying disciplined on the leverage. Let me come to the certain performance highlights.

6:55 I would like to tell you that always when you look at this business, you should compare it over last year. So quarter on quarter, it's... We are not a selling company. So you cannot compare it with quarter one to quarter two because this is a seasonal business. So as compared to last year's quarter two, we have done 216 crores of turnover. We have grown by 22.5%. We have done 110 crores of EBITDA, which is we have grown by 24.8%. Overall, EBITDA for the first half is 52.2. We have given a fact growth of nearly 18 crores, which is a jump of 62% over the last year. Now if you remove the break off, the the money that we have paid to the banks for paying off the debt, if you remove 6.5 of that, actually, we have grown our fact by 109%.

8:04 So this is a whopping story, and this you will be able to see in our future times to come, like, quarter three, quarter four. We have put in round about 417,000, not a lot of our pallet. So the people who are asking this question of whether there is growth since you have 90% of the market, that also comes to rest. We have added 37 new customers. LEAP has added 24 new customers, and Terron has added 30 new customers. So overall, in the first half, we have added 85 new customers. If you look at our energy business, we have grown by 60% on revenue and around about 28% on our EBITDA.

8:52 If you look at the outlook, our priorities for the rest of the year are very, very clear, which is deepen penetration with existing customers, keep moving customers from static to moment hire, cross sell across pallets, containers, and energy, open up new industries, integrate Zinfo Tech and tips, and build the BCC business in a measured way. We will do this with continued discipline on asset utilization, returns on capital, and balance sheet strength. With that, I will hand over to Rishi to take you through the operating and growth updates for the quarter. Thank you, mister Matthew, and a very good morning to all the part.

9:46 I would like to start with the business overview. A quick recap of how our growth works. LEAP growth on three engine, adding assets to the pool, keeping those assets productive and moving customers from static higher. That asset is at one location to move and hire. Whether assets are across the supply chain and earn at every way. Underneath all three is our network of 11,000 plus touchpoint, which lets customers hire anyway and be hire anyway. Let me take you through how each of this move during the quarter. So in terms of quarter update, our segment and utilization.

10:31 So we closed h one with 15,500,000 assets compared with 13,800,000 a year ago, an addition of 1,700,000. Talent utilization stood at 89.3% in line with q two f y twenty six. Continent utilization was at 73.7, up from 71.7%, and energy utilization at 82.3%, as I mentioned on our call last year. We aim to take the pilot utilization to 991% rate over the coming quarters, and we continue to deploy new effects quickly. In terms of customers and network infrastructure, we now serve 100 plus customers, and they are constantly adding that. We have 11,000 plus touch points. We also continue to capture network synergy from check integration, where our fulfillment centers were close to our five check facilities.

11:33 We consolidated them, closing two facilities and bringing our network to 27 fulfillment centers without any loss of reach. With regard to moment hire, there is a constant improvement in moment hire business, and we are converting customers from daily sector, Excel sector, from setting hire to the moment hire, and the journey will continue further. In terms of quick background about the new equation, it's an issue that already covered the strategic rationale. So let me speak to the commercial side. We'll protect users in house design, mold making, and plastic manufacturing activity.

12:20 That means faster development of design and mold, customization of various products, shorter turnaround, and better control over the quality and cost. It strengthens our container pulling position, especially in automotive business. The growth opportunity comes from three phases, cross selling of pallet, crates, containers, and energy across our 100 plus customers, And there, basically, impact and these groups, they have 200 plus customers taking their strong Southern presence into our Western and Northern network and moving into newer industries such as FMCG, electronics, e, energy. We integrated offering that supports longer contract and higher wallet share. Integrated.

13:10 Terms of GCC update, our subsidiaries in Saudi and UAE are very established. We got our licenses. This has been foundation building month. We have got all the approvals, and we have been putting our ground infrastructure right from setting our entity, getting all licenses, getting warehouse infrastructure, and hiring new people, customer engagement, and regularly approvals also. At the same time, we are engaging with our prospective customers and building our pipeline. Getting the foundation right now will let us scale faster once we go live. In terms of way forward, our priorities are clear. Different moment have, process palettes, container credits, and energy approach it, larger customer base.

13:58 It's pulling into newer industry and build the GCC into our next growth market. Every asset we pull replaces single use packaging for the growth that brings value for our shareholders also makes supply chain more sustainable. We have the network, the capability, and the balance sheet to do this, and I am confident about the role ahead. With that, let me hand over to our CFO, mister Ravi Shamal, to take you through the financial performance. Mister Ravi Shamal. Thank you, Rishi, and good afternoon, everyone. Before the moment, I'm sorry to interrupt, sir. If you can come closer to the mic.

14:54 Yeah. This gives us a recurring annuity like income stream and a long life asset base. Our financial levers are simple, grow the pool, keep the assets productive, and let operating leverage flow through to our money and cash. Key financial updates for the quarter. Vimplotech and TIPS acquisition. The acquisition of Vimplotech and TIPS is valued at an enterprise value of 1,020 million and 400,000,000 respectively. And it's structured as a term sales into only own subsidiaries of LEAP India. In FY '26, and team sales revenue of $470,000,000 and $180,000,000 respectively.

15:41 With respect to IPO proceeds and leverage, of the $44,800 million, 3,596 million has been used to repay debt and rupees 200,000,000 for general corporate purposes. On a post IPO basis, debt to equity is about point four eight x, and net debt to EBITDA is about 1.9 x compared with 4.4 x in h one year 05/26. We also hold around $1,101,100,000,000 as investments, and with India rating further upgrading our rating to a plus from stable year for both LEAP and time should additionally optimize our cost of borrowing and give us a clear runway to fund the next good year of growth.

16:33 With respect to quarter two, FY twenty twenty one performance, total income for the quarter was rupees 2,159 million, up 23% year on year. With this asset pulling income was rupees $100,759,000,000, up 19%. And MHC income was rupees 393,000,000, up by 52%. The adjusted EBITDA was rupees 1,097 million, up 25% with EBITDA margin at 50.8%, up 91 basis points year on year, supported by higher income, cost optimization and net loss synergies. Depreciation was at rupees $576,000,000.

17:19 Finance cost was at 215,000,000, reflecting the benefit of rupees 3,596 million debt repayment from IPO process. With respect to PAT, it was rupees $178,000,000, up by 62% with PAT margin of 8.2, and cash PAT was rupees $754,000,000, up by 26%. Now with respect to h one FY twenty seven performance, for the first half, total income was rupees 4,294 million, up by 26% year on year. EBITDA was rupees 2,239 million, up by 23% at a margin of 52.1%. That was rupees $4,425,000,000, up by 42%, and cash tax was 1,566 million, up by 25%.

18:14 To sum up, our focus remain the same. Scale the pool, keep the asset productive, and translate operating growth into stronger capital efficiency, now with a stronger balance sheet and broader platform. With that, I will hand the call back to the moderator for the question and answer session. Thank you. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star at 1 or get touched on telephone. If you wish to remove yourself from your question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

19:08 The first question comes from the line of with Emeritus. Please go ahead. Good afternoon, and thank you for the opportunity. And congrats on the number. My first question was on the receivable days. I do see that there was stock improvement in the receivable days when you compare it from March to September. So I just wanted to get some sense around how do you... Is there any room for further improvement which you can anticipate over the medium? You'll highlight something in the in the in the first quarter wherein SAP SHANA implementation will drive a staff reduction. So just wanted to get an update on the working capital days and how how it can shape up over the medium term.

19:58 Thanks, Supripa. Supripa, if you look at it, we have just the better number of days by six. Because when we started the year, it was hundred and twenty eight days. Now our DSO is, like, hundred and twenty two days. We really understand that this is not a right place to be there. But as I told you that we have implemented SAP S4HANA, and the bills are going on time. And you can see that whatever we have billed, we have started collecting more than that. So we are very confident as as as a team that by the end of the year, we will be less than ninety days. So that is what we are actually working upon. There are certain challenges with customers because very big customers also work on a PO basis.

20:47 When they work on a PO basis, if they ask for more pallets and if the billing for that month is 1 rupee higher than the PO, then that month, we do not get anything, and we will have to generate a PO from, say, 315 locations. So we are talking to those customers in order to get a centralized PO. I think if we are able to sort five or six customers who actually work on the basis of PO, I think we will be able to get it much better below ninety days. But you can take it from me that from one hundred twenty two days, this will get better to ninety days by the time we end the FY '27. Understood. That's that's very helpful. So so if I were to then accept that the our cash flow from operations would be, you know, if if you continue the trajectory on the profitability, so cash flow from operations would be more than enough to meet our CapEx requirements for the year. Is that understanding correct?

21:54 Steve, if you look at the current trend, that situation will come in f y twenty eight. But there are certain acquisitions which are on the line in India and also outside of India, which is basically GCC. We believe that we will be having enough and more EBITDA so that we will be covering whatever we want to put it in our assets. But since it is on the card, I would not like to comment upon it, but we will we will better it much before than what we have actually given to the shareholders. Sure, sir. So I was looking at the excess of the acquisition cost. Only the the the CapEx which we are incurring towards additional assets.

22:43 If I'm going to compare it to me on that basis, then the cash flow from operations would be more than adequate to meet that requirement. Is that understanding, sir? Yeah. Yeah. Yeah. The understanding is correct. If you look at it, so this quarter, we have done our CapEx of 213 crores as compared to 201 crores last year, h one, But the growth has been 21%. So you can see that we have put in the same amount of capital, but we have grown by 21%. So you are absolutely on top that overall, this year, we will be having a CapEx of 450 crores, and near to that, we are looking at our EBITDA. Understood. Understood. So second question would be on the pallet business.

23:28 I do appreciate the mix of the growth which has come through, Mhmm. The breakup between pallet sand containers is the new stream for this quarter is not explicitly highlighted in the presentation. Would that number be handy? We can be shared? Yeah. It it can be shared, and we will put it on the website. I I think the presentation, which has been uploaded in the website, has that. So the the split is there. So, technically, it is, again, 54% contribution from from direct side, around about 20 odd percent, 22... 20 to 22% contribution from auto side and the 40 to 15% contribution from MFC side. So more or less, the contribution, Tata has not changed that much. But you can look at it that this time, the granule cost has gone overboard, you know. The plastic cost has gone overboard. Automotive sector has done fantastically well. If they have asked for four crates, we have been able to deliver only 1.5 crates to them. Even though we have added 200,000 more crates into the system, but the demand was much more. But we cannot buy a crate at 60% or 70% higher cost, you know.

24:49 So we are just waiting for the cost to just lower down so that we can we can gain up in automotive much further. Understood. Understood. So taking that point forward, just wanted to get a sense of how are the number prices looking at? Why why you have given about the granular speed business for container? On the number side of things, it's considering the the dollar rates and and the limited shipping prices, how how is that seen? And on a realization basis, what is the like to like realization which has increased in in the September quarter? So I've already told you that one of the biggest risk that we carry in this is is is that your cost is continuously fluctuating.

25:36 That is the reason we created, you know, a four years back. And today, we have complete control over the timber cost. You can see that in last six years, our cost has not fluctuated more than two to 3% of the overall cost, you know. So this is a very highly regularized product. And once we have the contract with our with our suppliers all across the globe, it is actually not CIF but FOB. Even if the container cost has increased 10 times, that has actually not put too much of dent on our pallet cost, you know. So if the container cost goes down, they they benefit. If the container cost goes up, then we benefit. So currently, the average cost of our pallet, which is, like, 1,750 rupee pallet, is is there two or three places we have slightly increased the price, but timber cost more or less is totally under our control.

26:39 We may have to look at it if the current situation prevails after 03/31/2027, but currently, we are completely under control. Understood. Last question from my side, if may. Yeah. With the... Yeah. With respect to static and moment hire Yeah. I know why it cannot be quantified on a quarterly basis, but if you can throw some color around any any traction or new business buildings you have got on, and how that is shipping the payment profile. Yeah. Okay. Okay. See, if you look at the the moment business, this time, again, we have done round about 720,000 pallet moment, but we were expecting much more higher moment and much more higher revenue.

27:28 But what has happened, we we signed some of the textiles, we signed the Lota. If you look at that, there is a 100% growth on the moment hand, but the base is very small. We were looking at 10 times growth in textile, but the textile industry is only not functioning. They are functioning at 20% of their overall production capacity, you know. So textile industry is not doing well because of the cost cost of the granules. Plastic goods industry is also absolutely hit due to the granule rate fluctuation. So if you look at the cooling thing, this trade actually travel on our pallets to different automotive components. So that has also renewed a bit low because of the fluctuation of the plastic prices, and that has actually put a dent into into the movement higher. But if you look at Amul and the dairy agro industrial goods, they are continuously doing well. So what quantum jump we were expecting in the second quarter, that has not happened.

28:33 But at least we are on our numbers, and, again, we have done 720,000 transfer have moments in in in this quarter. And going forward, I I believe that the situation will get corrected, and we will be able to hit our numbers of 3,600,000 transfer ahead moment for this year. Understood. Thanks a lot for answering my questions. I'll get back. Bye. Thank you. Thanks,. Thank you. Thank you. Participants who wish to ask a question may press star and 1. The next question comes from the line of with UBS India. Please go ahead. Yes. Hi. Am I audible?

29:18 Yes. Yes, Anurag. Yeah. Yeah. Thanks. Good afternoon, sir. Thanks for taking my question. I think first, you know, question is on the acquisitions that you've done. You know, I think tips is gonna seem like a natural extension of the business, so, you know, more understandable. But I do want to spend more on Vimprotech that this is into manufacturing. So is it that, you know, you see that the cost benefit of having this in house is much larger than probably having a vendor do this? Or, you know, if you could just, know, quantify some of the benefits that you think you could derive from this sort of acquisition, given that we've always been more into the pooling part and manufacturing is not as strong forte. You know? Ah, okay. Good question, Andre, on on the acquisition. But you need to understand that, see, I'm always a customer customer guy.

30:10 But, you know, in India, if you have to do business, there are certain things that needs to be in house. We gain about everybody else because we control the price of timber in the country. And off late, we understood that there is so much of fluctuation. Sometimes it is 20%, sometimes it is 70%. And I cannot run to 400 automotive customers who keep changing the rates. Second very important point is Gimprotect is a mold making, a designing, and a plastic converter company. So if you look at any automotive component or or for that matter, if they have to move from one destination to another, they come to us, we actually create a prototype, and then we go to this small meeting company. They take their own sweet time, you know. So they take two to three months by that time. Sometimes we lose the customer or they give it to two, three players, and and and then competition starts.

31:13 So if we have an in house production, we will be able to to to actually improve our automotive business by at least 600 basis points because we will have somebody who will be able to turn around the things in one week rather than waiting for actually two months. So, again, the mold making will remain with us. What happens that if somebody copies our mold making, even if we have taken IP on that, it's a civil case, you know, and we will keep roaming around the course for next twenty years. So it is always better that we have something in house wherein all our intellectual property rights are within the company because this is this is a very hardcore design, and this is our brain and blood and sweat, which anybody can copy anytime. So we want it to be there within ourselves, and that is the reason it is a great buy. And then we'll have a 10 to 12% margin...

32:16 Betterment in the margin of the plastic crates that we make. If you give it somewhere outside, they may add a certain margin if we actually make it in a... In house. Then you can see that our ROTE and ROE will dramatically improve in automotive. Right. Got it. No. That's good to hear, sir. And Yeah. My second question is, you know, just continuing from the earlier participant on moment hire. Right? So Yeah. You mentioned that around this quarter around 720,000 moments that you've done, but I think last quarter around seven sixty six. So just to understand now, here on your basis, what would the growth be with the 720,000? What would that be last... Same quarter last year?

33:01 See, I have four years, five years trajectory, which I will tell you within India is that from 500,000, we are actually moved to 1,100,000. From 1,100,000, we went to 2,100,000. Last year, we did 2,800,000. This year, what we have said to the market is that we will do round about 3.6 to 3,700,000. So having said that, we are we are currently there at 1,500,000, which is 15 lakh pilots. So we have said that we will be doing 36 lakh pilot. Our season is just getting started. You need to understand that this is a rainy season. You know? So second quarter is a rainy rainy quarter, and this is the lowest that we do. Our biggest jump is going to come in December, January, February, wherein we contribute 34% to our total sales because everybody prebuilds, water prebuilds, juice, milk, cola companies, Jira companies, every company will will actually prebuild on that. And that is the time when you will see, at least, in the last quarter, you will see around about 1,000,000 kind of a moment higher. So we are very confident that we will be reaching the numbers what we have given to the market.

34:16 Great. And just, you know, just one follow-up on that. As you know, any incremental... If you can just guide qualitatively, you know, what's the traction you're seeing on converting, you know, customers from static to moment beyond dairy and textile also, and how are those conversations sort of shaping up? See, those are... See, as I said that we have signed 37 new customers in this roundabout six customers are on moment hire. This is again on the bottles and something on on on daily. There are three customers which are again being signed on the textiles front, and one more company is into the movement of movement of this tower tower kind of a stuff to various geographies.

35:09 So I think it is going on well. We have roundabout 60 companies that we are talking to as far as transfer high moments are concerned. And and we actually follow it on the basis of the sales funnel. See, in one quarter, actually, two or three customers could be signed. There is a possibility in one quarter, we will sign 20 customers. So it is just based on the trial and the time that it is taking. For example, I told you last time about what we are trying into solar panel. So solar panel, we have tried it, and it is it is a 90% successful because these pallets actually go into go into the power lines of the of the country where solar panels are being fixed. So we are also looking at introducing an active RFID to be placed on these panels so that we can track it through the computers.

36:14 So we are... We will be the first company which will be putting an active RFID into any kind of a pallet in the world. So that thing is also going on. Once that converts, there are 39 new... 39 companies, you know, which are doing this solar panel movement. So that will be a very big number. So if we have set 3,600,000 next year, possibly, it could be 7,000,000, 8,000,000, you know. So that is the kind of jump... Quantum jump that you will get into our cooling business. And you look at the... We we signed some of the textile and then it was below that. If you look at the textile industry, we are growing by 100%. But it is just from 7,000 moments, have gone to 8,000 moments. So the 7,000 actually has to go to round about 200,000.

37:01 So that is the kind of growth we were... We are expecting. But since everything has been shut down, there is a certain null. But I'm very confident that... You see, what has happened is that most of the states villagers are being declared as drought. If this drought kind of situation is there, people are going to drink more water, they are going to drink more cola, they are going to drink more juices, and that actually takes up our takes up our pallet penetration into the market, pallet into the... New pallet introduction into the market, and also the pooling from tech to the solar companies. So we are very confident that we will be able to do it. Got it, sir. Got it. Yes. I think that's all the questions I have. Thank you so much. All the best to the hand.

37:47 You got it. Thanks. Thanks, Rongar. Thank you. Thank you. Ladies and gentlemen, if you wish to ask a question, you may press 1. The next question comes from the line of Raj Kadam with B Wealth. Please go ahead. Hello? Hi, Raj. Hello? Yes. Yeah. I wanted to ask what's the update on the DCC market? Especially in this war situation, how are you planning for DCC operation? Okay. Thank you, Raj, for asking this question. People have a lot of anxiety about this. Yeah. Let me tell you that in in in GCC, we have already touched base with 26 customers.

38:35 As in the earnings call, mister Rishi has already explained that all our necessary licenses are in place. As far as customers are concerned, we are in touch with 26 customers. But suddenly, there are two, three better tailwinds that has actually come up in GCC. So as I have told in my earnings call that there are certain acquisitions that we may do. Now the situation is that we can give a price to our customer and quickly start the business, but we are waiting that if there is an acquisition proposition in the GCC, then the customer will always choose the lower price. So we are actually holding ourselves back, and we are looking at certain things to happen quickly in next quarter or the other half.

39:28 And if that is not getting into the parts, we will we will start to give the price and start our business. So if you look, we are we are going very prudent. We are looking at the situation, what is happening in GCC. We have just spent hardly 2.5, 3 crores into the entire licensing and taking up of the office and putting our people out there and meeting the customer. So we are trading this very, very cautiously. But in my future times to come, there will be a lot of good news from the DCC market. Thank you. Thank you so much. Thank you. Thank you. The next question comes from the line of Neil Patel, Sahu with GM Financial.

40:18 Please go ahead. Hi, sir. Good afternoon. Can I audible? Yes, ma'am. Thank you for the opportunity and most of my questions have been answered. Just some bookkeeping kind of questions. On the balance sheet, there seems to be a rise in other financial liabilities. Can you throw some light on what this number is? What is causing the increase? Right. So would you like to take this other financial liabilities? Yeah. Since we have raised the primary $4.80 crore 2,000 crore offer for sale. So, again, that's to be a 102 crore for IP expenditure. Now since we are awaiting the invoices from the various consultants and brokerage firms, so we will check.

41:18 Hello. Good morning. Hi. Sorry. I could not hear you. You know, I couldn't hear you completely. Can you confirm I'll just tell, yeah, I'll just tell you. We raised around $4.80 crores of primary and 2,000 crore offer for sale. We incurred expenditure of around item 13 crores towards IPO round. We have unlocked these expenditure to making the payments on broker. We are keeping under current liabilities. So this is stable in this quarter. Yeah. Understood. Understood. Thank you, sir. And any follow-up you could give on when do we expect, like, the first set of revenues to come in from Middle East and approximate timeline given the.

42:09 Yeah. So if you look at The Middle East, we can we can start the revenue maybe from next month. What... But we are looking at... As I said, that we are looking at certain certain companies to go forward, which already have their operations in in GCC. But next quarter, we will be definitely showing numbers on on GCC front. Alright. Thank you, sir. Those are my questions. Thank you. Thank you. Participants who wish to ask a question may press star and one. The next question comes from the line of Vishal Mehta with IIFL Capital.

43:03 My first question is on the Vimprotech acquisition. What I understand is, you know, given that this entity is into manufacturing, you know, the sales would be in the nature of outright sale of, you know, these plastic products, not necessarily cooling. So do we intend to continue this business of outright sale of plastic packaging products? And would we, you know, kind of grow this business as well? Your thoughts there. See, Vishal, first of all, we will see that what is the kind of growth that we are having within LEAP. So first of all, like, we need 400,000 grades, and we today go to three different vendors to actually get it manufactured for us because the automobile and other...

43:52 And the big commerce growth for utility boxes is really, high. So first, we will try to actually utilize their complete potential in order to use them out for our benefit. And then out of, like, 200 customers, you will see that which is which is the customer wherein we will be able to grow the business. And then over a period of time, our intent is pulling. So even after selling that, will we be able to pull those SKUs which is actually going to those customers? For example, I can tell you a very renowned brand of refrigerator. They take the plate which comes actually inside the refrigerator on which we keep our products.

44:41 So currently, it is very it is very heavily tagged and sent to our customer. We are looking at can we have a kind of a returnable packaging which can be introduced out there. So it's a it's a good problem to have, and we believe that from there, plastic manufacturing business also, we will derive certain amount of cooling revenue. Okay. So this $48.50 odd crores of revenue that will protect us, You know, will that entire revenue accrue to us or, you know, will it partially be flowing to us through margin improvement, partially through revenue? You know, some color there would, you know, help us Hey. Model it better. I think I think as far as the turnover is concerned, we will be able to take from November because we we have signed the BTA only in the month of October.

45:41 So we... Revenue will come starting starting November, and there will be a definite addition into the EBITDA margins, which is which is there, and which will be there in the consolidated balance sheet of LEAP India. But because of goodwill, we really do not know how much of that will flow to our balance sheet, but I'm very sure there will be a very healthy turnover and EBITDA at least for this financial year, which will come into the business. Okay. And and with this acquisition, how much of, you know, manufacturing do we intend to move to Mimbrotec? So for example, if we are adding 1,000,000 assets in our plastic business, how much of that will be captured by Mimprotect and how much, you know, will still rely on third party?

46:36 So currently, it will be fifty fifty. Currently, they have two lines. Two lines can only take up 50%. Once we see their productivity and and the kind of mix that they take out and we we check the strength and all those stuff. On the basis of that, over a period of time, we will continue to improve. And over a period of time, 100% of our production will be in house. Okay. Okay. And and, you know, these tips warehouses, they have four warehouses. We intend to keep all of these four or, you know, any overlap there and we want to consolidate there or... No. No. No. We will keep it. They run the business very, very smoothly, you know. If if I have to calculate the rupee of a customer of it, since they run it in a very frugal manner, they can show a better rupee than the moment it comes to LEAP. Because LEAP is into a really high five standard of multinational.

47:37 So over a period of time, it is a strategic buyout. Smaller company business, which is, like, one flow, two flow, we will move it to them. Certain businesses which are consolidating kind of a business that we will take it from them. So it will actually actually return to operate our smaller companies, wherein the distance needs to be covered smaller. And LEAP will do all all strategic kind of customers like Bosch, Cummins, Gabriel, and all these all these companies. Got it. Last question from my end, you know, on on the margins front specifically for this quarter. If I exclude other income, you know, the margin seems to have compressed around.

48:27 So, you know, any color on cost pressures this quarter or anything of that sort? See, see, nothing of that sort. First of all, you need to understand that this other income is not talking about any interest income or something from the bank which we have deposited also. This is a part of our business. See, this comprises of something which is known as LEC, locked equipment car. If a customer loses the equipment, they have to pay entire 1,750 rupees to us. Then the BBR broken beyond economic repair. So if they break 17 components or 10 components of a pallet, then those components are taken and they are sold into the market, which is technically, we get 1,750 rupees, the full cost, but we take these components and then we sell this. So these are those kind of other income. This is this is not the other income wherein always point five to 1.25 percentage of the entire pool will go through LEC and VDR, which we actually recover it from the customer. And then we actually sell it to the vendors and the scrap vendors, So this is both other income. It's actually goes into it. So this is not any other income from interest cost also. This is this is the proceeds of the business only.

49:45 This is the next business, which has always been there. Quarter to quarter, it will be changed. You know, I cannot tell you over half a truck load, you know, unless and until the VBR is a full truck load, then only I will be able to call for the vendor and give it. Sure. Okay. That's it from my side. Thank you, and all the best. Okay. Thank you. Thanks a lot. Thank you. Ladies and gentlemen, in order to ensure the management is able to address questions from all participants, please limit your questions to two per participant. The next question comes from the line of Tian Chen with FirstBridge.

50:30 Please go ahead. Hi. Good morning. Congratulations to you and the complete team of LEAP on on showing that the good growth. Thank you very much. And I know fantastic momentum that you've seen in the past two quarters. Would just like to have your view on the broader macroeconomic factors that would actually help LEAP keep the momentum going over the next quarters. Okay. Well, Priyank, we have been very fortunate that we actually cater to nearly 38 sectors. Even if three, four sectors actually do not do well, but then then there are other sectors which actually jump in so that our growth is continued.

51:20 So today, if you look at the crude price going going about $120, and that is an effect on the granules. So textile industry, say plastic industry, say transportation, like, they are asking for a 66% price hike and all all these kind of stuff. But at the same time, say, board government is declaring most of the villagers as as a drought drought village. That means people are going to consume more water. They are going to consume more cola, soft drink, juices, and that is, again, a sector which we we we we dominate that sector with 100% ship, you know. So that is, again, promulgating our growth. So normally, the second quarter is a subdued quarter because of rain. But this time, the October heat was so much that we have allotted round about a $100,000 starting September 15 to October 15. So so this is the kind of momentum that I am able to see.

52:25 Industrial goods are doing very, very well. I I see Quick Commerce also doing very well even though nowadays Quick Commerce have started going ahead with three p l in order to reach to the customers faster. So if you look at our three p l pallet penetration growth, this quarter, it has actually increased by 355%. 355%. But that is a culmination of quick commerce wherein they are growing very, very rapidly. So I can tell you that even though there is a fantastic growth in automobile component sector, but we are not able to tap to that sector because the cost of the revenue has gone up by 30, 50%.

53:14 So having said that, still, if you look at our our problem, we are having a very good problem that whether we need to grow in pallet, whether we need to grow in automotive, or whether we need to grow in in Taron. In Taron, we have put in round about hundred and fifty hundred and fifty machines. So continuously, India is moving from horizontal racking to vertical racking. So there is a very natural growth there also. So currently, if you look at few of the industries and macroeconomic, if you ask from me, for few of the other industries because we cater to round about 1,100 plus customers, and if you add 200 customers more from the in protect and and and this, it is, like, 1,300 customers plus we are catching to today. So we are looking at all the sectors for others. There are very sectors.

54:12 It will be a tough quarter three and tough quarter four. But as far as LEAP is concerned, as I said that we cater to long ago 38 sectors, we will continue this momentum and the goal. And it is going to be the maximum which actually benefits us with time. Got it. Got it. No. Thank you. Thanks a lot. Thanks a lot to the to you, and and congratulations once again to the whole team. I'm okay. I'm good for now. Thank you. Bye bye. Thank you. The next question comes from the line of with Blue Sky Fintech. Please go ahead. Yeah. Hi. Thanks for the opportunity. I just wanted to confirm I I heard a message a while ago.

54:59 Mister, regards your voice is not coming clear. Could you please use your handset? I want to ask Yes. Yes, sir. Like, just a while ago, I heard and talking to and he said that they are targeting for 9980 to 9020 for '47, which implies close to 26% growth. And we guided for 120% growth in q one twenty seven. So is this kind of a guidance update? We we have always said that we will be growing in between 20 to 27%, which is our natural organic growth, and that is what we have been able to demonstrate.

55:45 So this number, every time people keep asking, you know, so this is this is something that we have actually shared with our investors, which is which is, like, nine hundred eighteen, nine hundred twenty crores of top line. And, again, a 50% added to that. And our PAT margin, which is under PAT of around 90 close. So this is this is what is the guidance that we have given. And currently, we are on the trend. Second quarter being a bit of lull season for us. You will see much more improvement in what we have said. See, last year, we have done somewhere around about 62 crores, and then we are saying that we will do 90 crores this year, which itself is a kind of $42.44 percent growth impact.

56:39 So we will be able to do much better than in my previous TV interviews also. Said that we do not grow our FAD by 40%, but by 60 to 80%. So that is the guidance that I can give you as far as FAD is concerned. So thank you so much, sir. I'm okay, sir. Thank you. You. The next question comes from the line of, an individual investor. Please go ahead. Hi, sir. Thank you for the opportunity. Sir, could you talk a bit about the capital allocation philosophy of the company? Like, where could we expect the debt levels to be compared to equity and, like, what could be the CapEx we would be doing? Like, what what could be the average CapEx we would be doing for a rupee of revenue?

57:38 So if you look at it, we have given a guideline that this year, we will be doing around about 450 crores of CapEx overall. So this year, we have done 213 crores in the first half, and this has given us a growth of 21%. So last year also, you will see that we have done more or less the same kind of stuff. So with the same kind of asset asset base in the first half, we have been able to grow the business by 21%. And that is what is the beauty of cooling that once you put the product into the market, there is a possibility for that financial year, you may get eighty days, ninety days, two hundred forty days rental revenue.

58:23 But the moment it comes to the next year, you will get three hundred sixty five days of rental revenue. So that actually improves the entire entire mathematics of it. So now how we look at it is that we have certain amount of orders for pallets also, for crates also, and for machines also. So we have to pick and choose, you know. So if we get a fantastic customer wherein we get a contract of eight years, we will put a new machine, and we will buy a new machine. If we get a contract only for two to three years, we will put a refurbished machine as far as our MSC business is concerned. Now if you look at something which is like our pallet, which is going for a three year, five year locking period. We will introduce new pallet into the system. But if it is a kind of a higher and the higher seasonal kind of a substance, then we will repair more pallets, and then we will put that into the market. So we will have to make a choice, either the machine or the pallet. Now if you look at our first quarter, what has happened is that we have done hardly $70.77 crores of CapEx in that. Even though there was lot of demand of automotive grades, we actually did not... We we did not buy new grades because that was actually coming at 60% higher cost at... Than our normal

59:53 cost because the rate of the granules were everyday changing. So we did not buy those trades in the first quarter. When the prices actually reduced a bit, it came to $19, then we booked it, and then we have introduced 200,000 trades into the system. So the logic is that we have growth from all segments. So we have to pick and choose where we need to repair and put the pallet, where we need to introduce the new pallet. Do we have to improve our sales stock ratio in automotive, or do do we need to produce new price? Do we need to buy a new machine, or do we need to be ready for this machine? So this is case to case basis. You know, I will not be able to say... Because if I say Balco, Balco takes 54 machines. By default, I will have to buy it and put it in Balco because it's a five year contract, non refundable contract. Otherwise, they will have to make good the loss. So I would not like to put a refurbished machine out there.

1:00:55 So this is this is the basic pieces of our process. But overall, we said 450 per hour, so we will be in and around that. Now, for example, if somebody comes and ask for 300,000 more pallets, you know, from then there is a possibility we may exceed our CapEx requirement, but that will be seen in FY 2728 with a greater revenue. Thank you. Thank you very much. Thank you. Thank you. The next question comes from the line of Amit Tawani with Clear Blue Capital Advisors. Please go ahead. Hi, Sunil. Thank you for taking my call.

1:01:43 Wanted to understand the business a little better. My... So broadly, we are making about 500 rupees of, you know, on a packet with 50% EBITDA. That's about $2.50 rupees per pallet. Right now, our We need 554 rupees. We need 564 rupees. If you look at our previous per pallet deal, it was 1 rupee $46.48 paisa. Now it has gone to 1 rupee 54 paisa. So if you look at 1 rupee 54 paisa, you multiply it by three sixty five days, we generate on about 552 to 555 rupees per annum. With a 50% EBITDA, yes. Okay, sir. So $5.65 with the 50% EBITDA, that comes to about $22.80.

1:02:35 Right. Just... And that is at a 0.4 movement higher. I'm just trying to understand if that movement higher goes from 0.4 to 1.4, what will that EBITDA of that per pallet go up to? It will go up to 80%. Yes. Will percent Yes. But our... Because because because what happened, the same pallet moves. Because if I had given a pallet to a cola company, they keep it, and they keep giving me the rental model. The moment it gets transferred to somebody else, then we get the transfer has charges. But the moment it goes to the other customer, they also keep paying me the daily rental.

1:03:24 So it comes on top of this 562 rupees. So for example, if... How you have to look at this business is that if the pallet is, say, 1,750 rupees, we generate we generate $5.65 rupees per annum. So then new EBITDA aside, we will say that the breakeven is, say, three point one to three point two years. The moment this per pallet is 1.54, actually goes to one 0.62, 1.72. So this will come down to twenty seven months. This will come down to twenty four months, eighteen months, fourteen months. So that is how the business is that the more you improve... You may not have to go one four...

1:04:10 One one point four times, you know. Even if you come one to one as a ratio, like, have got 94 less pallets. If we do if we do 94 less moments, our our our EBITDA will be will be too much, you know, because the the per pallet yield was either getting previously was x. Now it is x plus two. So we really do not want to reveal all these numbers because if anybody has to do this business, they understand how to actually calculate it. So what we need to understand of our breakeven team, a 1,750 rupees pallet. Currently, breakeven is, say, 3.1 year. If we just add... Last year, we have done 2,800,000 moment. This year, we have said that we will do 3.6 to 3,700,000 moment.

1:05:03 That will take our four pilot in from one fifty fifty four pester to one fifty fifty two pester, and that will continue to keep increasing. And margin of one fifty four to one sixty two with margin going to? Which margin you're talking about? Ed Editor. I think just an add on. There is no reduction in margin. Yeah. Yeah. The transfer happens happens from there. It just... You have to just multiply 101 rupees 52 price and $23.65. This 555 will go to 612 rupees, then 722 rupees. Got And, sir I'm sorry. I'm sorry. I'm I'm I've had just one question answered.

1:05:56 I I'm think Yeah. Yeah. Yeah. I understand. The second question I had is on on... The EBITDA margin on a stand alone was 60 percent before the Chess acquisition. And now we we are at 50. Any chances we could go back to that 60%? It is a it is a combination. You know? So previously, when that thing was there, then the... Then we actually improved our business by 200% in Taron. If you look at Taron, Taron is at the top 30%. That that has basically pulled down our EBITDA. So I'm not too much concerned about what it is going to 55% or what it is going to 48%.

1:06:46 It should be that the quantum value should be seen. My EBITDA should be over a period of time much more higher than the CapEx plan I'm making. So that over a period of time, company can think about giving dividends or or something something else like better acquisition in the future. Thank you. Thank you, sir. Thank you. Thank you. Thank you. The next question comes from the line of with White Temple Capital. Please go ahead. Hello. Thank you for the opportunity. So my question was around the industry. I wanted to understand why is the pallet pooling penetration as a percentage so low in China? Is there something particular about the country which keeps it low? And and and what part do you expect India to take?

1:07:44 Okay. So when we are talking about China, we have to take the data from whatever is listed on the government side. If you visit China, they are absolutely 100% parasite. They say that they are 50% parasite. I think you should visit Hongdao and all these places. They are technologically so much upgraded even if when they do the ASRF or they do the robotic moment, the basic of the pallet. It could be a kind of a metal bag which they take, but I really do not concur to the to the number which is being there on the website. China is fully palletized. Okay. And and what about the pooling penetration?

1:08:29 That is... I mean, the asset... Pallet the pallet is about... Palletization is about 50%, but but the more concerning... But was that the the pallet coding is just nine and a half percent where India is already. Pallet coding is of a much greater extent. It was it was, like, five times more than India. I think there are these numbers which are not very right. Because step was there in China. They were very big in automotive. They were very big in in in pallet business also. But then, Merchant Group of China, which is a government entity, has not lost them. And, ultimately, Kep has sold their business to Loscan, but they hold 10% stake in Locustan China business.

1:09:21 So it it was a four, five times bigger, better business than us. Second important point you need to understand that the entire manufacturing, what happens in China is located to the South part of China, to to a particular region, you know. And then if you have to come to the other region, the distance is humongous. So distance is so huge that it is good for the company to have their own pooling kind of a circulation. So north does... We didn't know and south, China does within south, you know. So that is the reason you don't get a complete comparison. And India is not like that. India is very densely populated, but the distance is not that much as compared to China. Because anything what is produced in Sakhon goes to Gujarat, it goes to Chennai. Anything that is produced by Sundaram Partners or Delphi or any other company in Chennai actually goes to Nartik. It comes to Chandiwali, and it goes to Gurgaon also. So in India, there are only fourteen fourteen core locations as far as automotive is concerned, and the pooling is a much much more feasible thing in India as as it happens in any other country. And China is not a great comparison to our country because the density of population is actually spread across all regions in India, and so do the manufacturing

1:10:51 locations. So so this is this is one of the reasons that... And all the other questions of us getting into more prioritization and all need to be put to rest. Because you see, every year we have added since last seven years, seven, eight years, we have added 700,000 to 800,000 more pallets. This year, when we were starting, everybody was having the question that then we will be able to add 900,000 pallets this year. Now I can tell you that in September, we have already added net amount I'm talking about, 417,000 pallets. We have signed around about 37 new customers. Last quarter, we have signed 48 new customers. 88... 85 new customers, we have signed in the first half.

1:11:43 So we are very confident that we will surpass this 900,000 number in this financial year also. We will end somewhere somewhere at 1,000,000 or 1,200,000, you know. So that is the pace at which India is actually growing. And so is so is pooling. If you look at automotive, automotive is 100% cooling today. They really do not need any cardboard. So they are going to go carbon neutral, and we are the champions of carbon neutral in the country. So if you put something like in the environment calculator, a pooled pallet, what vis a vis, a one way pallet, you will see what is the kind of c o two imprint you that is in the atmosphere.

1:12:28 So in India, we do not have this concept of carbon credit. I'm very confident government is working towards it. And if it comes in next one to two year, all these... The people will buy carbon credits from us, and all these will go directly into our pack, which will be which will be a different ballgame altogether. Because we have learned this when we have gone to GCC, because in GCC, you can actually buy and sell carbon credit. Thank Thank you. Thank you. Ladies and gentlemen, due to time constraint, that was the last question for today. I now hand the conference over to the management for their closing comments. So thank you everyone for joining us today and for your questions.

1:13:19 I would like to take more and more questions from you. Whenever you want to, you can reach to my management team. See, this is a new business, difficult for people to understand. More and more questions that you ask actually challenges us back so that we are also more clear onto what is it that that investors are looking. Overall, I can tell you that we are we are doing fantastic as far as the companies are concerned. We will grow. We will continue to keep growing by the pace at which we are for the next five years. And acquisition and mergers are are the way forward for our company to go and show the kind of growth that we have shown in last ten years. I thank everybody for joining. Thank you. Thanks a ton.

1:14:14 Thank you. On behalf of Go India advisers, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.