Skyways Air Services (NSE:SKYWAYS) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Skyways Air Services Limited Q1 FY 'twenty seven Earnings Conference Call hosted by Dollar Capital Markets Private Limited. 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 hand the conference over to Mr. Kapil Yadav from Dollar Capital Markets Private Limited. Thank you, and over to you, Mr. Yadav. Thank you, Nirav. Thank you very much. Good afternoon, everyone, and welcome to the q one FY twenty seven earnings conference call of Skyways Air Services Limited hosted by Dollar Capital.

0:53 We are pleased to host the company's first earnings conference call following its recent listing. From the management side, we have with us mister Yashpal Sharma, CND Skyways Group and mister Himanshu Chabra. I would like to hand over the call to the management for their opening remarks, following which we will be open for the q and a session. Frank, and over to you, mister Sharma. Thank you, Kapil, and thank you, Nirav, for positioning this call. Good afternoon, everyone. On behalf of Skyways Air Services Limited, I would like to warmly welcome you to the first earnings call. On the call with us today, I have our Group CFO and whole time Director, Mr. Himachal Chabra here. We are the team of Golub Capital and our Investor Relations Advisors, Ad Factors team as well.

1:40 This is a very important milestone for us. The listing marks surely a beginning of a new chapter in our engagement with the capital markets. Our journey in the logistics industry, of course, goes back four decades. Since our establishment in 1984, we have progressively built capabilities across air freight forwarding and broader logistics value chain, while investing in technology, people and an increasing global operating footprint. We look forward to using this platform and communicating our performance with greater transparency and to build a long term relationship with you, our investors. I would like to start by setting some context in terms of our industry and operating environment before getting into our business.

2:29 So ladies and gentlemen, the industry and market environment, the global logistics and air freight industry continues to operate in a very, very dynamic environment. Freight flows are being influenced by changes in global trade patterns, geopolitical developments, fuel costs, supply chains, realignments and evolving customer needs. At the same time, we see structural opportunities arising from growth across border trade, e commerce, time sensitive business and increasing integrated supply chain solutions. Customers are looking for logistics partners who can provide reliability, visibility, speed and most importantly carrier capacity in access, especially in difficult times like what we saw in The Middle East work scenario recently.

3:19 What they also need is a broader range of services today, which go across the means of transportation, stocking or distribution options at diverse geographies of the trade rather than just a simple point to point movement of goods. We believe this environment creates an opportunity for someone like Skyways, who has established technology enabled logistics solutions with capabilities of handling scale So sorry to interrupt you. We lost your audio. Can you hear us? Participants, please stay connected. We have lost the line for the management. Ladies and gentlemen, thank you for your patience. We have the line for the management reconnected.

4:06 Niraj, I assume that I was hurt till... When I supposed to... Starting to talk about industry and market environment. Right? Yes, Yes, sir. Sir. Okay. So so what I what I would just do is I'll I'll just reposition what what I had just mentioned just to make sure that there is continuity to what I spoke. The global logistics environment today is very, very dynamic. The logistics freight flows have been influenced by changes in global trade patterns, lot of geopolitical developments, fuel costs, supply chain realignments and constant customers evolving needs. At this time, we see structural opportunities arising from the growth of cross border business, e commerce, even time sensitive cargo and increasing integrated supply chains.

4:55 Customers are actually looking today for logistics partners who can provide reliability, visibility, speed and most importantly, the carrier capacity, which gets very difficult to access in difficult times like the Middle East war that we just saw. What the customer also needs is a broader range of services, which go across the means of transportation, stocking and distributing options also across diverse geographies on the globe rather than just a point to point movement of goods. We believe this environment creates an opportunity for someone like Skyways who has established technology enabled logistics solutions with capabilities of handling scale, global carrier relationships and a diversified service capability.

5:41 The Indian logistics industry across the means of transportation is also expected to grow to by 40% to 50% over the next five years, opening huge opportunities for our trucking ocean express and other logistics solutions. This industry is potentially expected to get to about USD 500,000,000,000 by 2031. Skyways has built a strong position in India's air cargo freight market. According to the World ACD market data for chargeable volumes, we have retained our position as the number one air freight forwarder in India and are now ranked forty fourth globally as well in the air cargo for the Q1 of this financial year. Our Indian market share has also strengthened from a 5.9% to 6.2% on quarter to quarter basis.

6:33 We see the position not simply as a market shared milestone, but as a reflection of the trust we have built with customers, airline partners and our wider logistics ecosystem. We successfully navigated the West Asia crisis by creating alternate airline capacities for our valued customers. This not just strengthened our position with our current customers, but also has helped us to acquire some new customers as well. The Ministry of Civil Aviation has set out a very strong vision of getting to 10,000,000 metric tons from last year's 3,960,000 metric tons over the next five years. As the air cargo segment continues to grow on the back of new airports, enhanced capacities and at current airports, even bringing in new aircrafts by the airlines through a very strong order book means there's going to be a very sizable, ample growth in India's aviation.

7:31 This, ladies and gentlemen, will mean huge opportunities for us to also get a higher and a bigger slice of the enlarged AIRCAHO cake. Skyways has always outgrown the market growth over the last ten years by a fair distance, and we feel confident the trend will continue in times ahead too. Importantly, our ambition extends beyond air freight alone. Though through our group companies' subsidiaries, we have developed capabilities across ocean freight, warehousing, trucking, express cargo, cold chain solutions, cross border custom brokerage and also specialized logistics solutions. This gives us ability to increasingly serve customers through a more integrated logistics proposition.

8:18 Technology is an important part of this evolution for Skyways. Not just since inception, but especially over the last seven to eight years, we have developed some excellent technological capabilities to improve operational efficiency, shipment visibility, pricing and customer experiences. Our technology platforms like SLS Hike, Cargo Dash, SLS 100X are designed to digitize and streamline logistics life cycles, while our multimodal platforms is intended to bring air freight, ocean freight and Courier Express together through a unified interface. We believe technology will increasingly allow us to improve productivity, provide greater transparency to customers and scale our operations without a proportionate increase in complexity.

9:11 Our objective is to create the strength of a traditional logistics network with the speed, visibility and scalability of our technology enabled logistics platform. We are soon launching one of its kind platform called ASAP, which will tremendously enhance our customer acquisition and will bring huge ease of transacting to customers across the country, especially in Tier two and Tier three markets, where customers currently have limited access to competitive pricing and carrier capacities. Our international footprint expansion remains as one important element of our future growth strategy. We have established subsidiaries and operating relationships across key markets in Asia, Europe and Middle East and some of the other international locations.

9:59 These relationships allow us to provide customers with coordinated logistics solutions across geographies and strengthening our ability to support cross border business. At the same time, we continue to diversify into specialized cargo and value added logistics services. Our focus is not diversification for its own sake, for building complementary capabilities around our core freight franchise and deepening our share of customer logistics requirements. Our key focus shall remain towards building our volume scale in times ahead too. Our focus on staying diversified across commodities remains the ethos of the organization. We will keep the energy fully set towards strong and emerging commodities like pharmaceuticals, textiles, consumer electronics, automotive, defense equipment and more.

10:54 Our technology continues to API integrate carriers, vendors and customers to Skyways logistics ecosystem, bringing ease of moving goods from one point of the globe to another with utmost ease. Ladies and gentlemen, I would like to put a pause to myself here. I would like to hand over this call to our CFO, Mr. Himanshu Chawra, to take you through and would be here for the Q and A after this financial performance is done by him. Thank you. Good evening, ladies and gentlemen. I welcome you again on the maiden earnings call after the Q1 results of the current financial year FY 'twenty seven. Before I start the Q1 results analysis, I would like to spend one minute on you to take the good journey of Skyways since 2004 till the financial year 2024 till the financial year 2026.

11:51 So the revenues, operating revenues grew from INR1289 crores in FY24 to INR2812 crores in FY26, which was a CAGR of 48% in the two year audited numbers, the full year audited numbers that were also part of the RHV. Now coming on the quarter one analysis, it has been a stellar quarter on all the counts for the company. If you talk about the realization, the realizations have improved. There has been a volume growth of 23 in main revenue segment, which is Air Cargo operation. In Ocean Freight, there is a realization growth of more than 64% and a volume growth of 18%.

12:38 So, the ability of the group to pass on the cost or the cost increases in the Freight segment is very, very evident and the realization increase substantiate a very stellar performance in terms of the operating capability and passing on the cost and making money the margins on the overall revenue. On the Express side also, so we have delivered a significant growth of 64% in the revenue to INR63 crores and delivered INR59700 crores across 31 locations. Coming back to the air cargo number, so the overall volume growth has been 23% and the number of customers have remained stable with no loss of customers in the overall portfolio.

13:37 The profitability on the EBITDA, operating EBITDA has improved from INR27.31 crores on a consolidated basis to INR50.12 crores, which is an increase of 83.5% year on year basis if we compare the two quarters. On the revenue side, the operating revenue has increased from INR639 crores to INR1216.53 crores, which is a stellar performance increase of 90.4%. The profitability has increased from INR11.01 crores to INR26.79 crores. A number which I also want to highlight is as regards the employee benefit expense as a percentage of revenue quarter on quarter if you compare on the year on basis has reduced from 4.41% to 2.94% and the other expenses have also gone down as a percentage of revenue from 2.5% to 1.76%, which has helped in increasing our margins, the PAT margins from a 1.72% quarter one FY 'twenty six to 2.2% quarter one FY 'twenty seven.

14:54 Going forward, in the Q2 also, we are expecting a decent the trend of increase in the volumes is reflecting in the quarter two as well. So we are very happy to announce that on the operating side, the company's performance is improving quarter on quarter as well and the year on year performance of 23% is already to be seen and analyzed by all of you. On the growth opportunities going forward, management has already approved as for the Board meeting that which was conducted yesterday, the Board has already approved the expansion into five new geographies in Asia, and we hope these offices shall also add substantial volumes once the initial stabilization period is over.

15:44 I thank you everyone again for your time and appreciate any questions that you would have on the financials. We will be very happy to answer the same. I'll again hand over the mic to Neeraj for taking the call forward. Thank you very much. Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question, may press star and 1 on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

16:31 Participants, you may press star and one to ask a question. Ladies and gentlemen, you may press star and one First question is from the line of Utkarsh Maheshwari from Anderson General Insurance Company. Please go ahead. Good afternoon, sir. Am I audible? Yes, go ahead.

17:19 Am I audible, sir? Hello? Am I audible? Yes, it's better. Yes, Utkashi, you're audible. Go ahead. Yes, yes, yes. Thanks for the opportunity, and I think congratulations on a good set of numbers. Just want to understand what should be our steady state, I mean, revenue run rate? Because I mean, as we compare with the last quarter, it has almost doubled on a Y o Y basis. Even on a Q on Q basis, there has been a significant growth. So how do we should forecast this number on a steady state consistent basis? So Mr. Maheshwari, thank you for your question. Firstly, as you can see that we had a very consistent growth in our volumes over the years.

18:10 Even in this quarter, we've had a very significant growth in the volumes across all our products. And there has also been due to the fuel increase, fuel index increase in this period, there has also been an increase in the per unit cost, whether it is air, erosion, etcetera. So the whole I mean, the whole bucket of the way you look at the revenue, almost 23% to 25% of that comes through the volumes, and the rest is coming through the increase in the per unit cost for the logistics. I think there was some change in the presentation you have highlighted some improvement in the yield. So I mean, this improvement in the yield is sustainable, I mean, for the air, what we have mentioned?

18:58 So the yield increase, if you talk about the air cargo, which was at about INR $259 in Q1 'twenty six and has gone to about $416 now. And like I said, if you look at the significant increase in the fuel index, which was in January this year itself was at around $61 a barrel. And if you look at May numbers, that was about $110 a barrel, right? So there has been a very significant increase. So a lot of this yield increase is basically the per unit cost increase for us for the freight. And a significant part of this is the fuel index. So the fuel increase cost is actually factored in this. Okay. So is this cost to be kept here only? Or I mean, if there's a decline in crude, so we'll have to come back lower?

19:49 So the fuel cost is always a pass through from us. So whatever the fuel index, which is globally available, the indexes are very easily available and trackable across the world. So those are absolutely pass through to the customers, whether they are air or in ocean, even in trucking, the fuel cost is an absolute pass through. So if the fuel goes up, this yield slightly goes up. If it comes down, the yield also comes down slightly. So if I want to understand how much of the overall growth, what we have seen, it should be like... Well, if I see if the price of Brent comes down, so what should be our steady state growth rates? That is what I'm trying to understand.

20:39 You have mentioned 23% is the volume growth. So what should be the price growth over and over other than the fuel side? Mean, or is it like it will be it will remain like this in freight cost and the fuel cost always remain very dynamic and they can be tied back to various sources that are available. If you want, I can share a couple of sources with you as well. And the what we can control, controllable big controllable factor from our side is the volumes. And that is what we always continue to focus on. So even if there is a there has been a small revenue per yield decline at any time even in the historical times, our volumes are generally compensated for the increase of that. So we are continuing to focus towards the volume increase across our products.

21:32 And like I said, the yield is generally very dynamic and remains market driven. Okay. Fair point. That understandable. Similarly for I can the overseas share a couple of links with you if you want, and you can probably track the freight indexes on those. Yes, that will be really helpful. And I mean, I assume that similar should be the case for the Oceo freight also, right? Yes, yes, absolutely. It's just the same. And these trackers that are available are tracking air and ocean both. Okay. Fair point. Thanks a lot. Thank you. Thank you very much. Next question is from the line of Shivani Bhangal from three Head Capital. Please go ahead.

22:25 Yes. Hope I'm audible, sir. Can you hear me? Yes, sir. Go ahead. Yeah. Sir, as per your previous conversation, as you mentioned, this volume growth is sustainable, but the realization growth is not sustainable because it's completely dependent on fuel price. Am I right? So the yield remains dynamic. We are not saying that the growth in revenue is not going to happen in times ahead, but the yield per unit always remains dynamic. It goes up and down. The controllables are the volumes. Then what kind of volume would... I would like to add that the focus from the management is also from, you know, focusing on the higher trade lanes, which is where the yield is slightly, you know, higher.

23:19 And, you know, either volume growth, obviously, is the first and foremost priority for for the organization. But also in terms of the revenue management, focus is always being there on increasing the yield by focusing on the higher trade lanes or the longer trade lanes both on the ocean freight and the air freight side as well. So that conscious effort of the commodity mix and the trade led mix is always there apart, you know, the as Mr. Yash mentioned, the overall nature of the freight and the fuel is depending upon the global macro situation and not an exact controllable for us. That means can I assume this 25%, 30% kind of volume growth is sustainable going forward? Yes. We feel that the way we see the trends currently, we feel that we are very confident of sustaining some of the volume growth and the endeavor is actually to improve them.

24:14 Do you see any tailwind kind of things due to this war situation? So we always, like I mentioned in my opening address, when the market gets tough, what it does is it separates the people who have larger capacity controls from the rest of the market, so the rest of the competition. And Skyways has had a very, very strong capacity control in the market. We have had global contracts with airlines and shipping lines, and these airlines and shipping lines have specially helped us in these difficult times to give us more capacity than what they do otherwise, which enables us to service all our existing customers and their growing needs and also helps us to acquire certain more customers in these times actually.

25:04 Great. Got it. And my next question on the ocean trade mix. What kind of ocean hello? Yes. Yes, please continue. Yes. What kind of ocean freight mix are you targeting for next two to three years? When you say what kind of mix, is that a commodity you want to know or a trade lane that you want to know? Yes. Ocean business. In the ocean also, when you say what kind of mix, your question is directed towards what kind of commodities we will focus on or what kind of trade lanes No. No. Revenue. I'm not putting on that. Revenue. So if you look at our revenue, it's also grown 63% in this quarter in the Ocean Freight segment as well. Even our volumes have gone up considerably.

25:51 We've had a substantial increase in the volumes in the Ocean Freight segment as well. We've gone almost 18% above the same quarter previous year. So we feel that the Ocean business, which obviously did have a little bit of impact in The Middle East, but the other trade lanes are compensating for us and actually adding a lot of business towards the organization. Okay. Thank you. Best of luck, sir. Thank you, Jee. Thank you. Thank you. Next question is from the line of Rohit Mehra from SK Securities. Please go ahead. Hi, sir. Good evening, and thank you for the opportunity, and congratulations on good set of numbers. So my question is regarding the international expansion.

26:40 So basically, if I'm right, so would authorize some amount for offices in Malaysia, China, Singapore or and any how much other countries. So I just want to know what are the endeavors right now there and what do you suggest in period breakeven timelines and CapEx schedule for coming in next year? So Mr. Mehra, you're very right that the Board has approved expansion into some of the other Far East markets. Skyways is already existing in five markets on the East Of India. We are in Hong Kong, Thailand, Vietnam, Cambodia and Bangladesh. And Skyways has strongly positioned itself as somebody who has created its footprint close to the point of production.

27:27 And most of these new markets that you have just mentioned, China, Philippines, Malaysia, etcetera, all these are very strong manufacturing markets. And we have we are intending to get into these markets and create a stronger footprint for us, which will enable us to do a larger customer acquisition. And we have big contracts with us. We have global contracts of airlines and shipping lines, which will always also help us to enhance and create our presence in these markets. So the second part of your question was the gestation period. So usually what we've seen historically is that anything between two to four years is what any new international market takes for us to make it a good solid base for us in those markets. And we feel that we will be able to definitely improve that and maybe do it two to three years, each of these markets will become a very significant market for us.

28:21 Correct. And the CapEx schedule for these markets? So out of the 30 crores that we are going to invest over a period of time, generally, the CapEx in our industry is very low. Around 10 to 15% out of this 30 crores will be the CapEx, which will be the initial setting up cost of the offices and smaller warehouses that may be required. So generally 15% of this amount is towards the CapEx and rest is towards the initial setup cost, working capital and other other requirements. Got it. Got it, sir. Also, just in addition to this, that incremental capital was there by for, I think, 20 crores was approved for overseas subsidiary. Which specific international markets will receive this? So this is basically for our subsidiaries in The UAE, in Saudi Arabia, these are the primary And Vietnam. And Vietnam.

29:16 So we are seeing significant growth in these markets and also with whatever is happening in West Asia currently, we see a lot of opportunity actually in time there once the war situation comes to a little control. We see a huge amount of opportunity in The Middle East for the organization to expand its solutions because there will be a lot of infrastructure buildup that will be required in that region. And KSA has been expanding in a very, very big way in the last five to six years, and we feel very bullish about that market. UAE continues to be the gateway to the entire Middle East market and Vietnam has been growing very, very significantly as well and we have a very strong presence in Vietnam already and we feel that all these key markets in the next two to three years will add a substantial value to us as an organization.

30:05 Correct, right. So that answers my question. The one last question, just I think you have acquired Winddrop Logistics 100%, right, for INR 1.8 crores for Standard So World I just want to know the strategic capabilities and what this acquisition adds to Skyways capabilities. Just your thoughts on exactly an acquisition. It is a ground up entity that has been created. So as a as a greenfield project. Okay. Okay. Got it, sir. That's it from my side. Thank you, ma'am. Technically, is an activation if we if we talk about it, but there is very less investment that has gone into the the acquisition part.

30:57 Okay. Got it. Got it. You. Thank you. Next question is from the line of Ruchel Dinesh from Sharathinjay Investment Managers. Please go ahead. Hello. So I had one question regarding, like, what are the plans on the CapEx for the warehouse and the freight, like the... Like, commercial vehicles for end to end delivery? Like, you have added any fleet on that side, and have you considered any of the warehouses, like, for the CapEx thing? So the generic CapEx plan, you know, every year for for the group is around 5 to 40 crores per annum, And this is how we have been growing, barring the coal chain warehouse project, which is going to be operational during the next quarter.

32:00 And other than that, the operating of the generic CapEx for the group including the warehouses and our offices, everything is generally in the nature of in the to the tune of INR35 crores to INR40 crores per annum. Okay. Understood. And apart from that, what is the status of the tech platform, which was almost ready, like, for booking the consignment? So is it in the progress or is it already ready? What's the status on that? So as I mentioned in my opening address that we have building this platform and it's right in the final stages of its closing now. I think we should be able to put it in operation over the next thirty to sixty days.

32:47 We are just finalizing the we are just doing the piloting of this across three products and the fourth product is the development is in the final stages. Okay. So most likely Air Ocean Express and trucking, all four elements. So the three of these transportation medium are in the pilot testing stage currently, and the fourth one is in the final stages of development. So we are very hopeful that in the next thirty to sixty days, we should be able to launch the platform. Okay. Okay. Thank you so much. Good luck. Thank you very much. Thank you very much. Participants, you may press star and one to ask a question. Next question is from the line of from Dollar Capital. Please go ahead.

33:37 Hi. Am I audible? Yes. Go ahead. Perfect. Congratulations for a good number, sir. A couple of questions. Sir, how has been, you know, pharma doing as a contribution of your total revenues, which was actually scaled up because of the Odyssey acquisitions? So how do you what is the organic SKYWAYS business? And how does Odyssey has helped in the pharma division? That would be great if you can throw some light on that. So pharmaceutical as an industry has been of huge interest to us over the last five to six years. And the ODC acquisition was also part of this strategy.

34:24 And we've been significantly being able to up our mix of the product ever since ODC came in. Before ODC had come into our portfolio, we were about 8% to 9% of our business was pharmaceutical and which grew to 23% last year. We've actually managed to sustain the volumes and the percentage of pharmaceutical in this even in this difficult period. And we feel that in times ahead, Pharmaceuticals will continue to consolidate for us. Even on the OTC, the number that you asked about, so there has been significant growth in the stand alone business of OTC as well. And from a INR130 crore revenue quarter on quarter, it is now to crores.

35:13 Okay. And can you also throw light on the margins that you make with the farmers, especially it's above the group average? Or how is it? So the pharmaceutical, the gross margins are higher than the overall gross margin profile of the business, which include all kinds of commodities. And that is where the acquisition of Odyssey was very synergy to the overall pharma expansion strategy that we had developed since the COVID period. So this acquisition has also helped us in consolidating lot of businesses, which is helping SKYWAYS stand alone business as well. And also, we are bringing growth to Odyssey's financials.

36:01 To the next question, whether I mean, how you're looking for the acquisitions? Like your Board has approved a good amount. So can you just show some light what you're looking for? What kind of acquisitions is actually something which is missing in the portfolio or you're looking for enhancing your portfolio towards that? And generally, kind of growth threshold or something like that or capital commitment restrictions that you have, if you can provide on those things, it would be great. So the Board has approved as of now INR 30 crores expansion for the international offices, which will have creation of wholly owned subsidiaries or joint venture subsidiaries depending upon country to country situation on the regulatory side as well and also on the business negotiations that we are able to do with the partners that we are in the process of finalizing.

36:58 On the so there is no as of now no clear approval for the acquisitions per se other than this INR30 crores in the new offices and INR20 crores investment into the existing offices. But the world is very dynamic and if any exciting opportunity comes along going forward at the right valuation and it sits in with the overall expansion strategy of the group and the synergy, we feel that is very, very important for the group. Only there is a mature acquisition we will look at. Otherwise, we are focusing on organic growth as of now. Okay. Okay. And also, if I can ask one more question, sir. Regarding that, any updates on the Swissport International, AG some has some development been there?

37:51 The Swissport, the bid that we had given for the project, we were the second highest bidder for the project. So that has not obviously materialized. And going forward, projects, we will be bidding with the alliance that we have created with Swissport. Also, is decent bit of talk in the capital market of a second airport. So even there is as of now very, very mixed reactions that we are getting from that market because that being not a very large airport cannot sustain that city cannot really sustain two airports. So we are also waiting to see how Qualtrata as a market will evolve from here and the government's stand on building the second airport in the city.

38:45 Okay. Thank you. Thank you so much, sir. Yeah. Thank you very much. Thank you. Participants, you may press star and one to ask the question. Next question is from the line of Jasmine from TBC. Please go ahead. Hi. Are you able to hear me? Yes, Go ahead. Okay. Perfect. Great. So congratulations on the performance this quarter. Things are looking promising. I have a question on the legal disclosures. Could you please help us understand the current status of the EOW matter that was mentioned in the prospectus? And based on the legal advice that you received, does management anticipate any material financial or operational impact on Skyways of this matter?

39:32 And what are your next steps towards resolution? So the matter is still saturates and under investigation in its final stages. And currently, as we see it, we don't see any possible impact on us financially on this case. Understood. Jasmine, do you have any follow-up question? No. I just want to understand one thing. Is there anything in particular that we're doing towards the resolution of this, or we're just... It's a wait and watch kind of a situation? Towards the same case, you mean? Yes. So we've given all the necessary representations to the department.

40:17 And once we once they conclude their investigation, will we be taking any further steps towards whichever way we need to direct our next course of action? We feel we are on a strong ground. So once the investigation report gets concluded, we are very, very positive and very confident of India's legal system and how every investigation will be done on its merits. And we have a very we have a strong case on our merits. So we are very, very confident that things will move on towards a very positive side to us. Okay. That's good to know. Is there a timeline that we have in mind potentially when this could close? Well, you know, the departments don't necessarily give you a time line. So we have to work along with them and just work with the time kind of time lines because I think there are multiple parties involved there.

41:12 So probably they will need to just do all their necessary checks and balances and do the closure as they feel everything is well looked into by them. Understood. Thank you for your answer. Thank you. Thank you. Next question is from Anos Ware, Individual Investor. Please go ahead. Yes. Hi, sir. Am I audible to you? Yes. Yes. Yes. First of all, congratulation on the good set of numbers, sir. I have a couple Thank of you. Yes. So our cost of service business is around INR 1,100 crores and which comes to 91% of our total revenue. So what are the initiatives are we taking to improve our gross margin per shipment? And also, how are your airline capacity agreement structure to protect our margin from the fluctuation in the freight rates?

42:06 So I'll take up the capacity question and then I'll let Manjulreet take over the financial part of it. So SKYWAYS does a very strong positioning of itself with the carriers and we do get to sign PLI contracts with airlines and through these, we get to access various strong capacities of all the major carriers operating in India and overseas. And we and this has always been a very strong area for us. Even in like I said, even if you look at the challenging times of the Middle East crisis, we were able to navigate and get capacities from other carriers and in fact gain volumes when the markets were very, very challenging and there was almost like a 20 odd percent of capacity had gone out of the market, we still were able to consolidate our volumes because the other carrier capacities we were able to enhance and bring alternate solutions for our clients. So from the capacity standpoint, we are only enhancing our capacities and which is a very constant and year on year we've been able to grow our contract, grow our capacity access and this ultimately also benefits us in terms of better customer acquisitions.

43:16 I'll let Himanshuji take over the financial question. So on the gross margin side also, our endeavor is always to have a consistent gross margin profile, But the kind of situations like the war where there is sudden increase in the fuel cost, which is technically a pass through, full pass through to the customer, which overall raises the freight cost for the customer. We as an organization always want to maximize the opportunity in terms of passing and making gross margin accordingly on the increased cost. But at the same time, you have to be very customer centric also and try to absorb little bit of the cost increase wherever possible on the margins of the overall increase I'm talking about percentage margins.

44:08 Then from the scale, any which way overall absolute gross margin is on the increase, so we always take a calculated call on how much you want to make on the gross margin percentage at the incremental fuel cost that is kind of a global situation for us and the customer. Okay. My second question is like, I missed out the what you mentioned for our proposed investment previously. So we have a proposed investment of around 30 CRs across the China, Malaysia, Indonesia. So could you please give some visibility on the expected gestation period for this new operation and the CapEx deployment timeline and what do you expect this investment to break reach the breakeven point, sir?

44:57 So the breakeven point, as Mr. Yash mentioned on the profitability at the PAT level is a cycle of two to three years. But on the EBITDA breakeven side, it generally happens in scenario of fifteen to eighteen months is what we look at. But we are looking at these investments from a very, very long perspective in terms of these geographies contributing very significantly to our revenue portfolio going forward. As we have seen in the past, our Vietnam office performing very well for us in the last four, five years. We feel that similar kind of opportunity exists in these markets and China World Trade Link being the largest. We are going by the historical breakeven point that we have witnessed on business, but the scale, if we are able to scale up faster than what we have done in previous geography, there is a possibility of an early breakeven in all these geographies.

46:03 Okay, okay. And one more question on the finance cost. So it is increased to INR17.7 crores during the quarter. So could you please give us the update on the company's current net debt position post our IPO and how the working capital cycle has evolved over the quarter, sir? So there has been an absolute increase in the finance cost. If you do a percentage, there has been a reduction overall in the profit and fixed cost of similar to the previous quarter. And also, it's utilization of proceeds towards the debt reduction will help us in relative easing out on the finance cost. So, as of date, we have already kind of repaid around crores of approximate borrowings to the financial institution and the banks, which will obviously have an effect in the Q3 and the Q4 numbers on the interest Okay.

47:06 And so keeping in the mind the current West Asia conflict, so how was the how has the industry performed in this quarter, sir? How was our performance as compared to the industry, sir? So I'll talk to you about the air cargo industry in India. So India in this quarter versus the quarter versus the Q1 of twenty twenty six, India's air export market was 294,000 metric tons in Q1 twenty twenty six. In Q1 twenty twenty seven, it's gone to about 3.06 lakh metric tons, which is about a 3.8% increase, okay? And Skyways in the same period, actually on the Air Sports side has grown 19%. So we are like a 6x the growth in this quarter against the market trends.

47:58 Okay. And by any chance, do you also give margin breakups to our services? Like what is the margin breakup for air cargo, then ocean cargo, then express cargo? So the margin profile of all the products are very similar, right? And all are categorized into the logistic services overall basis. So we, an organization, are not doing separate EBITDA wise analysis and because the margins overall profile is quite similar. Okay. And are we also targeting the same kind of revenue mix for FY twenty twenty seven as well for the various services that we have?

48:44 Yes. So as you would have seen in the quarter one performance, the air cargo business is approximately 81%, which has increased 77% in overall FY twenty twenty six number. So, you know, all products are, you know, are scaling up very, very nicely for us. There is significant growth in air cargo business per se. You know, the ocean freight business, the trucking business, all the cylinders of the group are firing very nicely for us. And we are really hope we believe that this volume growth trend should continue in the quarter two as well. Okay. And by any chance, do you also provide some guidance for our FY 'twenty seven? So I mentioned a bit about the quarter two.

49:35 So as a company, we don't give the revenue guidance on an overall basis. But on a quarterly basis, we will have the earnings call and the visibility of the next quarter is available to us as we close a particular quarter. So we will be trying to give a volume guidance every quarter once we are doing this earnings call for the next quarter. Okay, understood sir, understood. And just last question, just last thing. So this West Asia conflict or all other conflicts, is not impacting our FY twenty twenty seven guidance, right? Whatever we are planning, it is still in the line, right? See, the beauty of our business is we are a very asset light business model. And we are able to pivot between markets very, very quickly because we are not asset owners.

50:27 So we don't have a challenge of positioning our customers' business or if for example we run an asset from point A to point B in the world and if there is any impact it doesn't affect us. So that is the beauty of our business and we are able to very, very quickly navigate into different trade lanes, different markets. So as customers are able to pivot into different markets, we are able to pivot with them. And even across commodities, we can always go and reach out to customers in different markets. And like I just mentioned that even with the Middle East crisis, we were able to create extra solutions, whether they were air and ocean, and we created solutions not just across the world, but we were able to even create solutions for the Middle East market. So our customers in The Middle East also we managed to service them even by creating alternate routes, which are probably not in the affected zones.

51:18 But our business is actually growing, the volumes have also grown as you can see. We feel that even in the time there, we feel that the volumes will continue to rise significantly for us. Okay, okay. Thank you, sir. Thank you for answering all of my questions and best of luck for the future, sir. Thank you very much. Thank you. Thank you. Next question is from the line of Amit Kishore Pouria from Tradeview Consulting. Please go ahead. Yeah. Hi. Good evening. Congratulations for the nice set of numbers. Have Thank very much. I have three questions. Number one, as you cannot give any future looking guidance, if I can ask you for a broad number of, say, three years aspirational number, a broad revenue you would like to hit, but the broad broad goalpost number, if you can please guide us, not a year on year, but a three year aspirational number if you have in mind in terms of revenue?

52:21 So see, we would we would not want to focus so much so and talk about how the three to five year projections are there in terms of revenues, but our modules are consistently and that is our key focus. And when we get into newer markets, that gives us access into so some of our customers who are actually procuring for multiple markets in Asia. And there are existing customer to us in multiple markets already. So we are able to participate and work with them and handle their logistics from these new markets. And that will add a lot of business plus we will acquire more customers as we go along. If you look at the trends in the last, say, even ten years for us, we've had a very consistent growth in our new customer acquisition and we've had a consistent growth in our volumes.

53:07 Every year, we have been growing our volumes and that is what we want to remain and create a strategy going forward as well, whether it is air, ocean and trucking express and like Himanshuji just mentioned, that the trade lanes that we work on, so historically there were certain trade lanes where the yield per kilo or yield per TEU was slightly less and we have now started to focus more in the higher yield trade lanes. So that helps us on the revenue side and it helps us also on the profitability side. So the in terms of our volume, we see a very consistent growth in the next three to five years, similar to what we've been seeing in the last three. So last two years, you had 48% CAGR growth like in terms of revenue. So do we expect similar runs? Or I mean, if we can give a ballpark figure, not any guidance per se, but any first ballpark benchmark you have or goalpost you have in mind?

54:01 So we maybe we'll come back to you on this question and probably give you we've not created something for three to five years as an exact goalpost for us. But we feel that what we have been growing, say, for example, this year and this quarter, we see that as a very possible growth for us in the quarter ahead and which itself on the compounding basis means a very decent number from where we are. Okay, fair enough. My second question would be in regard to Q1 ROE number if you have with you, return on equity for Q1, if you have or your CFSR has? What is the ROE for this quarter? So the ROE historically has been 14% to 15% and we would have as the capital base has increased in the month of September post listing, the capital increase. So the ROE analysis would be better if we do at the September end quarter.

55:04 Why I'm asking you this question? Because bulk of the primary fund you have raised, no, that has gone towards retiring of working capital. Right? And working capital loan comes at 9%. So ROE you are making 15% the equity investors have an expectation of 24% IRR. So going forward, where is the ROE you are targeting like, I mean, you can help me understand this part? See, the current quarter ROE is better as the profitability has improved in the and the equity base has remained the same as the March number. But once the as we close the September quarter, the ROE will depend on the profitability that is achieved and the capitalization that is the capital increase that has happened. So, it will have a marginal correction obviously because of the expanded capital base.

56:03 But as we grow along towards the year closure and the years ahead, the targeted range will always be around 15% that we would ideally want to remain on. No, but what I'm trying to ask sir is because the loan has been repaid or about to be repaid, which was at 9%, don't you think it will drag the ROE number to a much lesser number? No, sir. These the reduction of this debt is strategic in nature, right? And if it has an effect of the ROE, a temporary effect of the ROE, going forward, our overall realizations will you know, the the profitability will take care of the ROE as we expand in the years ahead.

56:52 Okay. And as regards... My last query is regards your other subsidiary called Resport. So since it's listing, there has been shareholder wealth erosion. So, I mean, what do you say for that? Because that's a listed entity already. So that... Can you please put some light on that as to what the company what is the thought in that regard? Although it is not directly related to this company, but because it is a group company and a subsidiary, so what do highlight on that? So, obviously, the stock price, these are market driven and we would want not go on to comment on those aspects. But fundamentally the company's growth has been decent on the profitability, although year on year there was a correction in the last year because of the realization pressure, especially that company is focusing on the ocean freight business and the realizations last year were slightly less.

57:54 But the performance in the quarter that has been consolidated into the current SKYWAYS consolidation, we feel that the current quarter and the next quarter will have a good fundamental growth in the business of baseboard as well. Okay. Thank you so much. That's all from my side. Thank you. Thank you. Thank you. Next follow-up question is from the line of Sumanshu Bhangarh from three eight Capital. Please go ahead. Yes. Thank you for follow-up. Sir, which of the industry doing great for us as for Q2?

58:45 So the business trends that we have been seeing, pharmaceutical continues to remain a good sector for us. The other sectors that have been also significantly growing for us are the textiles and ready made garments, plus automotive and also consumer electronics. These are some of the sectors which have been doing well for us and apart from that we do lot of our auto parts and we do fruits and vegetables. So the focus except for the only commodity we don't handle is non vegetarian. We don't handle non veg, we don't store and we don't move non veg. Apart from that, all commodities have got a decent kind of portfolio for us, but the larger commodities is what I mentioned to you. Correct. My second question on the realization. Are you seeing same kind of realization in Q2 or any correction because what is still continue?

59:37 So currently the trend of the fuel index, which has started to go down slightly has again come up, if you look at the fuel index. And like I mentioned, I can share certain indexes with you where you can track the trends in the last two point five months to get you a better picture. I'm happy to speak them out here if you want to note them down or otherwise we'll have dollar team or add factor to release them to you. Indexes like worldacd.com, fritos.com or webcagonet.com. They track the air and ocean pricing, I mean, worldacd, which does air only. The fritos and webcargo.com, both of them are tracking air and ocean trends in terms of per unit, trade lane wise. So you can get all various different mixes from there.

1:00:23 And we hope that the fuel indexes remain in check, which is good for the trade overall. Yes, it will be good for investor also. Thank you. Thank you, Best of luck. Thank you, sir. Thank you. As there are no further questions, I would now like to hand the conference over to mister Rohan Gupta from Dollar Capital for closing comments. Yeah. Thank you. So thank you, mister Sharma and mister Chandra, for taking the time to interact with the investor community and for sharing your perspectives on the business and its outlook. I would also like to thank all the participants for joining the call and for their questions. On behalf of Dollar Capital, we wish the management and the entire Skyways team all the very best for the future. With that, we conclude today's conference call. Thank you, everyone, and have a great evening.

1:01:11 Thank you, Rohan. Thank you, everybody. We look forward to engaging with you in the future as well. Thank you very much. Have a good evening. Thank you so much, and we look forward for the second quarter ending and the conference call thereafter. Thank you so much, everyone. Thank you very much. Thank you all. On behalf of Dollar Capital Markets Private Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines. Thank you.