VRL Logistics (NSE:VRLLOG) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to VRL Logistics Q2 FY 'twenty seven Earnings Conference Call hosted by Motilal Oswal Financial Services Limited. As a reminder, all participant lines will be in the 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. Alok Dionar from Motilal Oswal. Thank you, and over to you, sir. Thank you. Good morning, everyone, and welcome to the 2Q FY 'twenty seven earnings call of VRL Logistics.

0:49 So from the management side, we have Mr. Sunil Nalawadi, the CFO of the company. I will now hand over the call to Mr. Nalawadi for his opening comments, and then we can take up the Q and A. Thank you, and over to you, sir. Yes. Thank you, Allukti. Good morning to all the participants. I'm Sunil Nalwadi, CFO of VRL Logistics. I warmly welcome you all to VRL Logistics Q2 and half year FY 'twenty seven earnings conference call. Thank you for taking the time to join us today. Our financial results and investor presentations of the quarter and half year ended September 26 have been uploaded to the stock exchanges and are also available on our company website. The first half of FY 'twenty seven has been particularly encouraging and marks a robust new beginning for VRL Logistics Limited with strong profitable growth, significant margin expansion, improved cash generation and balance sheet strengthening.

1:47 We have witnessed a meaningful improvement in our operating and financial performance supported by the benefits of our earlier freight rate hikes and rationalization initiatives. Strong customer engagement, improved network penetration, and continued emphasis on operational efficiency. I'm also pleased to share that the company has delivered a strong performance during quarter two of FY twenty seven with significant improvement across total income, EBITDA and profitability. More importantly, this performance reflects an improvement in the quality of our earnings with higher freight relations, better cost absorption and stronger operating leverage contributing to our expanding margins. Let me begin with our financial performance for the quarter on a year on year basis.

2:37 Our total income for the quarter two is increased by approximately around 20% year on year to INR $9.67 crores compared with INR $80.04 crores in the corresponding quarter of the previous year. This growth was primarily supported by an approximately 11% increase in goods transport volumes from INR 1,100,000 tons to INR 1,079,000 tons, along with a 9% improvement in freight relation per ton from INR 8,799 to INR 8,840. The improvement in relation reflects the positive impact of our freight rate hike and rationalization initiatives. Our continued focus on securing remunerative business and maintaining pricing discipline has enabled us to improve revenue quality while retaining and expanding our customer base.

3:25 Our EBIT for the quarter increased to INR $2.26 crores from INR 158 crores in quarter two, registering an impressive growth of 43%. Correspondingly, the EBITDA margin expanded to 23.3% from 19.7% in the corresponding quarter last year, an improvement of three sixty seven basis points. Profit after tax also witnessed a substantial improvement, increasing to INR 103 crore from INR 50 crores, representing growth of approximately 106%. The PAT margin improved significantly to 10.7% from 6.2%. And also here, I would like to mention that the quarter part is more than the last year half year profit.

4:12 The operating operating environment during this quarter remained challenging, particularly due due to geopolitical developments, crude oil price volatility and the resulting increase in fuel procurement cost. Fuel continues to be one of our major operating expenses during the period. The cost per liter increased significantly from approximately INR 85 to INR 97, putting pressure on our operating cost structure. The increase also affected the benefits we traditionally derive from bulk procurement. However, through timely and calibrated freight rate adjustments, we were able to pass on a substantial part of these cost increases to our customers while maintaining healthy volume growth. At the same time, our continued focus on cost management and operating leverage help us to contain the impact of inflation across most of the operating expenses, including employee costs. Employee costs declined from 18% to 16.48% of total income in spite of increase in absolute terms from INR 147 crores to INR 159 crores.

5:15 Administrative expenses declined from 2.28 to 1.43%, largely reflecting lower legal and professional expenses incurred in the last year. Other operating expenses also declined from 1010.48% to 10.06%, And we also maintained better control over toll and Dhamali expenses as a proportion of income, notwithstanding the increase in toll plaza, higher toll rates effective from April 1 and increased transportation volumes as well. There were some moderate increase in vehicle running expenses primarily associated with higher driver incentives along with modest increase in L'Oreal service. Overall, these improvements in expenses ratio demonstrate our ability to manage costs effectively, improve asset utilization and protect operating margins in a challenging cost environment.

6:04 On the business front, our primary focus continues to be the expansion of our goods and services business through a wider branch network and deeper penetration into existing and new markets. During this quarter, we added 51 branches, taking out the total number of new branches added during the first half to 67 numbers. This expansion has strengthened our geographical reach and enabled us to access new customer segment and business opportunities. We have also seen encouraging traction in customer acquisition alongside onboarding new customers. We have successfully regained business and management certain customers who had earlier discontinued services following our freight rate rationalization and strategic withdrawal from low margin contracts. This is an important development because it demonstrates that our disciplined pricing approach along with unmatched service quality is helping us improve profitability without compromising our ability to retain and attract customers.

7:02 As you are aware, VRL has a strong presence in the B2B segment, supported by a diversified customer base of over 10 lakh customers across multiple industries. One of the key strengths of our businesses model is our collection mechanism. A substantial majority of our LTL business operates through paid and to pay segments, under which the freight is collected either at the time of bookings or upon delivery of the convent. This substantially reduces our dependence on extended customer credit and supports efficient working capital management. Consequently, our trade receivable cycle remains very healthy at approximately hardly around ten to eleven days. Our diversified customer base, relatively low customer concentration and extensive branch network and owned asset operating model continue to provide us with a competitive edge over other operators in the industry.

7:56 Similarly, the sequential performance is also on a growth trend and both Q1, Q1 to quarter two put together the H1 results are also commendable numbers. An important highlight of the first half has been our strong cash generation. The cash generated from operations before working capital changes is around INR $4.15 crores compared with around INR $3.14 crores in the last first half year. Net cash generated from operating activities increased to INR $3.67 crores from INR $3.34 crores. We have strategically developed these internal generated funds towards business expansion, infrastructure development and strengthening our balance sheet. Our capital expenditure for the first half stood at around INR 158 crores, comprising around INR 76 crores in quarter one and INR 82 crores in quarter two.

8:49 The expenditure was primarily towards the addition of commercial vehicles and investment in land and building facilities at a strategically important location, including Vijayawada, Nagpur, Lucknow and Raipur. These investments are intended to strengthen our operational infrastructure, support future network expansion and facilitate long term consolidation of our logistics hubs. Despite these investments, we have successfully reduced our net debt to INR $3.37 crores as of September 30 compared with INR $4.40 crores as on 03/31/2026. Our net debt equity ratio has consequently improved to 0.3x from 0.4x at the end of FY 'twenty six. Our own asset strategy continued to remain an important differentiator for VRL.

9:37 As of the end of H1 FY 'twenty seven, our fleet comprised 5,941 vehicles. We continue to follow a disciplined fleet rationalization program involving the replacement and scrapping of older vehicles while improving the inflation of our existing owned fleet. Approximately 76% of our total fleet is debt free, while around 11% is fully depreciated and continues to operate in optimal condition. This provides us with a meaningful advantage in terms of lower finance costs, better asset utilization and operating leverage. Before concluding, I would like to update you on the company's share buyback program. Considering the substantial improvement in profitability, healthy cash generation and the strength of our balance sheet, the Board had recommended a share buyback program aggregating up to rupees $2.80 crores at a price of $3.20 per equity shares.

10:28 The proposed buyback covers up to $87.05 lakh equity shares, representing approximately 5% of the company's paid off equity share capital. The shareholders approved the proposal through a postal ballot and concluded on 10/03/2026. The recorded for determining the shareholder eligibility was October 22, and the tendering window operated from October 27 to 11/02/2026. The tendering window has now closed and settlement of the bid is scheduled for 11/09/2026. The promoters are not participating in this buyback. We believe this program represents a responsible allocation of surplus capital and reflects our confidence in the company's financial strength and long term prospects. The consequential reduction on equity share capital and other equity will be reflected in the financial results for the nine months period ending 12/31/2026, following completion and settlement of the buyback in accordance with the applicable requirements. The reduction in equity will also support further improvement on return on equity, return on capital employed as well as earning per share going forward.

11:37 With this, I would like to conclude my initial remark. Now the session is open for question and answer. Thank you. Thank you very much, sir. We will now begin the question and answer session. Session. The first question is from the line of from Equities Securities. Please go ahead. Yeah. Hi. Thanks for the opportunity, and congratulation on a good set of numbers.

12:26 Sir, if you see us strategy over the last two and a half years since June 2024, we started doing this price hikes and all those adjustment to our business. Our realization has improved from around 6 rupees per kg to around 9 rupees per kg as of now. Over the period of time, there has been, of course, some, you can say, volume that has gone from our events and books to some other parties. And now we are eventually back on even, double digit kind of a volume, which probably we have not seen over the last maybe ten, twelve odd quarters. How do we see going forward two h panning out and also for next few years, like, the strategy of passing on to the cost will continue, or will there be any competitive pressure because of our pricing? Or what is your view on this pricing to volume kind of a... Like, pricing and volume, you can say settlement strategy?

13:14 Yeah. One thing on the pricing front, see initially for the current financial year also, we expected our tonnage growth at around 8% at the beginning of the year. Now in the first half, we already reached around 10% growth in our tonnage. So this shows very clearly that there is no pressure of the freight rate on the customers. So considering the inflation cost of, see, we would be increasing fuel cost, labor cost, so many other increases. Now most of the operators in the industry, actually, are increasing the rates. So considering this environment, it will not bring any pressure on the volumes growth. Got it, sir. And how do we see volume growth going forward for the 2H and P on, let's say, near to medium, the next two to three years, right? This growth trajectory will eventually continue given that we are back on the this double digit kind of a growth?

14:08 Yeah. Basically, this 9% to 10% growth in the volume growth will continue. And this first half, we already did around 9.5% growth in the tonnage. The similar growth we are expecting even in second half of the year. Got it, sir. Got it. And sir, one moving on, you will see commodity parts. So any specific commodity or let's say goods that have been doing really well for us in terms of volume growth across that has been playing out for us? No, across all industry because it is a widespread operations what we are having. But considering these festival seasons and all now FMCG and textile, there is a good growth compared to the industrial and other segments. But those are again steady growth across all the segments.

14:54 Got it, sir. And just last question from my side. We have been always even suggesting EBITDA margin of 20 odd percentage whereas we are beating the guidance overall. So by doing any kind of rate adjustment, what kind of margin do we have in mind? Or we should take this margin going forward as well for the future years? Yeah. Around 21, 22% is a sustainable EBITDA margin even going forward. Got it, sir. That's it. From my side, I'll join back with you. Thank you so much. Yeah. Thank you. The next question is from the line of Gurupashankar from Aventus. Congrats on the nature of numbers.

15:41 So my question first was on the cash generation part, sir. So it has been quite strong, quite robust. So just wanted to get a sense around how do you look to deploy cash over the medium term? Would you primarily focus on more CapEx towards land for hubs or would it be towards trucks? And or is it are you looking at more of dividend payout? Basically, in the second half, again, we are expecting a capital expenditure of around INR 150 crores, 160 crores, which is including the vehicles as well as some of the one or two properties what we are planning. And rest of the cash flows will be used for the timing reduction in our debt further. I was talking about more about longer term, sir, I think because you have seen... Longer term, again, our CapEx is going to be continued on the investment on vehicles and some of the selective properties.

16:40 And the properties where actually we are investing most of the investments again, we are looking to buy the existing properties which we are using from, you know, for for the last ten, twelve years, which are most suitable for our operation. For example, the Nagpur where we acquired, it is an existing facility. The Bangalore, what we acquired just around one one and a half year back, again, it's a existing facility. Similar to that, actually, are looking in other places, but it all depends on the cash flows and, again, the debt structure. But the capital expenditure will be at least around $25,300 crores every year it will continue considering the good cash flow. Yeah. Understood. So sir, looking at Danish growth being quite robust for this year while on a low base. On a structural basis, are you seeing any volumes coming back because of elevated pricing in an express business or something?

17:39 Or is is it... Is there some structural trends you are looking at with respect to your business on your overall growth, sir? So can you estimate the... Yeah. Sorry. The structure, basically, since we are opening a more and more branches, those branches are contributing good volumes, and that trend is going to be continued. Say, for example, again, I would like to mention the state like UP, Bihar, West Bengal. Our presence is not up to the mark even as of today. So we are concentrating on those areas to add more and more number of branches. And structural changes is, say, for example, we are very strong at South and Western market and and North market as of today. So be the interest rate as well as interest rate. But in Southern market, on the both side, interest rate and interest rate, we are very strong.

18:28 So considering these, you know, experience, we want to replicate in the other zones as well. For example, now with the considering our branch expansion in Northern and Eastern part, the most of June to June actually, the growth is very good compared to the Southern market. So that is giving a lot of value addition or volume merchants in our overall growth in Tanesh. Understood. And this will also promote a lot of intra city movement, which will also have a favorable realization per turn. Is that that understanding is also correct. Right, sir? Correct. Okay. Understood. Fine, sir. I I have more questions, but I'll get back in the queue, sir. Thank you. Thank you. The next question is from the line of Mr. Achal Lohade from Nuama Institutional Equities.

19:23 Please go ahead. Yes. Good morning, sir. Thank you for the opportunity. Sir, two questions. First, in terms of the volume growth, you said 9%, 10%, that is for second half. But what about medium term? Are we talking about 9%, 10% or the 78% what earlier we used to talk about? Yeah. Considering the present development, what we are seeing from the market, the 9% to 10% is an achievable target. Even for a medium term, sir? Yeah. And if you could remind us what is the contribution of the new branches led volume? How it has trended in last two, three, four quarters? If you could give us some sense. And how do you see that playing out? Yes. Now the 60 plus branches, what we opened in the current year, those are contributing almost around 2% in the first half year out of the overall 10% growth in volume.

20:27 Right. Okay. Understood. The second part is the fuel prices. If, let's say, theoretically, prices were to kind of come off, what happens in that case? Is there any automatic pass through or, you know, that, you know, you will be able to retain that benefit in that case? No. In that case, basically, with the contractual customers, most of the agreements as of today, we are having a fuel escalation clause. So based on that formula, whatever changes will happen, either it is increased or decreased accordingly, we are able to pass it on to the customers. In case of noncontractual customers, again, vision is, you know, honest. And there, actually, we are having a flexibility considering the route wise analysis and the reason wise analysis. We can take a call on the... Or even some commodity basis.

21:22 We can increase or decrease the rates depending on the fuel price. What's the contribution of the contractual customer, sir, in the total volume? It's a 17 to 18% revenue as of now. Understood. Understood. Sorry, I missed on the margin. You're saying 21% to 22% is the new sustainable EBITDA margin. Have I understood that? Yes, yes. Thank you. The next question is from the line of Madhu Zathi from Counter Cycle Investments. Sir, I wanted to understand how does increasing commercial vehicle prices affect our freight rates, sir. So do we see a onetime jump, or how does the market generally...

22:18 Historically, how has that evolved into freight rate increases? Normally, rate is not completely depending on the capital cost. Most of the freight rates are related to the the fuel rates, actually, industry works in India, especially. Most of the freight rate, you know, determines based on the fuel price increase or decrease. About the capital cost, yes, there is one time some minor improvement or increase or decrease will happen, but it is not a direct link with the freight rates. Got it. And, sir, if I were to look at VRL from the next two to three years because we are adding lot of these branches, sir, should we... How should we see the realization per ton or realization improving either via more long haul routes, or would would we like to continue our current route density in the sense that we are doing seven and a half, eight times capacity turns if you can help us under?

23:20 So, basically, now the the relation, the current year improvement, it is basically on account of increasing the freight rates. We did increase at the beginning of the year from April 1 around 5%, and in mid of May, we increased around 4%. So there is a 9% increase in the freight rates. So that is what is reflecting in the improvement in the relation. Now going forward, because of addition of our new branches and new routes, that is not a significant contribution to the relation. The realization is directly related to the freight rates. No, sir. I was asking that would we like to move towards more longer haul routes where the realization is higher or more general? See. For example, in our case, wherever opportunity actually we wish to operate, but it is not a short haul or long haul. Now, say, for example, within the Southern States, we're having a more volumes within the state as well.

24:18 So margin wise, across, if you take within state or interest rate or interest rate, more or less, it will be a similar number. Got it. And, sir, just one question was on these land and land and building investments that we are doing, sir. How do we decide the IRR or payback of these assets? Because... Versus renting these out, if you can help us understand. Their investments. See, for example, the the facility what we acquired in Bangalore and all, we worked very strictly on the IRR. So there actually, the return payback period was in the range of around ten to twelve years. But in smaller equation, normally, is on a need basis and it is based on the requirements. So there actually... There is some, you know, variance will be there, but in spite of that, considering the requirement of those assets, actually, we acquire those assets.

25:14 Sir, so how do we think about the overall ROCE of our company? Because these are lower ROCE certificate if there is a ten to twelve year payback period. No. Considering our high margin business, definitely the ROCE will be much better. If you see in the last year, we did almost around 25%. Now considering the buyback and reduction in the capital this year, we are expecting our ROCE will be at least around 30% plus. Got it. So that was from my end. Thank you so much and all the best. Yes. Thank you. Thank you. The next question is from the line of Gurupa Shankar from Aventis.

26:00 Just one question on the fleet side, sir. So as I can see that the net vision of fleet has... Or rather, you you scrapped more vehicles or sold more vehicles, and despite the underlying tonnage going up. Right? So so just wanted to get a sense around when you start procuring fleet, given that given a favorable outlook on the tonnage growth as well. And second part is that you've also seen that most of the vehicles which have been scrapped or which are reduced is also of the higher tonnage. So just wanted to get a sense around your fleet procurement strategy, if you would stick to your 15 to 20 or if the density is improving, would you prefer to go higher up with respect to your sourcing around 25 to 30 tons?

26:56 Yeah. Basically, we are looking for further expansion in the fleet, basically on a higher capacity vehicles going forward. And the numbers will be less, but overall capacity increase will be more or less equivalent to our tonnage growth. And predominantly, as a company policy, we wish to prefer to use our own vehicle, our own capacity in the tonnage growth as well to maintain a good higher operating margins compared to offshore vehicles. Understood. So is it fair to assume that you know, the scrappage of older trucks, which we were doing it for last year and a half or so, to large degrees, is more or less the end of the term.

27:42 From here on, you would see that the gross addition would be much higher than the Definitely. Right. Okay. Okay. Understood, sir. And and second question was primarily on the profitability side. So so we typically see the employee hikes coming through the third quarter. In the past, we have seen that. Any hikes or any cost elements which I missed out? Do you see any inflationary trend over there over the next six months or so, sir? Yeah. We are examining, you know, again, to consider the increment process. But shortly, we'll inform about it. As of today, there is no specific timeline as as such, but definitely we are working around it.

28:34 Right. So do do... As a broader sense, just do you feel confident now that incremental cost escalations, be it your toll cost increase or nonfuel cost increase, can be passed on to customers and this price hikes, what you have been taking quite consistently over the last two years or so, would be a sustained trend over the medium term, that confidence is still there in the management? Definitely. See now the EBITDA level reached almost around 23% plus. So considering all increase in total expenses, other overhead costs, whatever it is, that impact will be not more than 11.5%. So considering given such increases, our EBITDA level definitely will be in the range of around 21%, 22%.

29:23 Understood. Understood. That's all from my side, sir. Thank you. Thanks. Thank you. The next question is from the line of Nitin Jain from Fair Value Equity Advisory. Please go ahead. Yes. Thank you for the opportunity, and congratulations on an excellent quarter. My question is My question is regarding fuel prices. As we know that everything is quite volatile now. And for the last two days, we have seen a meaningful correction in fuel prices. So is there a possibility that if this situation persists, maybe in the next month or two months, we might have to take a correction in our in the fuel prices that where we have taken a hike in the last two, three quarters.

30:19 Is there a possibility that we'll have to take a reduction? And what kind of impact do we see that having on our growth as well as margin? That's all from me. Thank you. Yes. Basically, see, if any fuel price changes, fuel price in India is completely regulated by the government. If any reduction on the fuel price, that too in a substantial number, at least around 5% more than 5% or so, then definitely we have to rethink on the freight rates. If that is a scenario, then definitely we can pass it on that benefit to the customers considering our optimum level of EBITDA percentages, EBITDA margins as of today. So in that case, would we still be able to maintain our market? Definitely. See, in that case, actually, we will have a further savings mode, means we can make some money out of it even though reduction is there. But ultimately, we will take a call and pass it on to the customer considering our optimum EBITDA margins as of today. We don't want to wish further make margin out of that.

31:23 Right, right, right. And just one follow-up to that. So in that case, will the bulk purchases be... Become more efficient? Definitely. See, the bulk purchase as of today, what is happening again is directly related to the crude oil price. Now let's see. The fuel what we're getting from the, you know, if it is a 100 rupee as of today, 9,800 rupees. But in bulk, it is in the range of around $121.25 rupees. So considering this rate as of today, we are unable to buy the bulk purchase. If tomorrow assume that the scenario changes, definitely that option will be always open with us. And whatever savings we will do out of the bulk purchase, that is again will benefit to improving the margins and no need to pass on that benefit to the customers.

32:14 Right. And just one last one from my side. If we take correction in the fuel prices, would we see a temporary impact on the revenue growth then? Yes. Obviously, are multiplicated now for volume and relation. If any small correction in the relation, that impact on the revenue. Okay. Okay. Okay. That's very helpful. Thank you, and all the best. Yes. Thanks. Thank you. The next question is from the line of, an individual investor. Please go ahead. Hello. Am I audible? Yes, sir. Please. Yes, sir. Yeah.

33:00 So congratulations on a great quarter. I just want to check with the management that have we raised the CapEx guidance any further after a good set, or we would continue with the CapEx earlier projected? Yeah. We wish to continue with the CapEx, what we projected. Thanks. That's all from my side. Yep. The next question is from the line of Alok Deora from Motilal Oswal. Yes. Hello. Just wanted to understand how the margin project if we are going to do the similar volume growth in two h, and if the cost structure remains largely the same, I can only Hello? Can you hear?

33:59 Yeah, please. Yeah. I was just trying to understand how the margins could shape up because if the if the volume growth trajectory remains similar to what we have done in one h. And if the cost structure is would be similar or other can just improve marginally, so don't you think the margins could sustain at these current levels? And any reason why it could actually come down from what we delivered in quarter three... Quarter two? Sorry. No. Definitely, it is sustainable, but because of some small increase in other costs. Say, for example, the toll charge, some loading and loading cost or any, you know, change in the rates of these things, definitely, there is a small correction in the margin. But as of now considering these volumes and the current cost structure, whatever it is there, the 23 plus margin is sustainable.

34:49 But any increase in overhead cost or something, to that extent, actually, there will be some small correction. Got it. And this revenue growth of 20%, which we are seeing, which is combination of 9% or realization and 1011% volume. So this will continue through the fourth quarter, I mean, terms of the relation improvement at least. And after that, we'll see mainly the volume growth driving the revenue growth. I mean, there will be I mean, unless we take any further price change, the revenue growth will be more normalized at around eight to 10% kind of a number. Is that understanding correct? Yeah. In that sense, actually, we can expect at least around 10 to 12% growth in the revenue.

35:39 Assume that there will not be no price relation change or something. Basically, one thing what will happen, see, we are expecting the the tonnage growth in the range of around nine to 10% h one. And whatever correction in the relation from q one to q one to q two now, again, that will also lead to some one or 2% increase in the revenue. Okay. Okay. Yep. So so So overall Yeah. Assume that if there is no change in the realization from now onward. For the next year, at least the guidance will be... The revenue will increase at least around 10 to 12%. Got it. And the the... With 10 to 12%, the margins will kind of be at around 21% also. 21, 22%.

36:25 Definitely. Okay. Okay. Got it. Sir, just a last question. So, you know, we have been delivering this as margins, which are not seen anywhere in the industry listed or even unlisted side. So how are we sustaining that? I mean, it's since been many quarters since we are doing almost 19, 20%, and and now we have moved to a new trajectory of 23%. So... No. And now, you know, even for this year and even next year, we are maintaining a 21, 22% kind of a range. So how are we kind of doing this? And if you could just spend a minute on this, what is actually making and how much is... How... What is what is making this possible, how much of this is due to our internal, you know, cost saving initiatives or strategies?

37:19 And how much of this would be more of a market driven where things can also change in future? Yeah. See, one is... See, our service level is excellent as compared to other operators in India. Just I want to give one example. See, during the month of this October, it was a very peak season of festival. The most of the textile goods which are booking from Ahmedabad to Surat, many of the competitor or many of the operators, they were unable to book the consignment because of nonavailability of the vehicles. In our case, what happened, we have never stopped the one single minute that the booking has been stopped in these locations. So because of own infrastructure facility, because of the, you know, the network what we're having today, because of the customer base of 10 lakh plus customer without depending on any industry specific.

38:10 These are all key differentiations between other operators in India. And because of this whatever demand actually we met, we we are in a position to give the service. Our growth in the month of October is around 20% plus compared to year on year. It is a 20% growth in in October. Right. So these are the, you know, key differentiation as compared to other operators versus where... And when it goes to the freight rate to the customers, we are not charging any premium or something much different from the other competitor. But at a service level, we are much efficient as compared to others. See, our claim ratio is hardly in decimal as compared to the other operator if you compare it is at least in the range of around 10 to 12% claim ratio.

38:59 But in our case, it's hardly any decimals. Got it. So you're thinking So that's the reason we are in a position to retain the customers. And moreover, we'll our customers because of a short period, because of some price rationalization, they left us. Again, they came back to us and started the business. And currently now our strategy, how we are changing this. See, for example, if any corporate customer, if we are providing service in Karnataka or South States, then why can't in North, why can't in U. We are identifying such customers and we are approaching at the top level to get all India contracts as well. Got it. So just last question. Also, if with this recent correction in global crude prices, suppose the diesel prices were to get reduced by, say, five, and in that scenario, you also take a price cut of approximately where realization comes down by, say, 5%, then how does the margin...

40:02 How would the margin shape up? Because one of the key reasons for margin also has been the realization improvement, which you... Because of the price that you took in one q. Now if you... If it is reversed partially, then how the revenues and the margin shape up? The margin will be again at the optimum level. See, margin will will support further, you know, little bit we can add to the margin. But always how the math will work, For every 2 rupees change in the freight fuel rate, there is a 1% change in the freight rates. Okay. Say, for example, tomorrow, if there is a 5% reduction in the fuel rate, then there is a possibility that around two and a half percent relation where it is. Okay. Okay.

40:47 Yeah. And moreover, during that time, again, we'll have some time gap and all and select some routes wherever where we do not have a much of a competition. We can retain our existing price rather than passing that benefit to the customers. And wherever we are having a competition, actually, there there actually we can pass on that benefit to the customer. Like that, you know, because again, some good exercise we have to do and we have to effectively pass it on to the customers. Got it. But effectively, if a 5 rupee is reduced in the fuel rate, we can expect around two, two and a half percent reduction in the relation. And in that scenario, the margins will be maintained. The margins will not change. Got it. Got it. That's all from my side, sir. Thank you. Yeah.

41:35 Thank you. That was the last question for today. I now hand the conference over to the management for closing comments. Yes. Thank you all participants. Basically, we are very confident on the tonnage growth. Just I mentioned in the last question, see our tonnage growth in the month of October, reached almost 20% because of some good festival demand. And we also are calling from the market that some of the operators are unable to provide service whenever there's a very high demand in specific markets because they are completely depending on the outside vehicle or higher vehicles. Since we are having our own infrastructure, the own vehicle facility, wherever there is a peak demand in some of the sectors, definitely we can take that advantage and that will further add to our volume growth.

42:25 And considering the various cost structure, the change in fuel or so many things, always we will monitor the expenditure very keenly on a monthly basis or regular basis, and we will try to maintain the EBITDA margins at least around 21% -plus going forward. With these closing remarks, I would like to conclude this call. Thank you. Thank you. On behalf of Motilalu Swal Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.