TVS Supply Chain Solutions Ltd (NSE: TVSSCS) Q3 2026 Earnings Call dated Feb. 11, 2026
Corporate Participants:
Prabhu Hariharan — Head, Investor Relations
Ravi Viswanathan — Managing Director
R. Vaidhyanathan — Global Chief Financial Officer
Analysts:
Sucrit Patil — Analyst
Saumil Shah — Analyst
Disha Giria. — Analyst
Vikram Suryavanshi — Analyst
Bharat Sheth — Analyst
Rajit Aggarwal — Analyst
Presentation:
operator
Ladies and gentlemen, we welcome you all to the Q3FY26 earnings conference call of TVL Supply Chain Solutions Limited. This conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements do not guarantee the future performance of the company and may involve risk and uncertainties that are difficult to predict. 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.
Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded now. I hand over the conference to Mr. Prabhu Hariharan, Head Investor Relations from TVS Supply Chain Solutions Ltd. Thank you. And over to you sir.
Prabhu Hariharan — Head, Investor Relations
Thank you. Moderator. Good morning and welcome all to TVS Supply Chain Solutions earnings call for Q3FY26. I hope everyone had a chance to look at the financial results which were posted on the company’s website and also on the stock exchange. We have with us today Mr. Ravi Viswanathan, our managing director and Mr. R. Vaidyanathan, our global CFO. We commence the call now with opening remarks from our management along with the business performance update. It will be followed by an open forum for Q and A. Before we begin a customary remark. I would like to point out that some of the statements made during this call may be forward looking in nature and must be reviewed in conjunction with the risk that the company faces.
A disclaimer to this effect has been included in the investor presentation. Now I request and hand it over to Ravi to make the opening remarks. Over to you Ravi.
Ravi Viswanathan — Managing Director
Thank you Prabhu. Good morning to all of you. First, let me welcome all of you once again to our earnings call to discuss the performance for the third quarter ended December 31st, 2025. I will share with you the highlights of our performance and my colleague yz, our Global CFO will take you through the analysis of our numbers. We look forward to interacting with you as part of the Q and A session. For the benefit of those participants who might be joining the call the first time. Please note that TBS Supply Chain Solutions is a Tech led and Asset Light supply chain solutions provider.
We have two main business segments namely the Integrated Supply chain solutions or ISCs and the global forwarding solutions or GFS. We operate across four continents. Asia, Europe, North America, and Oceania where we offer bespoke and tailor made Solutions in the 3PL space and also offer 4PL services in select markets. For more details about the company, you may please refer to our website@www.TBSSCS.com. let me start with the key highlights for Q3 Q3 was a strong quarter for us marked by double digit growth. Our Consolidated revenue grew 11.1% year on year and adjusted EBITDA saw a step change as IT grew by 31.2%.
The adjusted EBITDA margins on year on year basis expanded by 110 basis points to 7.3% and by 60 basis points sequentially. As a result of this operating performance, the profit before tax grew from a loss of rupees 15 crore in Q3 last year to a profit of rupees 25 crores in Q3 FY26 with margins improving from negative 0.6% to positive plus 0.9% on a nine month basis our revenue grew by 6.3% and adjusted EBITDA grew by 7.2%. From a segment perspective, the quarter was led by strong growth in India supported by new business wins and improved profitability.
This points to a healthy demand environment and strong execution of the ground in both segments ISCS and GFS in India. Our India geography grew by 11.8% on a year on year basis and by 5.5% sequentially. In ISCs Europe we saw a clear profitability inflection. We delivered a strong margin expansion supported by disciplined cost actions and better business mix. Prova’s new business wins further supported our outlook for this region. You may recall from the past that Q3 is normally a soft quarter given the holiday season in Europe. In North America we launched one of our large engagements which went live in Q3 and we expect the volumes to start ramping up in the coming quarters.
You may recall last earnings call I had mentioned about inaugurating a new build to suit facility in the beginning of Q3 to serve key clients on manufacturing support services. And this is the facility which has gone live in Q3. Overall our ISCS segment revenue for Q3FY26 grew by 8.3% year on year and 9 month FY26 grew by 6.9% with adjusted EBITDA growing at 23.4% year on year in Q3FY26 and at 11.3% on 9 months FY26 basis. The margins improved from 8.1% in Q3FY25 to 9.2% in Q3FY26 and on a 9 month basis we saw that improve from 8.4 to 8.7%.
With respect to GFS, the revenue grew by 19.3% year on year and 10% sequentially and this came on the back of some very sharp rebound in India Volumes. Global freight however remain under pressure, but our cost initiatives and volume rebound help expand our adjusted ebitda margins from 1.9% last year and 2.2% in Q2FY26 to 2.3% in Q3FY26. Let me now briefly talk about our other key initiatives. The Project one program in the UK and Europe continues to progress well. As we outlined earlier, we are seeing the benefits of this program reflect in the margin recovery in IACS 0 and the overall improvement in profitability.
YD, our CFO will elaborate more on this. Alongside Project 1 we continue to execute on a broader cost takeout including rightsizing, right shoring and tighter overhead control across regions. We also announced the acquisition of Swami and sans3peer in India. This is a strategically important acquisition that strengthens our capabilities in the FMCG and consumption led supply chain space in India and deepens our presence in key consumption markets. The transaction is expected to be ebitda, PBT and ROCE accretive and is fully funded through internal accruals. Overall, Q3 demonstrates that the building blocks we have been putting in place over the last few quarters are now translating into stronger growth and profitability.
India is growing with better margins, Europe continues to strengthen GFS shows volume led growth and our cost and transformation programs are yielding tangible results. With this I hand over to Vaidi, our global CFO and he will walk you through the financial highlights for the company in detail.
R. Vaidhyanathan — Global Chief Financial Officer
Thank you Ravi Good morning to all. Thank you for joining us today. Q3FY26 was a strong financial quarter for TVA Supply Chain Solutions characterized by healthy top line growth, significant margin expansion in both adjusted EBITDA and PBT. Our consolidated revenue for the quarter is 2715.8 crores versus 2444.6 crores in Q3FY25 and 2662.6 crores in Q2FY26 reflecting a year on year growth of 11.1% and a sequential growth of 2%. From a segment perspective, ISCA segment delivered a strong year on year growth of 8.3% with revenue at 1979.5 crores versus 1827.4 crores in Q3 of last year and a flat sequential growth due to expected lower seasonal volumes in Europe and North America.
Within the ISCS segment, ISCS India has RAVI highlighted at a strong Q3. It grew by 4.2% sequentially supported with strong revenue from new business wins and improved profitability. This is also translating into a margin improvement in the India ISCS business. IACS Europe delivered a strong profitability as a result of our project initiatives along with other cost control measures and better product mix. Moving on to the GFS segment, Our revenue for Q3FY26 is 736.3 crores compared to 669.6 crores in Q2FY26 and 617.2 crores in Q3FY25 marking a 10% sequential growth and 19.3% year on year growth largely led by growth in ocean freight volumes.
In India, freight rates continue to be under pressure. As Ravi mentioned earlier, GSS India revenue grew from Q3FY25 of 147.9 crores and Q2 of 201.1 crores to 219.5 crores in Q3FY26 with 48.2% growth on year on year basis and 8.8% on quarter on quarter basis largely led by the volume growth in India. With respect to the nine month FY26, our consolidated revenue stood at 7970.7 crores with INR 7496.6 crores in the previous year and a growth rate of 6.3%. The growth was driven by our ISCS segment with revenues of 5,955.4 crores reflecting a 6.9% improvement compared to Rs 5,571.5 crores in the previous year.
The GFS segment reported A revenue of 2015.3 crores grew by 4.7% from 1925.4 crores in the previous year largely led by volumes in India. However, rates continue to remain under stress and the macroeconomic uncertainties under tariff volatility continue to impact this segment. On the strategic cost takeout initiatives, the Project 1 in the UK and Europe is tracking hazard plan as previously communicated we expect an annualized savings of around 110 to 120 crores and in year savings of about 50 to 60 crores from this program. These benefits are already visible in the overall ISCS margin improvement in Q3 and year to date.
We continue to drive the operating leverage through structural cost takeout initiatives across the geographies including through rightsizing and right shoring. Now moving to the cost structure, our movement and fright cloud clearing, forwarding and handling expenses on a quarterly basis and 9 month basis. In line with the revenue growth in the GFS segment offset by decline in ISCS segment due to the change in the business mix, material related costs increased from 391.4 crores in Q3FY25 and 444.3 crores in Q2FY26 to 475 crores in Q3FY26 on a year. On year and sequential basis. On a YTD basis, material costs increased from 1314.5 crores to 1408.7 crores.
Other expense increased from INR 251.6 crores in Q3FY25 to 269.8 crores in Q3FY26 and on a sequential basis it declined from 298.1 crores to 269.8 crores. On a YTD basis it increased from 679.6 crores to 824 crores. The movement in the material cost and other expenses are in line with the change of business mix in the ISCS segment. Subcontract expenses increased from 356.2 crores in Q3FY25 and from 369.4 crores in Q2FY26 to 389.5 crores in Q3FY26. This is in line with the revenue growth of new customers and change in the business mix. Employee cost marginally increased from 519.3 crores in Q3FY25 to 598.6 crores in Q3FY26 mainly due to the cost inflation and in line with the revenue growth partially offset by the cost takeout initiatives.
On a sequential basis it declined from 644.4 crores in Q2FY26 to 598.6 crores in Q3FY26 mainly due to an exit of large project in Europe as earlier communicated and also the benefits of cost takeout initiatives and savings from other In Project 1 on a YTD basis, the employee cost rose from 1,743.3 crores in previous year to 1861.9 crores in YTD FY26. This increase was primarily driven by impact of annual inflation also in line with the growth in the revenue depreciation of right of use assets and interest on lease. Liabilities under as 116 increased year on year with depreciation increasing from 99.4 crores to 105.9 crores and the interest cost on 116 increasing from 21.6 crores to 23.2 crores.
This increase is due to the launch of a new warehouse and go live of key project in North America in Q3 FY26 has highlighted Veravi in terms of profitability. Our adjusted EBITDA grew by 31.2% year on year with margins expanding by 110 basis points to 7.3%. This growth was driven by a combination of strong performance by India and Europe and the benefits of the cost takeout programs including the project one sequentially as well. Adjusted EBITDA grew 11.7% and margin expanded by 60 basis points demonstrating the consistency of the underlying earnings trajectory within the segments. ISC has delivered strong performance in Q3FY26 with adjusted EBITDA of 182.9 crores at 9.2% margin from 148.2 crores at 8.1% in Q3FY25 and 173.8 crores at 8.7% in Q2FY26.
The significant margin improvement in ISCS is mainly on account of recovery of our ISCS Europe business with ISCS India continuing to deliver consistent growth in comp. GSS delivered sequentially improved performance in Q3FY26 adjusted EBITDA of 17.3 crores at 2.3% margin up from 14.6 crores at 2.2% margin in Q2FY26 and from 11.5 crores at 1.9% in Q3FY25. The segment continues to face macroeconomic headwinds reflected in the subdued rates. On a sequential basis both the businesses showed improvement ISCS with continued growth and GFS improving on the back of volume growth in India. At the bottom line we delivered adjusted PBT of 24 crores compared to a loss of 16 crores in Q3 last year our PBT margin expanded significantly from negative 0.7% to positive 0.9% on a nine month basis.
The adjusted PPT has increased more than four times which is an important indicator of the continuous uptick in our earnings. Our reported PBT for the quarter stands at 16 crores after exceptional cost of 9.1 crores lifting to the effect of the new labor codes. To summarize, in Q3 we delivered double digit top line growth, strong adjusted EBITDA margin expansion and continued uptick in the profitability. With regard to our recent announcement of entering into definitive agreement for the acquisition of Swami Entrance, I would like to point out that the acquisition is fully funded through internal accruals and is expected to be ebitda, CBT and ROC accruals.
This will strengthen our presence in the attractive FMCG and consumption LED supply chain space in India. With this I will hand it back to Ravi.
Ravi Viswanathan — Managing Director
Thank you Vaidi for the detailed analysis. Let me now take a few minutes to walk you through the business update and key customer wins and the demand outlook across our markets we continued to build solid traction in new business development during the quarter in Q3 we have generated revenue of over 319 crores from new business wins representing 13% of our Q3 FY25 revenue and for the first nine months of the year our revenue from new business Wins stands at rupees 683 crores which represents 9.1% of our nine month FY25 revenue. With a healthy and diversified hurdle across India, Europe and North America, our overall pipeline remains very Strong at about 6,300 crore rupees providing clear revenue visibility for the coming quarters.
Across both ISCS and GFS we saw wins from several notable contracts Global Renewable Energy Leader Global automotive and industrial majors, technology service providers and consumer and mobility clients reflecting the breadth of trust we hold with global customers. A sample of the mandates that we have secured on the ISCS side A global Renewable energy leader in India a world class commercial vehicle pioneer in India, an integrated Clean energy specialist in India a world class building mobility systems leader in India a top energy storage manufacturer in India a leading European passenger vehicle manufacturer in India a global heavy equipment manufacturing pioneer in India, a Europe based global IT infrastructure services provider, one of the top global technology services firms in Europe, an urban rapid transit operator in Europe and international enterprise technology provider in Europe.
These wins reflect the strength of our tech enabled execution, our domain depth in industrial and mobility verticals and the trust our customers place in tvs. Ses, particularly India continues to deliver exceptionally well on business development with multiple large strategic wins across automotive, renewables and industrials. These wins will support revenue scale up in the quarters ahead, especially in the ISCS business where our positioning continues to strengthen across production, aftermarket and distribution LED supply chains on the GFS side, we added several marquee customers, including a global automotive technology pioneer, a global solar solution expert, a world class engineering and manufacturing solutions leader, a leading material handling technology platform, and one of Europe’s top renewable energy specialists.
Let me summarize by saying that Q3 has been another strong quarter of customer conversions with high quality wins across geographies. The strength of our IHCs proportion and the resilience of our diversified pipeline positions us well for the quarters ahead. We’ll now open the forum for Q and A.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you will press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. The first question is from the line of Sukrit Patil from ISAT Fintrep. Please go ahead on to the team.
Sucrit Patil
I have two questions. My first question to Mr. Ravi is, as CVS supply chains build on this profitability turnaround, what will be the key priorities guiding your growth strategy over the next few quarters? How do you see the balance between strengthening India operations and scaling global businesses evolving? Thank you.
Ravi Viswanathan
Yeah, thank you, Sukrit. We have said that in the past that for us, all the geographies, all the regions provide us with the opportunity to grow. India specifically, given its strong economic climate, presents a wonderful opportunity. And this quarter has been a quarter where we’ve been able to capitalize on a lot of these opportunities and converted those into meaningful revenues and margins. We continue to stay very focused on our India business and we are very confident that we’ll continue on this trajectory of growth. Last quarter, if you remember, I had mentioned that we will get to about 4% sequential growth and we did that in the ISCS segment itself and overall 5.5% in the India market.
We are confident that this trajectory will continue given the strength of the business wins that we have on what we remain focused. Of course the focus is staying very close to our customers and ensuring that we continue to execute with the same level of discipline that we have shown over the last few quarters. And that’s really what has been the key. What is also exciting for us is the MA that we have announced with Swami and Sons which will further strengthen our expertise into the FMCG segment which as all of us know, India is a very large consumption led economy and that provides TBS SES with A great opportunity to further expand the pie in India.
So India is clearly right in the middle of our strategy. And the opportunity to grow India at a differential growth rate compared to the rest of the world simply exists because of the economic activity that we see in India. Sukhrit, I hope that it answers your question.
Sucrit Patil
Thank you very much. My second question is to Mr. Vaidyanathan, again along the similar lines. What financial signals will shape the company’s approach to cost discipline, cash flow management and capital allocation? How do you see these signals influencing long term investment choices and margin protection? Just want to understand your plan of action and point of view on this. Thank you.
R. Vaidhyanathan
Sure. Thanks. Sukhri, I think you know, as we previously communicated, our capital allocation decisions are primarily towards our ISCS business, which is, which is in a strong growth strategy. You know, I think one of the key things for us is to know the revival of the Europe business from where it was say six, four or five quarters back, the actions that we have taken there and also the investment we are making in the India business. As Ravi mentioned, the M and A that we are doing, the amount of capital that we are allocating for the India business, all these are some of the things which we have taken in the last few quarters and we will continue to see that in the next few quarters as well as we strengthen the ISCS segment.
Sucrit Patil
Thank you and best wishes.
R. Vaidhyanathan
Thank you.
operator
Thank you. A reminder to all participants, anyone who wishes to ask a question may press star N1 on their touchstone telephone. The next question is from the line of Somil Shah from Paris Investments. Please go ahead.
Saumil Shah
Hi, good morning and Congress to the Dean for good numbers. So I wanted to know, I mean, since there are a lot of trade deals happening with EU and now again with us, so what’s your views on this, how this is going to benefit our company and are we seeing some benefits already coming through in this quarter?
Ravi Viswanathan
That’s a very relevant question which is occupying our time and mind space too. But we’ll wait. Somal, as you know, we are some time away before we get into the implemented stages of many of these FTAs, but it provides us an exciting opportunity. Specifically, we have said in the past, over the last three, four quarters, there has been a big, I would say, challenge in the global forwarding business because of the global macro. While our IACS segment has grown handsomely, the GSS segment is really based on volumes and the rates continue to be under pressure.
We expect with the macro hopefully turning in the right direction, the global freight business Both air and ocean will significantly pick up with rates stabilizing. And that will mean that opportunity to be a partner to our customers from India on the forwarding business both to Europe and to the US will expand. I will wait and watch. I think it’s too early for us to say whether that’s going to have an impact. Definitely we’re not factoring that in our Q4, but we are very bullish about what it could present for us in the next fiscal year.
With the US trade deal hopefully getting commenced by in faces from March and the European fta, I think the opportunity for us to see the global forwarding business stabilize in the next fiscal is something which we are looking forward to. But I would still say for the GFS segment we continue to be cautiously optimistic while we remain fairly strongly motivated in the ISCS segment, both in India and outside of India.
Saumil Shah
Okay. But not only on the gfs but even on the ISCS side, I mean once the trade deal happens we should see some benefits because there would be, I mean lot of shift from Europe to India and lot of transfer of services. So are they going to benefit in that also?
Ravi Viswanathan
There will definitely be an upside. Like I said, when the ISCS segment typically sommel, as we have said before, the pipeline takes anywhere between six to 18 months to conclude based on the kind of solution that we provide. GFS is far more transient. So we could submit a proposal today and close the deal three weeks from now. So the immediate impact can be seen in the GFS side. But you’re absolutely right, there will be an uptick in the IACS business too. Overall it augurs very well for the supply chain business.
Saumil Shah
Okay. Okay. And if you see our first nine months, I mean we have done a growth of 6% of IOI. So going forward for next quarter also, how shall we look at our growth? Because I think we are excited for a double digit growth. So to grow at double digit, I think the Q4 has to be bumper one. So just wanted your view on that.
Ravi Viswanathan
We continue to push very hard for double digit growth. You know, to my entire leadership team, we push the messaging that we need to be focused on the double digit. However, given the product mix that we have, which has got a fair amount of GF’s, we have to wait for the GFS business also to start firing before we can say that we are firing in all cylinders. In spite of all of that, I will call out GFS for a stellar quarter three simply on the back of some incredible volumes. We have seen pricing pressure in GFS prices have constantly come down in the last nine months and the volumes have been phenomenal and we’ve been able to expand absolute EBITDA and that’s really something which we’ll continue to be focused on.
But again the freight business is very simple math. Right? So volume times price, we have to push volume multiple times to manage the decline in price. And that decline in price is really factor of the global macro. So for us to get double digit growth we got to get both the product sets or both the segments to be firing extremely well in terms of revenue growth. We have seen early signs in gfs but I won’t call it we need to at least have three points before we can say it’s a trend. But we’ll wait for that.
But when I look forward, given all the headwinds, at least subsiding, we think FY27 would provide us with a clear opportunity for us to double down on GFS while we continue to build on the ihcs momentum. So I think we are very well placed as an organization. We continue to wait for some tailwinds on the GFSS side and that should be in our view possible with all the FDA’s that could come in play over the next few couple of quarters at least.
Saumil Shah
Okay, and so what is the reason? I mean our employee cost last quarter was around 644 crore and currently it is 598. So I mean are we reducing our employees or what is the reason for such a drop in employee works?
R. Vaidhyanathan
As explained, there is no. There was one large project in Europe where you know, the customer had decided to so which we had exited in Q2. That way you will see a reduction in the employee cost plus also the other, you know, the Project 1 savings and other things being reflected in the reduction in the employee cost.
Saumil Shah
Okay, okay, that’s it from my side. Thank you and all the best.
R. Vaidhyanathan
Sure. Thank you so much.
Ravi Viswanathan
Thank you sir.
operator
Thank you. The next question is from the line of Disha Giria from Ashika Group. Please go ahead.
Disha Giria.
Good morning. My first question is regarding the GFS business. Can you help with a volume uptake or a volume growth number for the GFS business for this particular quarter on a year, on year basis.
R. Vaidhyanathan
We don’t give a quarter wise volume. But I can tell you in terms of percentage, you know how we have grown in terms of ocean freight rate compared to the last Q3 we have grown by about 29.6%. And in terms of air freight I think we have grown by about 18.7%.
Disha Giria.
On a consolidated basis. Can you just help me with the same?
R. Vaidhyanathan
Yeah. Consolidated basis. Correct. This is what Raghu was also mentioning about the significant uptick in the volumes in the current quarter.
Disha Giria.
Yes. All right. My second question is regarding our FY27 performance. The last year guided to be able to reach a 4% PBT margin. So are we still on track for the same? Are we? And if you could guide some like a revenue growth number as well.
Ravi Viswanathan
Nisha. We continue to remain focused on the 4%. It’s an aspirational number that we will keep pushing at. Like I said to the previous question from I think Somil, we hope to get some tailwinds from the GFS business and that should help us from that perspective. Are we on track? I think we have got all the building blocks in place. I think the foundations are well established and we continue to go on a positive trajectory. We’ll hopefully get a better view of things as as we exit Q4 and get into the new fiscal. But we remain steadfastly focused on the 4% PBT.
It is something which the entire leadership team is aligned towards. And as we start the planning process in the next fiscal year as we hope to conclude that in the next few weeks, that’s the singular focus of all of the regions, the segments at this point, I guess that’s the place we are in and we’ll be happy to share that as we go forward.
Disha Giria.
All right. My last question is regarding the recent acquisition of Swami and Sons. So just wanted to understand what was our position in the Indian FMCG supply chain network before this acquisition and what was the need for this acquisition and what incremental margin or incremental revenue growth are you seeing from this acquisition in the next financial year?
Ravi Viswanathan
Okay. From a strategic perspective, FMCG was important because India is a very strong consumption led economy. We had a strong play in the FMC B segment. But FMCG is an area where I would say we have relatively we needed to strengthen our base and that’s the reason why we looked at a strategic opportunity in Swami and Sons. So for us that’s a very strategic place. FMCG in India in the consumption led economy with the economy numbers being what it is, it is a great opportunity for us to participate and it is not a white space that sits well in our overall strategy map and that drove our decision on the Swami and Sons acquisition on the specific financials highlight by the walk you through
R. Vaidhyanathan
Swami and.
Sandhill on as is basis their revenue is about 200 crores and their margins are slightly higher than our current business. So this transaction would be, you know, from a margin both on EBITDA and PBT basis. In terms of what is the outlook for FY2000? The transaction is still not closed. I think we are expecting to close this in Q4 and as we take control over the company, I think we’ll be able to come to a better conclusion. What are the opportunities and how best we can expand this business after we take control over them.
Disha Giria.
All right, thank you. That’s it from my end.
Ravi Viswanathan
Thank you Disha.
operator
Thank you. A reminder to all participants. Anyone who wishes to ask a question may press star N1 on their touchstone telephone. The next question is from the line of Vikram Suryamanshi from Philip Capital. Please go ahead.
Vikram Suryavanshi
Hi, good morning sir. In terms of if you look at profitability impact, we have good amount of new business win and also we have some customer churn. So is there any impact on margin also that new businesses are at better margin and customers on mix is also impacting the profitability going forward or that was not much in terms of margin improvement.
R. Vaidhyanathan
Could you please repeat the question?
Vikram Suryavanshi
I hope I’m audible now.
R. Vaidhyanathan
Yeah, a little bit. You could repeat the question.
Vikram Suryavanshi
Yeah, sure. Yeah. So I was just trying to understand the impact on margin because of the new business as well as the customer charge. Have we seen that new businesses are at better margin compared to what customer churn we had seen in the quarter?
R. Vaidhyanathan
No, I would say that from a margin point of view we will not dilute the margin. I think as of the focus is on taking out the cost and keeping the margin profile as it is. Right. So all the new business wins. We will continue to hold on to our margins that we are currently generating. The customer churn that you see here is I was explaining to the previous participants where we had to. Where the customer had to insource their activity and that is the customer churn that you would see there. But from a margin point of view, the new business continued to come at a healthy margin and we will continue to make get that.
Vikram Suryavanshi
Okay. But just as a curiosity, customer insourcing probably. I think our whole model is that really giving customers to better service at a better price. So what was the particular case where customers find value in. In sourcing? If you can just highlight as a curiosity.
Ravi Viswanathan
Sure, sure. It’s a good question. You know, it’s a relevant question. This particular customer in Europe decided to insource because of what I would call challenges internally. It was a very large Outsourcing engagement. And I think the organization wasn’t quite ready from a change management perspective to roll out that. And within a year of outsourcing there was a change in their management. In the new management case came in and decided that in sourcing of a crucial activity like supply chain needed to happen. So that’s the reason it is not normal that you would find large engagements getting reversed.
But it’s not the first time that’s happened. So in an organization’s journey we need to be very close to the customers, be very aligned to what the customer’s needs are. We continue to work with the same customer on. On other engagements, but we respect the sentiments of the customer. And that’s really what drove the customer towards the change of management. Their ability to manage the change which decided to the program getting brought back in house. So we had to move out a lot of the people. That’s one of the reasons why these folks about employee cost coming down.
A lot of the employees were also transferred back to the. To the customer. So very. I mean like I said, relationship with the customer drives the SES model. And that’s key.
Vikram Suryavanshi
Understood. And within ISCs if you can give comment on how was the performance of integrated final mile in terms of trajectory.
Ravi Viswanathan
I’ll have answer the question. But again we have, as you know we have. We have combined IF one entity. So we report IFC as one entity. But if you want to throw any color to
R. Vaidhyanathan
sure. If you know part of the ISCs in the current year after the merger both through the. One is the initiatives that we have taken in the IFM business in terms of price corrections and other site consolidation. Plus also the benefit of the project which is the merged business in the Europe. So both are stacking very well as per plan. And I think, I would say from an IFM turnaround point of view, I think all the actions have been or building blocks of turnaround that business has been completed and going forward the focus will be on the growth in that business.
Vikram Suryavanshi
Got it. And just one more point on Project 1 we were targeting almost like close to 120 basis point improvement from the Project 1 in terms of profitability side. So how much of that is materialized so far the efforts, what we have put and how much further scope is there and by when we can almost see that full benefit.
R. Vaidhyanathan
Yeah. In the current year 26, we expect about 50 to 60 crore savings coming out of it. And you will see the benefits in Q3 as well. The improvement in the ISCs in Q3 is also one of the key factor is the Project 1 benefit. And as we said on a full year basis, annualized basis next year we see about 110, 120 crores of savings. So all these things are permanent. Savings will flow into the next year as well.
Vikram Suryavanshi
Understood. I think that was helpful sir. Thank you very much.
R. Vaidhyanathan
Thanks.
operator
Thank you. The next question is from the line of Bharat Set from Quest Investments. Please go ahead.
Bharat Sheth
Hello. Am I audible?
R. Vaidhyanathan
Yes sir, you’re audible.
Bharat Sheth
Yeah. Sir, I have two question one is this when we are talking of personalizing some of the business, I mean low margin or low smacking caravan that in the pruning of such a journey, where are we still? How much do you think we will have to prune out so to consistently improve the profitability? Part one and second, I mean sorry I missed your answer on this. What are the levers that we have further? I mean to what project one you said and how is that Project one is only thing or beyond that also we are looking for improvement on sustainable basis over next two, three years.
How do we see in totality?
R. Vaidhyanathan
Okay, Bharat, probably I will answer the first question which is on the projects that we exited, I think we have done this project exit in the India region in the last 18 months or last couple of years and the focus has been on trying to reprice the low margin or loss making and exit some of the project. I think that is what we have planned. I would say the broadly I would say the correction has been done and going forward we will not see any big exit and the focus will be on growth going forward.
Right. In terms of the second question with respect to the project one I know I was explaining to Vikram as well. We have seen about 50, 60 crores of sage savings in the current year. We will see about 50, 60 crores of savings in the current financial year and the annualized savings would be about 110, 120 crores. So this is one of the key levers for us, you know, as we move into FY27 from a profitability point of view and plus also the ISE which is in a very strong growth trajectory, especially India, Europe and the North America business where we’re expecting a good revenue growth.
So all these things are going to be levers for us in the IUCL business. Gss as I mentioned, it is still going through some kind of a macroeconomic. We’ll have to wait for the overall industry to you know, revive and turn around hopefully. You know, as Ravi mentioned, we’re expecting something to happen in FY27.
Bharat Sheth
Okay, thank you. And all the best, sir.
R. Vaidhyanathan
Sure. Thanks.
operator
Thank you. A reminder to all participants. Anyone who wishes to ask a question may press star N1 on their touchstone telephone. The next question is from the line of Rajit Agarwal from Nilgiri Investment Managers. Please go ahead.
Rajit Aggarwal
Good morning gentlemen. Just a few data points to begin with. If you can share those. Can you share the number of customers as on date, as on end of 31st December, number of employees, warehouse space in million square feet. If you can.
R. Vaidhyanathan
Is part of the investor deck. If you can refer it, I think you’ll be able to figure it. We will given it for each geography would be able to look at end.
Rajit Aggarwal
Of FY25, the data which is given.
R. Vaidhyanathan
In the update on an annual basis actually.
Rajit Aggarwal
Okay, okay, fair enough. The others employees, number of customers, that also will be on annual basis.
R. Vaidhyanathan
All these data points are published on an annual basis. So if you could please wait for one more quarter, we’ll be able to publish that.
Rajit Aggarwal
All right. Can you share the gross debt as of date?
R. Vaidhyanathan
I mean as of 30 September we had about 8.
Rajit Aggarwal
Including these liabilities. Again. Okay, that, that’s
R. Vaidhyanathan
not the least liability. I’m only talking about the bank debt borrowings. That, that will be about 850, 851st at the end of September.
Rajit Aggarwal
Okay, you, you did share the order book. But would it be possible to share in terms of number of customers? What’s the outlook for whether you maintain a pipeline or for Q4 if you can share a tentative number? I mean, just want to understand. See, the reason I’m asking is after all the logistics business is more a business of volume and there’s only as much we can do on pricing and margin improvement. So if there is anything you can share in terms of number of. I mean subjective, qualitative or quantitative.
Ravi Viswanathan
So Rajit Ravi here. See the number of customers. I don’t know. We have two segments, right? There’s an ISCA segment and the global forwarding segment. The ISCA segment, typically I would say the number of customers would be in the hundreds. And the global forwarding business, the number of customers will be in the thousands. So because if you take a container or if I take a cargo, I may have one main customer and then I’ll stuff it with a whole bunch of other customers. So there’ll be a lot of transient customers in the GFS business. But typically the number of customers is something which you can take take a look at it from our End of year statement.
But to give you a broad perspective, the ISCs would be in hundreds and GFS would be in thousands.
Rajit Aggarwal
Right. And no, I actually wanted a bit more on the outlook in terms of onboarding of new customers. But I guess I’ll wait for the data points. As year end, the deck mentions the industrial, the breakup of our customers into various industries and it says consumer 13%. So that is inclusive of FMCG, right? Or is it pure FMCG and there’s nothing?
Ravi Viswanathan
It’s predominantly what I would call fmcd. With the attrition of Swami and Sons, it will give us an entry into the FMCG space.
Rajit Aggarwal
All right, so that would include E Commerce as well.
Ravi Viswanathan
We don’t do B2C business, so I want to qualify that. But yes, it will include E Commerce where we work with E commerce companies on their fulfillment side.
Rajit Aggarwal
All right. Okay, just one last question. Any outlook on any large organic capex or inorganic spend in going forward? If you have any concrete plans
R. Vaidhyanathan
on the CapEx? I think we are broadly we spend about 1 1.1% of our revenue that we continue to do that, especially for the new projects which will continue as per the previous years. In terms of inorganic, we just announced our SWAMI and since acquisition. Right. So that will be one key acquisition and we keep looking at it. If something materializes, probably we will keep all of you informed.
Rajit Aggarwal
All right, thank you sir. Thanks a lot.
Ravi Viswanathan
Thank you, Rajit.
R. Vaidhyanathan
Thank you.
operator
Thank you very much. We will take that as our last question for today. I now hand the conference over to Mr. Ravi Viswanathan, managing Director for closing comments. Over to you, sir.
Ravi Viswanathan
Thank you. It was a very interactive Q and A and hopefully we were able to provide all of you with the answers. Before we wrap up, I just want to reiterate the key takeaways from this quarter. Let me just close by saying that Q3 has been a quarter of solid performance for TV’s supply chain solutions with clear progress on growth, profitability and execution. Across our portfolio we delivered double digit revenue and adjusted EBITDA growth. Strong margin expansion at adjusted EBITDA and also at PBT level. Supported by disciplined execution and improving business mix. Our focus as a leadership team remains very clear.
Driving profitable growth. Continue the margin expansion through Project one and cost initiatives. Improving the cash generation and build services. Sustained revenue visibility through a strong diversified pipeline. With the momentum we have built so far this year and with disciplined execution across regions, I’m confident that we are moving steadily towards strengthening our financial profile and delivering on our medium term objectives. Thank you once again and for your continued trust and support.
operator
Thank you on behalf of TVS Supply Chain Solutions. That concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you.