MAHINDRA LOGISTICS LTD (NSE: MAHLOG) Q3 2025 Earnings Call dated Jan. 28, 2025
Corporate Participants:
Rampraveen Swaminathan — Managing Director and Chief Executive Officer
Analysts:
Mandar Chavan — Analyst
Krupashankar NJ — Analyst
Alok Deora — Analyst
Jainam Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Mahindra Logistics Limited Q3 and Nine Months FY ’25 Earnings Call. [Operator Instructions]
I now hand the conference over to Mr Mandar Chavan from Strategic Growth Advisors. Thank you, and over to you, sir.
Mandar Chavan — Analyst
Thank you, Ziko. Good evening, everyone. Thank you for joining us on Logistics Limited Q3 and Nine-Month FY 2025 earnings conference call. We have with us Mr Rampraveen Swaminathan, Managing Director and CEO; Mr Saurabh Taneja, CFO; and the senior management team. I hope everyone had a chance to view our financial results and investor presentation, which were recently posted on the company’s website and stock exchanges. We will begin the call with the opening remarks from management, followed by an open forum for question-and-answers. Before we begin, I would like to point out that some of the statements made during today’s call may be forward-looking. A disclaimer to that effect was included in the earnings presentation.
I would like to invite Ram to make some preliminary remarks.
Rampraveen Swaminathan — Managing Director and Chief Executive Officer
Good afternoon, everyone and thank you all for joining us today. Thank you,. Good evening once again. I trust you all had a chance to view our presentation on the financial results, which are available in the stock exchange and our company’s website. I think just as part of opening comments, I’ll just give you a quick update on how the sector is performing in terms of external environment, our end-markets, our own operations highlights, things to have gone well, things areas of focus. We’ll include an update on the Express business specifically and some corporate actions that are going around the company. Of course, I’ll close by discussing our financial performance for the 3rd-quarter and for the nine months of the first — of this financial year. Okay. So just beginning of the sector. I think the logistics sector is going through a mixed period, but has demonstrated continued resilience despite the challenging macroeconomic environment. While logistics activity showed a sequential uptick with the onset of the festive season, year-on-year growth remains fairly muted, primarily due to weaker consumption trends.
The high-cost environment driven by driver shortages, high elevated fuel prices, increasing interest rates and higher toll charges continue to exert cost pressures for surface logistics and transportation. Our global cross-border trade and geopolitics continue to drive volatility in cross-border freight prices. These trends continue to be visible in the quarter gone by as well. While freight correction on ocean freight threat to themselves in the early part of the quarter, there was softness in pricing for air-freight as well. Some liners also increased blank ceiling levels during the quarter on a port-specific basis. The continuing volatility has impacted our forward view of contracts and the firmness of the order board across the industry. Demand for warehousing services remained robust, while there is an increase in lead times for construction and deferment of orders by customers. Weaker consumption levels are resulting in slower startups and deferment by clients across many sectors.
E-commerce is a key end-market segment and is seeing positive trends with expansion by quick commerce companies. At the same time, the growth of quick commerce is impacting the historical supply-chain design-in the industry, prompting several e-com marketplaces to start redesigning their supply chains and impacting their warehousing footprint. The mobility sector continued to see seasonal trends during the quarter. The 3rd-quarter of every year generally tends to be an festive season and therefore, demand for enterprise mobility is generally lower, while it grows in airport and B2C movements driven by more vacation and related travel. This — this year as well, we saw that turn up in terms of uptick in B2C volumes and a seasonal downturn in B2B numbers. The Noda International Airport and the new Nabi Mumba Airport are significant potential drivers for long-term growth and demand in this segment. So moving on from sector and segment and sector in terms of specific end-markets which we operate in. And I’ll begin the automotive industry.
The automotive industry remain positive in passenger vehicles despite end-market offtake being mixed. We especially saw strong performance by M&M with new product launches, which provided a boost to volumes. Our two-wheeler segment remains muted, but demonstrated some green shoots at specific categories. In both PVs and two-wheelers, we continue to see an accelerated shift towards electric vehicles with a stronger demand growth for EVs, launch of new models and a very strong short-term outlook for that space. The commercial vehicle and auto components where showed a more muted or flat growth environment. During the year quarter, we witnessed higher-level of NPDs or planned shutdowns across several OEMs in the industry. From a farm sector perspective, Q3 is a seasonally weaker quarter for the farm sector with typically upcoming year changes and kind of a post-festive slowdown.
This quarter remained consistent with that pattern of prior years and we saw softer demand in the quarter compared to the preceding quarter of the year. M&M farm sector’s new products continue to gain traction in the market, reflecting positively for us. Our demand in urgan — from a consumer perspective, demand in urban markets continued to be muted with rural markets showing some recovery but despite the festive season, which is traditionally a period of heightened consumption, demand saw no real significant uplift. A delayed in milder winter has also had an adverse impact on-sales of seasonal products, while continued weakness in urban general trade channels has further negatively impacted demand. However, there has been a modest sequential improvement with some stabilization.
At the same time, premiumization in consumer goods also remains a strong driver for value growth. Moving on to consumer durables, the fan industry has stabilized post-implementation of the B2B norms and has experienced increasing premiumization in both urban and Tier-1 towns, driven by the growing adoption of BLD’s BLDC fabs. The room air-conditioner industry project posted robust growth during the first-half of FY ’25, continued the momentum from the previous year. Uninterrupted seasonal demand and soaring temperatures led to record demand for cooling products. With the summer season approaching inventory buildup is expected to commence soon to meet anticipated demand. In other categories of the segment, in FMCG, we generally see moderate growth, especially in the lower and middle category products, while premiumization remains a strong driver for value growth in higher product categories.
Rounding of telecom, the tariff increases in the telecom segment continue to benefit the industry, driving healthy growth in ARPUs and contributing to an overall improvement in industry performance. Consequently, capital — capex spend has remained stable compared to the previous quarter, supported by ongoing investments in 5G infrastructure and initiatives to expand and densify rural networks. We continue to see increased network expansion forecast from the major telecom players we are working with, both in terms of network expansion and specifically 5G expansion. From a Logistics perspective, some things have gone well in the quarter. Despite the challenging environment and sluggishness in the market, our order intake remains positive. Our pending order board for execution 3PL contract logistics business is over INR250 crores in terms of annual contract value and therefore, we are looking-forward to some momentum there in the coming quarters.
During the quarter, we won nearly INR100 crores or new orders worth the INR100 crores of annual contract value in the 3PL business. The mobility business won a key contract for the new Noda International Airport where we should start services as that airport opens up, right, in the coming quarters. The express business did see an uptick in new contracts, the total contract signed of nearly 3,500 metric tons on a monthly basis and we do expect the rollout or the flow-through of that in the coming four months. Warehousing volume, warehousing and solutions volumes grew by 14% year-on-year with stable and improving yields. Our white space at 7% are closed around 1.5 million square feet remains obviously above our long-term targets and we are working on driving utilization up by Q1 of next year based on some of the orders which have been won. New expansions in East and West are going well and cumulatively those new expansions, more than 75% of the capacity there is already sold-out.
Our new offerings for the linehaul transportation business, Pro Trucking has gained strong momentum with customer orders and the auto outbourne business where we actually added fleet earlier this year, is now in-full utilization and is kind of doing really well for us. During the quarter, we also launched a new analytics platform for emissions measurement called ER, which is an industry-leading platforms platform and provides all our customers data on emissions and optimization opportunities. We also, as part of an overall corporate action during the quarter, released a new brand identity, which integrates all of Mahindra Logistics and subsidiaries into one unified approach to our customers and an integrated value proposition to all our stakeholders. From a technology perspective, we continue to upgrade our one suite of technology products with new additions, leveraging Gen AI and we expect a full release of the suite by the end of this financial year. What’s not gone well in the quarter and kind of areas of focus for us.
Overall, firstly, overall, we saw a mixed impact of the festive season and the peak. The first part of the fiscal period was really positive, but post mid-November, we did start seeing a softening in volumes and that did affect multiple parts of our business, the 3PL business, the Express business and the last mile delivery business. The express business was flat in volumes on — sequentially on quarter-on-quarter basis despite the new order intake. We obviously had some churn or short-term attrition in volume. These were largely driven by two things. We had some operational challenges during the festive peak. As you all know, during the festive period, we do see a surge in-demand for delivery associates, operators and so on. And we had challenges around that, which kind of had some impact in-service levels across multiple parts of our network. This did impact customers dropping some volume in the short-term.
Our volume from our retail partners was also impacted post the festive peak. And across-the-board, some of our existing volume customers saw lower volumes, which was kind of not as per what we had expected going-in. Our estimate, these are not — these have not been issues of a loss of market-share, but really mean that our customers have fundamentally seen lower-volume. Cumulatively, those three factors have impacted the improvement plan, which we had estimated. Though we did see a recovery in December, for the quarter, we did end-up pretty flat on volume and Q3 overall looked a lot like Q2 on most 12 months. The 3PL and the contact Logistics business, many of our mature existing warehouse-based operations during the quarter have seen slightly lower-volume versus last year. This has been the second-quarter where we’ve seen the trend now with same-site volumes being lower, largely reflecting the lower — the broad consumption slowdown, which we are seeing.
This has reduced our operating leverage as we have seen sales growth now coming from new sites, right, which obviously are earlier in their maturity cycle. On a positive note, while volume has been — on the sites has been lesser than what we thought it would be, but because of the way we structure our contracts in terms of minimum guaranteed volumes in all our operations, we’ve not seen a significant downside impact of it. The freight-forwarding business was impacted sequentially by lower pricing in Q3 versus Q2 and that’s been a price correction across-the-board, both in air and sea. While we were able to show tonnage air and growth, the volatility in pricing that order closure in sea especially and obviously impacted revenue per TU as well. It’s a mixed bag in terms of some things which went well. Obviously, some things did not go as well. Let me now move on to financial performance because of consolidated financial performance. Revenue for Q3 increased by 14.1% year-on-year to INR1,594.2 crores.
Revenue from the warehousing segment stood at around approximately INR300 crores, exactly INR29.6 crores in Q3 FY ’25 as compared to INR261.9 crores in the same-period last year, a jump of nearly 15% year-on-year. The supply-chain management businesses, including our 3PL and Network services businesses contributed 95% of our overall revenue and the mobility businesses contributed 5% of our overall revenue for Q3 F ’25. Gross margin on a fully consolidated basis in the 3rd-quarter was at 9.2%, 10 basis-points up compared to the same quarter of last year.
Gross margin without the impact of the investments in the express business stood at 10.1%. Our EBITDA for the quarter was stood at INR73.7 crores, up from INR52.3 crores in Q3 FY ’24 and largely driven by improvements in cost performance in multiple areas, especially in the express business or. Overall losses for the quarter, Q3 F ’25 stood at INR9 crores right at a consolidated MLL level. Moving on to component performance, so individual companies, revenue for — and I’ll start with MLL standalone. To remind everyone MLL large — the standalone MLL business largely hosts the 3PL contact Logistics business and part of our last-mile delivery business. Our revenue for Q3 FY ’25 in this entity was INR1,326.9 crores as compared to INR1,160 crores for the same quarter last year. PAT for Q3 FY ’25 was INR11.6 crores, largely down from INR12.5 crores for the same quarter last year.
Moving on to of our freight forwarding business, revenue for Q3 F ’25 was INR71.5 crores, up from INR55.2 crores in the same quarter last year. Our PAT for the quarter for Q3 F ’25 was INR1.5 crores as compared to INR0.240 lakhs for the same-period last year. Express, the express business revenue for the quarter was INR89.1 crores compared to INR95 crores or INR95.6 crores in the same-period last year. PAT losses shunk to INR24.8 crores in Q3 of F ’25. The mobility business had revenues of around INR78.1 crores compared to INR83.9 crores in the same quarter last year.
PAT for Q3 FY ’25 stood at largely short of INR1 crore, around INR0.76 crores. The revenue for the entity revenue for on a reported basis for the quarter was INR42.2 crores as compared to reported revenue of INR3.2 crores in the last year. Important to note for all of you that in the last year, we had with the actual acquisition or the actual majority, the transaction which took us to majority of consolidation happening in the last end-of-the quarter and therefore, the INR3.2 crores of revenue in Q3 represents a very small part of the full quarter’s number. Adjusting for that, revenue grew by around 7% on a nominal basis in. Our part for Q3 F ’25 was INR0.1 crores as opposed to a loss of INR80 lakhs for the same-period last year. The 2×2 logistics business, which is our outbound logistics business had a good quarter. Revenue jumped from INR14 crores last year for the same-period last year to INR25.3 crores in Q3 FY ’25 and PAT jumped from INR0.40 lakhs last year for the same quarter to approximate INR2.1 crores in this quarter.
Overall for — for the — across the company, revenue in automotive and manufacturing business around 58% of our revenue and the non-automotive and auto and manufacturing and farm business is around 42%, split roughly equally between e-commerce and non-e-commerce. Consumer manufacturing durables and so on and e-commerce is roughly split halfway through there. So at an overall level, we continue to make progress on most business segments. As you can see, if you see the component level performance, I think you would see that we’ve had improvement year-on-year across most of our business segments. The 3PL business is well-positioned for growth given the positive order board we have and a set slate of new upcoming projects in the next two quarters. The cross-border and mobility business continue to make structural improvements while managing some short-term volatility in end-markets.
Our big focus continues to be the Express business, notwithstanding our weaker-than-expected performance in the quarter which weakest went by, we are confident that actions we have put in will place — will generate positive momentum. Over the last four quarters in the Express business, we have been able to reduce our gross margin from minus 13% or minus 5%, right, on fairly — on marginal volume growth. So obviously, for us, the key thing for us now is to drive volume in the business. We have several initiatives that are ongoing, not fully reflected in the bottom-line in the quarter we just went by, but things which are confident will have a — those are a bit long-tail will flowing through in the coming quarters.
With this, I’ll open the floor for questions-and-answers.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question comes from the line of Khupa Shankar with Avendus Spark. Please go-ahead.
Rampraveen Swaminathan
Good afternoon, Khrupa.
Krupashankar NJ
Hi, I’m so good afternoon. I think on the Central business, I just had a couple of questions. Given that the order book what you had mentioned of INR250 crores, which is pending and INR100 crores worth which you have won, these are annual worth of these contracts, is it or is it lifetime of these?
Rampraveen Swaminathan
These are annual contract volumes. So obviously they get — so they have to get executed on — and that’s a 12-year and 12 month run-rate of those numbers.
Krupashankar NJ
Okay. Great. And that was one clarification. And on the — on the white space of 1.5 million square feet, what is the thought process over there? How do you see a reduction coming in or what would be the average level of white spaces which would continue to remain given the churn or if at all, if there are any churn customer-base, what is your thought about that?
Rampraveen Swaminathan
That’s a good point. I think the way I believe we see this and obviously we model the network across-the-board is we are going to continue to invest in the network because we think that there is a long-term play. And we obviously have long development cycles. As I said earlier, even construction cycles have gone up as some of the commodity prices have increased. So we are building into a 24 to 13-month window given the construction cycle. We designed the network repair for roughly a 3.5% white space. So we always assume some amount of white space will be there. It’s good for us. It allows us to react to customers quickly. It allows us. There’s always customer sites which are basically demobilized or being newly mobilized and there’s kind of interplay time during that for startup and so on. So we do design the network from 3.5%. We think 3.5% as a white — as a general planning metric is actually very good, right, basis what we have assessed. Right now, we are running around twice that, right? So technically, we are kind of running around 1 million square feet extra, give or take a little bit. And as you all know that this big inflection point for us and this happened around Q3 end last year, right, from a contracting perspective and from a financial perspective in Q4, where post peak, one of our larger e-com customers actually foreclosed contracts or almost all the space which became excess was largely on account of that.
Now where we stand as we stand right now, we are pretty confident that I would say around 700,000 to 800,000 square feet should get sold-out basis of contracts we have should hit utilization somewhere in Q1 next year, okay. So that’s kind of roughly when this will get done. There are specific periods along the way, but we expect that in Q1 onwards, we should be able to get 800,000 of that done. Bear in mind, we’re obviously adding new space as well. So this is on the — this which is there. And that’s why this quarter I reported out what — how we are on the new space we’re adding as well. So we are adding between Kolkata and Gohati right and Puna and Chakan, we are adding another probably 1 million square feet roughly or so and around 75% of that is already sold is under-construction — actually client construction and commissioning. We have probably under 250,000 of that to be sold, but those infrastructure also come up over the next three, four months, four, five months.
So we have — we obviously have some amount of addition coming there as well. So broad and large, I expect that the right space as we go to next financial year, we expect to be between 700 and 700,000 per million. I mentioned last year, I think remember, in Q4 last year, you may remember, I said that we have now put a pause — we have kind of slowed down some of the new site constructions, given the volatility we see in the market. Obviously, a lot of the sites which you’re seeing now where sites where construction had begun much earlier, right? So we are — we have slowed down a little bit in terms of cap adds on — on warehousing just given the volatility we see in the market. But the focus right now, obviously is to be able to sell this out and I expect that by Q1, we should be at a wise space around 700,000 to 800,000 and the rest should get sold-out.
Krupashankar NJ
Got it. Thanks for the detailed expressure, Rob. The second question was on the Express business. While you are — you have highlighted something about taking new measures to improve the — the adjusted volumes which were required to breakeven. I just wanted to get a sense, given the underlying slowdown in the industry, what is the timeframe you’re expecting that these measures would start resulting in a positive common share run tonnage addition to your overall operations and how do you see the profitability shaping up over the next four to six quarters.
Rampraveen Swaminathan
So I think what’s — let me begin what has not changed, I’ll tell you about what has changed because both I do obviously are there. So let me first begin, and I think this might be a question that several of you have in your mind. I think this was not — this was a — obviously, we kind of delivered lesser than what we thought we would in this quarter on Express. But and therefore, I’m not going to gloss over that issue because I think we came short and we kind of expect to do what we had hoped to do in the quarter.
Now let me break that down into two-parts, right? So from a cost perspective, we are here at around 26% contribution margin in the business, 26.8% and our challenge is the utilization of the network. And what we could do in terms of optimizing costs below that, we’ve already done a fair amount of cuts. As you can see, our gross margin has improved by 800 basis-points year-on-year right in the business. So I don’t think there’s — while there is a range of optimization which will now happen, the optimization is going to be linked to volume growth, okay? So that’s the first thing. Now what’s happening in volume growth, I think as we enter the quarter, what we still hold-on to is that we need around 6,000 to 7,000 tons more per month-to basically be able to get to that point where we need to be at an EBITDA breakeven, right, perspective and somewhere between EBITDA breakeven and PAT breakeven, given the way we are — where we are right now, right? That — so at 7,000 tons, which is still the big ask for us. What happened in the quarter has that — that 7,000 comes to two-ways.
We have to ensure that we are winning new orders and we are monetizing in that and we have to ensure that we are not losing, right, simplistically. The last two quarters, we had very stable operations. We actually didn’t have a problem in holding our existing clients. I think a bit of a problem in the pace at which we acquired new brands. And I talked to all of you about all the new — additional things we were doing. On the positive side, that all actually did add tonnage and orders. So we did, as I mentioned earlier on, fresh order intake was around 3,500 to 3,600 tons monthly during the quarter. That’s the new contracts we signed. However, the challenge for us was that partially because of operational issues and partially because of the fact that many of our customers just downgraded. We did see almost an equal impact on — through the quarter on volume. The good news is December customers have come back, right? So we are expecting that in Jan, Feb, March, we should start getting back to seeing the flow-through of these new orders we have signed. But it is — it is a bit of an iterative situation because as you all know, the current market is actually pretty tough, okay.
So what are we doing? I think what we’re doing is three things. I think first of all, we are obviously sharpening our offerings and trying to offer some — start doing some newer offerings, which are focused on some spaces, which we are not operating in today. So that’s the first thing which we are trying to do. So we can strengthen that — strengthen our air offerings, strengthen some work on our regional offerings. So those are things we are doing, so we can actually capture those niches.
The second one obviously is we are putting more — we’re expanding the sales organization, driving more synergy. Last quarter, obviously, we got 3,500 tonnes of order intake, we need to kind of expand that further. And the third thing, obviously is we have made some corrections on the operation side because that was after seven or eight months of very stable operations. We did have a blip around the festive this time and the blip had some flow-through impact, right? So overall, not exactly — obviously not the quarter we wanted to have. We did a lot of work. Our teams did a lot of work on getting new volume in. And I know they worked pretty hard during the festive peak to ensure that our facilities ran well and we held customer deliveries and help customer promise levers.
Unfortunately, I think we had these parts of the network which got impacted by this. We have upgraded our tech, we’ve upgraded some of the organizational levers around there to ensure that this does not — that we are building more guardrails against this going-forward. But that’s the things which we have to do prepare. And I think as we stand right now, and I think if we are — if we’re able to hold the — hold our attrition rate of the churn, even this quarter, if we had held our churn, our volume would have been halfway about 35% to 40% or to that 7,000 tonne number, right? So I think that’s what we really have to focus on doing and ensure that we do that. I think one other thing which we have — we’ve been asked often is what are we going to do on pricing. And I think on pricing, our approach has still been the same, which is we price strategically, right? Our intrinsic approach is to retain value and not to go into price war or to get into a pricing gain, but we do obviously price strategically to the size of the account.
But those are three broad areas we’re working on, price-led demand expansion, obviously expanding our offerings and our coverage in the market and we’re going to kind of improve that good momentum we have seen on new order intake to expand that further. And obviously, we had to make a lot of these corrections in operations, which we didn’t expect to happen this year, but we did in couple of pockets see a significant impact because of festive in terms of availability of manpower and that did disrupt a week of operations, but obviously in an express business or network, it has a flow-through, which is slightly longer. And, I just had to answer a lot of express stuff because it’s probably in many people’s mind as well. So I’ll take the opportunity with your question to answer that.
Krupashankar NJ
Sure. Thanks. And one follow-up on that. What would be the extent of equity infusion in the Express business over the next couple of quarters or 3/4 until we find ground to improve overall profitability or any projections you have in mind?
Rampraveen Swaminathan
At this stage, I wouldn’t — I don’t think we’ve got a — we’ve got a specific number in mind there. I think if you want to ask, I mean, from a forward-looking view, we don’t have a specific target there. What I would say, I think is the business is actually — we put a lot of focus on cash and unfortunately, we don’t share component balance sheets with you in the third — in the end-of-the 3rd-quarter, but you would actually see we made a lot of progress in terms of the cash-to-cash cycle in that business. That’s been a significant focus. And therefore, the business from an OCF perspective, I think is in very good shape. There’s obviously the burn which we have to reduce and cut-down significantly. So I don’t have a specific number,, but obviously, if you’re asking, why can’t you — I’m going to put a couple of 100 crores more, right? I can range this for you. So that’s the kind of stuff which we are not going to do. We are topping up if it’s required, but at this stage, and I don’t have a specific number.
Krupashankar NJ
Got it. Thanks for answering my questions, sir and all the best.
Operator
Thank you. The next questions are from the line of Alok Deora with Motilal Oswal. Please go-ahead.
Alok Deora
Hi, sir. Good evening. So thanks for the elaborate discussion on the express business. My question is just related to that only. So what we also understand is that even January has been pretty soft and you know players have been queuing up for gen gathering volumes and even the price hikes which were proposed by some players like Gathi, et-cetera have not really gone through. So how do we see this now? Because even in 3Q, which was a festive quarter, you know Q-o-Q performance has been weak, I mean, weaker than Q2. So just some color on that, that when are we seeing the breakeven happening for this? I understand it might not be possible to give a specific quarter, but any timeline because last-time you mentioned that 5% month-on-month growth would be required for a breakeven. But in the current market scenario, that seems pretty far-faced. If you could just spend a couple of more minutes on this.
Rampraveen Swaminathan
Sure, please. I think it’s a great question. I’m glad you asked it because I think as I said last-time, and I’m really appreciate that you actually remember that as well. We had said last-time EBITDA was 30% to 35% volume growth. Over six months that have been up to 5%. And I think through the — the — and through the quarter, that’s why we had hoped to get around 15% order intake growth, right, and we had hope to actually be able to monetize parts of those as well, right, in the quarter. I think what on the positive side happened on I’ll look at that, that order intake story kind of stayed, right? I think our challenge has been on the churn we have seen. Obviously, there is some pricing competitiveness, which affects that churn as well. But as I said, a part of that was actually just our seasonal operational challenges, which we had in the quarter, which did impact some of the volume moving out.
So from my perspective, at least, I think, you know, the order intake opportunity still exists. Is it a tough market? It’s a tough market. It’s a very tough market right now and you want to create it that well using a bunch of other industry comps. It is a tough market, but the customers whom we have a very strong position within other parts of our business. And obviously, as I said earlier on, we are expanding — we are focused on expanding our retail partners to improve retail volume. We are attacking some of the industry — the industrials a little bit more strategically. And we obviously are looking at launching some new offerings a lot and some niches to kind of get that volume in. I’m fairly confident that we will be able to get to that because just given what we saw as order intake this quarter as well because it’s a new contracts we signed. These are not just contracts which upgraded in volume because of festive season. So there’s new contracts we have signed.
We just had to kind of keep expanding that further and it’s a — it’s a blocking and tackling game on-the-ground in terms of sales efficiency. We also have to ensure that our operations are really good, so we’re not losing any one, right? Because this quarter as well would have actually probably been 10%, 12% higher on revenue at least right on volume at least a look if we had not had some of these operational issues in the back.
Alok Deora
Yeah, but just whatever the orders which you have lost, I understand there is a new order inflow also, but you have lost some orders, that’s why it’s kind of a flattish Q-o-Q. So whatever you have lost is not really a one-time thing, right? I mean it’s like the industry is competitive, so we lost the — so we kind of lost the volume side, right? So that could continue in 4Q as well. I mean, I mean, when are we going to get a breakeven here? Because looking at the way things are progressing, it could well be by FY ’26 and also we might be in single-digit losses or at breakeven in an optimistic scenario because the industry itself is very slow at this point of time.
Rampraveen Swaminathan
I hear you and I think — and all the things which you have said are all possible scenarios. There’s no question on that. What I can share with you at this stage is I think approximately 70% to 75% of our customers who downtraded in the early part of last quarter came back-in December, right? Now can I be absolutely sure they will stay forever? I don’t think we can never say never say never, right? But we are still working on the same plan which we said earlier. We have — that we need to get 3% to 5% we roughly get 5% month-on-month volume growth and we have to obviously hold our existing volume and ensure that we are not allowing the attrition to happen. And obviously, we’ll have to probably price some part of that strategically to ensure, especially on the retention side that we are doing it.
Given the market right now, can I perfectly predict that this is the month it’s going to happen or that’s the month that’s going to happen? No, I can’t. I mean, it will not be fair and I would just not be being honest about it.
What I can tell you is what’s moved in our business, right? The zoo order intake has been good. It’s kind of starting to get-in line with what we needed to be. The attrition approximately, you know as — and the ops issues have been a challenge for us. We have to get the ops issues under control, which we have done and that extent of the ops issues, we have seen the recovery of volume. Some of the downtrading, we are working on getting that back. And I can’t say clearly if you ask me, will 10% come, 50%, 90% come, but I can tell you that a large majority have started up trading us again, okay. And I still therefore think that we still hold that this is probably — I’m not sure if ’26 F-26 issue alone, but I can — it will be reasonable to say that we are not going to be able to get this under control. If you are — I think we are still two quarters away from EBITDA breakeven at least. Okay. That I think is a fair conclusion. Just given our update right now that in terms of order intake, the market environment right now, we are probably a couple of quarters away from — from breakeven. And of course, the things could move a little bit here and there, not a little bit, they could move here and there and that could further impact it. But the way we are modeled right now, we think we are a couple of quarters away.
Alok Deora
Sure. Just last question. How has January volumes been as against?
Rampraveen Swaminathan
Jan has been decent, Jan has not been a blockbuster. I think you made that curve with your point. But I think Jan has been — Jan has been in — has been sequentially a positive move for us till now, right? It is obviously, as you know, it is — this is a ’28, so I last checked it on the numbers before a public day. But as of ’24, ’23, where we were in a good — better place a good place. We’re not seeing some of the — some of the headwinds which other people in the industry are talking about. But it is also true that volume is a crawl, volume is not a sprint right now and a look, and that’s a fair thing. And obviously, I don’t think — we’ve not seen a lot of the pricing actions with some industry reports have talked about really showing up on the floor — on-the-ground. So I think pricing remains tight as well.
Alok Deora
Sure. That’s all from my side. Thank you, sir. All the best.
Operator
Thank you. The next question comes from the line of Jainam Shah with Equirus Securities. Please go-ahead.
Jainam Shah
Yeah, hi, sir, sir. Thanks for the opportunity. Sir, just wanted to check that we are having around 90 cr of revenue from the expert segment. Let’s assume that we reached or we grew this revenue by 30, 40 cr. What kind of additional margin, be it gross margin or EBITDA margin that can — that we can make from the additional INR30 of revenue.
Rampraveen Swaminathan
I think if you look at it right now, I think we are at around, 26% 27% contribution margin in the lung business as it is right now. So I think — so I think on that, the first step therefore is Rafi, the contribution margin should largely fall-through. There will be some marginal cost increase. But overall, even if that doesn’t get better, that 26% rate around INR40 crores would be around INR10 crores to INR11 crores of additional — there will be additional margin. In addition to the obviously, as right now our linehauls are running at around 75% 76% utilization. Obviously, as that volume goes up, we expect the line hours will get to the mid 80s. I don’t think we can your late 80s. I don’t think we can probably push it beyond that, but that uplift should give us — we did one down to that correction, Janim earlier in late last year. We should be able to get that utilization further up and that should probably add another — we expect another INR2 crores to INR3 crores at least of — of goodness to the numbers.
So between — at that level, we should be expecting on INR11 crores to INR12 crores of business now overall coming in and that I think is mathematically look at it, that gets us close — almost to the PAT breakeven level as well. Right now we are losing around, INR212 crores at a PAT level. We’re losing around INR14 crores — INR1340 crores in the EBITDA level. So that goodness of around INR14 crores to INR15 crores actually adds to around — we expect that the linehaul optimization, I know around 65% of the cost. So we get around the 3%, 5% benefit there. That will be another INR4 crores INR5 crores and that gets us to EBITDA breakeven. So that kind of the EBITDA breakeven bridge basically.
Jainam Shah
Got it. So just wanted to check, we were doing at this 30 or kind of a run-rate on our Express segment before the acquisition of. This number is right?
Rampraveen Swaminathan
No, it’s not. I think we were doing — we were doing around — I think it depends on quarter-to-quarter, but at that time, I think we probably peaked around INR27 crores to INR26 crores to INR27 crores on a quarterly basis.
Jainam Shah
Yeah so even if we just rounded up to 100 on a yearly basis on the back of, let’s say, 25 cR on a quarterly basis and EUVO was doing around INR350 cR of revenue on the Express segment. And in total, we are targeting INR450 to 500 crore of revenue, whereas we are currently at around 90, we had made a high of around 97 during the last year. My point is that, of course, we are acquiring the customer or some churn is happening, market is competitive. A few other players have acquired the — I acquired the company, which is like four times of the size of the. Despite that they were able to gain the market-share. Of course, they are not also making money. We are also losing it out. So on what kind of scenario we can even reach to the INR450 crore of revenue per sleep? And of course, we have been talking about the synergy benefit after the business coming into the play. But is that?
Rampraveen Swaminathan
Yeah, let me just answer your question. Okay. I get the question if you can. Let me first clarify numbers, I think we at around — I think our — I don’t remember exactly, but I think our peak revenues in the network business was around INR92 crores on a full-year basis. We acquired the company from and so I think around INR340 crores of revenue. So the baseline number is on INR430 crores. We are actually running below the baseline. So that’s clearly a fact, okay, we are running approximately INR75 crores below the baseline. So let me just — but I’ll confirm your point and also I’ll just clarify the numbers. So we are still on the same page, okay so what has happened there, I think as you mentioned, when we started — I think as we have been talked through the period, two or three things happened, we obviously lost some business, which was one part of it.
The second part is that we downtraded a lot of the volume because we had issues on commercial payments and so on and so forth. And I think we’ve kind of called out earlier that we’ve actually dropped — we dropped some — and I don’t know the exact number, but we dropped probably a couple of thousand tonnes because of just the orders we — the business we got, we had kind of orders which we didn’t like or customer profiles we didn’t like. We also — the worstwhile business was actually also doing right a lot of retail business where we had to deliver a lot of deliveries outside our network in areas, which was — which was actually not helpful from a finance profitability perspective. So we rationalized customers, we rationalized network. And that has been a significant part of what we saw in terms of revenue drop. It’s also — I mean, if I may say so, it is also part of what helped us improve the gross margin, right?
The gross margin was minus 13%, part of the way we think it will get to the minus 3%, 4% now. In some part is also because we weeded out some of this stuff, right? So I think I take this into context that I think all revenue is not good revenue, right? When we are running a network, some revenue can be bad revenue as well. And I just want to say that because you can take the INR430 crores as a starting point. But if you look at what I said in our first-call and I think we just go back, we said that we expect the business to be around INR420 odd crores on a consol basis. That’s kind of what we are combining both of these to be and we got — we think it will grow at 10% to 15% on INR650 crores. We are obviously taken some of this network rationalization, which we expected in that, which is INR650 crores INR700 odd crores or so.
So I think therefore, I would just say that the starting point in revenue is just not a complete starting point because obviously all of that revenue was good and it was a problem for us. I think as you go-forward, I think obviously we need around 6,000 to 7,000 tonnes per month more. That’s around 70,000 tonnes a year, which is less — which is roughly around 1.2% to 1.3% of market-share, right? That’s kind of what we need to get to EBITDA breakeven, roughly around 1% of the market is what we need in terms of volumes and we probably need another 2% to 3% of the market in terms of volumes to get to where we want to be financially.
So we’re not looking because the base is small, we are — but what we have is a position where we have a network which is fairly capable in terms of width, but the base — volume base being small and that’s why there is a volume, right? But the volume growth itself, which we need is not — is not — we are expecting 10% growth in-market share, right? We need 200 bps of growth in-market share over four quarters to get where we need to be,. And obviously, while we look at the last couple of quarters, we could say, hey, listen, that 200 bps of market-share is a lot — is a stretch because of the way the numbers have panned in the last couple of quarters. But it’s already 200 bps of market-share in a market which we feel we understand very well. Right.
So I don’t answer your questions, but I just want to first calibrate, yes, the volume, the revenue is down compared to the past of what we acquired, but the revenue cumulatively is down in large part because of decline we have operational issues and volume went down, but we did recover almost all the volume we lost, almost all the volume we lost integration issues, we have actually recovered that. I think you made a great point about how much you want to — how much you want to invest in a business like this. And that’s one of the reasons why we like the business we acquired because while we knew we had to top in a lot more capital into it, we also felt that the transaction value allowed us to do that because we bought it down INR220 crores.
We had the headroom in the business to make that investment because the transaction value itself was low and we still remain with the hypothesis. For the last couple of quarters of execution and I’m cognizant of the fact that we’ve not delivered what we’ve said on the earnings calls and few and we can — and we can obviously explain it after the fact. Is largely an execution issue, which we need to tighten up for a fundamental structural problem in the business.
Jainam Shah
Got it, sir. Sir, just one clarification. I guess during the festive week, you have told that we have not been able to take on the volumes because there has been an operational challenge. So just wanted to check, if we want to grow in the revenue by, let’s say, INR30 crore INR40 crore and if our existing network is not able to even do the festive season peak, then there will be again an expansion cost which we’ll be doing. Of course, our utilization is at around 75% if it grows to 80%.
Rampraveen Swaminathan
The network has got three parts. It’s got infrastructure, it’s got vehicle utilization, it’s got people, right? Yeah. Network. I think what we saw this quarter was during the festive surge peak, we saw a sudden surge or shortage of manpower requirement in sites which are approximately 13% to 14% of our network, right? So in those locations, we saw a significant sudden surge in manpower costs and a sudden drop-in availability on manpowd and that impacted our network operations for a few a week or so, obviously, that cascading effect because when you are shipping, let’s say, from Ludhiana or Ahmedabad or Surat, the pickup there is delivered, delayed by five days, then obviously Jana, the delivery is also delayed by-5 days, right? And that obviously creates customer dissatisfaction. But it was not — it is not a fundamental business. I think both our warehousing space and our real — and our vehicles allow us to have not all the headroom.
So if you want to grow by-40 by — and that’s why I said that if you remember what I said earlier that we will get the contribution margin that we see today per ton and we’ll get some part of the operating leverage in terms of facilities and people and not more than that, right? And that’s why I capped that number around INR5 crores. If you mathematically look at it, you could actually make much more. If you assume that the network was — I didn’t spend a single war on transportation or facilities, then obviously lot more money would come into the — into profitability, but that’s not the model. So there’ll be some cost increase, but it will mostly be on the people side,, the vehicles and the transportation and the facility should be fairly stable.
Jainam Shah
Got it, sir. So just one thing. Of course, you told about INR11 crore INR12 crore of contribution margin from, let’s say, 30, 40 crore of revenue, additional INR5 crores of 5CR from the, let’s say, utilization increases and all. But let’s assume that given this kind of market-share exists for next few quarters and we have been able to reach to the revenue of, of less than INR90 crore only, which is the current range. Then what could be the alternative that we can do to have a better EBITDA or PAT margin or will this be no — will these numbers will continue in that case?
Rampraveen Swaminathan
No, I think if you’re not able to drive the viability, obviously, we are — I think there’s a couple of things there. Obviously, we do look at there are other cost leverage opportunities which exist. And then obviously, we had to look at the network itself,, and say that listen, I’ve got a network which today is designed to deliver 19,000 pin cores, right? Almost 40% of them, 35% to 40% of them in-network and the rest of them through connections, there’s a fairly large cost we are running to be done to obviously keep that network capability alive. If you don’t see the volume flow-through on the network, obviously, we start having to look at which point saying, do I rationalize the network capability itself. And so that’s the second — that’s the other areas of cost structure, which are there. So there are rings of different.
Obviously, there is a — you can look at these bookends, worst-case scenario, obviously is just a takeoff of where we have been performing in the last couple of quarters and I get that point. The other book case or end is obviously what we think we will definitely do. But the reality in-between probably will be that some part of volume even depending on what probabilities you want to put volume will move-up, may not move as much as we think it might not move as fast as we think it would. In which case, we will look at some other rings of defense like should we rationalize the network spread, right, should we change the way our fleets are working and kind of change vehicle patterns a little bit more, change the way we’re scheduling the vehicles right now.
So there are multiple other levers which you can do. They won’t solve the problem fully for sure, right? So someone saw the INR40 crore INR15 crore problem. We’ll have to obviously hit volume to solve parts of it. But at this stage, we have multiple of those things mapped out, Jen. It’s just not something which we want at this stage, we’re not necessarily in a position talk about that publicly, but we have several of those mapped out. Obviously, we are also cognizant that of the scenario you are calling out saying in the next four quarters, there could be no impact in improvement in volume. And then what will we do? But some of those actions are also underway as we talk.
Jainam Shah
Got it, sir. Thank you so much for the elaborative answer. That’s it from my side and all the very best.
Operator
Thank you. [Operator Instructions] As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Rampraveen Swaminathan
Over to you. Thank you, everyone. I hope you’ve been able to answer all your questions satisfactorily. However, if you need any further clarifications or want to know more about the company, please contact our team at SGA or team or SGI Investor Relations Advisors. Thank you once again for taking time to join us during this call today. There are more than 20 parties in the conference. Thank you.
Operator
[Operator Closing Remarks]