Mahindra Logistics Ltd (MAHLOG) Q4 FY23 Earnings Concall Transcript

Mahindra Logistics Ltd (NSE:MAHLOG) Q4 FY23 Earnings Concall dated Apr. 25, 2023.

Corporate Participants:

Shogun Jain — Investor Relations

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

Analysts:

Alok Deora — Motilal Oswal — Analyst

Amit Dixit — ICICI Securities — Analyst

Saras Singh — Haitong Securities — Analyst

Krupashankar NJ — Avendus Spark — Analyst

Tarun Bhatnagar — Tribeca Investment Partners — Analyst

Sumit Kishore — Axis Capital — Analyst

Teena Virmani — Kotak Securities — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Mahindra Logistics Limited Q4 FY ’23 Earnings Conference Call. [Operator Instructions] And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]

I now hand the conference over to Mr. Shogun Jain from SGA IR. Thank you, and over to you.

Shogun Jain — Investor Relations

Thank you. Good evening, everyone, and thank you for joining us on the Mahindra Logistics Limited Q4 FY ’23 earnings conference call. We have with us Mr. Rampraveen Swaminathan, MD and CEO, along with the senior management team. I hope everyone has had a chance to view our financial results and investor presentation, which were posted on the Company’s website and stock exchanges. We will begin the call with opening remarks from the management followed by an open forum for Q&A. Before we begin, I’d like to point out that some of the statements made during today’s call may be forward-looking in nature and a disclaimer to that effect has been included in the earnings presentation that was shared with you earlier.

I now invite Ram, MD and CEO of Mahindra Logistics Limited to make some preliminary remarks.

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

Good evening, everyone. Good afternoon, everyone. Thank you for joining, SGA. Thank you, Shogun. I trust all of you had a chance to view our presentation and financial results, which has been uploaded on the stock exchange on the Company’s website. Before sharing commentary on our operations, order intake and key developments in the quarter, I should just share a quick update on the external environment and our end-markets and the business as a whole. I will conclude my comments by briefly outlining our financial performance for the quarter just ended and the full-year financial FY ’23 and just talk a little bit about our focus areas for the upcoming year. In the interest of just time, I’m going to keep my comments — I’m going to brief my comments a little bit this time. So we actually have more time for questions and answers.

Just at a macro level, obviously, I think the global economy is experiencing kind of high level of volatility due to fresh headwinds caused by turmoil in the banking sector. And that’s occurred across various economies and concerns over economic stability have been brought to the forefront as a result of the collapse — [Indecipherable] collapse of several banks and the possibility of spillover of that into emerging economy — emerging markets as well. In light of that fact, inflation continues to be dodgy. And central banks are continuing their efforts to tighten monetary policy, albeit at a slower pace than the past. Rate of inflation across major economies has been showing signs of moderation over the past several months.

The process — but the process of returning inflation to the desired level or controlling inflation to desired level is proving to be long and difficult. The Indian logistics industry has been valued at around INR14 trillion in FY 2021. And broadly, we anticipate that it will grow at around 14% — at a CAGR of around 14% to around INR29.7 trillion by 2026. The industry and the sector remains extremely critical for the overall growth of the economy as much of our demand is derived from other economic factors. And therefore, as the economy propels itself to higher levels, we should see a strong spillover to our sector as well. That said, the sector remains highly fragmented with a large constitution of unorganized players. And large organized players still constitute less than 20% of the overall market, and the majority of it is layered and is managed by unorganized operators, who have challenges in terms of infrastructure and scale and limited levels of automation and mechanization.

Now coming specifically to the quarter itself and just talking about our specific end-markets, and I’ll begin with automotive, which has always been our bellwether sector. So obviously, years gone by without any major impact of COVID, and that’s been the first full-year after a gap of two years. Through the year, I think overall retail sales have seen robust double-digit growth, especially led by the four-wheeler industry. The two-wheeler segment’s annual retail sales of INR15.9 [Phonetic] million were the lowest in seven years. And so that sector still remains distressed. EV penetration in the sector has been on 4.5% and it’s kind of well set to grow. The three-wheeler category maintained its outstanding year-on-year trajectory with an annual growth of 84%. And this segment has seen the most deepest level of electrification as 52% of volumes now being electrified in large measure due to e-rickshaw segment and increasingly due to cargo movement as well.

The availability of finance, alternative fuels and government subsidies have obviously added to the growth of the segment. Passenger vehicle retail sales hit a new high of 3.6 million units, an increase of 23% year-on-year, positioning India as among the largest markets for four-wheeler passenger vehicles in the world. As the year progressed, the shortage of semiconductors have begun to ease, which has resulted in a higher number of product — new product launches and improvement in product availability. Demand for higher-end models continues to see an disproportionate growth, and that is an encouraging sign.

Still the pressure on entry-level models remains and lower-end segments are seeing the pressure of higher inflation. Due to high base, inflationary pressures, regular price increase and regulatory changes, growth is likely to probably slow down in FY ’24, as the period of rapid recovery and expansion has concluded. In addition, unexpected rains and hailstorms in North and Central India have impacted the Rabi crop. And delayed harvesting, which could affect the rural sector, which is important in general for the segment and for us at Mahindra Logistics specifically.

In addition, I think this year, we continue to see — expect to see a higher level of EV penetration, which will impact the overall share of ICE products in the market. The e-comm industry still remains a very large demand market for us. And Indian e-commerce seg market was valued at INR6,210 billion in 2021, and we expect it to grow at a CAGR of around 27% over the next five years. In addition, I think we estimate to see strong growth in the online grocery market, which is expected to grow at a CAGR of around 34% to over INR2,100 billion by FY ’27. While the market has grown exponentially over the last four years, five years, there has been a slow moderation in digital penetration, and we expect that this will continue in the mid-term. As a result of this, network expansion across large e-comm marketplaces has seen moderation and consolidation affecting the level of outsourcing in these businesses, including to players such as ourselves, where we have seen consolidation driving some site shutdowns.

Moving on to the consumer durable industry, following the soft festive season, the consumer durable industry has seen improving demand due to the ongoing summer, especially given the high — the forecast of high temperatures this year. Channel — both channel and leading brands continue to have a positive outlook on demand revival, and that is anticipated to accelerate during the summer season. The quarter is a sequentially strong one for air-conditioning and air temperature control products. So businesses hope to see a high rise in demand on account of that. Higher inflation has impacted some level of consumer enthusiasm for lower-priced products.

Our premium products performed relatively better and continue to do so. Demand for lighting products is significantly not being impacted through the pandemic and that continues to be robust. Clearly, our business as well has seen the impact of many of these factors. While the auto and industrial businesses have been strong and have seen an uptick across logos, the slowdown in network expansion in e-comm and consumer markets have impacted our business. We have seen some site closures in the 3PL businesses from e-comm, and obviously, we’ve also taken some actions, the last-mile delivery business to moderate coverage on account of often increasing price competition in that space. Overall, the annual contract volume from new order intake was a bit north of INR100 crores during this quarter, primarily driven by the non-Mahindra side of the SCM business. And we expect that to moderate itself in the next quarter or so and kind of have an uptick as we come towards the festive season.

Let me talk also about some of the important — some key business updates, which are relevant to this quarter especially. I’ll begin with the express business. Consequent to the acquisition of the Rivigo business, PTL business last quarter, we recently also transferred our existing express businesses to MLL Express Services Private Limited for a lump-sum payment of INR20.8 crores. MESPL revenues reported for the quarter were slightly lower than the preceding quarter when the business was managed by Rivigo largely on account of some transition impact and slowdown and seasonal adjustments based on specific demand patterns from Northern — from customers in Northern India.

The flow-through of the MESPL business — of the MLL Network business into the MESPL financials will happen post completion of the consolidation which has commenced this quarter. Most of our customers have already been transferred seamlessly and we have managed to boost our service levels for most of our clients. We believe that our combined express operations are on the right track and they will generate positive EBITDA towards the second half of the year somewhere in Q3 of this financial year. A longer-term direction to build an express business, which is among the top three or four companies in the industry with revenues of north of INR1,000 crores remains intact.

The freight forwarding business which has been another business saw a lot of change through this year and especially in the second half of the year. The forwarding business remains under significant pressure of downward pricing corrections. While the slope of the correction has moderated, the broad pressure continues to sustain. During the quarter, we saw the impact of that with a steep decline on year-on-year revenues. However, we have been able to mitigate that to some extent through volume growth, which has shown positive movement both across our air and sea products. We will be launching charter operations from our Dubai — from Dubai hub later in Q1 of FY ’23-’24, and that should help us to a strengthened recovery in this segment.

Our short-term focus remains strongly on volume penetration across end-markets lane expansion and kind of expanding our service offerings. And we should be able to demonstrate stronger run-through on volume through Q2 and Q3 of this financial year. The third business which has — which had a material impact obviously was our last-mile delivery business. During the quarter, we continue to invest in growing the last-mile delivery business, at the same time, higher pricing intensity has resulted in our position to cut back on several sites, which are getting unprofitable. So that has been offset through other wins in other parts of the last-mile delivery service line. We have taken a prudent accounting approach and various penalties and damage claims in the quarter which some of our customers have raised, which has resulted in underlying favorable impact on earnings.

While these items are still under discussion, we chose to be prudent about them. Our continued focus remains on fulfillment-as-a-service grocery and sub-same deliveries, all of which are showing strong progress in the quarter as it has done in the year which has gone by. The performance of our eDeL electric vehicle business, EEV [Phonetic] business is consistently improving. As of today, we are operating in more than 19 cities and have a fleet of nearly 1,300 vehicles. Earlier this month, we actually launched our four-wheeler offering right in eDeL, and we hope to supplement that with the two-wheeler offering shortly. The 2×2 business has been — is a business which we run company-owned car carriers for the auto outbound segment. And that’s a business, which last year had seen significant impact on the back of shrinking automotive volumes.

I think as I’ve mentioned in the last earnings call, we have been starting the fleet back again. But along the way, we have been investing and upgrading the fleet with modifications as per the new CMVR regulations, acquired adding domes and also upgrading vehicles in terms of runnability. And we’ve seen that progress through the fourth quarter. We ended the fourth quarter with our operating fleet almost completely on road, and we expect that in FY ’23-’24, we should see that the consolidation of the turnaround in that business.

Lastly, as a matter of significance I think in the warehousing side, we are — we continue to be committed to expanding our warehousing footprint in the quarter just by. We have announced the development of a new 1 million square feet warehouse park in the Chakan-Talegaon region. This is a collaboration with Ascendas-Firstspace and which will be spread over three phases. The first phase, which is roughly 0.5 million square feet will be operational by the end of this financial year. The net of that is something which will continue to expand. We also at the same park going to launch our first automation and technology center, which will be — there we’ll do development and automation technologies for — especially for warehousing.

The overall warehousing footprint in the year — in the quarter showed moderate trend, and that was largely on impact of the restructuring of the Bajaj Electrical contract, as a result of which we did drop warehousing space of nearly 0.6 million square feet, largely in distributed branch warehouse locations. Those contracts were all largely back to back and therefore do not have residual impact on our earnings going forward.

I’ll now move on to our consolidated financial performance. Revenue for — in Q4 FY ’23 increased by 17% on year-on-year basis to INR1,273 crores. That growth was on the back of adjustments, right, of lower growth obviously in our consumer business because of the restructuring of the Bajaj account and a decline in the freight forwarding business. Adjusted for those segments, our underlying volume growth and revenue growth is approximately 24%. The supply chain — supply chain management including 3PL and our network services businesses combined to 94% of our overall revenue and the mobility business contributed to 6% of our revenue.

Gross margin on a fully consolidated basis, including MESPL’s impact stood at 10.2% in Q4 F ’23 compared to 10.1% for the same quarter last year. EBITDA for the quarter was up 17% from INR58 crores in Q4 F ’22 up to INR68 crores adjusting for the consolidation of the Rivigo acquisition. PBT on a fully consolidated basis was obviously down and we reported a negative PBT — PBT of negative INR5 crores for the quarter down from INR9 crores for the same quarter last year. And we reported PAT on a fully consolidated basis of negative INR1 crore. The earnings obviously were impacted by the consolidation effect of the Rivigo acquisition, and I’ll therefore just share some numbers without the impact of the Rivigo acquisition as well.

Without the MESPL or the Rivigo acquisition, revenue for the quarter increased by 11% on a year-on-year basis to INR1,206 crores. Gross margin for the quarter without the acquisition stood at 11.4% compared to 10.1% in the same quarter last year. EBITDA for the quarter rose from INR58 crores for the same quarter last year to INR87 crores. And PBT for the quarter grew from INR9 crores to INR24 crores, right. And our PAT effect due to — without the acquisition grew from INR6 crores in the same quarter last year to INR21 crores for Q4 F ’23. As we obviously see the consolidation and the extraction of value of the Rivigo business, we obviously expect that, that will actually be accretive to earnings and that’s covered in the investor deck on the section called pathway to value creation, and we’ve talked a little bit about that.

Before I close, I just want to quickly recap subsidiary performance, our component performance for your benefit. MLL standalone business for FY ’23 and I talk about full-year numbers, revenue for FY ’23 in Mahindra Logistics, which is a holding Company, on a standalone basis was INR4,459 crores, up 27% compared to INR3,361 crores for F ’22. PAT for the business was up from INR24 crores in F ’22 to INR65 crores in FY ’23. Lords Freight revenue for the year was down from INR450 crores in FY ’22 to INR366 crores in FY ’23. And consequentially, PAT for the business, PAT was down by around 40%, 36% exactly, specifically from INR16 crores in FY ’22 to INR10 crores in FY ’23. The express business showed revenue of INR122 crores. Most of that is essentially the revenue spillover from the Rivigo acquisition. MLL Network revenues are not factored in this. Revenues continue to be at an adjusted run rate, as I mentioned earlier, right, and overall reported revenue was INR122 crores for four months and 10 days, I think roughly — four months and a week.

And PAT loss for the year on that revenue base was INR32 crores. We will take a deferred tax adjustment in the business and I’ll talk a little bit about that in a bit. MLL Mobility, revenue was up from — was INR185 crores as compared to INR58 crores in the preceding year. That included underlying growth of around 27% in revenues on the transport services — the airport-based services segment and the consolidation effect of the Enterprise Transport Mobility business from — which was transferred from MLL Mobility. Consequent to our continuing activities on cost reduction there, PAT has narrowed, right, from INR19 crores — losses have narrowed from INR19.5 crores in FY ’22 to INR8.6 crores in FY ’23.

We expect the business to be in a strong growth momentum and we are confident it’ll breakeven in FY ’23-’24. Whizzard, which is the investment we have made — is a investment — is a last-mile delivery business our fulfillment business, we made an investment in, reported revenue of around INR130 crores, up 18% from a comparable time period last year. PAT for the year — losses for the year expand — increased from INR4.4 crores last year to INR7.5 crores this year. 2×2, the division has made a loss of INR4 crores in FY ’23, narrowing from the INR6 crores in the preceding year. As I mentioned earlier, when 2×2 commence, we expect that to basically cut back to profitability in FY ’23 [Phonetic].

During the quarter, we also took and we also just had a deferred tax adjustment in two of our entities, principally the MESPL, which is express services business, that adjustment was on account of our line-of-sight to profitability and a certainty, another profitability, we’d be able to generate in the business over the next six quarters to eight quarters. And as we reviewed with our auditors, another — and our — and the Board, and we’re comfortable with that accounting adjustment.

Overall, we remain focused on investing for growth across all our segments. I think as we’ve mentioned before, we think it is critical in our business to grow scale, and we remain committed to our vision of building an integrated logistics and mobility services business, which has deep capabilities in multiple service lines and combined through technology people and process will create value of integration for our customers and emerge as a preferred choice for them as well.

So with that, I’ll open the question — the floor for questions and answers.

Questions and Answers:

Operator

Thank you very much. We will now begin the Q&A session. [Operator Instructions] We have a first question from the line of Alok Deora from Motilal Oswal. Please go ahead.

Alok Deora — Motilal Oswal — Analyst

Good evening, sir. Just the first question on this, the express business. So if you could just indicate what would be the revenues we generated from the Rivigo business in Q4?

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

Hi, Alok. I think we generated — I think we reported revenues of around INR77 [Phonetic] crores for the quarter for MESPL, and moves all of that essentially was the business which was transferred from Rivigo, because as you know, we’ve really not rolled in the value — the revenues and the volume from the MLL Network, right, for the large part. So almost all of that was that. I think when we did the acquisition, Alok, we had projected — kind of indicated that the run rate number, INR350 crore range on an trailing 12-month basis.

There are, of course, seasonal adjustments in those numbers, right. And that did impact us Q4 because of climatic conditions in the North. We did see some impact in load volume on the lanes in the North right there, because there’s no customer or account losses during the quarter, because largely because of that, we did have some transition impact because several of our customers as we transitioned ownership, right, because we have to get contracts in place and so on, Rivigo stop orders on us for a period of time before they actually triggered it back on.

So that did have some underlying impact. But from an underlying — from an overall perspective, adjusting for those things, our revenues are pretty much in line with what we gave as an indication at the time of the acquisition.

Alok Deora — Motilal Oswal — Analyst

Sure. And sir, if I see the EBITDA and the PAT for this segment. So we are currently at around 25% loss at the EBITDA level and around 28% loss, 28% sort of a loss at the PAT level, which is kind of worse than what we had done in quarter three. So just wanted to pierce of [Phonetic], how confident are we to turn around this and breakeven in the first half of FY ’24, considering that what signals we are getting from the industry, did the express business as a sector is kind of struggling because of various factors, demand slowdown and competition and all those factors. So just wanted your thoughts on that, sir?

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

Sure, Alok. I think — let me give you my perspective on it. I think, first of all, there is obviously — I think that the Q3 versus Q4 comps are not actually very accurate, because obviously in Q3, what we reported at the express business was largely our home business, with around one month and one month or six weeks of the MESPL business, we have seen obviously a full quarter impact of the Rivigo business. So that’s the first thing. And therefore, if you reach out to us separately, we’ll kind of give you a better re-go directionally of that, right?

But — from a — from an earnings quality perspective, I think the levers which we have said earlier still remain the same, Alok, right. The first one, obviously, is that a substantial amount of this is load-driven. We have a network of around 17 hubs, 270 branches, and the load which you carry on the network actually drives the operating leverage of the business. So the first thing which obviously will really make a big impact of the transition of the MLL Network volumes on to that. We expect that to be done with very marginal increase in overall cost, right. And that should obviously substantially improve the operating leverage of the business. That is actually under play. We’ve just transferred effective April 1st.

We — the Network business, so MLL into MESPL. And so through this quarter a lot of that load will actually transition out and we’ll see the benefit of that. It is quite significant, given that facilities and operations costs are roughly around 18% of our total cost mix. And so that’s a big operating leverage number. The second big element, of course is, which will drive value creation there is just the transportation efficiency, because we run, because we’d be able to run at higher load, consolidation of loads will be better, vehicle efficiencies, online, all especially will increase. And we expect to see better density in feeders and pick up in last-mile delivery volumes as well.

So combining both of those, I think even without considering any further volume growth, we expect a substantial amount of EBITDA loss to come down. As I said earlier in my comments, I think Alok assuming — based on our current forecast of transitions of accounts, we expect that by Q3 of this year, we will turn EBITDA positive on the business. There are some obviously — now coming to the other side of the question, which is where will growth come from? So I think obviously, there is some softening in demand. I think also express saw a bit of a spike during COVID, right, given that, but I think — but we still believe underlying growth is still there.

I think India’s demand is getting densified, right. On the e-commerce side of the business, customers are moving to more supplier fulfilled volumes, which is actually creating demand for supplier pick solutions and offerings, which are also part truckload in nature. So unlike probably what others feel, we do see that there is some robustness in specific parts of the segment. You must also remember that the fourth — so I think — and the other growth lever for us, Alok, is the fact that a substantial amount of our 3PL and other clients actually do have express volumes.

Our penetration or share of wallet in that has historically been low because we didn’t have an offering, right. So as the offering gets rolled out, we expect that we will actually improve share of wallet in those businesses. And integrate FTL, Warehousing, Xpress, etc., in better ways for our clients to give them higher productivity. So we kind of broadly look at a 12.5% to 13% annualized kind of growth rate secularly over the next four years, five years, and we believe that given the markets are right now, Alok, those are very defensible and what — and pretty much achievable numbers given our broad customer portfolio.

So I think as I’ve — so kind of mix of three or four levers together. There’s also things we are doing in terms of productivity improvement, reducing productivity — improving density of the work floor — of the shop floor, right, to reduce operating costs. So combining those three or four things, I think we do believe that we should be able to get first an EBITDA breakeven by the third quarter of this year, hope — and get to probably a breakeven at a PAT level on a running basis by the end of this year. And therefore, and then we’ll kind of kick into more aggressive growth phase. As I said earlier on, our view of the businesses, we have the opportunity the next four years, five years to build a INR1,000 crore business, right.

We are starting at roughly around INR450 crores, INR500 crores for the business that are consolidated, right, on a run rate basis, and we expect that to probably double over the next four years to five years and peak at around 3% to 4% PAT levels. And as we stand today, I think we are pretty — we’ve not lost — I think which has given us any reason to revisit those — that aspiration. Obviously, any integration does not go, bangs up completely on time, on everything. So there are things which go a bit sideways, but those are all controllables. So we’re still pretty — we feel we’re in a good place. It has a carry on the numbers. It’s something which we recognize, but it’s also a significant step-up in terms of MLL’s penetration and our ability to be an integrated logistics provider for our clients.

Alok Deora — Motilal Oswal — Analyst

Sure. Thanks for the elaborative answer. And also, this depreciation has increased to nearly INR55 crore at the consolidated level. So what’s the normalized run rate we can look forward for depreciation?

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

So I think depreciation has gone up. I think there are multiple components to that, Alok. And obviously, a part of that has essentially been around INR10 crores of the increase in depreciation has been because of the Meru consolidated effect on a full-year basis because of the Mobility business which we acquired from Meru, around INR8 crores of it has really been the run rate impact of the MESPL business. So that’s approximately been around 20%, if you may, of the increase in the overall depreciation, prior 22%. The rest of it, right, has really been, right, Ind AS impact of it. And the remaining INR35 crores, INR36 crores, Ind AS impact is around INR27 crores. And I can give a more specific number, but I think it is around INR27 crores. The remaining INR10 crores is split between electric vehicle fleet addition, right, some other capital items and obviously, software depreciation and so on. From a run rate basis…

Alok Deora — Motilal Oswal — Analyst

Yeah, yeah.

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

From a run rate basis, I think MESPL and the Meru depreciation should be capped roughly in this range. We don’t expect any significant addition there, right. And as far as the MLL, the core 3PL business is concerned, I think we will see some normative increase in terms of capital, right, which is in the same range as this year. This year, we spent a capital of around INR85 crores was roughly a — INR75 crores was our capex spend. And I think we expect it to be in that INR80 crores, INR85 crores at least for the — for — at least for ’23-’24.

So we expect that to roughly be in that range. The warehousing will obviously have an Ind AS 116 impact, but that also tale — there’s also tale of impact on Ind AS 116 as some of the older leases come off. So net-net, we kind of expect that we may be a little bit up, marginally up on the MLL side of the business, probably 7% to 8% up on depreciation. The Meru and the — the MLL Mobility and the MESPL number should roughly be capped.

Alok Deora — Motilal Oswal — Analyst

Sure. I have more questions, I’ll come back.

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

Yeah.

Alok Deora — Motilal Oswal — Analyst

Thank you so much, sir. Thanks.

Operator

Thank you. Ladies and gentlemen, in order to ensure that the management is able to answer queries from all participants, kindly raise questions to two at a time. You may join back the queue for follow-up questions. We have the next question from the line of Amit Dixit from ICICI Securities. Please go ahead.

Amit Dixit — ICICI Securities — Analyst

Yeah, hi, good evening, everyone, and thanks for taking my questions. Just two questions from my side. Did you take any price hike in this quarter and how was it deployed by the consumers, if you can split it, I mean business-wise that would be great?

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

So, Amit, just in the interest of everyone of — everyone’s convenience, can you just ask both the questions, I’ll answer both of them together.

Amit Dixit — ICICI Securities — Analyst

Yeah, yeah, sure. The second one is essentially on the industry, given that what you highlighted in your opening remarks that automotive especially going strong, consumer durables likely to pick up, and e-comm just sort of still on a sticky wicket. So what kind of growth can we expect for FY ’24 in terms of revenue? These are the two questions.

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

Sure. So let me — yeah. So I think in terms of growth, I think we expect that they will — so I think that what drives our growth is a couple of things, right. I think, Amit, one is underlying volume in all our existing sites. And that is kind of — that’s just how much of flow-through we get, because we do have some amount of per piece [Phonetic] of unitized pricing, per piece of unitized pricing in our business. We do get some flow-through from that. And the second one obviously is network expansion, as customers want to put more sites as they densify their networks.

I think from a broad demand perspective, I think transportation — automotive largely is transportation heavy. And we expect that volume to be reasonably robust in the first half, but we expect a lot of growth in the first quarter. We do expect stronger growth in automotive segment from the second quarter onwards. I think from an e-commerce consumer perspective, I do believe that we will see an uptick in volume definitely through those seasonal costs through the season this year. Whether — the question right now is how much of network capacity addition will we see, right. So we definitely think volume will go through and we will see kind of mid-teens kind of growth in volume, given what we’re seeing across all our end-markets and our logos.

But we are still seeing some tentativeness in terms of site expansions and network expansions. So I think that’s the one which very honestly, Amit, a bit hard to exactly figure out. But we are optimistic that in several segments, and given what we are doing, as I said, annualized contract value in the first — in the fourth quarter was roughly around INR100 crores, right, for the quarter. So that’s actually a healthy sign. So hopefully, we will be able to — we are confident we will able to sustain that run rate through the year. Q1 might be a little bit slower basically is a little bit what we expect.

I think from a pricing action perspective, I think as I said, we operate in multiple segments. The 3PL business, right, we have seen margin improvement there, I’d say largely on the basis of stronger cost management and operational performance, right. Most of our contracts have been continuing in nature. So really a fair amount of the business is continuing business and has not changed dramatically between Q3 and Q4. I think on the forwarding business, as I’ve already said prices have actually come down. The challenge has been to kind of hold margin levels as prices have come down, because I think people are — a lot of times, people are making forward based on further reductions in prices.

And I’m putting those as — making those — taking those projections and putting them into the deal. So we’ve really not been able to do a lot of price movement on the forwarding business. I think, clearly, we’re not going to do a lot of increase there. I think on the last-mile delivery business, I think, as I mentioned, we have optimized our margins there. We’ve really optimized not by doing a broad price increase, but actually, specifically, in accounts and offerings where we actually get better realizations, right, I don’t think I would say across the board, there has been an increase, right.

But it’s been really about how we’ve optimized our offerings and our customers. And on the express business, we have seen some uptick on what we call the retail end, which is really small and mid-sized establishments. But not so much on the enterprise, and the enterprise end has been more topical or tactical and not really been, I wouldn’t say been an across-the-board increase. So I hope that answered both your questions, Amit, and probably we should go to the — right. And if you have any further questions, Amit, happy to take you back in the queue later.

Amit Dixit — ICICI Securities — Analyst

No, no, sure. I’ll get back. Thank you, sir.

Operator

Thank you. We have our next question from the line of Saras Singh from Haitong Securities. Please go ahead.

Saras Singh — Haitong Securities — Analyst

Hi, hi, Ram. So I’ve got two questions as well. So firstly, needed some clarity on the borrowing side. So we have around INR400 crores of debt on our books. So where exactly is this being utilized? And can you give the timeline of the debt repayment? And the second question is on the Mobility side. So we have around INR185 crore of revenue from Meru. So I would expect like, I would assume that another INR75 crore is from Alyte. So what has impacted Alyte in FY ’23 that the revenue is down 50% here? That’s all. Thanks.

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

So let me take both of those, I think questions in some form. So I think on the debt side, we do have roughly around INR400 crores of debt on the books. It’s spread across multiple parts of the business. The largest part of it, of course, has been debt acquired by MESPL, taken by MESPL for the acquisition of the Rivigo business, which is a little bit around that — roughly around INR220 crores, that’s long-term in nature and has a structured repayment plan around it, don’t know the details, but there’s a structured repayment plan on a fairly, I think attractive coupon, right, and that is the largest part of it.

Apart from that, we have around INR150 crores, which is spread across the MLL side of the business, which has largely been investments we made, borrowings we made to support acquisition of the Meru business from MNM in F ’21-’22, and to support the — and for the investment in Whizzard. Those were the two larger parts of that along with some amount of working capital there. There are also those working capital lines in the 2×2 business. There are working capital lines in the forwarding business as well and those are purely working capital lines, right.

So the large part of our long-term debt is actually in — is largely in — is really around — so there are two part [Phonetic] — large parts, I think 45% of it is working capital to support operating cycle business, 55% of it is really to support the — has been taken by MESPL to support the Rivigo acquisition. Beyond structured plans, as you know, there is no — our ratings are good. We have a window of cycling the long-term — of reaping the long-term debt. From a working capital perspective, I think that number moves up and down, right, as we need it. We have — and we don’t particularly see a significant change on the volume of that line, right. As far as the other question was concerned, sorry, Saras, could you repeat the second question?

Saras Singh — Haitong Securities — Analyst

Yeah.

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

The Meru numbers, yeah, the Mobility numbers. So the MLL Mobility numbers which you see declared of INR185 crores is the consolidation of the revenues of the Mobility business from Meru, which was historically for Meru and the Alyte business, right. And there is a period impact of it because the transit acquisition or the transfer of the business was halfway during the year, right. And therefore, there is — you want the full-year revenues, right, of the Alyte business.

From a full-year perspective, the businesses together, right, in the INR185 crores, the erstwhile Meru component of that is around INR50 crores, INR55 crores and the remaining part of that — that accounting revenue, it’s not platform revenue, it’s accounting revenue, and the remaining part of that is actually the enterprise transportation business, which is principally Alyte, right. And you will see that obviously in the other part of our financials, unallocatable expenses have come down in our books, and that’s largely because we are no longer reporting the Mobility segment as a segment in standalone earnings. And therefore to that extent, unallocable expenses have come down. But actually, the transfer impact, but if you really look at it, the lion’s share from a revenue perspective is still actually the enterprise transportation business in the numbers.

Saras Singh — Haitong Securities — Analyst

Got it. Got it. Thank you very much for that. That’s all from my side.

Operator

Thank you. We have our next question from the line of Krupashankar NJ from Avendus Spark. Please go ahead.

Krupashankar NJ — Avendus Spark — Analyst

Hi, good evening, and thank you for the opportunity. My first question, Ram, was on the warehousing revenues. Well, you did mention that there is a 0.6 million square feet reduction in the warehousing space, but the decline has been for two quarters now. And just wanted to get a sense as to are we expecting warehousing to moderate from current levels, because we had this discussion in the past and you were quite upbeat on adding close to about 2.5 million square feet per annum. Is there any change in stance over there? That’s the first question. Perhaps after you answer, I’ll ask the second question.

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

Hi, Krupa, how are you? I hope all is well. Yeah, so I think from a warehousing perspective, I think you have seen we declared — we — I think we reported a 9% declared reduction in warehousing and solutions revenues for the quarter, which is on back of a 6% — 3% reduction, I think we reported in the preceding quarter of the year. I think the large part of it actually has been — so if you look at warehousing and solutions, Krupa, I think we mentioned earlier, there are two parts to it. The largest part of it obviously is a pure warehousing piece. And there is — when you do end-to-end solutions, there’s an associated transportation piece as well, which is included in that numbers because we bill to a client on an integrated basis.

The decline in the year-on-year numbers in the fourth quarter has largely been on account of the restructuring of the Bajaj account, right. What has happened of the Bajaj account, obviously, is we had — we reported year-on-year roughly a INR32 crore reduction in revenues, quarterly revenues on — because of the restructuring of the Bajaj account, and that is a combination of warehousing and transportation. Warehousing, the warehousing space which went away was either given away, as I said earlier on, all was replaced by other customers, right. The transportation revenue obviously completely went away. And so if you look at our numbers and you adjust that Bajaj reduction, you will find that warehousing, the rest of it is largely pure-play warehousing actually went up year-on-year, right.

I think the net impact was INR32 [Phonetic] crores for the quarter, right. I think I’ll just pull out the numbers. But I think — but net, I think if I will actually see that it has gone up adjusting for the Bajaj impact. From a long-term stance perspective, there is no change. As I mentioned earlier, we just announced the construction of another million square feet of warehousing in the Chakan-Talegaon area, that is off the back of construction, which is already going on in Calcutta, in Guwahati. So expansions are going on in other places. We obviously will have top — tactically, we always do have white-space challenges in different parts of the business, but as of now, white-space, white-space is only 4% of the overall volume. And therefore, that’s something which is within our operating envelope.

Krupashankar NJ — Avendus Spark — Analyst

Thank you for that. The second was on the freight forwarding operations. Just wanted to grasp or tear. So while I do understand there’s significant pressure on pricing. And what is, is that we are trying to do with respect to sustaining profitability? And from there on, just wanted to get a ballpark number as to where kind of the profit — the margins hover around in the freight forwarding business, given that next year also we are looking — we are looking at the high base, we are starting at a decline of mid-teens, if I’m not mistaken. So any light you can throw on this particular piece?

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

I think, Krupa, I think the freight forwarding rate adjustment has been secular across the industry, right. So I think it’s really not — if I actually look at it on many bellwether lanes for 20 feet queues [Phonetic], prices are actually down up to 75%, 80%, we’ve actually been able to offset that through volume growth. And I should go — so what I’ve always said, Krupa, everyone on this even earlier on is that, you got to go back and look at three years and adjust out this kind of one-time gorilla earnings we’ve had, and adjusted out, I think our CAGR back to ’18-’19 is still around 26%, 27% on revenue and is not up that on earnings.

So that growth trajectory still remains. I think the focus, Krupa, continues to remain on growing volume and supplementing India origin, India destination volume with the hubs or the operations we are building in Dubai and the U.K., right. From a broad guidance perspective or a broad indication perspective, I think our aspiration there has been to grow the business at the 18% to 20% level, which would then in F ’26-’27 mean revenue probably of around INR900 crores to INR1,000 crores, right on an annualized run rate basis.

And we believe that the business will be at 2% to 3%, roughly at the 3% PAT level. We’ve been there before, not just in the really, really good quarters, the really great quarters we’ve have been above that. But normalized, I think we expect early the 3% PAT will actually be very sustainable for us. I think once we reach around INR500 crores — INR450 crores to INR500 crores annualized revenue, I think we should be in the envelope of around 3% PAT, right. And so — and thereon, it’s a volume growth play. And as I said earlier on, I think we clearly do understand that and recognize that the pricing corrections have been huge, but as said, the underlying volume growth has actually offset a bunch of it. I think as you go forward, if you are able to sustain that volume growth, we should be able to see a recovery to peak levels. Our highest quarterly revenue of INR112 crores, if I’m not wrong, INR112 crores or INR118 crores, right, and in that range. And I think we should be — I fully expect to be able to get back to that kind of peak rate in the first half of F ’24-’25.

Krupashankar NJ — Avendus Spark — Analyst

That’s really helpful. Thank you, and all the best. I’ll get back into the queue.

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

Thanks, Krupa.

Operator

Thank you. We have our next question from the line of Tarun Bhatnagar from Tribeca Investment Partners. Please go ahead.

Tarun Bhatnagar — Tribeca Investment Partners — Analyst

Yeah, hi, thanks a lot for taking my question. My question is on Rivigo. So we have seen very heavy losses in this quarter, which has led to a disappointing loss and despite your core business doing really well. In this regard, I wanted to understand firstly, what was the thinking behind you acquiring Rivigo? And in case we are planning further acquisition, what sort of returns would you be expecting from them? And finally, how do you get Rivigo back to profitability and generate the desired returns? Thank you.

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

Sure. I think, Tarun, all the questions are all interlinked in some form, but I’ll answer the most — the outlier there in terms of what — just from an acquisition philosophy perspective. So I think from our perspective, three years ago, we essentially said that our goal is to build a business, which is — which combines the surface FTL transportation business with more warehousing on the 3PL side and then build out new service lines around freight forwarding, cross-border movement, part truckload and last-mile delivery. So we can actually provide customers — and coverage across the entire supply chain, right. And most of the acquisition has been north have all been in line with that story or that goal. We’ve not kind of gone left field away from that, right. So that’s one thing which I want to — so the strategic intent — for our strategic intent to drive acquisitions and not the opportunistic value around the transaction itself. And that philosophy, I think will remain in the business.

I mean obviously we run through returns profiles for all the acquisitions as we have done for Rivigo as well as a matter of governance with the Board. And those return, long-term return profiles are essentially what the Rivigo acquisition will also deliver for us, right, on a fully consolidated express business profile, but I won’t go into segment targets in terms of returns.

The longer-term target, which we have set out — medium-term target we have set for the overall business is to get north of 18% return on equity, of around 24% return on capital employed. And this — and our current business plan for the express business also ties into that, right. So from a philosophical — from a directional perspective, I think it’s intent driving the acquisition, the metrics are all accretive in nature. We are not — we don’t do — our acquisitions are not designed to basically chase revenue. But I think I’ve always said in logistics, there are oceans of revenue and islands of profitability. We don’t intend to be stuck in the ocean.

So that’s kind of clearly there from a philosophical direction perspective. I think specific to the Rivigo acquisition, I think our strategic view of supply chains in India is that across the board, India will see greater densification of networks. I think over the next five years — what we’ve seen over the last five years to seven years a significant densification of networks. And densification has two dimensions, there’s a dimension of coverage and a dimension of latency, right, how deep you have to cover the geographies and what is the latency the niche customers expect delivery to happen.

Our latency shrinks and coverage expands, the need for moving smaller loads of volume actually will increase further and further. We’ve seen that play out and we expect that to further play out in the industry, right. Everything which is happening from things like multi-modal etc., is all on arterial line-haul kind of movement, it’s not actually a solution for densification in the country. As you see more Tier 2, Tier 3 kind of penetration, this is something which we believe will continue. And the intent of buying Rivigo was to build a digital-first business with a strong technology stack, nationwide coverage in terms of direct, right, or direct delivery coverage, right. And be able to start with that network with existing volumes we already had with time-defined service levels, right. And that’s kind of what drove the acquisition rationale. I think what we’ve got with our business is — has been — has a very strong network coverage.

We are in more than 270 locations across the country and strong retail or SME presence, right, with a strong business partner network, which adds yield to the business and its revenues, right. And obviously, a great fit into the rest of our business, because it allows us to provide customers with real depth, right, in terms of coverage, right. So that’s been the strategic intent and everything, which we are right now on, we’re pretty happy about it. I think though it’s kind of delivered our 90-day goal on the transaction. Let’s remember, it’s only been 90 days really since we acquired the company, it seems like a much longer time at times. So you see the numbers, but it has only been 90 days, right.

And we’ve kind of hit that 90-day goal, which has largely been integration. We are happy with the tech stack. Network coverage has been solid. So all has been really positive. Now that said, obviously, the question or the big gorilla in the ring is the profitability of the business, right, which I think is what you alluded to, right, in larger measure in your question. And I think I’ve answered that earlier when I think it was — I don’t know who asked the question, but I think earlier that what — there are four levers. I think if you look at it simplistically in your cost structure of the business, you have two big transportation costs, which is the line-haul and feeder. And the second — is the line-haul and the second is just feeder and delivery. And then you have operating costs of running your hubs and your network because this you run your hubs and networks, no matter whether there’s load or not. So it’s a high operating leverage model.

And then there is overheads and other cost optimizations, which are there, which is kind of below the gross margin level, but above the EBITDA line, right. So we have an compression strategy in all of them, right. Each of them is specific. I think the line-haul and the transportation leverage, a lot of that will come as we transfer the MLL volume across and will further increase as we get additional volume growth, which we estimate to be the 12.5% to 15% range over the next few years on an annualized basis, right.

So that’s something which we’re going to drive that optimization because we have to move to larger trucks, better loading of the trucks, right. For instance, on lanes that we’ve already done early optimization in April, we have seen a 6% to 7% improvement in the — in vehicle utilization, which brings down — which is a very significant impact on cost, right. The second part is obviously facilities rationalization. We were running — we are — effectively we’re running two networks, an MLL Network and an MESPL network. And those networks have been crushed together or combined together, and therefore, we will get a significant amount of volume leverage. But I think the same facilities doing things, running for three shifts, running at higher productivity levels, remanning the floor to drive better improvements there.

And that is quite significant because facilities and what is fixed, period fixed cost in nature is around 20% — 18% to 20% of our cost mix. And so if we can run the same network with 30%, 40% more volume, we’ll actually get a operating leverage flowing in. There is, of course, a bunch of things on other cost reductions which are there in terms of our spend levels, overheads and so on, which are also being addressed. Some of those have already been addressed, they have not flown into the numbers in the quarter, because obviously as you do optimization on some of that, you have costs of doing that, right, whether it’s shutting down facilities and you have to take costs on shutting down facilities or adjusting productivity on manpower, you have associated costs of that.

Those costs have shown up in Q4, but they will stop showing up from Q1 onwards, right. And therefore, you will see this optimization flow through, right. Our first goal obviously is to get to that positive EBITDA level. And once we are able to — so as you get to that level, I think then we actually are looking at optimizing the numbers. So there is a clear game plan.

I understand that obviously the sticker shock somewhere is on the numbers, but that’s actually what we had given as an indication when we did the transaction as well that we expect that the transaction, which we closed, we take on favorable economics from an acquisition price perspective, because we have a five-quarter to six-quarter window to optimize the business and credit to kind of accretive level and probably a little bit more time to get it to peak earnings, right. And as of now, as I said, we are notwithstanding the size of what you see on the quarter’s results. I think we feel pretty good about where we are, and we are well positioned to deliver what we said we will. And that will be in line with our 18% return on equity target for the Company.

Operator

Mr. Bhatnagar?

Tarun Bhatnagar — Tribeca Investment Partners — Analyst

Yeah, thanks for the answer. Just one supplementary question on that. Firstly, maybe you can maybe talk us — talk through on your acquisition strategy, are there further acquisitions you are looking at? And secondly, also wanted to understand you mentioned that you will be getting back to profitability by end of this year, firstly, can you confirm that? And secondly, like what are the, like things we should be watching out in terms of the actual operations in the business which you are currently doing and which we should hope to achieve maybe by the end of — when we talk three months later and maybe when we talk maybe next year or sometime later in the second half?

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

So, Tarun, I’m assuming your question, your question is specific to the Rivigo business, the express business, right?

Tarun Bhatnagar — Tribeca Investment Partners — Analyst

Yes, yes. Rivigo and also on acquisition plan?

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

Sure. So acquisition philosophy, I think as I said earlier on, I think our strategic intent, we identified a few areas and those are pretty much done now. So there is no deliberate desire to pursue an acquisition on any specific area in the near-term. We might find tactical transaction if something happens because it’s really accretive to earnings and is very favorable to fit, but let me just say, we’re not looking right now. I think our focus, as I said last quarter and this quarter as well, Tarun, is to get to optimize the acquisitions we have done and deliver the earnings which we committed on that, right.

And as we have done on the 3PL business, right, to drive earnings improvement, we’ve kind of done that turnaround in large part on the Mobility acquisition we did, and now we kind of focus on doing the same thing on the MESPL or the Rivigo acquisition as well. So no real — so that’s kind of — that is from a philosophy perspective, I hope that’s clear. I think from an MESPL perspective, I think there are three big — as I said, there are three big parts to this puzzle. And I think as you look at markers along the way, I think, Tarun, there are three things which you should — we look forward and I’ll be fairly transparent about that. The first one, I think obviously is volume growth, right.

We are going through a process of integration right now. It’s a big focus on service delivery and controls, right, putting our governance systems in place, putting some of our processes and policies in place. But as we go into the second quarter of the next — of this financial year, I think one thing you really want to look at is that volume growth coming back, right. And as I said our — the combination of that volume, which on a cubic feet basis is probably — we have a pre-acquisition level on a cubic feet basis, we’re probably around 5 lakh tonnes. And so that’s the first — that’s the starting marker, and the question is how much do we grow from there. Our goal is to grow at 12.5% to 15% a year. So that’s one marker to clearly look for, Tarun. The second obviously is to look at the gross margin line, because that’s where you have a lot of the direct costs involved, and that’s where the operating leverage of the site utilization and line-haul cost efficiencies get better.

So I think that’s something which we hope to make progress on faster than probably on revenue because we are tying that optimization right now. And the third part, of course, is the EBITDA piece, which is between the gross margin and the EBITDA line, which is a lot around the optimization of various items, right. Obviously, there is a carrying cost of the debt, which is there on the transaction, which I think is a separate — there’s a separate process through which we look at, say, what are the base to kind of to reduce the impact of that. But those are the four things largely, I think, Tarun, which I would look at on a monthly or quarterly basis. Hopefully, it’s only on a quarterly basis, but the catch-up otherwise as well. Those are the four things, which I think will move the needle right on the path to profitability on the business.

Tarun Bhatnagar — Tribeca Investment Partners — Analyst

Thank you.

Operator

Thank you. We have our next question from the line of Sumit Kishore from Axis Capital. Please go ahead.

Sumit Kishore — Axis Capital — Analyst

Good evening. Two questions. The first one is on your path to value creation and the 18% ROE target by FY ’26. I mean, how does this look when you consider the business returns on a ROCE basis? And what is the math you’re using on net margin when you’re arriving at that 18% ROE for a relatively asset-light business? The second question is on intangible assets and the things that you’re seeing in the balance sheet there. So from INR10 crores to INR240 [Phonetic] crores. So what sort of explains that and what is the intangible assets?

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

Yeah. So I think, Sumit, I don’t have the exact intangible number with me. But I would say that almost all the intangible — a substantial part of the intangible growth has really been the goodwill on the MESPL acquisition, that I think is the — that I think is the bulk share of that number. And I can — somebody reach out to you, Sumit, with a more specific breakup of it. But I would assure you that I mean, it is probably 70%, 75% of the number is really that…

Sumit Kishore — Axis Capital — Analyst

No, I would have also thought so, but goodwill on consolidation, you mentioned in the presentation is flat at INR4.3 crores in your disclosures?

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

Okay, so let me — so I’ll come back to this, Sumit. I’m just looking at the slide, while we do that, I think in terms of your earlier question, your first part of your question in terms of the return on equity and how we measure it. I think as you know, I think we’ve said multiple sets of businesses, Sumit. So it’s hard to say that, I have one bellwether number across the board. But I think if I look at it simplistically, first of all, I think we do obviously look at ROE rather than ROCE because we do have some leverage on the books. And therefore, if we had zero leverage, we would obviously look at ROCE as being a proxy for ROE, but ultimately it’s shareholder value and wealth, which is most important.

So bellwether metric is ROE, Sumit, right, not ROCE, that’s more an operating metric for us internally. Now in the constituents of that metric, I think two broad elements. I think one is, what’s profitability and the other one is what’s going to be our cap table and continued cap investments in the business. And I think from a cap table investments in the business, the largest part in terms of density of our cap table has always been the 3PL investment. And I think we spent around INR75 crores of capex last year. We’ve always said that, we expect capital to be in that 1.72% range, that’s been the bulk of it. I think the only exception was last year when capital went up from INR120 crores on the back of some of the expansion we are doing. But in general, it’s always been at that range, and I expect that very much to be at that range, Sumit, right.

And I think as we model out our numbers or look at our numbers, we kind of look at it being in that range. The other part of the equation, of course, is profitability, and — but I won’t give one number as the number for the entire Company. I don’t think that’s very practical. I think we have said earlier, Sumit, as you know, that we expect the 3PL business to get to around 2% at a PAT level, and we expect different parts of the network services business to be between 3% to 4%, right, at a PAT level. Those businesses, we do believe will remain at 90% plus of the overall basket of MLL’s earnings. So I think those are the primary constituents of that 18% return on equity.

Working capital, of course, it moves a little bit. NWC was I think 14 days for the quarter, up three days compared to last year, but that’s largely just with marginal movements on our DSO, not being any structural issues around it, right. So I think those three pieces largely, I think, Sumit, of what kind of blend into that into our confidence in getting that to [Phonetic] past 18%. The biggest earnings element in that, of course, as we’ve already discussed at length today in multiple questions has been the express business, getting that back clearly is an hang and that’s obviously, we have great fair measure of confidence in delivering that.

But that I think is the short-term hang which we have to solve for. And then, of course, it’s solved for as volume builds up, we do believe that — and there are — and these numbers are even probably lower than some of the comps in the industry. So we actually feel pretty good about getting that. But I don’t know, Sumit, I’ve answered that question. As far as your — I think as far as the intangibles is concerned, I think it’s largely around goodwill. I think the intangibles on consolidation, yeah, I think I’ll come back to you on that, Sumit. I have your number, so that’s good. So in fairness, I don’t want to give you an halfway answer. So just give me some time, and I will reach out to you separately, Sumit, and tell you a note on that.

Sumit Kishore — Axis Capital — Analyst

Sure, thanks, Ram.

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

All right.

Operator

Thank you. We have our next question from the line of Teena Virmani from Kotak Securities. Please go ahead.

Teena Virmani — Kotak Securities — Analyst

Hi, sir. I have two questions. One is related to this other unallocable expense, which you talked about the impact of Mobility segment also. But there is a sharp decline beginning FY ’23 and FY ’24. So was the Mobility segment contributing to somewhere around INR79 crores, INR80 crores to the overall component? And how do you see it going forward, like, was it a one-time impact or is it going to be…

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

No, no, I think — so, Teena, I think the way to look at it is a bit of the other way around, right. So the Mobility business, so, unallocatable expense is X rupees and that unallocatable expense is what is shared between both businesses. So when two businesses become one, there’s nothing to share, right. The two businesses became one in September, right. So we have two segments reported until September. On September onwards, we report only one segment and because there has been one segment, there’s nothing unallocable, everything is allocable, right. So as simple as that. So don’t associate with the Mobility business as such because it’s not a cost dividend by the Mobility business. It’s just a fact that common expense pool, which would have been attributable to two segments is no longer attributable to two segments because there is only one segment. And therefore, has been fully attributed…

Teena Virmani — Kotak Securities — Analyst

And this will remain?

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

Yes, ad that will remain, and therefore, has been fully attributed into the 3PL businesses segments numbers and it’s reflected in the profitability of the business.

Teena Virmani — Kotak Securities — Analyst

Okay, okay. So this kind of trend we will see going forward also?

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

Yes, I don’t think we see — I think express is pretty flat in the second half of the year and that’s actually what, I think you should expect to see going forward, because the MLL holdco right now is pretty much — I mean Mahindra Logistics is now almost completely a 3PL Logistics Company, all the individual network services business, the individual entities as is the Mobility business.

Teena Virmani — Kotak Securities — Analyst

Okay. My second question was related to Bajaj Electrical contract, like you mentioned that you’re already scaling down the contract. So which complements are actually getting scaled down in this particular contract? And how much incremental positive benefit that you can yield on the EBITDA side, because it would have some impact on the revenue side, but — so what is the negative impact on revenues and what is the positive impact on EBITDA that can happen from FY ’24 onwards?

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

So, Teena, I think the Bajaj Electrical business at peak was in line with what we had said at the time of kicking off the business. I think when we did the contract, we had said it’s roughly a INR200 crore annual business. I think at a run rate basis, it’s probably peaked around there, because as you know, we had COVID impact and so on through the year, right. In Q4, I think revenue was around INR14 crores, right, down — as I said earlier on, down around INR32 crores for the same period last year, right.

On a going forward basis, we expect that should be at the same level through the most of this financial year, right. From a margin perspective, the business we’re doing now is all margin-accretive, and therefore, there is no — shutting down the business further does not necessarily add to margins, if that’s the question you’re asking, that doesn’t add to margins, right. So I think we are right now at a place where obviously, volumes are around 25% of what the contract was initially expected to be at, right, and that should continue for most of this financial year, right. And as I said, the margins are positive today at a pre and post Ind AS level. And therefore, there is no earnings optimization to further decline of volume.

Teena Virmani — Kotak Securities — Analyst

Okay, got it, sir. Got it. Thank you.

Operator

Thank you. Ladies and gentlemen, in the interest of time, that was the last question for today. I would now like to hand the conference over to management for closing comments. Over to you, sir.

Rampraveen Swaminathan — Managing Director and Chief Executive Officer

Right, thank you very much, and thank you all for joining us today. I hope we’ve been able to answer all the questions and queries you had. If you do have any further questions, please feel free to reach out to SGA, our Investor Relations partners or the management of the Company, and we look forward to have the opportunity to respond to those. Thank you once again for your continued interest in the Company and our results, and a good evening to all of you.

Operator

[Operator Closing Remarks]