TCI Express Limited (TCIEXP) Q2 FY23 Earnings Concall Transcript

TCI Express Limited (NSE:TCIEXP) Q2 FY23 Earnings Concall Oct. 31, 2022

Corporate Participants:

Chander Agarwal — Managing Director

Mukti Lal — Chief Financial Officer

Analysts:

Vikram Suryavanshi — PhillipCapital India Private Limited — Analyst

Amit Dixit — ICICI Securities — Analyst

Alok Deora — Motilal Oswal — Analyst

Krupashankar NJ — Spark Capital — Analyst

Sagar Bhatia — Prabhudas Lilladher — Analyst

Ravi Naredi — Naredi Investments — Analyst

Radha — B&K Securities — Analyst

Mayur Parkeria — Wealth Managers India Private Limited — Analyst

Prit Nagersheth — Wealth Finvisor — Analyst

Ashish Shah — Elara Capital — Analyst

Sumit Jain — ASK Investment Managers — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the TCS, I’m sorry, TCI Express Limited Q2 FY’23 Conference Call hosted by PhillipCapital India Private Limited.

This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as of the date of this call. These statements do not guarantee the future performance of the company and it may involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.

Now I hand the conference over to Mr. Vikram Suryavanshi from PhillipCapital. Thank you and over to you sir.

Vikram Suryavanshi — PhillipCapital India Private Limited — Analyst

Thank you, Venba. Good evening and very warm [Technical Issues]. Thank you for being on the call of TCI Express Limited. We’re happy to have the management with us here today for question-and-answer session with the investment community. The management is represented by Mr. Chander Agarwal, Managing Director; Mr. Pabitra Panda, Chief Operating Officer; and Mukti Lal, Chief Financial Officer. Before we start with the question-and-answer session, we’ll have opening comments from the management.

I will hand over the call to Mr. Chander Agarwal for opening comment. Over to you sir.

Chander Agarwal — Managing Director

Thank you. Good evening everyone and welcome to the Q2 financial year ’23 earnings call of TCI Express Limited. I would like to thank you all for joining us here today. To start with, I will give you an overview of industry and business for the quarter and then will hand over the call to our CFO, Mr. Mukti, to brief on the financial performance for the quarter. Our earnings presentation has been uploaded on the website and stock exchange. I hope you had chance to look at it.

The first-half of financial year ’23 continued to see recovery in overall macroeconomic scenario, guided by strong government initiatives to summon with the economy. The trend was visible in many economic indicators like index for industrial production, GST collection, stock market indices and the report from external rating agencies. During the quarter, we saw an overall improvement in the output for the month of July, with marginal decline of is primarily due to the decline in manufacturing and mining sector. The e-way bill generation is another sector that indicates the performance of the logistic sector. Overall the e-way bill generation for September ended up on a strong note with reaching 7.6 crores visit by saying [indecipherable] season demand, had a growth of 152% over pre-COVID period.

Given the strong economic environment, the logistics sector continued to experience recovery trend. TCI Express being the market-leader in express freight and logistics delivered the highest quarterly revenue of INR312 crores, registering a growth of 13.2% year-on year and 6.8% on sequential basis. The top-line growth was primarily driven by the SME customers, higher-volume across services, automation of the sorting centers, also substantially increased the daily capacity by reducing the parcel holding time and the labor involvement, resulting in enhancement of complete or operational efficiency and strong sustainable margin.

EBITDA for the quarter was INR54 crores with a strong margin of 17.2% as compared to 15.3% previous quarter. The EBITDA margin was primarily on account of higher capacity utilization and operational efficiencies. Coming to business update during the first half of the year, we have incurred total capex of INR50 crores, which has been primarily spent towards the purchase of land in Calcutta for setting in sorting center and also network expansion by adding 22 new branches to serve a growing market.

The automation and digitization will enable us — enables us to be much more efficient and in continuation deliver superior customer experiences, to enhance also the operational efficiencies. By leveraging our asset-light structure with automation and digitization, we continue to enhance our competitive position as a leading provider of Express Services. Our newly-launched services are also growing strength to strength and we expect these services offerings to contribute productively to the topline in the forthcoming quarters, enabling us to deliver higher margin levels.

From the balance sheet perspective, we continue to maintain strong capital structure, providing us the financial flexibility. We continue to focus on balanced capital allocation and strengthening of our network. And we have a strong performance in the first half of the year. I’m pleased to announce that the Board of Directors has recommended an interim dividend of INR3 per share, with a payout of 150% on the face value. Looking ahead, the industry remains poised to grow strong. As a growth, our logistic sector is fully aligned with the India’s economic growth potential.

With major policy push aided by the strong economic recovery, we remain confident in our ability. And with our superior product offering, we will further, help us benefit from the upcoming growing opportunities. With our customer-first focus and innovation-driven asset-light business with model, we remain confident of our superior value-added services to retain our leadership position.

With this, I’d like to hand over now to Mr. Mukti to talk about our financial performance for the last quarter. Thank you.

Mukti Lal — Chief Financial Officer

Yeah, thank you, Chander sir and now I would like to discuss the financial performance of the company and during the last quarter, our revenue from operations stood at INR310 crore for Q2 FY’23 as compared to INR290 crore in Q1 of FY’23 and INR273 crores in Q2 FY2022. The total income for the quarter was INR312 crore as compared to INR292 crores in Q1 of FY’23 and INR276 crores in Q2 FY’22 translating into a sequential growth of 7% and 13% year-on year basis. The significant growth is attributed to multiple factors like growth in-demand from SME customers, improvement driven by automated sorting center, higher capacity utilization, increased demand from rural areas and festive season.

So overall, the total income for the first half of the year is INR605 crore, as compared to INR500 crore last year posting a strong year-on-year growth of 21%. We witnessed the strong improvement in EBITDA and margin as well and the EBITDA stood at INR54 crore with margin of 17.2% in comparison of 15.3% in the previous quarter. So I am happy to report that for the first half of the year, our EBITDA is INR98.5 crore as compared to INR81 crore in the same-period of last year.

So the net profit for the company in Q2 is INR38 crore with the margin of — robust margin of 12.1% as compared to INR31 crore and margin of 10.6% in Q1 FY’23 and INR34 crores and margin of 12.3% in Q2 FY 2022. Overall, the net profit for the first half is INR69 crore with a margin of 11.4% registering a year-on year growth of 19%.

As far as our future focus is concerned, we will continue to invest in technology and investment automation to drive a more efficient operation and providing superior customer service. We invested a capex outlay of INR50 crore during the first half of the year, it was double. The ongoing automation and digitization, which will enable us to be much more efficient in delivering superior customer experiences and also our operation efficiency in the long-run, which enables us to deliver industry-leading performance, by leveraging our asset-light structure — structure with automation and digitization, we continue to enhance our competitive position as a leading provider of logistics services.

So going by the festival demand trend and government push in improving the overall connectivity across the country, I’m highly optimistic of higher capacity utilization and better conjunction from our new offerings like better contribution from our new offerings like pharma cold chain, C2C express and rail express. The impact of these changes will be reflected in our financial performance in the forthcoming quarter.

Now thank you very much. And now I would like to open the floor for question-and-answer. Over to you moderator, please.

Questions and Answers:

Operator

Thank you very much, sir. [Operator Instructions] The first question is from the line of Amit Dixit from ICICI Securities. Please go ahead.

Amit Dixit — ICICI Securities — Analyst

Yeah, good evening, everyone and thanks for the opportunity. I have couple of questions. The first one is on the tonnage. What was the tonnage in Q2 FY’23? And the second question is on working capital. So net working capital days exit fee they were higher in this quarter particularly due to high receivables. Do you see the possibility of the [indecipherable]? And if so, what could be the net working capital days by the end of FY’23. These are the quick question, sir.

Mukti Lal — Chief Financial Officer

So tonnage numbers in this quarter — for this quarter is 247,000 tons and in half year, half year it is 477,000 tons. And the second question. You asked for the working capital days. Yes, that has increased by almost nine days and it is a very temporary, because what happened in a last month of this quarter was the highest revenue we have achieved, that’s why it has a temporary impact on that. Another aspect of that in sundry creditors, we have had some vendor on early-on due to this festival season. So once we do we have made on some early payment to them. So that’s why it’s just like in a temporary impact in sundry creditors days and the debtor days. So it will be normalized in — I think in Q3 it will be normalized back to kind of like 48 days to 50 days in [indecipherable] days and 35 days creditor side. So net working capital cycle will be back to 14 to 16 days.

Amit Dixit — ICICI Securities — Analyst

Sir, basically INR29 crore, I think was locked up in receivables in this half year? So you are saying that at the — I mean, year goes by this also will be normalized?

Mukti Lal — Chief Financial Officer

Yes. This will be also normalized, it may be like — you rightly said is increased by INR29 crore, it may be increase of like by year end maybe INR10 crore or INR15 crore max in overall basis.

Amit Dixit — ICICI Securities — Analyst

Okay, wonderful, thanks and all the best.

Mukti Lal — Chief Financial Officer

Thank you.

Operator

Thank you. Our next question is from the line of Alok Deora from Motilal Oswal. Please go ahead.

Alok Deora — Motilal Oswal — Analyst

Good evening sir and, congratulations on great numbers, especially on the margin side. So just wanted to understand on the volume trend, how it has been and how is the festive season shaping up for us looking at the numbers, it seems have been pretty good. Just because in some sections of the logistics segment, we have been hearing of some slowdown in September? So just your thoughts on that.

Chander Agarwal — Managing Director

I don’t see, there is a slowdown as such, compared to other sectors. But in general, the economy is doing quite well and in fact most of the sectors, but because of year end, we have not seen any sort of like complete slowdown or anything of that sort.

Alok Deora — Motilal Oswal — Analyst

Sure. And also just wanted a sense on how is the Gurgaon sorting center has been coming up, because I understand that first couple of quarters after the commissioning would have been more of testing period time. So just — how is the feedback been then —

Chander Agarwal — Managing Director

[Speech Overlap] is already up. We’ve already done the maximum — like the — impact has already been seen of labor reduction of loading the trucks. The time it takes to the trucks to — it used to take earlier, the halting period. But this has to noise with the other locations. Really get another set of benefits coming in. So if you look at location A, B and C, if you only do this from location A. And then you don’t do it in B. So you get only half of that benefit. So it is very imperative that we do that location B also going, so that, if the vehicle is halting say, 12 hours or sorry 24 hours on each side and then that means it’s for the say almost 48 hours then and we were able to reduce it to eight hours. So we had a substantial saving right and then, so that sort of benefit will come as we keep going further into expanding occupation into other sorting centers. This Gurgaon had been performing very well and I invite all of you to have a visit this plant and so you can really see what we are talking about.

Alok Deora — Motilal Oswal — Analyst

Sure. Sure. And just last question so. However, we looking at you know deploying the automation at other center like Pune. How will be godown replicate that to other center? Any update on that or any strategy behind —

Chander Agarwal — Managing Director

Of course, our goal is to cover 10 — all 10 — the major 10 to 11 in the next four to five years. And of course, the learning curve comes down but at the sorting center that EBIT but automates on each. But obviously with the land and the land acquisition and all of that, becoming that time also. So and then of course the construction like these others — Gurgaon sorting center is growth of [Technical Issues] because of the pollution, norms and construction has been halted again in the Delhi. So I think you know as well. So I think these sort of challenges are always going to be in India and we have to live with that. So it wouldn’t be a bad. I think the four, five year plan that we have is it — it’s kind of like quite, I would like to achieve it.

Alok Deora — Motilal Oswal — Analyst

Sure. Just last question. So these margins of 16.5% to 16.6% that’s — how are we looking at that in the second half? Would it be at similar levels or it further improve from here?

Chander Agarwal — Managing Director

As it will 100% further improve the — there is no denying of that. I mean, they have to be always — there is no reason for it to come down, because like as I mentioned the economic conditions and awaiting period although it be inflation, everything seems to be normal. I and — with that there is no reason for the margins to come down.

Alok Deora — Motilal Oswal — Analyst

Sure. Great sir. Thank you very much and all the best, sir.

Chander Agarwal — Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Krupashankar NJ from Spark Capital. Please go ahead.

Krupashankar NJ — Spark Capital — Analyst

Good evening and thank you for the opportunity. Just couple of questions from my side. First on the automation front up, Chander Ji, you have mentioned that the turnaround time, of course, it’s very [indecipherable] that automation coming to reduce on incentives, but can we expect the margin improvement? So given that are trucks, are they vendors are paid on a per kilometer basis so margin improvement will not come to the key drivers, if I were to understand.

Chander Agarwal — Managing Director

Sorry. Can you repeat last line, what you said?

Krupashankar NJ — Spark Capital — Analyst

What are the margins, which is for example, you do highlight the margins will expand because of automation and that is, more or less translating into a shorter term turnaround time. So what are the key drivers given that you are paying our vendors on per kilometer basis, so the turnaround time shouldn’t matter which the respect to margin profile? So can you explain a little bit more detail on that front?

Mukti Lal — Chief Financial Officer

Yeah. Well, so basically, as Chander Ji had mentioned, we had a halting time right now in the range of 22 hour to 24 hour on a both end, like origin sorting center and destination sorting center. So supposing, they are making a kind of like they have tripping month from particular A location to B location. Now we are able to reduce their wage, now we have reduced halting time on location A. That means their trip will be increased in a particular month. So they will be saving on their fixed-cost like again driver salary and insurance and threat for sufficient everything they will be saving because and their inflow will be increased. So they will be increased. So they will be — whatever savings they will be had — they will be — they are saving with us, like they have done in the time or where we increase the axle load in these trucks and they — whatever saving they have because then they have share with us. So same way, we are doing for this one. This is the one aspect.

Second aspect, obviously, we also are able to reduce the labor component on this center. So that is also a part of direct cost and it will be also reducing on that. We are apart like — we are enhancing customer satisfaction level and it is a high turnaround time, so itself high turnaround time is doubling the capacity of the existing center, we can be like process of double, triple cargo in the same center by arranging or managing this speed of machine, because it’s know has been completely automated one. So in a various measures, it is giving a high-efficiency to us slightly, you will be wonderful like — we can be adjust the speed of this movement of cargo in this for that sorter, like supposing a lead time, we can we reduce the speed. In high time, we can be like increase that speed. So accordingly, cargo will be processed on that. But in the sense, it is giving a very good kind of efficiency in the system overall, in the part of like efficiency improvement and also like reduction in cost also.

Krupashankar NJ — Spark Capital — Analyst

So there should be order right on Gurgaon is then the next would be fully then followed by Chennai and then I think, can just list on what are the key sorting centers, which should be coming the next two years if at all. I mean commissioning itself by FY’24?

Chander Agarwal — Managing Director

Yeah. So basically, we are trying to negotiating for the — now we started the negotiation for Pune. Then it will become for Chennai, Kolkata, Mumbai, these are in-line with it. And, obviously, I think by 2025 like three years down the line, we will be having a five more in this three year.

Krupashankar NJ — Spark Capital — Analyst

Understood. Understood. And with respect to the load factors on the truck side, can you just elaborate [Technical Issues] for the quarter.

Mukti Lal — Chief Financial Officer

The load factor in this quarter is 85%.

Krupashankar NJ — Spark Capital — Analyst

Okay. And is there any guidance with respect to revision in the guidance of the respective revenue and margin for Slide 23 and if at all for FY’24?

Mukti Lal — Chief Financial Officer

So whatever guidance we had given in inception of this year we are — it’s still on the same path, we will be certainly achieve 18% to 20% revenue for the full year and same we are also looking for FY’24 and obviously, we want to be enhance our margin level. So margin level in this year we are planning to be — have on full-year basis 17.5% and then next year again in the range of 18% plus.

Krupashankar NJ — Spark Capital — Analyst

Understood. Thank you and all the best.

Chander Agarwal — Managing Director

Thank you.

Operator

Thank you. Our next question is from the line of Sagar Bhatia from Prabhudas Lilladher. Please go ahead.

Sagar Bhatia — Prabhudas Lilladher — Analyst

Hi, sir, congratulations on these set of numbers. Could you just want to [Technical Issues]

Operator

Mr. Bhatia, if you’re on a speaker mode, can you please switch to handset and speak. Your audio is a bit muffled, sir.

Sagar Bhatia — Prabhudas Lilladher — Analyst

Okay. Is this better? So quickly just want to understand the cold chain business and what margins are you looking at over there going forward for the next year?

Chander Agarwal — Managing Director

Yeah. So cold chain business, we just doing the pharma cold chain business, we are not doing other businesses or food or other grocery items. We are not doing that. Other thing we are also not doing that warehousing we just doing the trucking, refrigerated truck we are moving. So margin level in these trucks is also in the range of 18% to 20% and we are doing for the only pharma customers. Next year onwards this will be also the same — we are looking for the same margin level, because again, if you see like, we carried a like this perishable items we may be not have that much margin but we are just carrying that these high value magazine, high value vaccines everything we are carrying high-value that’s why margin level we are able to intact to in the range of 18% to 20%. Other aspects of that because we had a big branch network across India, so we — that’s why again, same way liking we are doing in a surface transit. We are able to fill these truck back to also like supposing one drug, I will move from Pune to Delhi. Then again we have the cargo for the daily to Pune. So that’s where we are able to generate the good margin level and again it is also same way, it is asset-light model we are not owning or not planning to own any truck on our balance sheet.

Sagar Bhatia — Prabhudas Lilladher — Analyst

All right. All right. That answers my question. Okay, thank you so much.

Operator

Thank you. Our next question is from the line of Ravi Naredi from Naredi Investments. Please go ahead.

Ravi Naredi — Naredi Investments — Analyst

Thank you, Chander Ji, really you are doing fabulous and extremely well. Sir our market share is 7% in India, which you show in the investor headline, where we can see in next five years this 7%?

Chander Agarwal — Managing Director

Thank you for your encouragement. Now I can tell you one thing that the market is so vast. And 7% to 10% is what we said. Now with the new [Technical Issues] policy coming up, there’s going to we got 15% to 18%, but the fact is that how do you determine that because government doesn’t give the data for now GST collection of 18% versus 5% and all that. So if really — if you really see the expectation, of course, I mean, logically it would mean that we are getting market-share, giving the larger the portion of the economy is becoming formalized. It’s coming under GST and [Technical Issues] is when we will see our market share also increasing in the organized segment.

Ravi Naredi — Naredi Investments — Analyst

Okay. But you will not able to quantify, right?

Chander Agarwal — Managing Director

See, it’s very early, because we have to see, COVID just got over. The war get started, war is probably going on —

Ravi Naredi — Naredi Investments — Analyst

War impact is not known India at list.

Chander Agarwal — Managing Director

But we are getting affected, right. That high impact and that is also led to inflation now this year [Technical Issues]. So certainly and we — I mean, even though I have not done the deal with Russia and we’d be looking at like observed basis on prices and inflation. So there are multiple factors that we would be watch out for.

Ravi Naredi — Naredi Investments — Analyst

And sir, in quarter two, how much volume growth and how much price growth?

Mukti Lal — Chief Financial Officer

Yeah. Yeah. So volume growth is in quarter — sorry, year-on year basis was 12.5%. So price increased hardly 1% of that.

Ravi Naredi — Naredi Investments — Analyst

Okay sir. And in buyback we are not offering any share in the market, right?

Mukti Lal — Chief Financial Officer

So we are buying the share from the market regularly.

Ravi Naredi — Naredi Investments — Analyst

Yeah. Yeah, yeah, that I knew. But say promoter is not going to sell any shares, right?

Mukti Lal — Chief Financial Officer

Yes. Promoter is not participating in this buyback.

Ravi Naredi — Naredi Investments — Analyst

Okay. Okay. Thank you very much and all the best, sir. You are doing extremely well. Thank you.

Chander Agarwal — Managing Director

Thank you.

Operator

Thank you. We’ll take the next question from the line of Radha from B&K Securities. Please go ahead.

Radha — B&K Securities — Analyst

Hello sir, thank you for the opportunity and congratulations on consistent performance. Sir, my first question was, so we have reported around 7% Q-on-Q topline growth. So what are — I believe that auto, pharma and transports are other primary sectors that we deal with. So what are the underlying sectors that have shown highest growth in the demand?

Chander Agarwal — Managing Director

Yeah. So Radha, you are right — you rightly said, so auto is a major contributor. Auto and retail sector, because this is a festival season, the pre-Deepavali month has gone. So retail and lifestyle products and electronic item they are major contributor in that. And pharma is a slightly kind of flat.

Radha — B&K Securities — Analyst

All right. Sir, my next question was, I believe that in FY’23 we were estimating to pay for around 3% price hike. And want to — if we were not able to take, but how much price hikes have we taken in this quarter and how much can we expect more for year?

Chander Agarwal — Managing Director

So we have — till time we have taken almost 1.5% price hike and by year end, we are targeting to be have at least 2.5% to 3% price hike for the whole year. That is we are planning and we have planning — so again it is a very systematic process. These agreements with the customers is renewing in each year, rollover basis and annual basis, if it is rollover and wherever it come for the renewal, we are asking for a hike from the customer, and we keep doing that. There is are no challenge on that.

Radha — B&K Securities — Analyst

Yeah. With respect to price hikes, during that we are in inflationary scenario and all, so what do you — what do you see, how our peers performing in this area? Are we able to take price hikes as well as new or is there fact?

Chander Agarwal — Managing Director

Look, you rightly said there is an — sometime customer is pressurizing not to increase the price due to other — their cost has also increased abruptly like various costs. So that’s why we are also very cautious and don’t want to give unnecessarily pressure customers, so wherever it’s possible and we see — we’re seeing various aspects their business volume and which sector they are giving the volume, whether they are fulfilling our return lower and all. So various aspect after seeing then we are putting that price hikes.

Radha — B&K Securities — Analyst

All right, sir. And sir how much revenue is from value-added services for first — first half FY’23?

Mukti Lal — Chief Financial Officer

It is around 16% of overall revenue.

Radha — B&K Securities — Analyst

Okay, sir. And my last question was previously we were — thought process that we will not include revenues from e-commerce given that you then on the profitable? So are you still on the same stance or is there some changes seeing in the sector during that some of the peers have rate concerns with respect to growth in e-commerce. So what is your perspective on e-commerce as of now?

Chander Agarwal — Managing Director

Our stand is the same. We will not touch it. Because we don’t have — does not talk about that, and it will ruin our B2B business.

Radha — B&K Securities — Analyst

All right. Okay. Thank you, sir, for answering all my questions.

Operator

Thank you. We’ll take our next question from the line of Mayur Parkeria from Wealth Managers India Private Limited. Please go ahead.

Mayur Parkeria — Wealth Managers India Private Limited — Analyst

Good evening, sir. Am I audible?

Chander Agarwal — Managing Director

Yes.

Operator

It looks like Mr. Parkeria is disconnected. We wait for him to rejoin. In the meanwhile, we’ll take our next question. That’s from the line of Prit Nagersheth from Wealth Finvisor. Please go ahead.

Prit Nagersheth — Wealth Finvisor — Analyst

Good evening, guys. Chander, one question, I wanted to ask you is that, you have given quite an update on the Gurgaon sorting center, but one aspect is that do you — have you — have you finished all the complete implementation of it? Or is there something remaining on the Gurgaon site?

Chander Agarwal — Managing Director

It’s all done. We’ve complete the service [Technical Issues] everything in term.

Prit Nagersheth — Wealth Finvisor — Analyst

And have you achieved all the goal that we had in [Speech Overlap].

Chander Agarwal — Managing Director

All our investors, there is a big group coming to look. [Technical Issues] So you can join them also.

Prit Nagersheth — Wealth Finvisor — Analyst

Okay. We’d love to. But my question is that have you achieved all the key objectives that you had with that sorting center.

Chander Agarwal — Managing Director

Mukti?

Mukti Lal — Chief Financial Officer

Yeah. Yeah. So yes, so we — that’s why we have taken a long-time because the first time we have launched this automation in B2B industry in India. So we make a lot of studies and then finally, we are able to stabilize everything at that onwards and so we have done like — we have stabilized the process of vehicles moment for the like my brass to have and then sorting center to sorting center

, the timing, everything like labor reduction or labor optimization we had done. Like we are also put like weighing scale there now we had a kind of weight management also we are done. So everything I think whatever we have put a component to be made there and we have leased out and then everything has been achieved now.

Prit Nagersheth — Wealth Finvisor — Analyst

Yeah. The reason I was asking is that, did basically what is your best —

Chander Agarwal — Managing Director

[Speech Overlap] at least our ESG goal with it. It is 100% solar proof. I mean, solar-led. It has got — it is about we are getting that also the green certificate for it. So it’s like one of the most important sorting centers that have come up and you make 10 of these like that.

Prit Nagersheth — Wealth Finvisor — Analyst

Okay, that’s great. So Chander, is the reason setting this up was because basically this means that this was your first launch and —

Chander Agarwal — Managing Director

Yeah, I can’t hear you. Can you speak a little louder?

Prit Nagersheth — Wealth Finvisor — Analyst

I’m sorry. Can you hear me, is it better?

Chander Agarwal — Managing Director

Little better yes.

Prit Nagersheth — Wealth Finvisor — Analyst

Hello? Yeah, okay. So now that all your assets are in place and all the learnings are in place, will you say that the next that you’re building for Pune, you would be able to achieve what you did with Gurgaon in much lesser time incident?

Chander Agarwal — Managing Director

What will be — sorry?

Prit Nagersheth — Wealth Finvisor — Analyst

Whatever you are looking to achieve in Pune, you will be able to achieve it in lesser timeframe than what we did the Gurgaon.

Chander Agarwal — Managing Director

No, because it’s not Gurgaon, it’s Pune, it has its own challenges, it has its own micro and macro-environment. So everything is very — our country is very dynamic, the investors different, north is different, central is different.

Prit Nagersheth — Wealth Finvisor — Analyst

Sure. Sure. Sure. Okay. Chander, any insight on the B2C and the rail express, how the traction on these two?

Chander Agarwal — Managing Director

No, B2C is average, there is nothing we are doing in that [Speech Overlap] than us in B2C we are doing and Rail Express is doing very well for us.

Prit Nagersheth — Wealth Finvisor — Analyst

C2C — like how are we doing at the C2C side?

Chander Agarwal — Managing Director

Mukti?

Mukti Lal — Chief Financial Officer

Yeah. The C2C, yes, it is again a niche segment and we are doing well and this business is increasing like if you talk about in this quarter, so it is increasing that around 14% and this is growing well and it is also like we are giving the similar kind of margin to us.

Prit Nagersheth — Wealth Finvisor — Analyst

Okay. And what about rail express is that is the traction doing — have you started new routes as you are planning to?

Chander Agarwal — Managing Director

Yeah. Yeah, so we have clearly given the update in our earning presentations also, so that route has increased, the number of customers has increased, now repetitive customers now — various number of customer our repetitive now in the nature. So they again and again using this service. So this is getting attraction and is growing fantastically well.

Prit Nagersheth — Wealth Finvisor — Analyst

Wonderful. Great. Thank you, guys.

Chander Agarwal — Managing Director

Thank you.

Operator

Thank you. We’ll take our next question from the line of Ashish Shah from Elara Capital. Please go ahead.

Ashish Shah — Elara Capital — Analyst

Hi good evening and congratulations for great set of numbers. So first question was that, Chander sir, you had mentioned that we have added 22 branches in this quarter? So how many branches are planning to add in FY’23 and ’24? Also if you could provide any particular geography that we are concentrating on?

Chander Agarwal — Managing Director

Yeah. So basically, in this half year we added almost 22 branches and major lever in a north and west — major lever in the west and then north. And the remaining six months, we are planning to be opened in the range numbers around 50 number we want to be open and in FY’24, again, we want to open 100 number. So basically, we expanding wherever we — before opening up any branches, we do the study there, whether we — it will be viable solution or is it really — and another aspect to see, we had to be see — it has to be on a particular route, where our trucks existing service going on. So additional costs should not be increase on to carry the material from that branch to my sorting center and vice-versa. So these various aspect we’re saying and then opening up the branches.

Ashish Shah — Elara Capital — Analyst

So basically, we are going to 72 branches in FY’23 which is lower than 100 that you are targeting. So any reason for the deviation or something?

Chander Agarwal — Managing Director

No. Nothing is — if there an unusual thing, we became making by study and then opening up sometime is not possible, sometime is possible, yeah.

Ashish Shah — Elara Capital — Analyst

Okay. Next on — can you just give us the contribution of retail SMEs and large accounts for this particular quarter and what are the — what are the targets that we are planning to achieve on that front?

Chander Agarwal — Managing Director

Yeah. So basically, in this quarter, particularly it is 52% to 48% ratio. 52% is from SME and 48% from above the customer. And in for the whole, this half year it is around 51% and 49%. So always our endeavor to be maintained to 50% though it is very easy to increase our business from the big customer, because they giving the big volumes, but we have to be balanced out the both things to maintain our margin level and fulfill factor in process. So that’s why we are taking a very balanced approach always.

Ashish Shah — Elara Capital — Analyst

Okay. And last question so after this Gurgaon center, we are planning to build Kolkata center, so how long will that take, I mean, I think the land acquisition has been completed. And could you give the timelines for the other sorting center also like Nagpur and — Nagpur and Chennai and Mumbai?

Chander Agarwal — Managing Director

Before Kolkata because Kolkata, we just bought the land it will be take the time to start the construction, because eastern sector has there — still has some more challenges than other parts of India to for approval and everything. So first, Chennai, we will be first come to that and then subsequently Kolkata will become and then Mumbai, Andaman and Nagpur will become.

Ashish Shah — Elara Capital — Analyst

Okay. So, Chennai will come in FY’23 or FY’24?

Chander Agarwal — Managing Director

It will mid of next year FY’24.

Ashish Shah — Elara Capital — Analyst

Okay. Okay. Thank you so much, sir.

Chander Agarwal — Managing Director

Thank you.

Operator

Thank you. Our next question is from the line of Mayur Parkeria from Wealth Managers India Private Limited. Please go ahead.

Mayur Parkeria — Wealth Managers India Private Limited — Analyst

Sir, thank you again for taking my questions. I got disconnected. Sir on — again on the Gurgaon center actually when I joined, there was a question already going on so. I may have missed a part of it. I had a question on the same site? The parameters, which you must have said earlier, some of the benchmarks and milestones, is there any major changes in which your expectations have not been met as part of what we had earlier anticipated in terms of either efficiency or in terms of cost structure? Just as an experience.

Chander Agarwal — Managing Director

Not really, but we are facing challenge on Mayur, because this is a vice-versa also like we sending the truck to my other destination there they do not have any automation. So sometimes they get delayed the things to unload and load the thing. So subsequently, this truck will be also then reach us late. So we are putting a parameter report time they should be reach and must be caring the like priority, where on these centers, so it really reached back to my center back. So these challenges with this testing and putting in some strict [Technical Issues] fulfilled by all the other centers basically. That is I think challenge we have, otherwise, so we already met all parameters it is and running very smoothly.

Mayur Parkeria — Wealth Managers India Private Limited — Analyst

Okay. Sir, I know it maybe a little directional statement but just to we want to get a little more clarity on that. FY’25 we said around INR2,000 plus crore turnover is our target. We are at the INR1,200 crore run rate on the annual basis. You said FY’24 we can still target 20% but the ask rate than for FY’25 would be substantially higher at 40%. Is that the correct way to read or because come from INR1,200 crore to INR2,000 crore is a 30% plus ask rate, whereas for FY’24, if we are at only 18%, 20% then FY’25 ask rate will be much higher, is it because more centers will come up or is there a directional some — just a clarification there, sir.

Mukti Lal — Chief Financial Officer

Yeah. We also — basically, if you see, Mayur, this is not the right — this is not the correct thing, what you are saying. In this year, this run rate in this quarter was INR310 crore rupees and next six months we’ll be getting around INR675 crore kind of revenue will be get in next two quarter. If you see the trend we have that Q4 is the highest revenue quarter. So we are targeting. [Speech Overlap] like INR1,275 crore or INR1,300 crore revenue. And then subsequently, you will be that rate will be get reduced like 20% in next year then it will become INR1,600 crore and then obviously 20%, 25% will be done INR2,000 crore and why we are saying, because we already have — we are ready for the next growth levels, like we launched the service in last year only and they are maturing now. Customer — we are finding new customer. We already put different independent team to we get businesses in new — this new streams on new services we large like rail, C2C and cold-chain pharma and we are also like adding of the branches. Now this automation is also obviously help us to get the customers — good customers experience on that.

So if you put together all thing, we are on the right path, obviously, and apart that we also will be take like price hikes also come from customer. Supposing in next year, inflation and also, so we will be able to take slightly more price hike from the customers. So all depends. But yes, we sincerely making the effort to be become a INR2,000 crore company by 2025 with the EBITDA margin level of 20%.

Mayur Parkeria — Wealth Managers India Private Limited — Analyst

Yes. Sure. Wish you all the best for that. So I had just one last question for — little a strategic question from a broader term. Sir, we have increased our total services, mark we look at whether it’s so normal B2B Express, C2C added, rail added, cold-chain added, rail — so many in those segments are — more and more segments are increasing. So from a management perspective, do you think that it will be from a customer standpoint? Is it an integrated service offering and hence there is no need to add no segment or SBU level precedent kind of our senior management? Or do you think that at some point of time we will have to require PC heads to reach to — lead each vertical, because they will have an independent offering and need to be driven independently? From a structure perspective, how do you foresee as the scale is also improving?

Chander Agarwal — Managing Director

You got that right as the business volumes and the business itself grows then there will be definitely [Technical Issues] basis.

Mayur Parkeria — Wealth Managers India Private Limited — Analyst

Okay. Okay. Sir, and do you see that foreseeing in the next two years or will it be faster?

Chander Agarwal — Managing Director

See, I’m not the kind of — we’re not the kind of company that we just add manpower just for this because [Technical Issues]. So we will see how the businesses in those and then we will do it.

Mayur Parkeria — Wealth Managers India Private Limited — Analyst

Okay. Okay, sir, thank you so much and wish you all the best. Thank you.

Operator

Thank you. Our next question is from the line of Sumit Jain from ASK Investment Managers. Please go ahead.

Sumit Jain — ASK Investment Managers — Analyst

Yeah. Hello sir. I just wanted to know what is the margin differential between our SME business and large corporates?

Chander Agarwal — Managing Director

Yeah. So it is actually significant difference is there like in retail and if you talk about big customers. So it is almost had a gap of 25% to 30% in general sense, I am saying, though because, again, depending on sector to sector, segment-wise like, always — engineering goods is giving higher margin compression to retail — retail business. So various dynamic factors is also there, but in general sense, yes it is, almost 25% to 30% difference is there.

Sumit Jain — ASK Investment Managers — Analyst

Okay. And when you said 58% is the mix, this is by volume or by values?

Mukti Lal — Chief Financial Officer

I said it’s 52%.

Sumit Jain — ASK Investment Managers — Analyst

52% by value?

Mukti Lal — Chief Financial Officer

Yes.

Sumit Jain — ASK Investment Managers — Analyst

Sure. Okay, thank you.

Chander Agarwal — Managing Director

Thank you.

Operator

Thank you. Ladies and gentlemen that was the last question. I now hand the floor back to the management for closing comments over to you sir.

Chander Agarwal — Managing Director

All right, thank you all for participating in tonight’s events and we are really very excited about the opportunity that awaits us in the next half of the year for the financial year. And I look forward to speaking to everyone again, accordingly. Thank you very much. Now have a pleasant evening.

Vikram Suryavanshi — PhillipCapital India Private Limited — Analyst

Thank you, everyone.

Operator

[Operator Closing Remarks]