Tiger Logistics (India) Ltd (536264) Q4 FY23 Earnings Concall Transcript

Tiger Logistics (India) Ltd (BSE:536264) Q4 FY23 Earnings Concall dated May. 12, 2023.

Corporate Participants:

Harpreet Singh Malhotra — Chairman & Managing Director

Analysts:

Abhijeet Waghmare — Private Investor — Analyst

Varsha Mehta — Value Growth Advisors — Analyst

Rajesh Agarwal — Moneyore — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Tiger logistics India Limited Q4 and FY 2023 Earnings Conference Call hosted by Ric Capital. We have with us today from the management Mr. Harpreet Singh Malhotra, Chief Managing Director of Tiger logistics India Limited. As a reminder, all participants’ lines will be in a listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]. Please note this conference is being recorded.

Before we proceed with this call, I’d like to take this opportunity to remind everyone about the disclaimer related to this conference call. Today’s discussion may be forward-looking in nature, based on management’s current beliefs and expectations, it must be viewed in conjunction with the risks that our business faces that could cause our future results, performance or achievements to differ significantly from what may be expressed or implied by such forward-looking statements.

I now hand the conference over to Mr. Harpreet Singh Malhotra sir, for his opening remarks. Thank you and over to you, sir.

Harpreet Singh Malhotra — Chairman & Managing Director

Hello. Good afternoon to everybody. I’m very happy to welcome everybody on this call today and it’s our privilege to talk to everybody to discuss about what’s happening in the business and what are the future prospects and everything, so great to have all of you here. I’m sure with some of them — we must-have been on a call earlier as well, so you know what business, what kind of business we are in to. So Tiger Logistics, as you know, is pure into international freight forwarding and logistics activities. So just to give you a little brief about what’s happening in the logistics industry, overall globally. So globally,yes last, I would say two quarters have been a little challenging, especially due to the global political scenario happening around the world and we see now the demand and such is little sluggish. Most of the big customers across the globe had already — they have their warehouses full so. I won’t say that it’s a recession, kind of a situation, but yes due to inflation, the overall consumption has taken a hit. And that’s showing in the order offtake of all these big buyer across the globe.

But the silver lining for us is that India is being looked upon as China plus one in a big way. Most of the big customers across the globe, whether it is in apparels, ready-made garments, home furnishings or auto or yarns and textile and food grains and commodities, all of them are looking at India as an alternate supplier base, when you quit China. So that’s a big silver line, which all of us are seeing most of the customers they don’t we deal with, have seen major upspurt in the number of queries business, queries which they’re getting and also the conversions which they’re are getting. So that’s a very positive sign, both in terms for the global business scenario and especially keeping India per se in context that, yes, the supplies from India are on the upswing and of course in coming quarters this is going to grow to good numbers.

Overall. I would say, some of the other factors which are — which have been very challenging about the global supply-chain has been the availability of exchange — foreign-exchange with the developing nations, and also but to some extent to the developed nations as well as. So we see that in the Indian subcontinent, in the developing nations like Bangladesh and Sri Lanka and other various countries who were buying big way from India, now those suppliers have taken a hit in terms of overall, non-availability of exchange. Other areas which are, where the global supply-chain is having challenges is in the South America region where– South America and Africa region, where again the exchange availability is becoming a big problem.

We see that easing out, of course, last six months have been very, very taxing for all these countries, but we see that easing out and Indian government also blending a big help to the Indian exporters, where they’re talking of receiving the payments in INR. It is going to be a big game-changer for the exporters in India, we especially see that happening in Indian subcontinent and also in the Gulf region. So overall. the talks of FTA with various other — various other countries is also going to help India’s exporers is in a big way and subsequently it is going to help our company as well.

Coming to the Indian logistics industry. Well, last two years, we’ve all seen a major big up spurt in the volume — in the overall business revenue. We can say it that the challenges which everybody faced in the logistics industry due to shortages in the containers and challenges in the containers are also big — it helps some of the businesses as well as it also disrupted, some of the businesses. So more or less. I think they are coming back to normal, which is a good change, which is a good thing happening. We are now moving towards pre-COVID level. Rather, in certain trade dens, we have already moved to pre-COVID levels, which is a good thing, overall it’s for the business because you cannot have all-the-time, a bull run in your business, it is the most — the favorable situation is that stability should be there. So we see that happening, and it is a very positive welcoming bull, this is there.

In terms of overall growth. As what I see volume is concerned, we see that Tiger Logistics as a company, entering into newer trade lane, newer businesses, which is a very positive sign, again. We see that, though in the revenue terms, we were highest last year, but we see that this year we’ve seen a 10% growth in the overall volume. This is especially in terms of newer markets, which we have managed to enter which we’ve managed to build in. And if you look at overall quarter-to-quarter, yes, the last quarter and this quarter there is — I’m proud to say that there was a big jump of close to 52% in the volumes. So overall, we are seeing that business — this is a sign that business scenario is stabilizing as far as global supply-chain is concerned. This also signifies that people globally are looking at India as a reliable source of supply. So this is a very, very positive sign for the Indian logistics industry and especially for us, because overall in business 100% of our — 100% of our business is in the international market. So we feel that in coming quarters, we are going to see a better business happening for us.

Now, yeah coming back to the quarterly performance, what’s we’ve done. So past few quarters, we’ve seen good growth in terms of volume. Yes, totally because the rates getting stabilized as you know that we are — we work in the cost-plus model so overall, because of normalization in the freight rates, the overall turnover has got stabilized. So, you know. If you compare it In terms of last year to this year, yes in numbers. We will see a downward overall in the turnover, but that is primarily because the freight levels have come down to the pre-COVID level. So we are very happy about what we’ve done in the last quarter and the whole year. because overall what we see is that — overall the Company’s position and overall growth, which we’re seeing has improved quite a lot. As I mentioned that the volumes have — in-spite of the global challenges in last two quarters the volumes have grown by close to 10%. If you look at even the GP, if you compare it percentage-to-percentage from last year to this year has grown by 2% and of course the profit before-tax is also up by 1.25%. And moreover, what I’m most happy about is the trade receivables, because in-spite business getting back to normal, we’ve been able to maintain the trade receivable to the same levels as close to 40 days. And of course our creditors have also reduced from INR44 crores to INR19 crores. So this signifies a major financial hygiene, which we introduced in last two years especially at the start off 2020, which of course, we have to take some tough decisions in terms of how to — what kind of business do and to say no to businesses and to say — temporarily, there was a downfall in the volumes as well. But. I think that has worked in our favor. I think that has helped us in creating a better financial hygiene for ourselves. Our interest cost is bare minimum — we are — we kind of paid-off, like there are no working capital usage happening in the organization. We feel that today, we are sitting at a good cash reserve of close to I would say INR57 crores. These are all cash earnings, which is made. But yeah, of course, we have to make a proper use of it, but yes we are waiting for the right opportunity.

But we are happy to say that we are in a very comfortable position as far as the financial condition of the organization is concerned, because this helps us in taking, some growth measures. I would say, we’ve been talking of the digital platform, I didn’t think that we’ve had a soft launch of our digital platform, which is called for FreightJar. We had a soft launch of this product on 14th of April, that parse [Phonetic] date. We had a soft launch of this and it has been accepted, It is being accepted by the trade very, very well. I must take pride in saying that, people are looking at it in a very, very positive way. So just in a layman’s language. This is going to be the MMT, Make My Trip of logistics industry, where you can actually book your shipment online, you can find real-time freight rates, suppose you have a shipment moving from India to maybe Germany, you can actually look at the dispatch, the freight rates online. So we see that this is going to be again a great game-changer and a very disruptive overall model for the organization and it will act like a big sales vertical for us. So it will give us access to a lot of small and medium enterprises, which we could not access, otherwise. We would have been required to keep a big sales force, but with this — with this platform, we can access to smaller exporters or importers in areas where we don’t have any excess and moreover, in a very transparent manner. So we feel that in coming quarters, we are seeing lot of traction coming from this digital platform.

Another thing, which we’ve been — I’ve been talking about it in lot of my calls earlier is, how to grow inorganically. So we feel that in on the inorganic sector –inorganic way, we are looking at some kind of acquisitions there. We are closing into some LCL companies and I think in coming weeks we should be able to share some positive news with our investors and, yeah. So. I will share more details on that later, but yes, we are working in the right direction and we are good at that.

So these two things, which we feel will be a future growth engine for us and, of course deep selling in the auto sector, creating that diversity in the government sector where the we are pitching in for a lot of exports and important activities in the government sector. So we feel that, that definitely will continue — it will continue to drive growth for us. So we feel that coming quarters, though it’s going to be challenging for overall global industry, but we feel that we’re on the right track and we are in time, we are doing things in time to kind of take care of these challenges and taking new challenges head-on, and quite rightly, we are really ready with what we’ve been projecting. So we feel that overall, things are looking bright and I thank everybody for having that trust and faith in us, and I can assure you that, that things are only getting better each day. Thank you so much, everybody for joining in and I’m ready to take any questions or any kind of queries or anything, if anybody has. Thank you.

Questions and Answers:

Operator

Thank you very much, sir. Ladies and gentlemen we will now begin the question-and-answer session. [Operator Instructions]. Ladies and gentlemen we will wait for a moment while the question queue assembles. [Operator Instructions] Take our first question from the line of Varsha Mehta from Value Growth Advisors. Please go ahead. Varsha Mehta, your line is unmuted, just go ahead and ask your question. Varsha Mehta, your line is unmuted, if you have muted yourself, please unmute yourself on your device and ask your question. Ms. Varsha Mehta, we’re unable to hear you, if you can hear, please unmute yourself and ask your question. Ms. Varsha Mehta, if you’re unable to — I will do one thing, I’ll disconnect, you may dial back again, mam.

[Operator Instructions] We take our next question from the line of Abhijeet Wagmare, an investor, please go ahead.

Abhijeet Waghmare — Private Investor — Analyst

We have seen growth in volume quarter-on-quarter and year-on-year, how do you see this going forward?

Harpreet Singh Malhotra — Chairman & Managing Director

Hi, Abhijeet, thanks for your question. So I think that, as I mentioned that the situation is very conducive for people to increased their buying from India and that’s being reflected in our numbers as well. We also feel that, that confidence of people in Indian businesses is increasing day-by-day, So I think this is going to continue and we feel that with our initiatives of whatever we are doing in terms of launching new products and increasing our accessibility to the market. I think, I think this is going to continue and it’s only get better.

Abhijeet Waghmare — Private Investor — Analyst

Thank you.

Operator

Thank you. [Operator Instructions] We take the next question from the line of Varsha Mehta from Value Growth Advisors. Please go ahead.

Varsha Mehta — Value Growth Advisors — Analyst

Hello, am I audible now.

Operator

Yes, you are. Please go ahead.

Varsha Mehta — Value Growth Advisors — Analyst

Yeah. Thank you. Congratulations, sir on great volumes this quarter and despite of very challenging situation. Sir, my question would be around, what — we have we have been a cash-rich company after FY21, so how are we looking to — looking-forward to utilize this cash.

Harpreet Singh Malhotra — Chairman & Managing Director

Yeah, thanks Varsha, so. As you know that we are asset-light company and we want to remain asset-light, and so we are looking to utilize this cash firstly In terms of increasing our present business where — where we feel that a lot of money would be needed towards the working capital. Secondly, we are looking at inorganic growth, in terms of acquiring companies in the LCL space. So as far as Tiger Logistics is concerned, we are a company in the full container load, but there is another segment of our business, which is called LCL, which caters to small and medium logistics company. So basically, it does operate consolidation.

So we are looking at — looking at acquisition in that area and I think, we would be utilizing some portion of cash there as well. And of course, on the new products which we have introduced. So we think that something will be utilized there as well, but we want to, feel good about sitting on cash, obviously because that gives you a lot of confident to get into new markets and to get into new businesses. But surely we are not planning any capex, we are not planning any big assets, we are not planning any ICDs or CFS, no asset building nothing. We want to keep the model same, we don’t want to reinvent the wheel. Yeah, so that it is.

Varsha Mehta — Value Growth Advisors — Analyst

Thank you sir. Sir, one more question from my side, is it — on the — we have recently launched FreightJar. So if you can highlight what benefit and opportunity as we Tiger Logistics will have going forward.

Harpreet Singh Malhotra — Chairman & Managing Director

Yes. So FreightJar Varsha is a product of Tiger Logistics. It is the digital platform of Tiger logistics, where people can access rates, book shipments digitally. So the whole platform is a digitized, where you can book shipments, go online see the freight, if you like it upload your documents, book the shipments and everything moves digitally. So with this we can have access to a smaller markets, which we were not able to access it earlier. So we see it has a big sales vertical for us. So we feel that this is going to be good growth engine, part of our growth story. This is one of the — this is going to be one of the growth engine for us. So it’s going to be good for us.

Varsha Mehta — Value Growth Advisors — Analyst

Okay. I tend to sir, like, one more question. So we’re looking at the freight rates. So where do you see this, freight rates stabilizing.

Harpreet Singh Malhotra — Chairman & Managing Director

So, Varsha now, we are seeing in last one month, 1.5 month freight slide has stopped. So now that slide has stopped now, we are seeing it going up every, every month. So we feel that, that slide which was happening, that free fall has stopped. So once that pre fall has stopped, we are in a good position to say that, yes in next few quarters, maybe one or two quarters, we will be at good levels. But surely, the last year levels its going to take a year or so, but yeah — but that slide, that free fall which was happening as stopped.

Varsha Mehta — Value Growth Advisors — Analyst

That’s all. Thank you so much sir and all the best.

Harpreet Singh Malhotra — Chairman & Managing Director

Thank you, Varsha. Thank you.

Varsha Mehta — Value Growth Advisors — Analyst

Thank you. [Operator Instructions] We take the next question from the line of Rajesh Agarwal from MoneyOre[Phonetic[. Please go ahead.

Rajesh Agarwal — Moneyore — Analyst

Hello.

Operator

Please go-ahead, sir.

Rajesh Agarwal — Moneyore — Analyst

Sir, in-spite of the freight being passed through, why our profitability has come down, volumes have gone up by 50%?

Harpreet Singh Malhotra — Chairman & Managing Director

Yeah, so what happens is that, overall in a very bullish business — in a very bullish business scenario you take [Technical Issues] we don’t face much competition. But when the rates are so low falling like it’s a free fall, you feel lot of people who are sitting on the edge, coming into the businesses. So they try to spoil the game. So when when — when freight rates were 10,000 per container, there were hardly any players who could enter the business and the resources, were scrace, but what happens then the rates are falling, there are lot of people who are sitting on the edge, get a chance to get into those businesses and they spoil the business. So we have to be very, very proactive in our approach that work — we have to ensure that we continue with the business, it is not that the client is married to me, if he gets a lower rate, he will just jump and get — grab that opportunity. So we don’t want that to happen and And that’s what — so there are cases where, we have to ensure that the business continues even if we are able to work at a lower margins, lower freight rates. So that’s what these challenging time do to us, but, yes — but we continue to maintain the business, at the same thing we do because we get a chance to get it to the other businesses and that’s the reason there has been increase in business volumes also.

Rajesh Agarwal — Moneyore — Analyst

Sir, the competition may continue further, now suppose the freight rate stabilization or it is at the same level and it stopped falling, then the competition will still continue, then how do we have more margins?

Harpreet Singh Malhotra — Chairman & Managing Director

But — yeah 100%, but I am maintaining my business no, so over a period of time when the client is with me, then I have a chance to when the rate goes up and. I have a better buying, then I have a chance to increase my profitability impact.

Rajesh Agarwal — Moneyore — Analyst

Okay. Sir. is your volume increased or the industry volume has increased. [Technical Issues]. Volumes.

Harpreet Singh Malhotra — Chairman & Managing Director

Sorry, this is Tiger Logistics volume, industry volume [Foreign Speech].

Rajesh Agarwal — Moneyore — Analyst

I got. I got it your volumes have gone up by 52% is overall the industry volume has increased or of Tiger Logistics only volumes has increased [Foreign Speech] market-share from somebody.

Harpreet Singh Malhotra — Chairman & Managing Director

No, no. Firstly, two things have happened. We have also, we are replacing somebody so our volumes — we have added new vertical — new freight capacity, but overall, also there has been a slight improvement in the business industry-wise also.

Rajesh Agarwal — Moneyore — Analyst

Okay. And so you feel, sooner or later the margins will come back.

Harpreet Singh Malhotra — Chairman & Managing Director

100% they have too.

Rajesh Agarwal — Moneyore — Analyst

In six months time.

Harpreet Singh Malhotra — Chairman & Managing Director

Yeah, yeah, six months time, we feel, maybe two quarters the business is going to be back to what we were earlier. And please also understand that we’re adding adding new sales vertical in the overall business. So they will also start contributing in next six months, which they have already started, on a smaller scale, but in the in six months’ time those done — those engines will also start firing.

Rajesh Agarwal — Moneyore — Analyst

Understood, Thanks. Thank you sir.

Operator

Thank you. [Operator Instructions] There are no further questions from the participants. That concludes today’s conference call. Thank you for joining us.

Harpreet Singh Malhotra — Chairman & Managing Director

Thank you

Operator

Thank you very much, sir. [Operator Closing Remarks]

Harpreet Singh Malhotra — Chairman & Managing Director

Thank you. Thank you, everybody. Thank you.

Operator

Thank you sir.