VRL Logistics Limited (NSE: VRLLOG) Q3 2025 Earnings Call dated Feb. 06, 2025
Corporate Participants:
Sunil Nalavadi — Chief Financial Officer
Analysts:
Alok Deora — Analyst
Amit Dixit — Analyst
Lokesh Maru — Analyst
Mukesh Saraf — Analyst
Harsh Shah — Analyst
Rohit Suresh — Analyst
Ankita Shah — Analyst
Ankur Kumar — Analyst
Sandesh Shetty — Analyst
Vikash Khatri — Analyst
Anshul Agrawal — Analyst
Vikram Vilas Suryavanshi — Analyst
Rajarshi Maitra — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to VRL Logistics Limited Q3 FY ’25 Earnings Conference Call hosted by Motilal Oswal Financial Services Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone form. Please note that this conference is being recorded.
I now hand the conference over to Mr Alok Diora from Motilal Oswal. Thank you, and over to you, Mr Diora.
Alok Deora — Analyst
Thank you. Good morning, everyone, and welcome to the Q3 FY ’25 earnings conference call of VRL Logistics. So today, we have with us Mr Sunil Nalawadi, the CFO of the company. So I’ll now hand over the call to Mr to give some opening remarks and discuss on the performance and then we can pick-up the Q&A session. Thank you, and over to you, sir. Thank you.
Sunil Nalavadi — Chief Financial Officer
Yeah. Thank you,. Good morning to all participants. I’m, CFO of VRL Logistics. I welcome all of you once again for the earnings call for the quarter three of financial year ’25. This is sequentially a very strong quarter marked by substantial revenue growth, improved profit margin and robust cash flows. Demonstrating efficient implementation of increasing freight rates, control on cost and strategic executions in many aspects by the management of the company.
As communicated during the last call about the increase in freight rates, we have successfully implemented the freight rates like — like across all sectors and geographies. These exercise has resulted into bring back our operational margins at optimum level along with maintaining growth in volumes. Apart from the increase in freight rates, the management of the company undertaken many steps to control the key operational costs, such as increase in quantity of bulk purchase of fuel directly from the refineries at lower-cost than the market value, key route mapping to minimize reaches of consignments to multiple transshipment hubs before reaching to ended destination, which resulted into increase in efficiency in the moment of consignment, increasing kilometers of the own vehicles, minimize the loading and unloading expenses and minimizing the dependency of the higher vehicle, etc. Due to these steps, we reached to the one of the highest-ever EBITDA margins in the current quarter.
On year-on-year-end basis, the revenue of this quarter has increased from INR739 crores to INR831 crores with a growth rate of around 12%. The growth in revenue is mainly on account of increase in freight rate across all the sectors and geographies in June 2024 due to which the realization of freight per ton increased by around 11% from INR6,670 per tonne to INR7,390 per ton. The growth in revenue is also on account of growth in volume by almost 1% from 10 lakh 91,000 metric tons to 11,400 metric tons in the quarter.
The growth in volume is from enhancement in our branch network in goods transport business. Year-on-year basis, we added around 60 branches and we continued our initiative to increase the number of branches in the current quarter and added around 10 new branches. The EBITDA has increased by around 78% from INR97 crores to INR172 crores and percentage to revenues increased from 13% to almost around 21%. We reached EBITDA at optimal level again and this is mainly on account of increase in freight — by freight rates by passing all incremental costs, which were impacted our margins in the past.
Further, the margin improvement is also due to good control on fuel expenses, which is major cost of operation in our business. We further increased the bulk purchase quantity in the current quarter from 22% to almost around close to 40% to the total quantity consumed. The fuel procurement cost per liter is reduced from INR89 to almost INR84. And on overall basis, the fuel costs as a percentage to the revenue is reduced from 30% to 26% in-spite of increase in quantity consumed. The improvement in the operational efficiency in the current quarter also leads to improvement in EBITDA margins.
We saw major efficiency in improvement in-vehicle utilization by improvement in kilometers per vehicle, increase in turnaround time of the vehicle and load factor carrying by each vehicle. This has supported us to reduce the dependency on the higher vehicles due to which the lower air service are decreased from 7% to 5% to the revenue even no addition of own vehicle capacity. The rest of the expenses, even though increase in absolute terms, the percentage of — to the revenue are due to increase in freight realizations. The improvement in EBITDA leads to increase in EBITDA and PAT margins in the current quarter.
The profit of the company has increased from around INR13 crores to close to around INR60 crores and percentage to revenues increased from 1.8% to 7% in the current quarter. On sequential basis, we have seen further improvement in terms of revenue growth and improvement in the margins. The revenues increased from INR802 crores to INR830 crores and the growth in revenue is contributed by increase in freight rates and realizations have improved from INR7,241 per tonne to INR7,390 per ton. It is increased by almost 2% with a growth in volume by around 1%.
The EBITDA margins also improved from 16% to 21%, mainly driven by increase in the freight realization, decrease in fuel cost due to lower procurement costs on account of increase in bulk purchased from the refineries and improvement in efficiency due to route mapping control on higher vehicles, etc. Further reduction of fixed expenses such as employee cost as a percentage to the revenue also reduced due to improvement in realization and on account of that EBITDA margins have been improved.
With this, we reached a revenue of around INR2,375 crores for the first-nine months for the financial year ’25 with a growth of around 11% on year-on-year basis with a net profit close to around INR109 crores, which is almost more than the full-year profit of the last financial year. Further, our business in B2B focus, our business is a B2B focused LTL business with a customer-base of around 9 lakh customers covering with wide range of sectors.
Our key stress is having a different mode of collections from the customers and 8% of our LTL business is on paid and two-pay basis, collecting the fright on the spot from the customers immediately after the booking or before — after the completion of the service. Our receivables days from the customer is hardly around 11 to 12 days and which is lowest in the industry as compared to other operators. Considering the improvement in turnaround time of the vehicles and control on usage of fired vehicles, we moved slower on vehicle capex during the quarter and invested around INR10 crores.
During this nine months period, including the current quarter, we did major investments in-land and building properties to effective investment of our cash flows for the future growth. As we briefed the investment in Bangalore transport hub facility during the previous call, we have completed the transaction in the last quarter with a total investment of around INR231 crores. The same was funded by low-cost debt at 8.6% and we borrowed INR185 crores for this investment. And remaining amount is funded through internal accruals.
The total area of the property is around 1,12,000 square meters, which is almost around 27 acres, consisting of a rede warehouse spread in 40 like 82,000 square meters. And the immediately financial benefits for these transactions are, one is the reduction in annual rent by almost around INR15 — around INR15 crores rental expenses have been reduced and we are getting the third-party rental income of around INR1.5 crores in a year and we kept the system deposit, around INR9 crore deposit we kept with the earlier owner that has been realized now. And moreover, we — during this last 10 to 12 years in the lease period, we invested a lot of the facilities over this assets like internal road where fuel station,, solar installation, et-cetera and around INR3.5 crores outstanding amount of those assets also became our own assets as of now.
And because of this, the ROU, the rate of used assets and lease liabilities which accounted under IndAS 116, which has been reduced. The ROU is reduced by around INR27 crores and the lease liabilities around reduced by around INR29 crores. Out-of-the total investment of around INR214 crores, around INR178 crores is related to the land value itself, which is non-depreciable even for the future period. So there will not be depreciation costs related to this investment. And one of the key factor is about the low-cost debt we borrowed at 8.6%. If we calculate the total interest payable on this loan amount, which is lesser than what the rent we used to pay on this facility.
So apart from these investments, we also invested around INR43 crores in Mangalore to expand our existing transshipment facilities. And in Maysur also, we invested around INR21 crores. Due to the above capex, the net-debt of the company has reached to around INR469 crores, but considering our good cash flows, which we are earning almost around INR90 crore to INR100 crores in a quarter, we will use these cash flows for repayment of debt in the future period and we are expecting drastic reduction in the debt level in coming quarters. Experiencing of this strong financial performance of the company and we are expecting similar performance in the coming quarters with a growth in revenue as well as profitability, definitely we can deliver strong financial results in the coming quarter as well.
With this, below this brief introduction, now I request participant to go for question-and-answer session.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. Anyone wishes to ask a question may press star and one on your touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are request you to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. The first question comes from the line of Amit Dixit with ICICI Securities. Please go-ahead.
Amit Dixit
Yeah. Hi, good morning, everyone, and thanks for the opportunity. Congratulations for a very strong performance, sir, in a very testing quarter for your peers. A couple of questions from my side. The first one is, we saw of course these realization picking-up significantly as highlighted by you during the last call. My question is, is the entire price hike being absorbed in the market and whether there are few areas where you expect that utilization can further go up during the next quarter? And also, on the volume front, we saw that growth was little bit slower. Is it expected to pick-up in H2 upper in Q4? This is my first question. Thank you.
Sunil Nalavadi
About the increase in rates, yes, we covered almost all areas. Now in the new structure, what we did basically, we simplified our the raise structure. Earlier, we used to charge — one is the basic freight along with that, we used to collect other chargers. Now we simplified very much on the freight structure. One is we used to collect additional toll, additional the fry down value from the customers and we used to collect some door delivery as for the fixed formula and all.
Now what we did basically, we simplified these charges and we added in the freight rate so that we can communicate to the customers very clearly that this is inclusive all these expenses and this is a total chargeable freight to the customers. So that because of this simplicity, the customers are understanding very quickly about our rates and it is becoming very easy for us to convince the customers about the increase in the rates.
Now earlier we were having a lot of terms and conditions also to the customers, say around 35 40 conditions depending on the products. Now even those terms and conditions have been brought around 10 to 12 conditions. So because of this, now our team is able to convince to the customers about our new credit structure and even the customers are accepting or convincing about why we increase the rates. So because of this reason, this rate increase is a sustainable model and the realizations will continue even in the future.
When it comes to the freight volumes, volumes, yes, whenever we take a rate hike little bit disturbance will be there in the market. But in our view, since we have increased the rates in two years, two quarters back-in the June ’24 itself, now most of the customers have been accepted and now it is stabilized. So considering this fact, going-forward, in Q4, actually we can maintain the volume with a similar growth of around 1% or 2% or lower-single digit, but overall revenue growth will be there in the range of around 12% to 13%. But when it comes to, say, about Q1 or Q2 of the next financial year, again, we can expect the volume growth in the range of around at least around 8% to 10%.
And moreover, now what is happening because of, as I said, we brought a lot of efficiency in the route mapping and other things, our service has become very fast and people — our customers are, you know, acknowledging our service that it is very fast now. And another major kind of change or difference between other competitor to us is about the safety of the. Since we are using our own vehicles across all the routes and our claim ratio, if you take damage or test ratio, it is very, very minimum as compared to other operators. That’s the reason the trust or reliability with customers is very-high. So with this backup, we are very confident that again volume growth will reach around 8% to 10% from Q2 or Q3 of next financial year.
Amit Dixit
Wonderful, sir. Thanks a lot for the elaborate explanation. The second question is the backlog.
Operator
MR.
Amit Dixit
While you have —
Operator
Sorry for interrupting, can you please come in the range because your voice is breaking?
Amit Dixit
Yeah. Is it better now?
Operator
Yes. Please go-ahead.
Amit Dixit
Yeah, sure. So on the Bangalore hub. So while you have highlighted the financial benefits very aptly in your PPT and prepared remarks, is it possible to also give some qualitative stroke quantitative aspects of the operational benefits that we will get from this hub?
Sunil Nalavadi
Yeah. Basically, given those operational benefits also mentioned in the slide, basically now we are having a workshop facility over there, which we are doing only some repairs and maintenance, which are very minimum activities what we’re hanging today. Since the property has been converted into own properties, then we wish to create a satellite workshop over there, so that even it will handle some major repurch and maintenance to avoid vehicles bring back to core major maintenance. So it will give a lot of maintenance on the spot of — to the vehicles because majority of the vehicles reaching to this hub for distribution across South. And moreover, we are providing that vertical storage stacks also.
Currently, what is happening because of the rental premises, we cannot do any internal structures over there. Now considering our own facilities, then definitely we wish to create some vertical stacking and because of that the additional space will be created. Now the square feet area for that entire warehouse is around 5 lakh square feet area with this vertical stacking, again the total storage area will be automatically increased without further investment in the warehouses. And moreover, currently the labor work what we are doing, it is completely some forkings and other machineries are using and we are using our manual methods predominantly.
Now again, we can bring out a lot of machinery installations, the belt convert belts and all installation that again bring back efficiency in the loading, unloading pattern. Again, it may reduce the overall Hamali or loading and loading channels going-forward. And moreover, the biggest advantage of this property is about the solar panels. Currently that the existing owner earlier he was not permitted us to install the stolar solar facility over there.
Now entire roof actually we can use for solar implementation of the solar panel panels and we can generate a good electricity for our four and other equipments what we are using. And moreover, some of the smaller EVs also electric vehicles also using for local delivery, even we can create a charging facility over there by using the solar energy. Okay. And moreover, with the currently again there are — there is some empty pace space also like parking space and all again effectively we can use this space to give further benefit in our future operations.
Amit Dixit
Great, sir. Very clear. Thanks a lot and all the best thank you.
Operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Lokesh Maru with Nippon India Mutual Fund. Please go-ahead.
Lokesh Maru
Thank you for taking my question. Congratulations, sir, on excellent set of results. Two, three points from my side. The first one being this year we have taken steep hikes in realizations, right, for the last two quarters. Since last two quarters. And as we enter next year, you already highlighted in your comments that realization hike is going to be sustainable every year. But if you could throw some color that if our expectation on volume front is 8% to 10%, same time next year, do you think we’ll be able to achieve that, 13% 14% revenue growth even 5% extra hike or you know next year should be the one where we work only with the volume growth per se in your opinion?
Sunil Nalavadi
Yeah. Yeah, basically, we are expecting the revenue growth in the range of around 12% to 13% even in the next financial year, which will be the combination of the increase in the realization as well as the volume. See, how it will happen is in the current quarter, we did a revenue growth of, say, around 12% year-on-year basis. In this majority of the contribution is coming from increase in the realization, the increase in the freight and around 1% is coming on account of increase in the volumes. In Q4 also the Q4 and next year quarter one, the similar trend will come.
The realization contribution will be very-high in the overall revenue growth and the volume growth contribution will be in the range of lower-single digit. But by that time, our rates will be stabilized in the market and actually we can convince more-and-more customers even we are doing aggressive marketing. And because of simplification of the rates, we are expecting that the acceptance from the given new customers will be very-high. So with that hope actually we are expecting that even in Q2 and Q3, our growth will be in the range of again around 12% to 13% in the overall revenue.
Lokesh Maru
So again, a key driver which you mentioned was route optimization and the speed that we have achieved now, the turnaround times and deliveries. If you could help understand, was this like a year-long process, which we are — the result of which we are seeing now? Or was it strategic which happened last quarter and what operationally what has changed per se?
Sunil Nalavadi
Yeah, it is a continuous process. See, we cannot define any timeline for this. So the reason what I’m saying here is depending on the loads or tonnage availability in each area. Accordingly, we designed the route. See, for example, to give one example, even I have mentioned in the presentation also, we shifted our Ahmedabad transshipment location from gold premises to the new locations. Earlier, we used to operate with the two warehouses. Now we shipped to-4 lakh square feet single warehouse.
Here what actually we did the entire movement of goods from Rajasthan, Punjab, and Kashmir and some part of you know the around the Himachal projection all earlier most of the used to go to either Ambala transshipment hub or to the Delhi transshipment hub for further moment. Now what we are doing, instead of say, for example, if a material is moving from say Jammu to, earlier Jammu material used to come to Ambala, Ambala to say Bangalore transitment, Bangalore to again.
Now what will happen that material directly will come to Ahmedabad and go to. So almost we are avoiding one or two transshipment hubs in most of the routes, wherever we are getting a good volumes. So this excesses will continue and even we are analyzing in such a way that wherever two transshipment hubs are there, we are restricting to one. And wherever the booking branches itself are contributing very-high volume, then directly that material will go to the delivery station rather than reaching to any transshipment hubs. So because of these initiatives, the vehicle turnaround time, the utilization levels are increasing.
Lokesh Maru
Understood, sir. Thank you so much for that. Just a few more questions if I can take. Two, three things. One is what is our savings per liter compared to retail because of our 40% direct procurement? That is one. Number two, number of branch additions has been lower for the year — for the nine months compared to what we planned out for the start of the year. If you could throw some light on that. And number three on capex side, CapEx for this year has been very heavy on capex, right? So some guidance on FY ’26 would help? That’s all from my side. Thanks.
Sunil Nalavadi
One is the difference between the retail and the bulk purchase is almost around INR5 to INR6 now. And because of the lower crude oil price. And again, the bulk purchase price changes every day. So depending on that moment that this savings also varies. And about the branch expenses, branch expansion are considering, see, every quarter, again, we are planning at least around 20 25 branches, new branches. So that the effort or that process will continue even for the next year. So on a full-year basis, definitely we can open around 80 to 100 branches even in the next financial year.
And when it comes to the capital expenditure, see, currently, this year, the majority of the investment in this land and building in three locations because of that the capex has increased. But the normal capex on the vehicles will be in the range of at least around INR150 crores to INR160 crores even in the next financial year
Lokesh Maru
Thank you, sir.
Sunil Nalavadi
Yeah.
Operator
Thank you. Next question comes from the line of Mukesh Saraf with Avendus Spark. Please go-ahead.
Mukesh Saraf
Yes, sir. Good morning and thank you for the opportunity. Congratulations on a great set of numbers. Firstly on-again going back to the volume versus pricing. So you did mention that second-half next year, you will start seeing some volume growth. But based on that, basically these customers who have right now kind of not kind of engaging with VRL, they have gone back to, say, unorganized kind of operators or what has happened there because of the price hike that you have done?
Sunil Nalavadi
You have a temporary purpose, actually they ship to the other operator, either it may be organized or unorganized, predominantly the unorganized people because the good thing here is since our network is expanded across all the country and many remote places also we are having branches, most of these organized players actually they do not have a reach to the remote places.
So even in our rate increase, we did in such a way that wherever our service-level is very-high, wherever our network is very reachable to the end-users. So based on that, actually, we did an increase in the rates. So considering these facts and considering the temporary shift of these customers, even in some of the customers, they are already saying that they have already billion service indoor. See some of customers feedback is in such a way that we are unable to trace our in other transporter kindly book our transforce whatever rate it is. That kind of feedback also we are getting from the customers.
And moreover, because of the number of branches widely spread in our case, we are not collecting additional over — outer delivery area charges from that, OEHRs from the customers. So our rates are fixed from branch to two branches. So that it is very easy to accept from the customer side that they have already know that what is a transport to our logistic cost in VRL. But in other cases, what will happen at the final billing, they charge ODA and other status, which they cannot assume at the time of booking. So these are the differences.
Mukesh Saraf
Got it. Got it. And I mean in terms of management strategy, I mean, do you — this is a situation where you might have to cut-back on some prices if say — I mean basically you have in the last couple of years also taken price hikes, but we haven’t seen this kind of a margin improvement because you mentioned in the past that the entire pricing has not been absorbed by the customers. This time maybe you’ve enforced it a bit more. But you know-how much does the management — how long are you willing to go without say volume growth? Are you willing to go with 1% volume growth for a longer time this time or if, say, volume growth doesn’t come in, you will be forced to cut prices?
Sunil Nalavadi
No, our strategy is very clear. Actually, see, we are expecting that based on whatever feedback we are getting from the ground, we are expecting that the revenue growth will be range of around 12% to 13%, again, which will be the combination of volume and the upright rates. So initially the volume contribution will be lower, but as and when we cross another one or two quarters, again, the volume growth will be picked-up very-high. That’s what we are expecting. And we are expecting that the margin maintenance, see, currently we reached around 21% EBITDA level, but going-forward, definitely around 18% of the EBITDA, around 18% we can maintain.
Mukesh Saraf
Okay. Got it. Got it. And secondly, fleet addition, I mean, we have seen that you’ve scrapped more trucks than you’ve added in the last two quarters. So your — actually the total fleet that you have, net addition has been negative this last two quarters. Any sense on that? I mean, is it because temporarily you’re going to see lower volumes and you want to increase your — your own vehicle running that you’re not adding trucks right now?
Sunil Nalavadi
No, this is again temporary this one mix change in the mix. And moreover, now what we are doing is, so some of the vehicles which are closer to the 15 meters and all and which are very-high capacity like 28 tonnes and all. So we have scrapped some of those vehicles and added the vehicles which are in the range of around 20 tons, 24 tons, which are more suitable across all routes. That’s the reason that overall the tonnage capacity has been little bit impacted. But because in terms of the number of vehicles, actually we added more vehicles.
So around 300 vehicles have been added in the nine months and we scrapped hardly around 200 because of change in the vehicle capacity is that overall the tonnage capacity is a little bit impacted. But even going-forward, the vehicle addition plan is — will continue. And depending on the load factor, see, again, the plan of vehicle addition is — it’s a continuous exercise. See, depending on the load factor-in each transshipment hub, we take a stock and we decide to add the vehicles.
Mukesh Saraf
Okay. Okay.
Sunil Nalavadi
So based on that, we are expecting that around INR150 crores capex anyway it will be there even for the next year only for addition of the vehicles.
Mukesh Saraf
Okay. Okay. Okay. And sir, every quarter you do mention the amount of tonnage that the new branches have given you. This time you have not so — and we have seen only 1% growth. So can we assume the new branches also has not seen volume growth or is it that the existing branches have seen a significant decline and the new branches have just offset that?
Sunil Nalavadi
No, new brands again the contribution is in the range of around 3% or so. So the total.
Operator
Thank you. MR. Sharaf, please rejoin the queue for more questions. Next question comes from the line of Harsh Shah with Rida Holdings. Please go-ahead.
Harsh Shah
Yeah, sorry. Good morning, sir. Sir, my question is again on the volume growth side. So if I look at last five years, we have grown our volume at around 8% CAGR. And during the same-period, our branch addition has almost been at a similar rate from 830 to almost 1250 branches where we are today. So just trying to assume that volume growth is only subject to branch addition and there won’t be anything like ATA or SBA, Call-IT SNG, would there be any organic growth in the existing branches that we have or have we reached a sort of saturation point on that on that front?
Sunil Nalavadi
Volume growth, obviously, it’s more contribution from the existing market alone. So with the new branches, actually we have taken an initiative to open and new branches in the potential area that is giving additional contribution to the volume. But if you see overall market trend, see, even on the MSME sectors, for example, which is major contribution to our overall tonnage, that segment is suffering very-high. And we are hoping that given in the current budget, the more thrust has been given to MSME sectors and the rural economy than agriculture sector.
So even from these sectors, we are getting a good volumes and we are expecting that because of these government initiatives, we may get good volumes. So it is not basically for — from the increase in the branches, but even from the existing areas also overall contribution is coming, which means we are seeing some growth. So in the future, what will happen since because of the government initiative and because once the rate increases stabilized, from Q2 onwards, the next financial year, again, we are expecting growth in all the areas, all the geographies.
Harsh Shah
So if I have to ask it the other way, sir, today if you stop expanding new branches, right at 1250 NCU, you keep your branches same for the next two years, do you still expect that you can see volume growth from these existing branches only?
Sunil Nalavadi
No, I’m not getting your question please.
Harsh Shah
So my question is hypothetic selling, if you assume that we don’t add any new branches. We are at 1,250 branches today and say for next two years, we don’t add any number of branches. We will still be able to grow our volume.
Sunil Nalavadi
Yeah, definitely. Definitely, we are still able to grow. Because what will happen, these the recently added branches in the last two to three years, those growth will be very-high in the coming days. Those are all new geographies where actually we added. Those contributions will be more. And apart from that, even the contribution from the existing branches, the existing market also our existing customers, depending on the growth in GDP, again, it will contribute addition to the volumes.
Harsh Shah
Okay. And just last question is on the margins. This quarter has been — I mean, it will be like highest-ever margin that we clocked at 20% and since you have taken the price hike, you said you have introduced a lot of efficiencies in your businesses and we are also expecting volume growth going ahead. So is it fair to assume that this 20% kind of a number could be sustainable going ahead?
Sunil Nalavadi
No, communicated the sustainable EBITDA margins will be around 18%.
Harsh Shah
18%. Okay. Okay, sure. Sure. Thank you. Thank you.
Sunil Nalavadi
With a growth in the top-line of around 12% to 13%.
Harsh Shah
Okay, understood. Understood. Okay. Thank you. That’s it from my side.
Sunil Nalavadi
Thank you.
Operator
Thank you. Next question comes from the line of Rohit with Samatwa Investments. Please go-ahead.
Rohit Suresh
Good morning, sir. Thank you for the opportunity. So I just have one question — one question. How much is the express part or the door-to-door delivery part of our entire business?
Sunil Nalavadi
See, we do not have our express, but we are having a door-to-do service. Out of our total volumes, almost around 34% to 35% of the volumes are door door delivery.
Rohit Suresh
Okay. Okay. And sir, the price hike.
Sunil Nalavadi
This again the major contribution from the — is coming from the contractual customers, the account quality customers what we call around 15% to 16% of the total volume, it is completely door pickup and door delivery.
Rohit Suresh
And these price hikes that you have taken since June, you were able to pass it on even for these door-to-door service, am I right?
Sunil Nalavadi
So to some of the customers because most of these contracts are due for the renewal from the month of April. And in the current quarter actually we are interacting with these customers to renew the agreement. There actually we can see some additional realizations in the current quarter. But anyway, see, wherever again a some overall factor it may not, you know, boost more into the realization.
Rohit Suresh
Got it, sir. Thank you so much and all the rest thank you.
Sunil Nalavadi
Yeah, thank you.
Operator
Thank you. Next question comes from the line of Ankitasha with Elara Capital. Please go-ahead.
Ankita Shah
Yeah. Hi, sir. Congratulations on a very good set of numbers.
Sunil Nalavadi
Yeah, thanks.
Ankita Shah
This vehicle addition for next year will continue to be in the similar range going for.
Sunil Nalavadi
Yeah, around INR150 crore INR150 crores what I indicated that kind of a capex will do even next year.
Ankita Shah
But that would include branch additions also, right? So on number of vehicle addition would be how much?
Sunil Nalavadi
No, for branch addition, there is no capital to capital expenditure. It’s all — only we open a branch and we engage — we open branches in the premises. So most of those expenses are charged to P&L account only. But only on capex is on the vehicle side.
Ankita Shah
So we can assume around 200 odd vehicles approximately that could be.
Sunil Nalavadi
Yeah, each vehicle cost we will be around INR40 lakh. So total investment will be around INR150 crores INR160 crores. Around 200 vehicles here, what you are expecting? Yes.
Ankita Shah
Yeah. Got it. Got it. Also, sir, on the biodiesel consumption, which is high this quarter, is it likely to continue at this level?
Sunil Nalavadi
No, biodiesel is not there, madam. Actually, we are not at all but any biodiesel. This is the bulk purchase of fuel has
Ankita Shah
That continue?
Sunil Nalavadi
Yes, it will continue. And now what happened compared to retail price versus the bulk purchase price, it is — is — the gap is very-high now. That’s why the benefit is coming. But the bulk purchase is purely depending on the crude oil price and that price changes every day depending on the crude oil prices.
Ankita Shah
Okay. So as long as that gap is there?
Sunil Nalavadi
Yes. As long as that premium will continue, then this quantity will continue and it may increase a little bit also.
Ankita Shah
Got it. And sir, last question, have you gained market-share? And do you have any numbers around market-share numbers?
Sunil Nalavadi
See on overall business side, yes, some of the products actually we gained. And basically again it is out-of-the GST compliances because of increase in the compliances, because the government is further going to strengthen this verification of the transactions. And again the one good development what the government has done now, even whatever we are raising today, the charge or liability will automatically come in later and not only the e-invoices, so they are fixing the liability also. So because of that, the compliances are further increased. And we are expecting that again because of this new customer may be added to our foray
Ankita Shah
Okay. And number of unique customers is around 9 lakh or has that
Sunil Nalavadi
Around 9 lakh customers we are having as of now and gradually it is improving.
Ankita Shah
Yeah, great point, sir. Okay. Thank you so much.
Sunil Nalavadi
Thanks. Thanks so much.
Operator
Thank you. Next question comes from the line of Ankur Kumar with Alpha Capital. Please go-ahead.
Ankur Kumar
Hello, sir. Congrats for a very good set of numbers. Sir.
Sunil Nalavadi
Thank you, sir.
Ankur Kumar
I wanted to understand regarding USA, as in we did 20% margin this quarter, but you’re guiding that sustainable should be around 18%. But given we have taken so much price hikes and customers have also accepted it, why are we expecting our margins to reduce on that front side?
Sunil Nalavadi
No, basically, see, as I said, the major contribution of around 2% to 3% is coming on account of the fuel chart, sir, because of the fuel efficiency because the bulk is what we are buying that gap is almost around INR6 to INR7 as of now. So if at all, any changes into these rates, then it will directly impact on the margins because of that reason, say on a sustainable basis, around 18% is maintainable, that’s what I said.
Ankur Kumar
Okay. So for FY ’26, we should work with the assumption of 18%.
Sunil Nalavadi
Yeah.
Ankur Kumar
Got it, sir. And sir, what are the capex plans for this full-year as well next year?
Sunil Nalavadi
In current quarter, again, there will be lower in-vehicle capex. But next year-on a full-year basis, around INR150 crore INR160 crores what I said. The — why again the vehicle capex always it is linked to our tonnage. So we analyze this movement in tonnage and engagement of the outside vehicles periodically. Accordingly, we decide the number of vehicles which needs to be added. Since the tonnage is almost around 1% or 2% growth, then because of that again addition is lower. But once again, it is a normalized growth will come say again the capex will be added.
Ankur Kumar
So sir, in terms of our total vehicles, what will be roughly utilization rates at which we are working right now?
Sunil Nalavadi
See, hub to hub operation always it is operating with a full capacity. See there out of 6,100 vehicle, hardly up to spoke, we are using around 1,000, 1,100 vehicles, but remaining all vehicles are operating between the house there the utilization is fully at 100%. And one more development what we are doing in the current quarter is even earlier we were not monitoring the vehicle utilization between half to spoke. Now we are creating a mechanism in our system that even the utilization of the local vehicle should be optimum. That excess is also going on and we are unable to quantify exactly what will be the savings, but definitely there will be savings in that front as well.
Ankur Kumar
Sure, sir. Thank you and all the best.
Sunil Nalavadi
Thank you.
Operator
Thank you. Next question comes from the line of Sandesh Chetty with HSBC Securities. Please go-ahead.
Sandesh Shetty
Hello. Good morning, sir. Am I audible?
Sunil Nalavadi
Yeah, good morning, sir. Please sir.
Sandesh Shetty
Sir, just wanted to check on the additional capex that you incurred because of investing into Bangalore facility, Bangalore, and Bangalore facility. So sir, if you can give us the breakup, how the capex is spread and also the increase in debt, so how much of debt has come because of this investment? And how do you progressively plan to reduce this debt, like is it a two or three-year plan or how do you plan to reduce your debt? That would be my first question.
Sunil Nalavadi
See, on Bangalore property, out of INR214 crores investment, we borrowed INR185 crores and which is repayable over one year moratorium is there and nine years repayment and the cost of the debt is around 8.6%. And normally in all our cases, most of the cases actually we prepay the debt. There is no pre-closure service in any of our loan agreements. So because of strong cash flows, we may repay this loan much prior to the tenure what the bank has offered. And similarly for Mangalore property also, total investment visit around INR42 crores and for that also we borrowed some amount. And going-forward, again, it will be repaid.
See, currently, the net to debt is around INR465 crores INR470 crores. See, basically our repayment plan is every quarter we are generating almost around INR90 crore to INR100 crore free-cash flows. So over and above capex, definitely these cash flows will be used for repayment of debt-only. So considering this fact, the debt level will come down drastically in the coming period.
Sandesh Shetty
Okay. And sir, second question is on the lorry hire charges that has come down around 2 percentage points. Do you think that this is sustainable over long period because of the route optimization and everything or it can again become
Sunil Nalavadi
We may see further improvement in again dependency on the, but this is a sustainable savings
Sandesh Shetty
Okay. Thank you, sir. Those were my questions and all the very best.
Sunil Nalavadi
Thank you.
Operator
Thank you. Next question comes from the line of Vikas Katri with. Please go-ahead.
Vikash Khatri
Good morning. First, congratulations on wonderful results. My question is regarding you mentioned that our benchmark damage and rates are lower than industry or other players. So what’s the delta over there? Second question related to is if our damages are lower, safety is higher and with a dense branch network, are we able to attract more loads from the organized express player like.
Sunil Nalavadi
Yeah, basically see our services again in the door-to-door service, definitely we are having some of the very good customers over there. So totally we are having around 1,200 to 1,500 very strong corporate. Actually, we are servicing them and most of these customers the first step will come about the safety of the commodities. So because of our own vehicle, because of the covered vehicle, because of the trend drivers in our operations, the claim ratio is very low. And even we are carrying some of the very valuable commodities also, which are so easy to fil or anything, say, like cashew nuts or even the black pepper, all these materials. So most of the customers are with us on these commodities.
Vikash Khatri
And what’s the difference in damage ratio any benchmark?
Sunil Nalavadi
See damage ratio in our P&L itself, we are showing it as a separate line-item. The overall claim, including whatever fire incident is, etc in a year it is not crossing even INR2.5 crores to INR3 crores out of INR3,000 crores turnover what we are handling. Which is lowest.
Vikash Khatri
Yeah. Thank you.
Sunil Nalavadi
Thank you.
Operator
Thank you. Next question comes from the line of Anshul Agarwal with MK. Please go-ahead.
Anshul Agrawal
Hi, thank you for the opportunity. Sir, my first question is on — my first question is on pricing. Am I audible?
Sunil Nalavadi
Yeah.
Anshul Agrawal
Great. So my first question is on pricing, sir. Our pricing strategy earlier used to be that we used to have certain discounts on the new branches. Is that continuing?
Sunil Nalavadi
Yes, wherever see our structure will be with that, wherever there are no written loads and all, there actually will be lesser price. It is not that actually from two rates will be for example, we opened this Northeast area. To Northeast area, our rates are high compared to the rates from Northeast Asia to rest of India.
Anshul Agrawal
Got it. So the discounting strategy to attract volumes at new branches that remains the same, if I got this correct?
Sunil Nalavadi
Yeah. It was there earlier also and it will continue now also.
Anshul Agrawal
Okay. Got it. Second question is on the bulk procurement of fuel. As a proportion of our total fuel requirement, how higher can we grow? Can we go to say 50%?
Sunil Nalavadi
Yeah. Now it is on a 40% level we are using. See every average our daily consumption is around 3 lakh liters of fuel. Out of that 40% we are directly using from the refinery and we are expecting that it is at a peak level, but there are — there is still scope to increase around another 3% to 5%.
Anshul Agrawal
Okay. And what proportion of our existing fleet would be older than say 15 years now?
Sunil Nalavadi
15 years around say 700 vehicles, but out of total capacity we take say around 6% to 7% of the capacity is older vehicle year.
Anshul Agrawal
Okay. Got it. Thanks. Just a follow-up on that, sir. You mentioned that we’ll expend about INR160 odd crores on vehicle capex next year. That would be roughly a gross addition of 400 odd vehicles, right? And we’ll say scrap another 100, IN 200 crores. So net additions will continue to be around 200 to 250 vehicles. Is that math correct?
Sunil Nalavadi
Yes. Yeah.
Anshul Agrawal
Great. Thank you. That’s it from my side. All the very best.
Sunil Nalavadi
Thank you.
Operator
Thank you. Next question comes from the line of Vikram Villa with PhillipCapital India Private Limited. Please go-ahead.
Vikram Vilas Suryavanshi
Yeah, good morning, sir. What is the current turnover limit for now?
Sunil Nalavadi
E, again, it’s INR5 crores now.
Vikram Vilas Suryavanshi
Okay. And in terms of I think most questions are answered. So just to get sense on how is our EV addition in last mile basically?
Sunil Nalavadi
No, currently, see, we are doing a lot of exercise with OEMs on the EV front. Once they create a sustainable model, then we are going to add. So still that product has not come into the market. We are awaiting.
Vikram Vilas Suryavanshi
Okay. And any thoughts on LNG trucks basically for a long while and
Sunil Nalavadi
We are putting efforts in all the angles, but wherever it will fit to our model, then definitely once the acceptable model comes in, definitely we are the first people to invest on the vehicles.
Vikram Vilas Suryavanshi
Understood. Okay.
Operator
Thank you.. Next question comes from the line of Rajeshri Meitra with Incredit Research. Please go-ahead.
Rajarshi Maitra
Yes, sir. Thanks for the opportunity. So my question is on employee costs. So any plans on salary hikes going-forward. So when and what kind of a hike is expected? Yeah, that’s my question.
Sunil Nalavadi
No, currently that plan is not there. It may come about Diwali season or something during Diwali period or something, we may think about it?
Rajarshi Maitra
Okay. And how much may — whether it will be like a 5% hike, 5% hike or a 10% plus kind of hike?
Sunil Nalavadi
No, we are not worked out anything on that front as of now. And moreover, on the routine basis, we promote a lot of people and continuously, even if you see on absolute terms around INR1.5 crores to INR2 crores salary cost is increasing. But these costs will not — these promotion — promoted people within a one-year period and all will continue as it is. So these people will not come against it in for an incremental list.
Rajarshi Maitra
Thank you. Thank you. Thanks.
Sunil Nalavadi
Thank you.
Operator
Thank you. Ladies and gentlemen, as there are no further questions, we have reached the end of question-and-answer session. I would now like to hand the conference over to the management for closing comments.
Sunil Nalavadi
Thank you all participants. Thanks for your questions and hope that I replied it properly. If any clarification or anything directly, you can call me. And as I said, definitely we are having one of the best quarter now in terms of financial performance and we are expecting that similar performance will continue even going-forward on a sustainable basis. And currently the debt level is high because of our good investment for the future growth in terms of properties and considering our cash flows, again, the level of debt will come drastically in the coming four quarters, that’s what we are expecting. With this, actually I wish to thanks everyone and conclude this call. Thank you.
Operator
Thank you. On behalf of Motilal Oswal Financial Services Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines