VRL Logistics Limited (NSE: VRLLOG) Q3 2026 Earnings Call dated Feb. 06, 2026
Corporate Participants:
Sunil Nalavadi — Chief Financial Officer
Analysts:
Unidentified Participant
Disha Giria — Analyst
Krupashankar NJ — Analyst
Alok Deora — Analyst
Pranav Doshi — Analyst
Anshul Agrawal — Analyst
Presentation:
operator
Ladies and gentlemen, good morning and welcome to The VRL Logistics Q3 FY26 earnings conference call hosted by Ashika Institutional Equities. 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 this conference call, please signal an operator by pressing Star then zero on a Touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Disha Giria from Ashika Institutional equities for the opening remarks. Thank you. And over to you, ma’a m.
Disha Giria — Analyst
Thank you. Good morning everyone. Come to the Q3FY26 earnings conference call of VRL Logistics. First of all, I would like to thank the management for providing us the opportunity to host this call. From the management. We have Mr. Sunil Nalavadi, CFO of the company. So without further ado, I will hand over the call to Mr. Nalavadi for the opening remarks followed by the Q and A session. Thank you. And over to you, sir.
Sunil Nalavadi — Chief Financial Officer
Yeah. Thank you madam. And good morning to everyone. I warmly welcome all of you to the earning conference call of ERL Logistics to discuss the financial and operational performance for the third quarter and nine months ended FY26. I hope everyone has had an opportunity to review our investor presentation which has been uploaded along with our financial results. The Indian logistics sector continues to benefit from resell and consumption, sustained public infrastructure spending and structural reforms such as GST2 and other policy initiatives aimed at improving efficiency and lowering overall logistic costs. These factors support a positive long term outlook for the sector.
Coming to our performance for quarter three of FY26. For the quarter ended December 25, total income stood at rupees 831 crore, broadly flat year on year basis and grew 3% sequentially driven by improved realizations, new client additions and the return of some previously lost accounts. Tonight saw a quarter on quarter improvement supported by new account additions, growth in tonnage from the existing customers and return of volumes following contract restructuring undertaken last year. Our daily tonnage has crossed 10,900 plus tons during the quarter reflecting improving demand trends on a year. On year basis, Tanesh declined by 9% primarily due to the exit of low margins and non strategic contracts.
We expect a gradual uptick in volumes going forward and during the quarter we placed an order of standard commercial vehicles, new HEVs to meet the demand and improve fleet efficiency through replacement of older vehicle. And out of these 500 vehicles, around 100 vehicles have been already delivered in the month of January, the realization per ton stood at around 8,117 and it is increased by approximately 10% year on year basis reflecting price hikes taken in the last year. We were able to maintain realizations with marginal sequential improvements. Yield improvement remains a key profitability driver and reinforces our focus on sustainable margin led growth rather than volume led expansion.
Our profitability EBITDA margin stood at around 20.9% up by around 20 basis points year on year and 130 basis points quarter on quarter. Supported by improved realization, discontinuation of low margin business, strict cost control measures and better asset utilizations of the company. The fuel cost remained well controlled. Fuel cost as a percentage of total income declined to 24.8% from 26.4% aided by increased bulk procurement from refinery which accounted for about 40% of fuel sourcing during the quarter. Our captive fuel pumps increased from 7 to 8 and further improving cost efficiency. Despite higher toll rates and additional toll plazas, bridge and toll expenses as a percentage of revenue remained under control.
The employee cost as a percentage of total income increased from 16.6% in Q3FY25 to 18.1% in Q3FY26 on account of annual increment and the vehicle running expenses increased from 4.9% in Q3FY25 to 5.7% in Q3FY26 on account of higher driver incentives. We continue to view these increases as investment in our people particularly given the industry wide shortage of skill drivers. Where VRL is on road driver model remains a key competitive advantage. The profit after tax for the quarter stood at 65 crores raising a 9% year on year growth and on sequential basis PAT is increased by almost 30% largely driven by lower interest costs following debt repayment.
The capex during the quarter stood at around 74 crores compared to 29 crores in quarter 2 of FY26 and out of this 74 crores 50 crores was deployed towards purchase of land and buildings at strategic locations. In some selective locations and for the 9 month FY26 our total income stood at around 2,386 crores. EBITDA margin stood at around 20.5% expanded by nearly around 330 basis points year on year basis supported by 13% improvement in realization and sustained cost efficiencies. The pad for the same price stood at around 165 crores which is improved by around 52% on year on year basis.
Our balance sheet remains Strong net debt stood at around 272 crores as of December 25 down from 3, not 4 crores in September 25. Reflecting healthy cash generation. The receivable days remained at around 11 to 12 days among the lowest in the industry. Underlining the strength of our collection mechanism and diversified customer base of 4.9lakh GST regional customers. Considering this improvement in cash profits, the board of directors have approved the interim dividend of Rupees five per shares to revolve to the shareholders. And in terms of operational, operationally, our network continues to scale. As of December 25th we operate with around 1250 branches and 50 transshipment hubs across 24 states and 5 name territories.
And fleet rationalization continues with older vehicle being scrapped and utilization of owned new assets improving. Around 80% of our fleet is debt free as of now and and 15% is fully depreciated providing strong operation leverage. Our strategic priorities remain unchanged. Profitable volume growth, disciplined cost management and tight working capital control. Looking ahead, while near term macro uncertainties persist, we remain optimistic. Improving demand conditions, stronger marketing initiatives, fleet rationalizations and expansion in under underpenetrated geographies position as well as position us well to drive gradual volume recovery while sustaining profitability. With this I conclude my opening remarks.
We now open the floor for questions and look forward to an engaging interaction with all of you. Thank you.
Questions and Answers:
operator
Thank you very much sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press STAR and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press STAR and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Krupai Shankaranji for a purpose from Avendus. Please go ahead.
Krupashankar NJ
Good morning and thank you for the opportunity. My first question would be on the volume growth side. So right now we see that the base has caught up and the volume decline. What you have seen in this quarter should most likely be the last of it. Just wanted to get your sense around what is your expectation on volume growth going ahead and what are the steps which you will be taking towards achieving that volume growth?
Sunil Nalavadi
On volume growth, one thing is we are expecting at least around sequential basis, at least around 3 to 4% growth in ton even in last Q4 and basically out of this around 345,000 tons have been already delivered in the month of January. So based on that we are expecting at least around 4% tonnage growth we are expecting in Q4 and with that, even on a sequential basis, the 2% growth in the next year, quarter on quarter basis, that will lead to almost around 10% growth in tonnage in the next financial year. That’s what we are expecting.
And basically what we are doing, we are opening some of the branches also and we are aggressively doing marketing activities. And apart from that, we are identifying some of the lost customers and approaching them too or customers themselves are approaching us to again revamp the business. So that is giving lot of support for us to having this kind of a growth.
Krupashankar NJ
Got it. So any targets with respect to branch addition in the next year? And are you looking at it from a. Primarily from higher, you know, volumes from existing banks. Is. Is that so what would be your strategy over here is are you looking at for example in the north and northeast you had expanded branches and that was contributing to a significant portion of volumes in 2324. Just wanted to get a sense around, you know what would be the strategy this time around.
Sunil Nalavadi
Yeah, what we. Again, you know, the additional activity what we are doing is apart from opening the new branches, the company owned branches actually we are considering to appoint the franchisees or agents in some of the newer geography or even in the existing market. And see basically what it is supporting is we are identifying some of the franchisees who are expert in the business. Either it may be local or with other competitor or something like that. And we are offering them to the agents. And for their business perspective they are having certain limitations. So some of the people are unable to.
They are local people and they are unable to book the conveyment across the country. So we are appointing them as exclusive agents to the company and definitely that will give support to us. And right now for this quarter we have already appointed in the month of January or so around 15 to 20 agents have been appointed and we are having a good number of additions. So we are having a plan to add a very good number of agents going forward. Okay.
Krupashankar NJ
Lastly, you also mentioned about fleet addition. I think about 500 odd cvs to meet incremental demand and replacement of whole fleet. So just given that 20% of your fleet is already depreciated, that translates to about 1,200. Is it fair to assume that the new fleet would be adequate to meet your growth expectation of 10% or you would be taking more lorry higher for meeting incremental demand?
Sunil Nalavadi
Yeah, this out of 500 vehicles, 100 vehicles have been already delivered in the month of January. And here what Our guidance is around 10% increase in the volume and even 500 vehicle addition will lead to increase of 10% addition in the capacity. So overall it will match whatever we are expecting on the tonnage. The addition in the capacity will match To that extent
Krupashankar NJ
and that would be the overall addition. So any plans on FY27 on capex or what would be your fleet edition plans next year?
Sunil Nalavadi
Yeah, now see most of the rectifications in terms of the business contracts and rates have been already done and now the complete focus is on the volume growth. So this trend will continue even for the FY27 also. So we are having, you know, at least internal, you know, around the plans and something like that. At least quarter on quarter we have to grow sequentially. Even if you assume 2 to 3% growth, then it will lead to at least around 10 to 12% volume growth even in FY27. And whatever CapEx required to that additional volume, definitely we will incur additional CapEx to that extent.
Krupashankar NJ
Understood. Thank you. I’ll get back in the queue.
Sunil Nalavadi
Yeah, thank you.
operator
Thank you. Participants who wish to ask a question may press star and one on their touchstone telephone. The next question is from the line of Disha Giria from Ashika Institutional Equities. Please go ahead.
Disha Giria
Good morning, sir. So my question is regarding. My question is regarding the realization. What I understand is that we had taken price hike from end of second quarter FY25. So a lot of those price hikes might have been factored in in the base period. Despite that we have had like a 10% realization gains. So just wanted to understand that how should we see it going forward.
Sunil Nalavadi
Now on the rate rationalization there are two things, ma’. Am. See whatever the freight rate increase, actually we did in quarter two of last year and in the quarter four of the last year what we did, we identified, you know, all low margin businesses and we just discontinued those contacts. So that that has led to further improvement in the realizations. So when we took up increase in the freight rate, actually our relations have been improved by around 10, 11% or so. And because of this withdrawal of the low margin contracts and other things, that was left to almost around 5 to 6% increase in the realization.
Disha Giria
All right, so going forward for the fourth quarter and sequential quarters, we can assume like the margin since we had let go of the low margin business around 4 to 5% year on year realization gain. Can you assume it for the coming 2, 3/4?
Sunil Nalavadi
No, around 1 or 2%. You can assume not beyond that.
Disha Giria
All right, understood. Sir, thank you.
operator
Thank you. The next question is from the line of Alok Diora from Motilal. Please go ahead.
Alok Deora
Good morning. So just had.
Sunil Nalavadi
Good morning.
Alok Deora
A couple of queries. So sir, we are now in fourth quarter, how we should look at it because the the basis now revised or you know the rebase. It’s rebase now with what you had the quarter or low base quarter? Fourth, you know, after the change in the policy of or strategy where you let go of low margin business. So now going forward what could be the realization we say for fourth quarter and how should we also look at the volumes? Because volumes have, the reductions have kept on coming down and now in the third quarter we did minus 9%.
So how we should look at fourth quarter and next year?
Sunil Nalavadi
Yeah, fourth quarter we are expecting a tonne growth of around 3 to 4% on a sequential basis because the for the month of January we have already delivered around 3,45,000 tonnes. And considering this volume definitely in February and March again we are expecting good volumes which will lead to around you know, 4% growth in the tonnage and the realizations will be maintained at the current level and next quarter on a sequential basis even if we assume around 2% growth based on the Q4 tonnage. So that will lead to at least around 10 to 11% growth in the tonnage.
Alok Deora
Or next year. 10 to 11 tonnage growth.
Sunil Nalavadi
Yeah.
Alok Deora
Okay. And no realization improvement
Sunil Nalavadi
relation will be. Maintained at the current level.
Alok Deora
Okay, you mean the quarter four exit level.
Sunil Nalavadi
Yes.
Alok Deora
Right.
Sunil Nalavadi
Yeah.
Alok Deora
Next year we’re looking at a 11% kind of revenue growth or it would be.
Sunil Nalavadi
Yeah, 11% revenue growth that will lead to the revenue of around 3,600 crores in the financial area. 27.
Alok Deora
Okay.
Sunil Nalavadi
And with a bit of around 20.5% then EBITDA will be in the range of around 730. Seven hundred and forty crores.
Alok Deora
Okay. Okay. So 20.5 we expect to maintain in the next year also.
Sunil Nalavadi
Yeah, around 20% definitely.
Alok Deora
Okay. And sir, we had given out this 2, 3% price, sorry wage correction which the margins were to get impacted. So that impact is already in this 20 or this. Something has happened there because the margins did not really come down after that. I mean it’s still at 20.
Sunil Nalavadi
Basically what happened. The fuel cost has supported us further.
Alok Deora
Okay.
Sunil Nalavadi
The fuel cost as a percentage is almost ready around 1.6 to 1.7%. So that has compensated with increase in the employee cost.
Alok Deora
Okay. Okay. So now the new normal margin you are saying is instead of 1718 it will be new normal will be 2021.
Sunil Nalavadi
Yeah, around 20%. You can say
Alok Deora
20% right. And capex for next year. I missed that number. If you can repeat capex for this Year, next year
Sunil Nalavadi
there are two capex. One is the addition of this 500 commercial vehicle that will fetch almost around 160170 crores investment and apart from that we identified some of the locations where actually we want to buy some land and building that will be in the range of another around 160170 crores. So yeah, next year.
Alok Deora
Okay,
Sunil Nalavadi
so total capex we are expecting next year? Yeah, around 350 crores.
Alok Deora
Okay. Okay, just last question. So any sharp improvement in you know the CV buying which you are seeing, you know have the volumes improved quite or the outlook improved quite materially that the CV volumes are also coming. Very good. And so because from our side we are just largely doing it as per the tonnage growth. So just your thoughts on that in.
Sunil Nalavadi
Outside market most of the cases see nobody is owning the vehicle, you know the leading.
Alok Deora
Correct, correct.
Sunil Nalavadi
But in other segment there is an improvement say like infrastructure and oil related vehicle, commercial vehicle. There is an improvement.
Alok Deora
Okay, but logistics you are saying it’s not something that it’s. It’s a kind of the usual 8 to 10%.
Sunil Nalavadi
Yeah. It is spread and most of the vehicle owners, again these are all small, small fleet owners.
Alok Deora
Right, right.
Sunil Nalavadi
Yeah.
Alok Deora
Okay. Okay, got it. So sir, if I just sum it up so there is no more improvement in realization which we are expecting ahead that is number one whatever the incremental volume, incremental revenue growth will come which will be largely from the volume growth which is expected to be around 9 To 10% ahead
Sunil Nalavadi
10 to 11% next Year,
Alok Deora
10 to 11 for next year and maybe after that more like a 8 to 9% on the higher base. Right?
Sunil Nalavadi
Yeah.
Alok Deora
But no price change, we are expecting further anytime soon?
Sunil Nalavadi
No. Right now? No. And unless there will be you know substantial change in the cost structure.
Alok Deora
Okay, okay. Okay. Got it sir. Oh got it. Okay, thank you so much. That’s all from my side.
Sunil Nalavadi
Yeah, thank you.
operator
Thank you. The next question is from the line of Pranav Doshi from Ardeko Asset management. Please go ahead.
Pranav Doshi
Yeah, hi. Thank you for the opportunity. So my first question is on the volume growth. So can we break it down between let’s say what was the growth from the current network, what was the attrition that we are looking from the current network and what was the growth from the new client quarter on quarter?
Sunil Nalavadi
Yeah. Basically if you see, in quarter three we added almost 10% of the tonnage has contributed from the new customers. Right out of this again we lost a tonnage year on year basis around 8% of the tonnage we lost because the customers have discontinued business with us or we discontinued their business contact and There is a 1% growth in tonnage from the existing customers. We have continued the business and their tonnage has improved by around 1%. So to sum up this, the quarter on quarter we grown by around 3%.
Pranav Doshi
So sir, you mentioned y loss of 8%. That is QoQ. Right, so Q2 and Q3.
Sunil Nalavadi
Yeah, Q OQ Q. Okay, okay, yeah. So for year on year basis there is, you know, decline of the customers we have left that accounted almost around 18% and the tonnage which came from the new customer is around 15%. So because of this we lost around 3% tonnage and the decline from the existing customer is around 6%. So both put together, the decline in the tonnage is around 9%. Right.
Pranav Doshi
So my next question would be that let’s say, let’s say in a normal business circumstance, so we took a price again, therefore there was a lot of loss of volume over the last one and a half years. But if we are to say in a normal business operations, what is the general QQ volume iteration that we are looking at? So on a steady state basis, so.
Sunil Nalavadi
Yeah, look, definitely see we are going to see how we did in quarter three, for example, 3% we grown, but this lost in customer, actually it will continue on a sequential basis around 5, 6% at least it will be there. But the new customer addition, what we did, 10% growth on quarter, on quarter basis that number will further improve. And even from the existing customer, what we are looking, the 1% growth from the existing customer, even that number is going to be improved further. So that’s the reason on a sequential basis, at least for quarter four, definitely will be in the range of around 4% growth in the tonnage.
Pranav Doshi
Right. And sir, on the CV friends, if we just look at the CV, so I think CV are now again going into upcycle. So there is a lot of demand and I think for us we are buying the vehicles according to our requirement. But overall, do you see any kind of a positive trend in the economy and especially in the logistics sector which can, you know, maybe push the growth towards, let’s say a bit higher than what we’re expecting. So 10% is what we’re expecting now. But let’s say can there be an upside risk to this Given the possible higher economic activity in the country.
Sunil Nalavadi
Definitely this is actually very conservative number. Actually what I am indicating based on our internal plans and all and with the additional improvements, say for example now change in GST that has supported some volume growth. And tomorrow again if there is a good monsoon spread and good agricultural activities, again it is support to further addition in the volumes. And even on FMCG side and all, if any improvement. And say for example textile actually which is major contribution in our tonnage, almost around 16 to 17% tonnage, we are carrying textile materials there. Also we are identifying some of the corporate clients.
And if addition of even some 4, 5 big, you know, textile manufacturers in India then definitely that will lead to further improvement in the volumes.
Pranav Doshi
Right, sir. And on the realization. So again, across the industry the commentary or the thinking now has been that let’s say people want to focus more on profitability also not just on the volume front. So I think given we are already very profitable. But do you see any possible scope where let’s say due to better demand we might consider a price hike. Especially if the other players are also doing the same?
Sunil Nalavadi
No. Right now we are at a good margin. So our focus is only on the volume growth. But we maintain whatever current relation plus margins.
Pranav Doshi
Okay. Okay. And just one final question. So given that majority of our clients are a smaller company so corporate is a very small chunk. So incrementally are we looking at more traction from the corporate clients or is the SME piece of our business also doing. Also expected to do well going ahead? So how do we see the mix shifting over the next two to three?
Sunil Nalavadi
Our focus will remain, you know, the entire market. For example, whenever we go, we go with the commodities. Whether it may be corporate, it may be retail. We go and approach each and every customer related to that particular product. Always our marketing activity is based on the product. For example, if we are entering into Northeast which are the major product in those areas, say one is incoming, then the next one is outgoing material. Accordingly we go and we identify customer. We go even mass marketing to the. Even the. Some of the Mondays and all. Even we do that.
The focus is based on the commodity rather than the kind of a customers. Hello. Hello.
operator
So we lost the line.
Sunil Nalavadi
Yeah, Speaker.
operator
We’ll move ahead. Sir.
Sunil Nalavadi
Yes, please.
operator
The next question is from the line of Ankita Shah. Over to you, ma’am
Unidentified Participant
Yeah. Hi sir.
Sunil Nalavadi
Yeah. Hello.
Unidentified Participant
Hi. This 500 crore vehicle edition is over what period of time that you are expecting?
Sunil Nalavadi
No 500 number of vehicles?
Unidentified Participant
Yeah.
Sunil Nalavadi
it is for the current the calendar year 26. Calendar year of 2026 till December 2026. What we plan.
Unidentified Participant
Okay. So this year itself. So yeah, this would lead to capacity expansion of 10%. But how much did it add to. Your revenue and ebitda? So incremental revenue and profitability coming from incremental capacity addition would be how much?
Sunil Nalavadi
Now basically this whatever volume growth we are anticipating, we are expecting the 10 volume growth in next financial year. To cater to this demand, actually we are adding this vehicle. We are adding the capacity.
Unidentified Participant
But there will be growth in the existing business also. Right? X of this addition, I’m just trying to see how much.
Sunil Nalavadi
Basically see the ownership of the vehicle and growth in tonnages. Both these two are totally independent. Whenever we get a tonnage board then how to carry those goods, we decide whether it is through outside vehicle or own vehicle. Now in FY26 we are expecting the 10% volume growth to meet this demand. To serve this additional demand, actually we are adding 500 vehicles.
Unidentified Participant
Got it. And these will be all.
Sunil Nalavadi
And since Almost around say now 96, 97% of the service we are providing through own vehicle and the further demand will also be through own vehicle, then definitely it will maintain our profitability margin of around 20%.
Unidentified Participant
Got it. And this will be all on long haul. I mean higher tonnage trucks.
Sunil Nalavadi
Yeah, higher tonnage trucks. These are all around 20 ton capacity vehicles.
Unidentified Participant
20 plus tons,
Sunil Nalavadi
20 tunnels.
Unidentified Participant
Okay, got it. Okay, sir, that’s it.
Sunil Nalavadi
Yeah.
operator
Thank you. The next question is from the line of Anshul from MK Global. Please go ahead.
Anshul Agrawal
Hi, good morning. I hope I’m audible, sir.
Sunil Nalavadi
Yeah, good morning. Please tell.
Anshul Agrawal
So first question is on this agent owned or franchisee branch network. In our existing branch network, what would be the contribution of such branches?
Sunil Nalavadi
See, currently we are having around 120, 130 agencies which is contributing almost around 9 to 10% to the finish currently. And going forward, actually we wish to focus more on appointing the new agencies.
Anshul Agrawal
Sure. Is there any difference in the realizations in the agent or the franchisee branches versus our own branches?
Sunil Nalavadi
No, there will not be any change in the relation because ultimately they have to follow our rate cards only. It is all bookings happening through system. So whatever rate card will appear in the system accordingly they have to book.
Anshul Agrawal
Okay, so.
Sunil Nalavadi
And it is common for both company owned branches and franchises.
Anshul Agrawal
Okay. I’m trying to understand how do we incentivize these agents? Because from what I understand, please correct me if I’m wrong. In an open market, these agents tie up with multiple logistics Operators and wherever they can sort of get cheaper realizations, they focus on sending those material or that tonnage through those LSPs. How do we sort of incentivize these agents to sort of ensure that their customer tonnage comes through our network?
Sunil Nalavadi
See, one is actually some of the markets, even customers need the support of the market also considering our efficient service. And some of the customers actually will approach to us. And even agent can market our service level to the customers and add the new tonnage. And even our network actually they can go and market and expand the tonnage. And third thing is actually we are incentivizing good commission to them based on the tonnage basis. And that will also lead, you know, if somebody is earning lower realization tonnage, then definitely he cannot offer good commission to the agent.
Since we are earning good realization from the tonnage, then definitely we can offer them better commission to the agent. Even that will also attracting some of the new agents who are already into this business. Got it.
Anshul Agrawal
Second question is on our guidance of 20% EBITDA margins, are we expecting gross margins to expand further in 27 and 28? Because from what I see, our employee expenses have grown at about say 14, 15% CAGR over the last two to three years. So 10% increase in revenue may not be able to sustain the same margin. So are we expecting higher procurement from fuel or more efficiencies? Because our driver incentives are also going up, toll prices are also going up. So just trying to understand, how do we maintain this 20% EBITDA margin run rate with on the expectation of a 10 to 11% revenue growth.
Sunil Nalavadi
Basically out of the total expenditure, almost around 35 to 40% of our expenses are fixed in nature. The one is major, the employee cost, which is almost around 18% of the revenue it is in fixed in nature. Whenever the revenue improves, then again the percentage of the employee cost will come down. The second thing, all rental expenses, which is almost around 8 to 9% of the revenue, including the 10 days accounting. So even that is fixed in nature. All insurance cost related to vehicles and even the taxes what we are paying to the vehicle, those are all fixed in nature.
So considering these things, definitely these fixed expenses ratio to the revenue bill come down as and when the tonnage or revenue will improve. Got it. Are we expecting gross margins and apart from that on the fuel side? Fuel side also we are adding the volt pumps in the last quarter also we added another, the captive pump. And going forward we are having a plan to add another at least around three to four Pumps in the next financial year. We are, you know, identifying the location where actually our consumption is on higher side There also we wish to establish our own pumps that will lead to further savings in the fuel cost.
Anshul Agrawal
Got it. That’s it for my end. All the way there sir.
Sunil Nalavadi
Thank you.
operator
Thank you. The next question is from the line of Kripaishankar NJ from Aventus. Please go ahead.
Krupashankar NJ
Thanks for the follow up. Sir, just one couple of questions. First one is on employee cost. You did mention in the last call that there’s going to be about a 6 crore of monthly increase in the employee cost. What is the explanation? But if you look at the number, I. I don’t think it has increased to that level. Any one off to call out here?
Sunil Nalavadi
No, nothing. Some based on some of the number of days and other things on a graph level actually the monthly increment is around 5 to 6 crores.
Krupashankar NJ
Okay.
Sunil Nalavadi
And since we are talking about the employee cost, just I wish to highlight that there’s the new labor code what the government has introduced. See we are happy to say that there will not be any incremental liability on the company to comply this new labor code, the whatever existing the salary structures and the contribution from the companies, these are all already in line with the new labor code. So there will not be any further burden on the company on account of compliance with the new labor code.
Krupashankar NJ
Understood sir, Understood. And you know also adding on to the point that while employee cost is fixed in nature, when is the next increase expected? Is it. Is it likely inflationary increase in salary will be expected in mid of next year? Is that something which is expected? Why I’m asking you, why I was asking is because the sustenance of the 20% without taking any price hikes would require us to do a lot of cost control measures going ahead in the next year. So just. Just wanted to get some sensor on this.
Sunil Nalavadi
No, basically employee talk. We did an interview. We gave an increment in the month of August now till August. Anyway it will not be there. But normally if you take, you know the past incremental process of the company. Normally we do after one and a half year or one and a half year, two years like that. So based on that till March 27th. I don’t think so. There’ll be further incremental process.
Krupashankar NJ
Understood? Understood. The last one on Capex sir, while I was looking at your fleet incrementally, I’ve seen that you scrapped more of 20, 35 and greater than 30 ton trucks right over the last 67 quarters based on tonnage and now you’re looking to add close to about 20 tonnes only. Are you not seeing any benefits of the larger trucks, the 20 to 25 ton or 25 ton plus or are you seeing that these trucks were broadly underutilized due to which you are strategically shifting towards 20 tonnes? Something which I wanted to take a break on.
Sunil Nalavadi
Yeah, one major thing this I want to highlight. Even in the larger capacity of vehicles, see earlier the current 28 tonner vehicles, earlier those were 24 ton of vehicle. Before the government has enhanced the, the weight factor on the vehicles. Now what is happening in 28 ton capacity they have not increased the size of the vehicle. The size of the vehicle remains same at around 32ft. So because of this even 20 ton capacity vehicle also having the size of 32ft and 28 ton are also having the 32ft capacity. It’s a 32ft size. So because of this reason what is happening if you see the payload factor of the vehicle, the 20 tonner vehicles are more efficient than the 28 tonners even though the installed, you know, tonnage is around 28 ton as of today.
If you see the actual weight, what we are carrying those vehicles because of the restriction in the size it is in the range of around 25, 26 tons. So considering these factors and considering the return load factor also. So those numbers of the 28 tonner vehicle have been whatever you know, the major maintenance or something like that then we scrap those vehicles.
Krupashankar NJ
Got it? Got. And if you had to take in a larger vehicle in the, in the next category with a, with a bigger size so you would be. Then you will have to go into tractor trailers sort of a system for, for you to get benefit because volumes are or rather the, the most of your shipments are volumetric in nature. Is that understanding correct?
Sunil Nalavadi
Yeah, but we are already using some of the trailer around 120 vehicles. We are already having those vehicles, we are already using those vehicles in our system. Wherever you know both side enough loads are there wherever the busiest routes there actually we are using those trailers.
Krupashankar NJ
Understood sir, Understood.
Sunil Nalavadi
Yeah.
Krupashankar NJ
And with respect to Capex, you did mention that you’re going to add around 160, 170 crores towards new locations. These are primarily hubs which are referring to. Or is it about the fuel pumps which you’re going to add in the Next year
Sunil Nalavadi
, not a fuel pump. These are the critical branches. Wherever the major branches are also there where actually we are not finding the ideal space. Where actually we are investing
Krupashankar NJ
and how. Many such pockets are available sir? So right now I think you own close to about 12 to 13 such hubs. If I’m not wrong.
Sunil Nalavadi
No. The wound hubs are around 10 hubs as of today. And the branches are around say 40, 45 branches are owned by the company as of today. Means properties are owned by the company. And this whatever 57, 58 crores we invested. These are invested in the branch of around eight to nine branches. And going forward again some of the branch have been already identified which are in the range of around 10 to 12 numbers.
Krupashankar NJ
Okay. Okay. Got it. Got it. So hubs wise you’re not adding anything so it’s. It’s going to be more of.
Sunil Nalavadi
Whatever capex we indicated around 150, 160 crores. This is other than the hubs. These are only investment in the branches and major branches. Not a small branches, the major ones.
Krupashankar NJ
Understood? Understood sir. Thank you sir. That’s it. From my side.
Sunil Nalavadi
Yes. Thanks.
operator
Thank you. Participants who wish to ask a question may press star and one on the touchstone telephone. The next question is from the line. Participants who wish to ask a question may press star and 1. Ladies and gentlemen, due to time constraint that is the last question. I now hand the conference over to Mr. Sunil Nalavada for closing comments.
Sunil Nalavadi
Yeah. Thank you. Thank you everyone for joining the call today. I’d like to reiterate that we remain confident on delivering around 10% volume growth in the next financial year. And with that 10% volume growth definitely will maintain the current EBITDA margins which are around 20% level. And definitely that will lead to good growth in the absolute terms of EBITDA as well as profitability in the coming period. With this I conclude the call. Thank you.
operator
Thank you sir. On behalf of Ashika Stockbroking Ltd. That concludes this conference. Thank you for joining us. You may now disconnect your lines.