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Overview of the Call • Date: August 5, 2024 • Participants: • Pirojshaw Sarkari (Managing Director & CEO) • Anish Mathew (CFO) • Jainam Shah (Moderator, Equirus Securities) • Key Topics: • Global growth projected at 3.2% for 2024 • India's growth forecast revised to 7% for FY 2025
Company Initiatives • Introduction of Ketan Kulkarni as Deputy Managing Director • Focus on cost optimization and technological advancements • Launch of Gati Associate Tracking Engine (GATE) for improved customer service
Financial Highlights • Debt-free status with net cash of INR 196 crores • Express business metrics: • Handled 300,000 metric tons • Revenue: INR 358 crores, gross margin at 27% • EBITDA growth of 33% to INR 20 crores • Future targets: • 15% volume growth for FY'25 • Revenue target of INR 3,000 crores by FY'26 • Merger with Allcargo Logistics expected by Q1 next year
Market Position and Strategy • Confidence in becoming a leading B2B express player in 3-5 years • Ongoing employee rationalization to reduce operational costs • Barriers for new entrants in B2B logistics due to operational complexities
Growth Projections • Anticipated growth and profitability post-Allcargo acquisition • Contract Logistics segment projected 30% CAGR over three years • Focus on Tier 1 and Tier 2 cities for market share expansion
Investment and Future Outlook • Planned investment of INR 70 crores in technology and infrastructure • Target yield increase of INR 0.10 per ton annually • Emphasis on cross-selling between Express and Contract Logistics businesses
Conclusion • Anticipated 60-40 mix of key accounts by year-end • Call concluded with an invitation for further questions through Investor Relations team.
Earnings Call Overview • Date: May 17, 2024 • Key Participants: CEO Pirojshaw Sarkari, CFO Anish Mathew • Focus: Financial performance and strategic initiatives
Financial Highlights • Record Express Volume: Driven by improved infrastructure and sales efforts. • EBITDA Growth: Over 100% growth from the previous quarter due to margin expansion. • Express Business: Slight decrease in tonnage but gross margin increased to 26%. • Debt-Free Status: Cash surplus of INR 33 crores; progress in selling non-core assets. • Cost Optimization: Targeting a 5% reduction in direct costs for the upcoming year.
Strategic Initiatives • Sales Acceleration: Implementation of initiatives to enhance efficiency and service quality. • Service Metrics Improvement: Stabilization of retail volumes post e-docket billing transition. • Long-Term Revenue Target: INR 3,000 crores by FY '26.
Revenue and Market Insights • Revenue Realization: No decline; slight increase noted. • Market Trends: Larger players favoring time-definite Express deliveries over LTL. • MSME Contributions: Decline attributed to previous strategy shortcomings; new inside sales team established.
Cost Management and Growth Focus • Margin Improvements: Resulting from various cost reduction initiatives. • Sector Growth: Focus on automotive, consumer durables, and engineering goods. • Warehousing Expansion: Plans to increase capacity by 3 million square feet over three years.
Client Mix and Strategic Goals • Client Composition: Shift to 70% strategic accounts and 30% MSME/retail in FY '24. • Goal: Revert to 62% MSME/retail mix by enhancing growth in these segments.
Transportation and Logistics Insights • Dedicated Freight Corridors: Impact on transportation volumes still being assessed. • Commercial Vehicle Focus: Shorter routes as freight corridors develop.
Challenges and Customer Retention • MSME Customer Retention: Churn due to insufficient sales touchpoints; new inside sales strategy introduced. • Retail Sector Issues: Leadership changes and e-docket transition initially caused business loss but have since stabilized.
Conclusion • Commitment to Cost Reduction: Focus on improving client mix for balanced revenue distribution.
Date and Participants • Date of Call: February 5, 2024 • Key Participants: • Pirojshaw Sarkari (Managing Director) • Anish Mathew (CFO)
Key Highlights • Demerger Announcement: • Upcoming demerger of Allcargo Logistics' international supply chain business. • Formation of two listed entities.
• Economic Outlook: • Projected GDP growth for India in 2024: 6.5% driven by domestic consumption.
• Business Performance: • Express Business: • 11% volume growth, handling 318,000 tons. • Revenue slightly decreased to INR 371 crores; gross margins at 21.7%. • Consolidated Revenue: • Decreased from INR 441 crores to INR 424 crores. • EBITDA also decreased.
Financial Initiatives • Accounts Receivables Clean-Up: • Enhanced cash flow and reduced Days Sales Outstanding (DSO). • Resulted in decreased business from some high-yield customers.
• Cost Optimization: • Focus on reducing line haul costs, which decreased by 5% year-on-year. • Price hikes initiated to improve margins.
Exceptional Items • Write-back of INR 23.6 crores related to a corporate guarantee. • Gains from the sale of non-core assets totaling INR 72 crores.
Market and Competitive Landscape • Revenue Growth Concerns: • Increased volumes but limited revenue growth due to cleaning up receivables. • Reduction in high-yield MSME customers impacting revenue.
• Competitive Intensity: • Acknowledgment of industry-wide volume decline and geopolitical factors affecting growth.
Strategic Focus • SME/MSME Segment: • Pivoting approach with a contactless sales strategy and adjusted credit policies. • Emphasis on untapped potential in the SME/MSME market.
• Pricing Dynamics: • Large clients leverage volume for better pricing; SMEs offer higher yields but have less negotiating power.
Future Outlook • Gross Margins: • Current margins at 21-22%; gradual improvements expected starting FY'25. • Planned price hike of 6% effective April 1, 2024.
• Hub Utilization: • Positive growth potential for Mumbai and Bangalore hubs over the next five years.
• Government Regulations: • New rule for timely payments to MSMEs could improve cash flow.
Conclusion • The call concluded with an invitation for further questions through the Investor Relations team.
Company Restructuring • Composite Scheme of Arrangement: Aimed at restructuring Allcargo Gati Limited. • Demerger: International supply chain business to form Allcargo ECU Limited. • Consolidation: Existing operations to unify under Allcargo Logistics. • Goals: Simplify corporate structure, enhance financial flexibility, and create independent growth-focused businesses. • Shareholder Impact: Shareholders will receive shares in Allcargo Logistics.
Financial Projections • Combined Revenue: Projected at approximately Rs. 1,800 crores. • EBITDA: Expected around Rs. 190-195 crores. • Debt: Projected debt of Rs. 250 crores for Allcargo Logistics; minimal for Allcargo Supply Chain. • Equity Fund Raise: Plans for Rs. 500 crores pending shareholder approval for technology and infrastructure investments.
Market Outlook • Global Trade: Weak macroeconomic environment; sluggish trade expected to continue short-term. • Recovery Anticipation: Expected demand recovery in H2 2024 due to interest rate decreases and improved inflation control. • Cost Optimization: Focus on improving profitability starting January to March 2024.
Merger Details • Share Structure: Approximately 139.2 crore total shares post-merger; 40.4 crore shares for Gati shareholders. • Independent Business Benefits: Strong cash flows and strategic independence for the international supply chain business.
Operational Insights • Logistics Expansion: Plans to grow warehousing from 5 million to 10 million square feet without significant capital expenditure. • Asset-Light Model: Focus on high return on capital employed (ROCE).
Valuation and Shareholder Benefits • Valuation Reports: Swap ratios determined by independent valuers to ensure fairness. • Inorganic Growth: Current focus on enhancing infrastructure and digital capabilities.
Future Revenue Targets • Revenue Goal: Target of ₹3,000 crores for Gati post-merger. • Divestment Plans: Confirmation of a buyer for the fuel station business, pending approvals.
Management and Operational Concerns • Management Structure: Established teams for international supply chain and domestic logistics. • Trade Receivables: Concerns addressed regarding rising trade receivables; stable Days Sales Outstanding (DSO).
Shipping and Trade Disruptions • Impact of Red Sea Attacks: Longer transit times and increased costs due to rerouting. • Freight Rate Concerns: Potential rise in ocean freight rates, varying effects on margins.
Conclusion • Cautious Optimism: Focus on cost management and strategic restructuring to enhance operational efficiencies and shareholder value.
Call Details • Date: November 6, 2023 • Hosted by: Dolat Capital Markets • Key Management: • Mr. Pirojshaw Sarkari (MD & CEO) • Mr. Anish Mathew (CFO) • Transcript Availability: On company website • Communication Signed by: T.S. Maharani (Company Secretary)
Economic Overview • Global GDP Growth: Steady projections • India's Growth Forecast: 6.3% for 2023 and 2024 • Domestic Trade Indicators: High e-way bill volumes and increased GST collections
Company Updates • Name Change: To Allcargo Gati Limited • New COO: Sandeep Kulkarni • Sales Volume Growth: 18% year-on-year increase • Infrastructure Expansion: New super hubs and operational excellence programs
Financial Highlights • Tonnage Handled: 18% increase in Q2 FY24 • Express Business Revenue: Slight growth, but EBITDA declined • Noncore Asset Sales: Ongoing efforts • Credit Loss Provisions: Impact on margins
Margin Concerns • Low Margins: Attributed to yield drop and business mix shift (65% large clients, 35% MSME/retail) • E-docket Technology: Increased transparency but initially lowered performance metrics • Intra-state Business Pricing: Uncompetitive, adjustments being made • EBITDA Margin Target: 10% to 12% by 2026
MSME Focus and Growth • MSME Growth: Not meeting expectations; large accounts skewing overall percentage • Dedicated MSME Cell: Established for customer acquisition
Operational Updates • New Hubs: Bangalore and Indore hubs on track • Synergy Benefits: Realized from contract logistics arm
Financial Projections and Queries • Volume Growth Impact: Questions on EBITDA and cash flow projections • Revenue Target for FY26: INR 3,000 crores, driven by volume and yield increases • Intra-state Orders: Lower yields but reduced costs may enhance profitability
IT Investments • Partnership with Tech Mahindra: Significant phased investment, no external debt planned
Key Sectors for Volume Growth • Driving Sectors: Retail and consumer durables from existing clients
Conclusion • Further Inquiries: Management invites questions through Investor Relations team.
Gati Limited Q4 FY2023 Earnings Conference Call Summary
Notice of Conference Call • Date: May 26, 2023 • Transcript availability: Gati's website • Hosted by: Dolat Capital • Key management: • CEO: Mr. Pirojshaw Sarkari • CFO: Mr. Anish Mathew • Signed by: T.S. Maharani, Company Secretary & Compliance Officer
Economic Overview • Global growth slowdown due to: • High inflation • Geopolitical conflicts • India projected GDP growth: 6-6.5% for 2023-2024 • Importance of logistics sector emphasized: • Supported by government initiatives • National logistics policy aimed at efficiency and cost reduction
Financial Highlights • Express business revenue growth: 18% to ₹1,469 crores • Key initiatives: • Infrastructure expansion • Technology enhancement • Sustainability through electric vehicles • CFO Anish Mathew to present financial details
Performance Metrics • Express business tonnage increase: 11% YoY to 284,602 metric tonnes • Quarterly revenue: Rs. 356 Crores (11% increase) • Gross margin: 27.1% • EBITDA: Increased by 199% to Rs. 12 Crores • Full fiscal year express business volume: 17% rise to 1,133,034 metric tonnes • Consolidated revenue: Rs. 1,723 Crores (16% increase) • Net debt reduction: From Rs. 152 Crores to Rs. 72 Crores
Margin and Volume Insights • Decline in margins attributed to: • Volume drop in January and February • Fixed costs impacting margins • New hubs contribute approximately 22-25% of total volumes • Historical baggage affecting gross margins discussed
Customer Mix and Future Provisions • Customer mix: • 61% from key accounts • 18% from retail • 21-22% from SMEs • Expected credit losses (ECL) provision increased to 24 Crores • Focus on growing SME segment through franchise expansion
Future Goals and Guidance • Revenue target: ₹3,000 Crores by FY2026 with a CAGR of 18-20% • Margin guidance complexities due to restructuring of acquired organization • Ongoing improvements emphasized by management
Conclusion • Call concluded with an invitation for further questions and gratitude expressed to participants.
Gati Limited Q3 FY 2022-23 Earnings Conference Call Summary
Conference Call Overview • Date: February 9, 2023 • Participants: • CEO Pirojshaw Sarkari • CFO Anish Mathew • Moderator: Amit Dixit (ICICI Securities) • Key Highlights: • Record quarterly operating revenue of INR 441 crores. • Focus on operational efficiency and customer service. • Growth potential in the logistics industry due to government initiatives.
Financial Performance • Express business metrics: • Handled 287,000 metric tons (up from 269,000 metric tons in Q3 FY '22). • Revenue increased by 8% to INR 379 crores. • Gross profit grew 18% to INR 105 crores. • EBITDA increased 30% to INR 21 crores. • Nine-month revenue: INR 1,113 crores (up 21% year-on-year). • Net debt reduced from INR 152 crores to INR 73 crores.
Market Insights and Strategies • Demand trends: • January typically slow; February showed improvement. • 8% price increase effective April 1. • EBITDA margin target of 9% may be realistic by mid-FY '24. • Revenue target of INR 3,000 crores by FY '26, driven by infrastructure developments.
Logistics Industry Dynamics • Discussion on demand-supply dynamics: • New truck acquisitions driven by improved infrastructure. • Focus on enhancing customer service to regain market confidence. • E-commerce involvement: B2B segment for first-mile logistics.
Financial Projections and Asset Management • Targeted ROCE: 20-25%. • Non-core asset sales: INR 29 crores, with 5-7 properties remaining. • Sales growth target: 15-20%, aiming to outpace market growth of 10-11%.
Margin Improvement and Growth Expectations • Projected margin increase from 5-6% to 10% by Q2. • Gross margin expected to rise to 32% through operational efficiency. • Volume growth anticipated from 8-9% to 10-12% without all hubs operational. • Current margin issues attributed to previous management's unmet commitments.
Conclusion • CEO Sarkari invited further inquiries through investor relations, emphasizing ongoing efforts to resolve customer-related issues and improve overall performance.