Shadowfax Technologies Ltd — Q4 FY26

Shadowfax Technologies Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=qruoFGXUudE Published: 14 hours ago

0:01 1 second Ladies and gentlemen, good day and welcome to the ShadowFax Q4 FY26 earnings conference call. As a reminder, 0:09 9 seconds all participant lines will be in the listenon only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should 0:16 16 seconds you need assistance during the conference call, please signal an operator by pressing start and zero on a touchstone phone. I now hand the conference over to Mr. Abishek Bansil, 0:25 25 seconds NDN CEO Shadowfax. Thank you and over to you sir. Thank you Ruja. 0:33 33 seconds Hi everyone. Good evening. My name is Abhishek Bansil. I'm the co-founder and CEO of Shadowfax. 0:40 40 seconds Today welcoming all of you for the fourth quarter FI26 earnings presentation along 0:48 48 seconds with Praina CFO. We also have on the call today Sachin Dakshit who has recently joined us to lead corporate strategy and investor relations. Many many of you might already know Sachin. 0:59 59 seconds He spent several years covering internet at JM Financial and he brings deep familiarity with our business and the industry. 1:08 1 minute, 8 seconds Over the next 20 25 minutes, I'm going to take you through our overview of the business. Broadly, my address is going to be covering three specific sections. 1:19 1 minute, 19 seconds What has happened in the last year? Where do we see ourselves in FI27? And what is our view for the long term? 1:28 1 minute, 28 seconds Starting off on what has happened in the in the last year. This is first of all only our second quarterly reporting as a listed company and the message is clear. 1:39 1 minute, 39 seconds We enter FI27 with a phenomenal tailwind speed, larger 1:46 1 minute, 46 seconds than ever scale, and an unprecedented conviction. 1:51 1 minute, 51 seconds Quarter 4 was a phenomenal quarter for us, showing not only record growth but 1:58 1 minute, 58 seconds also record profitability compared to anyone in the industry, be it our peers or our competitors. 2:07 2 minutes, 7 seconds For the full year, we delivered 72 K plus customer orders. Recorded a revenue 2:13 2 minutes, 13 seconds of 4,200 Kores plus, which is almost like a 69% year-on-year growth for a 2:21 2 minutes, 21 seconds full year basis. Adjusted AIDA for us has been close to 159 crores, which is 2:28 2 minutes, 28 seconds almost three times of what we delivered in financial year 25. 2:33 2 minutes, 33 seconds packed on a fullear basis has been around 112 crores compared to just 6 2:40 2 minutes, 40 seconds crores last year. This is the first time as a business we have recorded 100 plus crores of PAT for the full financial 2:48 2 minutes, 48 seconds year and we are very very proud of the fundamental design of the business we are building. 2:55 2 minutes, 55 seconds Just alone in quarter 4 we have delivered about 22 cr plus orders generating close to 1,237 3:05 3 minutes, 5 seconds crores in absolute revenue. This is about 74% yearon-year growth and 6.7% sequentially over Q3. 3:17 3 minutes, 17 seconds If if you remember our last earnings call, we had indicated that Q4 will be slightly softer than Q3 because that's 3:25 3 minutes, 25 seconds how the historic festive pattern has been. This is the first time we are seeing for the industry that our quarter 3:33 3 minutes, 33 seconds 4 has even beaten the festive quarter and this is happening for the first time. 3:40 3 minutes, 40 seconds Moreover, this growth that we are seeing has come in through margin expansion. 3:46 3 minutes, 46 seconds adjusted AIDA was 58 crores which is about 4.7% margin for the quarter 3:52 3 minutes, 52 seconds compared to about 4.3% in Q3 and nearly 7% last year. 3:59 3 minutes, 59 seconds PAT has grown to 56 crores which comes at a record margin of 4.5% 4:06 4 minutes, 6 seconds for the entire console business. It definitely has been our most profitable quarter ever. 4:13 4 minutes, 13 seconds Now an important point to note and to understand the business is that while we are growing fast and 4:21 4 minutes, 21 seconds while we are reporting this record profitability as a business we are not compromising on the future growth opportunity. If you 4:30 4 minutes, 30 seconds look at our earnings presentation you will find between September end and March end our real estate space has gone up by 35%. 4:42 4 minutes, 42 seconds In a business like Shadowfax, we today take real estate in our last mile centers and in our middle mile sortation 4:50 4 minutes, 50 seconds centers largely on a leasing basis. That real estate has gone up by 35%. 4:57 4 minutes, 57 seconds For the fullear basis, we have spent about 4 and a half% of our revenue as capex. 5:06 5 minutes, 6 seconds We believe the operating leverage is yet to come and this is again reflective to the investments we are making in the organization. 5:16 5 minutes, 16 seconds We believe Shadowfax through our unique investment strategy will continue outpacing industry growth, continue 5:23 5 minutes, 23 seconds improving on profitability and this positions us as a fairly unique asset in the entire industry. 5:31 5 minutes, 31 seconds Now deep diving a bit we'll quickly talk about the three segments of business that we operate. 5:38 5 minutes, 38 seconds The number one segment which is the core backbone of our business express parcel is now about 75% of our revenue. We have 5:48 5 minutes, 48 seconds continued to gain market share through new client wins deeper engagement with 5:55 5 minutes, 55 seconds our existing customers and by improving service quality. Just to remind everyone in this group, Shadowfax for the 6:03 6 minutes, 3 seconds industry stands for building these unique value added services. Be it same day delivery, next day delivery, reverse 6:11 6 minutes, 11 seconds logistics. These differentiated services continue to position us differently in the market. 6:20 6 minutes, 20 seconds We believe over the next 8 to 12 quarters we will continue gain gaining market share and as we see consolidation 6:28 6 minutes, 28 seconds happening in our space where the weaker players continue to lose market share every quarter 6:35 6 minutes, 35 seconds we believe we we are set on a very very unique path and we will continue outpacing the industry growth when it comes to express parcel business for us. 6:46 6 minutes, 46 seconds Hyperloal continues to be a place which is the second business line where we have demonstrated market leadership in 6:53 6 minutes, 53 seconds the past. Hyperlocal has grown more than 50% year on year grown 16% sequentially. 7:01 7 minutes, 1 second Quickcommerce volumes have meaningfully picked up in quarter 4 and one very very important announcement we have also commenced operations with Amazon now on their quickcommerce business. 7:12 7 minutes, 12 seconds This is a this is a important milestone for the company and we expect significant wallet share gains as as they expand. 7:21 7 minutes, 21 seconds The third line of service is other logistics services which contributed about 80 crores uh out of the 1200 plus 7:28 7 minutes, 28 seconds kores of the business. As discussed last quarter, we are deliberately Z-shaping this segment towards 7:36 7 minutes, 36 seconds higher value critical logistics and winding down some of the some of the experiments we were running as on 7:42 7 minutes, 42 seconds quarter 4 FI26 the windown is largely over. Now between all these three 7:49 7 minutes, 49 seconds segments there is one underlying thesis that I have little bit spoken about 7:56 7 minutes, 56 seconds but what is also happening is we are continuously doing real estate and geographical expansion 8:05 8 minutes, 5 seconds between September and and now our number of touch points have gone up which are basically the last mile facilities that 8:12 8 minutes, 12 seconds we run has gone from 4,200 to 4,700 In a matter of 6 months 8:19 8 minutes, 19 seconds there is rapid and fierce expansion at a geographical level that we are doing. We are opening about 120 to 150 pin code 8:27 8 minutes, 27 seconds still every month. This is real investment and the return is expected in due time. Newer touch points means 8:35 8 minutes, 35 seconds relatively underutilized drugs underutilized roots. 8:40 8 minutes, 40 seconds While we are expanding, we continue to stay extremely bullish around the underlying macro which we are serving in this country today. 8:51 8 minutes, 51 seconds I think that's broadly at a at a high level around around the business that has just happened and what kind of investments and returns we have seen. 9:01 9 minutes, 1 second Shifting a bit of gears and talking a bit about what we what we foresee for FY27. 9:10 9 minutes, 10 seconds Now FI27 we have all entered in a very tumultous geopolitical environment 9:17 9 minutes, 17 seconds but what has surprised us in India is the core consumption story which remains 9:24 9 minutes, 24 seconds stronger than ever. In quarter 4 alone we saw growth probably in every segment. 9:31 9 minutes, 31 seconds Now we have sequentially grown from Q3 to Q4. 9:36 9 minutes, 36 seconds There is not one client or one element of the business which has which has grown faster than the other. We have seen our growth coming equally across 9:46 9 minutes, 46 seconds the board. Be it direct to consumers, be it our large enterprises, be it our quick commerce division. 9:55 9 minutes, 55 seconds We believe every digital platform will probably be recording the best quarter ever thanks to the underlying growth in 10:02 10 minutes, 2 seconds our economy and the growth in digital penetration that is happening. 10:08 10 minutes, 8 seconds Our view is that India's digital penetration will continue growing 120 to 10:15 10 minutes, 15 seconds 150 basis points every year. This was merely 78% in FI25. 10:22 10 minutes, 22 seconds Our view is this will go to 14 15% by FY30. 10:27 10 minutes, 27 seconds This is the opportunity we are after. If customers order online, we as a model agnostic platform will be the clear 10:35 10 minutes, 35 seconds winners in this sector. Be it 10 minutes, be 30 minutes, be it 1 day, be it 5 day, we do it all. 10:44 10 minutes, 44 seconds Knowing what I've just told you, within this larger ambit of digital penetration, we have shortlisted five 10:52 10 minutes, 52 seconds key strategies that are going to drive growth and focus for Shadowfax. We're going to talk about those five strategies now in brief. 11:02 11 minutes, 2 seconds The number one strategy over here which is the single largest focus of the organization is D2C's andmemes. 11:10 11 minutes, 10 seconds Just a few weeks back we announced a platform called Shadowfax 360 through which any small seller any small 11:19 11 minutes, 19 seconds retailer can get onboarded and start shipping across the country directly with us. In India there are about 15 16 11:28 11 minutes, 28 seconds lakh sellers who are selling online either through marketplaces or directly. 11:32 11 minutes, 32 seconds About 20% of them today take orders directly through their own front-end platform. 11:39 11 minutes, 39 seconds As this funnel opens further, we believe direct ordering will be the single biggest focus for us. Just to give you 11:46 11 minutes, 46 seconds an update on our D2C business as well, over the last year between FI26 and FI25, 11:54 11 minutes, 54 seconds we have grown two and a half times in our D2C business. 11:59 11 minutes, 59 seconds This outcome has been delivered through constant focus and our investments in the same dimension. 12:06 12 minutes, 6 seconds We have expanded our sales team today to more than 100 people. We have opened sales offices in tier 2 cities and are 12:13 12 minutes, 13 seconds strongly investing now in brand development. The interesting fact is that these D2C's and theme customers come at a significantly higher 12:22 12 minutes, 22 seconds incremental margins as the pricing is typically 15 20% higher than what we charge as enterprises. So that 12:29 12 minutes, 29 seconds D2C'smemes continue to remain one of the strongest focus for the organization. 12:36 12 minutes, 36 seconds The second key lever where we will continue investing is what we call as large shipment capability. Think about suitcases, washing machines, furniture. 12:48 12 minutes, 48 seconds Today, Shadowfax has started delivering large shipments in about 6,000 odd pin codes. We have a view to open 10,000 pin codes in FI27. 12:59 12 minutes, 59 seconds The complexity in large shipments is significantly higher than small shipments. 13:05 13 minutes, 5 seconds And investing over here gives us an extra advantage. 13:11 13 minutes, 11 seconds Also, this is not a market where we are fighting for share. The demand is actually pulling us in. Most of our 13:18 13 minutes, 18 seconds existing customers are asking us to expand coverage, expand categories and take on wide goods as well. When you 13:25 13 minutes, 25 seconds combine strong demand, higher realizations, higher entry barriers, this this segment simply becomes something that we need to 13:34 13 minutes, 34 seconds go after. Now our large shipment business has grown three to four times compared to FI25. 13:42 13 minutes, 42 seconds This continues to remain a key focus area for FI27 and every incremental pin code we will add here is direct market share gain. 13:53 13 minutes, 53 seconds The third element in our business and we have briefly spoken about it continues to be coverage and pin code expansion. 14:00 14 minutes We have hit 15,600 pin codes out of the 19,300 available pin codes in India. We we'll 14:09 14 minutes, 9 seconds be hitting about 17,000 odd pin codes by end of FI27. 14:15 14 minutes, 15 seconds Our mayor presence in some of these pin codes unlocks volumes and market share gains in states like UP Hana. We have 14:23 14 minutes, 23 seconds actually reached 99% plus pin code coverage already and we have seen how comprehensive presence in some of these 14:31 14 minutes, 31 seconds places gives you a competitive advantage. 14:35 14 minutes, 35 seconds We stay true to our strategy of covering the entire country by FY28. 14:42 14 minutes, 42 seconds So these are the three strategies which we have been working about. The fourth one is something which I would say is 14:50 14 minutes, 50 seconds one of the most audacious bet that we have probably taken in the last few years. This strategy is not going to be 14:57 14 minutes, 57 seconds about market share with it is about category creation. 15:02 15 minutes, 2 seconds We all know quick commerce has become a norm in the country. What we are seeing and feeling now is verticalized quick 15:11 15 minutes, 11 seconds commerce becoming the newest game in town. Think about every category today is moving the quick commerce way. It has 15:20 15 minutes, 20 seconds become the go-to liver for digital penetration right now. 15:24 15 minutes, 24 seconds We today are working with very young customers who are dealing in premium grocery, gourmet food, child care, 15:33 15 minutes, 33 seconds fashion, even some audacious items which have always been offline 15:40 15 minutes, 40 seconds like building material, hardware shops, spare part material are actually moving online and start trying 15:49 15 minutes, 49 seconds to deliver in 30 minutes. We can tell you there's a lot of excitement both in the venture capital world as well as the 15:56 15 minutes, 56 seconds as the customers about this interesting new segment. Now what we've learned from our pilots is that vertical quickcommerce platforms offer 16:05 16 minutes, 5 seconds significantly higher value per engagement than horizontal fulfillment. 16:09 16 minutes, 9 seconds Capital is also very very limited for these players and building in-house logistics just does not make sense. 16:16 16 minutes, 16 seconds like how horizontal e-commerce evolved over the last decade. We believe vertical 16:25 16 minutes, 25 seconds quick commerce is going to is going to be having 3PL as the natural answer. 16:32 16 minutes, 32 seconds As part of our strategy after learning and piloting over the last 12 months, we are making a important announcement 16:39 16 minutes, 39 seconds today that we are going to set up about 100 dark stores in this financial year. 16:46 16 minutes, 46 seconds specifically for vertical quick commerce and that's the fourth lever of growth where we are investing in today. 16:56 16 minutes, 56 seconds The fifth liver is about an acquisition that we made more than a year back. We have done 100% acquisition now of 17:05 17 minutes, 5 seconds critical log. They serve more than 500 customers especially in the high value segment jewelry, luxury apparel, 17:12 17 minutes, 12 seconds electronics where traditional parcel solutions have not had a credible outcome. 17:19 17 minutes, 19 seconds We are now in process of integrating brand and technology. We believe critical log will strengthen the overall 17:26 17 minutes, 26 seconds vast portfolio we offer to our existing customers. Now across all these five initiatives that we have spoken about 17:34 17 minutes, 34 seconds there is one thread which remains common which is our relentless focus on continuously building value added services. 17:43 17 minutes, 43 seconds Value added services have been the key element which has kept us apart and helped with our profitability in the 17:50 17 minutes, 50 seconds past. We believe investing in these unique services be same day delivery, next day delivery to critical logistics 18:00 18 minutes help us basically become a more profitable as well as a high retention sort of an organization. 18:08 18 minutes, 8 seconds While we are doing all of this, our focus truly remains on serving the digital economy on serving the end customer you and me over there. uh and 18:16 18 minutes, 16 seconds that is again as I that's the way we started with we are focusing on the digital penetration and we'll continue doing that 18:25 18 minutes, 25 seconds now this is broadly what one should expect over the next 12 months now comes a interesting point around our 18:33 18 minutes, 33 seconds long-term outcome there are two specific things we are going to talk about now which are the 18:41 18 minutes, 41 seconds elements that gives us the conviction in our right to The first thing we are going to talk about is AI and the second element is 18:51 18 minutes, 51 seconds we're going to talk about again a very interesting point around what is the right network design for any end to end player. 19:00 19 minutes Now these are the two areas which where we are obsessed about as a team and we 19:07 19 minutes, 7 seconds continuously think on how to create long durable competitive advantage across this. Now talking about AI at Shadowfax, 19:18 19 minutes, 18 seconds AI is not a side project. It is probably becoming one of the core operating layers of the company and I believe very 19:27 19 minutes, 27 seconds few sectors are going to benefit from AI like logistics will. As an organization, 19:35 19 minutes, 35 seconds we are a young organization and the pace at which we are adopting AI today, we'll probably place ourselves in the top 1% of the companies in India on AI adoption. 19:46 19 minutes, 46 seconds Over here, AI is no more an option. This has become a sort of a way to work. We don't have an AI leader, but we have like every individual who's transforming 19:55 19 minutes, 55 seconds to use AI to become efficient and bring efficiency to the organization. The profitability gains in the midterm and 20:02 20 minutes, 2 seconds long-term from AI are going to be meaningful but that's probably a smaller story. The larger benefit that we are 20:10 20 minutes, 10 seconds going to expect we can broadly divide that again into two elements. One is we believe AI is going to unlock crazy 20:18 20 minutes, 18 seconds demand in the country digitally. Think about the next 300 million customers who essentially have to be moved online to 20:26 20 minutes, 26 seconds start placing order online. things like voice-based vernacular solutions or accelerated digital 20:34 20 minutes, 34 seconds marketing solutions or think about the fact that any smallme any small D2C can set up shop online 20:44 20 minutes, 44 seconds launch their marketing campaign without writing a piece of code. The technical barrier which existed for the last 5 10 20:52 20 minutes, 52 seconds years has suddenly collapsed. We believe more of these sellers are going to come online which essentially means more 20:59 20 minutes, 59 seconds demand and they all are going to need efficient logistics on the supply side on the rather the 21:07 21 minutes, 7 seconds operation side AI is already improving utilization for us be routing beat rider acquisition be marketing efficiency be 21:15 21 minutes, 15 seconds the just the speed of shipping new solutions the paradigm has completely shifted for us in in in basically building outcomes. 21:25 21 minutes, 25 seconds Today a super majority of our code base is now being written by AI and the AI platforms we are building on top of that is going to further accelerate that. 21:38 21 minutes, 38 seconds However, there is one part of the business we are very very confident that AI is never going to replace. It is the 21:45 21 minutes, 45 seconds humble delivery person. The supply chain solution, the last mile interaction and the problem solving in the moment will always remain human. AI is just going to 21:54 21 minutes, 54 seconds make the back end engine smarter and efficient. The front line always remains human. 22:01 22 minutes, 1 second Coming probably to the last 10% of my address today and I've kept the best for the last is around 22:09 22 minutes, 9 seconds what's the right network design and I know a lot of you have been obsessing over that over the last year. 22:17 22 minutes, 17 seconds We internally have have been have been building financial models. We have been we have been running simulations around what exactly is the model which which 22:26 22 minutes, 26 seconds can help a company like Shadowfax scale 10x and bring the right cost advantage at scale. Thanks to AI, our network 22:35 22 minutes, 35 seconds simulation models are now far more robust and our decision making on top of that in doubling down what we think is right is just becoming more and more 22:44 22 minutes, 44 seconds faster. There are three key outcomes of the network design which essentially determine the long-term cost of 22:53 22 minutes, 53 seconds ownership and these are the three key operating strategies that we are going to double down after having having invested over the last few years. 23:03 23 minutes, 3 seconds The first strategy is that everything under the roof, be it last mile hubs, be it sortation centers 23:10 23 minutes, 10 seconds or be it even in the future dark stores must be cell phoned run by your own employees and you need to put 23:18 23 minutes, 18 seconds state-of-the-art automation. You would have seen we have invested in in one of the largest sorting centers we have had over the last quarter called 1NCR. 23:29 23 minutes, 29 seconds We have already started seeing benefits of some of those centers. 23:34 23 minutes, 34 seconds Such high cape centers create operating leverage in the long term and offer us the opportunity to create a better customer experience. 23:44 23 minutes, 44 seconds These are the assets one needs to invest and that is where our infra bets over the next few years are going to continue. As a matter of fact, over the 23:52 23 minutes, 52 seconds last three years, more than 60% of our capeex spending is only happening in sorting centers. 24:00 24 minutes between sorting centers and last mile hub probably 85% of our capeex spending is only happening in these centers and so we are going to double down on that. 24:10 24 minutes, 10 seconds The second key outcome of the of the exercise we have done is is what we have realized that having too many nodes in 24:18 24 minutes, 18 seconds the network especially on the last mile can be really really counterintuitive. 24:24 24 minutes, 24 seconds While in the short term to having many nodes can give you an advantage in nodal cost but your total cost of operations 24:32 24 minutes, 32 seconds because of the transportation optimization always goes for a toss. The right model is to have the right number of nodes to avoid errors to manage your 24:41 24 minutes, 41 seconds transportation cost. Larger nodes offer you an opportunity to have a fairly 24:47 24 minutes, 47 seconds optimized mesh grid which is efficient as well as optimized for speed. We have realized the way we are expanding of 24:56 24 minutes, 56 seconds having a strategy of limited defined last mile nodes is going to be the way forward and this is something which 25:05 25 minutes, 5 seconds gives us a lot of operating leverage on the last mile. The third key strategy that we are again doubling down on is 25:14 25 minutes, 14 seconds that while everything under the roof has to be asset heavy. Conversely over here everything on the road has to be asset light. 25:24 25 minutes, 24 seconds Roughly 50% of our cost today is partner expense which is the which is the sort of crowdsource network that we have 25:31 25 minutes, 31 seconds created. Roughly about 18 19% is our trucking expense. 25:36 25 minutes, 36 seconds We believe in a country like India if you have 70% of your cost is on the 25:42 25 minutes, 42 seconds road you you need to have a variable model. In the future we believe some of these assets are going to have an over 25:51 25 minutes, 51 seconds supply in the country. A trucking is becoming far more efficient. Our road speed is becoming faster. 25:58 25 minutes, 58 seconds Having an asset light sort of a model on the road helps you stay lean and gives you a cost advantage in the long term. 26:07 26 minutes, 7 seconds Now some of these designs which I've just spoken about is something which we have been working on. We are happy to take questions on that later and maybe address even in smaller audiences. 26:18 26 minutes, 18 seconds But we believe that once we continue building on this it compounds and right architecture gives you the right to win 26:26 26 minutes, 26 seconds in this sector. So I think that's a very very sort of an important element and and realization that that we have had 26:33 26 minutes, 33 seconds over the over the last few quarters. Now I think just to close maybe let me just close with this. FI26 was just a 26:42 26 minutes, 42 seconds demonstration that we have arrived and we've just got started. 26:47 26 minutes, 47 seconds India's digital economy is still very very nent. The next wave is going to be faster. We'll need solutions which are 26:56 26 minutes, 56 seconds there for more fragmented sellers and operationally things are only going to get more and more complex. Frankly, this is the environment that we have built 27:04 27 minutes, 4 seconds for. We have the momentum, we have the capital and we have the right operating discipline to turn this opportunity into 27:11 27 minutes, 11 seconds extraordinary value. In FI27, we will raise the bar. Thank you. Thank you everyone for listening in. 27:26 27 minutes, 26 seconds Thank you very much. 27:29 27 minutes, 29 seconds Yes, thank you very much. We will now begin the question and answer session. 27:33 27 minutes, 33 seconds 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 27:41 27 minutes, 41 seconds may press star and two. Participants are requested to use answers while asking a question. Ladies and gentlemen, we will 27:49 27 minutes, 49 seconds wait for a moment while the question Qseles. 27:59 27 minutes, 59 seconds The first question is from the line of Kora Rataria from Morgan Stanley. Please go ahead. 28:05 28 minutes, 5 seconds Hi May, congratulations on strong numbers. Uh thanks for taking my question. Uh my first question is on 28:13 28 minutes, 13 seconds market share gain. Uh if you could little bit elaborate on where are you gaining share from? Uh is it a share gain from uh in within the 3PL market? 28:24 28 minutes, 24 seconds Is it a share gain from the captive uh market of the uh large uh you know 28:30 28 minutes, 30 seconds customers? Uh secondly, the share gain is also driven by our continued investment and expansion in pin codes 28:38 28 minutes, 38 seconds and building out you know various value added services. At some point in time this expansion will kind of also stabilize as you mentioned in by fiscal 28:47 28 minutes, 47 seconds 28 right. So should one assume that the uh you know market share gain kind of stabilizes at that point in time and then you know growth becomes in line 28:56 28 minutes, 56 seconds with that of industry around that number. 29:01 29 minutes, 1 second I'll take that question Gorav thank you for asking. Uh so let me break down the market share journey for you. Okay, 29:11 29 minutes, 11 seconds I think if you look at the overall 3PL market, we believe as a overall market 29:17 29 minutes, 17 seconds of 3PL versus insource over the last few quarters, there's been a lot of stability while we also believe that 29:25 29 minutes, 25 seconds there have been some market share gains for the 3PL industry as as our customers as some of the guys who had uh sort of 29:34 29 minutes, 34 seconds so-called insourcing arms uh tend to optimize their cost and uh become more rational in in looking at for the most 29:44 29 minutes, 44 seconds cost effective sort of solutions. So yes there will be some bit of that as well. 29:48 29 minutes, 48 seconds uh I think within the 3PL industry only as part of the 3PL industry I would say we have we have we have hit about from 29:56 29 minutes, 56 seconds this is an internal estimate uh it's going to be about close to 28 29% market share for the for the full quarter on 30:05 30 minutes, 5 seconds our estimate which has which is like one year back which would have been about close to 17 18%. So within the 3PL 30:12 30 minutes, 12 seconds itself we have also gained a lot of market share year on year. Um we would typically say that what is happening in 30:19 30 minutes, 19 seconds the industry is like the top two players continue to gain market share and the market is becoming more and more 30:27 30 minutes, 27 seconds consolidated. So a few years back uh the market was far more fragmented than versus what it is right now. uh I think 30:35 30 minutes, 35 seconds our market share gain is happening from some of the traditional 3PLs some of the some of the I would say inefficient uh 30:45 30 minutes, 45 seconds uh people who are who are essentially losing losing business today. Uh and that's where most of our market share gain is is is happening. 30:56 30 minutes, 56 seconds I hope I answer your question. 30:58 30 minutes, 58 seconds Yeah, thank you. Second question on uh you know I saw the like the capeex uh 31:05 31 minutes, 5 seconds comparison that you gave for FI26 and the total capeex that you have made from your inception till FI25 31:13 31 minutes, 13 seconds and it's a meaningful jump in your investment that you did in FI26. uh and you know our understanding is that a lot 31:20 31 minutes, 20 seconds of these investments also have a some element of opex that comes through the P&L and despite that fiscal 26 has seen 31:28 31 minutes, 28 seconds a good margin expansion. So the question is that as these capex normalizes which is what you kind of mentioned in your 31:36 31 minutes, 36 seconds presentation uh and some of the operating leverage plays out do you think that the fiscal 31:43 31 minutes, 43 seconds 26 margin expansion would look much better in the coming years uh because the investment intensity will reduce? 31:54 31 minutes, 54 seconds That's a great question. Um so I think in our industry see we we have had probably the highest Apex 32:02 32 minutes, 2 seconds spends ever and we are just doubling down on the strategy of everything under the roof. We want to we want to automate we want to set up sautation centers. We 32:10 32 minutes, 10 seconds want to set up some of the best-in-class facilities uh out there in the country and you're absolutely right. I think there is a there's a lot of operating 32:18 32 minutes, 18 seconds leverage which is yet to come. There is a lot of opex cost we have incurred today. um for which the return probably is going to maybe come in FI 2728 32:27 32 minutes, 27 seconds uh over the years. But I think we are we are coming from from a year where in H1 we had to rapidly invest in capeex looking at how the market was behaving 32:36 32 minutes, 36 seconds and how much growth the industry wanted us. But I think in H2 when we started investing we realized that uh probably FI27 is also going to be a formidable 32:45 32 minutes, 45 seconds year for us and we need to like invest in advance. So I think probably some of the investments that I also spoke about 32:52 32 minutes, 52 seconds in my address um are linked to some of the capacities that we want to set up for the for the coming years. But yeah, 32:59 32 minutes, 59 seconds if we were not investing in some of these capacities uh I think the business mix that is that we have arrived into uh 33:07 33 minutes, 7 seconds we would probably had I think some benefit in our in our in our overall profitability had we not done that. 33:15 33 minutes, 15 seconds I think moving forward we Yeah. Yeah. Yes. Yeah, please go ahead. 33:19 33 minutes, 19 seconds No, no, no. Yeah, I think moving forward we will uh we are continuing to be bullish about setting up sort centers, 33:27 33 minutes, 27 seconds automating a lot of our work inside these sort centers and we have hit a critical volume where if we invest in sort centers uh further our break even 33:36 33 minutes, 36 seconds is going to be significantly faster as well. 33:40 33 minutes, 40 seconds Understood. This is super useful. Thank you and all the best. 33:46 33 minutes, 46 seconds Thank you. The next question is from the line of Abhishek Banerji from ICS securities. Please go ahead. 33:53 33 minutes, 53 seconds Hey hi uh hi Abishek thanks for the opportunity. Uh just a couple of questions from my side. Uh first is uh you know on the capix question right uh 34:01 34 minutes, 1 second I uh your original thought process was you know you do manually till you reach 34:07 34 minutes, 7 seconds a certain scale uh and then shift to uh you know an automated facility. So is is 34:15 34 minutes, 15 seconds that also changing because you're also expanding your uh pin code footprint right so whenever now you go you'll have 34:23 34 minutes, 23 seconds uh an automated facility from day one is that the new thought process 34:30 34 minutes, 30 seconds uh soik thanks for asking this question so the strategy hasn't changed u we are 34:37 34 minutes, 37 seconds very very clear that we will run a dual system which has some manual some automated setup up so that once we 34:46 34 minutes, 46 seconds invest in Apex we get the return on that fairly faster. So that strategy hasn't 34:52 34 minutes, 52 seconds changed. Uh I think what has changed is the level of automation once we realize that this facility needs to go for an 34:59 34 minutes, 59 seconds automation. I think the intensity of taking those bets getting more audacious on investing and getting ROI within the 35:08 35 minutes, 8 seconds facilities once we know that we need to invest is just uh I think getting more aggressive and confident but that philosophy hasn't changed just to 35:16 35 minutes, 16 seconds clarify your question we are still very very focused on driving high rosy in our in our cash spends 35:24 35 minutes, 24 seconds got it got it very clear now on the hyperloal business you alluded to you know getting uh you know getting Amazon 35:32 35 minutes, 32 seconds uh now on board. Uh now are we seeing any change in the profitability in that business and you know with uh an 35:42 35 minutes, 42 seconds increasing number of larger players in the QC business does that mean that your ability to kind of uh price your services has gone up a little bit? 35:54 35 minutes, 54 seconds So we again uh this is again a multifaceted question. I'll try to answer as much as I can because we don't 36:01 36 minutes, 1 second typically disclose our uh client level profitability at all. Um see what is 36:08 36 minutes, 8 seconds happening in quickmerce today there are two kind of customers. One is the large enterprises which again there are multiple of them now. Uh the second is 36:17 36 minutes, 17 seconds what we speak about as vertical quickcommerce. Typically vertical quickcommerce companies end up depending 36:24 36 minutes, 24 seconds a lot more on 3PL and hence the profitability profile is slightly better than working with the horizontal guys. 36:31 36 minutes, 31 seconds But the great thing about I think quickcommerce today is that unlike horizontal e-commerce they're not just one or two players in this segment. It's 36:40 36 minutes, 40 seconds a it's a six seven player sort of a market. We are probably working with each one of them. there is a very very 36:47 36 minutes, 47 seconds good client distribution across each of the platforms which are delivering to the end customer. So we believe there is 36:55 36 minutes, 55 seconds again um there's not sort of a um a leverage that any one partner has on 3PL and given we are the largest guys over 37:02 37 minutes, 2 seconds there I think we have had we have been able to maintain the pricing even as we are scaling up. 37:09 37 minutes, 9 seconds Got it. So, so on the overall profitability bit, has there been a move or are have you seen some margins from there? 37:18 37 minutes, 18 seconds Yeah. Yeah. Yeah. So, I think uh while our entire profitability has has moved up as you would see here on Q on Q um I 37:26 37 minutes, 26 seconds think we continue to stay extremely efficient um inside the organization. 37:32 37 minutes, 32 seconds What we have also been able to now do is in especially if you talk about quickcommerce as a business I think we have been able to rapidly cut down our 37:40 37 minutes, 40 seconds overheads whatever they were in managing this business through rapid use of AI. 37:49 37 minutes, 49 seconds Got it. Fine. And then just one last thing uh so uh we are all uh you know worried about you know how the next 6 37:58 37 minutes, 58 seconds months kind of pans out given given the uh geopolitical situation uh right and of of course I understand you know your 38:05 38 minutes, 5 seconds thought process on the overall year uh given the kind of traction we have seen in e-commerce but uh could you give some 38:12 38 minutes, 12 seconds kind of color as to you know what uh crude inflation how it can kind of impact your business and you know how 38:20 38 minutes, 20 seconds what the reverse you have to kind of mitigate that impact that would be really helpful. 38:26 38 minutes, 26 seconds Yeah. No, no, no. Again, that's a very sensitive sort of a conversation and uh uh something again a lot of uh lot of 38:34 38 minutes, 34 seconds volatility globally that's been happening on this uh see if you look at the space okay so 38:42 38 minutes, 42 seconds I'll explain on two sides one is on the demand side the other one is on the supply side okay on the demand side typically whenever such kind of global 38:51 38 minutes, 51 seconds volatility happens somehow the e-commerce grows in the country the digital penetration grows in the country 38:58 38 minutes, 58 seconds because a lot of spends that customers would anyway might be doing in hospitality, travel essentially end up now getting translated into more 39:06 39 minutes, 6 seconds consumption spends at home. So home delivery tends to go up uh and typically like summer months which are sort of very very lean month because everybody's 39:14 39 minutes, 14 seconds traveling and spending money over there um uh probably can be very different this year and we saw this something in COVID uh as well where we saw big boom. 39:23 39 minutes, 23 seconds So I think the consumption looks pretty healthy. I think on the supply side um if you look at uh look at our business 39:30 39 minutes, 30 seconds today uh I think probably about less than 10% of our cost is linked to or 39:40 39 minutes, 40 seconds less than 10% of our cost is actually fuel cost. Okay. Um while fuel cost are going to be there it's probably going to 39:47 39 minutes, 47 seconds also impact the entire industry. So it's not going to create a competitive disadvantage between between anyone out 39:54 39 minutes, 54 seconds there. Typically in our contracts the way we sign so both on supply side as well as with our customers you have a 40:02 40 minutes, 2 seconds fuel search charge as a component. It's a pretty standard thing in the industry. 40:06 40 minutes, 6 seconds So we don't anticipate any any sort of uh cost or or sort sort of a uh problem 40:14 40 minutes, 14 seconds in our profitability. Uh but yeah, I mean logistics can potentially get expensive uh for our customers if there is a rapid rise in in fuel cost. 40:25 40 minutes, 25 seconds Got it. Got it. That is very helpful. Thank you so much. 40:30 40 minutes, 30 seconds Thank you. The next question is from the line of Atul Bors from JM Financial. Please go ahead. 40:38 40 minutes, 38 seconds Uh congrats on a good set of number. Uh so my first question is more of around 40:44 40 minutes, 44 seconds the express parcel volume growth that we are seeing Q on Q. Uh there is also a dip in your yield. So is it fair to 40:53 40 minutes, 53 seconds assume that the volume growth there if we are seeing Q on Q is mostly coming from the insourcing challenges or the 41:01 41 minutes, 1 second lower insourcing that is happening at Misho. 41:06 41 minutes, 6 seconds So I think the realization is largely dependent on the volutric weight of the shipment. What we have seen quarter on 41:15 41 minutes, 15 seconds quarter is that uh is basically the average volume of the shipments has actually uh gone down. Okay. And this is 41:24 41 minutes, 24 seconds purely sorry there's a lot of disturbance we are hearing. Yeah. Maybe 41:30 41 minutes, 30 seconds uh Mr. Aul may request you to please mute your line. Thank you so please go ahead. 41:39 41 minutes, 39 seconds Now what we've seen is and that underlying actually our growth has happened across the sector. Probably our D2C segment has actually grown much 41:47 41 minutes, 47 seconds faster than any other sector. Uh between Q3 and Q4 we have gained rapid market share in the in the D2C segment specifically between the two quarters. 41:58 41 minutes, 58 seconds If you if you ask me I mean has our percentage of business coming from the top two three customers changed? No it 42:05 42 minutes, 5 seconds is probably same between Q3 and Q4. So uh every part of the business is actually growing. Uh and the great thing 42:12 42 minutes, 12 seconds where we are happy about and that is also helping us become like sort of profitable faster uh is the high value D2C business growing much faster than anything else. 42:23 42 minutes, 23 seconds Uh all right and uh uh one more thing that uh FYI 26 has been a phenomenal for you in uh both express and hyper 42:32 42 minutes, 32 seconds localal. What kind of uh growth you foresee on a steady state basis in the coming years? 42:41 42 minutes, 41 seconds I think see for the overall business I think we continue to maintain that same trajectory guidance of anywhere between 42:49 42 minutes, 49 seconds 27 to 30% overall business growth. Uh hyper local uh because the base is smaller will grow uh slightly faster at 42:58 42 minutes, 58 seconds about 45 to 50% yearon-year growth and the rest is again going to come from express parcel. So that's the view we will continue maintaining as part of our guidance. 43:09 43 minutes, 9 seconds All right. Thank you for my question. All the best. 43:14 43 minutes, 14 seconds Thank you ladies and gentlemen. In order to ensure that the management is able to address questions from all participants, we request you to please limit your question to two per participant. 43:25 43 minutes, 25 seconds The next question is from the line of Satimna Chadri from Boehead. Please go ahead. 43:31 43 minutes, 31 seconds Yeah. Hi. Congratulations on a great set of numbers sir. My first question is uh when when we are talking about investing 43:39 43 minutes, 39 seconds more in real estate and the operating leverage is yet to kick in, what sort of margin improvement are we talking about? 43:47 43 minutes, 47 seconds And in fact, a broader question would be what sort of margins do you believe uh are sustainable in our line of business? 43:57 43 minutes, 57 seconds Yeah, that's yeah, that's a complex answer I can tell you. Um I'll answer the second part first. See we believe in 44:04 44 minutes, 4 seconds a business like ours where we are offering our services to the end customers there's a lot of complexity around RTO's coods there's a lot of 44:12 44 minutes, 12 seconds value added services we have to offer uh through reverse logistics same day delivery and and similar means uh we 44:20 44 minutes, 20 seconds believe in a business like this early doubledigit sort of sort of steady state aida margins are sustainable so that's 44:27 44 minutes, 27 seconds the view we have and I think in a business the way we have planned for is that for the next couple of years we're 44:35 44 minutes, 35 seconds giving a guidance of 100 to 120 basis points um in terms of improving profitability by till FI28 and this is 44:43 44 minutes, 43 seconds the time where we'll continue expanding our sort of real estate geographical expansion post FI28 we are we are hoping 44:51 44 minutes, 51 seconds to hit about somewhere between um 200 to 250 basis points every year for the next few years until we hit steady state AIDA 44:59 44 minutes, 59 seconds now to answer your first question it's It's very very difficult to carve out exactly how many basis points are going 45:07 45 minutes, 7 seconds to be there only attributable to some of the investments that we are doing but I mean you can imagine that we we our 45:15 45 minutes, 15 seconds profitability growth will become 2x between FI28 and and uh before FI28 and 45:22 45 minutes, 22 seconds post FI28 maybe that can help you get an estimate on that some of these again investments are fairly complex around the network you end up like once you're 45:30 45 minutes, 30 seconds setting up a new center um with a fully automation sort of setup. You you end up giving 6 months of like 6 months is the 45:37 45 minutes, 37 seconds setup time. You end up incurring cost on both the sides, rentals, electricity and everything. So like we set up one NCR facility which went live just a few 45:46 45 minutes, 46 seconds months back. Uh it took almost 6 months where I mean dual cost were incurred for the for the entire duration despite us 45:54 45 minutes, 54 seconds not utilizing that facility at all. So I think some of these things continue to happen. Um typically when we open a new 46:02 46 minutes, 2 seconds last mile facility uh it takes about six to eight months because our trucks are running fairly suboptimally in in some 46:10 46 minutes, 10 seconds of those locations. So uh I think I don't know if I can ask because it's a very complex network sort of a thing 46:17 46 minutes, 17 seconds that we are looking at but that's the way we are planning our financials and our guidance. 46:23 46 minutes, 23 seconds Understood. And uh just uh one or two more questions. One is on the uh like one of your peers um listed peers 46:32 46 minutes, 32 seconds suggests a lower cost advantage due to their presence in partial truckloads. 46:37 46 minutes, 37 seconds What is your view on that? Does it really make a difference? How are we placed? And second uh is on the hyper 46:44 46 minutes, 44 seconds local growth. So uh Q4 hyperlocal growth was probably lower than uh what you are guiding for going 46:52 46 minutes, 52 seconds forward. So uh what could be the reason for that? 46:58 46 minutes, 58 seconds No. Um I think uh just to answer your first question, see different organizations have different type of networks and different fundamentals 47:07 47 minutes, 7 seconds around it. Shadowfax has designed its network on a first principal basis on what we think is going to give us the right answer in the in the long term. 47:18 47 minutes, 18 seconds Now for us and I can talk about us over here. See we have built a business which has a very strong mix around 47:26 47 minutes, 26 seconds crowdsourcing where we end up doing a lot of last mileile businesses which is essentially a competitive advantage as well. We have also built a 47:34 47 minutes, 34 seconds specialization around value added services. Now in a business like ours uh are we going to offer PTL services? 47:45 47 minutes, 45 seconds Probably I don't think so. In the next few years at least that's a visibility we have but yeah never say never. I mean 47:55 47 minutes, 55 seconds on the on the question on the on the question on hyper local see I mean if you look you should look at on a full year sort of a basis I 48:02 48 minutes, 2 seconds think a full year growth continues to stay very very strong. uh last year Q4 was extraordinarily better and that's 48:10 48 minutes, 10 seconds why the year-on-year growth might be looking uh a bit slow but sequentially I think we are growing as per the plan um one needs to look at yearon-year growth 48:18 48 minutes, 18 seconds in businesses like this for getting the real trend I think with with a new customer acquisition with with vertical quick commerce and dark store enablement 48:27 48 minutes, 27 seconds coming into the play um I think the the growth is going to be formidable and we are pretty sure on what we are guiding 48:36 48 minutes, 36 seconds All right, thank you and all the best. 48:43 48 minutes, 43 seconds Thank you. The next question is from the line of Duv Jen from Ambbit Capital. Please go ahead. 48:50 48 minutes, 50 seconds Uh, hi Abijek, thanks a lot for the opportunity and congratulations on uh, very good numbers. Uh, my first question 48:57 48 minutes, 57 seconds is on the dark store uh, you know, expansion piece that you spoke about. So you spoke about uh 15 dark stores and 49:04 49 minutes, 4 seconds that going to 100 and it seems like a new vertical uh entirely for shadowax right so if you could just talk about 49:11 49 minutes, 11 seconds you know how does the unit economics in this business stand what kind of scalability uh that you're looking at and you seem pretty excited about it so 49:19 49 minutes, 19 seconds you know I would be very happy to hear your thoughts on this one and then I'll take my second question yeah so so we first ventured into dark 49:28 49 minutes, 28 seconds to probably two years back um these 15 that we have been running we like 90% of them we have just been running in one 49:37 49 minutes, 37 seconds city. So we spent a lot of time learning how they work, learning how the profitability needs to work, building 49:46 49 minutes, 46 seconds the underlying technology both on dark store management, people management, last mile and at the end of the day how do we how do we make it profitable? 49:56 49 minutes, 56 seconds Today our top stores okay would be running at about 20% plus gross margins 50:04 50 minutes, 4 seconds with a further space to expand as the dark store volume goes up. So there is a healthy profitability profile that we 50:13 50 minutes, 13 seconds have proven and we have spent enough time before we before we have come out and said okay we are going to go uh 50:21 50 minutes, 21 seconds aggressive on on on this sort of a model. So that's confidence on building this out over the last few years is there with us. The second thing in terms 50:30 50 minutes, 30 seconds of how this model typically works. So again we are not working with the horizontal platforms that all of us 50:36 50 minutes, 36 seconds typically known uh know this is meant for the vertical guys and think about a 50:44 50 minutes, 44 seconds specialized apparel players. Think about specialized beauty uh uh players. Think about u think about sports sports gear. 50:54 50 minutes, 54 seconds Okay, there are specific companies and we have a list of about 50 odd customers right now who are actively working where 51:01 51 minutes, 1 second they can't have a supply chain solution over there on their own. they just don't have the capability of doing that and 51:08 51 minutes, 8 seconds they rely largely on 3PLs like us and us being a leader in the space us understanding how last mile should work 51:16 51 minutes, 16 seconds in we have sort of a natural go-to partner for some of these some of these platforms um so I mean the idea is to 51:25 51 minutes, 25 seconds work with very specific people uh companies which have stronger balance sheets uh the radius that we offer over 51:32 51 minutes, 32 seconds here is not necessarily 5 to 10 minutes um the radius that as part of the solution is what we are looking for a 30 to 45 minutes sort of a solution. So 51:41 51 minutes, 41 seconds think about dark stool which will be there in about let's say 7 kilometer radius in in some of the metros pick and pack time continues to remain I think 51:50 51 minutes, 50 seconds very similar to how horizontals run it but the radius might be slightly higher. 51:56 51 minutes, 56 seconds Got it and just on this part right uh you know how should we think about the peak revenue per store or you know how does the typical store mature in your 52:04 52 minutes, 4 seconds view so you know year one should be this year two should be this and you know so on and so forth. 52:10 52 minutes, 10 seconds Yeah. So I think we've been very financially savvy in in in in setting up these dark stores and planning our 52:17 52 minutes, 17 seconds commercials. Um it has roughly about 3 to four months for a dark store to start making money for us. Average revenue per 52:25 52 minutes, 25 seconds dark store can be anywhere between depends on who you're working but can be anywhere between 8 lakhs to 15 lakhs per dark store. 52:34 52 minutes, 34 seconds This is per month right? Per month. Yes. Sorry. Yeah. Per month. Yeah. 52:38 52 minutes, 38 seconds So maybe request Mr. Jen to please rejoin the queue. 52:43 52 minutes, 43 seconds Thank you. Participants are requested to please limit your question to two per participant. The next question is from the line of Alicia Mahava from Trust Mutual Fund. Please go ahead. 52:54 52 minutes, 54 seconds Hi. So, good evening. Great set of numbers. Just taking up what um the previous caller was asking. So, what is the kind of investment that will be 53:02 53 minutes, 2 seconds required for these dark stores and what is the ROI that you're expecting for this? 53:09 53 minutes, 9 seconds Sorry, you're asking for the capex investment. Yeah, for the dark store. 53:15 53 minutes, 15 seconds So um again I don't can't give a split of dark store versus overall but our guidance for FI27 will remain on an 53:24 53 minutes, 24 seconds absolute basis very similar to FI26 which is in the range of about 180 to 190 kores which is uh yeah I mean which 53:33 53 minutes, 33 seconds which essentially is going to be sort of a flat in terms of absolute count uh dark store again think about it uh like 53:40 53 minutes, 40 seconds I mean the way we have managed it's going to be probably what less than 10% of our capex 53:48 53 minutes, 48 seconds what is the kind of ROI we're expecting on the dark store vertical 53:55 53 minutes, 55 seconds yeah see um as we scale up we just run 15 dark stores I think it's too early to say exactly this is the ROIC that we'll 54:04 54 minutes, 4 seconds we'll get when we actually scale it up right now the model looks good the profitability looks good the incremental margin that it adds to our overall 54:12 54 minutes, 12 seconds margin is also good but the investment that we have done right now because we're on a pilot basis are very small to calculate a realistic ROIC but we'll I 54:21 54 minutes, 21 seconds think keep updating you as and when it scales up and we have meaningful numbers here to discuss sorry to interrupt may request Miss 54:29 54 minutes, 29 seconds Mahava to please rejoin the queue thank you the next question is from is from the line of Danicha from PL Capital 54:36 54 minutes, 36 seconds please go ahead yeah hi sir thanks for the opportunity and congrats on a good set of numbers. 54:44 54 minutes, 44 seconds Uh so my question is regarding the loss shipments and quality check cost. I see it has increased to close to around 7% 54:53 54 minutes, 53 seconds of the total revenue and it has increased Q and Y. So any any you can 55:01 55 minutes, 1 second attribute it to any segment was it because of hyper local or express business and also can you give a 55:08 55 minutes, 8 seconds categorization whether the apparel business is suffering or the appliance business and how would you juggle the 55:15 55 minutes, 15 seconds loss shipment cost you know now that you're entering into the white good space I believe the white good space is 55:23 55 minutes, 23 seconds margin accative but uh let's just say if our lo shipments uh stay the same on a steady 55:29 55 minutes, 29 seconds state basis or so yeah how would you juggle these two things yeah thank you 55:36 55 minutes, 36 seconds yeah drain I'll take that uh so let me give you a brief about what this loss shipment is actually this entire 55:45 55 minutes, 45 seconds value of 6% that you see for the quarter is not loss shipment it's split into two historically this number used to be 55:52 55 minutes, 52 seconds about five to 6% closer to 5% actually and roughly half of that is what we call as quality check debits. Uh this comes 56:01 56 minutes, 1 second essentially from a reverse product. I think we have explained this also in the past where in our reverse product we have a doorstep QC check for which we 56:09 56 minutes, 9 seconds charge a premium and despite doing a QC check if we pick up a wrong shipment we underwrite the value of um the parcel to 56:19 56 minutes, 19 seconds our customers. So that's the cost that comes in there. Despite this cost it's decently profitable vertical for us. So 56:26 56 minutes, 26 seconds that's included in this line item. The other cost is about two roughly other half of it. Uh which is essentially 56:33 56 minutes, 33 seconds actual loss shipments you know where either a shipment gets lost or gets damaged or you know t breached and things like that. Now it is not entirely 56:43 56 minutes, 43 seconds true. It is it is it's consistently gone up. So if you look at it this quarter it's come down. What had happened is last year it was 5.7%. 56:53 56 minutes, 53 seconds In first half it went up because we've said that when we launched our large parcel business we saw the losses going 57:01 57 minutes, 1 second higher and then we had taken sufficient steps to bring it down. Q3 again it came down to about 6.3%. Q4 it's come down further to 6.1%. 57:12 57 minutes, 12 seconds Our view is in the longer term we actually we felt even 5% was a high number. We our long-term goal was to 57:18 57 minutes, 18 seconds bring it down to about 4 to 5%. Um now this is at 6% threshold. Our endeavor is to bring this down to a long-term 57:26 57 minutes, 26 seconds average on what kind of uh steps we have taken. Abishek will also add a few things on that. 57:33 57 minutes, 33 seconds Yeah. Yeah. No, I think uh we've been obsessively building a lot of technologies around um beat improving 57:40 57 minutes, 40 seconds our scanning technology be building image recognition systems uh to improve our reverse logistics losses. So very 57:48 57 minutes, 48 seconds just the last quarter we actually um did a massive upgrade on our image recognition at at the doorstep which has 57:56 57 minutes, 56 seconds started to show some brilliant green shoots in our in our business. So moreover I think we as you mentioned we 58:03 58 minutes, 3 seconds we have ventured into large logistics uh initially first couple of quarters we saw a lot of damages happening over there and that's a that's a thing we 58:12 58 minutes, 12 seconds have been fixing over in H2. So there is a good bunch of ideas and things uh and typically what you will see is that as 58:19 58 minutes, 19 seconds companies mature um this is a this is sorry sort of a very very different kind of a leverage that comes in as you become more and more efficient and the losses come down. 58:35 58 minutes, 35 seconds Thank you. The next question is from the line of Nikil Shadri from Toro Wealth Managers. Please go ahead. 58:41 58 minutes, 41 seconds Yeah. Hi uh congratulations on a great set of workers. Uh uh I'm a 58:50 58 minutes, 50 seconds hello Mrs. Chry but there is some kind of a disturbance from your line. Yeah. Is it better now? Yes please go ahead. 58:57 58 minutes, 57 seconds Yeah. So uh just wanted to understand uh as a percentage of total revenue what 59:04 59 minutes, 4 seconds would be the D2C and FM channel uh as of financial 26 and second is uh lately 59:13 59 minutes, 13 seconds we've been uh hearing about Amazon shipping is now probably opened their network globally although they were in 59:20 59 minutes, 20 seconds India and they are almost 4,000 plus 15,000 plus I'm sorry to interrupt you Mr. Chri but your line is not clear sir 59:29 59 minutes, 29 seconds I think we got the question now yeah it's better yeah but we got questions here yeah so just wanted to get your uh sense 59:38 59 minutes, 38 seconds on probably since they have an active seller base of around 12 millionmemes and they could probably sub subsidize 59:46 59 minutes, 46 seconds pricing also so how does our 360 the 360 differentiate against this 59:53 59 minutes, 53 seconds offering so And uh yeah these were the two questions. 59:59 59 minutes, 59 seconds I think on the Amazon side I think what you are hearing right now is probably a global news now but that same thing has been active in India for more than 2 1:00:07 1 hour, 7 seconds years. Uh see I I I'll give a generic view on this and because we've been observing some of these uh some of these 1:00:14 1 hour, 14 seconds captive arms coming in and trying to build 3P as a business. Uh there are two kind of customers. The large customers 1:00:23 1 hour, 23 seconds will never work with them because of of data security. The small customers maybe in the short term they they try working 1:00:30 1 hour, 30 seconds with them. But what happens is that once peak day comes when the peak month come um I think external customers get 1:00:38 1 hour, 38 seconds massively dep prioritized by these kind of supply chains and that's why they've never been a meaningful business with Amazon. I think they've been experimenting in India for last few 1:00:46 1 hour, 46 seconds years. Nothing is new in this. They've been experimenting for the last few years. uh we don't think these kind of models will work in India. That's our 1:00:56 1 hour, 56 seconds sort of a view. Regarding your first question, I think D2 in the CNM it's a it's a meaningful um double-digit sort of a number for us. We can't give you 1:01:05 1 hour, 1 minute, 5 seconds the exact split of that because I mean that's not a KPI we have been reporting. 1:01:08 1 hour, 1 minute, 8 seconds It's slightly um sensitive in nature from a competitive dynamic standpoint. 1:01:15 1 hour, 1 minute, 15 seconds Thank you. The next question is from the line of Anay Karal from Exponent. Please go ahead. 1:01:22 1 hour, 1 minute, 22 seconds Hi Rishid, thank you for the watching the uh and converation for a great set of uh so uh just wanted a reiteration 1:01:30 1 hour, 1 minute, 30 seconds from your uh side on question. Uh so what you're seeing is uh growth going ahead would be a variable of market 1:01:39 1 hour, 1 minute, 39 seconds share events and uh there is nothing as sort of outsourcing that you're seeing from your customers. 1:01:49 1 hour, 1 minute, 49 seconds Sorry, I didn't get the question. Can you come again? 1:01:52 1 hour, 1 minute, 52 seconds So, so uh so I just wanted to understand uh the fact uh the variables of growth going forward. So u so do you think uh 1:02:00 1 hour, 2 minutes the growth going forward would be uh the only variable uh of that growth would be market share wins or do you think there 1:02:08 1 hour, 2 minutes, 8 seconds is something uh something going on uh on the part of your customers where they are outsourcing uh back again? uh that 1:02:16 1 hour, 2 minutes, 16 seconds cycle is playing out. So are you are have are you seeing any any sort of that thing playing out or just the market share is going to drive the growth forward? 1:02:25 1 hour, 2 minutes, 25 seconds I mean think about it like that whatever we are we are growing today. Okay. 1:02:29 1 hour, 2 minutes, 29 seconds whatever we are forecasting about I think 50 55% we are attributing to the underlying market for 3PL's growing 1:02:38 1 hour, 2 minutes, 38 seconds which might happen largely because the underlying economy of this country is growing the remaining 40 45% might be 1:02:45 1 hour, 2 minutes, 45 seconds coming from market share gains now whether some of the large guys are going to outsource more or not I don't think 1:02:53 1 hour, 2 minutes, 53 seconds we are planning on that whatever if they if they end up outsourcing more there's an upside possible to the to the guidance that we are giving right now we 1:03:01 1 hour, 3 minutes, 1 second have done a basic assumption assuming things remain same then what is going to happen um but again we are seeing the 1:03:09 1 hour, 3 minutes, 9 seconds market to become far more rational uh and people who have cost advantage are essentially gaining market share so so I 1:03:18 1 hour, 3 minutes, 18 seconds I think that theme sort of continues where everybody's trying to be more and more efficient but if our customer end up outsourcing more I think that's an upside you can expect. 1:03:29 1 hour, 3 minutes, 29 seconds Okay. Okay. So, so going forward u the the growth we are seeing this year uh won't be won't we won't be seen in the 1:03:37 1 hour, 3 minutes, 37 seconds in the next coming year. So like is is it fair to build like 30 40% growth on your uh business going forward or coming 1:03:44 1 hour, 3 minutes, 44 seconds two three years or you could have overshoot that? 1:03:48 1 hour, 3 minutes, 48 seconds No, we are not guiding for that. I think we are still guiding um for about 20 30% 1:03:55 1 hour, 3 minutes, 55 seconds uh maximum growth uh from a future guidance standpoint. 1:04:01 1 hour, 4 minutes, 1 second Oh and and my second question was uh second question was on margins. So uh can you when you say 120 that's increase 1:04:09 1 hour, 4 minutes, 9 seconds in margin for the next uh two years um could you could you help me understand are you are you guiding these margins on the service level or are you guiding 1:04:18 1 hour, 4 minutes, 18 seconds this margin on the adjusted VA level because they would be uh if if I keep the service aid same uh you would be 1:04:25 1 hour, 4 minutes, 25 seconds able to uh get get those margins uh uh uh uh without without increasing the service a bit itself because of the 1:04:33 1 hour, 4 minutes, 33 seconds operating leverage on your product overhead So uh so like yeah 1:04:40 1 hour, 4 minutes, 40 seconds yeah uh so we are so we we are only talking about adjusted aida that's the only aida I think as an organization 1:04:48 1 hour, 4 minutes, 48 seconds today we look for u I think some part of it will obviously come from operating leverage at our corporate level uh but 1:04:56 1 hour, 4 minutes, 56 seconds yeah a lot of it will actually come from some of the underlying service aida what typically the industry calls a service 1:05:02 1 hour, 5 minutes, 2 seconds aida maybe uh some of Right. But see as we are saying that we are also saying we are going to invest heavily into 1:05:09 1 hour, 5 minutes, 9 seconds expansion new categories newer customers. So those expansions won't stop and that's why we are giving a limited view of 100 120 basis points 1:05:18 1 hour, 5 minutes, 18 seconds where post FI28 when some of those investments uh are going to get more saturated that's when we'll see the real aggressive jump in AIDA. 1:05:28 1 hour, 5 minutes, 28 seconds So so your service AITA should remain at the same levels going forward like two three years at least. uh where like I 1:05:35 1 hour, 5 minutes, 35 seconds guess they are technically we don't talk about service aida we don't look at service aida uh we only 1:05:42 1 hour, 5 minutes, 42 seconds look at adjusted aida and that's what we are guiding everyone the improvement will come from both 1:05:50 1 hour, 5 minutes, 50 seconds places essentially okay okay sure and one last question if 1:05:56 1 hour, 5 minutes, 56 seconds I um um so you have this crowd sourcing platform already for your hypers hyper 1:06:03 1 hour, 6 minutes, 3 seconds local uh segment. So uh what part of that business comes from that platform that you have created where uh people 1:06:10 1 hour, 6 minutes, 10 seconds could uh come on your platform get get the gigs and and and the second part of that question is uh what is the 1:06:18 1 hour, 6 minutes, 18 seconds competition you are seeing uh on your crowdsourcing platform because I have uh like what we have came to know that 1:06:24 1 hour, 6 minutes, 24 seconds there there are many platforms which are uh doing the same thing where they are uh uh uh doing the crowdsourcing uh 1:06:32 1 hour, 6 minutes, 32 seconds thing which uh a platform like node share also does uh from uh and they have partnerships with Amazon now. Um so what 1:06:41 1 hour, 6 minutes, 41 seconds is what is the entry barriers to such a platform that you have created because um many players could be doing that. 1:06:49 1 hour, 6 minutes, 49 seconds I I hope this is the last question from you. So I'll try to answer that uh in in simple ways. See 100% of our last mile 1:06:58 1 hour, 6 minutes, 58 seconds today is crowdsourced. Every single order that we do is done through a through a through a individual who's being paid on a per order basis. So 1:07:06 1 hour, 7 minutes, 6 seconds that's sort of a unique thing for our platform. So 100% of whatever last mile we do which is like for 99% of our revenue we do last mile. So I mean 1:07:14 1 hour, 7 minutes, 14 seconds everything happens through this crowdsource sort of a network. See this crowdsource network u is that is a very very unique competitive advantage we 1:07:23 1 hour, 7 minutes, 23 seconds have built. Actually there is nobody like us in the country. Okay. where 100% of your deliveries are happening through through a per order sort of a model 1:07:31 1 hour, 7 minutes, 31 seconds while I mean some of our competitors some of our even customers have captive arms um who focus on a single category 1:07:38 1 hour, 7 minutes, 38 seconds but if you look at our network today our delivery partner can do e-commerce as well as a food delivery as well as a quick commerce orders on the same app 1:07:47 1 hour, 7 minutes, 47 seconds there is nothing like that that exist in in our country so I think that remains sort of a competitive advantage while I 1:07:55 1 hour, 7 minutes, 55 seconds mean there'll be companies coming and building in a certain category and we can't stop that competition. The logistics is never a winner take all market. You always want some sort of 1:08:04 1 hour, 8 minutes, 4 seconds competition. Uh but I think the model that we have created is sort of a very very unique one. 1:08:10 1 hour, 8 minutes, 10 seconds Thank you ladies and gentlemen. That was the last question for today. I now hand the conference over to Mr. Abishek Benzel for closing comments. 1:08:21 1 hour, 8 minutes, 21 seconds Oh thank you Rutuja. Um I think uh thanks everyone for being so patient. uh on this call and patiently asking so 1:08:28 1 hour, 8 minutes, 28 seconds many questions. Uh looking forward to seeing all of you over the next earning call over the next few quarters. Thank you. 1:08:37 1 hour, 8 minutes, 37 seconds Thank you ladies and gentlemen. On behalf of Shadowfax that concludes this conference. Thank you for joining us.