Release Date: June 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tiger Logistics (India) Ltd (BOM:536264, Financial) achieved a significant volume growth of around 17% quarter-over-quarter.
- The company successfully launched version 2.0 of its logistics online platform, FreightJar, enhancing market access and customer experience.
- The imports department has shown promising growth, particularly in the electronics and polyester sectors.
- The company secured new contracts in government projects and expanded its footprint in the auto and steel sectors.
- Despite industry challenges, the company remains optimistic about future growth, supported by long-term contracts and a robust business model.
Negative Points
- The logistics industry faced significant challenges due to the Red Sea crisis, port congestion, and container shortages.
- Revenue for FY24 was significantly lower at INR24,026 lakhs compared to INR43,335 lakhs in FY23, primarily due to lower freight rates.
- The company has not yet achieved its goal of inorganic growth through the acquisition of an LCL company.
- Increased freight rates have led to some customers holding off on imports, particularly for low-value products.
- The ongoing Red Sea crisis and container shortages are expected to continue impacting operations in the near term.
Q & A Highlights
Q: Sir, container shortage and the container rates going up for 20 feet and 40 feet, will it benefit or affect our LCL and FCL business?
A: I would say it will. Since we are in the cost-plus model, we will have to pass on this increase to our customer. So, I don't think it will have any negative impact, but definitely, it will have a positive impact. Because any freight increase definitely also increases the overall margins as well. (Harpreet Malhotra, Managing Director)
Q: Now, a lot of things are getting banned from export from China to the US and all. How will that scenario play for us?
A: At the moment, whatever is getting banned, it's getting transferred either to India or to Vietnam or to other countries. So definitely the Indian international business is going to grow and that benefit will definitely come to us. (Harpreet Malhotra, Managing Director)
Q: Could you elaborate on the performance of FreightJar in its first year and what were the key milestones and achievements?
A: When we launched FreightJar last year, the industry welcomed this product very well. We onboarded close to 250 plus new customers. This helped us to work towards improvising the platform better, and now we've launched the revised version of FreightJar 2.0. It is now open to global logistics companies, and the business is growing. (Harpreet Malhotra, Managing Director)
Q: Can you explain the reasons behind the lower revenue in this financial year compared to the previous year?
A: We are in a cost-plus model. Whenever the freight rates go up, the turnover goes up. Though our volume business has grown, the freight rate was the lowest ever, so the billing per container revenue has gone down. (Harpreet Malhotra, Managing Director)
Q: What are the company's key strategies to sustain growth momentum in both air transport and container volumes going forward?
A: We are following our growth strategy established three, four years back, including setting up the online platform, developing our imports, and growing our footprints in the auto sector. We are on track and hope to achieve good numbers in the coming quarters. (Harpreet Malhotra, Managing Director)
Q: The contract with HPCL for petrochemical logistics or BHEL, will the cargo be moved through a container only or will it include ODC cargo as well?
A: We are doing both ODC and normal container cargo. For BHEL, we handle ODC shipments almost every month. HPCL predominantly involves container cargo. (Harpreet Malhotra, Managing Director)
Q: What is the revenue model for FreightJar?
A: The revenue model is the same as our current business. It is a sales product of Tiger Logistics, offering the same services through an online portal with the same margin of 7%-8%. (Harpreet Malhotra, Managing Director)
Q: How was the import and export mix for FY24?
A: 80% was exports and 15% was imports. Imports definitely give better margins, and we are looking at imports to be a very sustainable vertical for us. (Harpreet Malhotra, Managing Director)
Q: How are the container rates today compared to when they were down?
A: In February and March, a 20-feet container from Shanghai to Chennai was around $800. Today, the same container is at $4,500. (Harpreet Malhotra, Managing Director)
Q: Are customers ready to pay for container availability given the current situation?
A: Yes, if there is urgent cargo, people are paying $4,500. However, there is a lot of congestion, skipping, and blank sailing, which adds to the problem. (Harpreet Malhotra, Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
