LEAP India (NSE:LEAPIND) Q1 2026 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to LEAP India Limited q one and FY twenty seven earning conference call hosted by Go India adviser. As a reminder, all participant line will be in the listen only mode, and there will be opportunity for you to ask questions after the presentation conclude. Please note that this conference is being recorded. I now hand the conference over to miss Soumya Chajir from Go India adviser. Thank you, and over to you, Soumya. Good morning, everyone, and welcome to maiden earnings call of LEAP India Limited. We have on call with us Mr. Sulu Mathew, the Chairman, MD and CEO Mr. Rishi Gandhi, the Chief Growth Officer and Mr. Rajesham Ale, the Chief Financial Officer.

0:51 Please be reminded that discussion on today's call may include certain forward looking statements and must be therefore viewed in conjunction with the risk pertaining to the business. I now request the management to take us through the same and provide some more insight on the quarter and year gone by. Before that, we open the floor to Q and A. Thank you, and over to you, sir. So thank you. This is Sunu Mathew here, MD, Chairman and CEO. And first of all, a big namaste to all all the investors and who also ever there is in the call. So... And I welcome all of you to LEAP India Limited's maiden earnings conference call. Let me talk something about FY '26.

1:37 It was an excellent year for LEAP and our stock market listing actually marked an important milestone in our journey. As this is our first interaction with the investor community after listing, I would like to begin by explaining our business in a very, very simple terms. We are a supply chain asset pooling company, and these assets basically connects all four pillars of supply chain, namely supplier, manufacturer, third party logistics, and the retailer. So everybody needs to understand that we are not a conventional transportation company or any kind of a warehousing company. Our pooling assets form the physical backbone of the supply chain. For the supply chain, if if pallets are not there, then supply chain is not there.

2:27 Whenever any kind of finished products, raw material, or packing material actually moves between two warehouses, fulfillment center and distribution, plastic containers, pallets, energy equipments actually enable safer, faster, cost effective and standardized handling of the same. This is also actually called as unit load. Our assets enable companies to handle higher volumes by reducing loading and unloading time by up to 80% to 90%. It supports automation through conveyors, robotics, AGVs, thus improving space utilization and the efficiency of the goods which are moving between all four pillars of supply chain.

3:14 Now let me give few real life examples which we experience in our company. So I would like to take moment to give an example of two industries. So where talents have actually held business scale substantially and created significant cost saving. So first example, would like to quote is a leading global beverage company, which was able to move only 50 to 60 trucks in a day from one plant Using the conventional method of loading everything into the truck through labor by hand and post use of our pallets and forklifts, the number of trucks released from the plant has gone to 300 plus per day. Second example is a global noodle manufacturing company.

4:00 It has been able to reduce its damages, perforators, and hence improve profitability using our pallets across its location in India, thereby supporting circular economy and creating stronger stakeholder value. These developments are creating strong opportunity for us with other companies in the same sector. Now a punch line statement, if I I would like to give is, like, as supply chain becomes complex and more automated, a reliable and standardized pallet is no longer an optional thing. It actually becomes an integral part of the operating system. Coming to LEAP, we are India's largest on demand asset pooling company with a 90% market share. We manage approximately 14,900,000 assets with an asset base exceeding rupees 1,690 crores.

4:58 We serve more than 1,000 customers across 10,500 touch points supported by 28 fulfillment centers, basically warehouses. Our portfolio extends beyond pallet to containers, rails, foldable large containers, and material handling equipment. We believe we are absolutely positioned to capitalize on a multi decadal structural opportunity driven by rising palletization in the country, formalization and the shift from ownership to pooling of parrots. To put the opportunity into perspective, parrotization in India remains significantly underpenetrated at just 14 to 17% versus 89% to 94% across developed markets such as North America, Europe, Americas, U. S, Australia and New Zealand.

5:56 Let me take a moment to explain Movement Hire, which is the core value and the services that we provide to our customers. Asset pooling in the country is at a very nascent stage. Globally, each pallet travels four x on average per annum compared with just 0.4 x in India. So you can truly imagine what is the runway which is which is lying ahead of us that from point four, we have the opportunity to convert this into four heads. Of India's estimated 106,000,000 pallets, 82,000,000 pallets are low quality, one way pallets and largely unsuitable for pooling. Only 18,000,000 pilots are actually pooling grade, of which 10,000,000 are currently pooled, and that is the reason we say 9,000,000 pilot is with us, so we have 90% market share.

6:52 Pooling converts asset ownership into on demand service. Customer access the assets they need, where and when they need them without having to invest in ownership or manage tracking, maintenance, retrieval or reposition. LEAP takes responsibility for the entire asset life cycle. When when supplier, manufacturer, PPL, retailer are connected, this entire asset life cycle like availability, quality deployment, tracking, recovery, repair, and redeployment across its network. When we talk about network, this is actually the real mode for us wherein from a to b and b to a locations, we have enough load to actually pool our assets.

7:41 LEAP owns approximately 9,000,000 of these pooled assets representing market share of 90%. We are absolutely sector agnostic. Let me explain that. As organized supply chain expands and customers increasingly focus on automation, we expect pallet adoption to broaden across industries. We are sector agnostic, and our assets are being deployed across diversified industries and serve 1,000 plus customers. So overall, when we look at our nearly 1,100 customers which are there with us, we see that we cover to the tune of 38 sectors put together. Our business is also very sticky as we have not lost any customers since inception.

8:32 Well, but we might have not... We might have decided not to service the customer due to various reasons, but otherwise we have not lost a single customer. As we have demonstrated in the past that we take nearly 5% to 9% price increase every year and this is based on the good price index, which is listed on German stock exchange. So for next couple of years, we could easily beat the inflation with price increase. Given the better changes in countries infrastructure, better roads, better facility center, automation, our asset position is going to get further stronger. With labor market getting tighter as we have seen, labor is actually very difficult to find in India. Our forklift loading of pallet is much in demand. We believe that adoption will take off and we are at the forefront in increasing our footprint into various other sectors.

9:29 Being a market leader, we always strive to develop new industries from palletization. Recently, industries such as dairy, paints, textiles have migrated from traditional methods to pallet pool. Now let me talk a bit about the entry barrier into this business. While we own the asset pool, our deeper competitive advantage lies in the 10,500 location, which is... Which are our touch points, our fulfillment centers, technology led tracking, technology led repair and maintenance capabilities, customer integration because we connect supplier manufacture three p m e... Retailer. So it cannot happen that four different type or colors of pallets are used in in one integrated supply chain and ability to retrieve and redeploy assets efficiently at scale.

10:23 This combination of assets, technology, and network density gives us a unique advantage. We always say that we are champions to the sustainability criteria. Sustainability is actually embedded in how we operate. Our wooden assets are manufactured using timber sourced from sustainably harvested forest where every tree is cut is actually replenished with three more new trees. We own India as one of the largest fleet of 400 plus lithium ion electric battery forklift. Let me come to a kind of business financials, which will actually talk about that how our quarter one has gone vis a vis the last quarter of twenty five, twenty six.

11:15 So I'm very happy to actually announce that we have done customer acquisition at a great speed in the first quarter. We signed 48 new customers from 11 secondtors, which is considerably higher than the normal customer acquisition rate. Normally, in a quarter, we actually get 18 to 20 customers. This time, we have got nearly 48 new customers. This gives us additional 100,000 pallet opportunity in this financial year due to extended summer season. I believe the demand from the existing beverages and preform segment persisted in quarter one along with the wave of opportunities brought by the entry of major players in COLA segment.

12:04 Growth of e com and consumer goods reflected in 3PL customers such as DP World, DHL, User Logistics, which added another 30,000 pallets. E com and QuickCom, we have continues to see rise with 25,000 pallet addition, basically in both Zomato and Lynkit. The key the e commerce and consumer goods demand, I believe, will continue to rise in quarter two and quarter three with upcoming big million day, Ganpati, Durga Puja, Diwali and on the first season. Let's come to agro companies like Garudanandi Seeds, Kaveri Seeds, and global brands such as Cortiva AgriScience have added further 20,000 more pallets.

12:53 When I'm talking about that these are the industries which are actually performed well, the performance in textile was subdued on account of supply shortages due to the war and the cost has also increased. So there had been subdued performance in textiles in the first quarter. Moment had business has been signed with marquee customers like a major cola company, Gulf Oil, Melosa Textile, Fuelitex, Bicolol Synthetics. In automotive, we have won the business with Autoliv and Bosch. Movement hire, last year, we have actually moved 711,000 pilots, and this year, we have increased it by 88% to 766,000 pilot.

13:41 Let's come and talk about a bit of MHC business. In MHC business, Taron has added 174 new machines in the first quarter, and we did a revenue of INR 35.3 crores with 33% growth over last year. Let me talk about something which is the pillar part of our business, which is the supply chain that runs our company. So we are an execution driven business and our transportation cost as percentage for revenue has reduced from 11% to 10%, and our repair cost has reduced from 6% to 4.7%. Our warehouse cost definitely has gone up by 7% because of onetime settlement for closing down three warehouses.

14:31 But you have to understand that our volume in FMCG and automotive has increased by 20%. Few new technological developments that we are doing, one, I can bring to the point that we are going to introduce three d printing solution for inserts, which we develop for automotive companies, textile companies, etcetera. And by next quarter, we will automate our crate cleaning system also. After giving a brief on the business front, definitely Rajesham will be able to talk more about the numbers. Let me talk about a bit of corporate governance.

15:16 As a listed company, our focus is firmly on long term value creation, strong governance, and disciplined growth. We are supported by the experienced board and a very, very strong leadership team, which we call MANCOM, which is management committee. Our growth priorities are absolutely clear, deepen existing customer relation into new industries, participate across a wider range of supply chain movements, broaden our product portfolio and selectively enter new markets. We will pursue these opportunities with continued discipline around asset utilization, return on capital, and balance sheet strength.

16:02 With that, I will now hand over to mister Rishi Gandhi to explain the multiple growth opportunities available to LEAP and how we intend to translate them into the next phase of value creation. Thank you, mister Matthew, and very good morning to all the participants. I think mister Matthew has given a very comprehensive background about the validation pooling industry. And now in my speech, I would like to take you through our growth story, how we have evolved over a period of time. So I would like to start my discussion with one statement that no nation can move from a developing nation to a developed nation unless and until there is an adoption of pilot part of supply chain ecosystem.

16:59 And LEAP is taking, you know, that particular lead in introducing pulling of pilot and to reduce the overall supply chain cost. So I'll explain the growth story in two points. Right? How this entire cooling solution is expanding within the supply chain ecosystem and what are the multiple growth opportunities what... You know, we are pursuing. So in the year 2013, it's a focused cooling offering we started to see. And over a period of time, we have expanded the territories also. We have expanded the product portfolio to plastic asset and to energy also. Our growth has been supported by steady expansion of our operating network.

17:44 We have diversified our customer base, and we have diversified to now 38 plus industries also. Some of the key operating parameters where I would like to draw it in that, as compared to last year, q one, where we are operating at 13,650,000 assets, we have added 1,260,000 assets, and now we have closed the Q1 with 14,900,000 assets. Lot of corporates are struggling with growth. However, at quarter on quarter, we are adding assets, and we are penetrating into the market into pooling of assets. Our asset utilization has also improved from 88.6% to 89.2%. So mind me, our constant effort and endeavors to improve asset utilization, and we expect in a quarter to come, we will cross this 991%.

18:38 And next couple of years, it may go up to 92% plus also. Always our focus at LEAP is to diversify customer base. So last year, q one, we are in 900 plus customers, like, from varied industry. And now we have improved 2,000 plus customers, and concept is to add newer and newer industries, newer and newer customer base. At LEAP, our biggest strength is our network infrastructure. So we have now moved to 10,000 plus touch points. So you hire from anywhere, customer can be hired from anywhere.

19:23 And this is the biggest strength if at all any player wants to get into. In fact, if at all the competition decide to get into this particular business, they will take couple of tickets to build this 10,500 plus touchpoint. Now let me check some of the phases of how this only, you know, ecosystem evolves. So it evolves over the three cycles. One is education phase, 30 hire phase, and the moment hire phase. Now the way it has evolved is only business in India. We have crossed the phase of education phase, educating industries about supply chain automation, advantages of pooling, cost reduction, in various other aspect.

20:10 Then the epic hire adoption takes place. And from that on, when the client starts hiring pilot inside the factories warehouse and they see the advantage, and the moment hire business picks up, and we can see the advantage of moment hire business for last couple of years. And the story, the journey has begun, and the same will continue. And every year, like, we improve upon our moment hire business. So for any customer, we start first with static hire business. So they take the pallet for using inside the factory for either storage or continuous production or storage of finished product. And then over a period of time, the same evolves to moment has been. So here, I would like to share two examples.

20:57 Okay. So one leading daily company, which is a fan in their presence, they are very cashy. But then there was a resistance in terms of migration towards automation. But only a period of time, we explained them that one things of ASR, which is automated shopping and retrieval system. And now they have adopted that. And, initially, with one location, it started with some few thousand pallet. Now after seeing the advantage in terms of storage of cargo, evacuation of among the amount of cargo, safety aspects, less damage to the product, and the cost reduction. And the environment advantage and all the things, now they are pushing to the sister dailies.

21:42 They are asking all the dealership to take the palletized cargo, and we have reached out to 86 depots of that. And with the success of this dailies company, our business has gone to a four last two years' time, and the other dailies, the smaller dailies also has started approaching us in terms of adoption of talent. Another example I would like to share with you all is about the textile index. Textile index is a very conventional industry. So over there, tech corruption, there was a great amount of resistance. But now with the, you know, joining of new age promoters and all the team, There also, they are exploring adoption of AFRS automation system. It took some time for us to convince one of the leading textile manufacturing in terms of adoption of pallet, adoption of moment hire.

22:36 But now the entire system is working very well, and they can see the great amount of saving into logistics cost, the great amount of saving in terms of damage to the raw material. And as mister mentioned, there are another five, six new textile entities that approach, and we would like to replicate the success of that. Okay. So we integrate with raw materials, active metal supplier, manufacturer, and to the retailer. That is how we start working with over there. Now we have broadly five strategies for our future growth. So deep mining of the existing relationship. So if we are successful with one large player into ecommerce, the success stories will replicate with the other ecommerce players or quick commerce players into that.

23:27 We replicate the success stories with other players into that. Something similarly, we always work towards development of newer and newer industries, newer newer territories also. So as we we take pride that we are one of the largest logistics engineering team. The focus of that team is to provide solution to the newer and newer industry for adoption of pallet, advantages of that, and successfully implementation of. Now after capturing this 95% market share, we are also exploring. And as we have mentioned in our BRHP and RHP, we are pursuing our growth opportunities outside India.

24:12 We have established our entities in Gulf countries, and due to Western conflict, we are... We have adopted a cautious approach. However, we have established a core infrastructure over there, and very soon, we will go live with ARC, who in business over there, and customer has rolled out great carpet welcome for us. Before I wrap up, you know, my presentation to the group, I would like to, you know, provide one clarity about this recent market commentary of the related party transaction. So I would like to assure all our investor friends that we remain committed to transform communication and high standards of corporate governance.

24:57 All related party transactions are at arm's length and have been audited and disclosed in our RHP and in accounts also. With that clarification, let me hand over this to our CFO, mister Rajeshamalik, who will provide the background about the financial performance. Mister Rajeshamalik? Yes. Thank you, Rishi, and good morning, everyone. I will take you through our quarter one FY twenty seven performance, where we continue to deliver growth in revenue, EBITDA and cash earnings while maintaining high asset utilization. For quarter one FY 'twenty seven, our total income increased 19% to thousand 134,000,000 EBITDA grew at 21% year on year to $1,141,000,000 dollars with EBITDA margin expanding by approximately 118 basis points to 53.5.

25:59 Improvement was supported by higher income, cost optimization and operating synergies. At the bottom line, PAT outpaced the growth revenue growth by growing up 30% to $247,000,000 with a PAT margin of 12%, up by 114 basis points, while cash PAT increased to 23% year on year to approximately $812,000,000 supported by strong EBITDA and operating leverage. We believe this reflects the core financial characteristic we want to preserve as we grow, scale the pool, keep the asset productive, and translate operating growth into stronger capital efficiency.

26:48 With that, I will hand the call back to the moderator for the question and answer session. Thank you. Thank you so much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touch tone telephone. If you wish to remove yourself from the question queue, first session. Question comes from the line of Akshad Jain with Sixth Sense. Please go ahead. Good morning. Congratulations to the entire LEAP team on a successful lifting and excited to see LEAP's journey from here on as a listed company.

27:39 I just had a couple of questions. So we've noticed that in the first quarter, assets have grown by 9%, but the revenue has grown by 19%. So going forward, how do we expect the revenue growth to be split between the asset growth and the higher throughput per asset deployed? So if you look at it, we have grown by, say, 9% to 12%, and our growth eventually actually comes from churning of our assets. So say, last year, we have moved nearly 2,800,000 pallets plus. So this year, we will be moving somewhere around about 3,700,000 pallets. So in the first quarter, you will see that as compared to the last quarter of last year, first quarter of last year, we did 711,000 moments moment hire. And this year, we have done in the first quarter, 766,000 pilot moment.

28:40 So so so if So just hold on. So that is one of the problems... Oh my god. That could be probably... That is one of the reason that, say, suppose in beverage sector, we are getting a particular transfer higher pricing. This time, we have been able to move more pallets into textile industries and other industries that has given a growth of 19%.

29:29 Looking at the same terms, you look at our MHC business, MHC business actually has done nearly 35.3 growth turnover, which is which actually has put in 174 new machines, and it has also actually grown by 33%. So it is upon the value of the assets that we put in, and that leads to the growth of our business. But technically, there is no much correlation between the number of assets that we are adding and the growth that we are getting. Okay. Sure. Thank you. Thank you. Thank you. Our next question comes from the line of Vijay Shah with Insightful Investment. Please go ahead.

30:17 Yes, Vijay. Good morning. Am I audible? Yes, absolutely audible. Perfect. Thank you and congratulations on the new listing. So I had a couple of questions, sir. One, we get any kind of guidance in respect to margins for the rest of the year, especially EBITDA margins? Okay. Now if you look at our EBITDA margin since last six to seven years, we have hovered around 47% to 56%. This business is also such that as you keep growing the business, the cost actually comes down. For that, I will give you a small example that if there is a warehouse, it was storing 5,000 pallet, it can go vertical and store 50,000 pallet and 250,000 pallet. And what cost actually gets incurred is the salary of the the house people who are actually managing it. So there are definitely great chances for us to improve the EBITDA and which we have demonstrated. If you look at our last full year EBITDA margin, that was somewhere around about 50.5%.

31:28 This first quarter, it has actually jumped to 53.5. So we very clearly say that 100 to 200 bps on EBITDA margin can be added. And this is also a bit worried about the seasonal business. You can see that our volume growth has happened between 18% to 20% in both FMCG and automotive. But still, we have been able to control our repair cost, warehouse cost and transportation cost, thus we have been able to increase the margin. But you should not be taking it that every quarter we will be able to increase EBITDA margin by 3% to 5%. That is basically not possible.

32:18 Say, suppose if MHC is doing a bigger business and better business, then there the ROCE is very good, that is very good, but EBITDA is a bit subdued in MHC business. So it will be a combination of pallets, automotive and MHC business. But one thing I can very clearly tell you that it will hover around 47% to 56% margin for next couple of quarters. Okay. And second, sir, if we could get some guidance on top line growth. And I would like to see if you could give us a little sense on the organic growth and also from new geographies what we can get and how do we look at this opportunity at Middle East? What kind of revenues do you estimate can come in FY 'twenty seven, 'twenty eight or even three years down the line?

33:08 Okay. So first, let me answer to your question about the top line growth. See, the guidance that we have given is that quarter on quarter, we will be clearly going ahead 20% plus growth as far as our revenues are concerned. So that is what we have told investors during our roadshows also. And as far as our new geography is concerned, now you can see that in the last quarter in the last year, same quarter, we have spent roundabout 110 crores on our assets. But this year, first quarter, we have only spent 76 crores. So what this talks about is that in The Middle East, currently, the turmoil has increased a bit.

34:00 So we are very, very cautious. So we are not deploying that kind of an asset right now, but we believe that it is a very natural extension of our business because GCC is a completely importing country. And there are lots of thousands and lots of pallet which goes to GCC on a higher... The higher model. Currently, it is on the sales model. So we are converting customers so that we can give the pallets over here, and we can actually collect the pallets in GCC. So this will actually increase our margins in India also. And as and when this war actually stabilizes, I believe it's a great opportunity for us to actually get bigger, better revenues from GCC because of the one important factor.

34:55 Nobody actually loads product into the truck. So everything is pallet in and pallet out. All the trucks in GCCs are absolutely operating on palletized mode. So there is nothing which is which is ignorance that we have to deal with in GCC. So once the business actually starts, we will be able to see good inroads into the business because our our model is that first we view as a static use as mister Rishi Gandhi has explained, and then we get into the pooling. So pooling is the value that we provide, which is already persisting in the DCC model. So we will be doing a handsome amount of turnover from GCC, but we have many levers within India if the the war persists. We have many levers in India to compensate that growth with... Within the growth of India.

35:53 Sure. Sir, just one small clarification on this and just to, you know, summarize that I understand this correctly. Yeah. Yeah. So you said we will see quarter on quarter 20% growth. I believe you mean to say Y o Y. Right? Y o Y. Yes. Yes. Yes. Got it. Y o Y quarter on quarter. Yeah. And, sir, if I look at on of... If I don't look at very on quarter on quarter basis, but I look at on a year on year basis, If our top line growth theoretically will be 20% plus, would you agree that the EBITDA growth should be higher than that? Absolutely. EBITDA growth will be absolutely higher on that, and I can I understand there might be quarterly variations as you explained depending on the mix and the seasonality of the business? Uh-huh. But Because you see If I look at it on a full year basis, the EBITDA margin should tend to go northwards if we have a 20% plus growth, you know, given Absolutely.

36:45 Yeah. See, our split of the business is, like, 22% in quarter one, 24% in quarter two, 25 in quarter three, and major churn comes from quarter four, which is 29%. So one or 2% here and there, variation will be there. But on a yearly basis and for a long period of time, we are definitely anticipating 20% plus growth. Got it. And, sir, all this when we are saying 20%, this is all largely India business. Middle East will be an over and above opportunity. This is it. Yeah. Yeah. Middle East will be... Yeah. Yeah. Middle East will be over and above business. So so that is what we are expecting. And, sir, if I may, three years down the line, if you want to estimate, what kind of revenues can we get from Middle East?

37:33 See, three year down the line, we believe that it should be somewhere to the tune of 150 to 200 crores. Sure. Thank you so much, sir, and all the best. Thank you, Vijay. Thanks a lot. Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address all the question from the participant, We request you to kindly limit your question to three question per participant. If you have a follow-up question, you may rejoin the line. Our next question comes from the line of Vishal Mehta from IFL Capital. Please go ahead. Yes. Hi, Sanu, Rishi. Congratulations on a very successful listing. A decent set of numbers, I would say, just a few questions on specifics. So firstly, on the container side, the revenue growth has been relatively modest, right, at 13% vis a vis the growth we've seen in other assets.

38:34 In FY 'twenty six also, if you see our growth over FY 'twenty five pro form a was in container was around eight odd percent types. The asset addition here is also in the range of 3% to 4% kind of a growth. So any slowdown that we are witnessing here in this segment? What is the outlook here? As far as business is concerned, Vishal, we are not anticipating a slowdown, but we are anticipating and we are seeing a huge growth in the container cooling business, wherein we have internally also given a very high number target to our internal teams. For example, if component manufacturing companies are asking for four units of crate, we are able to just deliver one and a half to two units. Why? Because the cost of raw material has tremendously gone up since last Oh, okay. So many months. So so if I'm getting a credit for 650 rupees, now it is costing 1,201,000.

39:39 So my entire ROCE goes for a toss if I acquire new assets. You know? So we are going slow on that, and that is one of the reason that in the first quarter also, you will see that as compared to 110 crores investment vis a vis last year, this year, we have just done 76 crores. So we are just going slow on that. We are asking our asset management team to retrieve it faster so that we can actually pull it. These are an unprecedented time, so we really want to be cautious and not put too much of money into into buying the assets at double the cost. Okay. Okay. So this is just to do with the with the RM inflation that we have seen from the containers. Otherwise, you know, business is normal.

40:27 Absolutely. Business is doing that. Okay. On on the pallet side, you know, I I wanted the clarification. Know, from the COGS, if we were to infer the trading revenue, No. No. See, what happens is that we are not into selling off pallets. Okay? At least in India, we are not into selling off pallets. What happens is that we pick and choose our customers, a, wherein they are ready to take quality pallets, which we need. Okay?

41:14 And b, we look at a certain margins that we can get it from them. But the most important criteria that we select to sell pallets is that over a period of time, this should come back to us as a pooling thing. Because you see, 1,100 companies, 1,000 companies as customers that we have, some or the other company gets this idea that why not I purchase the pallet and then do this business. You know? So we never actually demotivate them. We say that, okay. You wanna go purchase the pallet? No problem. You better purchase it from us so that we give you a quality pallet. And when people get tired of handling it and they keep losing the assets because asset management is the most integral part, so then they come back to us in six months to one year time. So this has happened actually with 10, 12 companies in the past, And this time, a very big company has also started that we will buy pallets. And after four to six months, they have come back and said that very difficult to manage it across 88 locations, span India. So so that is the reason you have...

42:24 You you can see inflated selling selling number. But otherwise, our focus is absolutely on pulling of pallet. And pulling of pallet also, you can very easily contain that as 17% to 18% growth year on year. Okay. Okay. Just one more on MHC. The count of MHEs in the prospective FY 'twenty six end was 4,700 or in 1Q, the presentation states 4,500. So is there a reduction here? And do we also include batteries here? Are are batteries charged separately from the customers? Yes. Yes. Yes. Yes. Yes. Yes. You are right. Yeah. That is a charge separately from the customer. That also comes into the asset.

43:12 But as far as the machine and the forklift is concerned, we have said that it is 1,440 forklifts that we have in totality. And Theran has actually added 174 new machines into the system. So you need to understand that when we talk about 174 new machines, there are few old machines which actually comes back to us also. So the important point that you need to note is that our average turnover from the pooling revenue of MHC was 9.6 crore, which has actually gone up to INR 11.6 crore. That is the average that we are doing every month, and that is the reason we have done somewhere around about 35.3 in the first quarter, which is actually a 33% jump from the last from the last year, first quarter.

44:04 So so that is how batteries keep fluctuating. Say, suppose we have called for a certain machine and we call for two batteries. You know? And then we look at the certain number of machines, which on the basis of the number of years that it has spent in the market, we say that we need to keep a spare battery, you know, or a controller. So all that actually is been taken in our asset pool. Okay. Okay. So the the reduction would be mainly because of these controllers and batteries and not not on machines per se? Yes. Not on From 4,700 to 4,000. No, no. Okay. I'll join back in the question queue. I have few more. Probably I'll get. Sir. Thank you. Thanks, sir. Thank you. Thank you.

44:54 Our next question comes from the line of Malik Shah with Bivldi. Please go ahead. Hi, Sunu sir. This is Malik. Good morning. Congratulations on the successful IPO. Thank you. I just wanted to understand this during... In the entire world, this business has been considered in the most complex business. So can you just help us to simplify this that how this complexity has helped you to turn around this entire story of growth? And can you please help us to understand how can it... How it is run by you? Okay. See, Mohit, thank you. This is this is a very generic question, but I can tell you that I always wanted to do business which is a bit difficult to replicate.

45:40 And for that very reason, there are only five companies in the world which has done this business. There is only one company which is listed, that is Brambles, and that is also listed in Australian Stock Exchange. I was a part of Brambles for six and a half years in India from 2008 to 2013. And all the offshoots in the world, if you look at it, are actually... Have actually come out from check. So India needed a different kind of customer servicing. So first, I started with the automotive business. And when I got the funding, then only I entered into a CapEx driven business, which is into balance. And if you look at it, the moat which revolves around this is that how quickly you are able to create your network.

46:32 Once you create your network, then it is very easy for you to move the assets. So, see, this is a very, very execution driven job. So three sixty five days, twenty four by sevens, you have to be absolutely on the foot in order to do this business. And this is this is not a very charming business for companies to actually take because once the load has been delivered, pallet is being considered as nothing. So so we have to tell the customers that this is not your pallet and you cannot throw it. We have a s r c model called sorting repairing condition. We go plant to plant. We have a repair mobile van. If they even break 20 pallets, we go to each and every location.

47:19 We we repair those pallets. So it is a very cumbersome kind of a business, but I believe that my team is absolutely and slowly and steadily we have grown, and they are the one who are running this business. And once we have created this mode that from Chakan to Chennai, we take our load, we pick it back, give it to the customer, to the OEM, then again, we clean it. Again, give it to somebody in Chennai and bring it back to Chakan. So if we do not have this mode, then this is a bad business to do. But if you create your network, so it it actually took took us nearly one and a half decade to actually create it, and and we believe that we will go from strength to strength from here. And there is a great team which is backing me, my Mancom, and all the top managers. So this is a very different level of skill set because nobody understands asset management in the country. So we have to recruit people from Premier Institute and actually put them into the water, explaining them how actually we trace and track our asset.

48:29 So this is my generic generic answer to your question, Mohit. Thank you, sir. Thank you for highlighting and all the best to the team. Thank you. Thanks a lot. Thank you. Our next question comes from the line of Mukesh Sarraf with Avidispark Institutional Equities. Please go ahead. Yes. Good morning and thank you for the opportunity. Congrats to Sunil and team. Sir, my first question is on the pallet addition. I think this quarter, we are standing at about 9,200,000 pallets end of quarter. Just trying to understand how what's the target there in terms of this year, where would we want to end the pallet count?

49:15 Okay. So, Mukesh, since last six years, we are continuously adding 700,000 pallets to 1,000,000 pallets into our pool. So this is the same target that we have taken that we will be adding somewhere around about 850,000 pallets net addition into this financial year. So normally, if you look at the first quarter, Mukesh, say, suppose we are at 9,000,000 pallets. So we used to be negative 100,000 pallets. So we will come to 8,900,000 pallets. But this is the first time because of the and because of the extension of rainy season, so there was an extension into the beverage sector, beer sector, water sector.

50:04 So that has actually moved from March to April. That is one of the reasons you will see positive addition of salads. Now as our season starts with Durga Puja, the and and the Diwali and the New Year. So from here, the palette pooling actually gets a kick start. And if I can tell you something which is related to the current month also, we are ahead of our numbers. So these are some of the points. It. And just in relation to this, like you mentioned about your crates, the cost of acquisition going up with material costs going up there. Here as well, we're noticing that lumber costs are going up plus the INR depreciating would also impact your cost of acquisition.

50:57 How is that playing out right now? Is it significantly higher, the cost per pallet? And will that impact your addition of pallets? Okay. So I would like to bring you to the point that as compared to last year, we have done INR 25 crore less deployment in assets. So that is the point of pallets also, GCC also, the war is intensifying. So there also, we are not putting too much of assets and also the automotive part. So what we are trying to do, as I have already explained in my previous road shows, you see, we have already got a buffer of 900,000 pounds So if you look at our utilization, our utilization was 88%.

51:49 Now this time, it has gone to 89.8%. So 1.5 utilization increase is actually 70,000 to 80,000 pallets, which we have not bought. Okay? Got So what we have said, so we repaired roundabout 12 lakh pallets in the first quarter. This year, we have repaired roundabout 14 lakh pallets in the first quarter. So we said that we will repair more and we will purchase less. So having said that, the container cost has increased, but you will see that since last one month, the cost of timber has actually reduced. Okay. Okay. Understood. Understood. Thanks for that. Second question is, in your speech, you mentioned about the continuous integration with Chep.

52:36 So we did notice that a couple of your fulfillment centers have now gone down to 28. I'm assuming that is also part of integration. What more is there in terms of integration, Is there more to be squeezed out of, say, some of the cost elements or, say, on the business side of it? What can we expect with more integration here with Teck? So I think very good question on future, Mitesh. I believe we have the opportunity to close two more warehouses, which are like 300,000 square feet warehouses, and that can be integrated in the second to third quarter. That is one point. Second point is that we may open up also small warehouses. So what is happening, say, we have got Sanatan textile, we have got Reliance, we have got Savari, we have got Vilosa, Alok Industries. So this comes into... I'm just giving an example. This comes into the part of Silvani.

53:35 So there is a possibility in order to service them faster and not take the pallets from Vivendi to that location, we may start a 40,000 pallet pool out there. So these numbers will keep fluctuating. But as far as Chef's utilization is concerned, we really believe that and we are having the plans to actually close down nearly 250,000 square foot warehouses, two warehouses. Okay. Okay. Okay. Got it. Got it. And just last question from my side is on working capital. How does that stand in end of 1Q? If any sense you can give us. Yes. Working capital, we are currently into a comfortable kind of a situation. So our DSO basically has reduced from one hundred and thirty one days to one hundred and nineteen days. I'm not saying that it is great as far as LEAP is concerned.

54:32 Tarun is continuing to do well at sixty two, sixty three days. So we believe that every quarter, we will be able to reduce ten to fifteen days into our DSO. So in the next two to three quarters, we will be up to date with our working capital. Got it. Got it. Thanks a lot for this. Thanks, Mukhish. Thanks a lot. Thank you. Our next question comes from the line of Agam with Agam Capital Limited. Please go ahead. Hi, sir. Thanks for opportunity. So I have two, three questions quick. So first question, in the GCC region, on the EBITDA front when you said so, as of all the costs and all, has it been incurred or yet any more costs we have to incur to set up the GCC business?

55:26 Or on the one comment you said for the revenue growth of more than 20%, EBITDA growth should be more. But you said the margin will keep on fluctuating. These two things don't matter. I mean, if the revenue growth comes up and if EBITDA has to outperform, the margin also percentage also has to increase, right? Okay, Agam. So first, let me talk about the GCC, and then I will talk about, one second, EBITDA. Okay? So first, GCC, yes, the cost has been actually incurred. Most of the cost, we have got the Misa license in Saudi. We have got the business to do license in ABGM and also in Dubai entity. So previously, we felt that we will keep one company under one umbrella, but geopolitics is continuously changing.

56:17 So Saudi is talking their tune and UAE is talking their tune. So we have separated that and two companies will be operating that region. Our recruitment is not in full phase, but technically we have five people. We have completed roundabout 20 discussions with our customers and we will we will start to move ahead. So as far as money is concerned to set up the business, it is not further required. Now whatever will be required will be something to create asset base out there. Now as far as the data is concerned, now you see, there... This is not a mathematical connection. You know? Say, suppose one quarter, get order from somebody to supply 100,000 pallet. Business will grow, but EBITDA will be less, but that will increase.

57:17 Say, suppose one quarter from 15% contribution, energy business contributes to, say, 17%. Say, I get a order from, say, Coca Cola for 200 machines or from Balco or from Vedanta or for somebody else. If that happens, the ROCE is fantastic. ROCE ROCE improves, but EBITDA gets subdued. So we have three different lines of business. Yes. If, like, we have done 711,000 pallet pooling last year in the same quarter. This year, we have done 766. So if you look at the growth opportunity, which we are talking 20%, if pooling has happened to a... To an extent of, say, only 8%, then EBITDA margin will not go to that an extent.

58:08 Say, suppose I get repairing of pallets. Say, this time, we have repaired pallet, which is called t one board. So when 1.4 ton is kept on the pallet and forklift comes and hits it, the first board which break is t one board. So we spent x amount on repair. Say, suppose in a quarter, I get two pallets, which is breaking... Which which has been broken from the connector board. If a connector board is broken, I have to cut first all the 11 plants which is on top, and then I have to repair. So repair cost goes high and EBITDA comes down. So there are many levers on how this fluctuates. So we cannot put a mathematical calculation that if you are growing by 24, 25%, your our value in EBITDA will definitely increase, but our margin can be, say, 50%, 51%, but the value will go up.

59:03 This is my assumption. Actual term, the growth will you're saying, right? Yes. Yes. Yes. Very much. And on this, as we since last sixty years, we look at our numbers, it is between 47% to 56%. I cannot tell the I will not be This is bringing my my EBITDA down. So so so it's all different. Yeah. Broadly, you expect the mix to remain the same or can't say? Yeah. Yeah. It will remain the same. No. What what has been remaining same for last six to seven years, we have grown further, Adam, from pillar to post. You know? Like, slowly and steadily, we have... Now we have got the largest pool of lithium and battery in the country.

59:50 Because in... If you ask anybody to give a lithium and battery first, they will take 50% advance, and then they will go to source it. We have 140 machines standing ready to be delivered anywhere. We have 800,000 pilots ready to be given to any any company. Now automotive, yes, I understand that the cost is humongous right now, so we are not buying too much of crates. So there there is a bit of slowdown, but we actually have work on 38 sectors. So one or two secondtors going down actually does not move our EBITDA margins to a great extent. Okay. Okay. Also on the growth front, I mean Q4 base is highest for us, right, as you said? Pardon? Yes, Q4. Yes, yes. Q4, for Q4, the Q1, you have almost managed Q4 and we have grown 19%.

1:00:44 So is 20% being on a very much conservative side? Because the way the run rate is showing, we should cross it, right? Yes. So Q1 basically contributes 21% to 22%. We have grown by somewhere around about 21.5%. So what I'm saying is the market is going in the same direction. See, because of Adikmas, all our festivals have got stretched by one month. But for us, the season for the beverage industry also got stretched because of less rain. So whether it is beer industry, whether it is water industry, whether it is solar industry, from March, that actually come to June, March to April, You know? So that has actually helped us to actually over deliver on whatever numbers.

1:01:36 But yes, the guidance that we have given to the market is 20%, but we are trying our level best to absolutely outperform and give great create great value for the shareholders. Okay. Thanks a lot. Wish you the best. Thank you. You. Our next question comes from the line of with Diamond Asia. Please go ahead. Yeah. Good afternoon, team, and congratulations for good set of numbers. I just wanted to understand, you know, two aspects. One was the the the traction on the the movement higher and as well as, you know, the the rate increases on the on the total asset side.

1:02:26 Okay. So good question. See, moment hire, as I've told, that last year, we moved around about 711,000 pallet. And this year, we have moved 766,000 pallet, which is basically an 8% increase into as quarter on quarter, even though we have grown by 21% on our overall revenue. This is not a desirable area. This has actually happened because of slow performance in the textile industry. See, all the raw material costs, whether it is for plastic grade textile has gone over the roof. So companies which were into this kind of industries actually did not do too much of transfer higher movement, which which actually contributes four to 5% of our overall moment hire turnover.

1:03:23 So this is probably one of the reason why moment hire was less. But we work on a Salesforce management and Miller hiring theory. We we absolutely believe that the numbers that we are putting for the entire year, which is 3,700,000 pallets, we will add around about 800,000 to 900,000 pallets into our pooling model. So we are are in just to the target of that. Now so in future times to come, in future quarters, we will definitely keep improving our numbers on moment higher. As far as the price increase is concerned, we have taken a 5% to six percent price increase as compared to last year. What you need to understand is that last year, same quarter, we were at a per pallet yield of 1 rupee 45 paisa, and this quarter, we are at a per pallet yield of 1 rupee 54 paisa. That is a fantastic gem, and and this is how this is how we actually look at our business.

1:04:29 So we have less taken price increase of five to 6%. And since this is a very, very sticky business, Aditha, and we have not lost a single customer since we have formed this company. Yes. We might not have serviced the customer due to various reasons, but firstly, we have not lost a single customer. So since this pallet creates utility boxes, foldable large container, MHC material handling equipment, belts and wedges, everything is provided by us. So we have a solid ground to take 5% to 6% price increase year on year, which will absolutely beat the inflation. And this is on a very scientific method on the basis of the stock exchange price of wood, which fluctuates and the base we take is the one good price index.

1:05:24 And price increase, we definitely take. And all the agreements that we have is a three year to five year contract. And this price increase is already mentioned in that. It is not that we have to go and renegotiate price every now and then. So this price increase is already mentioned. Got it. So as we move into the balance part of the years and also going forward, do we in the stronger half of the years, do we see you will will see... You're you're saying you'll see better movement higher, and that typically is very highly margin effective. Right? Yes. Yes. Absolutely. Absolutely. Okay. So that that is that is the right thing. Yeah. And and, typically, you know, our price increases are, as you said, you know, kind of linked to the index. And so do we take the pricing increases for the balance nine months as well? Is there a fair enough Yeah. Yeah. See. See.

1:06:25 So we have renewed 24 contracts in the first quarter. You know? So by default in the 24 contract, the price increase will come. Got it, sir. So you will have both these coming in the balance half, know, both the move higher and the price increase. Very much. Much. Very much. It all depends upon when the contract is going to come to an end. If the contract is coming to an end in the month of July, so we start six months in advance for the pricing negotiations and few points that we add on to the con... We want to add on to the contract. And once July comes, we sign the contract much before before that, and we take a price increase and move on. So, technically, we may not be getting the full price increase of twelve months, but at least for the next seven months, we'll be able to get that.

1:07:15 Okay. And the pricing increase would be the prevailing prices then. Right? Yes. Yes. Prevailing prices are the base for that. Got it. Sure. Thanks thanks a Thanks lot. Thank you, Ajith. Thanks a lot. Thank you. Ladies and gentlemen, just a reminder, that ensure that the management will be able to address all the questions from the participant, we request you to kindly limit the question to two question only per participant. Our next question comes from the line of Mayank Shah with First Bridge Fund. Please go ahead. Hi, Sameer. Thanks for this call. So just wanted to understand, is there any estimate for the synergies that we have got for the from the Chep acquisition that we have?

1:08:05 Yeah. So, Mayank, the synergies that we have got is on automotive sector. So you will see that previously before Chep, we used to the overall automotive business used to contribute around about 13.5% to 14% to the total turnover. Now this has gone to 20%. And we have given targets internally to actually take it to 22% to 25%. So we were number one into pallet pooling at that point in time, and check was at 20%. We were at 80%. So the so the consolidation that has happened has actually put us pallet, number one, and also automotive pooling, number one. Second very important point was that they were very good with their system. So we have integrated a lot of stuff with their system.

1:08:55 And third very important thing was that they had few molds, few crates, which is very, very difficult to replicate. So we have got hold of the mold also, and that is how we have actually gained great amount of strength into our automotive cooling. So I believe that component manufacturing is going places in India. They are doing so very well. Male, there, Visteon, Lucas, Sundaram fasteners, Linda. So these guys have found after COVID, these guys have found even exports and all other businesses. So we can say that component manufacturing has gone to next level in India, and it is growing strength to strength. And that is one of the reasons we are totally focused on everything which is related to battery vehicle.

1:09:52 So whether it is a boost or a shaft or a hose or a a feedback, auto leave absolutely makes feedbacks. We have just won the business with auto leave and wash. So we are focusing a bit on that. So a, the mode b, the concentration of our business into automotive and c, the 1,400,000 panels, which they were having in the different customers have also come to us. So, actually, Mayank, this had also helped us to tell us that the depreciation that we take for pallets is 15, but, actually, the life of the pallet is perpetual, forty, fifty, fifty five years. How we are demonstrating it? Check was started in 2006, 2008. It's been twenty years that their pallets are into the system, and they are still generating revenue.

1:10:46 Like, 1.4, 1,500,000 pallets have come to us, and it is still used by the customers, and they are paying the rent. We keep repairing it and it keeps getting new. So this is a very important point for all investors to know. When you look at a p kind of a model that what is the p of this company, then the depreciated value is actually the life of the asset of the product. But in our case, why we say that there is not a single company wherein you can actually compare it and say that this is a p that multiple that we should put in. We say that the life is fifteen years, but but it actually runs for forty five to fifty years. We can give international example of Brambles, wherein they have 422,000,000 pallets in 56 countries. And car plants, they have not changed the pallets anywhere in the world. But in India, also to our local investors, we want to prove that we have taken a company which is having a twenty year old pallet, and still we are generating revenue out of that. So the moment this business is like fifteen year old pallet can work for fifteen years, good business. The moment it becomes twenty year pallet, twenty five year pallet, thirty year pallet, then from good, this business moves to great.

1:12:05 Thank you. And second question and last second and last question that I have, what is the... So in the investor presentation, you talk about moving from static to movement higher. What is the kind of revenue uplift that we can expect from this... Like, if if a pallet is on static higher model if we turn 500 rupees a year, then what is the kind of revenue uplift just for the sake of numbers? Or what is the kind of revenue uplift you can earn from from a movement higher? See, it it it depends on the sector that we are going. There are few few parameters. The sector that we are going, the value of the product which is kept on the pallet, the distance that the pallet is going to travel, do we have a pooling business when it reaches the next location?

1:12:54 So there are roundabout 16 parameters on which we judge that what is the kind of movement higher charges we should apply on this business. At the same time, we say that if there is any conventional method which has been used by the customer, we should be at least 20 to 30% cost benefit analysis. We give cost benefit to them. Having put all of these together, everything boils down to our per pallet yield. So if we say that our per pallet yield is 1 rupee 54 paisa today, so we are generating roundabout 552 rupees per annum. So as this pooling increases, say, we have 9,000,000 pallets and out of 9,000,000 pallets, we have moved 2,900,000 pallets, movement hub. So we will go to, say, 9,600,000 pallet or 9,500,000 pallet, but we will move 3,700,000 pallet. So from point three, we will move to point four, point five. The moment this point moment increases, this actually brings in great amount of value which sits on our PDR, which is for the rental, which is a static hire. So it can happen that we may end the year at, say, one that is 62 by seven. So this 550 rupees will go to 600 rupees. This can go to 650 rupees, 650 to 712 rupees.

1:14:13 So this all depends on how fast we are able to actually pull pallets within our system and take this point three into point five and point six. So asset remains the same. We do not have to put a new asset. So with the same base, first, we enter as static hire, and then we start to move the pallet. And then there are various parameters on which we will be able to bring it to the customers. Thank you. Thanks, Mani. Thank you. Ladies and gentlemen, we request you to please limit your question to one question only per participant. Our next question comes from the line of Nikhil Agarwal with TDF Capital. Please go ahead. Like you described on the movement higher going up from point three to point six.

1:15:06 Right now, point three seems very low for a country like India, whereas the global peers, like, check is at almost four times or even higher in most developed countries. So Yeah. What are the challenges that you see in the moment higher picking up? And let's say next three to five years, how do you see the moment ratio picking up from point five towards higher numbers? And how can that change the return on capital for the business? Thank you. Okay. Okay. So, Mitchell, I can very well say that since last four years, like, our movement has started with, say, 250,000 pallets to 500,000 pallets, then it went to 1,100,000 pallets, then it went to 2,100,000.

1:15:51 And last year, we have done 2.8, 2,900,000. So every year, we are adding somewhere around about 800,000 to 900,000 pallets into pooling arena. So I believe that this is not a great scenario, but this is still an okay scenario. And say suppose if I would have stopped myself at eight eight million pallet, then this would have gone to point five. But static higher growth is also ramping. So if you look at that, in this first quarter, we have signed roundabout 48 new customers, like Lear Automotive, Linda Instrument, has a lot of logistics, Wood Petters, BMW, Serum Foods. So these are few of the marketing names. So normally, we signed 15 to 20 customers in a quarter.

1:16:39 This time, we have... In this quarter itself, we have signed 48 customers. So this is going to bring in additional 120,000 of static hire pool. So my static hire pilot is also expanding. So it is actually looked at as point three, point four. The reason why it is not happening is because of a very, very fragmented transportation system that we have. We have to the tune of 1,000 different sizes of truck. You know, if we have to standardize it, we have given we have given few recommendations to to the body that it should be at least to curtail to 10. Then the palletization and the movement actually becomes very, very feasible, and then you will be able to cut down your supply chain cost by five to 6% onto the GDP. See, any developed country, if you look at it, it is not that they can do anything with the body of the truck. In India, you can actually go and do anything with the body of the truck. But now we are talking to the OEMs also. They are also understanding that one size kind of a container is is the name of the game in future. And that is one of the reason why our supply chain cost will come down. So I believe that this is a bit of ignorance into the supply chain network. People are not even aware about few of the things which can be automized

1:18:12 into warehouses, which can actually look at the efficacy of palletization. But we are, as a nation, very low experimenters. You know? We will go with what is actually going on. So suppose one Cola company looks into pooling, so rest everybody joins. For example, one paint company we cracked, you know, now all paint companies are our customer. We just cracked one company as far as textile is concerned. Now everybody has from textile... From Sanatan textile to Billosa to Alok industry to the rest. Everybody has started working with us. So it takes time in India, but then the growth is rock solid. Thank you. Our next question comes from the line of with PL Capital. Please go ahead.

1:19:03 Yeah. Thanks for taking my question. Most of those have been answered, and I think we are short on time. So I just have a couple of clarifications. One thing is you said that the India market is much more underpenetrated compared to other markets, including GCC. So I just wanted to understand why not continue focusing on in the market rather than going into GCC. I completely understand you explained the growth potential. But do you think it is better to stick to within India compared to GCC? And secondly, what is the targeted revenue mix? Because I see that the energy business has outpaced the other businesses, and that has a bearing on your margins and ROCE.

1:19:52 So just wanted to understand how much... How higher can it go? Okay. So, Sunny, as far as this is concerned, look, I am a I am a brand guy. So I look at all businesses from the PLC model, you know, product life cycle model. So there is an introduction stage. Today, we are on a hockey stick growth stage. You know? And in, say, two to three years when our three three plus years, if our growth actually comes down or it becomes... It... From hockey stick growth, it it goes into a linear growth. I need another market which will pick up the pace from there. Probably maybe two years down the line, we will look at another niche, another product, another markets wherein when we will say that, okay, 5,000,000 pallets or 4,000,000 pallets in GCC is actually moving 12,000,000 times, then it is the time for us to go and invest in in something else. Because you see, this business is something that it takes time to build this business. It is not that you will go tomorrow and you will start selling the product because I I can get into any website, and I will say that I offer this product, and I will do my turnover in next one month. I just cannot increase 1 rupee turnover, or I cannot give a scheme like FMCG to anybody, and they take 12 plus one scheme, and they will let my target gets completed. So I really need to prepare two

1:21:24 to three years in advance that what I'm looking at. So GCC is one of the lever. Few product introductions which we are going to do, say, suppose tomorrow we may rent AGVs, you know, automated guided vehicle. So we are already into into experimenting of that. So we should have five, six levers so that this growth for our shareholders actually continue. So this is one of the reason. And, see, staying only in India actually limits the thought process of my people. You know? So we have not seen a great amount of supply chain revolution in the country. But if you go to GCC, they are more inclined towards they are more inclined towards rest and typically Europe and US. So if you talk about ASR as automated supply chain, system, everything is already there. So the people whom I send from here, from logistics engineering on all those, so they learn 10 things from there, come back, and they try to implement that in India. So these are few of the reasons because the cost is very less and the moment hire is very more. So one pallet technically moves three to three and a half times in in GCC. You know?

1:22:40 So nobody handballs anything into the truck. So that is a great business for me to actually explain it to my own people within the company that see, this is how palletization happens. So so for those reasons, we are going to GCC plus. As I explained, Sunny, this is a... GCC is an important country. You know? So there are so many pallets which people take from here. They break it and throw it there. So we will bring lot of value to our own current customers. I will just take an example of PGT glass, Piramal glass. They supply 40,000 pallets to Jamali and Ratal Pima every month. So if they are spending $1,213,100 rupees, we will be able to cut down the cost by 30% and give them the pallet and then collect it over there and then pull it out there. So if you think about it, a 1,750 rupees pallet, I actually take out the complete money in two point nine nine years, I'll be able to...

1:23:37 I will be taking just half the time to actually recover the entire money from this. So that is one thing. Second, you asked about Terron and how fast this business can grow. See, Terron will always remain within within a bracket of 14 to 17% even though it is growing very fast, but palletization and automotive creating and everything is growing on a long term basis will grow much faster than that. So I believe that even if that one has grown by 33% this time, but if you will see in the future quarters that automotive and FMCG business picks up the pace with them.

1:24:24 Base is very small, Puni, for Tarun, actually. Thank you so much, sir. Thank you, sir. Ladies and gentlemen, due to the time constraint, we'll take the last question from Divesh Chenani from Equities Wealth Advisory Service Limited. Please go ahead. Hello. Hi,. Good afternoon, sir. Thanks for taking my question. So, sir, just most of the questions have been answered for me. So just had a one question on the Gulf expansion that you are doing. So the revenue guidance which you have given of about 20% in the quarter years, so is that the inclusion of the Gulf expansion or, like, how is it? And from when can we Yes. Yes. I saw It is it is it is it is included, but we understand that there is a situation which is there in The Gulf. So we have another three, four levers which can compensate this. Say, suppose we have said that x will be...

1:25:25 X revenue will be generated out of GCC, and as we wanted to go in August and August, the war has actually intensified. So we are planning for September mid. So we have viewers within India, you know. So it is just a small fraction that we have budgeted for for BCC. And we will be... Yeah. Got four, five more viewers that If that doesn't happen, we will be able to gain that number from within India. And are we looking any further acquisitions of the company in the regions to expand our base over there in the portfolio? See, in in our last board meeting, which was being conducted yesterday only, in in few other matters to be taken, we have actually informed our shareholders and board members, which is now in public also, that we have looked at few acquisition opportunities.

1:26:28 We are just at the nascent stage, and we are looking it in India and elsewhere also. So as you have seen that we grow organically also and inorganically also. So we have certain acquisitions in mind, which maybe in the second, third quarter, we'll see more colors, and we will inform investors and our board members as and when we move forward on that. Okay. So we can see the acquisition coming in the light in the quarter quarter, right, the agreement for the house? Yes. Yes. Yes. Yes. Yes. That's very helpful, sir. Thank you. Thanks a lot. Thank you so much, sir. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the managing director for the closing remarks.

1:27:15 Thank you, and over to you. So Thank you, everyone, for joining us on our medium medium earnings call as a listed company. This is an important milestone for LEAP, but more importantly, it marks the beginning of a new phase of growth and long term value creation for all the shareholders. We are grateful to our customers, employees, partners, and shareholders for their trust and great support. We look forward to building this business thoughtfully and creating sustainable value. For any additional queries or follow-up discussions that you may have, please feel free to reach to our investors relation advisers, Go India advisers. We look forward to engaging with you again.

1:28:00 A big no star, and thank you to you all. Thank you so much, sir. Ladies and gentlemen, on behalf of Go India adviser, that concludes today's call. Thank you for joining us, and you may now disconnect your line.