Blue Dart Express Ltd

Especially when your ground is grov.ing faster as compared to air. the variabk margin on the air, because there is a largely fixed capacity will be relatively lower as compared to ground, so I am talking about variable margin, not the actual margin as such. So, when the business grov.s and when it goes more on ground in a quarter, then at an overall level. the margin can grov. slower. or it can be lower as compared to the earlier quarter as such. But at the same time, having said that air is a limited resource, we are the only freighters who are consistently buying aircraft on a daily basis.

So. with the same capacit) and v.ith the business volumes growing, there can be a better possibility of getting better yields over then:. So. that again opens up an opportunity when we look at the movement in margins happening. So, as a business. we keep on looking at what mix of products or mix or customer mix or th,;: lane mix that is being applied and work towards reaching to a better number ofyidd. improving the margins at an overall level. Page 10 of 14

BLUE DAIT _...,_";..,z._

So. I understood this on the ground and air side. But on the B2B parcels and B2C parcels. if there is the profitability even on the B2B parcels and B2C parcels also has this variability. like the way you said between ground and air? And if that is the case, which one is better for you, in terms of profitability? Is it B28 parcels, which are higher weight parcels. or is it B2C. which arc Imʿ weight parcels? Which yields better profitability?

Even in case of 828 and B2C, so at a standalone level of for us or a static level of margins, they are comparable not very different than each other. But depending on. the variability in the volume, so if your ground grows faster, it grows along with the variable cost. So, in a quarter if the air is not growing as fast as ground. the impact of variable margin would be less bcneficial in that quarter as such.

Got it. So, effectively basicall) it is not the type of shipment. whether it's B2B. B2C. it is more mode of the movement of the cargo, which impacts the margins. Yes. Am I correct?

Yes. Yes. fhc variability would be more on air where we have a largely fixed kind of network.

Though, it is optimally utilized, but at the same time. the incn:mental volumes coming on a variabk. but lower cost commercial airline ovo:r there\\ ill yield mon: margins for the air product.

Sir, just one question is there in the chat box. So, any color on the volume growth for this year and next year? Sorry. I couldn't get it. /\ny color on the volume growth trajo:ctor) for this year and next year'1 Maybe it would be a forward-looking, so we will not be able to comment. There will be seasonality. and there will be, of course. running growth that is happening. /\nd we will. as a Management. we will ti")- to improve the numbers. but no view from the Company point of view, Sure. And just one more question is there on the capacity utilization. Yes.

If you can just provide some capacit) utilization on the new aircrafts. or where it has reached?

And any sense on the existing aircrafts as well'?

So, the new aircrafts have also reached the normal capacity utilization, which comes to about 85%. Page 11 of 14

BlUE DAIT s,J,_«;.z,,.,_ Sagar Pa ti\: So, on the aircraft. yes.

Yes. So, there basically, we don't t1y point to point. It's a part ofan overall network. And even the new aircraft have been kind of merged into the existing network. adding only Guwahati as an additional station. So, overall network utilization is about 85'?-o and that is more or less standard across the flights.

Got it. Yes. I think those were the questions. Anyone have the question can please raise their hand or we can now close the call. Yes, 1 think we will just take the last question from Mr. Achal, please go ahead. Yes, sure, Achal.

Y cs. Thank you for the follO\͛-up, sir. Sir, if you could give us a sense in terms of the demand situation or the business, ho\V it is trending? Because we hear that consumption is weak, there is fair amount of slackness. So, just wanted to check. are you seeing any improvement in the volumes. as we speak9 And B. an1 structural change you are seeing in the industry in terms of compdition or in terms of pricing or anything on that front. sir'!

Understood. And out of your total expenses, sir, would it be possihle to kno"" what the fixed cost, as in, is ifth.: volumes go dO\vn 10%, you still incur the same cost, if you could give us a sense. Let's say. of the quarter's expense. how much ""ould be fixed. let's say. of th.:: total employee cost and the other expenses? We have roughl:, about Rs. 400 crores quarterly expense, right? So, how much of this would be fixed cost according to you? Because I presume the freight and service cost and all that will be fixed before we calculate the gross profits.

So, yes, employee costs would be largely fixed in a short to medium-term. Within freight handling, we have a mix of both fixed and variable. The aircraft cost will be largcl) fixed as far as the cost of the aircrafts, but the running cost of the ETF would be variable with the number of flights '-"C would have. And largely. we try to variabilize that by ensuring that we t1y only when we are sure of the capacil) being utilized. But now. with the increasing gro\Hh in the ground, we also are increasing the variable costs. for the middle-mile. Last-mile, also. largel)', our deliveries an: outsourced with our vendor. with our partners. We still have 50%-50% variable and fixed element. So. it's a mix. If you ask me at a quarter level looking at the c,pcus -c X 1> I :p Page 12 of 14

ho" much will be variable and how much will be fixed? It will be close to 50%-50%. 50% would be variable.

That's massive. Operating leverage. actually. if the growth. picks up. If the growth is substantial, let's say, a double-digit growth, you can have a reasonably large delta on the margin. Is that understanding right?

Yes. That is one yes and no because. with the capacities being largely optimally utilized. we also cannot add a very big volume because the capacities are all across. Okay. Sor!)·. I couldn't hear you. sir.

Yes. So. the first-mile. last-mile capacities would take time to ramp up, be it facilities or even manpower for pickup and delivery. So. when peak season also happens, we start ramping up the capacities. which are variable. So, for a one or two months of peak also. they would be more or less. like, fixed in nature because we would hire the vehicks as \\ell as manpower for that period and some facilities here.

Yes. So. we will just take one last question from Mr. Vinod from Meena. Please go ahead. lldlo. Vinod. You are on mute.

Yes. So, thanks for the opportunity. sir. I mean. on I like to hear the strategy question. Like, how docs, Blue Dart plan to. strategically balance its focus on expanding the market share. espcciallj. let's sa1, particularl1 in the surface segment where the competition is growing much faster. \\ hile simultaneously driving the margin recovery as well in the coming years through operational efficienc) as wdl as the end of the premium service differentiation'!

Yes. So, our prime focus is always on service differentiation i.e. the service quality. So. while we also work towards increasing the volumes. the market share that is without giving up on the margin. Yes. it's a mix of different products with different variability with margins going up and down \\ith the increasing volumes depending on the customer mix, as well as the product mix.

But the prime motto is to have the differentiator in service, which will help us to gro\\ with without giving up the profitability. Strategically. that is how we look at moving forward. Profitable revenue is the key. Yes.

Okay. So, basically. you don't want to sacrifice just for the sake of increasing the volumes. Page 13 of 14

BLUE DART _z,_y- Yes. That's right. Got it. Thank you, sir. Thank you. Vinod.

So. we are done with the questions. So, sir, an) closing comments from the team then we will close the call.

We sec the grov.th trajectory being consistent and stable. And we are also working towards improving the business further with improvement in both i.e. taking care of the peak volume adding to our profitability, as well as margin that is going to be the way forward for us.

So. thanks, everyone, for joining in. And once again, thank you to the Management of Blue Dart for giving us the opportunity to host the call. Thank you. Thank you, everyone.