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Transport Corporation: An overview - Views on News from Equitymaster
 
 
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  • Oct 9, 2007

    Transport Corporation: An overview

    Transport Corporation of India Ltd (TCI) is India's leading integrated supply chain and logistics solution provider. The company provides a complete range of services like transportation, supply chain, express distribution, cold chain and coastal shipping. Currently, the TCI group moves goods which are valued at more than 1.5% of India's GDP. The company has 6.5 m sq ft of prime warehouse space, more than 200,000 customers and a strong network of 1,100 company owned branches across India. TCI moves approximately 7,000 trucks daily, 15% of which are company owned.

    TCI has six business divisions. Here is a brief description of the same.

    Transport division: TCI is India's foremost surface transport company with significant national presence. Through 800 branches, the transport division operates over 1,000 trucks every day. With its traditional offer mix of full truckload, less than truckload and sundry cargoes, this division competes with unorganized players on one hand. On the other hand, the division is continuously developing value added specialised capabilities in handling over dimensional cargoes (ODC), containerized cargo and project cargo. It offers one-stop solutions to a significantly large customer base of over 200,000 customers nationwide. In FY07, the company entered into a strategic tie up with Container Corporation of India (CONCOR), in order to offer a unique railroad, door-to-door cargo transportation mix to the manufacturing and trading clients of the country. The division contributes 53% of TCI's revenues and accounts for 29% of the total PBIT.

    Supply chain: TCI's supply chain solutions business is a JV with Mitsui, called Transystem. The company provides the entire gamut of supply chain solutions like distribution, clearing and forwarding, warehousing, cold chain logistics and other value-added services consultancy. Strong growth is expected from this segment due to lower base and larger volumes from existing clients. New clients are being added in a variety of verticals that include auto, retail and cold chain solutions. The cold chain business of the company has various clients like Amul and Cadburys. It also supplies fresh fruits, vegetables and pharma products. The management is laying more emphasis on this high margin business. The division contributes 10% of TCI's revenues and accounts for 15% of the total PBIT.

    Express division: Incorporated in 1997, XPS, today, has emerged as the fastest growing express brand in the country (28% CAGR between FY02-FY07). It has over 350 branches that cover more then 3,000 destinations. The division contributes 24% of TCI's revenues and accounts for 32% of the total PBIT.

    XPS Surface: The operational backbone of XPS Surface lies in its strategically located hubs, a fully containerized fleet of express, feeder and service route vehicles that connect over 3,000 pick-up and delivery locations and enables doorstep pickup and delivery of customer's cargo. XPS service offerings include COD (Collect on Delivery), FOD (Freight on Delivery), and DACC (Delivery against Consignee / Consignor Copy).

    XPS Air: It has a business associate relationship with all the major airlines in the country. This enables XPS Air division to deliver to all major metros in 24 hours and to Mini Metros and A class cities in 48 hours, through specialised and dedicated infrastructure.

    XPS Courier: With an all India network of own branches and Strategic Business Associates, XPS Courier reaches out to nearly 13,000 locations in India and more than 200 countries internationally. With technological edge and dedicated infrastructure, XPS Courier provides tailor made services to its customers. It has established its own branch in Singapore to cater to the South East Asian markets.

    XPS Global: It has positioned itself through agency networks at different countries to enable customers to import and export by sea and air modes. Equipped with CHA, IATA and MTO licenses, XPS Global can provide customs clearance from all the major sea and airports of India. It can also issue House waybills for both sea and air shipments. XPS Global has established its own office in Singapore to service the South East Asian region.

    Costal shipping: TCI Seaways is primarily engaged in coastal shipping with scheduled services between East Coast of India and the Andaman Islands. It also provides services like time charter hires on international waters. The company caters to the coastal cargo movement of the container and the bulk cargo, both domestic and international. Currently, the company has a fleet of five vessels with a total capacity of 16,444 DWT. The division contributes 4% of TCI's revenues and accounts for 17% of the total PBIT.

    Fuel stations: TCI has been consistently consolidating and diversifying with a focus on profitable growth areas. In this context, the trading division is being considered as an area to de-focus from. The company used to operate nine fuel stations. However, the company has taken the strategic decision and hived/sold off eight of them. The remaining one would also get hived/sold off in the current financial year. Being a low margin business, the hiving off will have a positive impact on the profitability of the company. The division contributes 8% of TCI's revenues and accounts for 1% of the total PBIT.

    Power division: The company has 11.5 MW of wind power as of March 2007. It is likely to add 3 MW in the current financial year, thereby taking the total capacity to 14.5 MW by March 2008. This is being done primarily for tax benefit purposes. The division contributes 1% of TCI's revenues and accounts for 7% of the total PBIT.

    We shall discuss the TCI's business potential and financials in the next article.

     

     

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