With a growth of 60% in sales on a year-on-year basis, supply chain is the fastest growing segment for the company, whose other divisions include freight, express, seaways, wind power and real estate and warehousing.
According to a report by Cushman & Wakefield, the logistics industry in the country is expected to grow annually at a rate of 15- 20%, fetching revenues of approximately $385 billion R17.3 lakh crore) by 2015.
We are on the look-out (for acquisitions), ideally in the supply chain division, said Vineet Agarwal, executive director, TCI. Although it was still early to assess the size of such an acquisition, the company, which had around R51 lakh in cash as on March 2010, will fund the acquisition primarily through debt. Last year, TCI picked 51% stake in Infinite Logistics Solutions, valuing Infinite at R2 crore.
The company had Ebidta margins of close to 8% for FY2011, having been impacted by the diesel price hike. However, in the coming year, we expect margins to improve because the mix of our business is changing from the basic freight to supply chain solutions and express cargo, said Agarwal.
TCIs shares were up 1.06% on the BSE on Wednesday to close at R90.85.
According to a recent report by IDBI Capital, TCIs supply chain division recorded a robust growth of 74.3% year-on-year for the quarter. However, it adds a word of caution. The SCM division, which had recorded growth on the back of auto sector, is expected to slow down in the coming years, where we expect the revenue growth to taper down to 35% in FY12, analyst Chetan Kapoor said in the report.
TCI has a capex plan of about R100 crore for the current financial year, compared to R75 crore last year. This should be adequately funded by both debt and internal accruals. It will be mainly used for acquisition of new trucks and replacement of old ones, Agarwal added.
For the quarter ended March 31, 2011, the company reported a net profit of R12.76 crore against R12.54 crore in same quarter last year. Its revenues for the quarter ended March 2011 stood at R477.9 crore as compared to R401.42 crore in same quarter of the previous year.