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Analyst meeting notes - Transport Corporation of India

Keynote Capitals presents notes on the recent analyst meeting of Transport Corporation of India Ltd.

Incorporated in 1958, Transport Corporation ot India Ltd. (TCIL) is India's leading multimodal integrated supply chain solutions provider. It went public in 1974.

It has a network ot 1200 owned branches and 7.25mn sq. tt. ot warehousing space. Head count (on payroll) increased trom 5700 employees in FY07 to 6500 in FY08.

Results

- For full year FY08, income from operations grew 10%. Modest growth witnessed in all segments mainly Seaways, supply chain solutions, XPS, and transport.

- EBITDA margin flat at 6.4% vis-?-vis 6.5% y-o-y. The fuel price hike was passed on immediate or gradual basis depending on the client profile.

- PAT declined by 7% due to scheduled and unscheduled dry docking of 3 ships as well as the slowdown witnessed in the auto sector which affected the supply chain solutions division (65% of the clients are in the auto sector).

Transport

TCIL entered this segment in 1958. It currently operates a mammoth fleet of over 7000 trucks, 1200 of which are owned, serving 150,000 customers. It has leased trains too. This segment constitutes 54% of revenues, however with slim EBITDA margin of 3-5%. Going forward, it plans to reduce the contribution from this segment as it being a matured industry, has low margins. It however, serves as a good reference for other businesses.

XPS (Courier)

Launched in 1996, XPS serves 200,000 customers in 13,000 locations in India and 200 countries in the world. It has chartered space from airlines. XPS (Courier) division to grow by 25-30% through organic as well as inorganic routes.

Supply Chain Solutions

It designs the supply chain for clients on customized basis and then executes the same. In FY07, 65% of the clients were in the auto sector. Due to the slowdown in the auto sector, the profitability of this segment was impacted. Recently, it added new clients from other sectors viz., Spinach, ITC Foods, P&G and Ceat Tyres. The pipeline for clients is increasing with large scale contracts under finalization for Tata Nano car and Hero Honda. TCIL has been shortlisted for these projects.

TCI Seaways

It has 6 ocean going vessels, of which 5 are owned and one is on a joint venture basis. It plans to add 1 ship every year for next 3 years. This division contributes 5% to revenues and has EBITDA margin of 25%. TCIL seaways topline growth by 20-30%.

Others

- Wind power division with installed capacity of 11.5MW
- Real estate division with land value of approx. Rs60Cr at Delhi, Chennai and Bangalore.

New Division - TCI Global

TCI has set up a new division viz., TCI Global in FY08 which performs activities such as custom clearance licenses, freight forwarding, etc. It would target internal customers. It has opened 7 branches in India and 3 internationally, in Singapore, Hongkong and Indonesia. It plans to have 4 regional offices and 16 branches by Q2-FY09.