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Logistics player TCI Express Ltd has laid out plans for Rs 400 crore expansion over the next five years to modernise its existing 28 sorting centres across the country and scale up the IT network.
The company's Managing Director, Chander Agarwal, maintained that the logistics industry grows at double the rate of the country's GDP growth.
"GST is a big boost for the organised players like us. Manufacturing is the growth driver and we see that picking up pace in coming years. Currently, we have 28 sorting centres across 9 regions pan-India. We are planning to invest Rs 400 crore for modernisation, expansion and setting up IT network over the next five years," Agarwal told BusinessLine.
The investment, funded through internal accruals, will scale up the company's revenues to Rs 4,000 crore in the next five years from the Rs 754 crore in 2016-17.
The company has reported first quarter 2017-18 revenues of Rs 204 crore, up 15 per cent on year-on-year basis, while net profit stood at Rs 12.12 crore, up 74 per cent. Post expansion, the company looks at about 20 million square feet of space at its sorting centres against the current 100,000-125,000 sqft.
The exchange-listed logistics player has client mix from sectors such as textiles, pharma, engineering, electronics, automobiles and SMEs.
For TCI Express Business-2-Business (B2B) segment remains the focus area. As against the notion of emergence of e-commerce boosting the logistics businesses, Agarwal stated the hyper-local nature of the offline trade in India makes it challenging for e-commerce players to score on timely delivery.
"Delivery duration is an issue. Unless there are discounts, customers do not prefer to buy online. At higher salaries of the delivery men, the last mile delivery is not cost-efficient. This has already started hurting the B2C logistics players and lay-offs have silently started in this domain," said Agarwal hinting at the consolidation of logistics players going forward.
Agarwal further mentioned that SMEs will drive the growth further for large logistics players like TCI Express. Currently, Mumbai region is the top contributor to the company's revenues with 30 per cent share, while Delhi and Gujarat are immediate next regions with about 20-25 per cent share.
"We are confident of the burgeoning Indian economy and the reforms such as GST to boost the business prospects. Operational efficiency and digital infrastructure will be our growth driver," said Agarwal.
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