Integrated multi-modal logistics service provider Transport Corporation of India (TCI), which posted a 25.4% increase in the profit after tax in 2023 – 24, on the back of robust automotive supply chain, is of the view that demand for two wheelers, especially electric two wheelers is up while tractors and earth moving equipment are likely to remain buoyant in this year. The company expects other segments like consumer durables to pick up once the rate cut sets in, leading to a good festive season.
TCI’s profit after tax increased 25.4% year on year to ₹103.3 crore in Q4, FY24, especially led by the automotive supply chain. The company also announced a dividend of ₹2 per equity share while declaring its financial results on May 15.
On the trend in the supply chain, Agarwal said, "Supply chain segment has been growing basically on the back of the automotive growth, and auto logistics is changing as well as growing quite rapidly. So that is helping us. For us, automotive is not just four-wheeler or two-wheeler, but commercial vehicles, earth moving equipment, tractors and the whole gamut."
"In FY24, we saw tractors and earth moving equipment doing quite poorly. But four wheelers did quite well. Two wheelers have started to pick up again. Going forward, in FY25, we do think that two-wheelers will continue to do well. Some reports have suggested that four wheelers might slow down a little bit. Tractors should grow with good monsoons. Plus the government spend on infrastructure should also increase post the new budget when the new government comes in. If that happens, we will see more earth moving equipment going," Agarwal added.
He pointed out that in the two wheeler segment, EVs have picked up, while even in the tier II and tier III towns there is no weakness in the auto sector demand.
That said, Agarwal points out that demand in the other segments like consumer durables has not moved as much as it should have. “I think that is the factor of high interest rates,” he said, expressing hope that once the rate cut sets in, one could look forward to a good festive season.
The company’s seaways segment remained flat in line with expectations. Freight business witnessed higher volumes, but profitability remained a little skewed as the shift from the full truck load (FTL) to less than truck load (LTL), which the company had been wanting to do, could not be implemented fully.
With an overall ROCE of 20%, zero debt on the books, and cash worth ₹400 crore, the company is poised for next level of growth. The company has lined up a capital expenditure plan worth ₹1,000 crore for the next four years. Beginning the current financial year, the company will spend ₹375 crore towards warehouses, and acquisition of trucks and rakes and will continue the exercise in the next three financial years, totalling about ₹1,000 crore.
"We have a ₹375 crore plan for this year. Out of this, ₹100-115 crore will be spent towards warehouses, buildings and related infrastructure, ₹100 crore will be spent on trucks and rakes that we might buy. About ₹75 crore will be for warehousing equipment, IT equipment and container equipment. We have also set aside ₹75 crore in case we end up buying two new ships," said Vineet Agarwal, managing director, TCI.
Agarwal said the company will keep investing in the ballpark of this year’s number for the next couple of years so as to achieve a cumulative investment of ₹1,000 crore in the next four years.
