TCI's Growth Momentum Continues Despite Mixed Trends | NDTV Profit
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00:00You're watching Earnings. Let's just take a look at how the markets are faring right now. Well we have the nifty 50 up about
00:11three tenths of a cent. You know it's at the twenty four thousand nine hundred and twenty eight mark right now. When you look at
00:17you know the counters that have been gaining on the benchmark we have BP sale was the top nifty 50 gainer. Today it's up over 4
00:23percent. And that could be some strength. You know with the pipeline tariffs getting hiked 17 percent effective August 1st. We
00:31also have come counters like Tata Motors as well as NDPC up about 3 percent in trade right now as well as some strength with
00:38Bajaj Finserv and Power Grid. When you look at the companies that aren't doing so well well we have LTI Mindtree as well as
00:45counters like CIPLA and party at all down over a percent. Let's just take a quick look at the broader markets which are clearly
00:53outperforming. And I want to put special focus on the nifty small cap to 50 index which is the top performer of the day. It's up
00:59almost 1 percent right now. And when you look at the counters that are you know contributing to these gains we have PCBL which is
01:06up over almost 10 percent in trade right now followed by companies like fine organics scams and tried and all trading in the
01:14range of 7 to 9 percent. Some of the counters on the small cap to 50 that aren't doing so well. We have Alembic Pharma down 5
01:21percent as a top loser on the index right now as well as counters like CSB Bank and Concord by Biotech which is you know
01:30they're on the negative side by 2 to 4 percent. But on that note we're now moving on to the next management that and company that we
01:38have in focus and that is Transport Corporation of India. And to talk about the quarter when we've gone by in the future out of
01:43we're joined by the managing director of the company Mr. Vinita Agarwal. Good morning. Good afternoon Mr. Agarwal.
01:49Good afternoon. How are you. No. Well I'll start off with you know the Q1 results. What's your assessment on how the quarter went by.
01:56Growth was higher than what was guided before. Yes. Quarter one is usually the weakest quarter for the year because we are just
02:04coming off from the highs of the financial year end. And this year was also the election year. So it was a it was relatively better
02:13than expected. I think some of the sectors like auto like the capital goods sector sector continue to keep their momentum up. And
02:22I think now we should be looking at more positive growth for the next few months. So we are quite satisfied with the quarter gone by.
02:30And what is the kind of outlook that you have in terms of growth for FY 25 for the company as a whole.
02:36For FY 25 26 we are looking at a growth of sorry 24 25. We're looking at a growth of 15 percent about 10 to 15 percent on the top line and
02:47about 10 to 15 percent on the bottom line. And we expect this to continue for the next two three years. All right. So 10 to 15 percent of
02:55growth that we are looking at. Now if I want to look at your three segments to understand what's the kind of outlook that we have for the
03:01freight supply chain and the CV segment. Where are we seeing more of these growth coming in for FY 25. And for freight also what is
03:08the impact that we're seeing coming in from MSME. So this is like a double double folded question that I'm posing with you.
03:16Yes. Yes. Well you see the impact of the MSME growth has been slightly muted in the last few months. And that has had an impact on
03:26the freight business. And that is that is not grown as fast as the other businesses. We do expect this to start picking up because see what
03:34has happened with MSMEs that money from the from the larger companies has to flow down to the MSMEs for them to be more active. And that has
03:41been a little slow. I think credit offtake there has been less. So that has affected the freight business a little bit. But I do expect it to
03:49come back and reach about 10 percent top line growth for the year. For the supply chain business 75 80 percent of our business is automotive
03:57logistics. We do work for two wheeler three wheeler four wheelers commercial vehicles tractors and earth moving equipment company. So the
04:05growth prospects are very good with infrastructure growth coming up. So equipment growth will happen. But nevertheless automotive market is
04:11also going through a lot of changes. Two wheeler growth has picked up. So we do expect this business to really do well. And looking at about a
04:18closer to 15 percent top line growth. The CVS business does coastal cargo movement. Basically on the West Coast we have two ships moving
04:26from Kandla to Cochin and on the East Coast we have four ships that move from Vizag Chennai to Port Blair. And we are seeing decent cargo
04:35growth over there as well. Simultaneously we are seeing good increase in container rates there. So that has helped in growing this business
04:42by about 14 percent. I do expect this business to be closer to the 5 to 10 percent on the top line basis for the year.
04:50Thank you. You know before I go on and you talk about the container and freight rates I just want to ask what in terms of revenue
04:56contribution what's the breakup of the three segments. And is there a kind of targeted mix that the company is aiming at.
05:02Of the freight business about 45 percent of the overall business the supply chain business about 40 percent and the remainder is a
05:10CVS business. And going forward the supply chain business is definitely going to grow much faster. So I do expect by FY 26 the supply
05:18chain business to be the larger business out of the three. CVS will not grow as fast. It is mostly based on capacity expansion and that
05:26capacity expansion will happen. We are now adding two new ships that will come in FY 26. The order was just placed last week with a
05:34Chinese shipyard. But the delivery is still to two and a half years away. So that shift in any kind of revenue on the on the CVS business
05:43or the increase in share of our overall business will not happen in the near future.
05:49So we need you mentioned about the container rates but I also want to understand your outlook on freight rates. How are they as compared to
05:55the last quarter. If we see are we seeing some signs of recovery over your along with this another cost which have increased at the
06:02toll cost. So can you comment give a picture on all three of these costs.
06:07Yes you know the domestic freighters on the roadside typically is a factor of fuel and a factor of demand and supply. It is not necessary that
06:16when a truck moves from the north part of India to the east part of India the freighter on the reverse is the same because the demand on the east
06:25is much lesser. Hence the components of the cost are now starting to change as well. Toll is becoming a higher cost. So is driver wages
06:36because driver availability is still quite weak in the country. And apart from that maintenance costs etc. have also gone up. So this structure
06:43is changing though I do not expect a major shift in this year in terms of the freight rates. If there's any any of these input costs increase
06:52dramatically more we'll definitely see an increase. But not otherwise we are seeing capacity addition happening on the commercial vehicles as well. So
07:00this should help to balance some of that increase in cost versus supply coming on board. So yeah. So we should expect a little bit of increase over the
07:11year for the freighters but not too much. Yes. Vinita I also want to talk about the latest agreement that you mentioned with Taza Sanfo Ship
07:18Engineering. The company currently has six domestic ships and now you've ordered two more. Yes the timeline of you know till y'all get the
07:26ships in hand is you know in by the end of 2026. But in terms of the incremental benefits after that could you maybe give us more more
07:36details on that. Well you know we've always bought second hand ships from the international market to run on the domestic coastal routes. It is
07:45just more economical. But with the Red Sea crisis with the wars that are happening we are seeing that the prices of these second hand ships are
07:52just just escalated too much and they're just not viable right now. So we decided that we will go in for a little bit of a longer term purchase with
08:00these brand new ships. These are two ships of 7300 deadweight tonne each and their cost the total cost is about thirty eight point eight
08:08million dollars. We will do part payment this year and then subsequent payments in the course of the next two three years when the ship gets
08:15delivered in year 26. We will still keep a lookout for second hand ships for capacity addition. If you're able to find something at the right price at
08:25the right type of ship that we need for our services we will go ahead and buy that. That's part of the capex that is anyways budgeted so it should
08:34not be an issue. So the budgeted capex for the ships that you've mentioned stand at about 80 crores. But what is the overall capex that we are
08:41looking at for this year. Overall capex is about three hundred and seventy five crores. Eighty crores as you rightly said is for the ship
08:47advance for the advance purchase. Apart apart from that about one hundred hundred twenty five crores is going to go into land building
08:54warehouses about seven about one hundred crores into trucks and the remainder into containers and other warehousing equipment and assets
09:03the sector. So we are quite confident that we should be able to do about two fifty to three hundred seventy five crores of capex in this fiscal.
09:11I also want to get a perspective on the competitive landscape. None. The FI 25 con call management of the company has stated that you know the
09:18company is facing competitive pressure in the LTE businesses. There are impact of competitors moving to a lower pricing models. What's the
09:26company's strategy to deal with this. See the business of NTL which is the freight business essentially is a business which has a lot of
09:35competition both from national players and from domestic players. This is a business where some of the express companies who do not make much
09:44money today and on the B2C side which is on the last mile side are now trying to move to the B2B side. And when that starts happening
09:51they are trying to influence some amount of price cut and discovery on the LTE side as well. So but this is an ongoing thing. I think this has
10:00always happened in the past as well with regional players being present. So it is a competitiveness that a competitive thing that we are
10:08handling. We have started opening more new branches this year itself in the first quarter. We've opened 15 new branches. Our target is about 75 to 100
10:17new branches this year. Adding more feet on the street more sales team having a strong digitized digital presence across the board for the LTE business
10:26are some of the strategies that we adopted. And we are hoping that we should be able to achieve the target of 40 percent of the FDL of the freight
10:34business by FY26. All right. So that's a target for FY26. But another area that I want to focus is on one you've mentioned in supply chain business
10:44that the focus remains on the automated side. But what other industries except for these are we focusing on going forward.
10:51Well we are doing a lot of warehousing for FMCG companies FMCD companies retail e-commerce quick commerce name it. So we are working on all
11:05these segments as well. So the business remains robust remains active and we've been able to bring you know create modes around our business
11:14because of our strong digital presence and all the assets that we've created in the multimodal side the services that we have. So all of those
11:22things have definitely ensured that we are competitive even in the supply chain side. Yes. And we need last on one last question before we let
11:30you go. What are the segment wise margin breakup for the three segments that the company operates in.
11:37So the freight business operates about 4 percent EBITDA margins the supply chain business at about 12 10 percent about EBITDA levels and the
11:46seaways business about 35 40 percent EBITDA levels. This is the broad structure. And all three of them contribute to the overall growth of
11:56the company. Well thank you so much for joining us and we wish you all the best.
12:02Well that was the management of transport corporation of India. But while speaking at the CIA conference PM Modi slammed opposition saying
12:11that the budget allocation made by the previous government was never fully used. My colleague Rishabh had several conversations on the
12:18sidelines of that conference. One such conversation was with DP IIT joint Secchi Sanjeev Singh and he speaks about the government is
12:27focusing on manufacturing and sunrise sectors. Listen in as we offer this edition of earnings edge.
12:34I think this is a very important initiative which has been given by Honorable Prime Minister. We at Startup India are focusing on
12:45creating manufacturing incubators with the help of private sector and the corporate houses which primarily deals with sunrise sectors
12:57like IOT artificial intelligence machine learning green and clean energy. So the emphasis is on such sunrise sectors and maybe with time
13:10we will have very good manufacturing incubators which will be promoting startup ecosystem and startups engaged in these sunrise sectors.