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Transport Corporation of India should benefit from ecommerce expansion and GST

Posted 8 years ago by QuikrCars | 280 views

The Transport Corporation of India (TCI) should be a prominent beneficiary of growth in ecommerce and GST according to sources.

The Transport Corporation of India, which is based in Gurgaon, should profit from implementing GST and subsequent growth in ecommerce sectors. The TCI has approximately 1,400 branches, 9,000 managed and owned trucks and 10.5 million sq ft across warehouses. This network is definitely unmatchable! According to TCI Managing Director, Vineet Agarwal, there are more than 6,000 skilled employees at the helm of affairs and decades of customer relationships offer a greater edge over competitors in this segment.

There are four key divisions of TCI, namely supply chain, freight, seaways and express. For freight transportation, the organization lines up parcel, LTL (less than truck load) and full truck transportation services. There is a clause for price escalation with most customers which allows for passing on fuel hikes to them. The organization uses its own or hired trucks for road transportation while there is a Joint Venture with the Container Corporation of India for rail freight. This ensures greater efficiency in terms of movement of cargo. Due to a big branch and warehouse network, the organization will benefit greatly from the ecommerce boom.

Indian ecommerce should be growing by a CAGR of between 30-34% over a period of five years. This would increase logistics spend of ecommerce companies four-fold within 2020. GST implementation would mean uniformity in taxation and outsourcing of logistics needs to third party logistics companies for cost reduction. GST implementation would also spur bigger warehousing and greater movement towards hubs along with lower paperwork and faster truck movement.

For FY16, the company should be incurring INR 275 crore capex out of which 60% will be for establishing warehousing hubs. The company is also planning for a de-merger of its express division into a new entity for boosting future shareholder value.

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