The BL Interview. TCIEXPRESS eyes 20% revenue growth post-GST

Managing Director of TCIEXPRESS Chander Agarwal talks on how he is planning to increase his business by focussing the company services where manufacturing density is high.

TCIEXPRESS, the recently demerged entity from the Transport Corporation of India, caters to movement of high-value and time-sensitive materials by trucks. In an interview to BusinessLine , Agarwal talks about the bright prospects that the Goods and Services Tax (GST) will bring to the organised transportation players. Excerpts:

What are the services that TCIEXPRESS offers and wants to cater to over the mid-term and long-term?

Our focus is mainly on express air and express surface cargo. Our truck segment is growing at 14-15 per cent by volume and by value, which is the fastest in the country. We expect this to increase to 18-20 per cent post GST implementation. Apart from containerised and GPS-enabled cargo, we have managed to incorporate new products like retail, auto parts and other finished products that move through express. Also, high value manufacturing-based production which is at a nascent stage in India, should improve over next few years. In e-commerce business too, unlike many companies, we are EBITDA and PAT positive.

Since e-commerce industry itself is going through a churn, do you find any impact of that in your business?

No, not much as only 5 per cent of our revenues comes from the e-commerce businessand we even make healthy cash profit in this segment. Since e-commerce may be taxed under services under GST, we may see a reduction in this business. But if it does not happen, we will see a good growth here.

What other value add and service differentiation do you offer?

We have around 550 own offices. Through this network, we manage our international deliveries as well. Besides, we have a strong vendor management system, robust ERP and GPS-enabled services and robust quality control. Also, we get to know of any delays right away and thus ensure seamless delivery operations. Besides this, we cater to 625 of the 650 districts in India. We cover close to 30,000 locations individually.

How is your competitive landscape changing with respect to your peers? What will be the impact of waterways in your business?

We never compete on a level playing field. We are an organised player while 98 per cent of the peers are unorganised. So, GST is very important for us in fighting competition. Also, waterways are used more for commodity and product transportation that requires long transportation time . Hence, we don’t see much competition from waterways. Coastal is good for commodities but not for express delivery which is expected in hours and not days.

Demonetisation has affected small and medium enterprises. How has it affected your business?

Demonetisation did not affect us as neither our clients pay us in cash nor we under-invoice anybody. Also we have a strong corporate governance policy. We cater to engineering goods, spare parts of automobiles and ready-made garments. Everybody talks about the top 500 companies in India. But, the plethora of SMEs is huge. SMEs are very important and highly profitable part for us.

How do you use technology in your business and what strategic expansion plans do you have to capture new market?

Technology is the backbone of our business. All offices are ERP-enabled VPN, GPs, barcoding, centralised billing which is one of a kind. This is unique to our company and we spend heavily on this every year and will continue to do that. In case of strategic expansion, we do not have any plans laterally. We will increase our reach by going denser. We will cater greater service in place where there is greater manufacturing density. We will keep analysing where manufacturing is happening increasingly and will add more offices/branches there.

EBITDA and PAT has grown sharply for nine months ended December 2016 compared to the same period a year ago earlier. Any specific reason for this?

Competitive pricing, healthy cost control, demand in general for express delivery and concentrating on specific business verticals are the main reasons. Customer bifurcation (traditional vs express) was also clear in our minds. That clearly helped. We hardly have any cash business from our clients. So, it helped us grow even during demonetisation. None of our group companies were affected either.