TCI may offload 7% to PE funds

Economic Times, July 26 2007

SHIPPING and road transport major Transport Corporation of India (TCI) may offload a 7% stake to private equity players to fund its capital expenditure (capex) in the current fiscal. The company is already in talks with PE investors. Blackstone and Carlyle are in the race to acquire the stake, persons familiar with the matter told ET. When contacted, TCI’s executive director Vineet Aggarwal confirmed to ET that company is looking at selling a 7% stake. However, he refused to divulge any details about possible investors. The decision would be taken by the company’s board in a fortnight. Consultancy firm Edelweiss is advising the company. The company has earmarked Rs 450 crore capex for FY 2007-08. Rs 110 would be raised from internal accruals and Rs 180 crore through debt. According to Mr Aggarwal, the rest would be funded from the stake dilution. TCI operates a fleet of over 3000 trucks moving 15,000 consignments daily. The company also has plans to own one ship every year which would entail a yearly investment of Rs 37 crore. In its move to get a substantial chunk of income from overseas, TCI is planning to expand its operation to Malaysia, Singapore, Indonesia and Europe. According to sources in the transport industry, TCI wants to move up from the low margin road transport to the shipping sector in increase revenues. The company is also negotiating with major retailers including Reliance Industries for setting up a supply chain infrastructure across the country. Here the company will also use its rail infrastructure which it shares with CONCOR. The company is also planning to provide supply chain management service to pharma retailers such as Apollo and Fortis. The company’s share on the BSE closed at Rs 109.95 on Wednesday, down 1% as compared to the previous closing.