Mumbai: Transport Corp. of India Ltd (TCIL) is planning to raise Rs50-75 crore by selling shares to a select group of investors before the end of the year as the company expands its warehousing operations and ventures into the real estate business.
The Gurgaon-based company is acquiring land for constructing warehouses across the country to tap opportunities in the retail and agriculture sector. It also plans to develop a part of its land bank in Mumbai, New Delhi and Bangalore for commercial and residential projects, and is setting up a team with expertise in real estate development.
TCIL, which manages 7.5 million sq.ft. of warehousing space in India, has already acquired land Chennai, Mumbai, Nagpur and New Delhi and has started construction in Pune.
“We have earmarked about Rs200 crore to expand warehousing capacity,” said Vineet Aggarwal, executive director of the company. He had earlier said the company would create separate special purpose vehicles to set up warehouses and induct strategic investors.
TCIL has appointed Mumbai-based investment bank Edelweiss Capital Ltd to advice on this share sale.
Last September, Fidelity Investments International, an international fund manager, purchased around 10% equity in TCIL for Rs52 crore.
The company’s market value is Rs598.17 crore based on its share price of Rs82.55 each at close of trading on the Bombay Stock Exchange on Friday.
Selling shares to a select group under a deal known as private placement does not have to be registered with the market regulator. Investors involved in such transactions are usually banks, mutual funds, insurance firms and other financial companies.
According to a report of business research and consulting firm Frost and Sullivan, the Indian warehousing market, estimated at about $890.3 million (about Rs3,800 crore) in 2005, is expected to grow to about $3.6 billion in 2012. The logistics sector, estimated at $130 billion now, is expected to be worth $220 billion then.
The growth in the manufacturing sector, coupled with domestic spending in the second fastest growing major economy in the world, will be the key drivers for the domestic logistics sector, ICICI Direct, the online arm of domestic brokerage firm ICICI Securities Ltd, said in a recent report.
To supplement its courier division, TCIL has kept aside about Rs100 crore as it conducts due-diligence on mid-sized Indian courier and cargo firms for an acquisition.
“We have established specialised hubs in Gurgaon and Bengal for boosting high-yield courier segment,” Aggarwal said. The company is expecting 30-40% growth from its logistics business, including warehousing and road transport.
“TCIL is in the process of signing large-scale contracts for managing warehousing and logistics, including for Hero Honda and the Tata group’s small car project Nano. We are also having new clients in verticals such as retail and cold chain,” he said.
Aggarwal said his company, which also owns five cargo ships, has no plan to enter into container train transportation business. Instead, “we intend to tie up with the Indian railways and its subsidiaries for cargo movement.”