Conference Call with TCI Express Management and Analysts on Q4FY20 Earnings Performance and Outlook. Listen in to the full earnings transcript.

Call Participants: Mr. Chander Agarwal - MD, Mr. Mukti Lal - CFO

Introductory remarks from Chander Agarwal

Good evening everyone and welcome to the fourth quarter and full year 2020 earnings call of TCI Express Limited. I would like to thank all of you for joining us during the ongoing health crisis caused by Covid-19 and hope that you and your loved ones are doing well and keeping safe. On this call, we will start with a quick business overview of the full year followed by the discussions about the impact of Covid-19 on the industry and the business and how we are getting ourselves to manage the impact of this pandemic. Our earnings presentation has been uploaded on the website and stock exchange and I hope you had a chance to review it. 

Now coming to the results, I am pleased to report overall encouraging performance review of the financial year 2020 despite the challenging economic and the business environment. 

• On a full year basis, TCI Express delivered a total income of Rs 1,036 crores. It’s flat compared to last year. EBITDA was at Rs 126 crores with margin of 12.1%

• Our company delivered a robust growth in profit after tax of 22.3% to Rs 89 crores

• During the year, we continued our focus on enhancing margins through high capacity utilization, penetrating deep in the cities and tapping into growing SME and of course the efficient working capital management

• The company distributed a dividend of Rs 4 per share for full year with a pay out of 17.2%

• TCI Express has added 17 new branches in the year to penetrate deeper in the selected geographies and this strategy has been successful in contributing to the company’s growth

• We have incurred a total capex of Rs 32 crores towards the construction of new sorting centres in Gurgaon and Pune. The construction of these centres were halted earlier due to the NGT path and now due to Covid-19, it has got delayed further. However, we have got the government approval to restart the construction at these centres and are hopeful that our new sorting centres will commence operations in the third quarter of fiscal financial 2021. We are putting our current efforts in making that happen

• The complete automation and implementation of business intelligence and our sorting centres will result in shorter turn on times, higher utilization and enhance operational efficiency in the long run

• Furthermore, it is important to note that the business environment during the year remains challenging with the economic slowdown in the year 19-20. 

• Despite all the challenges, the company delivered a top line growth of 5% in the first 11 months from April 2020. March is considered to be the best operational month where we see high movement of goods and stock clearance. However, with the unfortunate India shut down because of Covid in the middle of March, it impacted our business performance

• Although the nationwide lockdown dropped business to a halt and disrupted economies, we stand in full support with the decisions taken by the government. During these difficult times health and safety of our employees, partners and other stakeholders remain our utmost priority

• With the announcement of lockdown on 24th of March, the company allowed work from home policy and promoted video and audio conferencing tools to interact internally and externally

• Our offices resumed on 20th April and we have taken various initiatives such as we have created a limited workforce, sanitization, social distancing at our workplace, employees screening at regular intervals, mask and sanitizer distribution. We believe that all these measures are critically important to ensure safety of our employees at the workplace

• Covid-19 impact on the industry - The business environment came to a grinding halt with the announcement of the nationwide lockdown in March. Markets rapidly deteriorated in March with the closure of factories and offices along with interstate movement and that has really impacted the transportation logistics sector. Covid-19 has impacted all categories of industries and India’s growth sector also declined by 6.5% in March and is particularly climbing in April as well

• The pandemic has been rapidly evolving on a daily basis. Government has extended lockdown multiple times and now with some relaxation, the economic activity has started but at a lower capacity

• Last mile delivery is facing challenges such as strictness and restrictions especially in interstate movements in the metro cities such as Delhi, Calcutta, Bombay due to high cases of coronavirus coupled with migration of labour adding to the transportation challenges

• We have taken a series of strategic initiatives to mitigate businesses - 1) Cost structure optimization. We are reviewing all our cost heads negotiating with our business partners and objectives to reduce fixed cost. Cost effective measures are more efficient communication to reduce travels and fuel operations footprint. 2) Collaborating on various projects to deliver health equipment like ventilators and medicines. With all these initiatives, we are committed to optimize our cost structure and improve our margins of profitability 

• Moving ahead, the actual impact on the business will depend on the severity and the course of Covid-19 in the near term and we shall have a better clarity in the coming days once the lockdown is lifted

• I believe we are better placed than other companies as we are asset light, we have the money with a strong balance sheet which will allow us to navigate through these unprecedented times with also being more stronger

• We are confident that we will remain the preferred partner of choice for offering time defined services to our clients