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GST-driven freight demand hike boosts Transport Corp. India profits by 23%

GST-driven freight demand hike boosts Transport Corp. India profits by 23%

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TCI’s net profit recorded for July-September increased from INR 19.7 crore in 2016 to INR 25.6 crore (USD 3.9 million) in 2017. Year-on-year revenue for the same time period also increased by 16.6%. The boost is likely a result of GST driven freight demand upticks. After its July rollout, the GST-induced organisation in the logistics sphere eliminated cascading taxes and reduced costs players who embraced the uniform, national levy.

According to Managing Director of TCI, Vineet Agarwal, TCI ensured strong growth setbacks in the GST transition by focusing on high margin businesses while leveraging the collaborative benefits of multi-modal logistics and integrated supply chain solutions.

The GST, as predicted, seems to have a positive effect on logistics. As Agarwal propounded, the tax is likely to move businesses away from unorganised and fragmented logistics providers towards more established and organised firms like TCI. This incentivises smaller, non-compliant players to reconfigure operating models to implement transparent and efficient processes.

Other logistics providers to note sizable gains include, Mahindra Logistics (profits jumped 28% between FY 2016-2017) and Gati (profits rose nearly 259%, as interest expenses dropped by half).

Growth and volatility are inextricable, however. As India’s logistics market leapfrogs ahead, prudence trumps gallantry. Much buzzed about Rivigo tripled expenditures and witnessed skyrocketing losses that rose 2400% to INR 137 crore from just INR 5.5 crore.

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