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  • Sector alert: Infrastructure | Transworld Group

    Time to accelerate

    Publish date: July 9, 2018

    Logistics — Steady march ahead for organized players

    Global end-to-end logistics company, Transworld Group, is backing itself to get a larger footprint in the country in the face of increased growth opportunities in the sector. The company wants to use its unique single point-of-contact facility to differentiate itself from other businesses in the sector — a strategy that has won over the otherwise-resilient Indian business houses for its end-to-end logistics.

    The other unique features they are keen on bringing in are cloud-based management system, predictive analysis and smart containers.

    The Dubai-based group has also invested or acquired customer-facing businesses to help create a brand and reach out to Indian businesses. Not content with the logistics side alone, the 1977-established company has diversified from its shipping business by installing warehousing and freight facilities.

    Key Highlights

    • From our discussion with the company’s chairman Ramesh S Ramakrishnan, we gleaned that the company is expecting the Indian market to open up due to GST and simplification of EXIM trade processes. The company also expects the coastal shipping business to ramp up in scale.
    • The Sagarmala project would bring down logistics cost in the country, according to the chairman. But he felt that it would take another government term before the benefits could be seen on the ground.
    • The company also believes in going digital. They feel that would be future of doing business globally. The chairman said they would launch an app in July, enabling people to book and track consignment.
    • Their holdings in India have performed well in the last few years. Shreyas Shipping and Logistics (SSL) — the Transworld Group owns 73.25% stake of the company — has seen its earnings double in the last four years. The company has also invested in Avana Logistic to enter the last-mile transportation business. Alana Logistic will issue a fresh Rs 3 billion IPO, with most of the proceeds to be invested in setting up industrial warehousing and cold chain facilities.
    • The company also foresees an uptick in India-UAE trade, resulting in increased business opportunities.
    • We also spoke to the master shipper and the logistics to get a grip of the ground realities. You can read our full report to understand the ground realities better.

    Valuation & outlook

    We feel the organized logistics ecosystem in the country is an attractive proposition. The advent of GST and relaxing of EXIM rules will spur this sector, while the Sagarmala tailwind will also be a factor over the medium-term.

    Currently, other players in this segment are looking to integrate their business as well. Like Transworld Group, the MNCs are looking to shore up their networks and expand through investments/collaborations.

    Among the MNCs, Concor’s large market share has taken a hit due to emerging players in the coastal shipping business. Maersk is on the other end of the spectrum, looking to expand its operations by offering dedicated block trains, trade financing, online platform and making rural inroads. The domestic players, meanwhile, will face stiff competition from MNCs. The MNCs’ one-stop logistic solutions mean companies like Mahindra Logistics will have to look beyond their strong network system.

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