TCI's supply chain solutions division, one of its fastest growing businesses, has expanded by only 16 percent so far this year compared with 60 percent growth in 2010, Joint Managing Director Vineet Agarwal said.
Asia's third-largest economy grew at its weakest pace in more than two years in the September quarter, hurt by stubborn inflation, rising interest rates and the crisis-hit global capital markets.
After earnings grew just 2 percent in the first half to September on a modest 4 percent rise in sales, TCI had cut its full-year sales growth projection to 10-12 percent from 15-20 percent and profit rise to 10-15 percent from 20 percent.
"Typically, the second half is much better for us, but with this contraction coming in, we're not really sure how things are going to pan out," Agarwal said in an interview.
Sales and earnings had grown by about 22 percent in the past fiscal year that ended in March.
He said steep increases in borrowing costs and high inflation had dented demand, and sales at some of the company's clients in the consumer durables sector were now almost flat after growing between 30 to 40 percent last year.
India's central bank has raised interest rates 13 times since early 2010 to rein in inflation that has remained above 9 percent for almost a year.
Freight contributed less than half of the company's net sales of 8.69 billion rupees ($169 million) in the first half, as TCI expanded into express cargo and supply chain solutions.
Agarwal said allowing global supermarket giants into the retail sector would help businesses like TCI, but absence of dedicated infrastructure such as truck terminals and warehousing parks were challenges to growth in the sector.
"FDI reform is not really a magic bullet and it won't solve these challenges in the next three to four years. I think you have to be optimistic living in this country to hope for everything to happen soon," he said.
The government has put on hold the policy reform that would open its $450 billion retail market to supermarket chains such as Wal-Mart Stores Inc after the move drew fierce opposition from across the political spectrum.
Shares in TCI, with a market value of $87.5 million, have slumped 44 percent in the year to date, compared with an 18 percent drop in the main index.
TCI, which has dropped plans for a 750 million rupees share sale to institutional investors, is interested in acquiring logistics companies with a focus on the retail and telecom sectors, Agarwal said. (Reuters)
