Transport Corporation of India (TCIL) will demerge its real estate and warehousing divisions in next three months and expects to create greater value for shareholders through the hive-off. After the demerger, the company would focus on the core activity of providing logistic services, according to a report published in Financial Express.

“Our board approved the demerger in April this year while shareholders have just given their nod to the proposal. The matter is with the Andhra Pradesh High Court at present. We are expecting a green signal in next 2-3 months,” (TCIL) executive director Vineet Agarwal, said. “The logic in the demerger is that we want to create value for shareholders by focusing on our core activity. The development of real estate and warehouses will be done by the new company,” he added.

The company has 15 real estate properties with a book value of Rs 55 crore. It has engaged a slew of consultants to ascertain the best use and market value of the properties. “Some of these properties may be developed as commercial real estate,” Agarwal said.

As per the demerger scheme, a holder of 20 shares of Rs 2 each in TCIL will receive one share of Rs 10 in the new company. The earning per share (EPS) of the company was Rs 5.9 at the end of March 2010 against Rs 3.9 a year ago. TCIL aims to take it to Rs 8 by the end of 2011-12.

Agarwal said his company is also exploring the possibilities of setting up multimodal logistics parks along the dedicated freight corridor being developed by Dedicated Freight Corridor Corporation of India (DFCCIL). DFCCIL has planned four such zones in Haryana and Gujarat in public-private partnership mode.
DFCCIL will provide only land for the zones while the development investment will have to be put in by partner companies.

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