Mr. Suresh Krishna disclosed on the occasion that the TVS Group has crossed a turnover of $5 billion in 2007-08. The group companies could weather many a crisis despite its traditionally conservative approach. “It pays to be conservative”.
TVS’ Logistics business was earlier part of the parent company T V Sundram Iyengar & Sons. This was spun off as a separate company in 2004. This company has now grown in India and globally through joint ventures and organically and has achieved a turnover in excess of Rs. 340 crores in 2007-08. The company has set an ambitious target of Rs. 1,000 crores turnover by 2010.
The logistics industry is a sunrise industry in India accounting for over 13 per cent of the country’s GDP. In developed economies it is usually 8 to 10 per cent of the GDP but in India it slightly higher due to high level inefficiencies, road conditions and high gasoline prices. The next 5-10 years will present great opportunity for the logistic business, Mr. Suresh Krishna added.
Vehicle manufacturers have also set some ambitious target for export of cars from India. Hyundai is planning 300,000 units, Maruti 100,000 units and even tractor manufacturers like John Deere and Mahindra have planned significant exports out of India. This again offers a big opportunity for the logistics business, said Mr. Ram.
Goldman Sachs invests
To fund the growth plans of TVS Logistics, Goldman Sachs has invested nearly Rs. 100 crores for a significant stake. This is the first time a private equity investment has been made in a TVS Group Company. The company will also leverage the contact and reach of Goldman Sachs to further speed up its growth.
TVS Logistics has established strong presence in the overseas markets particularly in North America and parts of Western Europe. Currently Sundram Fasteners and Wheels India are the major customers from the TVS Group, but considering the fact that most of the TVS Group companies, including Brakes India, Sundaram Brake Linings, Lucas TVS and others have “major OEM exports, it offers a huge opportunity for future growth”.
In fact, out of the total turnover of Rs. 340 crores, the domestic business contributes Rs. 240 crores and global business Rs. 100 crores. Within the domestic market, only 20 per cent of the business from the TVS group companies and the rest come from other clients. In the global business 60 per cent of the business comes from within the TVS Group and balance 49 per cent from non-group companies. Essentially it shows that TVS Logistics is not heavily dependent on the group for its existing business.
TVS infrastructure
Expanding into the infrastructure business, TVS Logistics has recently acquired 50 per cent stake in Greenarches Ltd. (based in Mumbai) and renamed it as TVS Infrastructure Ltd. This company will create Logistics Parks and propose to invest nearly Rs. 500 crores by itself and through special purpose vehicles (SPVs) for building up warehousing and other required infrastructure.
This company already owns 20 acres in Pune and 10 acres in Chennai with plans to build up land bank around 200 acres in centers of automotive importance namely Hosur, Gurgaon, Halol, Lucknow, Singur, Uttaranchal and Indore.
New company floated
TVS Dynamic Global Freight Services Ltd. is a new company formed by TVS Logistics Services and Dynamic Freight Forwarding Service which has combined the freight forwarding business of both the entities. TVS Logistics has 75 per cent stake in the newly formed company. TVS Dynamic Global Freight Services will focus on auto and non-auto segment and is expected to reach Rs. 250 crores turnover in 3 years time.
TVS Logistics has plans to enter finished goods transportation (CBU) through forming joint venture with operators and also through merger and acquisitions. These joint ventures are expected to contribute around Rs. 100 crores during this fiscal.
TVS Logistics Services also recently entered the commutation solutions for corporate staff transportation, and has plans to expand its current fleet strength from 200 buses’ to 1000 buses within the next two years.
The company is further examining expansion of operations in overseas joint ventures, especially in Thailand and Indonesia, to support its existing clients. It has got an excellent relationship with its existing customers and will build on this to grow further.
TVS Logistics has put in place a new customized ERP solution which provides Just-in-Time (JIT) tracking solutions with several unique features.
These plans will result in an increase in the company’s employee strength from 3,000 to 5,000. In order to retain and develop the talent of its employees, the company has started training academies in Chennai and Madurai.
TVS Logistics and its overseas subsidiaries will continue to focus on auto vertical, while the other domestic joint venture companies will also provide their services to other related sectors. This will help the company accelerate its sales beyond Rs. 1,000 crores by 2010.
The company has already build up an enviable client list which includes major OEMs in India and leading Tier-I manufacturers in India and abroad. With all the needed inputs like funds, infrastructure and global presence through joint ventures and well trained employees, the company is confident of surpassing the expectations of all the business stakeholders.
