TVS Logistics Services Ltd. (TVS LSL), part of the $5 billion TVS Group, has set an ambitious target of Rs. 2,000 crores in turnover by 2012. The company is looking at both organic and inorganic ways to double its existing turnover in the next couple of years. Amongst its many JVs and acquisitions, the recently acquired Multipart Holdings of the UK is expected to significantly expand the company’s footprint in Europe.
The UK is one country where the maximum value-added outsourcing (including inventory ownership) of aftermarket services takes place. TVS LSL is planning to invest in excess of Rs. 125 crores into the company to fund its growth. The acquisition of Multipart Holding will provide customer access of TVS LSL and also allow it to leverage its IT capabilities to provide inspirational services to its customers in India and overseas and also expand TVS LSL area of operations to Defence and Utility Services. Multipart has annual sales of £60 million (Rs. 475 crores), predominantly UK-based, and employs 250 people out of four UK locations, two of which are based “behind the wire” on Ministry of Defence sites.
Multipart was originally formed to look after the distribution of Leyland vehicle parts and therefore has been in existence for more than 100 years. Now it is a separate independent company providing Aftermarket Logistics Services that has successfully grown its client base in the automotive and the UK Defence sector and is applying its business model to the newly-emerging utility sector.
Multipart has focused on developing excellent IT demand forecasting, cataloguing and logistics software tools which they have further leveraged to enter into other verticals like utilities in their meter installation and exchange program partnering with construction companies for physical installations. Its automotive customers include LDV, Isuzu – Commercial Vehicles, TVR – Sports Car, Optare – Bus & Coach Manufacturers, Dennis Eagle – Refuse Trucks Manufacturers and Modec – Electric Vehicles.
The Defence business works directly and indirectly with the UK Ministry of Defense and includes HASP – Challenge Tank parts; GSIPT – Bearings, Valves & Hoses; ALC – Parts for construction vehicles like JCB, Caterpillar; MBDA for the apparatus that deploy the Rapier missile.
More recently, Multipart entered the water meter replacement and fit market with Anglian Water Services as its first client. So successful was it in delivering inspirational service to Anglian Water that it was voted its service partner of the year in 2009.
The Directors of Multipart are very excited about the growth prospects under TVS which provides Multipart opportunities to expand in the UK and Europe, provide access to low-cost country sourcing and also to reverse Multipart’s IT skills into TVS, creating an excellent partnership for both Multipart and TVS.
TVS & Sons, the holding company, hived off TVS LSL as a separate company in 2004 with an objective to create value for all its stakeholders. It was planned that TVS LSL would be a preferred Logistics Service provider in Auto Vertical with a global presence in the countries which has significant Auto footprint. This growth was facilitated through acquiring companies globally and joint ventures formed in the last few years. Further TVS LSL has started providing services to companies which have discrete component manufacturing.
TVS LSL had created a joint venture in the freight forwarding space in India called TVS Dynamic Logistics Services and a joint venture in passenger commutation called TVS Commutation Solutions. Both these companies have a combined turnover of around Rs. 100 crores.
The first major step for TVS LSL had been inviting a private equity partner in 2008, namely, Goldman Sachs. After this, it had been looking for acquisitions in target markets in the UK, Europe and the US to offer support to Indian suppliers and overseas customers in sourcing from low-cost countries.
TVS LSL is one of the few players providing a complete range of services to customers, thereby offering a one-stop solution. It is a leader in providing the aftermarket logistics services in India and had been examining acquisitions in this sector as well.
Multipart Holding has always been well recognised for its service, delivery and quality. The company has diversified into new sectors in the last two years. The acquisition by TVS LSL provides the necessary financial strength and access to global customers to enable Multipart increase its rate of growth. Furthermore, Multipart will have the opportunity to source more parts from India and other low-cost countries where TVS LSL operates.
With the acquisition of Multipart Holding, the TVS LSL revenue will be around Rs. 1,000 crores in 2010 itself against our original expectation of 2012. The company’s revised target now is to cross Rs. 2,000 crores by 2012.
