May 13, 2022
R Dinesh elected CII National Vice-President
R Dinesh, Executive Vice Chairman, TVS Supply Chain Solutions and director, TVS Automobile Solutions has been elected as CII...
“Having an international investor like Exor or Gateway increases the confidence in the market because of the strong governance,” said Viswanathan.
TVS Supply Chain Solutions (TVS SCS), part of the Rs 15,000 crore TVS Mobility Group and one of the largest companies under the TVS fold, is gearing up for an initial public offering. The company’s Managing Director Ravi Viswanathan talks about the IPO plans, family settlement and growth in the logistics segment in an exclusive interview with Shine Jacob. Edited excerpts:
With the TVS family settlement, what are the positives that you are seeing with TVS SCS?
At TVS SCS, we are bullish about what we can do with the TVS family businesses. Already 3.3 per cent of our revenue globally comes from TVS family member-owned companies. That is also a growth opportunity. We will continue to pursue opportunities as earlier with other TVS companies. From the business perspective, I don’t see anything as changing.
What changes will the IPO bring to the company?
I look at it as a great opportunity. TVS family-promoted companies have been successfully listed for a long time in the market. TVS SCS will be the first TVS family member promoted company to go for an IPO since 1994 (TVS Electronics). We are looking at raising a primary of around Rs 2,000 crore and post IPO, we will be a debt free company. The IPO will make our brand even more visible and powerful and will help us in our business growth.
How do you see the growth of ecommerce and non-e-commerce segment in the logistic space?
We see opportunities in both the segments. We expect the e-commerce logistics business to grow by $6 billion in the next four years (In India). However, the non-ecommerce supply chain is set to grow by $12 billion during the same period. Therefore, the size of the opportunity in the non-ecommerce supply chain is large. In the e-commerce supply chain, we participate in the B2B side of the business. We have a presence in the fulfillment side (B2b), but not in the B-to-C delivery side.
The auto sector still makes up 42 per cent of your market share in India. Are you worried about the ups and downs in the sector?
When we started, 100 per cent of our business came from the automobile sector. Today, we have a highly diversified portfolio. Globally, 24 per cent of our business comes from automobiles, 26 per cent from industrial, 17.5 per cent comes from technology, 12.5 percent from consumer durables and we have expanded into network rail and utility too. It shows that we have significantly grown in the non-automobile segment and have diversified sectorally. We have the capability and technology which can easily be adopted to multiple segments. It is a conscious choice to be a company with the ability to provide end-to-end supply chain solutions across multiple sectors.
We continue to see the growth in our core sectors that include, auto, industrial, consumer durables, retail and technology. We have also diversified into adjacent sectors like, rail, utilities, defence and beverages and continue to look at emerging sectors like EV, Clean Energy and Health-tech. As explained earlier, thanks to our exposure to both the Production Supply Chain and our aftermarket business in the auto sector, we are not worried about the ups and downs.
What are the advantages of having global investors like Exor and Gateway?
Having an international investor like Exor or Gateway increases the confidence in the market because of the strong governance. That is what customers also look at. While companies like TVS SCS are known for strong governance, such partners strengthen it further.
From the logistics point of view, how is the market behaving post Covid?
Our business is divided into two segments – integrated supply chain solutions and network solutions. Even during the Covid period, if you look at the numbers, our revenues have grown. We have customers with whom we have long-term contracts. In the early days of Covid, we did undergo a bit of stress as our customers’ production facilities were shut down due to lockdowns. However, after the easing of lockdowns, our business has grown as reflected in the numbers. Our half-year revenue was Rs 4,200 crore in H1 FY22,
which is already 61 per cent of our FY21 annual revenue.
One of the reasons that we have grown even during Covid-19 is because we provide solutions to manufacturers and their aftermarket requirements. Our aftermarket business is quite resilient and this helped us, especially during the Covid period, when the manufacturing sector underwent a significant slowdown.
On the network solutions side, there has been a significant disruption in the freight business, especially in container costs. However, we have been able to manage that by working closely with our customers and by leveraging our relationship with freight carriers, both on the capacity and on the price point of view. From the overall perspective, the volumes have remained stable while the prices have gone up in the network business. We are hopeful that prices will stabilise at some point down the line.