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Business
Swaraj Singh Dhanjal

TVS Supply Chain likely to explore acquisitions from IPO proceeds

According to its draft prospectus filed with Sebi, the company reported a revenue of ₹4,271 crore for the first half of FY22. mint (MINT_PRINT)

TVS Supply Chain plans to raise 2,000 crore from the public, of which 1,300 crore will be used to repay loans and invest in overseas units. The rest of the funds may be used to pursue acquisitions.

The company has had a history of acquiring businesses, especially overseas, to gain access to new markets and technology. It made over 20 acquisitions in the past 15 years.

“In our early days, very quickly we realized that it is not possible for us to be able to build a good business, with all the capabilities, unless we were able to acquire those capabilities from the developed markets because that is where the level of outsourcing and the concept of logistics was well understood. So starting from 2004, but mainly from 2008, we went ahead and acquired companies in the UK for the aftermarket side of the business; in the US for the production supply chain side of the business. And then post 2015, we went into the Asia side for building the network," said R. Dinesh, vice-chairman of TVS Supply Chain.

The company, however, declined to provide details about the type of companies it plans to buy.

TVS Supply Chain has two core businesses--integrated supply-chain solutions and network solutions. As part of the supply chain solutions, the company offers sourcing and procurement, integrated transportation, logistics operation centres, in-plant logistics operations, finished goods, aftermarket fulfilment and supply chain consulting. While the network solutions business includes managing end-to-end freight forwarding and distribution across oceans, air and land, warehousing and at port storage and value-added services, and time-critical, final-mile solutions, including spares logistics, break-fix, refurbishment and engineering support, and courier and consignment management.

“On the supply chain side, we have strengthened our capabilities and our revenue growth in the core sectors like auto, industrial, consumer durables, retail and technology. We have also diversified into adjacent sectors like rail, utilities, defence and beverages.

On the network solutions side, even though there has been a significant disruption in the freight business, especially in the container cost, 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," said Ravi Viswanathan, managing director at TVS Supply Chain.

Despite belonging to the TVS group, known for its automobiles business, TVS Supply Chain has over the years built a diversified portfolio with only 24% of the business coming from the automobile sector, 26% from industrial, 17.5% from technology, 12.5% from consumer durables besides expanding into network rail and utilities.

While the pandemic caused major disruptions to its business, the company has managed to grow even through this critical period.

According to its draft prospectus filed with Sebi, the company reported a revenue of 4,271 crore for the first half of FY22, which was 61% of the 6,999 crore revenue for the whole of the previous financial year.

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