Aiming at a revenue of Rs.7000 crores by FY2020-21, TVS Logistics has chalked out an ambitious growth plan.

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Bhargav TS

Multinational third-party logistics service provider, TVS Logistics Services Ltd. (TVS LSL) has chalked out an ambitious growth plan as far as the Indian market is concerned. The company is targeting a revenue of Rs.7000 crore by FY2020-21. For the current fiscal, the company is targeting a revenue of Rs.2500 to Rs.2700 crore. While the global revenue of the company has crossed the USD-one billion mark, according to R Dinesh, Managing Director, TVS LSL, for the last five years, the Indian business has been growing at a CAGR of over 30 per cent. Carrying out a change in the organisational structure and focusing on global integration, the company is looking at cross deployment and new ways to leverage opportunities created by the implementation of GST. Annouced R Shankar, CEO of Indian operations, that they are confident of the multi-pronged strategy to achieve the goal of Rs.7000 crore by FY2020-21. R Dinesh mentioned, “We are setting our focus firmly on the India operations to achieve a strong growth. Our India business, especially post acquisition of Drive India Enterprise Solutions Ltd (DIESL), has been growing at a CAGR of over 30 per cent for the last five years. Our emphasis is on accelerating growth to reach the target of Rs.7000 crore revenue in India.”

Leveraging global expertise, TVS LSL is looking at making a difference by inculcating operational synergies to provide end-to-end solutions and value-added services to its customers in India. Seeing a growth opportunity with global customers in India, and with Indian customers globally, the company, according to Sanjive Sharma, Global CEO, Rico Logistics (a part of TVS Supply Chain Solutions), has integrated as well as converted the aftermarket (non-auto) spare parts business in a solutons model globally. “Our capabilities are unique,” averred Sharma. Implementing a Matrix structure, the company, to offer best-in-class solutions to multi-national clients in India, and to Indian clients, according to S Ravichandran, Deputy Managing Director, TVS LSL, is keen to offer unqiue value propositions to its customers.

Unique value propositions

Present in 14 countries, TVS LSL has come to manage over 10 million sq. ft. of warehouse space in India to tap the huge growth potential the market is offering. Providing end-to-end integrated logistics services to diverse sectors, including automotive, beverage, IT, healthcare, telecom, retail, FMCG and defence, the company is forging an indispensable link between suppliers and customers. Managing over 100 blue chip customers with the support of over 15,000 skilled work force, TVS LSL has decided to move up the value chain to retain its customers and attract others. Drawing attenttion to many service providers losing five to ten per cent customers every year, Ravichandran averred, “Our ability to offer a unique value proposition is ensuring that our attrition rate is low.“ Stating that a company would need to acquire 20 per cent business to record 10 per cent growth, Ravichandran mentioned, “We have to simply grow since our attrition rate is low. The investments and acquisitions that we have made outside India during 2008, 2010 and 2011 are helping us to create unique value propositions for clients across diverse industry verticals. We are implementing more IT systems that we have got from various countries. These measures, we are confident, will lead to 100 per cent growth. They are also a reflection of how we are striving to enhance growth.”

Keen to add value through acquisitions, and through internal development, TVS LSL is paying particular attention to the supply chain. It is emphasising on a ‘logistics strategy’ in connection with the material movement. Said Ravichandran, “Once I design the strategy, I also need to design my engineering. I have to look at the requirement of warehouse and equipment. I need to design my IT. I have to ensure that the people are trained to eliminate waste. The backbone of the logistics industry is its manpower.” With close to 950 vehicles in its fleet, the company is creating its own control tower IT system. The system is claimed to present TVS LSL with the visibility and transparency to ensure things don’t go wrong. According to Ravichandran, it is a single command centre for visibility, decision taking and action based on real-time data. A ‘back-end’ that the company is trying to develop, the control tower IT system represents common processes enabled by cloud-based technologies. These include basic functions of collecting and aggregating orders, shipments, inventory, and status. “This information is linked to other enterprise systems to provide global visibility. It is then transformed to become an input for supply chain execution solutions. Rather than wait for a situation to rise, it is always good to be proactive,” quipped Ravichandran.

GST has not changed the business prospects of TVS LSL as much. It is perhaps because the company has been in the GST mode for four-to-five years. With the check posts removed, the transit time is going down. Challenges in the supply chain on loading and un-loading continue to emerge. Mentioned Ravichandaran, “GST will contribute some amount of growth. The rest will come from the initiatives we have taken in terms of elevating the capabilities.”

Expanding customer base

The acquisition of DIESL has helped TVS LSL to expand its customer base and client profile. Before acquiring DIESL, TVS Logistics was a company that served most auto industry clients. After the acquisition, the share of auto business has come down to around 70 per cent from the earlier 95 per cent. Dominant in the South and the West, according to Ravichandran, TVS LSL has excelled in the concept of ‘single’, ‘mother’ and ‘dedicated’ warehouses. Opening the doors to the FMCG sector, the acquisition of DIESL revealed that a part of its capability enabler was a concept called the ‘distributed’ warehouse. It referred to the availability of a consolidated warehouse at each location. Strong in the Northern and the Eastern markets, DIESL has brought to the table a good deal of warehousing space. With DIESL warehouses included, TVS LSL has come to have around 10 million sq.ft. of warehousing space. Claimed to have the most warehousing space, the company has come to offer dedicated warehouse space worth 250,000 to 300,000 sq. ft. Biased towards production supply chain, TVS LSL is invading new segments.

Global Centres of Excellence

TVS LSL has formed four Centres of Excellence (COE) in the UK, US, Singapore and India. Each has its own focus area. The UK centre, for example, focuses on contract logistics. The US centre focuses on production and in-bound supply chain. The Singapore centre focuses on freight forwarding. The Indian centre focuses on global technology. Created in April 2017, the India centre is based at Madurai. It is building new-age apps. and solutions by combining Indian ingenuity with global know-how. The know-how includes track and trace, which is about providing intelligent communication to the clients.

New structure

Apart from Finance, IT and HR, TVS LSL has created a new role of integrated business heads for four major regions in India. The company will have subject experts for key sectors like automotive, technology and engineering. With India taking a lead in adopting this strategy, the company is keen to standardise a template for global roll-out, albeit in a phased manner. With a firm belief that it is the people that are the most valuable, TVS LSL is providing them opportunities to grow.