TVS SCS (Supply Chain Solutions), the logistics arm of the TVS Group, has filed its DRHP (draft red herring prospectus) with the market regulator SEBI. According to various bankers, the company will likely raise around Rs. 2,000 crores from its fresh issuance of equity shares. Some existing shareholders will pare their stakes through an OFS (offer for sale) of Rs. 3,000 crores.
This is the third logistics company to open an IPO (Initial Public Offering) in this financial year. It is also the only company from the TVS conglomerate to go public. Earlier in February 2022, TVS Group received a final nod from NCLAT (National Company Law Tribunal) for its family recast deal.
Now, let us learn about this company and its IPO in more detail.
Know About the Company – TVS Supply Chain Solutions
A part of the Chennai-based TVS Group, TVS SCS specialises in providing end-to-end supply chain services worldwide across numerous industries. This company was established in 1995 as TVS Logistics before being separated in 2004. Today, it has a presence in more than 25 countries, including the US, UK, Germany, Spain and Thailand.
TVS SCS’s comprehensive services include in-plant warehouse management, transportation, material handling, handling logistics and aftermarket warehouse facilities. Additionally, it offers customised logistics solutions to enable agile and efficient large-scale supply chains. They specialise in providing their clients with revenue growth and reduction in inventory and operating costs.
The company has a low-asset business model, which allows it to work with clients across sections like automobiles, electronics, defence, manufacturing and beverages. Its customer base includes names such as Sony India, Hyundai Motor, Ashok Leyland, Hero MotoCorp, Panasonic Life Solutions and Mahindra & Mahindra. It caters to over 60 clients with names on the Fortune Global 500 list for 2021.
TVS SCS has facilities in Europe, North America and the Asia Pacific Region. The integrated logistics service provider has employed a workforce of over 30,000 personnel. The company conducts 95% of its business from non-TVS group companies and 75% from non-auto clients.
About the Financial Status of TVS Supply Chain Solutions
TVS Supply Chain Solutions is the 2nd fastest-growing company of the TVS Group and contributes to 10% of the conglomerate’s revenue. For the financial year ending on March 2021, this company reported a 5% rise in revenues to Rs. 6,950 crores, according to a report by India Ratings. This happened despite a dip in income from India and the US and a decline in trade flows and supply-chain disruptions.
A strong financial performance in its business in Europe and Asia led to this company overcoming the effects of the COVID-19 pandemic. Its gross debt for the period reduced from Rs. 3,400 crores to Rs. 2,800 crores for the fiscal year ending on March 2021. For the same period, TVS Supply Chain Solutions’ adjusted EBITDA (earnings before interest, depreciation and amortisation) margin increased to 6.8% from 5.6% in the previous financial year.
Since its inception, this company has grown at a CAGR (compound annual growth rate) of 36% to $1 billion in 2021. Meanwhile, its operating profits have increased by 37% for the previous 15 years. For the six months period ending on September 2021, TVS SCS’s revenue from operations was at Rs. 4,240.1 crores with a loss of Rs. 58.7 crores.
In the last three months, the company raised around Rs. 1,600 crores from various private investors. TVS SCS raised Rs. 590 crores in October 2021 from the Europe-based diversified holding company Exor. Before that, this company had raised Rs. 1,000 crores from Kotak Special Situations Fund.
A Brief Overview of TVS Supply Chain Solutions’s Upcoming IPO
On Sunday, 13 February 2022, TVS Supply Chain Solutions had filed draft papers for a Rs. 5,000 crores IPO. Of this, there will be a fresh issuance of Rs. 2,000 crores and an OFS of 5.95 crores equity shares. The following are the shareholders participating in the OFS and their offerings:
The promoter TVS Mobility Pvt. Ltd. – 20 million shares
Tata Capital Financial Services Ltd. – 1.45 million shares
DRSR Logistics Service Pvt. Ltd. – 4.18 million shares
Mahogany Singapore Company Pte Ltd. – 12.54 million shares
Omega TC Holdings Pte Ltd. – 15.85 million shares
The company may consider a pre-IPO placement worth Rs. 400 crores which would reduce the size of the fresh issuance. It has appointed Axis Capital, BNP Paribas, Edelweiss Financial Services, Equirus Capital and JP Morgan India as BRLM (book running lead managers) to the public issue.
The proceeds from the IPO will be used for the following objectives:
The company will use part of the fresh issuance proceeds to increase its UK subsidiary’s stake in Rico UK to 100% (Rs. 60 crores).
It will repay its outstanding borrowings (partly or fully) and of its units TVS SCS Singapore and TVS LI UK (Rs. 1,166 crores).
To capitalise on the company’s strategically important subsidiaries in the USA, Thailand and Germany (Rs. 75.2 crores)
The remaining amount will be used to fund inorganic growth and for general corporate purposes.
Over the years, TVS Supply Chain Solutions has grown to become a fully integrated supply chain and logistics solutions provider providing its services worldwide. Its business is quite diversified, with operations in many countries in Europe, Asia and America and across various sectors. The company has raised $317 million in its last six funds rounds since 2019.
Frequently Asked Questions
What is the date for opening and closing of the TVS Supply Chain Solutions IPO?
The company has just filed its preliminary papers with SEBI for its IPO. After approval from authorities, it will announce its opening and closing date along with other information.
Who are some of the lead investors of this company?
Kotak Investment Advisors, Tata Opportunities Fund, Exor, Mitsubishi Corporation and Gateway Partners are some of the lead investors of TVS SCS.
What are some of the acquisitions of TVS Supply Chain Solutions?
TVS SCS is well-known for its successful acquisitions, having made 20 acquisitions over the last 15 years. Since 2017, it has acquired 3 companies – namely SPC International, Gateway Partners and Fit 3PL.
Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.