The initial public offering (IPO) of TVS Supply Chain Solutions is set to open today and will remain open for subscription until Monday, August 14. The offering comprises a fresh issue of equity shares totaling ₹600 crore and an offer for sale of ₹280 crore, reflecting a total issue size of ₹880 crore.
The price band for the offer has been fixed at ₹187–197 per equity share, with a face value of ₹one each. The net offer will be reserved for qualified institutional buyers at 75% of the total offer size, non-institutional investors at 15%, and retail investors at 10%.
Retail investors have the opportunity to submit bids for up to 13 lots, with each lot consisting of 76 shares. Retail investors must make a minimum investment of ₹14,972 per lot at the upper band of the IPO price.
Ahead of the IPO, the company's shares in the grey market are trading at a healthy premium of ₹22.
Let's delve into the company's operations, market opportunity, objectives for the issue, and an overview of its current financial position.
Business Overview
TVS Supply Chain Solutions, is among India’s largest and fastest-growing integrated supply chain solutions providers in terms of revenues in FY22. The company commenced operations as ‘TVS Logistics’, a division of TVS & Sons, in 1995 before being incorporated as a separate company in 2004.
It was promoted by the erstwhile TVS Group, one of the reputed business groups in India, and is now part of the TVS Mobility Group. The company is an Indian supply chain logistics solution provider that has global capabilities and a network across the value chain with cross-deployment abilities.
For more than 16 years, TVS SCS has managed large and complex supply chains across multiple industries in India and select global markets through customized tech-enabled solutions. During this period, they have grown significantly, according to company's DRHP report.
The company offers comprehensive solutions across the value chain, divided into two segments: integrated supply chain solutions (ISCS) and network solutions (NS). ISCS encompasses sourcing, transportation, logistics centres, in-plant operations, fulfilment, and consulting.
NS includes global forwarding solutions (GFS), which involves managing end-to-end freight forwarding and distribution across ocean, air, and land, warehousing and at port storage and value-added services, and time-critical final mile solutions (TCFMS).
In fiscal 2022 and the nine months ended December 31, 2022, the company provided ISCS services to 341 and 291 customers, respectively, and NS services to 703 and 442 customers in India, respectively. In a global context, the company provided ISCS services to 9,383 customers and NS services to 7,280 customers, reflecting the broad reach and scale of the company's operations beyond India's borders.
Diversified Customer base
The company's customers span across numerous industries such as automotive, industrial, consumer, tech and tech infrastructure, rail and utilities, and healthcare.
The company's key customers in India include Daimler India Commercial Vehicles Pvt Ltd., Sony India Private Limited, Hyundai Motor India Limited, TVS Srichakra Limited, TVS Motor Company Limited, Panasonic Life Solutions India Private Limited, Hero MotoCorp Limited, Modicare Limited, Ashok Leyland Limited, Yamaha Motor India Private Limited, and Torrot Electric Europa, S.A.
For the nine months ended December 31, 2022, the company's global customers included 72 ‘Fortune Global 500 2022’ companies, while their Indian customers included 25 ‘Fortune Global 500 2022’ companies.
The company carried 1,797 and 1,606 tons, respectively, of air freight, along with 32,501 and 25,577 TEU, of sea freight within India, while also carrying 22,909 and 20,766 tons, respectively, of air freight and 75,075 and 58,014 TEU, respectively, of sea freight in the rest of the world during FY22 and for the first three quarters of FY23.
Opportunity
The Indian logistics market presents a large addressable opportunity, with direct spending on logistics of US$216 billion in Fiscal 2020 and US$180 billion in Fiscal 2021 due to the COVID-19 pandemic, which subsequently recovered to reach US$205 billion in Fiscal 2022. The Indian logistics market is expected to grow to approximately US$385 billion by fiscal 2027 at a CAGR of 13% from fiscal 2022 to fiscal 2027.
Out of this market opportunity, the size of the outsourced supply chain solutions market (excluding e-commerce) in Fiscal 2022 was US$7.5 to US$7.7 billion, which is expected to grow at a CAGR of 20–22% to approximately US$20 to US$21 billion by Fiscal 2027.
"As the leading supply chain solutions provider in India in terms of revenues for Fiscal 2022, and with our technological capabilities and extensive scale, we are strategically positioned to harness these substantial growth prospects," the company said in its DRHP report.
Objectives of the Issue
From the issue's proceeds, ₹525 crore Prepayment or repayment of all or a portion of certain outstanding debt availed by the company and its subsidiaries, TVS LI UK and TVS SCS Singapore, and the rest for general corporate purposes.
Financials
The company's revenue is diversified across numerous industries and customers located across Asia-Pacific (including India), Europe, and the United States, with different demand patterns.
For the fiscal year ending March 31, 2023, the company achieved a total revenue of ₹10,235 crore. Among this, integrated supply chain solutions constituted 44.75%, while network solutions made up the remaining 55.25%.
The company's revenue diversification is notable, with the industrial and automotive segments contributing over 30% and 23%, respectively, in FY23. Tech and Tech Infra, Consumer, Rail, and Utilities account for 11.5%, 11%, and 5%, respectively, while health care contributed over 1.7%.
The company's revenue has exhibited consistent growth, with FY22 reporting ₹9,249.79 crore and FY21 recording ₹6,933.60 crore.
The company reported a profit after tax of ₹41.76 crore in FY23, a significant improvement from a net loss of ₹45.80 crore reported in the same period of last year.
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