Awards
For third party logistics service providers, it is boom time

TVS Logistics plays a major role in the entire supply chain management. It analyses data and does "part-by-part" planning.

Mr S. Ravichandran, President TVS Logistics Services Limited

Handling logistics for the automotive industry can be quite complicated given that in a manufacturing facility over 50,000 parts are required at any point of time, of which about 5,000 are fast moving. This makes it challenging for third party logistics (3PL) service providers to serve the industry.

However, the Chennai-based TVS Logistics Services Ltd, a part of the TVS group, has made its mark as a niche 3PL (third party logistics) service provider for the automotive industry. Though in logistics business since 1995, TVS Sundram Iyengar and Sons Ltd, the parent company of the TVS group, hived off the logistics division into a wholly-owned subsidiary in November 2004.

AWARD-WINNING COMPANY
TVS Logistics beat a number of competitors to get the Frost & Sullivan's 2005 Voice of Customer Award for best domestic logistics service provider for automotive and auto component industries.

Research was carried out with logistics managers of automotive and auto component companies to determine the parameters for evaluating logistics companies. The parameters used encompassed various aspects of transportation, warehousing, value-added services and overall capability.

" We wanted to be a niche player in the highly complicated auto industry, and will continue to focus in this sector," said Mr S. Ravichandran, President, TVS Logistics. "We move goods worth Rs 5,000 crore a year," he said. Last year the company reported a turnover of Rs 75 crore, and this year it is likely to be about Rs 140 crore. Its subsidiaries in Spain, Thailand and Germany would contribute Rs 45 crore, said Mr Ravichandran. "Our target is to reach Rs 500 crore by 2007-08," he said.

GROWING IN INDIA
According to Mr Ravichandran, outsourcing of logistics to a 3PL has been happening in Europe and the US (80-90 per cent of companies in America outsource their logistics requirement) for many years.
However, in India 3PL picked up momentum in the last decade with a number of multinational companies setting up operations.

The role of a 3PL is not only to provide transportation services, but also help clients reduce the cost of supply chain, and ultimately the cost of operations. Competition is forcing companies to cut down unnecessary expenditure and outsource non-core areas such as logistics, he said.
In India, companies spend 7-8 per cent of their turnover on supply chain. This includes raw material inventory, finished product, transportation, packing and unpacking, he said. The automobile sector was much ahead of other sectors in embracing supply chain. TVS Logistics plays an important role in the supply chain management. The company analyses data and does a "part-by-part" planning, he said.

GROUP CONTRIBUTION
According to Mr Ravichandran, 40 per cent of the company's revenue comes from TVS group. However, the aim is to get more business from outside the group. TVS Logistics would like to help companies, especially small and medium size, with warehousing facilities and international exposure. People look at supply chain to reduce cost. "I look at it as a tool to bring a competitive edge in the system. We would like to be a logistics partner for original equipment manufacturers for their entire supply chain requirement," he said.

MILK-RUN SYSTEM
Citing an example of how TVS Logistics reduced costs significantly for one of the group companies, Mr Ravichandran said each day about 250 vehicles used to enter the client's premises. After studying the supply chain of raw material requirement, inventory and transportation, the number of vehicles was reduced to 14 a day. The company used the "milk run" system, a parts collection method in which the logistics service provider goes to supplies and picks up parts, rather than awaiting delivery from the suppliers, he said. The client saved Rs 50-60 lakh a year, he said.

TVS Logistics' list of clients includes Ashok Leyland, Ford India, General Motors, JCB, Mahindra & Mahindra, Royal Enfield, Tata Motors, TVS Motor Company, Pricol, Cummins and Rane group. The company has over 15 warehouses in India and six in Europe. TVS and Sons has two companies abroad — one in the UK (TVS Automotive Europe) and the other in Sri Lanka (TVS Lanka) — for carrying on the dealership and distribution business.

TVS Automotive Europe's client base includes leading Tier-1 and Tier-2 component suppliers and this company will act as the parent for setting up logistics joint ventures in Europe, he said.

JVS

TVS Logistics forms joint venture with two Thai cos

(From left) Mr Nash Purswani, Director, TVS Logistics SIAM Ltd; Mr R. Dinesh, Executive Director, TV Sundram Iyengar & Sons Ltd and Director, TVS Logistics SIAM; and Mr Kamnoon Srethbhakdi, Director, TVS Logistics SIAM; at a press conference in Chennai on Tuesday. — Bijoy Ghosh

Chennai , June 14
TVS Logistics Services Ltd has entered the Thailand market by forming a joint venture — TVS Logistics SIAM Ltd — with Thai Martin Trading Co Ltd and Tyvin International Co Ltd.
The total equity investment in the joint venture would be $400,000. The Rs 90-crore TVS Logistics would have a 55 per cent stake in the new firm withthe rest held by the two Thai firms, according to Mr R. Dinesh, Executive Director, T V Sundaram Iyengar & Sons Ltd., and Director in the new joint venture firm.

TVS Logistics SIAM would provide clients all necessary support, including manpower for handling complete sourcing of raw materials and parts. It will also facilitate procurement of goods worth Rs 200 crore by Indian companies in its first year of operations and aims to double this figure in the next couple of years. The joint venture firm is likely to have Rs 20-crore logistics services turnover in the first full year of operations.

Thailand would be a gateway to tap the Asean countries. With a one-stop-shop solution for logistics services and sourcing needs, TVS Logistics SIAM would become an extended arm of Indian and Thailand companies for their complete supply chain needs, he said.

According to Mr Dinesh, the joint venture firm will work on improving the efficiency of clients in inbound and outbound logistics and warehousing. The firm will initially work with four companies for providing logistics services. TVS Logistics would provide expertise and select manpower (sent from India), and partners would do marketing, enable better asset infrastructure and recruit people locally. For a year, an Indian would be a CEO, and in future a Thai will lead the company, he said.

" We see scope for cost saving for the Thai industry through effective supply chain solutions," he said.
TVS Logistics plans to enter the US and China, and a decision on this will be taken in six months. The company is also planning foray into Germany through a joint venture partner, Mr Dinesh said. "We will announce something on the German foray in a month," he said.

TVS Logistics enters Thailand
New Delhi, June 14

TVS Logistics Services Ltd, a part of the 2-billion dollar TVS group, today announced its foray into Thailand for providing logistics services to Thailand’s Tier 1 and Tier 2 companies.

The company has set up a joint venture with Thailand-based Thai Martin Trading Company and Tyvin International Company Ltd to form TVS Logistics SIAM Ltd. The supply chain knowledge of TVS will be out to use by Thailand’s auto industry. — UNI

TVS for tie-up

TVS Automotive Europe has tied up with Transcoma group of Spain to form a new company -- TVS Logistics Iberia, which will provide a complete range of logistics and supply chain management services in Spain and Portugal. TVS Automotive Europe will hold 51% in the Rs 2-crore equity of the new company with the Spanish group holding the balance. Both the companies will have equal representation on the board of the new company. The business from two Spanish companies - Hispacold and Irizar - that source components from India through TVS Automotive Europe will be transferred to TVS Logistics Iberia. The agreement between TVS and Transcoma stipulates that the existing and new automotive logistics business would be handled by TVS Logistics Iberia, according to R Dinesh, director, TVS Automotive Europe, and executive director, TV Sundram Iyengar & Sons, the parent company of the TVS group.

TVS Logistics forays into Thailand
TVS Logistics Services Ltd. has spread its wings to Thailand by setting up a joint venture in that country in tandem with a couple of closely held local companies.

Christened TVS Logistics Siam Ltd., the new company is a three-way alliance between TVS Logistics, Tyvin International Co. Ltd. and Thai Martin Trading Company Ltd. The initial equity capital of the joint outfit is $400,000. TVS Logistics will hold 55 per cent equity in the venture. The rest is equally shared between the two Thai outfits.

Addressing a press conference here on Tuesday, R. Dinesh, Director, TVS Logistics Siam Ltd., said the joint venture, approved by the Board of Investment in Thailand, would focus on Tier I and Tier II companies. The new company would strive to beef up the efficiency of these firms in inbound, outbound and warehousing logistics.

Mr. Dinesh cited the market similarity in the two countries, the growth in two- and four-wheeler population, the huge component base, among others, as reasons for TVS Logistics to make a foray into Thailand. The logistics cost as a percentage of GDP (gross domestic product) was around 25 per cent in Thailand, a far cry from the regional average of 13 per cent.

" The industry in Thailand is asking for an efficient logistics supply system,'' he said, pointing to the huge business possibilities.

Mr. Dinesh said the new joint venture was set to ink tie-ups with four companies in Thailand.

Others / General

TVS Group launches logistics services company

CHENNAI, NOV. 29. T. V. Sundram Iyengar and Sons Ltd., the parent company of $2 billion TVS Group, has formed a wholly owned subsidiary by spinning off the logistics business into a separate company. The new outfit is christened as TVS Logistics Services Limited.

The company began its logistics business in 1997 as a backward integration of its distribution activity. The logistics business will focus on auto vertical.

The company initially started offering warehousing solution alone to its clients. Today, however, it partners clients to offer a complete basket of logistics solutions, according to Suresh Krishna, a director of TVS & Sons. Mr. Krishna said TVS & Sons had started its distribution company in 1921. The group would use its expertise and know-how in the newly formed company.

Mr. Krishna said the group had decided to amalgamate the strengths of the various group companies and effectively run the company. He said the group's export turnover was nearly Rs. 400 crores and expected this to grow further in the coming years.

He hoped that the new company would clock a turnover of Rs. 100 crores in the coming year.

The company had already established two outfits — one in the U.K. (TVS Automotive Europe) and the other in Sri Lanka (TVS Lanka) — for carrying on distribution and dealership businesses. It had set up a company in Spain and was proposing to float one in Germany by April next year and another in Thailand by March 2005. It was in the process of finalising alliances in the U.S. and China.

Director R. Dinesh indicated that all joint ventures of TVS Logistics Services Ltd. would have majority ownership by the TVS Group.

Nearly 40 per cent of the revenue for the logistics outfit came from group business. This would come down to 20 per cent over a period, he said. The non-group clients of the company were Ashok Leyland, Ford, General Motors, and Royal Enfield.

Venu Srinivasan, another director, said the logistic business was the fastest growing sector in India. The outsourcing of components had increased with the entry of multinational companies. The delivery time and just in time was met with the improved logistics.

TVS Logistics had been able to significantly reduce the total supply chain cost for its clients in India and abroad (ranging from 5 per cent to 25 per cent). TVS had also tested its capabilities with a few clients in Europe and the Far East. These had proved that these savings could be replicated in other countries as well. TVS Logistics' knowledge of client requirements had helped it offer a unique consulting and implementing solutions covering the entire supply chain, said Viji Santhanam, Director.

TVS Logistics buys UK co CJ Components

TVS Logistics now has access to a wider client base in Europe and the UK company gains access to manufacturers in India and components suppliers here reach clients in Europe.
Chennai , Feb. 23

TVS Logistics Services Ltd has acquired the UK-based CJ Components Ltd through its subsidiary TVS Automotive Europe Ltd.

TVS Automotive Europe has acquired an 80 per cent stake in CJ Components, a family-owned company offering services such as components sourcing, supply chain management, warehousing and logistics support. Following the acquisition, the new company, TVS CJ Components Ltd, will operate out of Daventry, UK.

Announcing the acquisition here today, Mr R. Dinesh, Executive Director, T.V. Sundram Iyengar & Sons Ltd, said that the new company will drive TVS's business plans in Europe, which in the short term includes expanding into Germany.

TVS Logistics now has access to a wider client base in Europe and the UK company gains access to manufacturers in India and components suppliers herereach clients in Europe. Clients in hand and new ones, such as JCB, Lister Petter, an engine manufacturer, Perkins and Land Rover, with whom discussions are at an advanced stage, will contribute to the company's growth plans, he said. The tie-up with the UK company will also help TVS Logistics realise its ambition of becoming an end-to-end provider of logistics services. While declining to name the customer, Mr Dinesh said that discussions are afoot to manage a leading manufacturer's entire supply chain. An announcement may be expected in the coming the weeks, he said.

With TVS CJC in UK, TVS Logistics Iberia in Spain and another such joint venture planned in Germany, its European business is set to touch Rs 50 crore this year and double in the coming year, he said. The company is targeting a turnover of Rs 500 crore in 2006-07, he added.
CJ Components business activities also include value-added services such as packing and kitting, barcoding, warehousing, logistics, Just-in-time deliveries. Its promoter, Mr Clive Jarrett, said that the company's clients include Cummins, Case New Holland and McCormick. India has emerged a low-cost supplier of components of international quality and the joint venture would benefit by better exploiting the business opportunity.

TVS acquires 80% share in UK company

Mumbai: TVS Logistics Services Limited, part of $2.0 billion TVS Group has acquired an 80 per cent share in CJ Components Limited, a UK-based company. The new company has since been named as TVS CJ Components Limited and will operate from Daventry, UK.

As part of its global expansion plans for supply chain and related BPO activities, TVS has been carefully planning and choosing its overseas partners. TVS CJC will be a 80:20 firm, with TVS Automotive Europe Limited (subsidiary of TVS Logistics Services Limited) holding 80 per cent share.

Established in 1989, the family-owned company has been growing steadily in the last 15 years through active support from its clients like Cummins, Case New Holland (CNH), Delphi, Fermec and McCormick, among others. The original promoters will retain the remaining 20 per cent shareholding.

CJ Components is in the business of sourcing components for the auto industry, warehousing and the logistics support-end of the supply chain. It sources components from India as well as low cost European countries on behalf of its clients and offers value-added services as well, like packing, kitting, bar-coding, warehousing, logistics and 'just-in-time' deliveries. Its sophisticated warehousing facilities with exclusive testing and inspection facilities will be of major value to the Indian company.

According to R. Dinesh, director, TVS Logistics Service Limited, "TVS CJC will act as a gateway for Indian auto component manufacturers to reach out to their clients in UK. TVS Logistics would provide complete supply chain and sourcing related support from India and their other overseas ventures".

" CJC is already servicing its UK clients by sourcing from Spain, Italy, Turkey and India and now its supplier base will be increased by leveraging on TVS' sourcing capabilities. In India, apart from the TVS group companies, host of other leading auto component manufacturers who are currently supplying to Cummins, CNH, Delphi, Perkins etc., in UK market will be focused for servicing by TVS CJC" said Gillian Jarrett, CEO,TVS CJ Components Limited.

With TVS CJC in UK, TVS Logistics Iberia in Spain and one more joint-venture planned in Germany this year, the European operations of TVS Logistics Services Limited will achieve a turnover of Rs48 crores in 2005 and targeting Rs100 crore by 2006, in line with the company's projections for achieving an overall turnover of Rs500 crores by 2007.

TVS Logistics to expand services

TVS Logistics, which now concentrates only on providing third-party logistics for the automotive sector, hopes to offer its services to other industries too next year. It is also looking at starting overseas operations, to begin with in Sri Lanka.

Initially, it will look at the electronics sector where the company believes it can easily replicate the logistics model it has developed and implemented for the automotive sector.

TVS Logistics, a division of T.V. Sundram Iyengar & Sons Ltd, was formed in 1995-96 mainly as an offshoot of the spare parts distribution business handled by the company.
Since then, TVS Logistics has been providing the entire basket of logistics services including in-bound logistics, warehousing operations - plant operations, after market warehouse and export warehouse - and out-bound logistics.

In 2000-01, the value of goods handled by the division was about Rs 2,500 crore, about 60 per cent of which was from the transportation business and the balance from the warehouse operations. The service income earned by it was Rs 33 crore.

This year, the division hopes to handle goods valued at about Rs 2,600 crore and increase its income to about Rs 40 crore, and to Rs 100 crore by 2003. ``This increase will come about with very little investment,'' says Mr R. Dinesh, Executive Director, T.V. Sundram Iyengar & Sons Ltd.

``We had originally looked at an extension of the spare parts distribution business and then realised the huge potential in third-party logistics. We are in supply chain management and not in the business of transportation. Also, we do not sell infrastructure but sell total solutions,'' he told Business Line.

TVS Logistics handles or controls about one million sq.ft. of warehouse space. It has warehouses or hubs in 19 locations in 14 cities, including Chennai, Madurai, Hosur, Pondicherry, Bangalore, Hubli, Hyderabad, Vijayawada, Pune, Mumbai, Gurgaon, Ludhiana and Jamshedpur.

According to Mr Dinesh, TVS Logistics handles the in-bound logistics for Ashok Leyland, TVS Suzuki, Sundram Fasteners, Lucas TVS; after market warehousing for Telco, Ashok Leyland, Sundram Fasteners, Mahindra & Mahindra, Escorts JCB, Lucas Indian Services, L&T John Deere; export warehouse for Tata International; and out-bound logistics (CBU) for L&T John Deere.

He said the logistics division had stayed focussed on the automotive sector because of the parent company's background - that of being dealers for various automobile companies and being a distributor of auto spare parts. Moreover, the concept of third-party logistics worked well in the automotive sector, where just-in-time manufacturing was being increasingly practised.

TVS Logistics, he said, had a good record in the three performance parameters for warehouse operations - zero defect despatch, variation in inventory and order fulfilment cycle. As far as the order fulfilment cycle was concerned, it would start within two hours of an order being received at the warehouse.

He said the division instead of investing in brick and mortar infrastructure had spent money on IT and in training people. While the capital investment in brick and mortar infrastructure would only be about Rs 50 lakh in the last 2-3 years, that on IT and training would be about Rs 4-5 crore. All the warehouses had material handling equipment, radio connectivity, computer and e-mail facility.

TVS Logistics, Mr Dinesh said, did not own any truck or warehouse. It had tied up with three truck operators from whom about 50 trucks were hired on a dedicated basis. The number of trucks hired was expected to go up to 250 this year and the closed partnership would be expanded to 20 operators.

Similarly, for the warehouse, the division only leased space. It had identified builders who would construct the warehouses as per specifications.

He said that thanks to its partnership with truck operators, the division was able to ensure a transit time of only four days between Delhi and Chennai whereas the industry norm was 6-7 days. The division would introduce a track-and-trace software package developed for it by eCalyx, which would help in keeping all concerned up-to-date about the location of a shipment.

TVS Logistics hopes to capitalise on its relationship with MNCs to start overseas operations for the automotive business. The division hoped to start its operations in Sri Lanka next year, mainly in the areas of freight forwarding and transportation.

This could later be extended to other countries, when T.V. Sundram Iyengar & Sons would also have to take a decision on whether to rope in an international partner or hive off the division.
TVS Lean Logistics - a joint venture involving TVS with a 51 per cent stake, Eagle Global Logistics, TDS and Ocean Freight - was the lead logistics partner for Ford India Ltd, handling all of Ford India's logistics requirements.