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TVS Logistics to expand services

N. Ramakrishnan

CHENNAI, July 11

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 infrastru cture 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, Ludhian a 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 Service s, 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-pa rty 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 tw o 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 an d 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 partn ership 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 packag e 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.