The fiscal 2023-24 was a landmark year for the TVS Supply Chain Solutions. It went public — the first in the TVS group since 1994 when TVS Electronics got listed, and has set the ball rolling for the next milestone of reaching $2 billion in the ‘medium’ term (3-4 years). The company operates in two segments — Integrated Supply Chain Solutions (ISCS); and Network Solutions (NS). For FY24, it reported a net loss of ₹90 crore on reduced revenue of ₹9,199 crore against net profit of ₹42 crore on revenue of ₹9,994 crore in the previous year. “Our roadmap includes increasing revenue from TVS group companies,” TVS SCS MD Ravi Viswanathan told businessline in an interview. Excerpts:
“We are a fit company,” TVS SCS Managing Director Ravi Viswanathan
Fiscal 2023-24 was a landmark year for the company. Were you happy with the company’s financial performance?
We were in a landmark year because of the IPO. But performance wise, given the headwinds that we faced in the global freight business, it’s been satisfying. Revenues were down by ₹790 crore on the back of decline in the global freight business. But the EBITDA margins grew by about ₹25 crore. So on a declining revenue, we were able to expand EBITDA margins. Nearly 90 per cent is non-TVS business. The overall TVS number is 5-6 per cent. This is something that we need to work on. I think the opportunity within the TVS group is huge. So what internally we are driving towards is to have a focused global account management towards the TVS Group and to see how we can get double digit growth in the TVS Group companies. It’s clearly a strategy. But right now I will say the pipeline doesn’t reflect that.
But, the bottom line seems to be still a concern?
The bottom line has two components. One is because of the network solutions business, which is hugely dependent on the freight business. It is something which we continue to watch. However, ISCS business is concerned, there is continuous expansion of margins. We believe double digit margins and ISCS business is definitely possible in the short term. We are already at about 9-9.5 and will get to about double digits very shortly.
What measures are being taken to improve the bottom line?
On the network solution side we need to bring more volumes; focus on managing overheads and bring technology. I believe EBITDA numbers of 12 to 15 per cent is the benchmark. We are at about 10 and we have visibility to 10 and ten and a half.
The company reported $1 billion revenue in 2019. When will you reach $2 billion?
In the medium term we want to get to more than $2 billion and with about 4 per cent PBT.
What difference has the IPO made for the company?
The IPO gave us the brand visibility. We now participate in deals where customers have complete transparency to who we are; what we do and know about our financials. Outside India, there is a lot of scrutiny before you get in to large deals. Today, the large deal pipeline has significantly increased on the back of our own success, and the IPO has also contributed to it. We are well positioned to participate in mega deals that we are being invited for.
Can you elaborate on the mega deals?
Centrica was a 7-year-deal and worth about 175 million pounds. Today, the deals are over $100 million. We are participating in some deals as a single participant and in some as a consortium partner. If we had 3 or 4 such large deals in the pipeline before the IPO, it is now in double digit.
How about the debt position?
Before the IPO, our debt was about ₹1,900 crore. Today, it is just over ₹700 crore. And if I net it out for cash, the net is just over ₹200 crore. So we are very fit from an overall balance sheet perspective. We are a fit company now. We believe that our gross debt will be significantly reduced and then gives us the ability to run much faster.
How big is your order book position?
It is healthy with ₹4,000 crore, which is ARR (annual revenue rate) and typically the conversion is about 25 per cent. Many are mega deals of five to seven year. Three years ago, our Fortune 500 penetration was 61 customers while in FY24 we finished with 78 Fortune 500 customers. Nearly 70 per cent of revenue comes from Rest of the World and 30 per cent from India.