TVS Supply Chain Solutions (TVS SCS), an end-to-end supply chain solutions provider with capabilities across the value chain, expects a year-on-year revenue growth in the high-teens in the integrated supply chain solutions (ISCS) segment for FY 24 on the back of robust demand in sectors such as utilities, defence, energy, auto and farm equipment in its key markets such as Europe, UK and the US.
Ravi Viswanathan, MD, TVS SCS, said: “We are strong in Europe, UK and the US and our business in these markets have shown resilience in the current macro environment and this continues to be the case. We are seeing robust demand in sectors such as utilities, defence, energy, auto and farm equipment. In summary, we expect the market factors to be favourable to us for the rest of the year for the ISCS segment.”
He told analysts the ISCS segment grew across all the three geographies with revenues coming close to 20% and EBITDA growing by 190 basis points in Q1FY24. “India grew by 14.3% in the ISCS segment. So clearly, India continues to be a very strong driver of growth. Europe and North America together made the rest. When I say we will grow in teens, we are looking at very high teens, maybe closer to the 20% and we will hold to that,” he said.
In addition, the company’s business development momentum continues to be good, with new engagements in all three geographies, including the large transformative engagement with Centrica, one of the leading utilities in the UK, which went live in quarter one FY ‘24. “We have a strong pipeline of new opportunities in the ISCS,” he said.
The company classifies its business into two segments, such as integrated supply chain solutions or ISCS segment and network solutions or the NS segment. In the ISCS segment, the company’s capabilities including sourcing and procurement, in-plan solutions, aftermarket solutions, integrated transportations and aftermarket fulfilment. Customer engagements in this segment are typically driven by multi-year outsourcing contracts, under which it deploys solutioning, manpower & transportation and technology.
In the NS segment, the company leverages its operating network of two types: global freight solutions or GFS, where it has a global forwarding network to provide end-to-end solutioning on air and ocean freight, along with warehousing and ground transportation.
Viswanathan said in the NS segment, it expects the final-mile business to remain steady. “On global freight, while we are not expecting any uptrend in freight rates, we are expecting volumes to improve. Our continued focus on business development is delivering a strong pipeline. In the previous financial year, freight rates were high in the first half and then declined significantly in H2. In that context, our year-on-year comparison of revenues for freight should improve significantly in the second half because of the base getting normalise,” he said.
Ravi Prakash, global chief financial officer, TVS SCS, said in the second quarter, the company will be deploying the IPO funds to repay Rs 525 crore for the borrowing. “We will reduce our borrowings further out of surplus funds in capital raised prior to the IPO. As a result, our borrowing cost is expected to come down by approximately Rs 15 crore on a net basis on a run rate basis or per quarter on a run rate basis,” he said.