TVs & sons. Admired pioneer in automotive domain scales up operations for a wider pan-india role and global business footprint.

Transcription

1 TVs & sons Admired pioneer in automotive domain scales up operations for a wider pan-india role and global business footprint By S. Anantharaman TVS, an acronym based on the name of the revered founder of the TVS Group of companies Sri. T.V. Sundaram Iyengar, should deinitely be one of the most popular brand recalls on the industrial front in general and automotive domain in particular. TVS Group companies are present in many of the diverse industrial and automotive sectors in the functional areas encompassing production, logistics, sales, service, consultancy, project management, i- nance, exports, et. al. - and catering to the local and global markets. The parent company TVS & Sons Ltd. focussing predominantly on the automotive sales and service related functions have regrouped their operations and expanded at an impressive pace to cater to many of the emerging customer segments. The growth has been impressive with signiicant contributions to both the top and bottom lines; and to understand the background behind the same and the future game plan in furthering the current upward business trajectory, we met Mr. R. Dinesh, Joint Managing Director of the company amidst his compelling assignments, for a tête-à-tête in their swanky Chennai ofice-read on for the excerpts from the peppy interactions. Initial years TVS & Sons was established during the year 1911 in Madurai, T.N., and it is the holding company TVS Group. TVS & Sons operating in the auto sales, service and parts distribution domain for a very long time has 3 divisions under its fold TVS, Sundaram Motors and Madras Auto service. The company clocked a turnover of over Rs. 8,000 cr. in last iscal Mr. R. Dinesh, Joint Managing Director, TVS & Sons Ltd. year and has around 5,000 employees in its various companies spread all over India and at overseas locations; and about 70 per cent of the revenue comes from the south India operations. Recalling the initial years, Mr. Dinesh says: We started with service as the main core of businessfoundation was laid for the motor transport industry 90

2 in South India by starting a bus service in the city of Madurai in the year 1911; it then evolved into sales and followed by spares parts distribution. Going back into the history, family seniors always kept customers at the centre of business operations and listened to their needs before venturing into expansions or new business developments. If the customers required a particular type of service or product, they focussed on the same and implemented it thro a venture relecting the ingrained customercentric approach. Continuing with the evolution and following spares distribution, business moves led them to inance, insurance, logistics et al. That s how Madurai became the hub of the operations. Following the service foray was the dealership business evolution in the sales endeavour. Interestingly in my great grandfather s (Sri. T.V. Sundaram Iyengar) diary noting about those initial years, one of it says that my grandfather (Sri. T.S. Rajam) took the ship route from Rameswaram in T.N. (taking the erstwhile popular boat mail train to Rameswaram to board the ship) to London and board the ship set sail to USA, to sign dealership agreement with General motors; after a lapse 45 days, the noting says he got the information about the successful inking of the agreement by his son Sri. T.S. Rajam. Staring from that point onwards, we have progressed thro various facets in furthering the sales, reminisces 91

3 Mr. Dinesh of the nostalgic memories. The philosophy of the irm has always been to work with good manufacturers be it foreign or Indian; had worked in the past with General Motors and Daimler Chrysler as their distributor of cars and continue to work for over 5 decades with leading Indian companies like Ashok Leyland Ltd. (ALL) and Mahindra & Mahindra (M&M). The association with ALL has been since their inception and the progress thro the 60s to 80 s was more into expanding the sales, service and distribution functions. No major marketing was done as the customers came to them for their requirements and were extended genuine and honest services in time. During 90 s there was churning in the auto sector with the opening up of Indian economy and the arrival of many auto players in the scene. Mr. Dinesh indicates that this was the time they gave a relook at their operations and evolved the company operating structure to address the emerging opportunities and challenges expanding to more locations and moving out of one product and territory to a wider domain. Yes, the focus was on selling but the company started representing many manufacturers and sold and serviced thro more dealership outlets from 2 States and one car and a CV manufacturer representation, we have today many dealerships and service outlets in 8 states and union territories in India; apart from operations in Sri Lanka, Bangladesh and U.K. Dealership business The company operates thro 5 business verticals Dealership business, Distribution business, Global business, TVS Logistics and TVS Automobile Solutions (MyTVS). Major revenue, over 70% comes thro dealership business; and under this vertical, company deals with commercial vehicles, MUVs, three wheelers, cars and off-highway equipment. They represent ALL, M&M, Mahindra Navistar, Renault India, Escorts, Honda, Volkswagen, Mercedes Benz, Chevrolet, et. al.; sell thro about 150 dealership outlets per annum over 60,000 vehicles and service 6,00,000 vehicles and are the leading automobile distributor in India a few of the key milestones in the timeline include going out of India to set-up operations in Sri Lanka in 1999 (joint venture with United Motors Lanka Ltd. of Sri Lanka) and Bangladesh in 2002 (joint venture Rian Motors of Bangladesh). CV business has always been one of the main focus areas contributing about 50% of the sales revenue. Herein we deal with ALL and the relationship with them since the beginning has been very strong and special. We act as their extension and both of us think alike while addressing the market needs. The interactions at various levels are cordial and we share a true partnership type association would say that it s probably the ideal association between a principal and a dealer. We represent them exclusively in the States T.N., Kerala, Karnataka, and M.P., briefs Mr. Dinesh about ALL co-operation. How do the ASCs (Authorised Service Centre-in 2S) of other irms coming up at various locations impact the business of 3S dealer like TVS?; and whether TVS & Sons too have plans to expand the ASC model in the other locations as per OEM (ALL) requirements? Mr. Dinesh clariies: CV dealership business is very different from that of cars opera- 92

4 tions; irstly we cover the states under our jurisdiction completely. In T.N. we have service coverage say every km on an average and there is no requirement for any other ASC company - but it s not the same in other States. The sales volumes in those regions do not justify the investment levels needed for more ASCs; hence ALL is bound to look at other 2S dealers to ill in the gaps. We do operate ASCs wherever it is viable or needed speciically by ALL and are open to the demands. With regard to the service revenue, we have not even covered 20% of the business potential and hence our priority is to increase this to at least 50%. Therefore, ASCs of other irms coming up do not in any way affect our business. What about the SCV segment of ALL? Mr. Dinesh indicates: It was a conscious decision not to get involved in this domain despite the popular DOST brand of SCV coming from ALL. The coverage required for these vehicles demand high capital investment; and our philosophy in representation has been to go State-wise and not town wise. Such a town wise consideration on an exclusive basis does not appeal on commercial ground for us. However ALL for this product would need the wide coverage to promote sales and attend to the service needs within say 30 to 60 km; and hence we have kept away from the SCV sector. In the case of BOSS, the model falling under the ICV (9.6 to 12.9 ton GVW) recently launched by ALL suits our approach and we have included it in our marketing program. In this case, we can take up the sales and service with about 50 outlets and cover the state to principal s needs as opposed to having in excess of 100 outlets for the SCV. We now start from the ICV range 9.6 ton and go all the way up to 49 ton GVW in the M&HCV segment. The company has been dealing with M&M for over 50 yrs and represent them exclusively for Kerala State; they are their authorised dealers for utility vehicles, micro commercial vehicles and cars; and also deal with Mahindra Navistar CVs - under Sundaram Automobiles. In the CV representation, it has been an exclusive symbiotic association and we intend to keep it the same way. However in the segment of cars the business model is very different. The approach is town or region speciic; and there are also more manufacturers catering to a bigger customer segment. Hence the business model has to be multi-brand and we have brought in various cars representation under the Sundaram motors division to give clarity to principals thus manufacturers sign dealership agreements with the respective divisions, viz., ALL, M&M, et. al. with TVS and Honda, Volkswagen and others 94

5 with Sundaram Motors, explains Mr. Dinesh. Commenting on the advantages of their CV experience in the cars dealership, the common and distinct requirements Mr. Dinesh comments: The nos. are very different in the cars market, big and customers widespread. The commonality in approach to CV and cars market is deinitely the service aspect- yes, in both segments, expectation of the customer is very high. In the CV segment, the focus is on price and quality; you need to be the lowest on price and also provide a good quality product. The CV customer has a clear balance of cost and quality aspects. In the case of cars, the paramount factor is product quality and then comes the price the price factor does not arise in the case of product quality not matching up to the expectation of customer. He adds that the business growth for the company in the M&HCV mid-segment could be around 10%, with many manufacturers and dealers coming up all over; and in ICV around 20% while in Off-Highway Equipment (OHE) business, it could be around 30% or more. Thus ICV&OHE are going to be the two growth engines for them in the years to come. This was one of the reasons for taking up the Leyland Deere products dealership apart from of course taking cognizance of the equipment coming with ALL banner. Under the OHE comprising Construction Equipment and Materials Handling Equipment the company deals with many popular brands of established companies in their segments, viz., Escorts, JLG, Ingersoll Rand, Palinger, LeylandDeere, Thermoking, Masats S.A. etc.; and the products include Pick-n-carry crane, Backhoe-Loader, Vibratory compactor, Fork lift truck, Aerial work platform, Tower crane, Loader crane, etc. What are the synergies in considering OHE in their ambit and the marketing thrust for this domain by the company for promoting various brands? Mr. Dinesh points out: The choice of dealership has been to add on products that align with either manufacturer-centric or customer-centric approach around the CV line as both the CV and OHE segments are intertwined in meeting the diverse customer applications. In the case of Palinger loader crane, it s easier for us to sell it because of its mounting on truck while in case of LeylandDeere products, the customer for construction equipment segment invariably owns the trucks leet; and it s easier to meet them for other products and services related to their domain. But it s still early stages in the business cycle as several of the new additions have been done in the last 18 months. The problem in India these days is you have to invest upfront in any dealership business and wait for a long time say 3 to 4 years to get back returns. Business potential in this ield is expected to be the high and we will be deinitely on the look out for adding on more products - to be an important player when this segment demand peaks in future. In this domain, it s not the scenario of many manufactures with few products but a few dominant players having many products in their range, taking the major share of the business. We would like to expand our product offering aligning with a few such who have the wide range to address diverse customer applications. Distribution business & other operations Commenting on the distribution business, Mr. Dinesh says that this line has been one of their core businesses from the early times. The company is one of the largest distributors in India and associated with over 80 companies in supplying their products to the local and global markets. The OEMs cater to about 25% of the spares needs while the rest are met by other distributors and dealers major supplies by the dealers are unorganised leading to lack of availability of genuine and quality spare parts at competitive prices. Hence the prospects in this line are good; and 96

6 Solutions is one of the recent initiatives, a subsidiary company formed in 2011 to meet the diverse customer needs thro multi-brand car service outlets-erstwhile the service was extended thro brand MyTVS. This has also been registering expanded to global fronts and many of the same are giving impressive returns for the company to explore further more and add on new ones in its fold. Blending caution with aggressive entrepreneurship, consolidation and expansion seem to be the mantras put into practice to move up. With the dynamic, passionate TVS PartSmart is a new initiative by them to carter to the aftermarket needs of the CV customers to start with - to provide reliable parts at acceptable prices thro dedicated outlets. Global business is another vertical in which lot of thrust is expected to be channelized-it is again essentially parts distribution, sales and service related to auto domain and Mr. Dinesh adds: The local customer s ability and willingness to pay is on the lower side; and there are many manufacturers and territory restrictions. Also the margins in the global business are higher and attractive; hence even though the contribution to the revenue is currently low, we see immense growth potential and signiicant contribution to both the top and bottom lines in the future-in fact more than 40% of our India proits come from the overseas operations. We are already present in various markets around the world and see this as one of the growth engines for future. TVS Logistics and TVS Automobile Solutions are the other two important business operations that have registered impressive growth rates. Logistics has been one of the main stays of the company and recently they have consolidated and expanded the operations - and registered an impressive 30% growth despite the numerous challenges in the varied markets including India. The plan for the logistics group is to touch a sales turnover of USD1 billion by 2015; Mr. Dinesh opines considering the depressed economic conditions, the igure looks daunting but they should be reaching the vicinity of the igure by the target time estimated. TVS Automobile impressive results; and they also handle tools& garage equipment business and represent leading US brand Myers in the ield. The company s operations are too vast to be captured in its entirety thro a short narration. The impressive growth witnessed in each of the divisions is a classic industrial success story by itself; and by the natural corollary these have led to the cascade of new ventures and associations, making the organisation reach the current impressive position. The focus of the company erstwhile on the local markets has now and hands-on approach of the leader at the helm, professional management team to plan, execute and give shape to the company s vision, partnership type association with principals and the trust and goodwill of the loyal customer base assimilated over a long period of association, we should soon see TVS & Sons become an important multinational player in its operational segments; and replicate the local market successes in the overseas domain to expand further the global business footprint. 98