 "G Srinivasa Raghavan")
Chennai-based TVS group is best known for its zippy lightweight scooters. But the group, which besides automobiles has presence in electronics and finance, has its strongest performer in one of its oldest businesses: fleet management.
The over 100-year-old dealership and distribution arm, a segment that large companies have shied away from, has managed an impressive growth run since inception in the 1900s.
The distribution arm, which retails commercial and passenger vehicles from manufacturers such as Ashok Leyland, Mahindra & Mahindra and Daimler and provides after-sale service, generated revenue of around Rs 6,000 crore in 2013-14. The target is to double the revenue in the next three years and expand the company's footprint overseas, especially to countries where automobiles from India are imported in large numbers.
According to G Srinivasa Raghavan, chief executive & global president of TVS & Sons, 7-8 per cent of commercial vehicles sold in India are through TVS dealerships. Through its 150 outlets, the company sells around 60,000 vehicles and provides after-sale service to 600,000 vehicles annually, making it the largest automobile distribution and services company in India.
"We see plenty of opportunity in the market. An organisation like TVS brings tremendous brand value and a trusted name to customers; that is our strength," says Raghavan.
The distribution arm saw its big growth spurt in the last two decades after R Dinesh (who hails from the TVS family) took over as joint managing director in 2010, says an analyst who has been tracking the company for years.
One of the game changers was TVS's efforts to organise the after-sale service. With the intention to become a one-stop-shop for management and after-sale needs of large fleet operators, the company started TVS Connect in February 2015.
TVS Connect has separate arms to look after fleet management, repair and after-sale service. It also provides tracking services that help large fleet operators know the exact location of their vehicles. As every minute a vehicle is kept idle adds to a transporter's loss, it is important for a service provider to fix broken parts as quickly as possible. With this in mind, TVS is incorporating technology in its fleet management system, and is also looking at expanding its network by adding more retailers. "If you really want to have an aftermarket leadership globally, you have to reinvent yourself," says Raghavan.
Changes are also afoot in the company's retail distribution model. TVS is adopting a franchisee model for retail parts distribution both for TVS PartSmart and TVS Super Auto Mart. "We feel that the collaborative ecosystem is the way forward and that is exactly the model we have developed with TVS PartSmart, where we create value for all stakeholders like dealers, retailers and so on," he says.
The company's plan is to modernise its existing retailers and bring others who operate in the unorganised market under its fold by providing them with inventory management and other support.
The target is to increase the number of PartSmarts outlets to 100 by September from 51 now and to 250 in three years, says Raghavan.
While the initial focus will be commercial vehicles, spare parts for cars and two-wheelers will also be added to the product range gradually.
The company is also looking at widening the ambit of PartSmart stores from a spare part retailer to a garage in order to help its owners widen their revenue stream. While TVS hopes to expand its business all over India, its initial focus will be south India. "That's my priority. It would be 10-15 per cent of the total market share of around 2,500 stores in this region. That is what we are looking at," says Raghavan.
Besides entrenching its position in India, the company is also looking at West Asia and other emerging markets.
