 "TVS Logistics' JV acquires Australia-based Transtar International Freight")
The company is planning to consolidate the frieght forwarding business under the Joint Venture and thus planning to move its Indian freight forwarding business subsidiary TVS Dynamic Global Freight Services to TVS Asianics, subject to Reserve Bank of India's (RBI) approval, said company officials.
With the acquisition of Transtar, which is an integrated transportation and supply chain solutions provider throughout the Asia region, TVS Logistics would mark its entry into Australia and strengthen its presence in Asia with its presence. At present, TVS Logistics has its presence in South East Asian countries like Singapore, Thailand and China.
"The total investment which will be going into the company (Transtar) will be around Rs 200 crore. The investment include the cost of acquisition and the investment into growing the business. It is a majority acquisition, above 51 per cent," said R Dinesh, managing director, TVS Logistics Services Ltd.
The deal will help TVS Asianics to become a specialised player in International Freight Forwarding and provide end-to-end solutions for importers and exporters doing business throughout Asia.
"We are creating TVS Asianic as the holding company and hub or a common point for our entire freight forwarding business globally. Once the transfer holding of TVS Dynamic into TVS Asianic, subject to RBI approval, happens, TVS Asianics will become the clearing house to take the call on how investments are made and across which geography related to the freight forwarding business," he added. Majority stake of TVS Asianics is also owned by TVS Logistics.
While the TVS Logistics has been offering its services to the Asian countries through partners, there has been a need for the company's own offices in various parts of the geography to capture the opportunities and that is where the acquisition of Transtar comes in, said James McAdam, chief executive officer, TVS Asianics Supply Chain Solutions Pte Ltd.
The Asian logistics markets are growing very fast. With the acquisition, TVS Logistics will have 125 of its own team on the ground in various locations in China, in Bangkok, in Singapore, in Hongkong, and across Australia, New Zealand that can help its existing customers source new products to grow their business.
Transtar has an annual revenue of Rs 850 crore ($130 million), with around 70 per cent of the revenues from Asian markets. Around 50 per cent of the company's business is from China.
At present, TVS Logistics has around Rs 120 crore business in China and this would go up to Rs 600 crore post acquisition. TVS Asianics is targeting to reach around $500 million in next five years. Out of this acquisition, the JV would get around $200 million, immediately, said Dinesh.
He added that the acquisition strategy of the company depends upon the need gaps and the customer requirements and it would also look at larger acquisitions if required.
TVS Ltogistics, in the past, had acquired companies in UK, Europe and in the USA for both capabilities and customers and will now have its focus on Asia through TVS Asianics. With the acquisition of Transtar, Asia will become a significant market
Transtar has a goal to become a global major in freight forwarding business and the deal will help the company to grow higher, said Hank Meyer, CEO and Founder of Transtar. The company will continue to be headquartered in Melbourne, Australia and Meyer will continue to remain its CEO. The company has 16 offices throughout Asia and a back office in China.
TVS Logistics said that it is looking at a revenue of Rs 4,700 crore by end of March, 2016, from last years' revenue of Rs 3,100 crore. Next financial year, the run rate is expected to be around Rs 6,000 crore, he added.
