TVS Supply Chain IPO to open on August 10, price band fixed at ₹187-₹197

• The issue opens on August 10 and closes on August 14.
  
• The lot size is fixed at a minimum of 76 equity shares and in multiples of the same thereafter.
  
• The issue is a mix of a fresh issue to the tune of ₹600 crore, an offer for sale.
  
• The net proceeds from the fresh issue will be used for prepayment or repayment of outstanding borrowings, and towards general corporate purposes.
  

TVS Supply Chain will open its public offer on August 10 and close on August 14. The company has fixed the price band for the IPO at ₹187-₹197 per equity share.

Bids can be made for a minimum of 76 equity shares and in multiples of 76 equity shares thereafter. The issue is a mix of a fresh issue and an offer for sale. The fresh issue intends to raise as much as ₹600 crore and the proceeds from this portion will be used for prepayment or repayment of outstanding borrowings, and towards general corporate purposes.

Investors such as Omega TC Holdings, Tata Capital Financial Services, Kotak Special Situations Fund, as well as TVS Motor Company will sell shares as a part of the offer.

The offer is being made through a book building process wherein not less than 75% shall be available for allocation on a proportionate basis to Qualified Institutional Buyers (QIBs). The book running lead managers may allocate up to 60% of the QIB portion to anchor investors on a discretionary basis, the company.

JM Financial, Axis Capital, J P Morgan India, BNP Paribas, Nuvama Wealth Management and Equirus Capital are the book running lead managers of the issue.

About the company

The company is an integrated supply chain solutions provider, which calls itself a multinational based in India. Its business is divided into two segments — integrated supply chain solutions (ISCS); and network solutions.

Under ISCS segment, it sourcing and procurement, integrated transportation, logistics operation centres, in-plant logistics operations, finished goods, aftermarket fulfilment and supply chain consulting. Its network solutions include global forwarding solutions which involves managing end-to-end freight forwarding and distribution across ocean, air and land, warehousing and at port storage and value added services, and time critical final mile solutions and more.

It provided these solutions to 8,788 global customers and 902 customers in FY23. Its customers span across numerous industries such as automotive, industrial, consumer, tech and tech infra, rail and utilities, and healthcare.

As of March 31, 2023, it has managed 22 million square feet of logistics warehouse space. Some of its customers include Daimler India, Sony India, Hyundai Motor, TVS Srichakra, TVS Motor, Panasonic Life Solutions, Hero MotoCorp, Modicare, Ashok Leyland, Yamaha Motor and Torrot Electric. In FY23, it carried 2,074 tons of air freight and 32,720 TEUs (twenty foot equivalent units) of sea freight in India.

Financials & risk factors

The company’s revenues have been consistently growing in the last three years, and in the recently concluded financial years, it has been able to post profits after reducing its losses over two years.

“We incurred losses in these periods due to macroeconomic headwinds, labour strike at one of our largest automotive customer plants outside India which began with the walkout of a large number of workers at various of our customers plants and lasted for about six weeks,” the company said in its red herring prospectus.

It added that the costs related to the integration of acquisitions, legal costs, costs of exiting certain contracts which were commercially not optimal, foreign exchange volatility, debt refinancing, and the Covid-19 pandemic as some of the reasons for the losses.

Source: RHP

Elucidating its risks, the company said that in the last three years, around 73% of its revenue was denominated in foreign currencies, along with an average of 73.8% of its borrowings. It is exposed to exchange rate fluctuations, which can impact its operations.

It’s subject to multiple and complex legal and regulatory requirements as its operations are spread across 26 countries. Failure to comply with the laws and regulations can adversely impact its business.

Freight, clearing, forwarding and handling charges, and manpower expenses constitute a significant portion of our operating expenses and any increase due to any internal or external factors may adversely affect our business, financial condition, results of operations and cash flows, the company said in its RHP.

The business is dependent on its ability to utilise our logistics infrastructure in an uninterrupted manner. Any disruption or delays can have a material adverse effect on the business.

Its operations are significantly dependent on network partners and third parties for warehousing and transportation needs, which can have an adverse effect on its business. “Any increase in the operating costs of network partners or other third parties may have a direct impact on our operations and profitability,” the company said.

Its promoters and certain directors, key managerial personnel and senior management have interests in the company other than their normal remuneration or benefits. There are two criminal and 22 tax proceedings against the company. Its promoters have one criminal and 65 tax proceedings against them.