TVS Supply Chain Solutions Wins Strategic Deal with Daimler Truck AG

Streamlining Operations in Asia-Pacific

TVS Supply Chain Solutions Limited (TVS SCS), a leading global supply chain solutions provider based in India, has secured a significant 5-year contract with Daimler Truck South East Asia Pte Ltd. This deal will enable TVS SCS to manage integrated supply chain solutions for Daimler Truck AG in the Asia-Pacific region, operating from a strategic logistics centre in Singapore. Daimler Truck AG is the world’s largest manufacturer of commercial vehicles.

Partnership Objectives

This partnership aims to achieve several critical operational goals:

• Establish a strong logistics system for distributing spare parts and related items.
• Improve supply chain operations for Daimler Truck South East Asia’s distributor network, dealers, and workshops in 16 Asia-Pacific countries.
• Efficiently manage 8,000 stock-keeping units (SKUs) and 65,000 order lines annually, handling a variety of parts with different storage needs.
• Ensure smooth transportation across air, Full Container Load (FCL), Less than Container Load (LCL), and road transportation, including customs clearance and Dangerous Goods (DG) declarations.

Custom IT Solutions

TVS SCS is also providing a customised IT solution suite, which includes an online platform offering inventory visibility and ordering capabilities for Daimler Truck Parts Centre (DTPC) Southeast Asia customers. This IT solution integrates inventory management, parts replenishment ordering, parts pricing, invoicing, and data analytics.

Statements from Leadership

Vittorio Favati, CEO of TVS SCS Global Forwarding Solutions, expressed excitement about the new contract: “We are thrilled to deepen our partnership with Daimler Truck AG and assist with their strategic goals, especially in distribution and warehousing solutions in Singapore.”

Christoph Stemmer, Vice President Customer Services & Parts, Mercedes-Benz Bus and Special Truck Sales SEA, also shared his enthusiasm: “We are excited to move into a dedicated commercial vehicles warehouse, focusing entirely on the needs of our Daimler Truck customers in the region. TVS SCS was chosen for their unique service offerings and dedicated performance.”

Financial Performance

The Integrated Supply Chain Solutions (ISCS) segment showed strong growth in both revenue and margins. ISCS segment margins improved by 40 basis points year-on-year.

The Network Solutions segment faced margin pressures due to inflation in the UK and Europe.

The Global Forwarding Solutions (GFS) business saw an increase in revenue in Q4, reflecting a rise in demand after a previous slowdown.

Overall Revenue and Profitability

Overall consolidated revenues were 9.2% higher sequentially and 4.5% higher year-on-year. Adjusted EBITDA margins for Q4 were at 7.2%. The company turned profitable, showing consistent improvement in profits quarter-on-quarter.

Cost Management and Debt Reduction

TVS SCS focused on cost reduction measures, improving margins, and implementing pricing revisions with customers. They also worked on reducing fixed costs and enhancing operational efficiency.

The company used IPO proceeds and internal funds to repay all long-term debts, reducing interest expenses from Rs 41 crores per quarter to Rs 16.6 crores. Interest expenses are expected to remain in this range in the coming quarters.

Business Development and Revenue Growth

Business development efforts consistently contributed 9% of quarterly revenue. TVS SCS secured significant new customer wins across various sectors and has a strong pipeline of new opportunities totaling over Rs 4,000 crores.

The company is confident of achieving double-digit revenue growth in the ISCS segment.

Global Capabilities and Market Differentiation

TVS SCS is leveraging its global capabilities to enhance services in India, maintaining strong sectorial diversification across various customer segments.

The company differentiates itself through full-scale services, its own IT stack, and end-to-end solutions, fostering strong relationships with multinational customers setting up in India.

Challenges and Outlook

The Integrated Facilities Management (IFM) business faces challenges due to cost inflation in the UK. The company is working on cost reduction and pricing actions to improve profitability.

TVS SCS remains cautiously optimistic about the network solutions segment and is focused on volume growth in the freight business to ensure future profitability.

Conclusion

This strategic partnership enhances TVS SCS’s role in global logistics, demonstrating their capability to deliver comprehensive supply chain solutions and drive significant growth and profitability.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.