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T V Sundram Iyengar and Sons Ltd has hived off its distribution division MyTVS into a company under the name TVS Automobile Solutions Ltd.
The new company has attracted private equity (PE) investment of Rs 78 crore for a ‘significant minority stake' from the Muscat-based Kitara Capital to fuel growth. It will continue to use the brand name “MyTVS,” said Mr R. Dinesh, Director, TVS Automobile, the second company in the TVS group after TVS Logistics to get PE funding.
Mr R. Srivatchan, President, Customer Centric Business, T V Sundram Iyengar & Sons, will be President of the new company, which will continue to provide service to multi-brand two-wheelers and cars.
TVS Logistics Services Ltd raised Rs 100 crore in 2008 through PE investment from Goldman Sachs to fuel growth.
Speaking to newspersons, Mr Dinesh said of Rs 500 crore to be invested in the next two years, Rs 250 crore would come from the new company. The balance would come from partners providing infrastructure and land to operate MyTVS outlets. The company is looking at a plug-and-play model wherein the partners will have the infrastructure ready to enable TVS Automobile start the outlets from day one, he said.
While the stake of Kitara was not finalised, Mr Dinesh said by 2014 it would have 20-30 per cent in the new company. “For a speedy growth, we wanted to access funds outside the group. There is a capacity beyond which the parent could not invest in MyTVS,” he said.
TVS Automobile, which will become profitable by March, expects to report revenue of Rs 80 crore from the present Rs 33 crore and a ‘significant' jump to Rs 460 crore by 2014, said Mr Dinesh. The company plans to more than triple its outlets to 52 from 15 and double the franchisee outlets to 105 from 50. Its workforce will grow to 1,500 from 440, he said.
Mr Dinesh said the company will look for partners having readily available infrastructure such as large garage that can be upgraded into a service station. It is talking to three such partners and plans to invest nearly Rs 12 crore in this venture. The company has over 60 lakh customers across India, he said.
TVS Automobile will soon enter overseas markets such as Sri Lanka and in the Gulf where it will seek the help of Kitara in setting up the outlets, said Mr Dinesh.
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