TVS Logistics keen to expand, focus on packaging segment

The ₹1,200-crore TVS Logistics Services Ltd, a third party logistics services provider, is looking at expanding in the packaging segment.

While TVS Logistics Services has taken the inorganic route for growth in several areas, R Dinesh, Managing Director, declined to comment on whether it will take the inorganic route to grow in packaging as well.

“That is a new capability that we are now focussing on,” Dinesh told BusinessLine . TVS Logistics has a company that does packaging and TVS will further focus on it, he said. It is now becoming an important business for logistics firms.

“I am talking not just about designing but the actual process of packaging,” Dinesh added.

He said Asia was the company’s focus right now. “If we are looking at mergers and acquisitions, it is in India and Asia,” he said, adding a caveat that “nothing is on the anvil”.

The company has about three million sq ft of warehouse space in India, and has operations in the UK, Spain, Thailand, the US, Germany and China, through warehouses located both in India and abroad, according to the company website.

TVS Logistics Services, which has investments from pension fund CDPQ, has no plans for further dilution of stake right now, Dinesh said.

In 2016, Caisse de dépôt et placement du Québec (CDPQ), one of North America’s largest pension fund managers, had invested over ₹1,000 crore ($155 million) to acquire a sizeable minority stake in TVS LSL, a privately held subsidiary of the TVS Group. CDPQ purchased most of KKR’s and Goldman Sachs’ joint stake, while TVS family members and management acquired the remainder.

As per a release last year, CDPQ was ready to commit significant additional capital to finance transformative acquisitions and support the expansion of TVS LSL in India and globally.

Dinesh said the company plans to have Fastags, or the National Highways’ electronic toll collection systems, on all its long distance vehicles in the next three-six months. Right now, it has Fastags on about 60 per cent of vehicles.

As logistics firms grow, particularly on the back of e-commerce deliveries, several companies have started putting more intelligence into packaging. This happens more so, as there is scope to lower the air space in moving packaged materials. Express logistics service providers, such as DTDC, India Post, FedEx and DHL charge customers on the basis of the dimensional weight that takes into account both the weight and volume, or the dimensions or size of the boxes. Industry experts from packaging space say they can lower dimensional weight for e-commerce firms as well as logistics firms, which effectively lowers the cost.

Lance Wallin, Director, Global Accounts and Innovation, Product Care, Sealed Air, a company in the space of providing packaging machinery, said they can optimise dimensional width by at least 15 per cent by getting the list of products, identifying the sizes where maximum orders take place and accordingly recommending packaging solutions.

Sealed Air said it had seen a tremendous increase in queries from customers with air carriers and several express carrier increasingly introducing prices based on dimensional weight. “Till this date, we see that packaging done by e-commerce companies has more than 50 per cent void space in its packaging. If you pack that out, much of cost, time can be packed out of the shipping arena,” Wallin told BusinessLine .

COMMENT NOW