TVS Logistics Services Ltd is exploring opportunities in consolidated logistics services for the construction sector, including movement of bulk commodities and procurement planning of non-production items for other projects, as per news reports.
These are capabilities available within the company’s fold elsewhere and will be cross deployed in India. TVS Logistics has over the last decade-and-a-half acquired over 20 businesses in logistics and related areas worldwide. Some of the expertise available elsewhere will be offered in India.
R Shankar, CEO (India), TVSLSL, told news reports that in the construction business, the company will get into bulk transport of various commodities such as cement and steel “some time next year.” It will involve point-to-point movement of bulk items.
Apart from that TVSLSL will also get into procurement, procurement planning and inventory management of non-production items, referred to as C-class items, for its clients. This is a step beyond just logistics services. For instance, packaging material, safety shoes, nuts, bolts and washers are non-core items that large project companies have to contend with. TVSLSL can take over ownership and management of these inventories and keep them available as and when needed for its clients, he said.
These are proven models of outsourcing in developed markets and can be deployed in India particularly with the transition to GST, he said.
TVSLSL is exploring option of supplying construction material on ‘just-in-time’ basis or as needed by large construction companies. This is now being tested, said Shankar, but a decision is yet to be taken.
Essentially, large construction companies may have multiple construction sites in a city. TVSLSL will provide a consolidated storage facility to hold adequate stocks like pipes and electrical fittings which can be moved as needed by the clients, he said.
TVSLSL is bringing together its domain knowledge in India with technology-backed capabilities from developed markets. It is also tapping into market opportunities like tower construction in telecom, IT products like POS machines, apart from its core areas like automobile sector.
For now, automobile, FMCG and engineering associated logistics account for 70 per cent of its ₹1,500-crore business in India. With growth into new areas, the company over the next five years is targeting ₹6,000 crore and its traditional areas will contribute about 30 per cent of the business.