The public issue of TVS Supply Chain Solutions, promoted by the erstwhile TVS Group and now a part of TVS Mobility Group, will open for subscription today. This will be the first IPO from the Group in the last 25 years.
Here are 10 key things to know about the issue before subscribing to it:
1) IPO Date
The bidding for the offer will start from August 10, and will continue till August 14, 2023. The anchor book opened for a day on August 9.
2) Price Band
The offer price band has been fixed at Rs 187-197 per equity share, with a face value of Re 1 each.
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3) Offer Size
The supply chain logistics solution provider intends to raise Rs 880 crore from the public issue which comprises a fresh issue of Rs 600 crore and an offer-for-sale (OFS) of Rs 280 crore by 22 selling shareholders.
Omega TC Holdings Pte Ltd, a subsidiary of offshore private equity fund Tata Opportunities Fund LP, is the largest selling shareholder in the OFS, offloading Rs 211.47 crore worth shares, while Tata Capital Financial Services will be selling Rs 19.4 crore of shares.
Also Read: TVS Supply Chain Solutions mobilises Rs 396 crore via anchor book ahead of IPO
Other selling shareholders included Dinesh Narayan, TVS Motor Company, Sargunaraj Ravichandran, Kotak Special Situations Fund, Andrew Jones, P D Krishna Prasad, Ramalingam Shankar, Nagesh Nagarajan, Ethirajan Balaji, and Venugopal Murali. Among them, Andrew Jones, Ethirajan Balaji, and KK Prakash will be exiting the company.
The total issue size, at the time of filing the DRHP in April 2023, was Rs 1,144 crore at the upper price band, comprising fresh issue of Rs 750 crore and an offer-for-sale of Rs 394.14 crore.
4) Objectives of the Issue
The fresh issue proceeds will be utilised mainly for repaying debts of Rs 525 crore and general corporate purposes, while the OFS money will go to selling shareholders.
Also read: Pyramid Technoplast IPO opens on Aug 18, price band set at Rs 151-166
5) Lot Size
The minimum bid lot size is of 76 equity shares and in multiples of 76 shares thereafter. Hence, the retail investors can invest a minimum of Rs 14,972 per lot (76 shares) and their maximum investment would be Rs 1,94,636 for 13 lots (988 shares).
High net-worth individuals, who are allowed to invest in a range of Rs 2-10 lakh, can apply for a minimum of Rs 2,09,608 worth of 1,064 shares, and their maximum investment would be Rs 9,88,152 crore (5,016 shares).
Up to 75 percent of the offer size is reserved for qualified institutional investors, including anchor book, while high net-worth individuals (non-institutional investors) and retail investors have 15 percent and 10 percent reservation in the IPO.
6) Company Profile
The Chennai-based company claimed to be India’s largest and among the fastest-growing integrated supply chain solutions provider among Indian listed supply chain solutions companies in terms of revenues and revenue growth, respectively, in FY23, as per the Redseer report.
Its solutions spanning the entire value chain from sourcing to consumption can be divided into two segments - integrated supply chain solutions (ISCS), and network solutions (NS).
TVS Supply Chain has developed long-term relationships with a number of clients, which has provided resilience to its revenue and profitability, including Sony India, Hyundai Motor India, Johnson Controls-Hitachi Air Conditioning India, Ashok Leyland, Diebold Nixdorf. Lexmark International Technology Sarl, Daimler India Commercial Vehicles, Hero MotoCorp, Panasonic Life Solutions India, and Dennis Eagle.
Also read: Aeroflex Industries gets Sebi green light to float Rs 350-crore IPO
7) Financial Performance
The over $1-billion logistics solutions provider turned profitable in the financial year ended March FY23, reporting a profit of Rs 41.76 crore, against a loss of Rs 45.8 crore in FY22, which has reduced from Rs 76.34 crore in FY21, but borrowings increased year-after-year to Rs 1,989.6 crore in FY23, up from Rs 1,763.8 crore in FY22 and Rs 1,547.9 crore in FY21.
The revenue from operations in FY23 grew by 10.65 percent to Rs 10,235.4 crore, compared to previous year, while the EBITDA increased from Rs 612.56 crore in FY22 to Rs 683.65 crore in FY23, up 11.6 percent on-year. EBITDA is earnings before interest, tax, depreciation and amortisation. The EBTIDA margin too expanded to 6.67 percent in FY23, up from 6.62 percent in FY22 and 5.57 percent in FY21.
TVS Supply Chain, which operates business through an asset-light business model, compares itself with listed players in the logistics business like TCI Express, Mahindra Logistics, Blue Dart Express, and Delhivery.
8) Promoters and Management
TVS Mobility, TS Rajam Rubbers, Dhinrama Mobility Solution, and Ramachandhran Dinesh are the promoters of the company. Promoters along with promoter group hold 45.56 percent shareholding in the company, and the rest is held by public shareholders including Exor Special Opportunities Master Fund, Mahogany Logistics Services, Mahogany Singapore Company, Kotak Special Situations Fund, Omega TC Holdings, and Hero Enterprise Partner Ventures.
Also read: Shelter Pharma to launch IPO on August 10, offer price at Rs 42 per share
Mahalingam Seturaman is the chairman and independent director on the board, while Ramachandhran Dinesh is the executive vice-chairman, and Ravi Viswanathan is the managing director.
Ravi Prakash Bhagavathula is the global chief financial officer of the company, while PD Krishna Prasad is the company secretary and compliance officer of the company.
9) Risk Factors
(a) The company is exposed to foreign currency exchange rate fluctuations as an average of 73 percent revenue was denominated in foreign currencies.
(b) Freight, clearing, forwarding and handling charges, and manpower expenses constitute a significant portion of its operating expenses. Any increase due to any internal or external factors may adversely affect its business.
(c) The company operates in a highly competitive and fragmented industry, and any failure to compete or respond to customer requirements could negatively affect the business.
(d) The company derives a significant portion of its revenue from customers engaged in certain industries. So, any loss or a significant decrease in business from customers in these industries could adversely affect its business. Industrial segment contributed 35 percent in FY23, automotive 23.2 percent, and tech and tech infra, and consumer contributed nearly 12 percent each to its revenue.
(e) The company is susceptible to risks relating to compliance with labour laws. Operations could be adversely affected by labour shortages, strikes, work stoppages or increased wage demands by employees or any other kind of disputes with employees.
(f) There are outstanding litigation proceedings against the company, promoters and subsidiaries.
10) Allotment and Listing Dates
The finalisation of basis of allotment of IPO shares will take place by August 21, and the equity shares will be transferred to demat accounts of eligible investors by August 23. The refunds will be credited to bank accounts of unsuccessful investors by August 22.
TVS Supply Chain will make its debut on the BSE and NSE on August 24, as per IPO schedule.
Its IPO shares were available at a 15 percent premium to the upper price band, in the grey market, analysts said on anonymity. The grey market is an unofficial market for trading in IPO shares till the listing.
JM Financial, JP Morgan India, BNP Paribas, Nuvama Wealth Management, and Equirus Capital are the merchant bankers to the issue, while Link Intime India is the registrar to the IPO.
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