Today's podcast will narrate the story of the TVS Group, India’s leading supplier of automotive components and one of the country’s most trusted brands with multiple companies covering diverse areas like two-wheeler and automotive component manufacturing to automotive dealerships, finance and electronics.
Every old and still thriving business empire has one thing in common. Adaptability and of course resilience and trustworthiness.This is Rakesh and on the Business of Family series that we have running on Digging Deeper with Moneycontrol, I will narrate the story of the TVS Group, India’s leading supplier of automotive components and one of the country’s most trusted brands with multiple companies covering diverse areas like two-wheeler and automotive component manufacturing to automotive dealerships, finance and electronics.
Documentaries shot in pre-independence India and books written about the time mostly chronicle the use of vintage cars by Maharajas and of course the gora saabs . Patiala's Maharaja Bhupinder Singh for instance was infamous for having a fleet of more than two dozen Rolls Royce beauties for his exclusive use. For ordinary Indians, this kind of luxury was unthinkable though we use the term ordinary only in a limited sense because there was nothing ordinary about the multiple mass movements that created a ground swell big enough to oust the British. So yes, cars were not yet part of the unfurling Indian aspirations. There were other pressing matters like a crushing colonial rule to worry about.
This was unlike the US for instance, where even in the roaring twenties, citizens had access to stylish and economical personal transport and even in fiction and cinema, cars had a role to play.
Ford and General Motors were already a part of American lexicon and lifestyle in the US and trying to scout newer markets.
In the late twenties, General Motors began to look towards the East and scouted a south Indian company to become its franchisee.
A fortuitous choice this because the scion of the Indian company, TS Duraisamy as legend has it, was an audacious sales genius. He would drive a gleaming Chevrolet to the zamindars, the prospective rich customers, leave the car behind for over a week or so just to give them a taste of convenience and luxury. By the time, he went back to reclaim his car, a sale was already in the bag as the customer, now used to a car could not imagine going back to a horse cart. The company also invited the moneyed customers to enjoy the benefits of an exchange offer where they could bring their horse-drawn carts and leave in a spanking new car. Not just that, after the car was sold, the dealership at TVS & Sons kept a check on its performance, complaints and offered quick servicing. Another pathbreaking move as early as in the 1940s was a doorstep mobile service facility!
His father of course was the original pathbreaker. TS Duraisamy's father, TV Sundram Iyengar, by this time had already spent nearly 20 years in business after taking the route his family did not expect him to. Like most affluent young Indians, he was earmarked for a career in law but did not go down that road. He even quit two well-paying jobs in banking and railways and instead in 1911, pioneered a rural bus service in Madurai.
TV Sundram Iyengar was a visionary and in order to ensure that buses never got delayed, he customised vehicles by fitting magnets underneath so that punctures could be avoided. The magnets would clean up nails etc left behind by horse and bullock carts and ease the way for the buses. During the times of the second world war, in times of acute petrol scarcity, Sundram Iyengar envisioned the TVS Gas Plant and later on also started a factory for rubber retreading, and started the Madras Auto Service Ltd and Sundaram Motors.
Sundram Iyengar had eight children and as was the case in families then and also is widely prevalent today, only the five male heirs were included in the business. After the early demise of one of the sons, the other four —TS Rajam, TS Santhanam, TS Srinivasan and TS Krishna went on to thrive in their chosen directions under the sheltering sky of the TVS brand.
In 1919, TVS forayed into vehicle sales, service and spare parts and in 1929, it bagged the dealership for General Motors.
In 1954, Sundaram Finance was floated to finance buses and trucks and in 1960, the group set up Wheels India in Chennai, and started making car parts.
In 1996, the group entered the logistics business.
By 2011 when the company was a hundred years old, the TVS group was cradling 40 companies, with more than 25,000 employees and aggregate revenues of over $4 billion
A 2011 Business Today story pointed out how the group which was till 1960, engaged in service oriented areas like rural transport, car dealership, auto parts distribution, vehicle insurance, and auto finance - ventured into manufacturing with the second generation, consisting of T.S. Rajam, T.S. Krishna, T.S. Srinivasan and T.S. Santhanam.
Wheels India was set up in 1960, followed by Sundaram Clayton, Brakes India and Lucas TVS.
The third generation, according to the piece, focused on quality management and we go on to learn how the first three Indian companies to win the prestigious Deming prize, awarded by the Union of Japanese Scientists and Engineers, were from the TVS group.
TVS Motor also set up a factory in Indonesia, Sundram Fasteners started one in China, and bought companies in Germany and the UK.
A highly ranked spokesperson of the company had said then memorably and we quote, "Our dharma is to... add value to the nation and to the stakeholders in it
TVS Group went on to become one of India's largest diversified industrial conglomerates with a presence in 129 countries with 73 holding group companies. The largest and most visible subsidiary of course is TVS Motor Company, the third-largest two-wheeler and three-wheeler manufacturer in India. TVS Group, boasts group revenues of more than US$ 7.2 billion, an employee strength of over 60,000 and specialises in the manufacturing of two-wheelers, three-wheelers, auto-components, hardware electronics, high tensile fasteners, die casting products, brakes, wheels, tyres, axles, seating systems, corrosion management, fuel injection components, electronic and electrical components and many more. It also owns vehicle dealerships.
Through the decades, the family has stayed connected as well as independent through four generations and multiple challenges. And has also stayed relatively controversy free. Even though an India Today report in 2012, spoke about dormant tensions over the fact that the posts of chairman, managing director, vice-chairman and joint managing director have always gone to the families of Santhanam and Rajam.
There was also an appeal in 2012 to the Madras High Court to ask for a a postponement of the extraordinary general meeting (EGM), which would decide the top slots.
However, the court dismissed the petition but the problems had erupted as early as in 1982 when the push and pull between various branches became apparent.
The amicable splitA 2014 report in FirstPost hailed the company for taking the dignified route and splitting without too much visible acrimony and drama.
It spoke of how brothers Venu and Gopal Srinivasan of the TVS group parted ways by reorganising the businesses of holding company Sundaram Clayton.We quote from the report, "With the restructuring that happened, all automobile businesses came under Venu, while other investments related businesses went to Gopal. Sundaram Clayton had four arms with completely different business focuses-Anusha Investments, TVS Motor, TVS Investments, and Sundarama Investment.
The operating companies have been separated to give management focus and enhance value for stakeholders."
The group while keeping the family's interests in mind, has also taken professional help in running the businesses and is a good example of keeping the roots and the branches of the family tree healthy overall. The success rate according to observers has been steady because the largely conservative company uses capital judiciously and has consistently upheld global standards of quality in its manufacturing competencies.
Add to this, a legacy of employee assessment based on merit and we can see why the group has succeeded where so many have failed.
A 2007, archived article in outlookbusiness.com quoted one of the family members who said and we quote, "Too much centralisation is dangerous is every sphere. That’s true for family businesses, too. TVS has a decentralised set-up but centralised unity."
This according to the piece was the ideal way forward for a scenario where there was not one but many leaders bound together by certain core values like quality parameters and employees wellbeing.
Enduring Success Stories
Every successful conglomerate has an emblematic service or product and the TVS moped is one such offering that inspires fierce loyalty in its small town customers who want value for money and reliability.In 2017, a Business Today article reported how in 2016, TVS XL touched the 10-million sales mark, underlining its role in country's rural economy that and we quote the piece here, " moves on TVS XL mopeds, as attested by faithful users."
The company also appeals to a diverse demographic with an assortment of automobile options and this quality, says the article, has made TVS stand out in the highly-competitive Indian automobile market with its mopeds, scooters, bikes and auto-rickshaws. We quote, "This is reflected in the company's financials. Over the past three years, while TVSMC's revenue grew at a compounded annual growth rate (CAGR) of 16.2 per cent, net profit grew at 27.8 per cent CAGR. TVSMC is now India's third-largest two-wheeler player, with around 14 per cent market share. Its stock is trading at its highest levels in the past 15 years. While at first glance, all this may seem not out of the ordinary, what TVSMC has achieved over the years is pretty impressive if we look at how challenging things were around 2001 when it had just ended its two-decade-old joint venture with Japan's Suzuki. That time, not many competitors, observers and analysts thought it would be able to do well after the break-up. That it thrived is all thanks to the leadership of Venu Srinivasan, the third-generation scion of the storied T.V. Sundaram Iyengar family."
TVS ventured into the two wheeler space in 1978 and launched its first moped, the now legendary TVS 50, a couple of years later, says the article and recalls how in 1982, it joined hands with Suzuki for technology, and in 1984 entered the bike segment.
Ind-Suzuki, bikes were trailblazing successes till the endeavour ran into labour trouble. The company was re-named TVS-Suzuki but the inevitable rupture in the partnership left the company floundering till it independently designed and released their first four-stroke bike, Victor.
TVSMC has taken a number of steps over the past few years, says the Business Today article, to strengthen its product portfolio by launching Jupiter in the fast-growing scooter segment to challenge the dominance of Honda's Activa. In the premium segment, it launched RTR 200 to take on Bajaj's Pulsar range. In the commuter segment, it launched a refreshed Victor.
We quote, "In 2013, TVS tied up with German major BMW to manufacture the latter's products at its Hosur facility. An industry analyst who did not want to be identified as he is not authorised to speak to the media says the arrangement with BMW will not only provide an additional revenue stream but also give TVS's portfolio of premium products an aspirational value. An improved product mix with greater emphasis on higher-margin scooters and bikes is what has helped the company do well in the marketplace."
The Business Today article, also outlines how the fourth generation is being trained to take over the business mantle. Venu Srinivasan's son Sudarshan Venu, joined as Joint Managing Director a few years ago. And Sudarshan has reportedly led the company's foray into real estate through a subsidiary. Its first two projects, says the piece, sold out in record time and have been delivered.
Venu Srinivasan is also passionate about Srinivasan Services Trust (SST), which works in 4,000 villages, which helps more than 2.5 million people. He spends about 30 days a year in villages monitoring the SST's work.Says the article eloquently, "Even as Venu Srinivasan grooms his son to succeed, he leads TVSMC in battles amid intense competition with global players such as Honda, Yamaha and Suzuki, and local majors Hero, Bajaj and Mahindra. He, though, believes there is space for everybody to do well.
For now, TVSMC is sitting pretty and getting ready to fight the next battle in its war for market dominance. "
The family of pioneers continues to grow, leaving behind old milestones to move towards new ones.The family of pioneers continues to grow, leaving behind old milestones to move towards new ones, and in the process, giving India's rural middle-class wheels, to fly on.