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TVS Logistics acquires Tata Group's DIESL

Tata Opportunities Fund takes minority stake to fund the deal

Published: May 26, 2015 05:48:26 PM IST
Updated: May 26, 2015 06:20:44 PM IST
TVS Logistics acquires Tata Group's DIESL
R Dinesh, Managing Director, TVSL at a PC in Chennai said that the acquisition of Drive India Enterprise Solutions Ltd (DIESL) would enable the company to add to its expanding base of non-auto customers

TVS Logistics Services Ltd (TVSL), a leading third party logistics player in the country, announced the acquisition of Drive India Enterprise Solutions Ltd (DIESL) – a Tata Group company. The value of the acquisition, which is still subjected to regulatory approval, has not been disclosed. Tata Opportunities Fund will take a minority stake in TVSL by investing up to a maximum of Rs 250 crore. This money, among other things, will be used to fund the acquisition. “This acquisition will be a game changer for TVSL as it will bring together two companies that have complementary strengths,” said R Dinesh, managing director, TVSL. 

Part of the TVS group, TVSL is the largest logistics player in the country in the automotive space. A series of acquisitions abroad have enabled it to build a strong global base serving over 100 blue chip companies across 50 countries. Its revenue has touched Rs 3,000 crore and it has about 11,000 employees. DIESL, a company jointly owned by Tata Industries Ltd and Tata International Ltd, has revenues of Rs 953 crore and 3,400 employees with a strong focus on India.The combined entity will have revenues of Rs 4,000 crore, 15,000 employees and a warehouse space in excess of 10 million sq ft.

Dinesh explained that TVSL set its sights on India about a year ago and began looking for attractive investment options in a market which had a huge future potential (TVSL, till then, was focussed on creating a global base and had made as many as seven acquisitions across EU, the US and Asia).

“Our chances of growing the business organically would have meant incremental increase in revenues. Also we were strong in India only in the automotive space and it was difficult to break into other segments without showcasing our abilities,” Dinesh added. This acquisition gives TVSL just that. DIESL has a strong presence in the consumer and retail space. Also the footprint (in terms of warehouses) is complimentary as TVSL has a strong presence in auto hubs, southern and western India while DIESL has presence in the northern and eastern parts of the country.

That apart, while TVSL offers end-to-end solutions, DIESL is a strong warehousing player with last mile delivery capability. “This last mile delivery capability of DIESL will help us offer same day delivery in India and this will open large ecommerce-related opportunities for us,” Dinesh said.

Simultaneously TVSL will be able to offer DIESL’s 187 clients global supply solutions, leveraging its base that is already in place. TVSL expects huge cost synergies through this acquisition. Dinesh clarified that DIESL brand will continue to exist but what the structure of the organisation will be would be decided after all the regulatory approvals are sought. He said this acquisition will enable TVSL achieve its target of reaching a turnover of $1 billion by 2016.

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  • Eranna

    As TVSL is aquiring DIESL but TATA Opportunity Fund is also investing Rs.250 crore so whether it will be a JV or what?

    on May 31, 2015
    • Madhavan

      As the first para of the story states, TOF will take a minority stake in TVSL for the Rs 250 crore it is investing in the company. That money will be used by TVSL to acquire DIESL.

      on Jun 1, 2015