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Exclusive: TVS Group’s logistics arm invests in bus operating firm

TVS Logistics Services, part of the Chennai-based TVS Group, has invested in a Pune-based bus-operating firm, a person privy to the development told VCCircle. The company has put in Rs 24 crore ($3.5 million) in Prasanna Purple Mobility Solutions Pvt Ltd through debentures, issued by the latter to TVS Logistics, a third-party logistics service provider.

“Prasanna Purple has bought several buses from TVS on a slump sale basis and issued debentures worth Rs 24 crore to the company,” the person quoted above said.

While Prasanna Purple confirmed the development, an email query sent to TVS Logistics did not elicit any response.

With an annual turnover of Rs 1200 crore, TVS Logistics specializes in warehousing, distribution and transportation services. The company has grown its business through acquisitions and joint ventures primarily. Some of its joint ventures include TVS Dynamic Logistics Services, a business floated in partnership with Dynamic Freight Forwarders in 2007 and TVS GMR Aviation Logistics Ltd, under which it operates Aero-express bus services to airports in partnership with the GMR group since 2010.

Launched in 1986, Prasanna Purple is one of the largest bus services operator in the country operating in cities such as Pune, Indore, Ahmednagar and Bhopal. Backed by private equity firm Ambit Pragma Ventures, the company operates more than 1,000 vehicles offering inter and intra city bus services, corporate and school bus services, holiday tours and rental services. Prasanna Purple claims to be carrying 30 million and 5,000 passengers per month on its city and inter-city bus routes on a regular basis and also, has a tie-up with Delhi Metro Rail Corporation to operate its metro feeder services.

TVS LS' Deals
TVS Logistics, which provides supply chain management, inbound and outbound logistics and warehousing services, has acquired around 12 companies outside India prior to this deal. One such major acquisition was that of UK's Multipart Holding in 2009. It recently entered the Australian market by buying a majority stake in Melbourne-based Transtar International Freight.

The company also acquired Tata Group’s privately held logistics firm Drive India Enterprise Solutions in 2015 for an undisclosed amount. The investment was bankrolled by Tata Capital’s flagship private equity fund Tata Opportunities Fund, which invested close to Rs 250 crore ($40 million then) for a minority stake in TVS Logistics.

TVS Logistics was planning an initial public offer this year but has shelved the plans for now. The company is backed by leading private equity firm Kohlberg Kravis Roberts & Co. Ltd (KKR) and investment banking firm Goldman Sachs. According to media reports, the duo, though, is exploring a sale of their 44% stake in the company.

According to market research firm Novonous, the size of the logistics market in India is close to $300 billion and is poised to grow at a CAGR of 12.7% by 2020.

TVS Logistics, which operates across India, UK, USA, Europe and South East Asia, had consolidated revenues of over Rs 3,127 crore in 2014-15.

Other deals in logistics sector
The logistics and supply chain sector has attracted several deals this year. One of the largest transaction involved Singapore's distressed assets fund management firm SSG Capital Management Group’s investment of Rs 580 crore ($87 million) to acquire a 40% stake in Future Supply Chain Solutions Ltd from the company's existing shareholders.

In the biggest deal this year, private equity firm Warburg Pincus invested close to Rs 835 crore (up to $125 million) in a logistics startup floated by Anshuman Singh, who until recently headed the supply chain arm of retailer Kishore Biyani’s Future Group.

In yet another deal, Schedulers Logistics India Pvt Ltd, a Mumbai-based cold storage warehousing and transport solutions provider, also raised its Series B round of funding.

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Future Supply Chain Solutions Ltd. (Formerly Future Logistic Solutions Ltd.) is a logistics company. It provides integrated end to end supply chain management, warehousing and distribution, multi-modal transportation and container freight station. It caters to food and beverages, lifestyle, consumer electronics and high tech, automotive engineering, home furniture, healthcare, general merchandise and e-commerce. The company was founded in 2007 and is based in Mumbai, Maharashtra. Future Supply Chain Solutions Ltd. operates as a subsidiary of the Future Retail Ltd.

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