TVS Automobile Solutions (TASL), the prominent independent aftermarket player and part of the TVS Group, is looking for enhanced engagement with Mitsubishi Corporation of Japan. In line with this strategic game-plan, Mitsubishi Corporation has invested in excess of Rs 250 crore to increase its equity stake in TASL by from the existing 3% to 25%, through a combination of primary investment and secondary purchase.
TASL has been looking to grow aggressively both in the local and overseas markets by expanding its services to the growing independent aftermarket. In FY2019, the company recorded total revenues of Rs 1,300 crore with close to Rs 400 crore coming from overseas operations that notched nearly 35 percent YoY growth. The company is targeting similar high growth in FY2020 and aim to hit the Rs 1,800 crore turnover mark. TASL now banking on Mitsubishi Corporation to grow its business in key markets such as Africa and the Middle East.
Speaking on the partnership, R Dinesh, director, TASL, said: “This partnership will facilitate the next phase of our growth journey. We see the future of this tie-up help us not just in India but several overseas markets. Mitsubishi Corporation will provide us the exposure to Japanese suppliers for the parts availability in India and other parts of the world. Secondly, it gives us access and visibility into those markets it is already present in and also introduce as its partner in new markets too.”
TASL says it is in the process of engaging with parts retailers and garage mechanics in India by not only making them competitive but helping them stay abreast of fast-changing technologies. The company believes this attempt of working with Indian entrepreneurs is something which can be replicated in other markets, as well as the automotive aftermarket which is similar globally except in the USA and Australia. TASL is banking on this partnership explore new business potential in other developing markets.
S Wakabayashi, senior vice-president, Mitsubishi Corporation said, “We are extremely interested in TASL’s business model, which is highly advanced as we see it across the world by using IT in the aftermarket business and also by using the potential of entrepreneurs in India. We are looking at expanding this business model in India and overseas, primarily in Africa and we want to do it together.”
Humungous market growing by 10-15% per annum
The independent aftermarket in India is a large but completely fragmented one with many small players. In India, there are 100,000 retailers, over 20,000 distributors and over 500,000 garages. With the automotive sector experiencing disruptive technologies like never before, bigger players will be looking to assist smaller players become part of the organised sector.
Speaking on the company’s focus, Srinivasan Raghavan, executive director, TASL, said, “TSAL is primarily focused on the independent aftermarket in India catering to customers of trucks, buses, cars and two-wheelers outside the warranty when they get their vehicle for service. The market size is estimated to be $8 billion growing by 10-15 percent per annum.”
To bring unorganised players under the more structured and organised sector to improve their business prospects in a disruptive era, TASL has categorised them into four business lines. The first is traditional distribution business as a more organised supply chain platform to supply parts within 24 hours, so that they don’t have to invest more in working capital. TASL today covers more than 20,000 retailers across 80 fulfillment centres across India. Secondly, the technology-based parts distribution systems for the retailer to pick and choose the right parts; TASL has come up with its own catalogue with 175,000 parts. The third is the mobility service. Digital services, through IoT and telematics, has made it possible to address more than 40,000 calls a month for speedy roadside services. Lastly, for large fleet owners in India, there are ERP solutions, assured uptime, tracking of breakdowns and other services.
“With the market showing readiness to accept the new technology solutions, we believe this platform will now empower more entrepreneurs and help them join the ecosystem and be part of the organised sector,” concluded Raghavan.
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