MyTVS receives Kitara PE funding

TV Sundram Iyengar and Sons Ltd, he holding company of the Chennai-based TVS group, has turned its six-year-old automobile deal- ership and services arm MyTVS into a separate company called TVS Automo- bile Solutions Ltd (TVS ASL), with pri- vate equity (PE) investment from Oman-based Kitara Capital.

The move was taken to take the busi- ness to the next level and expand it across the country, the company said in a release. This is only the second time that a TVS Group company has gone in for PE funding, after TVS Logistics Services Ltd (TVS LSL) raised `100 crore from Goldman Sachs in 2008.

TVS ASL will continue to be a subsid- iary of TVS and Sons and also retain the brand name MyTVS. An investment of `120 crore has gone into the company at this stage, of which `78 crore has come from Kitara. “The equity share of Kitara in this has not yet been decided as there is convertibility in the year 2013-14. It will not go beyond 30%,“ said TVS ASL director R. Dinesh. “Their participation is long term, five-seven years. Whenever they prefer to exit, we will have right of refusal for their stake.“

The venture could be a significant one, KPMG executive director Naray- anan Ramaswamy.

“That sector is highly fragmented, and short of capital. This investment will give a big boost to it because TVS is placed very well to create an industry out of this market,“ he said. “TVS also seems to be opening up to the idea of outside investments. This is a good ven- ture to bring in PE because it is multi- faceted and their other businesses re- quire the group's reserves more.“

TVS ASL plans to invest `500 crore by 2014 to expand its presence all over the country, by way of partnerships, partic- ularly in west and north India. “We will be investing `250 crore and expect our partners to invest the other half,“ Di- nesh said. “We are in talks with four in- vestors in west India, with whom we'll invest `15 crore and hold majority stake in those joint ventures.“

MyTVS has already partnered with automobile manufacturers to train me- chanics and other technicians to work on cars of all brands, including the lux- ury segment. “With the high growth in the automotive market, there is large- scale capacity shortage for service and spare parts. So, our relationships with OEMs (original equipment manufactur- ers) is complementary and cooperative than competitive,“ MyTVS president Srivatchan said.

The company currently has 3,000 emergency service stations for automo- biles across India. Its All Car Service stations are available in 65 locations in the south, with 16 of these owned and 49 franchised. The present investment will ramp up this number to 80 owned and 180 franchised stations by 2014.

“We currently have 60 lakh customers and expect the company to become profitable by the end of this fiscal year,“ Dinesh said. “We are currently not look- ing for any other PE investment. It is just that the company grew faster than TVS and Sons' investment limits, and so went in for PE this time.“ By 2014, TVS ASL plans to open outlets in Sri Lanka and West Asia.