The TVS Group, one of the iconic business groups in the south, has roped in a global consulting firm to advice it on the possibility of charging a fee on group firms which want to use the TVS brand name.
Sources have indicated that the TVS group has retained consulting firm E&Y to help it understand the feasibility of such an option and also suggest a mechanism to do it.
T V Sundram Iyengar & Sons, the holding company, was set up in 1911. The group is present across diverse fields ranging from automotive to finance and logistics.
The TVS group is reputed for being ethical and trustworthy in its business. The group has a turnover of close to $7.5 billion. As of now, the group firms are allowed to use the TVS brand name if 25% or more of their equity is held by the group. In May last year, Suresh Krishna, chairman of TVS & Sons, told journalists in an informal chat that the group was considering royalty-type payment by group firms for using the TVS brand name. He, however, underlined that the thought process on this issue was only at a preliminary stage.
“All companies in the group follow highest ethical standards. Though different family members run their businesses differently, the core, which is ethics and trust, is followed very strictly,” Mr. Krishna had said.
The TVS group has undergone a major metamorphosis in the decades that followed since the inception of the holding company early last century. Today, third generation cousins have also come in to play active roles in the businesses of the group companies.
The TVS group is following in the footsteps of another iconic name in the industrial empire of the country, the Tatas.
Tata brand agreement
In 1996, the Tata group laid out an agreement titled Tata Brand Equity and Business Promotion (TBEBP). Under this, companies using the Tata brand name have to directly shell out 0.25% of the annual revenue or 5% of the profit before tax, whichever is less, for use of the Tata brand name. Those companies which use the name indirectly pay 0.15% of the turnover. If companies incur losses, they do not pay any royalty. TBEBP has been modified to accommodate certain group companies that have, over the years, grown exponentially and were paying huge fees under the earlier system.
The TVS brand has been built over several decades. And, the brand commands high degree of trust and respect across the entire business spectrum right down to end-customers. With the GenNext coming into the business, the need for not only strengthening the brand but also monetising it has become imperative, feel long-time TVS watchers.