TVS Automobile Solutions Pvt Ltd (TASL), a leading player in the automotive aftermarket business in India, has announced deepening of partnership with Japan’s Mitsubishi Corporation, which will significantly increase its stake in the former, to grow jointly in developing countries.
Mitsubishi will increase its stake in TVS Automobile from three per cent to 25 per cent through a combination of primary investment and secondary purchase. Other investors in TVS Auto include TVS group companies and PE firm Kitara Capital.
“The total investment of Mitsubishi in TVS Automobile will be in excess of ₹250 crore,” R Dinesh, Director, TASL, said here.
Exposure to Japan
The enhanced partnership will result in Mitsubishi providing TVS Auto exposure to Japanese suppliers for the availability of their parts in India and other parts of the world.
It will also provide TVS Auto with access and visibility in markets where they are already present and introducing them to TVS Auto in many geographies.
For Mitsubishi, the growth of the Indian automotive aftermarket and its future potential is an attractive part. Also, the successful model of TVS Auto in the Indian aftermarket segment and its applicability in developing markets prompted the Japanese engineering giant to strengthen the partnership.
“TVS Auto’s business model in the aftermarket segment is a very advanced one with the use of IT. Also, the class of entrepreneurs they support is quite attractive for us,” said Wakabayashi, Senior Vice- President, Mitsubishi Corporation.
Initially, TVS Auto is hopeful of establishing a strong presence in Africa as Mitsubishi could help TVS rope in trading partners in many countries of the region quickly.
If TVS enters Africa on its own, it could take three years to identify partners in 2 or 3 countries. But with Mitsubishi, it hopes it could identify partners in 20 countries. “So it is the speed with which we can grow in those developing markets,” said Dinesh.
He also believes that TVS Auto’s model of working with aftermarket entrepreneurs and its success could be replicated in other markets as the aftermarket structure is the same in most of the markets globally.
In 2018-19, TVS Automobile’s revenue crossed ₹1,300 crore, of which the overseas market contributed more than ₹400 crore, in which the UK business had a significant share, followed by West Asia.
The company targets to grow its revenue to about ₹1,800 crore during this fiscal.