TVS Logistics buys 85% stake in UK firm Rico for Rs 100 cr

Chennai: TVS Logistics has acquired an 85 per cent stake in the UK-based Rico Logistics for Rs 100 crore.

The acquisition will ‘significantly’ help TVS Logistics move towards becoming a $1-billion company by 2015, according to its Managing Director R. Dinesh. The acquisition was partly funded through funds raised from KKR, which had last year invested Rs 265 crore in TVS Logistics, and from internal accruals.

Last-Mile Capabilities
The stake buy will add service capabilities such as ‘last mile rapid response’ and new service verticals such as information technology, telecom and medical.

The deal was done through the holding company (TVS Logistics, UK), which will retain Rico’s 450 employees, he said.

This is the third acquisition by TVS Logistics in the UK, after CJ Components in 2004 and Multipart Holdings in 2009. These two companies now function under one brand — TVS Supply Chain Solutions.

With the acquisition of Rico, the employee strength of TVS Logistics in Europe will exceed 2,000 (direct and indirect).

Dinesh said the company would announce smaller acquisitions before March. Both organic and inorganic business will contribute equally to the target of achieving $1-billion revenue. “We have been growing 10-15 per cent in a market which is growing less than 5 per cent. The company is likely to end with revenue of around Rs 2,500 crore this year. This will not be as high as we hoped it to be,” he said.

Rico was formed in 1988 as a ‘same-day’ courier company and has grown to be a pan-European logistics service provider. With a turnover of Rs 380 crore, its clients include companies such as Dell, said Rico’s Managing Director, Sanjive Sharma. He will continue to oversee this company, says the press release.

Same-Day Response
The stake buy will give TVS Logistics technical value-add too.

For example, if an ATM fails in the UK, and an engineer needs a spare part to replace the damaged parts, Rico drops this spare in the engineer’s car boot at 3 a.m. and the engineer is at the site to repair the machine at 7 a.m. The same applies to the medical and telecom sectors, said Dinesh.