MUMBAI : Shares of TVS Supply Chain Solutions rose as much as 8% on Monday after the company announced a strategic agreement with Japan’s Sankyu Inc, which plans to acquire a 0.5% stake in the Indian logistics company.
The two companies have signed a memorandum of understanding to work together on supply chain and engineering services. The proposed investment by Sankyu will require the necessary regulatory approvals.
The partnership will initially focus on India, particularly manufacturing and industrial customers. TVS Supply Chain will bring its logistics network and customer base, while Sankyu will contribute its engineering capabilities and links with Japanese industry.
The planned services will cover logistics, warehousing, transportation, engineering, maintenance and on-site industrial support.
More than 1,400 Japanese companies operate in India, giving the two companies a large base of potential industrial customers. The companies also plan to form a joint steering committee to identify business opportunities and develop combined services.
Sankyu operates in logistics and engineering, while TVS Supply Chain Solutions has operations across 26 countries and more than 16,500 employees. Its customers include companies in automotive, industrial, consumer, technology, rail, utilities and healthcare sectors.
The announcement triggered buying in the stock.
TVS Supply Chain shares climbed about 8% during Monday’s session, reaching around ₹131.17 at one point. The rise came despite a sharp fall in the company’s latest quarterly profit.
TVS Supply Chain reported consolidated net profit of ₹20.85 crore for the June quarter, down 70.37% from a year earlier. Revenue increased 28.66% to ₹3,335.22 crore.
The Sankyu partnership gives TVS Supply Chain another avenue to pursue Japanese manufacturers operating in India. The companies have also said they may look at opportunities in Asia, the Middle East and Africa.
TVS Supply Chain chairman R. Dinesh said Sankyu’s engineering capabilities and Japanese industrial relationships would complement the company’s supply chain business.
Sankyu president and CEO Kimihiro Nakamura also backed the partnership, with both companies looking at opportunities to expand their combined services.
The proposed 0.5% stake purchase is still subject to approvals.
