TVS Supply Chain Solutions has taken a significant legal step by filing an appeal with the National Company Law Appellate Tribunal (NCLAT) in New Delhi. The appeal challenges an order dated October 09, 2023, passed by the National Company Law Tribunal (NCLT), Chandigarh Bench, regarding a financial dispute with ZTE Telecom.

Key Details of the Dispute

Background of the Dispute

The conflict stems from operational dues claimed by TVS Supply Chain Solutions for work performed under business arrangements with ZTE Telecom. According to the company's disclosure:

1. TVS Supply Chain Solutions carried out work for ZTE Telecom under specific business arrangements.
2. While partial payments were received, certain amounts remained outstanding.
3. The company has filed an operational claim of approximately ₹5.03 crore.

Legal Action

TVS Supply Chain Solutions has decided to challenge the NCLT order by filing an appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016. This move indicates the company's determination to recover the claimed operational dues through the legal system.

Implications

The outcome of this appeal could have financial implications for TVS Supply Chain Solutions. A favorable ruling may result in the recovery of the claimed ₹5.03 crore, potentially impacting the company's financial position. Conversely, an unfavorable decision could affect the company's ability to recover these dues.

Investors and stakeholders of TVS Supply Chain Solutions may want to monitor the progress of this legal proceeding, as it could affect the company's financial statements and future business relationships.

This development highlights the importance of robust contract management and the potential complexities that can arise in business-to-business transactions, particularly concerning payment for services rendered.

TVS Supply Chain Solutions Limited (TVS SCS) has reported a strong financial performance for the second quarter, demonstrating resilience in its business model and operational discipline.

Key Financial Highlights

• Consolidated revenue reached INR 2,662.60 crores, up 6% year-on-year
• Profit Before Tax (PBT) grew by 30.8% to INR 23.32 crores
• Profit After Tax (PAT) increased by 54% to INR 16.31 crores
• Adjusted EBITDA stood at INR 178.40 crores, maintaining a healthy margin of 6.7%

Segment Performance

Integrated Supply Chain Solutions (ISCS)

The ISCS segment continued to be the primary driver of growth:

• Revenue grew by 8.4% year-on-year to INR 1,993.00 crores
• EBITDA margin expanded to 8.7%, up from 8.2% in the previous year's corresponding quarter

Global Forwarding Solutions (GFS)

The GFS segment faced challenges but showed signs of stabilization:

• Revenue remained relatively flat at INR 669.60 crores
• EBITDA margin declined to 2.2% from 4.2% year-on-year, primarily due to pricing pressures

Business Development

TVS SCS secured new business wins worth INR 204.00 crores during the quarter, representing 8.1% of the previous year's corresponding quarter revenue. The company maintains a healthy order pipeline of INR 6,200.00 crores, providing solid revenue visibility.

Notable contract wins include:

• A global leader in building technologies in India
• A top Indian commercial vehicle manufacturer
• A large global agricultural equipment company based in the USA
• A leading Europe-based coffee equipment manufacturer

Ravi Viswanathan, Managing Director of TVS SCS, commented on the performance: "We have delivered another strong quarter of consistent growth in both revenue and profitability. The strong performance of our ISCS segment, operating discipline, and substantial cash flow generation demonstrate the resilience of our business model."

Strategic Initiatives

The company's strategic initiatives, including Project One in the UK and Europe, are on track to deliver estimated benefits. These initiatives are expected to yield annualized savings of INR 110.00-120.00 crores, with in-year savings of INR 50.00-60.00 crores.

Future Outlook

TVS SCS remains focused on sustaining the ISCS momentum, improving GFS profitability, and converting its strong pipeline into consistent, high-quality growth. The company aims to achieve its medium-term objective of 4% PBT by Q4 FY27.

As the company moves into the second half of the fiscal year, it aims to capitalize on the growth opportunities in the Indian market, particularly following recent GST rate reductions that may stimulate consumption in sectors such as consumer durables.

While challenges persist in the global forwarding segment due to macroeconomic factors, TVS SCS remains cautiously optimistic about the sector's stabilization by the end of the fiscal year.

With its continued focus on execution discipline and cost management, TVS Supply Chain Solutions appears well-positioned to navigate the evolving market landscape and deliver on its performance objectives.