Profit before tax declined due to increase in interest on borrowings by Rs 19.2 crore over Q1 FY23 and a one-time non-cash exceptional P&L impact of Rs 23.2 crore on account of conversion of compulsorily convertible preference shares issued prior to the IPO and thereafter converted to equity at a discount to the IPO price.

Adjusted EBITDA stood at Rs 179.4 crore in Q1 FY24, registering the growth of 3.3% as compared with Rs 167.2 crore in Q1 FY23. Adjusted EBITDA margin stood at 7.7% in Q1 FY24 as against 6.3% in Q1 FY23.

Revenue from Integrated Supply Chain Solutions segment (ISCS) was Rs 1,318.9 crore, up 20.1% YoY from Rs 1,097.7 crore in Q1 FY23 and up 5.1% QoQ from Rs 1,255.2 crore in Q4 FY23. ISCS Segment revenue grew in all geographies (India, Europe, North America) both sequentially and YoY.

In the Network Solutions (NS) segment, the Integrated Final Mile business continued to be resilient while the global forwarding business showed a decline in line with global trends. Network Solutions revenue was Rs 1,023.5 crore, down 9.0% QoQ from Rs 1,125.1 crore in Q4 FY23 and down 35.1% YoY from Rs 1,577.7 crore in Q1 FY23.

Ravi Viswanathan, managing director of TVS Supply Chain Solutions, said, “We are witnessing a trend of increasing outsourcing of supply chain activities across industries that are resulting in expansion of existing engagements and a strong pipeline of new opportunities. This trend is a tailwind for growth of the ISCS segment where we have strong demand drivers in all geographies that we are present. India's ISCS revenue has grown by 14.3% YoY reflecting the company's ability to capitalize on the opportunities which the increased economic activity in India is presenting. Inflationary pressures are seen to ease off in both UK / Europe and North America. Our sectoral mix of revenue has enabled us to grow YoY in double digits in both North America and Europe.”

Ravi Prakash Bhagavathula, global CFO of TVS Supply Chain Solutions, said, “Q1 FY24 showcased the inherent strengths in our portfolio and business mix. Our growth in the ISCS segment balanced the impact of subdued freight rates and delay in volume uptake in ocean and air freight. Our focus was on operational efficiency and cost reduction initiatives resulting in expansion of Adjusted EBITDA margins by 140 bps YoY. Overall profitability showed a decline because of higher interest cost and a one-time exceptional expense.”

Meanwhile, the company has agreed to acquire 100% equity shares of its wholly owned subsidiary, TVS Logistics Investments UK, TVS Logistics Investments Inc. USA, TVS Supply Chain Solutions Pte, Singapore.

The infusion of additional capital into the wholly owned subsidiaries is towards strengthening the capital structure so as to facilitate the business growth needs and reducing the indebtednesses of the respective overseas entities so as to de-leverage the company and improve the profitability. Additional capital infusion may result in lower gearing ratio.

The cost of acquisition shall be aggregate sum of up to Rs 450 crore and indicative time period for completion of investment in overseas subsidiaries is by November 2023.

TVS Supply Chain Solutions is an India-based multinational company, who pioneered the development of the supply chain solutions market in India. The company's customers span across numerous industries such as automotive, industrial, consumer, tech and tech infra, rail and utilities, and healthcare.