AI adoption helped cut costs and gain new customers, says TVS ILP

Logistics parks operate at full capacity as AI adoption drives operational efficiency, cost reduction and higher customer retention despite global tariff challenges

Increased adoption of the artificial intelligence (AI)-driven technologies into its logistics and warehousing-related operations has helped TVS Industrial & Logistics Parks (TVS ILP) to reduce costs and gain new customers, Ravi Swaminathan, the company’s founder and vice-chairman, said.

 

“Following the adoption of AI, it becomes very efficient, not only to us, but also to our customers. We look at AI in a very positive way. It's not that it (AI) is going to take away jobs, but on the contrary create new jobs,” Swaminathan said in an interview to Business Standard.

 

“It’s (adoption of AI) like shifting from typewriters to computers and every industry has to adopt it to remain relevant,” he said.

 

TVS ILP and TVS Supply Chain Solutions (SCS), a third-party logistics (3PL) firm related to TVS ILP, have both implemented AI in their operations.

 

 

TVS ILP has a staff strength of 3,000 people in Madurai for tech-driven back-end work. All 21 of the company’s logistics parks operate via AI-driven technologies. “From complaint management to concise management, everything is now AI-driven,” Swaminathan said.

 

TVS ILP is a joint venture between BSE-listed TVS SCS and the Swaminathan family. The TVS Mobility Group through TVS Supply Chain Solutions Limited (TVS SCS), which is the Group’s logistics arm, currently holds 25.20 per cent stake in TVS ILP, Ravikumar Swaminathan & Associates holds 29.6 per cent stake, while British International Investment (erstwhile CDC group) and Lingotto Opportunity Fund ILP hold 21.1 per cent and 21 per cent stake, respectively, in TVS ILP as on December 31, 2024.

 

He said by using AI, mistakes in operational level will come down dramatically, especially in the paper work to begin with.

 

“In SCS, we have a ‘visual’ programme where a camera scans containers from inside to enhance logistics efficiency and cost savings.  It can detect whether the container is being shipped at lower capacity or not. So, instead of sending two half-full containers 10,000 kms away, we can send just one. The productivity improves dramatically because of AI adoption.”

 

TVS ILP’s warehousing and industrial assets portfolio spans an area of 20 million square feet (msf), out of which about 11 msf of assets valued at around ₹3,000 crore have been transferred to the company’s recently listed private infrastructure investment trust (InvIT). The company raised ₹1,300 crore via the InvIT. 

 

Swaminathan believes that the logistics sector has picked up amid its recognition as an industry by the government, India’s GDP growth, and the movement of goods. These factors, coupled with the company’s build-to-suit strategy of building warehouses, have helped it to maintain 100 per cent occupancy over the last five years. “The industry average is between 75 and 80 per cent. That's a huge difference. It reflects in profitability and yields,” he added.

 

He said that there has not been any slowdown in the sector. “The industry is not slowing down for any reason. I don't consider the last 2-3 months to be reflective of what the industry would do. These months are reactions to the US’ tariff threats, but it’s picking up now. Even if we eliminate that portion, there is a tremendous growth in general trade in the economy, both in the manufacturing and the services sectors.”

 

Currently, 10 per cent of TVS ILP’s income comes from its logistics-related value-added services. The company aims to increase it to 25 per cent in the next five years by diversifying the business into non-capital-intensive segments.

 

According to Swaminathan, the company has grown at a compound annual growth rate of 32 per cent for the last five years. Currently, 20 per cent of its total business comes from new-age businesses like qcommerce, while most of the growth comes from the manufacturing of autos and auto components segment.