The Hindu : Business : TVS Motor bets on new launches

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Friday, Jun 29, 2007
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TVS Motor bets on new launches

Special Correspondent

High input costs impact profitability

Indonesian venture to unveil two products
Three-wheeler project by November

CHENNAI: With the two-wheeler industry facing a flat growth due to a combination of factors, TVS Motor Company is banking on a series of launches to turn out improved top line and bottom line numbers this financial year.

Addressing a press conference here on Thursday, Venu Srinivasan, Chairman and Managing Director, said TVS Motor would launch half-a-dozen new products over the next 12 months. An upgraded 160 cc Apache motorcycle had just been launched. It was planning one more upgrade of Apache, he said. The company would also come out with a bike in the executive segment in the second-half. It would launch another bike in the segment thereafter.

The much talked about entry into three-wheeler would now happen sometime in November. The Indonesian venture would launch two products, he added. Sales from the Indonesian venture would be around Rs. 300 crore (TVS was hoping to sell 75,000 bikes there this year). And, the revenue from three-wheeler sales from its Hosur plant would be around Rs. 70 crore (with projected sales of 10,000 units). Mr. Srinivasan said that TVS was hoping that the revenue from these two (Indonesian venture and three-wheeler) would gross Rs. 750 crore next year. Yet, the biggest increase in revenue would come from sales of bikes in the executive segment, he added.

The Chairman also informed presspersons that the capital expenditure for the year would be around Rs. 100 crore. It would remain so over the next three years, he added. The capex programme would be more on technical side and targeted towards improving the productivity of assets and employee cost, he pointed out.

Notwithstanding adverse conditions, TVS Motor, he said, had held on to its market share at 11 per cent. He, nevertheless, admitted that the company “had dropped two points due to slide in entry-level segment.” The executive segment comprised 45 per cent of the two-wheeler market, he said. “Our 11 per cent market share came out of the rest 55 per cent of the two-wheeler market,” he pointed out.

TVS Motor reported sales of Rs. 946.84 crore in the fourth quarter of 2006-07, up from Rs. 860.62 crore in the same period last year. The profit before tax for the quarter was Rs. 10.35 crore (Rs. 41.04 crore). The profit after tax was placed at Rs. 9.05 crore (Rs. 29.09 crore).

The company reported sales of Rs. 3,928.19 crore for 2006-07, up from Rs. 3,305.96 crore in the preceding year. The profit before tax for the year was Rs. 90.85 crore (Rs. 168.45 crore) and the profit after tax Rs. 66.60 crore (Rs. 117 crore). Mr. Venu Srinivasan attributed the dip in profit to high cost of inputs such as aluminium, steel, rubber, copper and polymers.

The input cost was around 74 per cent of sales compared to 70 per cent in the preceding year, he said. Further, non-availability of finance also made things difficult, especially in the entry-level segment.

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