TVS Motor Company reported
total revenue of Rs. 801.56 crores for the quarter ended June 2007
compared to Rs. 939.62 crores recorded during corresponding quarter of
the previous year.
Profit before tax during the quarter ended June 2007 stood at Rs. 10.90
crores as against Rs. 30.14 crores recorded in the corresponding period
last year. Profit after tax stood at 7.55 crores as against Rs. 21.26
crores recorded last year.
During the quarter ended June 2007, the overall two-wheeler recorded a
sale of 320,178 units compared to 376,297 units recorded corresponding
period last year.
Motorcycle sales were lower at 150,487 units compared to 233,614 units
over the previous period. The decline in motorcycle sales was mainly due
to the industry slowdown witnessed by the motorcycle segment due to
reduced availability of finance, increased cost and stringent norms
being followed by retail financiers. Currently, more than 60 per cent of
the purchases of the two wheelers are dependent on retail finance.
Consequently, the company is consciously reducing the stock of
motorcycles held by the trade to keep the stocks under control.
Further, the profits were lower due to high cost of raw materials
especially steel, aluminum, rubber, copper, polymers etc. This impacted
the margins of the company substantially. The cost of raw materials
during the quarter was 74.3% of the revenue compared to 72.2 % of the
revenue recorded in the same period last year. During this period, the
company continued to invest behind brands as a part of strategic brand
The interest costs for the quarter was higher due to increased level of
borrowing for the new projects as well as higher cost of borrowings for
NEW PRODUCT LAUNCHES
The company will soon launch two new motorcycles in the executive
segment, which will set a new benchmark in the industry in terms of
technology, performance and style.
In addition, the company will also launch an upgrade of TVS StaR, which
will provide superb value to its customers in the economy segment.
The launch of these products will be around the forthcoming festival
season. With these three launches and the existing Apache RTR 160, the
company will have significant presence in all the three key segments of
motorcycles, namely the economy, executive and premium segments.
PT TVS Motor Company Indonesia, wholly owned subsidiary of TVS Motor
Company, commenced its operation with the inauguration of its plant at
Karawang Indonesia on July 16th 2007 by the President of Indonesia, Mr.
Susilo Bambang Yudhoyono. The factory, located in 20 hectares of land
with complete manufacturing facilities, will produce TVS Neo, the new
generation of bebeks for the Indonesian market. With a capacity of
300,000 units per year, the company will soon launch other variants and
During the quarter, the Company's Himachal Pradesh Manufacturing plant
was formally opened on April 29th 2007. This state of the art facility
is located at Nalagarh, Solan district in Himachal Pradesh and is
designed to support the production of the company's world-class
two-wheelers. TVS Motor Company will have reduced cost of transportation
of vehicles, as this facility will cater to all the states in northern
India, and parts of central India. This will also help the company to
improve their delivery time to the vast dealer network already
established in these areas and help the company increase sales.
The three-wheeler project is on schedule and will have a capacity of
90,000 units per annum. The first three-wheeler product will be launched
by October 2007.
The company has taken up the above three large projects. Of these, two
projects have already gone into production and the remaining
three-wheeler project is expected to commence production shortly. Once
these projects achieve full production levels and stabilize their
operations, they will contribute significantly to the overall turnover
and profits of the company.
The company continues to undertake several cost saving measures like
value engineering, process improvement etc. TPM is practiced in all the
plants to ensure significant improvement in productivity leading to
reduction in manufacturing cost.
The company believes that the pressure on the margin will continue in
the first half of 2007-08 due to high cost of raw material and intense
competitive activity. However, in the second half of the year, the
company expects the pressure on margin to ease with the launch of new
products and the other initiatives mentioned above.
NEW PRODUCTS DURING QUARTER 1
During quarter 1, towards end of June 2007, the company launched an
upgrade of Apache, a 160 cc motorcycle with 15.2 bhp. This high
performance motorcycle is targeted at the youth looking for both style
as well as latest features, normally seen on international high-end
motorcycles. The bike has received favourable response among the
customers as well as leading experts from the automobile magazines.
During quarter 1 ended June 2007, the company's unique offering to its
Scooty customers with a wide choice of 99 colours was launched in 37
towns across the countries and will soon be expanded to more cities.
This is the first time in the world that an Automobile company offers
such huge range of customized colours for its product to choose from.
The Scooty brand continues to maintain leadership in the sub 100 cc
During the quarter one ended June 2007, the company exported 26,213 two
wheelers and exports will continue to be a focus area for the company.