TVS MOTOR REPORTS TURNOVER OF Rs. 952.98 CRORES,
Growth of 8% Exports up 20 per cent
TVS Motor Company recorded a growth of 8% and
reported a turnover of Rs. 952.98 crore for the third quarter ended
December 2006 compared to Rs. 883.38 crore recorded for the
corresponding quarter of the previous year. The turnover in the 9-month
period ended December 2006 was Rs. 2981.35 crores compared to Rs.
2445.34 crores, recording a growth of 22%.
During the 9-month period ended December 2006, motorcycles sales
registered an impressive growth of 21% at 7,12,112 units compared to
5,87,089 units over the previous period. This growth rate was higher
than the industry growth rate of 17.9%. During the same period, the
overall two-wheeler growth of 16.9% by TVS Motor Company was higher than
the industry growth of 14.3%.
Profit before tax during the 9-month period ended December'06 stood at Rs. 80.50 crore as against Rs. 127.41 crore recorded in the
corresponding period last year. Profit after tax stood at Rs. 57.55
crore as against Rs. 87.91 crore recorded last year.
The company recorded profit before tax of Rs14.11 crore in Q3 compared
to Rs. 45.03 crore recorded in the corresponding previous quarter. The
profit after tax stood at Rs. 11.46 crore compared to Rs. 31.06 crore
achieved during the same period last year.
The high material costs especially steel, aluminum, rubber, copper etc
continued to impact the margins of the company substantially. The cost
of raw materials during the quarter was 73.1% of sales rising from 69.9%
of sales recorded in the corresponding period last year.
During the quarter under reference, the company invested heavily in the
brands as a part of strategic brand building exercise. To avoid erosion
in the value of the brands, the company refrained from the industry
practice of offering discounts on products, especially in the festival
season. Consequently, due to intense competition during the quarter, the
company's two wheeler sales recorded a slow growth. However the retail
sales were far more robust and stock of motorcycles with the trade has
been reduced by 10 days.
During the quarter, the company undertook several cost saving measures
like value engineering and global sourcing. This is being intensified in
quarter 4 for reducing the material cost.
Further the company has been able to control the fixed cost during the
quarter compared to previous quarter and going forward with increased
top line growth, the profitability is expected improve substantially.
"All other factors remaining constant, the increased emphasis on
productivity improvement, waste elimination using total productive
maintenance would boost the fourth quarter performance, " said Mr
Radhakrishnan, President, TVS Motor Company.
In Q4, the company expects to outperform the industry growth rate. In
order to achieve this, the company has committed to capitalise on the
• The company has received favourable response on the recently launched
StaR City ES. This motorcycle with its attractive pricing coupled with
the fact that it is India's first and only electric start motorcycle in
the 100 CC segment brings great value to motorcycle customers across the
• The 2-stroke variant of TVS Scooty, 'Teenz' was well received in the
markets it has been launched.
• The company has intensified several sales activation programmes across
key markets and will certainly yield good results.
Total exports during the quarter recorded 21,938 units compared to
18,205 units recording a growth of 20%. The total export of 79,439
units, at a growth rate of 30%, during the 9-month period was the
highest ever achieved by the company in a 9-month period.
The proposed three new projects namely the Three Wheeler, Himachal
Pradesh and Indonesian ventures are progressing as per the schedule.
In line with the overall business plan of 2007-08, the company expects
to grow around 20%. The Himachal Pradesh Plant, with an annual capacity
of 300,000 units, is nearing completion and will be ready for commercial
production by April 07. The annual capacity can be increased to 500,000
units with nominal additional expenditure. This will help the company to
improve their delivery time to the vast dealer network already
established in North India and help the company increase sales. The
investment in this plant is estimated at Rs. 120 crores.
The three-wheeler plant will have a capacity of 100,000 units per annum
and will roll out state of the art three wheelers early next financial
year. The investment plan for this project is Rs. 115 crores.
Indonesian Plant will commence production with the roll out of 'Bebek' form of two-wheelers, which constitute 80% of the total two
wheelers sold in Indonesia. In phase I, the plant will have a capacity
of 3,00,000 units and in phase II, this will be extended to 5,00,000
units. The investment planned in phase 1 is US$ 45 Million.
CUSTOMER SATISFACTION AND QUALITY
The continued improvement in quality of its products has resulted in the
company winning several quality awards for its products. Last year, TVS
Apache, which was awarded 'Bike of the Year 2006' by several leading
auto magazines, was chosen as the number 1 motorcycle brand in its
class, in an all India customer satisfaction survey conducted by TNS
Automotive. Recently, TVS Apache won the 'NDTV Car & Bike - AAA viewers
choice Bike of the Year 2007' award, thus reinforcing customer's
During the quarter, TVS M offered a unique 5-year warranty scheme for
its discerning TVS StaR customers.
Several products are in the pipeline across key segments of motorcycles
and scooters. All these projects are currently on schedule.