TVS Motor to Invest Rs 700 Crore on New Products and BSVI Upgrade

Chennai-based TVS Motor Company will spend Rs 700 crore this financial year on new products, enhancing production capacity, new technology and on-going works at the Bharat Stage VI (BSVI) upgradation.

It’s capex budget will see a 55 percent increase over last year.

The country's third-largest two-wheeler maker had lined up a capital expenditure of Rs 450 crore last year for existing products, new product launches and capacity addition.

K N Radhakrisnan, President and CEO, TVS Motor Company said, "We have close to 4.8 million capacity which is sufficient for next one year. In addition to that there is a three wheeler capacity of 180,000 per year. The capex for FY19 is Rs 700 crore. These will be used for new products, some supplementation of capacity and new technology and also for BSVI."

The Chennai-based company that sells models like the Jupiter, Apache and Scooty, clocked total sales of 8.89 lakh units, a growth of 32 percent in Q4FY18 compared to 6.74 lakh units sold in Q4FY17.

Domestic two- and there-wheeler sales grew by 29 percent to 7.28 lakh units against 5.64 lakh units, according to the Society of Indian Automobile Manufacturers. TVS announced its fourth quarter financial numbers on May 16.

Further, the management hinted that there could be a hike in prices of its products due to an increase in raw material prices. The company has already hiked prices by 0.5 percent in April, which was preceded by a 1.2 percent hike in January.

K Gopala Desikan, Chief Financial Officer, TVS Motor Company said, “We have seen substantial increase in raw material costs in Q4. Overall there was 1.2 percent increase. This quarter too we have taken another 0.5 percent increase. We are seeing more increase in raw material and it will be like this in H1. Closely watching opportunities to increase prices. Will continue review on that.”

The company launched three models during the quarter including an all-new scooter called NTorq 125, which was launched in February. It also launched the Apache RTR 160 4V and the Apache RTR 200 4V.

TVS is ramping up production of the Apache 310 RR which is having a waiting period of up to three months. The premium bike is presently available through a limited channel of dealerships. The bike is reportedly sold out for the next three months.

"Product mix, cost reduction and volume improvement will help in margin improvement. On the Apache 310 RR we have started supplying 1000 per month. Depending upon the demand we have capacity to increase the volume," added Radhakrishnan.

TVS is expecting the two-wheeler industry to grow by 8-10 percent this year. "We will surely beat the industry growth," Radhakrishnan said.