Financial Daily from THE HINDU group of publications
Friday, Jan 18, 2002
Royalty termination to boost TVS bottomline
NEW DELHI, Jan. 17
TVS Motor Company's termination of the royalty agreement with Suzuki Motor Corporation from May 1 is projected to add significantly to its bottomline.
"The termination of the royalty agreement from May 1, 2002 will add 1 per cent of the sales to the bottomline of the company,'' says Mr Venu Srinivasan, Chairman and Managing Director, TVS Motor Company Ltd. This is because the company will save on the royalty payments to the Japanese major.
TVS Motor's sales in 2000-01 were Rs 1,820.98 crore and its net profit was Rs 62.65 crore.
The termination of the agreement will also give TVS the freedom to re-engineer its Fiero and Victor models. "We would like to re-engineer the Fiero to increase its fuel efficiency, ride handling and also the styling,'' Mr Srinivasan said at a press conference here today. From May 1, all its models would be badged as TVS and Suzuki would be dropped, he said.
Long waiting list for Victor
The recently launched TVS Victor is a big success going by the numbers revealed by Mr Srinivasan. According to him, there is a waiting list of 35,000 forcing him to ramp up production of the model from 10,600 motorcycles in December 2001 to 15,000 in the current month. Peak production of the Victor will be in March when TVS hopes to produce 25,000 motorcycles.
The company, which has a capacity to produce about 2,000 motorcycles a day now, is planning to double that. The ultimate objective is to raise the capacity to 1 million units for motorcycles only.
Alluding to the lower turnover and profits this fiscal, Mr Srinivasan said that the declining sales of two-stroke motorcycles, which form a major part of its portfolio, were affecting the company. "However, the Victor is expected to correct this trend,'' he said.
TVS Motor would be launching one or two more variants of the Victor and the Fiero in the next one year. First off the block will be the new-look Fiero, which is expected to be in the market by August 2002. The company is also planning to introduce a four-stroke moped by early next year, apart from a variant of the Scooty. A completely new motorcycle would be launched in the next eighteen months, Mr Srinivasan said.
TVS Motor is planning to set up a production base "somewhere in the ASEAN region by 2004''.
"This is only a statement of intent and plans would develop in due course,'' Mr Srinivasan said. It could be as a joint venture with a company from one of these countries, he said.
Meanwhile, the company has put on hold its plans for the Spectra. Mr Srinivasan said that the company did not intend putting "any more energy into the Spectra''. "These energies would be better utilised elsewhere,'' he said, pointing out that the company would sell probably a few hundred Spectras in a year.
But he said that the Spectra experience proved invaluable in the development of the Victor.
"Victor is the son of the Spectra. We learnt quite a few lessons in styling, fit and finish and pricing from the Spectra,'' said Mr Srinivasan.
There are no signs of a revival in the mopeds segment. Tamil Nadu is showing a negative growth while Andhra Pradesh and Karnataka are flat, according to Mr Srinivasan.
He said that the company was investing about Rs 80-100 crore every year in product development and it would continue to do so in future. Mr Srinivasan also ruled out any major product introductions in the high-power bikes segment, saying that TVS Motor was essentially a high-volume, commuter vehicle manufacturing company.
Send this article to Friends by E-Mail
Stories in this Section
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |
Copyright © 2002, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line