The Hindu Business Line : TVS Motor plans Rs 200-cr capex spend

TVS Motor Co Ltd will incur a capital expenditure of over Rs 200 crore this year with a bulk of it — Rs 100 crore each — going into the new plant at Himachal Pradesh and the three-wheeler project.

Company officials, on Monday, told a press conference that the plant in Himachal Pradesh was expected to begin production in the second quarter of this financial year and the company hoped to make about 100,000 vehicles this year. The plant would have a capacity of about 25,000 vehicles a month.

The three-wheeler project was on schedule and the product would be launched before the end of this financial year.

Mr K.N. Radhakrishnan, President, TVS Motor Co, said that construction of the Indonesia plant was almost complete and product testing was in progress. The product — a step-thru vehicle — would be launched by the end of this year. The plant would have a capacity of 300,000 vehicles a year.

Net profit lower

On the company's performance in the first quarter of this financial year, Mr Radhakrishnan and Mr S.G. Murali, Senior Vice-President - Finance, said that net profit was lower because of higher raw material cost and increased investment by the company in its brands. Material cost increased by Rs 30 crore, of which the company absorbed a part through value engineering, leaving unabsorbed a net cost increase of 1.5 per cent, which was sought to be made up through a price increase effected in June. This increase would see it through the second quarter, Mr Radhakrishnan said.

He said the strong sales in the first quarter were boosted by motorcycle sales, which accounted for 233,506 units, a 32 per cent growth over the previous quarter, compared to the industry average of 24 per cent. TVS Motor's motorcycle market share increased by 0.8 per cent to 13.4 per cent at the end of the first quarter.

To cross 1-m mark

TVS Motor Company hoped to cross the one-million mark in motorcycle sales this year. It would increase production of the Apache, a premium segment motorcycle, from 500 units a day to about 800 a day. Once it crossed this figure, the company would review the performance of the Fiero, and decide on whether to continue with the product or not. The company was working on a direct injection vehicle and also a variant of the Victor, for launch during the year.

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