TVS Motor Company has earmarked Rs 400 crore for expenses related to capacity expansion across its production facilities in India during FY2016-17, say market analysts closely tracking the company. In FY2015-16, the Hosur-based company had invested Rs 450 crore to expand capacity.
Currently, the company’s total two-wheeler production capacity stands at 3.8 million units annually. It also has production capacity to roll out up to 120,000 units of its three-wheeler models. Its manufacturing plants are located across the states of Karnataka, Tamil Nadu, Himachal Pradesh and in Indonesia as well.
Yesterday, TVS reported total standalone income of Rs 11,295 crore for the year ended March 31, 2016 thereby marking a YoY growth of 12.14 percent over the total standalone income for FY2014-15 which stood at Rs 10,072 crore.
The company has posted a net profit (audited standalone) of Rs 432.1 crore in FY2015-16 as against Rs 347.8 crore in FY2014-15.
Read more: TVS Motor’s Q4 profit rises 30% to Rs 118 crore
In a company document, TVS stated “the unaudited standalone results for Q4 FY2015-16, total income has increased from Rs 24,534.20 million for the quarter ended March 31, 2015 to Rs 28,396.00 million for the quarter ended March 31, 2016.”
Speaking to Autocar Professional, a market analyst said, “TVS Motor’s margins fell in Q4 FY2016 due to the expenses incurred on the Auto Expo and the marketing and advertising campaigns promoting its recently launched products that include the Apache RTR 200 and the 110cc Victor motorcycle. However, the company management insists that they continue to eye faster year-on-year growth for FY2017 as that of the overall two-wheeler industry. Their EBIDTA margin is recorded at 6.67 percent for last fiscal as compared to 6.04 percent in FY2015.”
Motorcycles pep up revenues, scooters a shining contributor
Motorcycles, which stood as the largest contributor in terms of the revenues to TVS Motor’s overall turnover, fetched Rs 4,236.16 crore during FY2016 as against Rs 3,810.20 crore earned in FY2015. The revenues from motorcycle portfolio have marked a growth of 11.18 percent YoY.
Scooters, on the other hand, contributed a total of Rs 3,054.91 crore to overall sales, growing at 25.62 percent YoY. The scooter portfolio had garnered total revenues of Rs 2,431.91 crore in FY2015.
Interestingly, the moped models stand as the third largest contributor by revenues to TVS Motor’s annual turnover. The mopeds garnered a total of Rs 1,554.81 crore during FY2016, which almost remained flat as the company had earned revenues worth Rs 1,553.04 crore under the same head in FY2015.
Three-wheelers, being the fifth largest revenue earning category for the company, fetched Rs 1023.92 crore during FY2016 compared to Rs 976 crore in FY2015.
Looking to drive exports
On the exports front, the company, which is also the second largest exporter of two-wheelers from India after Bajaj Auto, has reported revenues of Rs 550 crore (Q4 FY2016) and Rs 2,500 crore for FY2015-16.
“The company management estimates that its market share in two-wheeler exports will increase in FY2017. They forecast that while the export demand will remain low, market corrections could be seen in 6-9 months period as the crude oil prices stabilise. The company management has conveyed that they will continue to invest in its brands, technology, products and quality,” added the industry analyst.
TVS Motors’ market share among total two-wheeler exports from India stood at 14.45 percent in FY2016. Its domestic market share, on the other hand, for overall two-wheeler segment was 13.43 percent during the same period.
Experts say that the company is aiming to gain market share during FY2016-17 on the back of new products. It has already launched three products within the last few months that include top-of-the-line Apache RTR 200, 110cc Victor commuter motorcycle, and the four-stroke, 100cc moped – XL 100.
It had also rolled out refreshed products such as the Star City special edition (gold alloy wheels, tubeless tyres, USB port), Sport (with 95kpl fuel efficiency, 5-year warranty) and Apache (new colour graphics). It also rolled out facelifts of its existing scooter models including the Jupiter, Scooty Zest, Wego and Scooty Pep+ to keep up demand.
According to SIAM data, the company registered total domestic sales of 22,09,366 units, which marked a YoY growth of 5.76 percent in FY2015-16. Total domestic sales were split into sales of 773,597 scooters and scooties (13.77 percent YoY growth) and 712,002 motorcycles (7.81 percent YoY growth).
On the export front, it shipped out 358,515 units during FY2015-16, thereby marking a YoY growth of 10.81 percent.
Also read: First TVS-BMW motorcycle to roll out in H2-FY17