India’s third largest two-wheeler maker TVS Motor Company will invest Rs 800 crore this year on new product and technology development, and also towards preparation for the new emission norms.
This is an increase of Rs 100 crore over the management guidance at the end of the first quarter and marks a 78 percent rise from the company’s capex of last financial year when it spent Rs 450 crore.
The Chennai-based maker of Apache and Jupiter models posted a fall on nearly 1 percent in net profit for the quarter ended September but managed to beat estimates of a Reuters poll. The company posted Rs 211.3 crore net profit during the reporting quarter as compared to Rs 216 crore posted during the same quarter last year.
Speaking to analysts after announcing the results, KN Radhakrishnan, President and Chief Executive Officer at TVS Motor said, “There was lots of confusion over third-party insurance premium and consumers were preferring to postpone purchases. The increase in insurance was 10 percent of the cost of the vehicle at the entry level. But we are expecting demand to pick up in the coming days in the run-up to Diwali.”
TVS posted sales growth of 13.6 percent in overall volumes (domestic + exports) to 10.49 million units during the September quarter from 9.23 lakh sold in the same quarter last year.
Motorcycle sales grew 14.9 percent to 4.20 lakh units in the quarter from 3.65 lakh units registered in the quarter ended September 2017.
Scooter sales grew 18.2 percent to 3.88 lakh units in the quarter ended September 2018, from 3.28 lakh units a year ago.
Total three-wheelers sales grew 57.4 percent to 40,000 units in the quarter ended September 2018 from 25,000 units a year ago.
Radhakrishnan said the new budget bike Radeon has been very well received in the market while it is ramping up for increased deliveries of the Ntorq scooter which is on its way to hit a monthly run rate of 20,000 units.
The management did not state the reasons behind the consistent fall in volumes of the Apache 310 RR, the most expensive production bike by the company.
Industry scooter demand took a hit once again while witnessing a surge in demand for motorcycles due to a variety of factors including the price cut taken by Bajaj Auto at the start of this financial year.
“We have seen some discounting from the competition from Q1 and they are continuing that. The surprise element (during the quarter) was the insurance rise,” added Radhakrishnan.
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