Market is opening up gradually, Q2 looks much better: TVS Motor Chairman

The second quarter looks much better, but we have to wait and see how the rest of the year will pan out amid coronavirus pandemic, said TVS Motor's Chairman & Managing Director Venu Srinivasan.

It will be very difficult to make an assessment about the coming year even beyond a quarter, he said while addressing company's stakeholders on Wednesday.

"GDP is expected to decelerate to around (-) 5 per cent for the year and the impact of Covid will continue for some time to come. The first wave followed by the second wave and all cities and districts are shutting down to flatten the curve as Covid cases are increasing and make enough capacity available in our health care system," he said.

Sales drop will be one of the biggest in the Indian industry, be it automotive or engineering manufacturing industry, said Srinivasan.

However, he said that the market is opening up gradually after the lockdown. He expects the market to overcome the supply chain problem during the second quarter of the year.

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Going forward, two wheelers will have a greater preference due to distancing and therefore demand for two-wheelers will be greater, said Srinivasan.

Domestic demand was hit last year due to lower GDP, cost increase of nearly 30 per cent in the last 2 years (due to GST, emission norm changes, insurance cost) and on top of that Covid from end of the year.

"The company is cutting and saving costs, adopting new practices including digital booking options, door delivery mechanism and services to manage profitability. Premium motorcycles and scooters in exports will do better," said Srinivasan, adding that profit decline was kept to minimum last year as the company took a lot of cost saving initiatives.

On international business, he said, the company grew by 7 per cent in 2019-20, compared to 16.6 per cent in 2018-19. Company's Indonesian subsidiary reported a positive EBITDA for the full year, as against loss of $3 million and operating profit during the second of half of year.

TVS Motor is planning to commercialise some of the IPs, which will be built by the start-ups in which the company's Singapore subsidiary has invested in the last one or two years.

Sudarshan Venu, joint managing director, TVS Motor said that the idea is to invest in companies which have related technology to company's automotive or to its key subsidiary TVS Credit business in fintech and to build IPs in those start-ups and more importantly build them in there operating companies.

“In the second phase will look to commercialise some of the IPs and build business,” said Sudarshan Venu.

TVS Motor is betting big on several of the next generation technologies that have direct relevance with its business.