TVS Motor plans to invest Rs 600 crore on capex, R&D

TVS, bike, motorcycle, two wheelers TVS Motor is planning to invest around Rs 600 crore to expand its manufacturing capacity and investment in R&D.

TVS Motor's Advisor S G Murali and company's new CFO K Gopala Desikan have said that capacity will be increased to 4.5 million units from 3.5 million units a year. TVS has manufacturing facilities in Tamil Nadu, Karnataka and in North.

Part of the capex will also be used to develop new products that the company is planning to introduce in the second half.

While the company did not put any time frame for its electric scooter, sources said a new electric Jupiter will be launched begining of 2018.

Murali confirmed that TVS will launch a 310cc vehicle, based on the BMW platform, by early 2018.

TVS has a strategic partnership with BMW Motorrad to develop and manufacture sub-500cc bikes for domestic and global markets. On an average, it exports around 2,000-2,500 units for BMW. The BMW G310R is the first motorcycle manufactured and exported under the partnership.

Murali said company plan to end the current fiscal with a double digit EBITDA, which during the quarter ended September 2017 was 8.6 per cent as compared to 8.1 per cent.

Growth in revenue, better product mix, fixed cost per centage of sales coming down are among the key factors which have helped TVS to report better margins.

Analysts believes, TVS is on path with achieveing its target of 10 per cent by next year.

"We will end the year with double digit margin and we will continue to maintain the momentum for the whole year next year," said Murali.

TVS has reported a profit of Rs 213.16 crore during the second quarter as compared to Rs 177.39 crore, an increase of around 20.2 per cent. Revenue, excluding Excise duty / GST grew to Rs 4,097.99 crore from Rs. 3,465.69 crore.

Contribution of exports has increased to 19 per cent after the entry of new markets.

TVS sees huge opportunities in International markets, especially Latin America, Middle East and ASEAN countries.

TVS Motor reported a marginal drop in domestic two-wheelers sales which stood at 270,372 units in October 2017 as against 272,229 units in October 2016.

Murali said that the numbers are not comparable since last year Diwali was in the month of October, while this year it was in November.

He claimed that during the 2017 festival season, the company witnessed 20 per cent sales growth compared to last year.