TVS Motor, the country’s third largest two-wheeler maker, reported a 24 per cent growth in profit at Rs 432 crore in 2015-16. The company is bullish that it will report double-digit growth as there are expectations of good monsoon and the infrastructure sector is getting a booster. Chief Financial Officer S G Murali speaks to T E Narasimhan about the company’s plans. Excerpts:
What helped TVS Motor post such good numbers? What is your outlook?
A comprehensive product portfolio with good market acceptance of new products and steady growth in sales enabled TVS Motor to post good sales numbers. We had set three targets two years ago, including increasing market share from 11.5 per cent to 18 per cent in the next 2-2.5 years. The growth will be portfolio-driven. TVS is the only company in all the three segments of the two-wheelers. We will leverage this. Market share has now increased to 14 per cent and the company will achieve 18 per cent market share.
Why did the company lose its third position to Bajaj?
We don’t speak about competition. TVS continues to be third largest in the domestic market.
How will you achieve earnings before interest, taxes, depreciation and amortisation (Ebitda) target?
Double-digit Ebitda will be achieved in two years. With top line growing, we will be able to bring down costs. By leveraging the complete portfolio, sales will go up. Total overhead as a percentage of sales will come down.
What are your capex plans?
Around Rs 400 crore in 2016-17 for capacity expansion and products. Capacity will be increased to 4.5 million units from 3.5 million units across all the three plants (Tamil Nadu, Karnataka and Himachal Pradesh).
What is your outlook for 2016-17?
Everything depends on the monsoon, which is expected to be good. Industry is expected to do well. With the direct benefits transfer scheme, finance commission recommendations and focus on infrastructure, economic growth would return. We hope the industry will come back strongly and TVS will grow by double digits. We have to grow ahead of other players to achieve our two per cent market share increase every year.
Any new products in the pipeline? When is your tie-up with BMW expected to come out with a product?
There will be some upgrades in the pipeline. I cannot comment on the BMW tie-up.
What can you say about the company exports?
Exports are a key focus area for the company. Currently, to over 45 countries TVS products are being exported. Currently, 23 per cent of revenue comes from exports.