TVS will grow faster than industry both in domestic and global markets: CEO

Company confident on maintaining EBITDA growth momentum on the backdrop of better product mix, cost management and exports

TVS Motor has said that capex for the FY21 would be around Rs 500 crore and it will go towards new product development and technology among others. The company will also be supporting Norton, the UK brand which was acquired by the company early this year and the company's credit arm TVS Credit.

Meanwhile TVS EBITDA during the second quarter rose to 9.3 per cent from 8.8 per cent, last year, and the company is optimistic about maintaining the momentum on the backdrop of a series of initiatives it has taken.

K N Radhakrishnan, Director and Chief Executive Officer, TVS Motor said that capex includes development of new products, technologies, marketing and on international markets. "No projects are delayed," he said.

While the management did not comment on upcoming launches,  sources said that one of the products which is on the cards is a new 200cc motorcycle under the 'Zeppelin' brand in a bid to capture a larger share of global and domestic markets.

The company is also planning to support its recently-acquired Britain's legacy brand Norton by investing Rs 40 crore for its capex and around Rs 50 crore in TVS Credit Service, its lending arm, to strengthen its Capital Adequacy Ratio (CAR).

Despite Covid-19 challenges, TVS has strengthened its supply chain during the second quarter of 2020-21. The production and sales improved consistently from July 2020 onwards. Strong focus on cost reduction initiatives helped the company to improve EBITDA for the quarter to 9.3 per cent compared to 8.8 per cent during Q2 of 2019-20, said the company.

He added, despite challenges the company's sales and production have improved during the second quarter. TVS Motor has reported a profit of Rs 196.41 crore during the quarter ended September 30, 2020 as compared to Rs 255.01 crore, a year ago. Company reported a revenue of Rs 4,617 Crores in the second quarter of 2020-21 as against Rs. 4,353 crore in the second quarter of 2019-20 registering a growth of 6 per cent.

During the investors call, Radhakrishnan said he is optimistic that the company will be able to maintain the growth momentum in EBITDA and the factors would help include better product mix, international markets, cost management among other factors.

He said, demand in the urban markets ia back to pre-Covid-19 levels (in the markets which have opened up), while the sentiment in rural market is good on the back of a good monsoon and reservoir levels increasing among other factors. He said, in both urban and rural markets premium products are seeing  good traction.

"Bottom of the pyramid will come back as the markets open up, jobs are opening up. GST reduction will aid the revival of the market," said Radhakrishnan.

"We are cautiously optimistic about the festival season," said Radhakrishnan. He added, TVS will grow faster than industry in both domestic and export markets with the existing product portfolio and new product line ups, said the company which reinstated the salary cuts with effect from October 1 as the company sales are increasing.  

In the month of July 2020, TVS total two-wheeler sales was 244,000, it improved to 277,000 in the month of August 2020 and in September 2020 sales further improved to 313,000.

Total two-wheeler sales of 834,000 for the quarter was almost in line with last year's second quarter number of 842,000. Two-wheeler export sales grew by 7.8 per cent compared to Q2 of last year. Motorcycles registered sales of 366,000 units in the quarter ended September 2020 as against sales of 342,000 units registered in the quarter ended September 2019.

Scooter sales of the company for the quarter registered sales of 270,000 units as against sales of 333,000 units in the quarter ended September 2019. Total three wheelers registered sales of 33,000 units in the quarter ended September 2020 as against sales of 43,000 units in the quarter ended September 2019.