TVS Motor Company has said that it will be improving its capex to Rs 500 crore for the remaining period of FY21 as the company is planning to invest in international markets, new products and technologies, thanks to its growing export basket and improving domestic dispatches, back in the country. The company had, earlier in May, said that its capex plan for FY21 would only be around Rs 300 crore. The Chennai-based two-wheeler and three-wheeler major is also looking at investing Rs 40 crore in its recently-acquired Britain’s legacy brand Norton and around Rs 50 crore in TVS Credit Service, its lending arm. Speaking at an investor call post the second quarter earnings release, K N Radhakrishnan, director & CEO, TVS Motor Company said the company will continue to launch new products in the segments in which it does not have presence. Refusing to give specific details about the products and the categories, he said, “ We will fill up the white spaces in due course, no projects are delayed due to Covid-19 situation.”
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% compared to 8.8% during Q2 of 2019-20. “We are optimistic that the company will be able to maintain the growth momentum in ebitda riding on the better product mix, international markets and cost management,” he said. The cost reduction measures the company had initiated some two years ago have started to yield results. The same focus will lead to robust improvement in ebitda, according to him.
Demand in the urban markets, wherever businesses are opened up, is back to pre-Covid levels while the sentiment in rural market has been good on the back of a good monsoon and reservoir levels increasing. “In both urban and rural markets, premium products are seeing good traction. The bottom of the pyramid will also come back as the markets open up, and with jobs coming back. I would say, GST reduction will aid the revival of the market,” said Radhakrishnan.
On the question of festival sales, he said that the company was cautiously optimistic about the season. Though the company had a small growth in the last ten days, it has to see how sales pan out, during the Navaratri season. TVS Motor will grow faster than industry in both domestic and export markets with the existing product portfolio and new product line- up, he said. In the international markets, the company is closely working with distributors and will launch products of their choices.
“As far as international markets are concerned we are witnessing a very good growth. Overall, on domestic front, the second half will carry positive momentum created in September and the series of measures initiated by the government will improve the liquidity,” he said.
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