TVS Motor plans Rs200-crore capex

Chennai: TVS Motor Co is planning a capital expenditure of over Rs200 crore this year. Half of the expenditure, of about Rs100 crore will be spent on the company's new plant in Himachal Pradesh while the other half would go into a three-wheeler project. Company officials said the plant in Himachal Pradesh was expected to begin production in the second quarter of this year and the company hoped to make about 100,000 vehicles this year. The plant would have a capacity of about 25,000 vehicles a month.

The company's three-wheeler project was also on schedule and the product would be launched before the end of this financial year.

K.N. Radhakrishnan, president, TVS Motor Co, said the company had almost completed the construction of its Indonesia plant and product testing was in progress. The company would launch a step-thru vehicle from this plant by the end of this year. The plant would have a capacity of 300,000 vehicles a year.

Company officials said TVS Motor has reported a lower net profit this quarter because of higher raw material cost and increased investment in its brands. Material cost increased by Rs30 crore, of which the company absorbed a part through value engineering, leaving unabsorbed a net cost increase of 1.5 per cent, which was sought to be made up through a price increase effected in June. The strong sales in the first quarter were boosted by motorcycle sales, which accounted for 233,506 units, a 32 per cent growth over the previous quarter, compared to the industry average of 24 per cent.

The company said its share of the motorcycle market increased by 0.8 per cent to 13.4 per cent at the end of the first quarter.