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TVS Motor hopes to be in top-5 league by 2007-08

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MUMBAI, Nov. 20

TVS Motor Company Ltd hopes to be among the top five 2-wheeler manufacturers in the world with operations in at least five countries by 2007-08, Mr Venu Srinivasan, Managing Director of the company, said here today.

"We will make only TVS-branded products,'' he said, when asked if the company, once a joint venture with Suzuki, would include products made for others in the volumes needed to be in the Big Five league. "But I may supply engines,'' he explained.

On whether the average annual capital expenditure of Rs 200 crore, assigned for the next three years, was adequate to finance the road map ahead, he said, no capital issue was planned for the next three years. Besides, debt was always an option.

Currently, TVS Motor Company has operations only in India. Though Mr Srinivasan maintained the company's operational freedom had only grown with its split from Suzuki, it would take "at least 2-3 years'' for TVS Motor Company to touch good export volumes by itself. South Asian and South American markets may be the first to be tapped, Asean markets in contrast requiring resident production.

Early 2003, consultants will begin studying the potential for an overseas plant in Indonesia or Vietnam, the former seen to become the world's third biggest two-wheeler market and the latter, its fastest growing one.

"A typical plant would cost Rs 100 crore,'' Mr Srinivasan said. In the resultant assembly and local manufacture mix, engine parts will be shipped from India.

Growing abroad through Asean is not without a Chinese angle. As a market, China is complex and regulated. "We will not pick the toughest market to start with,'' he said, pointing alongside to the pattern of Chinese 2-wheeler sales in select Asean markets, beginning with a bang and slowing down thereafter.

"By 2008-09, we would definitely like to be in China,'' Mr Srinivasan said.

He sees the domestic market which is poised to touch 5 million unit-sales overall this fiscal end, being 10 million unit-strong by 2007. "Not less than 70 per cent'' of that will be motorcycles.

On its part, TVS Motor Company will launch a new, albeit costlier, Fiero (in February 2003), one or two variants of the Victor, new 4-stroke Scooty and new motorcycle by April/May 2003.

Production constraints in the Victor, which met with strong market demand, will be over by January 2003. Production capacity for the bike has been doubled and will rise to 3,000 units per day by August 2003. Overall, the company with an installed capacity for 1.4-1.5 million 2-wheelers would be adding roughly 70,000-unit capacity next year, Mr Srinivasan said.

According to him, the natural marginalisation of moped sales (65 per cent of moped market is in South India) in the sales portfolio and the Victor's wide acceptance would question any perception of TVS Motor Company as a South-focussed outfit.

From a pre-Victor level of 13 per cent, the company's western region market share has risen to 19 per cent, the east - 17 per cent (13 per cent), the north - 17 per cent (14 per cent) and the south - 25 per cent (18 per cent).

The company spends two per cent of its turnover on R&D. There has been consistent reduction of time taken for new product development, upcoming initiatives pegged to bear fruit in 18 months, the target being 12 months, three years from now including a 6 month-period to develop variants.

`Quality movement not recognised'

"THERE is a high quality-movement in India that is not being recognised in the world,'' Mr Venu Srinivasan said on the slowly growing number of companies capable of top notch manufacturing. TVS Motor Company was itself awarded the Deming Prize recently.

"Such improvements get rarely noticed by the outside world because it is shadowed by the more visible deterioration in segments like infrastructure. But even as the macro-climate may not be conducive, it is still possible to create a world-class micro-climate that is competitive", he said of efforts to improve quality.

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