The Hindu Business Line : TVS Motor Q2 net drops 22.28%

Mr K.N. Radhakrishnan (left), President, TVS Motor Company, and Mr S.G. Murali, Senior Vice-President, Finance, at a press conference in Bangalore on Wednesday. - G.R.N. Somashekar

Bangalore , Oct. 25

Two-wheeler company, TVS Motor has recorded a 22.28 per cent drop in net profit to Rs 24.83 crore on a turnover of Rs 1,088.75 crore, which grew 33.5 per cent during the second quarter of 2006-07.

The TVS Motor President, Mr K.N. Radhakrishnan, told newspersons on Wednesday that the profit before tax (PBT) was down 21.7 per cent to Rs 36.25 crore during the quarter. He pointed out that the last year's PBT included a one-off DEPB target plus incentive of Rs 9.7 crore. Excluding this incentive, the PBT for last year's second quarter was Rs 36.6 crore. "Hence we have been able to maintain the profitability even though there was an increase in the cost of raw material," Mr Radhakrishnan said.

The company has also declared an interim dividend of 70 paise per share absorbing a sum of Rs 16.63 crore, the official said.

He said there was an increase of two percentage points in raw material prices and the company is now actively considering neutralising the increase through global sourcing and other activities. It also increased the prices of some of the models marginally to absorb some of the costs.

He said during the quarter, the company sold 2,58,321 motorcycles recording a growth of 37.3 per cent compared with the industry growth of 17.4 per cent. Sale of scooters grew 6.6 per cent to 73,364 units while mopeds grew 27 per cent to Rs 87,510 units. The overall share of the company in the two-wheeler segment grew over two per cent to 20.1 per cent. Exports grew 38 per cent to 31,729 units during the quarter.

Mr Radhakrishnan said the company expects to launch its three-wheeler model by the first quarter of the next financial year. It has set up a Rs 100-crore plant in Himachal Pradesh to produce the three-wheelers. It expects to sell 25,000 units of the model every month. The company also plans to launch one more variant of StaR motorcycle, which crossed the one million mark during the second quarter. There are also plans to launch two more models of Apache, the premium end of the two-wheeler. He, however, admitted that there was a poor response to the company's two-wheeler model, Centra.

He said the company would launch two wheeler models from its Indonesian plant sometime during the first quarter of the next financial year. It has invested $45 million in the plant, which has an annual capacity of three lakh units.