The Hindu Business Line : TVS Motor rides into Indonesia

TVS Motor will formally inaugurate its Indonesian plant and roll out a step-thru in that market next month. The company hopes to wean away buyers from the Japanese brands by offering similar build quality and features at a lower price.

HONDA SUPRAX... one of the competitor's TVS Motor is likely to face in Indonesia.

Japanese two-wheeler brands dominate the Indonesian market, which is predominantly one for step-through-style small bikes. Come May, one new entrant will try to muscle into this market.

Rollout next month

TVS Motor will formally inaugurate its Indonesian plant and roll out a step-thru in that market next month. The Indonesian plant, at Karawang in West Java, is expected to be the `mother plant' for the Asean (Association of South-east Asian Nations) region and eventually it would have an annual installed capacity of about quarter of a million units. Initial production capacity is likely to be about 1.2-lakh units per annum.

While the initial investment in the plant was about $43 million or about Rs 200 crore, additional outlays of $57 million is contemplated for later date.

Hiking local content

The step up in investments would be mainly to develop the local production of components and for increasing local content in the bikes sold in that market. TVS's Indonesian bikes are expected to have a local content of 40 per cent in early production. With additional investment of $57 million in place, TVS is expected to boost local content to 80 per cent within three years.

The company's step-thrus and bikes are likely to be fitted with 100-150cc engines. An overwhelming majority of bikes sold in Indonesia are in this engine size category, including the Honda step-thru featured below. TVS Motor is hoping to wean away buyers from the Japanese brands by offering similar build quality and features at a lower price.

The stakeholders

PT TVS Motor Company Indonesia was incorporated in that country to manufacture motorcycles and parts with an initial capital of $27.60 million. It is a subsidiary of the Indian parent, in view of it being the subsidiary of TVS Motor Company (Europe) B.V.

TVS Motor Company (Europe) B.V, was incorporated in the Netherlands as a wholly-owned subsidiary of the Indian parent TVS Motor Company and holds 75 per cent of the total paid-up equity capital of PT TVS Motor Company Indonesia.

TVS Motor Singapore Pte. Ltd, another wholly-owned subsidiary of the Indian parent, has also invested in the equity capital of PT TVS Motor Company Indonesia and holds 25 per cent of the latter's total paid-up equity capital.

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