TVS benefited from good product mix, low commodity prices: S G Murali

Interview with CFO, TVS Motor

TVS Motor’s robust earnings for the quarter ended September surprised the Street. Chief Financial Officer S G Murali speaks to T E Narasimhan about the factors that helped the company, as well as its plans. Edited excerpts:

What helped TVS Motor during the September quarter?
A good product mix, especially the Jupiter and Apache, and soft commodity prices. Both contributed equally. Commodity prices were 1.2% lower during the September quarter, compared to the quarter ended June. Jupiter has already touched the 50,000 mark.

Can the momentum be sustained? What is your outlook on commodity prices?

Yes. For the next one or two quarters, we will continue to see benefits from commodities prices, which will soften after 6-12 months.

Is the poor monsoon a concern?
Weak rains in July-August have dampened growth for the industry, but indications are the second monsoon, the north-east one, will be good.

Why did TVS decide to postpone motorcycle launches?
Demand for the Jupiter is high and we want to capitalise on this. So, we have decided to launch the new motorcycles in the fourth quarter.

Are you on course to achieving targets, in terms of market share and double-digit earnings before interest, tax, depreciation and amortisation margins?
Yes. We will achieve 14-14.5% market share (currently, it is 13.3%) in the two-wheeler sector in 2015-16, and 18% in three years.

We are also sticking to double-digit Ebitda and profitable growth.

What will be the capital expenditure for 2015-16?
It will be around Rs 350 crore, for product development and capacity expansion.