TVS Motor expects to be debt free on standalone basis next year

Company also infusing a capex of Rs 200 crore this year for its new product launches

TVS Motor Company is expecting that the company, on a stand-alone basis, would be debt free by next year. The company is also infusing a capex of Rs 200 crore this year for its new product launches, scaling up of three wheeler capacity and its joint venture with BMW.

It is also looking at its Indonesian subsidiary to be cash break-even next year, by scaling up the sales following the recent launch of a skubec, a scooter format platform in Indonesia.

It is also planning to launch a motorcycle and a new Scooty for the youth who are looking for powerful scooter, said the company's management officials to the analysts recently.

"The interest bearing debt is Rs 240 crore, but we are also sitting on a cash of Rs 150 crore. So the net of cash on interest bearing debt is only about Rs 100 crore in the stand-alone balance sheet," said S G Murali, CFO, TVS Motor Company.

"As a standalone company, we will be definitely be debt free by next year," he added while speaking to the Analysts in a conference call. The company also has a sales tax loan of Rs 400 crore. Around Rs 260 crore borrowings in the company's consolidated balance sheet has vanished with the divestment of TVS Energy. During the last quarter, the company divested its majority stake in TVS Energy Ltd realizing a profit of Rs 30 crore.

The only other substantial company where the company's borrowing goes into is the Indonesian subsidiary, which is around $15 million.

The company has recently launched a skubec, a scooter, in Indonesia, which has a huge market in the country. "With the kind of focus we are putting in Indonesia, we are confident that we will be able to cut down the cash losses substantially in this year and next year," said K N Radhakrishnan, president and CEO, TVS Motor Company.

The officials said that the company is expecting the volume of sales in Indonesia to grow from the current 2000 units per month to around 5000 units a month. It is expecting that launch of its first product in the Skubec format in Indonesia would help it to scale up the numbers quickly. It has exported around 1,200 units per month from Indonesia.

The company is also investing around Rs 200 crore mainly in India including for a capacity expansion in its three wheeler facility, which is growing at a fast pace, and into its joint venture with BMW. Considering the growth in three wheeler market, it is planning to expand the capacity for the three wheelers, he added. Besides, it would also be investing from this estimated amount into new product launch and R&D.