TVS Motor lines up Rs 175 crore capex for new launches

TVS Motor has planned a capital expenditure of Rs 175 crore for 2013-14, up from Rs 100 crore the previous year. The investment will support company's new two launches, including one scooter and motorcycle. Analysts feels that the new launches are “extremely important” for the company to gain market share, which has slipped in recent months.

According to a senior official from the company the capex will be for new launches.

The company will introduce a new motorcycle and a new scooter during the course of the current financial year. In addition, the company has planned upgrades across the product portfolio and will also launch a diesel three-wheeler during the year.

The official said that the first half of the fiscal seems to be tough, the second half will see some sort of positive growth, based on the forecast the launches are being planned. The official, who didn't want to be quoted, declined to reveal further.

“With a complete portfolio, the company expects to improve its performance during the next financial year,” it said in the company statement.

It may be noted That the company's total April sales dropped by around 5% to 165,215 units from 174,455 units registered in April 2012.

Two-wheeler sales stood at 160,502 units as against 171,551 units recorded in April 2012, a drop of around 6%. Motorcycles remained flat at 67,849 units in April 2013 against 67,966 units in April 2012. Scooters registered sales of 29,692 units in April 2013 against 35,833 units in the same month of the previous year.

Yaresh Kothari, research analyst – automobiles, Angel Broking said that the new launches will be extremely important for the company, to gain some market share, which was slipped in the recent months. It may be noted, the company lost its third slot, in the two-wheeler market to its competitor.

“Success of the new launches will be very crucial. They need to come up with the right product and right strategy to succeed,” he said.

The 125 cc motorcycle, Phoenix, has not seen volumes improving substantially. Similarly, on Scooter segment, the new launch would help the company to gain some market share, as the company slipped from the number 2 position to number 3 in terms of ranking in the segment in the recent past, said analysts.