TVS Motor against Bengal unit takeover

The company will, however, continue to assemble 2-wheelers at the facility

The two-wheeler unit that Chennai-based TVS Motor helped set up in Uluberia, West Bengal, is witnessing a problem between its two promoters.

The promoters of the company that owns the factory wants TVS Motor to take over the entire facility. However, TVS Motor, which entered into a technical collaboration with those promoters, has stated it is not interested in a takeover.

S G Murali, executive vice-president, finance, TVS Motor, said: “TVS Motor extended the technical consultancy to establish that facility. Subsequently, the party requested us to use the facility to assemble two-wheelers on a conversion charge basis. The fee agreed with them was payable over five years. The party subsequently requested takeover of the facility without any further cash consideration and adjust the fees payable to TVS Motor towards the takeover."

TVS' partners have not made the due payment to the company in lieu of the technical assistance provided to set up the facility and commence production. "The company has decided not to progress to take over the facility, while we will use this facility for assembling the two-wheelers for more time," added Murali. TVS had shown interest in producing two-wheelers from this facility to have a manufacturing footprint in the east. It presently also has facilities in Uttarakhand, Karnataka and Tamil Nadu. Though the reason behind TVS showing no interest in buying the Uluberia facility remains unspecified, experts have been supporting the idea of having less number of facilities, with the road looking clear for implementing the national goods and services tax.

TVS Srichakra

TVS Srichakra is in a process of developing radial tyres for the TVS Motor-BMW joint venture’s two-wheeler products, expected to be revealed in 2016, said an official.

With the latter's rollout, manufacturing companies might look at integrating their factories and have one of two large facilities, rather than many smaller ones spread across the country.

In 2011, TVS Motor had proposed to manufacture motorcyles in the franchise-operated two-wheeler plant at Uluberia. This was preceded by a 2008 agreement allowing TVS Motor to build at that facility under a manufacturing contract. Mahabharat Motors, jointly promoted by Indonesia’s Salim Group and the Universal Success Enterprise based in Singapore, was incorporated in 2006 to produce two-wheelers there, based on Chinese technology. In 2008, TVS Motor tied up with Mahabharat Motors as their contract manufacturers. According to the proposal, the facility was to manufacture 1,000 motorcycles a month from October 2009 onwards.

The production capacity was supposed to be expanded to 10,000 per month by 2011. However, it failed to match the estimated production and after the economic slowdown in 2009, TVS stopped sourcing from Mahabharat.