However, Srinivasan has, just last month, been pushed to the fourth position in two-wheeler sales by Honda Motorcycle and Scooter India, which was recently freed from its association with Hero MotoCorp. Srinivasan declined to comment for this story despite being approached several times by Business Standard.
TVS' numbers say it all: In August, two-wheeler sales for TVS dropped by almost 21 per cent, from 190,000 units a year ago to 150,000 units this year, but, the overall industry fell for the first time since 2009 by only 4.81 per cent. TVS' motorcycle sales were down 31 per cent and scooter sales by 27 per cent. Even six years ago, the company had a decent brand recall, say shareholders, but, according to them, that, too, has eroded today.
While August represented an all-around bloodbath for motorcycle manufacturers, TVS' problems seem to go back many years. For instance, in scooters and scooterettes, TVS has watched its market share slide from close to 26 per cent in 2005-06 to 16.1 per cent in August 2012, according to the Society of Indian Automobile Manufacturers. For motorcycles, TVS went from selling close to 13 per cent of the country's bikes in 2005-06 to 5.14 per cent of them this August. Subsequently, the company's stock price has plummeted over the past decade, going from Rs 840 in September 2001 to Rs 42 today.
What could explain such a consistent decline in sales for a respected and established player, while other two-wheeler manufacturers have thrived?
TVS' moment of reckoning came when its partnership with Suzuki came to an end. Initially, the markets weren't too hopeful about TVS going it alone, considering the stock got hammered, falling from a high of Rs 830 in October 1999 to Rs 82 on the day before the split was announced in September 2001.
But, Srinivasan seemed undeterred. In an interview at the time, he said that the partnership with Suzuki came with its own set of drawbacks - that even a minor modification under the joint venture (JV) would have normally taken six-12 months. "We are now in a position to react much more to change," he says.
Srinivasan was proved right, as the company came out with the TVS Victor, a 110cc motorcycle that was the first indigenous product from the its stables, in 2001. The bike soon became successful enough to become the de facto brand ambassador for the company, and turned its fortunes around.
In the January-March quarter of 2002, TVS Motor's sales increased by 32 per cent and net profits by 448 per cent, while its stock skyrocketed to Rs 457.25, nearly 400 per cent up from the corresponding time in the previous year. TVS continued its run of hits, by launching India's first scooterette, the TVS Scooty Pep, in 2003, which also went on to become a major success.
There were also failures. For instance, the TVS Spectra, its four-stroke scooter (and the first one in the industry), was considered a better scooter compared to rivals, such as the Honda Eterno. Yet, the Eterno succeeded while the Spectra failed. The reason is, the product was launched in a hurry and at the time, aluminium-based components for engine construction were entering the market, while TVS relied more on traditional, heavier raw materials. This meant that the unisex Spectra, at 130 kgs, was a good 40 kgs heavier than its competitors.
At the time, Srinivasan emphasised the silver lining in this failure. "Spectra was an important product, without which the company could not have made the Victor. It was a learning product, with an aim to produce four-stroke geared two-wheelers," he said.
There was, however, a more pernicious problem, embodied by the steady erosion in market share - the lack of a game-changing series of scooters or motorcycles. Bajaj, meanwhile, had revolutionised the motorcycle space in the early 2000s with its line of Pulsar bikes, which was far ahead of the technology curve than its competitors, say analysts. In addition to having a technology that couldn't match the Pulsars, analysts say that TVS also had insufficient presence in large northern markets, and was late to react to the industry's shift to four-stroke bikes.
Then, there was the problem of upgrading existing models, which was key to keeping any brand or line of autos - on four wheels or two - alive. When TVS's Apache line of motorcycles was launched, it was a bona fide success, as the company was able to capture the youth segment. However, according to an analyst, in a recent report, the company did not bother to give the Apache RTR series any mechanical upgrades.
Today, the only category that the company dominates - mopeds - is the one that made it a household name decades ago. All other manufacturers of the product have exited the space. It has a 100 per cent market share and mopeds represent 45 per cent of total sales for TVS, with 58, 618 units sold in August.
Today, competition is at fever pitch, as every two-wheeler maker is gearing up for an expansion. Honda, which increased its production volume significantly in the past year after separating from Hero, is ramping up to produce 10 million units a year from four million earlier. Hero MotoCorp has spent Rs 2,400 crore to expand production capacity to more than nine million units in two years. Bajaj's installed capacity is 5.1 million units per annum and it is planning to increase it to 6.4 million units per annum by March 2013. Yamaha is setting up its third facility in Tamil Nadu and expects to sell around 1 million units by 2014. Almost all the Indian players have joint ventures with sophisticated international two-wheeler makers - Bajaj with KTM and HeroMotoCorp with Eric Buell, for instance.
Meanwhile, TVS announced at the beginning of the year that it planned to invest Rs 100-125 crore on product development and R&D. While the last two years have been bleak on the sales front for the company, Srinivasan says that they have been spent focusing on production, quality and supply chain, and for the next two years the company will introduce new products and into new geographies.
Playing catch-up, the company, at its annual general meeting (AGM) said it would launch a new product every quarter. The first one will be the Phoenix - a 125cc motorcycle - TVS' first in this largest-selling category, where the company isn't a significant player. It is expected to hit the roads by the end of this month. TVS will also introduce bikes with engine capacities ranging from 200-250cc, another segment where it has no presence. The company aims to retain its position in the sub-100cc ungeared scooter and executive scooter segments through new launches and a series of brand activities. Other launches include a variant of its premium segment bikes, the Apache RTR 160cc and 180cc.
In January, Srinivasan said the company will invest Rs 400 crore at Howrah, West Bengal over the next three years to increase production from 1,600 units per year to 240,000 units per year, in a phased manner.
To address its technology gap, analysts say the company is in talks with German auto maker BMW's unit, BMW Motorrad, to source much-needed technological know-how and also plans to develop high-end motorcycles. At the recently concluded AGM, Srinivasan confirmed this but did not reveal any further details.
Will these efforts work, especially when competitors like Bajaj and HeroMotoCorp are already so far down the line of product innovation and joint ventures?
"The aggressive new launch pipeline could make the company regain its position if it is worked out strategically, but, it is very difficult and would take at least two to three years," says Mitul Shah of Karvy Stock Broking Research. "By the time the company reaches there, its competitors might also have moved fast and reached greater heights. It is a competitive market," he added.