The company, which has been losing out due to lack of fresh models, said it would not shy away from investment. Compared to FY13, it will invest an additional Rs 50 crore in the current financial year, taking the total investment in FY14 to Rs 150-175 crore. Speaking at the annual general meeting in Chennai on Friday, Venu Srinivasan, chairman and managing director, said a poor monsoon has impacted agricultural output and inflation pressure forced people to tighten spending.
"People are investing in unproductive areas like real estate and gold," said Srinivasan, who noted petrol prices increased by 46 per cent in the last three years.
Due to a combination of these factors, the two-wheeler industry grew only 2.4 per cent in FY13, compared with the norm of 15 per cent.
Sudarshan Venu officially inducted in board
TVS Motor on Friday got the nod from its shareholders to induct 24-year-old Sudarshan Venu, son of Srinivasan, into the company's board.
The shareholders approved Venu's appointment as an additional director of the company. He was earlier appointed as vice-president with effect from December 2011.
"Though the first quarter (of FY14) was not too bad, we see the pressure continues during the current fiscal," said Srinivasan.
According to him, the industry will decline by about five per cent in FY14.
He said TVS Motor reported drop in sales last year due to lack of products in the executive segment. Besides, launches were also slow.
"It's just 11 years since we broke our partnership with Suzuki. We are doing everything to improve our quality and technology. In the last three years, the focus has been on improving the quality keeping BMW and Honda as benchmarks. These improvements delayed some of our launches," said Srinivasan.
"With a series of launches, we are looking at increasing our market share," said K N Radhakrishnan, president and chief executive officer. "This year so far, we gained market share in motorcycles by about 0.5 per cent in the last three months, purely because of Pheonix and other products including Apache are doing well."
Indonesian subsidiary to break even by next year
TVS Motor has said its Indonesian subsidiary, PT TVS Motor Company Indonesia, will break even by next year.
Srinivasan said the subsidiary had struggled because finance was denied for vehicles. Plus, there was pressure on pricing of the products. "With the launch of new products, we are hopeful it will break even."
He noted the TVS Wego and TVS Phoenix 125-cc, launched in December 2012, had a zero defect ratio. The company claims it has sold around 10,000 units of Phoenix since launch.
The company will also upgrade TVS Scooty, for male commuters on the Wego platform.
Radhakrishnan added that the new launches starting from the second quarter will be launched before December 2014. During the current financial year, a minimum of two scooters and one motorcycle will be launched.
The company has lined up about Rs 150-175 crore this financial year, compared to about Rs 100-110 crore in FY13.
K N Radhakrishnan, president and chief executive officer of TVS Motor, said the industry is facing a tough environment in Indonesia. The government has mandated a minimum requirement of 20 per cent down payment, which has put enormous pressure on the buyers.
Besides, there has been a shift in people's preference from motorcycle to scooter, in which the company did not have product. "With the launch of a new product in the scooter category, we are hopeful that the subsidiary will break-even next year. Besides, the Indonesian arm will also export products," he said.