TVS Motor’s profit skids on competition

TVS Motor’s profit skids on competition
Comment E-mail Print Share
First Published: Fri, Jan 25 2008. 11 51 PM IST
Updated: Fri, Jan 25 2008. 11 51 PM IST
Mumbai: The country’s No. 3 motorcycle maker, TVS Motor Co. Ltd, reported on Friday that its December quarter net profit almost halved, missing analyst forecasts, hit by lack of cheap loans, bike models and cut- throat competition.
The company said in a statement that its higher margin motorcycle volumes fell by one-fifth to 176,158 units in the third quarter, dragging down net profit to Rs5.83 crore and sales by 6.5% to Rs875 crore.
Analysts polled by Reuters estimated a net profit of Rs8.2 crore on sales of Rs880 crore.
“The motorcycle sales continue to be affected due to stringent norms followed by retail financiers, restricted availability and high rates of interest,” the company said in a statement.
The central bank, in a bid to moderate inflation, raised interest rate five times between June 2006 and March 2007 to a five-year high of 7.75%, crippling two-wheeler sales in the largest two-wheeler market after China. Almost three-fourths of two-wheelers in India are bought with loans.
TVS said its vehicle sales fell 6.5%, the steepest compared to larger rivals Hero Honda Motors Ltd and Bajaj Auto Ltd, to 339,956 units.
TVS was also unable to raise prices despite higher input costs as competitors offered discounts to attract customers, analysts said.
The company is looking at overcoming the slowdown in the motorcycles segment thr-ough a slew of launches and tie-ups with finance firms, it said.
TVS has launched a 125cc motorcycle and an entry-level 110cc bike in the quarter. It plans a three-wheeler, electric scooters and heavy bikes to return to growth.
“With new launches in the two- and three-wheeler segments, the company forecasts a positive growth in the fourth quarter,” it said
TVS shares ended 2.41% up at Rs44.65 on the Bombay Stock Exchange on Friday.
Comment E-mail Print Share
First Published: Fri, Jan 25 2008. 11 51 PM IST