Excerpts from CNBCTV18's exclusive interview with SG Murli:
What do you expect to see in FY07 both in terms of volume growth and margins for TVS Motors?
During 2005-2006, we have grown in a handsome manner in line with the market. The overall growth was 15 per cent in terms of two-wheelers and in motorcycles, it has grown by 19 per cent. During the first two months of the current year, our growth has been ahead of the market and we hope to continue the trend.
What kind of percentage growth are you seeing in volumes this year?
This year we should be growing around 20 per cent.
What will that do for your margins? Will you be able to maintain them or better them by the end of this financial year?
The absolute growth in terms of topline will always lead to increase profit. If growth comes, we presume that profits also will happen.
For motorcycles, across which category in specific are you expecting to see higher volume growth? Is it the entry level or the premium segment?
We expect growth in both the segments. The Star, which we launched last year, has already crossed 500,000 and that is something, which has become one of the favourite brands in the entry level. Apache, which was launched in the premium segment towards the end of last year, also has been doing extremely well. We expect to grow in that segment as well.
Can you give us some numbers on what kind of targets you have for this year for Apache and Star?
For Apache, we should be doing anywhere between 12,000-15,000, we are talking of 150,000 numbers for the year.
For Star, we should easily be able to cross 600,000 numbers or more than that. Star is doing around 60,000 per month; so Star itself will be around 720,000 numbers.
For any of these models at this point are you offering discounts as well like some of your competitors?
No, we are not offering any discounts, we are selling it purely centred on our brand and the product.
The market leader in your industry says that margins will be extremely challenging this year. Do you think that you can improve your margins or just about hold them at FY06 levels?
Margins will continue to be under pressure for the simple reason that the remedial costs have gone up whether it is aluminium, steel or rubber, the cost of various inputs have gone up. So that will definitely put pressure on margins. But we have tried to neutralise it through some selective price increase in some of the models and also through aggressive cost reduction in raw material, whether it is value engineering or global sourcing, we have taken several initiatives to neutralize the cost increase. Margins will continue to be under pressure but hopefully we will maintain that margin.
Are you launching any products this fiscal?
We will definitely be launching a model during festival time and at the appropriate time, we will launch the new model.
New models or variants of existing models?
It will be a bit of both but for the time being I would like to keep it as classified.
Any targets that you have set out for your scooter segment?
Scooter is a sector, which has been growing handsomely. The Scooty has become practically the genetic word for defining the hand geared scooter. We have grown in the past and we will continue to grow in that segment this year as well.
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