Calcutta, Feb. 22: TVS Motor Company Ltd (TMCL), the Chennai-based two-wheeler major, is planning to set up a manufacturing unit in Vietnam. Confirming the development, sources said a high-level team is working on the project and it will submit its recommendations soon.
“Preliminary study suggests that the two-wheeler markets in Vietnam and its neighbouring countries have good prospects, which the company can tap once a manufacturing unit is set up,” they said.
The other country, that the company is looking at, is Indonesia. But the recent problem that Polaris Software faced there has made TVS Motor a little cautious about that country.
Indonesia provides a lot of opportunity for the two-wheeler industry. But investing in foreign soil always needs a great level of understanding of the market as well as the policy makers, they said.
The sources, however, refused to divulge any more details about the proposed project in Vietnam. “Once the plan is transformed into a decision only then we will be able to provide more information,” they added.
TMCL, which came into existence after the TVS-Suzuki joint venture broke up a couple of years back, currently has about 23 per cent market share in the country’s two-wheeler market.
Riding on the sales of its premium motorbike model Victor the company has crossed the Rs 2000-crore mark in its turnover in the first nine months of the current fiscal. The company had posted a total turnover of Rs 1944 crore in the full year ended March 31, 2002.
According to sources, the company has set a target of achieving a turnover of over Rs 2500 crore at the end of the current fiscal year. Buoyant sales have helped the company to clear most of its debt with the bottomline getting strengthened. Only in the third quarter ending December 31, the company’s net profit stood at Rs 32.48 crore against a net profit of Rs 10.68 crore during the corresponding period last year.
At present, the company is expanding the production capacity in its Mysore plant where it manufactures scooters and scooterettes. The total investment in this project is estimated at Rs 120 crore, which the company is pumping through internal accruals.
Another plant at Hosur, where the company manufactures motorcycles and mopeds, will also be beefed up to meet the rising demand of motorcycles. The unit is currently manufacturing 75,000 vehicles per month.
While TMCL is the leader in mopeds with a 62 per cent market share, it has little over 17 per cent share in the motorcycle segment.