Aim to outpace industry growth of 10-12% this year: TVS Motor

Run-up to the festive season has been good for TVS Motor, says the company’s Marketing VP, Arun Siddharth. Good monsoon, implementation of 7th Pay Commission will lead industry growth to 10-12 percent this year. TVS is hoping to outpace the industry growth, Siddharth says while reiterating the company’s guidance of double-digit margin growth by FY18-end.TVS will launch new products in collaboration with BMW by end of the current fiscal, says Siddarth. The company, which has presence in mopeds, scooters and the bike segment is expecting growth to come in from all verticals.Below is the verbatim transcript of Arun Siddharth's interview to Sonia Shenoy and Anuj Singhal on CNBC-TV18.Sonia: It has been a very good run for TVS over the last four-five months. Can you tell us what the monthly runrate could be? Will you do much better than this 2.7 lakh per month runrate that you have done so far and what are the triggers that could take it there?A: We have had a reasonably good couple of months and the run up to the season has been pretty positive. With the rains being pretty uniform across the country and overall the sentiment looking up and also the Seventh Pay Commission coming in right now, the industry is expected to grow by about 10-12 percent. It has been about that mark as of now for the year and we have been outpacing that and we hope to continue to outpace that.Anuj: The street wants to know when will you roll out the products in partnership with BMW because that is the next trigger?A: We have made a statement on this before also which is that we will be seeing towards end of this fiscal the product coming from the platform that we have with BMW Motorrad and we continue to stick to that particular guidance.Sonia: You said that you will outperform the industry growth, which is about 10-12 percent the expectation, where do you see it coming from because a lot of your new launches have done pretty well, the likes of the Apache, the Victor but there are some concerns that players like Honda are eating into the market share of some of your products, how are you facing competition and where do you see the growth coming from for TVS Motor?A: When we are looking at the kind of growth that we are talking about, we are pretty confident of the kind of products that we have. We have been just voted the number one in customer satisfaction in JD Power also and our growth is going to be pretty uniform. We are present in mopeds, we are present in motorcycles and we are present in scooters. So our growth is going to come equally from all the three segments where we participate in and we are pretty confident about this.Sonia: Regionwise, how is the demand looking because last two years, I am just looking at the data, it has been relatively weak for the southern region, which is key market for TVS Motor, do you see a sharp demand revival in FY17 beyond the Southern region?A: To give you some data, which is that we sell equally across and today our volumes are pretty well spread across the four zones comparative to the industry that exists in each of these zones. We are seeing growth coming pretty democratically for this year for sure across all the industries. Like you said before, our existing as well as our new products have done well and we continue to keep the momentum and the outlook going forward also pretty high.Anuj: The big problem for your investors has been the very low margin profile for your company and the fact is that some of the TVS products do sell cheaper than Honda product or a Bajaj product in the same segment, do you see some kind of pricing power coming back to you going forward?A: To answer your question with a bit of data, we equally have products which are priced higher than the competition that each one of them plays with. So it is always dependent on -- we go into this more scientifically and we look at what is the consumer quotient of what exactly are we looking at and the pricing always depends on there and going forward definitely, with the strong growth that we are foreseeing and also the kind of brand health increase that we are seeing and the fact that it is reflected in studies like JD Power and all, we definitely are looking at a very healthy brand uptick in terms of how our brands are performing. So to that extent, we are pretty confident about our brands performance.Sonia: Your management has mentioned in the past that you aim to reach double digit margins over the next two years, it looks slightly tough, given the margin situation currently, it is still sub 7 percent, by the end of FY18, where do you see the margins for the company?A: We stand by the guidance that we have already given and any which way we are in the fag end of September, definitely you will see the results coming out end of this quarter. So we are sticking to the guidance that has already been provided by the management.Sonia: What kind of demand surge have you seen for the two new products that was launched, the Victor that was launched in Q4 and the Apache as well? Has it been much better this festive season compared to what we have seen in the past and what kind of average runrate can you clock-in in Victor and in Apache?A: We have launched RTR 200, which now we are very happy to note that now it is national. We have started in a selective launch, we have made that very clear during our launch. Now we are available all through the country now and we have had a tremendous amount of response for this particular model.Similarly, with Victor, we are already hitting the kind of guidance that we had given in terms of volumes on a monthly hit rate. Going forward, we expect to improve this in the season and post it.