TVS Motor Company lines up capex of Rs 500 crore for FY22

TVS Motor Company, India’s fourth-largest two-wheeler producer, has lined up Rs 500 crore of capital expenditure (capex) for FY22 as the company hopes to keep the current momentum of demand going.

The investments will be used for new products that will start rolling out in the first half of FY22, a senior company official said while addressing analysts. The Chennai-based company is also readying a slew of electric vehicles for launch, details of which will be shared closer to their launch dates.

KN Radhakrishnan, Director and CEO, TVS Motor Company, said: “Capex for next year will be similar to this year, around Rs 500 crore. We have lined up several new products and a range of electric vehicles for next year.”

The FY21 capex has been revised by the company to Rs 500 crore following a stronger-than-expected rebound in demand after the festive season. This optimism had taken a hard knock when, at the end of FY20, TVS set aside only Rs 300 crore as capex for FY21, which was the lowest in five years.

Domestic two-wheeler sales of TVS Motor Company grew 25 percent in January and 15 percent in February compared to the same months last year, riding on demand for the XL100 moped and Apache.

“Products will start coming in from the first half of FY22 and these will be new products as well as new versions of existing products. We have seen that demand has also been very good for the iQube in the Bengaluru market”, Radhakrishnan added.

Two-wheeler makers are upping their spends as business has largely come back to normal levels, especially with sales consistently surpassing pre-Covid levels in each of the last few months. Hero MotoCorp, the country’s largest two-wheeler maker, has lined up capex of Rs 800-1,000 crore for FY22. Bajaj Auto is yet to firm up its capex plans for FY22.

After a strict lockdown spanning between April and May last year, and the ensuing slow unlocking process, the two-wheeler segment saw sales crash 60 percent between April and July 2020 to 2.57 million units.

But from August, the two-wheeler segment rebounded and started growing, compared to the same period in the previous year. As per data shared by the Society of Indian Automobile Manufacturers (SIAM), the August-January period saw two-wheeler sales grow 10 percent to 9.62 million units.

Two-wheeler makers are banking on rural areas, where demand is expected to remain robust due to favourable levels of farm income, the ongoing marriage season and the continued push for infrastructure development by the government.

Demand from urban areas is also expected to remain buoyant, according to senior officials at two-wheeler companies.