Two-wheeler makers plan Rs 2,000 crore capex for FY22; multiple launches in the pipeline

Two-wheeler majors such as TVS Motor Company, Hero MotoCorp and Bajaj Auto will spend about Rs 2,000 crore in FY22 as capital expenditure despite the uncertainty of demand because of COVID-19.

May 16, 2021 / 10:59 PM IST
 
 
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TVS Motor CompanyHero MotoCorp and Bajaj Auto, who together control 70 percent of India’s two-wheeler market, will add new production lines and launch new models including battery-powered scooters in FY22, although the pandemic may prompt them to recalibrate their capital expenditure

Bajaj Auto is going ahead with its planned new factory near Pune that will churn out KTM, Husqvarna and Triumph branded motorcycles. The total capex lined up by Bajaj Auto of Rs 800 crore for FY22 includes investment set aside for this new facility which is expected to begin production in 2023.

“We expect to spend about Rs 700-800 crore this year. We are opening a new factory at Chakan for which we have signed an MoU with the Maharashtra government and work will soon start. The pandemic has impacted its work a little,” Soumen Ray, CFO, Bajaj Auto, told Moneycontrol.

Chennai-based TVS Motor Company, India’s third largest two-wheeler seller, will spend up to Rs 600 crore in FY22 as capex. Additional outlay of Rs 150 crore is being lined up for the group’s finance company TVS Credit. The maker of Apache and Jupiter, however, cautioned that it will keep a watch on how the on-going June quarter shapes up.

Speaking to analysts K N Radhakrishnan, director and CEO, TVS Motor Company, said “This year the capex will be between Rs 500-600 crore. We will closely monitor the Q1 situation and take a call. But all these investments will be in EV and other emerging technologies and new products. Separate investments in TVS Credit will be around Rs 150 crore”.

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TVS plans to expand its sales network of its only electric two-wheeler iQube to 20 cities from two, which will involve a significant rise in production. It is being planned in synchronisation with the planned expansion of its electric vehicle portfolio as well as investment in emerging technologies.

Market leader Hero MotoCorp plans to spend Rs 800-1,000 crore in FY22 as capex, which senior company officials say may be reviewed depending on the partial lockdown impact felt in the June quarter.

Speaking to analysts Niranjan Gupta, CFO, Hero MotoCorp, said, “FY21 we spent Rs 600 crore. FY22 we are not outlining any numbers as of now. As far as Quarter 1 is concerned all of us are going through a very different level of crisis and challenges and we will recalibrate our capex plans.”

FY22 will mark the entry of Hero MotoCorp into the electric two-wheeler space. A product launch has been planned in the January-March quarter of FY22. The Delhi-based maker of popular bike brands like Splendor and HF Delux, is working on its own line of fixed-battery electric models as well as swappable battery models with its Taiwanese partner Gogoro.

In view of the prevailing Covid-19 situation across the country, Hero MotoCorp has decided to extend the shutdown of its manufacturing facilities by another week, till May 16, 2021. Hero MotoCorp observed such shutdowns in a staggered manner for four days between April 22 and May 1 which was later extended till May 9.

“Although the outlook for Q1 FY22 is very difficult to provide we are confident that with the accelerated vaccine programme the market should be back on its feet in Q2 and we should have a good year”, Gupta added.
Swaraj Baggonkar
first published: May 10, 2021 01:12 pm

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