The Society of Indian Automobile Manufacturers' (SIAM) Annual Convention is underway and it's not often that KN Radhakrishnan, CEO of TVS Motor Company makes a media appearance but CNBC-TV18's Ronojoy Banerjee caught up with him and asked about the company's plans of growing the market share.
Below is the verbatim transcript of the interview:
Q: Your market share has also gone up, if I go by the SIAM data. So we have collective SIAM data till July, so I couldn't calculate for the month of August and we have seen 2 percentage point increase, so it is over 15 percent and you have done better than Hero Motocorp in that sense. I know TVS is a company that under promises and over delivers and you do not like to give guidance but is there something that you can tell me that the internal target that you may have as far as your market share in scooters that you are aiming for now?
A: We want to continue growing faster than the industry. We respect our competitors whether it is Hondo or Hero. They equally have very good products but we feel that we can grow faster given the type of brands that we have and the kind of acceptance we have.
Q: So with the festive season coming up, do you see this kind of growth momentum that we have seen in the first four-five months of this financial year. Do you see that continuing?
A: In the first six months we saw about 9 percent growth.
Q: But what about your scooters?
A: We have grown more than 30 percent in scooters and we continue to grow around 30 percent, maybe we will look at little better than 30 percent in the season time.
Q: So it could be better than 30 percent?
A: Yes.
Q: What you are doing about production, if you can throw some light on that. What is your scooter production? If you are telling me you are going to grow more than 30 percent then you are going to grow 1/3rd of what you are doing, you would need capacity. Could you throw some light on that?
A: We have sufficient capacities. We will do close to 100,000 scooters. We are very close to that now, so there is a possibility to touch that number.
Q: Are you looking to expand capacity as well?
A: Yes. Capacity expansion takes only three-four months. It is not that complex anymore because the platforms are common and the supply chain is very good, so we can do it much faster.
Q: Compared to scooters of course motorcycles' growth is high single digit but your market share still under 10 percent. What is TVS doing as far as motorcycle business is concerned?
A: In terms of motorcycles we had portfolio issues. We have launched Victor only last year and till demonetisation it was doing extremely well. The last nine months have been little bit complex and now again we are rebuilding that. Apache is doing extremely well. Now we are almost 21-22 percent market share and it is growing faster than the industry. So in the premium category we are doing extremely well. At the entry level, there have been challenges because of rural demand. There (in the rural market) also we are gaining market share but the headwinds are far higher but we are anticipating that post demonetisation the availability of money and a reasonably good monsoon, I think so far this year has been almost reasonably good monsoon all over India, so we are anticipating that season will be good and post January we are expecting that it should be much better.
Q: Therefore, you are expecting your motorcycle volumes to grow. So what you are telling me is scooters possibly 30 percent plus, motorcycles could be in the double digits.
A: I do not want to give guidance exactly on the growth rate.
Q: It is already 8-9 percent so far.
A: Most important is to always look at what is likely to be industry growth. We have to gain market share. We want to gain in overall two-wheelers at least 1-1.5 percent market share year-after-year - that is the kind of target we have set, which means we have to grow faster than the industry.
If you look at the scooter industry, scooter realisation has been moving much faster for the industry and we have four good brands.
Q: It is currently how much in the industry - 35 percent odd?
A: Industry is about 32-33 percent and more and more urban users are moving into scooters because of many factors. So we feel that leveraging these four, definitely they are good brands, we can get much better growth rate than the industry.
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