OE, aftermarket to drive TVS Srichakra’s growth this fiscal

TVS Srichakra, which manufactures two- and three-wheeler tyres and also off-road tyres under the TVS Tyres brand, has reported an improved EBITDA of Rs 40.12 crore for the first quarter in fiscal year 2014-15 as against Rs 28.85 crore a year ago.

Commenting on the company’s financial performance, P Vijayaraghavan, director, TVS Srichakra, said, “We are optimistic that in the months to come, the improving scenario of the two-wheeler industry and aftermarket demand are sure to boost our performance still further.”

The company, which is optimistic about recording double-digit growth in 2014-15, recorded a turnover of Rs 1,700 crore in 2013-14, a growth of 10 percent over 2012-13. This has been attributed largely to demand in the aftermarket segment as well as a marginal increase in exports.

In an interaction with Autocar Professional, P Vijayaraghavan, director, TVS Srichakra, said, “Over the past 18 months, we have been consistently growing in the aftermarket. That has helped us maintain growth above the industry rate.”

Last year, the company launched eight new products both in the scooter and motorcycle aftermarket, which received a good response. Continuing with new launches, the company plans to launch new products as well as new sizes in its existing tyre portfolio. Without revealing the numbers, Vijayaraghavan says, “We control the largest market share in OEMs and manufacture tyres specially for their new models. We will continue to develop new products for them as well as for the aftermarket.”

As regards the changing trends in the two-wheeler industry, Vijayaraghavan remarks that in the past couple of years, the local two-wheeler segment has seen a rapid increase in tubeless tyres being shod on both motorcycles and scooters. The sudden demand for tubeless tyres took OEMs and tyre makers by surprise as they did not anticipate such speedy growth. Although this began with the scooter segment, it has now caught up with motorcycles. Currently, almost all the leading OEMs have started rolling out new models with tubeless tyres as a result of which TVS has seen its volume of tubeless tyres increase significantly.

At present, the company’s clientele includes Atul Auto, Bajaj Auto, Hero MotoCorp, Honda Motorcycle & Scooter India, India Yamaha Motor, Mahindra Two Wheelers, Piaggio Vehicles and TVS Motor Co.

Though radialisation in motorcycles is yet to take off in India (only Yamaha has introduced radials in its FZ16), Vijayaraghavan expresses confidence that these tyres will not only restricted to premium bike segment but percolate down to executive models.

Other than two- and three-wheeler tyres, TVS Srichakra also manufactures industrial pneumatic tyres, farm and implement tyres, skid steer tyres, multipurpose tyres and floatation tyres.

The company currently manufactures 1.7 million tyres every month from its two manufacturing units at Madurai (Tamil Nadu) and Rudrapur (Uttrakhand). According to Vijayaraghavan, “We are targeting to increase our sales by a minimum of 12 percent in 2014-15 and anticipating growth to come from OEMs, followed by the aftermarket and export.” This clearly underlines the need for additional capacity which is taking place at both Madurai and Rudrapur plants.

To ensure just-in-time supplies to OEMs, TVS Srichakra supplies directly from warehouses that are located in their vicinity. In the south, the company mostly sells through distributors who in turn sell to dealers and spare parts outlets whereas in western and northern parts of the country, the company has its own depots and network. “Our reach in semi-urban and rural has been top-class and constitutes our strength because the rural market is witnessing real growth. At present, for the aftermarket, we have 3,000 dealers across the country,” he adds.

The company says its new product development programme taps its in-house R&D centre which is staffed by tyre engineers and technologists. It also conducts extensive tests to ensure quality and durability. It has a test track for field evaluations at its Madurai plant with qualified test riders who put 6-7 vehicles through their paces for up to 250 kilometres every day, after which the feedback (on tyres) is passed onto R&D and product development.