For the quarter ended June 30, the company's net sales also declined by 15 per cent to Rs 783.33 crore from Rs 921.78 crore in the same period a year ago.
The net sales drop was due to a decline in motorcycle sales following the credit squeeze by banks and the consequent reduced availability of finance.
At present, more than 60 per cent of two-wheeler purchases are dependent on retail finance. Consequently, the company is consciously reducing the stock of motorcycles held by the trade to keep stocks under control, said a company statement.
TVS recorded overall two-wheeler sales of 320,178 units for the quarter ended June 30, compared to 376,297 units recorded in the same period a year ago. Motorcycle sales were lower at 150,487 units compared to 233,614 units in the previous comparable quarter. The company exported 26,213 two-wheelers in the quarter ended June 30.
Profit before tax stood at Rs 10.90 crore against Rs 30.14 crore reported in the same period last fiscal. High cost of raw materials such as steel, aluminum, rubber, copper and polymers impacted the margins substantially.
The cost of raw materials during the quarter was 74.3 per cent of the revenue compared to 72.2 per cent of the revenue in the same period a year earlier.
Interest costs for the quarter were also higher due to increased level of borrowing for the new projects as well as higher cost of borrowings for working capital. Interest was Rs 9.78 crore for the quarter compared with Rs 5.97 crore a year ago. The company expects pressure on margins during the first half of 2007-08 due to high cost of raw material and intense competition.
However, in the second half of the year, it expects margin pressures to ease with the launch of new products and a slew of other initiatives.
TVS Motor will undertake several cost-saving measures like value engineering, process improvement, among others to ensure significant improvement in productivity leading to reduction in manufacturing cost.
© 2025