India being the world's largest two-wheeler market offers a great base for companies such as TVS Tyres, a major player in the two and three-wheeler segment of the market. The company also produces pneumatic tyres, skid steer & multi-purpose tyres, farm & implement tyres, and motor grader & agricultural tyres.
We interacted with P Vijayaragahavan, Director, TVS Srichakra Ltd, who spoke of the company's new brand identity, as well its conscious effort to maintain its leadership spot in the two-wheeler segment. He also told us about the current trends in tyre-manufacturing, the company's expansion plans and the main reasons for its growing profitability. TVS Srichakra Ltd markets its tyres under the TVS Tyres and EUROGRIP brands, which have received new brand identity over the last 18 months.
THE ROAD AHEAD
TVS Tyres is investing Rs 150 cr through 2015 to increase production capacity at its plants in Madurai, Tamil Nadu and Rudrapur, Uttarakhand. By then, the company will increase its combined monthly production capacity to 2.3 mn tyres. In terms of tyres being developed, he said the company is designing tyres specific to Indian road and usage conditions. Tyres for India need to be strong enough to support heavy loads, last long and provide safety on different local terrains. The company has also been manufacturing tubeless tyres over the last six years for both OEMs and aftermarkets, and volumes for these tyres have been growing, Vijayaragahavan said.
At the Hannover Agri technical show in 2014, TVS Tyres had unveiled its tractor radial tyres, and has already developed a couple of sizes, Vijayaragahavan noted. He said that the company has also begun production of these tyres for some European markets. Additionally, the company is also going to launch its radial motorcycle tyres for OEMs and the aftermarket shortly. It must be noted that the company is currently developing tyres for the TVS-BMW co-operation.
The company also has strong focus on exports, but at this stage, it has no plans of setting up any Greenfield manufacturing plant abroad. Vijayaragahavan said the company has enough space for further expansion at both its plants.
ROBUST IN-HOUSE CAPABILITIES
The R&D set-up at TVS Tyres' Madurai plant employs over 50 people, comprising of a number of rubber engineers and a process team. The company undertakes all its development in-house, and does not have any collaborations or technical partnerships. However, Vijayaragahavan said TVS Tyres makes use of third-party consultants from Europe and Japan, who assist with R&D and other manufacturing techniques.
The company also has a test track at the Madurai plant, which is used extensively for product development and testing. Qualified test riders help in developing the technology for future products by providing feedback to OEMs, as well as testing products that have received feedback from aftermarket users, Vijayaragahavan observed.
TVS Tyres currently has a combined production capacity of two million tyres per month from both its plants. Even though the company stands third in the two-wheeler aftermarket tyre segment, it holds the position of being the largest supplier of tyres to OEMs, Vijayaragahavan said. He added that even with stiff competition from other tyre manufacturers, TVS Tyres has grown substantially through its technology and aftermarket dealer set-up. The company has about 3,000 dealerships across urban and rural areas of the country, with an average of one touch point every five kilometre.
Vijayaragahavan said the company's new brand identity, as well as the increased marketing activities have helped increase sales substantially, especially from the aftermarket. He added that sales of TVS Tyres from the aftermarket have grown quarter-after-quarter for the last six quarters in a row, which shows results of the conducted activities. While revenues have increased in double digits, the company has also worked on increasing top line and bottom line profits.
The company also credits its increased revenues to lower material cost. This has been achieved by better inventory management, lower interest costs because of higher cash generation within the company, as well as reduced cost of power and fuel, Vijayaragahavan said. He added that while the two-wheeler industry is expected to grow between 7 and 8 %, TVS Tyres hopes to achieve double-digit growth.
TVS Tyres accounts 13 % of its turnover from exports, with most of it being for the off-road segment including forklifts, farm equipment, agricultural implement, construction and tractors. The company exports its two- and three-wheeler tyres to Africa and South-East Asia, and is also working on expanding to other markets. This has mainly begun in the form of OEMs exporting their products to markets like Europe, fitted with TVS tyres. Exports are likely to grow in double digits, he said.
In all, the company plans to launch a total of 14 new products this year.
Text: Naveen Arul