Concerned about global operations: TVS Motor

CMD cites container scarcity, 2nd wave

TVS Motor Company Ltd. (TVSM), a leading two-and-three wheeler manufacturer, has raised concerns about its international operations following shortage of containers and the rapid spread of COVID-19 second wave in the company’s target markets/countries.

“Due to continued high traffic container movement from China to North America and Europe post COVID-19 outbreak, there has been shortages of containers at Indian ports,” said Venu Srinivasan, CMD, in the company’s annual report.

“This clubbed with increased exports from India is posing further shortage of space availability or availability at higher costs. This situation is expected to continue and result in delayed supplies to global customers,” he added.

He also said that some of the company’s target markets/countries might witness a rapid spread of COVID-19 second wave thereby lowering economic activity. A sustained drop in commodity prices and exports could reduce foreign exchange income in some of the export countries.

The effect of second wave is already seen in LATAM, Bangladesh and Tanzania which are important export destinations. The company has looked at options to minimise the impact by leveraging opportunity in less-affected countries and by introducing new products and leveraging financing solutions for customers, he said.

According to him, the ban on import of two-wheelers in Sri Lanka and political turmoil in Myanmar might hit exports.

During FY21, TVSM’s two wheeler exports witnessed 12% growth at 7.64 lakh units over the year-earlier period. Three- wheeler exports contracted by 29% to 1.15 lakh units.

Post the acquisition of The Norton Motorcycle Co. Ltd. of U.K., a new state-of-the art facility is being established in Solar Park, Solihull near Coventry to produce high-end premium motorcycles. Production and sales will commence during the first half of FY22. Norton will continue to invest in the development of new premium motorcycles, R&D and developing dealer network across the globe, he said.

Regarding the shortfall of semiconductors that had increased the lead time from 3 to 18 months, he said it formed a critical component in two-wheelers too. The shortfall is likely to continue and pose a risk in meeting production demand.

With regard to the domestic market, the board is optimistic about the future but are concerned about the evolving COVID-19 scenario across the country and it’s effects on consumer demand.

Asserting that the pandemic was causing paradigm shifts in consumer behaviour that might affect many industries, including automobiles, he said this changed preference would lead to enhanced need for personal mobility solutions. This could emerge as an area of opportunity for two wheelers.

TVS iQUBE, the company’s electric vehicle which had been very well received, has a 8-week order book. During the year, its footprint will be expanded to 20 more Indian cities. The portfolio also is set to expand to newer formats including a 3W version, he said.

Despite the rising second wave of active cases, TVSM remains confident that adverse impact would be lower and bounce-back swifter. This outlook of cautious optimism is built upon company’s own supply chain preparedness and measured administrative responses, targeted and widespread vaccintion drive to ‘break the chain,’ he said.

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