TVS recasts operations in Lanka, ropes in new partner

Our Bureau

 (From right to left): Mr Venu Srinivasan, Chairman, TVS Lanka P Ltd, Mr R. Dinesh, Director, and Mr D. Anil

Wijesinghe, Managing Director and CEO, United Motors Lanka Ltd, at a press conference in Chennai on Friday.

CHENNAI, April 25

T.V. Sundram Iyengar & Sons has restructured its Sri Lanka operations, by roping in a new local partner and converting it into a 50:50 joint venture. Simultaneously, the Sri Lankan company TVS Lanka P Ltd has set up a subsidiary, also in partnership with another local company, for dealing in automobile spare parts.

While TVS Lanka P Ltd will sell two-wheelers to begin with and get into multi-brand car servicing, its subsidiary, TVS Auto Parts P Ltd, will deal in spare parts of automobiles sold in the island nation. The TVS group sees a good business opportunity for both the companies, with total turnover expected to go up to SL Rs 400 crore in the next three years.

Earlier, the TVS group had a 60 per cent stake in the SL Rs 7 crore equity of TVS Lanka P Ltd, which commenced operations in September 1997. A local partner, the Sun Match group, held the balance. Now, United Motors Lanka Ltd, a leading automobile dealer, has bought out the Sun Match's stake. The equity capital of TVS Lanka P Ltd has been enhanced to Rs 10 crore. TVS Lanka P Ltd commenced operations with the distribution of components for Indian made commercial vehicles. The company intended to diversify into various new activities depending on the market conditions. This did not happen and with the changed business outlook now, TVS has decided to expand its operations there, according to company officials.

Mr Venu Srinivasan, Chairman, TVS Lanka P Ltd, and Mr R. Dinesh, Director, told a press conference here on Friday that TVS Lanka will now distribute the two-wheelers made by TVS Motor Company Ltd - both mopeds and motorcycles - for which it feels there is a good potential. The joint venture will also distribute tools and garage equipment, which will help it reach out to the service industry in the island nation. The company plans to get into multi-brand car repair service network, almost like the TVS Xpress that the TVS group has launched in India. At a later stage, TVS Lanka plans to take up distribution of Indian made cars and utility vehicles.

Mr Dinesh said that the subsidiary floated by TVS Lanka - TVS Auto Parts P Ltd - had roped in the World-Wide General Trading Agency P Ltd, a leading spare parts dealer, as a partner. While TVS Lanka would have a 65 per cent holding in the Rs 2 crore equity of the company, World-Wide would have the balance. This company would distribute all four-wheeler vehicle parts.

Mr Dinesh said that TVS Auto Parts would immediately take up distribution of parts for Japanese vehicles as it was a large market. This business was expected to contribute Rs 15 crore initially, going up to Rs 50 crore in three years. TVS had started working with Indian auto component manufacturers for developing components to meet the requirement of this segment. Total sales for the TVS Auto Parts was expected to be Rs 30 crore in the first year going up to Rs 100 crore in three years. Likewise, TVS Lanka expected its turnover to grow to Rs 300 crore in three years.

The TVS group, Mr Dinesh said, would look at other business opportunities in Sri Lanka. Since Colombo was the gateway to the island nation, logistics was one area that the group would look into, he said.

TVS Motor: Of facelifts and nosejobs

S. Muralidhar

IT TOOK its own time to recognise the shift in market preference towards four-stroke technology in two wheelers, but TVS Motors (post-Suzuki split) has managed to swing back with one winner in the Victor and a decent performer in the Fiero. Now, after the Fiero's sales seemed to slacken, the company is attempting to refresh its looks and appeal with the Fiero F2. Further, with a view to tapping into the booming gearless scooterrette market, TVS Motors has launched the new Scooty Pep.

The reworked Fiero and the Scooty Pep are the products of customer feedback and actual market experience for TVS Motors. Both are aimed at offering that bit more for the customers in their respective segments. And in many ways, both will find the going tough due to the highly competitive segments they are in.

Scooty Pep

The Scooty Pep comes with a 75cc, four-stroke engine that pumps out 4.1 bhp of power compared to the Honda Activa's (and Dio) 102cc engine generating 7 bhp.

The "Pinocchio-nosed" Scooty Pep sports a completely overhauled design and styling. Dual-tone body panels, wider seating, a large headlamp, integrated, tear-drop indicator lamps in the front, loads of storage space around the floor and below the seat, a new trendy instrument cluster and chrome-finish heat guard on the exhaust pipe. Fit and finish quality in the Scooty Pep is good and more than matches its peers in the industry. In addition, TVS is now offering an auto choke mechanism in the Scooty Pep, to improve mileage by regulating fuel flow based on the engine suction. The company claims that

the system will dispel cold start problems that the traditional choke mechanism tries to address.

The other features of the Scooty Pep include a side-stand alarm, hydraulic dampened suspension, broader tyres, a larger 110mm brake drum and puncture resistant tyres, on the lines of the Tuff-up tube and tyre system that the Honda Activa and Dio were introduced with. The similarities with the Honda duo do not end there. The Scooty Pep's electrical switches (head lamp, indicator, horn and electric start) are all identical to that of the Honda vehicles.

The Scooty Pep will also feature the TVS patented "Power-Economy" mode technology. The technology that was first used in the TVS Victor, signals whether the user is on power mode (high power and acceleration, but low mileage) or economy mode (lower power and acceleration, but higher mileage). And, finally, TVS Motors has managed to get rid of the manual fuel reserve knob. The Scooty Pep comes with an auto reserve fuel tap.

However, at Rs 34,000 plus (on-road), the Scooty Pep is stiffly priced. Being a notch lower than the scooter/scooterrette segment in terms of performance, and with the availability of stripped down, cheaper versions of motorcycles such as the Hero Honda CD-Dawn and Bajaj Boxer, Scooty Pep's pricing could be the reason for the potential buyer's dilemma.

In true TVS style, the company continues to retain the old two-stroke Scooty, the work horse that made the TVS brand name popular in the Central Indian cities of Indore and Bhopal. With the two-stroke Scooty, at Rs 28,000 plus, still being targeted at the traditional, extremely value conscious scooterrette buyer, the new Scooty Pep will instead be focussed on attracting young women and the college goer.

Fiero F2

Unlike the Scooty Pep, the Fiero F2's is more a cosmetic changeover from its previous avatar. The bike has had an obvious nose-job. Replacing the more fancily designed head lamp and indicators cluster is the new bigger, integrated fairing and clear lens head-lamp with the indicators being separated on to the side of the fairing.

In addition, the new Fiero F2 features an all-chrome silencer with muffler guard, a new look pressure die-cast aluminium pillion footrest and saree guard, side stand alarm, a single radius, wider and aspect ratio rear tyre for better road grip, star-burst tail lamp and a disc brake option. The engine remains the 150cc, four-stroke, 12 bhp one that powered the original. An intelligent CV carburetor, which operates on a pressure-sensitive diaphragm and a digitally mapped ignition system ensures better power transition and higher mileage.

The new Fiero F2 is priced marginally higher than the previous version at Rs 53,000 plus (on-road).

Question 'N' Auto

Which bike will be ideal for driving in city conditions within the price range of Rs 50,000?

- Vegesana Ravindra Varma

The options that are available in the motorcycles market within the Rs 50,000 price range are: Bajaj's Caliber 115 and Pulsar, TVS Motors' Fiero F2 and the Victor, Hero Honda's Splendor and Ambition, Yamaha Motor India's Libero and the Enticer, and even the LML Freedom and Kinetic Boss.

The ideal two-wheeler to drive in city conditions should have a four-stroke engine, as it offers immense advantages — lower emission levels, lower noise and high fuel efficiency — over the two-stroke one. In the stop and go traffic that is endemic to most Indian cities, four-stroke technology will enable one to get the maximum mileage without sacrificing on pick-up and throttle response.

The Bajaj Pulsar, the TVS Victor and Hero Honda Splendor are the best options available. All the three bikes are from reputed, well-established two-wheeler companies represented by dealers and service outlets throughout the country. They are best selling models of the respective companies and are priced attractively.

If the Bajaj Pulsar is to your liking, it would be prudent to go in for the 150cc version with drum brakes in the front. If you don't mind paying the extra bit for higher safety, the disc brakes option could be opted for.

TVS Victor - It's tried and tested

S. Muralidhar

I WANT to buy a bike and after a review of the choices available, I have narrowed down my options between TVS's two bikes — the Victor 110 and the Victor GLX 125.

The Victor GLX 125 is new in the market, while the 110cc version has been available for a while.

Is it advisable to buy the 125cc even if it is new, since the problems that the bike may develop are probably yet to be noticed by users? Or to be on the safer side, should I opt for the 110cc?

Raghuram

Both the TVS Victor bikes — the 110cc and the 125cc versions — have been tried and tested on the road and by the company at its facilities. So, though the Victor GLX 125 has had fewer months on road, it has had its share of burning rubber at TVS' test tracks.

Of course, real world experience tends to throw up new issues and problems, but even here the Victor GLX 125 is unlikely to score badly. This 125 cc bike has been launched a few months ago and any major technical issue would have come up by now in the form of customer feedback.

Further, the Victor GLX 125 is a slightly bigger engine. But apart from this difference, it borrows the configuration and technology from TVS' previous engines which have been used in the Victor 110 and the innovative new VT-i engine first used in the Centra. The Victor GLX 125, as a result, should be about as safe a bike to buy as the Victor 110.

But since the GLX 125 is a relatively new bike from the TVS stable, service and spare parts costs may be comparatively higher than that of the Victor 110. But, after all, the Victor GLX 125 is a much better looker than its smaller engine sibling.

Are the Maruti Esteem and Zen likely to be phased out soon? If yes, then is it prudent to buy one of these vehicles? What is the alternative to these cars?

Praveen Singh Gohil

The risk of a phase out, generally speaking, exists for any passenger car manufactured by any company. But the Maruti Suzuki Esteem and the Zen are unlikely to be phased out in the near future.

The continued existence of a car really depends on the demand for the car in the market and the health of the company. If those parameters are considered, then there is no real threat for the Esteem and the Zen, both of which have been refreshed with new looks and features.

As such both the cars represent good value and offer practical comfort in their respective price and size segments.

The Esteem continues to be a major draw for customers looking for a value for money, entry-level mid-size car. The alternative to these cars, which offer similar levels of value and comfort would be the Ford Ikon Flair 1.3, in place of the Esteem, and the Hyundai Santro Xing, instead of the Zen.

At present, I own a Maruti 800. My daily usage is about 40 km within the city and long distance drives only happen once in two months.

I want to switch over to either the Hyundai Santro Xing or the Opel Corsa Sail.

How do these two vehicles compare on parameters such as driving comfort, safety, maintenance, mileage, and resale value?

Latha Alaguvelu

The Hyundai Santro Xing would be the vehicle that we would recommend for you, particularly if issues such as resale value, running costs and maintenance charges are of concern to you. Additionally, the Santro Xing also features what Hyundai calls the "tall boy" design. This styling theme gives the Santro driver a tall seating position and a good view of the road.

The sharp sloping bonnet that reduces the blind spots while parking the vehicle also aids this feature.

The tall boy design also makes entering and exiting the car easier than would be the case with lower slung cars such as the Maruti Zen, Esteem and the Opel Corsa Sail.

Of the two cars that you are considering, the Santro has also been rated as the car with a relatively higher resale value.

The Santro's 1.1-litre engine is also more frugal than the 1.4-litre engine that is available in the Corsa Sail. Long-term mileage expectations from the Santro could be about 10-12 kmpl in city driving conditions.

TVS group hives off logistics division into separate co

Our Bureau

 (From left) Mr S. Viji, Joint Managing Director, Brakes India Ltd; Mr Suresh Krishna, Chairman and Managing

Director, Sundram Fasteners Ltd; Mr R. Dinesh, Executive Director, T.V. Sundram Iyengar and Sons Ltd; and Mr Venu Srinivasan, Chairman and Managing Director, TVS Motor Co Ltd, at a press conference in Chennai on Monday

to announce the formation of a new company, TVS Logistics Services Ltd. — Bijoy Ghosh

Chennai , Nov. 29

T.V. Sundram Iyengar and Sons Ltd, the parent company of the TVS group, has hived off its logistics division into a separate, wholly owned subsidiary company.

The new company, TVS Logistics Services Ltd, hopes to get into agreements with companies abroad to get a global presence.

It will establish joint venture companies in Spain, Thailand, Germany, the UK, the US and China.

The new company is expected to end 2004-05 with a turnover of about Rs 100 crore, which it feels will grow to Rs 500 crore by 2007.

Turnover from overseas operations is expected to reach Rs 100 crore next year.

The initial investment in the company will be Rs 25 crore and it will have a paid-up capital of Rs 12 crore.

It will concentrate only on the automotive sector, where the group has gained experience over the years, in distribution and retailing of automobiles and spare parts.

The decision to form a separate company has been prompted by the increase in the division's turnover, which has been doubling year on year for the last two or three years, and also because the TVS group feels that with outsourcing of components increasing from India, providing logistics services requires specialised skills that the division has acquired.

Announcing the starting of the new company, senior members of the TVS group companies - Mr Suresh Krishna, Chairman and Managing Director, Sundram Fasteners Ltd; Mr Venu Srinivasan, Chairman and Managing Director, TVS Motor Co Ltd; Mr S. Viji, Joint Managing Director, Brakes India Ltd; and Mr R. Dinesh, Executive Director, T.V. Sundram Iyengar and Sons - said providing logistics services was a knowledge-based industry and required skills to combine various elements such as warehousing, delivery and materials planning.

According to them, TVS Logistics has tied up with a company in Spain and will set up a company in partnership with a local company in Thailand.

This company is expected to begin operations by March 2005.

It is holding talks with a company in the US and with freight forwarder in China.

It will form a company in Germany by April 2005 and is examining acquisitions and alliances in Europe.

Its strategy for Europe will be to not only provide logistics solutions but also a complete business process outsourcing solution, including sourcing related work such as identification and audit of suppliers and quality documents, planning and delivery follow up, technical and commercial support and product development.

According to a press release, TVS Logistics has been able to reduce the total supply chain cost ranging from 5 per cent to 25 per cent for its clients in India and abroad.

Currently, 40 per cent of TVS Logistics' turnover comes from TVS group companies and the balance from outside. Over time, the new company expects business from non-TVS group companies to grow as much as 80 per cent of turnover, according to Mr Dinesh.

Its list of clients includes Ashok Leyland, Ford India (through a separate joint venture), General Motors, JCB, Mahindra & Mahindra, Royal Enfield, Tata Motors, TVS Motor Company, Pricol, Cummins and Rane group.

Mr Dinesh said TVS Logistics would hold a majority stake in all the joint ventures it forms.

The company has 17 warehouses and 14 hubs in India and six warehouses in Europe.

TVS and Sons has two companies abroad - one in the UK (TVS Automotive Europe) and the other in Sri Lanka (TVS Lanka) for carrying on the dealership and distribution business.

TVS Automotive Europe's client base includes leading tier-1 and tier-2 component suppliers and this company will act as the parent for setting up logistics joint ventures in Europe.

According to Mr Venu Srinivasan, in a vehicle 75 per cent of the parts are sourced from outside, because of which logistics is key to a manufacturing company.

Typically, logistics cost of automobile companies is 2 per cent of sales and there is a possibility of getting savings of 20 per cent on that.

TVS Motor converts loan to subsidiary to equity

Our Bureau

Chennai, March 12 TVS Motor Company has converted a loan of Rs 18.50 crore that it gave to its wholly-owned subsidiary, Sundaram Auto Components Ltd, last year, into equity.

TVS Motor announced to the stock exchanges that it would get 37 lakh equity shares in SACL at Rs 50 a share. Upon enquiry, it was learnt that TVS Motor is making no fresh investment; it is only a conversion of last year’s loan into equity.

Sources said that SACL, which produces plastic and rubber components for automobiles, has also been hit by the slowdown and would find payment of interest difficult. Even if it could pay, the interest turns up as income in TVS Motor’s books, giving rise to an incidence of tax.

TVS Motor also announced that Mr R. Ramakrishnan has joined the company’s board of directors as a non-executive member of the board, filling a vacancy caused by the resignation of Mr Gopal Srinivasan.

Mr Ramakrishnan was earlier a dealer of TVS Motor Company. He is on the board of PT TVS Motor Company Indonesia, TVS Motor’s arm in Indonesia.

Maditssia-TVS services industry award

Our Correspondent

Madurai, April 16 Applications are invited for the award of ‘Maditssia-TVS Service Industry Award 2008’ for the best small-scale industry in the services sector in the southern districts of Tamil Nadu.

Jointly instituted by Madurai District Tiny And Small Scale Industries Association (Maditssia) and T.V. Sundram Iyengar & Sons Ltd., Madurai (TVS), the award carries a prize worth Rs 10,000.

Small-scale units from the nine southern districts engaged in any of the following activities are eligible to apply, provided they have registered under service tax and started functioning before April 2005: Information & Technology Sector, Software Industries, BPO Centre, Automobiles Service Industry, Electronic Service Industry, Catering Industry, Computer Training Centre, Hospitals, Clinical Laboratories and Scanning Centres, Travels, Tour Operators, Mobile Phone Service Centre, Beauty Parlour, Self help Groups and Business Centres.

The award application forms will be available at the Office of Maditssia, District SSI Association, District Industries Centres and Offices of Tamil Nadu Industrial Investment Corporation in southern districts. The last date for submission is April 28.