This is second consecutive year of Rs 1,000 crore investment lined up by the two-wheeler major from South India, which will go into doubling its EV production capacity to 25,000 units a month by the end of this year and further ramping it up to 50,000 units a month in the following year – taking up the annual production capacity to 5-6 lakh units per annum.
Sudarshan Venu, MD of
Motor, told ET that the direction is clear; the company expects EVs to account for 30% of the scooter market and 35% of the three-wheeler market by 2025 and it is investing to grasp that opportunity.
“I think the electric vehicles are at the front end of our investment, there is a huge focus and higher mix of our investment towards EVs in the coming years. A significant part of Rs 1,000 crore investment announced has been substantially invested, we will continue to invest at a similar pace in the coming years,” added Venu.
TVS Motor is increasing its investment allocation to capitalise on rising penetration of electric vehicles by hiking its investment in overseas subsidiaries for the second year in row.
The company invested close to Rs 1,100 crore via its arm TVS Singapore, of which around Rs 750 crore was into SEMG, which TVS acquired last year, Rs130 crore in EGO Corporation and balance in Norton Motorcycle. The total investment in TVS Singapore reached Rs 1,892 crore in FY22, compared with Rs 809 crore a year ago, according to the company’s annual report of FY22.
A sharp rise in the investment resulted in the company’s free cash flow turning negative despite operating performance improving substantially on higher volume and better cost efficiencies, underlining bullishness on part of the company to aggressively pursue high investments and market outperformance.
Apart from investment in subsidiaries,
pumped in around Rs 730 crore as capital expenditure in FY22, a growth of 31% YoY. So, cumulatively it invested close to Rs 2,100 crore on capital expenditure and investment in FY22.
Its recently launched upgraded iQube has received very good response and has a healthy order backlog; with the expansion of capacity and sales touchpoints, it is ready for a production of 25,000 units a month by the end of 2022.
The EV product action will continue. There is one more EV lined up for the second half of the year, the MD of TVS assured.
Venu reiterated that while there is an increased focus on EVs, the company is not losing sight of the mainstream internal combustion engine (ICE) market. The product portfolio is getting revamped with entry into new segments.
“We have many exciting products lined up for the ICE space in the lifestyle segment, and also a full portfolio of EVs, which also means, there is an opportunity for the market to come back to healthy growth on the back of economic recovery,” he added.