Exports likely to go up to 20% after capacity expansion takes place: S Ravichandran, Director, TVS Srichakra

S Ravichandran, Director, TVS Srichakra, talks about restructuring plans of TVS Group and its impact on his company, expansion plans - how it will be funded, capacity utilization, export market, demand from OEMs and debt position of the company among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: The group has announced a restructuring. What does it mean for your company, TVS Srichakra?

A: I think, there will be not any difference for the company as far as that is concerned and that was the message given by the Chairman. It is purely to understand the full settlement, so, we should wait for some more time to give any opinion. But as far as the company is concerned, there will not be any change for the company.

Q: You have announced an expansion plan worth Rs 1,000 crore for the next three years. Tell us about the segments where you will focus and how much the capacity would be increasing from the current capacity? 

A: As you are aware, we do have two plans, one each in Madurai and Pantnagar. The capacity of these two plants currently is around 300 metric tonnes (MT) per day. Once the capacity expansion is completed, the total capacity will go to 400 MT per day. And, as far as the OHT tyres are concerned, around 10% of the capacity will be utilized for the Off-Highway Tyres (OHT).

Q: What are your plans related to the export market and what kind of growth you foresee in the next three years? Also, let us know about the opportunities and expansion that would happen in the export market?

A: Currently, we have around 10% of our sale is catered to the export market. Once the capacity expansion takes place, we expect that percentage to go to 20% overall.

Q: What kind of demand for two-wheelers is coming from OEMs? The festive season has been a good time with the point of view of demand, so, is the momentum is continuing or not? You also supply to three-wheelers and demand has been subdued in the segment, so, how much impact it is making?

A: I think, almost all the companies suffered during the COVID period. For the first six months, there have been a lot of challenges. But from the last two months, we are seeing the OEMs are coming up with lots of volumes, so I think, the performance has really improved, it could be due to the festive demand and it is not unnatural that after the festive there could be a slight decline in the demand. So, it is not unusual and we must not be worried about that. As far as the three-wheelers are concerned, it is one of the segments, which is affected by the COVID because most of the passenger related kind of three-wheeler sale has come down because of the COVID and we have to really wait and watch this particular segment and maybe coming few months will tell how this segment is going to work.

Q: What are the debt position of the company at present and you have taken a big expansion how will you fund it? You are talking about the organic growth but are you looking forward to some inorganic or M&A opportunities going forward from here?

A: I will be able to make comments on the debt position and I think the other one I am not in a position to make any statement. Our cash flows and balance sheet, both, have been very very good. So, some of the CapEx requirement would be met through the internal accruals of cash and some also through the internal accruals of cash and also some through the debt. And, we will continue to keep our debt under a very manageable level and would be almost at the current level at which we are expecting it to be there.

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