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Our Corporate Bureau
New Delhi, Sept 21: TVS Suzuki announced on Monday that it will launch a 150cc four-stroke premium scooter `Spectra' on October 1. Addressing a press conference, company chairman and managing director Venu Srinivasan said, "The company plans to capture 6 per cent to 7 per cent of the scooter market initially, and sales of 15,000 units to 20,000 units during October to March."
Priced at Rs 37,200 (ex-showroom Delhi) TVS Spectra will be unveiled by the illusionist Franz Harary at the TVZ Millennium Show, slated to be the country's most spectacular product launch event.
The Spectra is being manufactured at the company's new manufacturing facility in Mysore, set up with an investment of Rs 180 crore.
The Chennai-based company will roll out a slew of two wheelers, all four stroke like mopeds, in the next few years to garner a 25 per cent market share by 2001-02.
"We have decided to phase out the existing two stroke bikes by year 2005 and will introduce at least three four-stroke vehicles every year,"Srinivasan said. The company will roll out other products for the semi-urban and rural market soon, he added.
TVS will focus on exports with the launch of new products, as earlier there were restrictions on exporting old vehicles under the company's banner.
The company has earmarked a Rs 500-crore investment over the next four years, of which Rs 300 crore will be funded through internal accruals and Rs 200 crore via debt. "There will be no increase in the equity base," he added.
The company will manufacture 15,000-20,000 scooters in this financial year, and hike output to 80,000-100,000 units next year. With an additional Rs 60-crore investment, the plant's production capacity may be increased to 3.5 lakh units from the existing 1.5 lakh units, Srinivasan said.
"We have set up a plant with a flexible production line so that we can manufacture motor cycles as well as four stroke engines for other products like the Scooty," he said.
The company's turnover, now around Rs 1,000 crore, will cross Rs1,300 crore this year and increase in the subsequent years to cross Rs 2,000 crore by the year 2000-2001, he said. The profit before tax is also expected to show an increase in the coming years from Rs 120 crore by the end of the year to Rs 190 crore by the turn of the century.
The Spectra comes with a twin fork front suspension, coupled with the centrally mounted engine.
INSIGHT: pricing will be the key
While the launch of the premium priced Spectra, will ensure that TVS Suzuki has a full complement of two wheelers, one cannot overlook the fact that the company is also aggressively entering the big league scooter market. Thus probably the only question mark over the success of the new 150cc manual geared scooter is the premium pricing niche. More so with competitors like of Bajaj and LML far ahead in terms of capacities, a lot could depend on TVS's ability to aggressively price its models to counter the threat. Herein volumes and the ability to achieve economies of scale could play a veryintegral role in driving earings. However with a debt equity ratio of 0.8, TVS should have no problem garnering the additional funding for its Mysore facility.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
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