Thu Jan 25, 2007 11:45 PM IST
MUMBAI (Reuters) - TVS Motor Co. Ltd. said on Thursday that high raw-material costs hit its quarterly net profit, but said higher sales and cost savings would help boost revenue by 20 percent in the next year.
The cost of raw materials rose by more than a fifth during the fiscal third quarter to Dec. 31 compared to a year earlier.
"All other factors remaining constant, the increased emphasis on productivity improvement and waste elimination would boost fourth-quarter performance," TVS President K.N. Radhakrishnan said in a statement.
TVS, India's third-biggest motorcycle maker, reported a 63 percent decline in quarterly net profit to 114.6 million rupees ($2.6 million), trailing a Reuters poll estimate of 230 million.
Its revenue rose 7 percent to 9.35 billion, meeting the Reuters estimate of 9.32 billion.
Ahead of the news, its shares ended down 1.7 percent at 77.45 rupees, just off a 17-month low of 77.15.
TVS said a new plant in Himachal Pradesh with an annual capacity of 300,000 two-wheelers would start production by April. Capacity could be expanded to 500,000 units with "nominal additional expenditure," it said.
TVS has invested 1.2 billion rupees in the plant.
A three-wheeler plant in Tamil Nadu with an annual capacity of 100,000 units will start production early in the fiscal year that begins in April, it said.
TVS has invested 1.15 billion rupees in the plant.
A plant in Indonesia will commence production of two-wheelers with an initial annual capacity of 300,000 units, which will be expanded to 500,000 units.
TVS has invested $45 million in the first phase, it said.
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