To use a slightly worn-out but entirely true turn of phrase, TVS Srichakra, the tyre manufacturing arm of the $6.5-billion TVS Group, has been on a roll. The company, which is the market leader in the two-wheeler and three-wheeler domestic OEM tyre market, has seen its revenue grow by 25% and net profit rise by 27% over a five-year period, helped in part by falling rubber prices, better inventory management and lower debt.
Over the past couple of years, while passenger car and truck sales have been on the wane, the two-wheeler and three-wheeler segments have fared much better. Of course, the fact that the company focuses only on the two-wheeler and three-wheeler segment has worked in its favour. TVS Srichakra is the largest supplier to OEMs such as Honda Motorcycle and Scooter India, TVS Motor Company, Hero MotoCorp, Bajaj Auto and Yamaha Motor Company.
“While competitors such as MRF and CEAT have a presence across segments, our bread and butter comes from the two-wheeler and three-wheeler markets. We have made a conscious decision to stay in this segment, as it gives us the opportunity to work closely with manufacturers on the technology and development process. We are able to offer them specifically designed tyres for every new model of theirs. It is a collaborative effort between us and the vehicle manufacturers,” says P Vijayaraghavan, director, TVS Srichakra, who has been with the company since its inception in 1983.
To keep up with growing demand in the two-wheeler segment, the company has been on a continuous capacity expansion spree. It has two manufacturing facilities, one in Madurai, Tamil Nadu, and the other in Pantnagar, Uttarakhand, with a combined capacity to produce 2.3 million tyres per month. In FY15, overall capacity increased from 1.7 million tyres per month to 2 million tyres per month.
Now, that capacity will rise to 2.3 million tyres per month. With capacity utilisation at over 90%, the company is drawing up plans for increasing capacity over the next year, details of which are likely to be finalised in early 2016. Srichakra currently has a network of over 3,000 dealers across the coun