Dec 20, 2007

8 Net profit of Bajaj, Hero Honda & TVS (2nd Financial Quarter 2007) Vs.prospects of the 180-200 cc TVS Apache

2'nd Quarter Net Profit figures (Financial year 2007) of the top three bike makers of India.. also can TVS afford to launch 180-200 cc Apache Variants..??

The sole reason for the existence of a business is for making Profit. In financial terms it is called as “Net Profit” or “Bottom Line”, i.e. the balance profit left with the company after paying for the expenses and outstanding dues.

It is the Net Profit figures of TVS Motors that is most alarming..!!

Published below are the results of the 2’nd Quarter of the financial year 2007-08 of the top three companies Bajaj Auto, Hero Honda and TVS Motors.





2'nd Quarter

Financial Results

Net Profit

July-Sept (2007)

Net Profit

July-Sept (2006)

% Change
Bajaj Auto336.4 Cr318 .8 Cr+ 5.2 %
Hero Honda204.33 Cr215.97 Cr- 5.38 %
TVS Motors11.94 Cr24.83 Cr- 52 %


As can be clearly seen, Bajaj auto leads the pack by making a profit of Rs. 336.4 Crores, followed by Hero Honda at 204.33 Crores.

TVS already has its hands full with the soon to be launched 125 cc Flame motorcycle, TVS Scooty EV (electric vahicle), “Fuel Injected” Apache RTR 160 FI..

and the huge promotional expenses whenever they are launched..

Point to note here is that, Bajaj auto has managed to garner more profit than Hero Honda even if the latter has more overall market share than Bajaj Auto. This can be explained because majority of the bikes sold by Hero Honda belongs to the 100 cc Splendor/Passion category, where profit margins are comparatively less. On the other hand Bajaj Auto has the major market share in the 125 cc and above segment, and the profitability in this segment is higher. One also have to take into account the 3 wheeler (auto rickshaw) sales of Bajaj Auto where it had virtually enjoyed monopoly till now (TVS has recently joined the fray). Also important is the fact that Bajaj vehicles are exported to other countries in huge numbers.


But it is the Net Profit figures of TVS Motors that is most alarming.

Compared to the 300-200 crores of profits of Bajaj auto and Hero Honda, TVS motors has just managed a meagre 11.94 crores..!!

TVS already has its hands full with the soon to be launched 125 cc Flame motorcycle. Also on the anvil is the Electric Battery powered scooter, the TVS Scooty EV. Plus the “Fuel Injected” Apache RTR 160 FI. Whenever these products are lauched, it will also involve huge expenses in terms of promotion and advertising.

Lately there have been news reports of TVS planning to launch bigger Apache variants in the range of 180-200 cc. But with such low profits can TVS really attempt to try so many things..??

My personal take is that the bigger Apaches (180-200 cc) might have to wait till TVS Motors show a healthier net profit.


[Disclaimer: Financial Results obtained from Hindu Business line. Click for the news articles on Bajaj Auto, Hero Honda, TVS Motors]





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This is to remind that the Views or Opinions in the blog are entirely mine unless explicitly stated. The Views and Opinions published in this blog should in no way be related to any other person or organization associated -- directly or indirectly -- with me.




8 Comments:

ExhausTec said...

Nice post but the nit-picker in me says that Balance Sheets don't show Net Profit, Profit & Loss (P&L) Statements do! :)

Prakash...... said...

hey i think for business to prosper, both turnover and profit has to go hand in hand...

n i think HH is doin very gud job of balancing between the two

Payeng said...

Thanks exhaustec, please correct me in the future too..

:-)


@prakash,

One thing Hero Honda should seriously do is start investing heavily in R&D. How long can they expect to Piggyback on Honda..??

Prakash...... said...

agreed they shud...but as long as they are gettin gud engines from honda, y wud they??

they jus hv to concentrate on the chassis and body of the bike

but its seems dat even that is difficult for them...seems dat they invest heavily in stickering and paint jobs :)

Swagat said...

..u won't come to conclude just by lukin at the profits!!..remember TVS unveiled 7 products in one go..a first in the industry!!...at tat time TVS also was makin loss...it;s makin loss frm past 9 months n also has opened up a world class overseas operation in Indonesia n also launched NEO out thr...Flame n EFi160 gonna be launched n also TVS has bukd the biggest 2-wheeler stall for the Auto expo!!.....so expect some fireworks frm em..but ya 180 n 200cc variants will take some time to get launched ,may be 6 months!!

Kedar Parikh, said...

may be already know now.
just keep an eye:-
http://indiansautomobiles.blogspot.com/2007/12/net-profit-of-bajaj-hero-honda-tvs-2nd.html

Sajal Chakraborty said...

In all the number game, I see the Indian bikers comming out as the true winners. Who cares who's on the top and who's not........at least the competetion is making the standard of Indian bikes better day by day!!!!

Also, it's really good to see that Indians are by and large accepting bikes made purely by Indians.

Payeng said...

Thanks exhaustec, please correct me in the future too..

:-)


@prakash,

One thing Hero Honda should seriously do is start investing heavily in R&D. How long can they expect to Piggyback on Honda..??

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