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DIRECTORS' REPORT TO THE SHAREHOLDERS:
The directors have pleasure in presenting the twentieth annual report and the audited accounts for the year ended 31st March 2012.
The board of directors of the Company at their meeting held on 14th March 2012, declared an interim dividend of Re.0.60 per share (60%) for the year 2011-12 absorbing a sum of Rs.33.13 Cr including dividend distribution tax. The same was paid to the shareholders on 26th March 2012.
The board of directors of the Company at their meeting held on 24th May 2012 declared a second interim dividend of Re.0.70 per share (70%) for the year 2011-12 absorbing a sum of Rs.38.65 Cr including dividend distribution tax. The same will be paid to the shareholders on or after 12th June 2012. Hence, the total amount of dividend including the second interim dividend payable, for the year ended 31st March 2012 will aggregate to Rs.1.30/- per share (130%) on 47,50,87,114 equity shares of Re.1/- each.
The board of directors of the Company do not recommend any further dividend for the year under consideration.
2. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
INDUSTRY STRUCTURE AND DEVELOPMENTS
The macro-economic environment in 2011-12 presented several challenges. Uncertainty in economic scenario, both global and domestic further affected consumer sentiment. Consequently, the growth in two wheeler industry slowed down to 16% from a high of 27% in 2010-11.The momentum of previous year continued in the first half resulting in growth of 19% but slowed to 12% in the second half.
The overall two wheeler industry sales increased by 16% from 133.2 lakh numbers in 2010-11 to 153.8 lakh numbers in 2011-12. This growth was mainly propelled by an impressive 26% growth in Scooters from 21 lakh numbers to 27 lakh numbers and 14% growth in Motorcycles from 105.0 lakh numbers to 119.4 lakh numbers. Scooters as a category continued to gain share from motorcycles in the total two wheeler industry. Mopeds registered a growth of 12% growing from 7.0 lakh numbers to 7.9 lakh numbers.
In the motorcycle category, growth was mainly propelled by 24% growth in economy segment. The executive segment contributing to 60% of the volumes, grew by 12% while growth in premium segment remained at a low level of 5%.
The Petrol Passenger three wheeler industry (3 plus 1 segment) grew by 18% during 2011-12 reaching 4.8 lakh units mainly due to higher exports. Three wheeler exports (3.47 lakhs) grew at 39%, whereas domestic sales (1.35 lakhs) declined by 16%.
BUSINESS OUTLOOK AND OVERVIEW
The uncertainty witnessed in 2011-12 is likely to continue even in 2012-13. Global economy shows no signs of recovery in 2012-13 and is expected to be more uncertain. This may result in volatile crude and commodity prices and fluctuations in foreign exchange rates. In domestic economy, continued inflationary pressures, lower private consumption and high fiscal deficit are likely to result in lower GDP growth compared to previous year. The two wheeler industry is also consequently expected to grow at a lower rate of 10% compared to 16% growth recorded in the previous year.
The Company's overall domestic two wheeler sales growth was lower at 5% mainly due to its absence in executive segment of motor cycles. Mopeds grew at 10% and scooters by 10%. The Company crossed a new milestone in exports with all time high sales of 2.70 lakh numbers in 2011-12. Three wheeler sales of the Company increased marginally from 0.39 lakh in 2010-11 to 0.40 lakh in 2011-12. Sales of spare parts grew by 29%.
The Company's total revenue including other income grew from Rs. 6,323.64 Cr in the previous year to Rs. 7,147.91 Cr in the current year. The profit before tax (PBT) was higher by 28% and grew from Rs.248.09 Cr in 2010-11 to Rs. 316.46 Cr in 2011-12. Similarly, the profit after tax (PAT) was also higher by 28% and grew from Rs. 194.58 Cr in 2010-11 to Rs. 249.07 Cr in 2011-12.
New Product Launches and Initiatives
During the year 2011-12, the following new products and variants were launched.
TVS StaR City:
TVS StaR City 2012 edition with executive segment features such as dual tone body colours and an all-new stylish headlamp was launched. The engine of the new TVS StaR City deploys TVS Motor Company's indigenous revolutionary CVTi (Continuous Variable Timing ignition) which facilitates superior pickup and boosts performance without compromising on mileage. This is achieved through a unique combination of swirl and tumble motion that generates very high in-cylinder charge motion, almost three times more than the conventional port designs.
The last year saw the latest offering, wego designed for the successful young urban couple. The 110cc wego comes with unique body balance technology and is feature packed with 12" alloy wheels, telescopic suspension and nitrogen gas charged rear suspension. wego delivers superior pickup, enhanced mileage, greater handling ease & comfort, alongwith its international styling and looks. wego won many awards across the country and was undoubtedly the "Scooter of the Year".
The young independent working woman inspired the new "TVS Streak". The all black Streak was to celebrate the coming of age of the Indian working woman and her ability to excel in all walks of life. The powerful looking Streak continues to enthral its audience with its performance and in its new look.
Two wheeler operations:
The Company's sales grew by 5% in domestic market. In motorcycle, sales declined by 3% due to its absence in executive segment. Within the motorcycle portfolio, TVS Sport grew at an impressive 28%, higher than economy segment growth of 24%.
Moped sales in first half grew at 13% while second half witnessed a growth of 7%. The Company's growth in scooter segment was 10%. wego continued to grow at an impressive rate of 60%.
The Company's products are distributed by a network of authorized dealers across India. The Company continuously seeks to increase its distribution reach.
The Company crossed a new milestone in exports with an all time high sales of 2.70 lakh numbers in 2011-12. The first three quarters registered average 31% growth while the sales in fourth quarter declined by 7% due to volatile macro-economic conditions in export markets.
While increased competition on the export front is likely, the Company is confident of taking advantage of the interest shown in its products. Further new markets are opening up with potential for export of Company's products.
Three wheeler operations:
Export sales grew by 51%. However, domestic sales of three wheelers declined by 35% due to substantial reduction in the permits issued in key three wheeler markets. The overall three wheeler numbers were, therefore, in line with last year.
Opportunities and Threats:
Favourable demographic profile and rising income levels have been the drivers of growth for two-wheelers. Preference of owning a personal transport is also going up over the last few years. These trends are expected to continue in the medium term.
The Company has established brands in economy and premium segments. With the launch of two new brands in the executive segment in the coming year, the Company is expected to leve