K. Gopala Desikan, chief financial officer, TVS Motor, said a combination of factors aided the impressive performance. The company’s market share improved steadily and it also made efforts to reduce material costs. As a result, its operating Ebitda (earnings before interest, taxes, depreciation, and amortization) rose 60 basis points from a year ago to 10.6% in Q1FY24, including its EV business.

TVS Motor, which manufactures two- and three- wheelers, also saw its revenue grow 20% to ₹7,218 crore in Q1, compared with ₹6,009 crore in the year-ago period.

Despite the recent slowdown in electric two-wheeler sales following the government’s decision to reduce incentives under FAME-II scheme, TVS is optimistic about its electric scooter iQube’s performance, and expects to deliver over 25,000 units of the iQube in August.

The company is expanding its distribution network for electric vehicles (EV), and aims to double its touch-points from just over 300 now to over 600 by FY23 end.

Also, the company plans to grow its EV portfolio and will launch new models in the 5kWh-25KWh battery ranges, including some in the September quarter. TVS will unveil an e-two-wheeler on 28 August in Dubai, and new premium motorcycles over the next couple of quarters.

“Despite short-term challenges in electric two-wheeler adoption, we will reach 25,000 sales in August. We are expanding availability of the iQube and have also started retailing to Nepal. We will dispatch to international markets within this year,” Desikan said during a post-earnings conference call.

“The contribution margin in EV business continues to be positive despite FAME-II subsidy reduction. We have 30,000 pending bookings for which we took a nearly 30 basis point hit in revenue in Q1FY24 to reflect the changes in our charger invoicing system and passed on the cost benefit to the customers.”

The company is evaluating ways to strike a delicate balance between topline growth aspirations and passing on the impact of FAME-II subsidy cuts. It realizes that volumes growth is the only way to enhance margins and capitalize on economies of scale to drive down the costs, which will lead to positive Ebitda for the EV business. In April-June, sales for the iQube was at 39,000 units. Overall, two- and three-wheeler sale including exports grew 5% from 907,000 units in Q1FY23 to 953,000 units in April-June 2023. Motorcycle sales were up 7% to 463,000 units, while scooter sales grew 11% to 350,000.

Updated: 25 Jul 2023, 12:14 AM IST