TVS Motors profit falls 43.3% due to one-time hits like COVID-19 and dealer discounts for BS-VI transition

• TVS Motor Company reported around 43.3% fall in its consolidated net profit to ₹81.85 crore between January and March 2020.
• The company’s total revenue was down 20.5% YoY to ₹3,481.42 crore during the period.
• Although the coronavirus lockdown period was just for one week in the relevant period, the motorcycle giants saw a steep drop of 62.01% in its March sales.

India’s third-largest motorcycle manufacturer TVS Motor Company reported around 43.3% fall in its consolidated net profit to ₹81.85 crore between January and March 2020 compared to the same quarter last year.

The company’s total revenue was down 20.5% YoY to ₹3,481.42 crore during the period, the company said. However, analysts had expected its fourth-quarter profits to fall by about 23%.


The company in its filing said, during March 2020, the company incurred ₹40.33 Crores towards COVID-19 related expenses.

The company have to give one time additional discount to dealers of ₹22 crore for transition to new emission standards called BS-VI.

Although the coronavirus lockdown period was just for one week in the relevant period, the motorcycle giants saw a steep drop of 62.01% in its March sales of three and two-wheelers, according to data from Society of Indian Automobile Manufacturers (Siam).

Source: TVS Q4 earnings report

Since the beginning of 2020, TVS Motor share prices had taken a massive hit because of subdued sales. The share price has declined over 30% since the beginning of this year, till date. The shares however gained 3%, ahead of the earnings on May 28 and added another 1.5% the morning after.

On March 22, the government announced a nationwide lockdown to deal with the COVID-19 pandemic and TVS Motor to halt operations until May 6 when the Hosur, Mysuru and Nalagarh plant opened after more than 40 days.

At the same time, the margin shrank as costs did not fall with the sales. The company had to pay for salaries, materials and advertisements even though the demand for cars remained weak. Earlier this week the company announced a cut in employees’ salaries for six months, starting May.

“In the wake of the unprecedented crisis, TVS Motor Company has rolled out a temporary salary reduction across different levels for a period of six months,” TVS Motor spokesperson said.

The company said that there would be a reduction of 5% in the salaries for junior executives and 15-20% for the senior management level. However, it has also decided not to cut salary at the workmen level.

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