Buoyed by the success of recently launched motorcycle models like Star City and Apache, TVS Motor has reported good growth in sales for the first quarter of the current financial year. However, rising costs have put tremendous pressure on margins and led to a decline in the bottom line.

For the quarter ended 30 June, 2006, net profits have declined 14.5 per cent to Rs21.29 crore from Rs24.9 crore for the previous year quarter. Total revenues increased 25.85 per cent to Rs939.62 crore from Rs746.6 crore for the prior year quarter.

Net sales increased 25.4 per cent to Rs921.78 crore from Rs735.06 crore for the prior year quarter.

Operating profits declined 16.26 per cent for the quarter and operating margins dropped by 225 basis points. Operating margins as a percentage of net sales declined to 4.51 per cent from 6.76 per cent for the pervious year quarter.

Cost of inputs went up by 28.78 per cent during the quarter, pulling down the margins. Staff costs increased more modestly by 12.93 per cent while other operating expenses were higher by 31.74 per cent.

Net interest costs jumped 147 per cent to Rs5.97 crore from Rs2.42 crore for the previous year quarter while depreciation charges were higher by 2.69 per cent.

The pressure on bottom line was absorbed to some extent by a 54.59 per cent rise in other income to Rs17.84 crore from Rs11.54 crore a year ago. A 20.57 per cent decline in tax provision also helped the bottom line during the quarter.

Total two-wheelers for the quarter was 3.76 lakh units compared to 3.07 lakh units in the same period last year - a growth of 22 per cent. Motorcycle sales increased 32 per cent to 2.33 lakh units during the quarter. Total exports were 25,772 units, an increase of 32 per cent.

Trial production at the company's new plant in Himachal Pradesh will commence shortly. The launch of three-wheelers in India and two-wheelers in Indonesia is likely to be in the Q4 of 2006-07.