Tube Investments to invest Rs65 crore in new chain and car doorframe plants

Venkatachari Jagannathan
30 April 2007

The chain plant will mainly cater to the needs of Hero Honda''s facility there at Uttarkhand while the car doorframe plant at Pune will be to serve Tata Motors. While the capacity of these two plants are kept under wraps, the chain plant would involve an outlay of Rs40 crore and the car door frame plant Rs25 crore.

According to officials the rationale for the investment in Uttarkhand is that the company has almost reached the optimum capacity at its two existing chain plants and hence the need for a new plant as the demand is growing. Further Bajaj Auto is also setting up a plant there. As TI''s plant is not part of any vehicle manufacturer''s production zone, it can supply to any company.

On the other hand the company''s 12,000 tonne per annum (tpa) tube plant being established by the wholly owned Chinese subsidiary Tubular Precision Products Suzhou Limited is expected to start commercial production from July''07.

Meanwhile, the company closed FY 2007 with a net profit Rs155.78 crore lower than the previous year''s figure of Rs182.93 crore. Though the topline grew by 11 per cent over FY 2006 figure of Rs1,584.18 crore, the lower bottomline is owing to increase in the input costs and reduction in margins in certain product lines. Included in the profit for FY 2007 is the profit from sale of investment to the tune of Rs71.7 crore (previous year figure Rs110.50 crore).

Turnover in the bicycles business crossed the Rs500 crore mark for the first time and touched Rs511 crore against Rs466 crore in the previous year, representing a growth of 9.7 per cent. This was possible due to the higher volumes achieved in the trade segment through new retail initiative under the brand BSA Go. During the year, a range of fitness equipment was launched under the brand BSA Workout and the initial feedback has been encouraging. (See: TI Cycles'' new fitness strategy)

Last fiscal the company''s engineering business grew from Rs995 crore to Rs1,104 crore with growth in all major product lines namely strips, tubes, automotive and industrial chains and car doorframes.