Chennai, 30th January, 2010: The Board of Directors of Tube Investments of India Limited (TII) met today and approved the un-audited financial results for the quarter and nine months ended 31st December, 2009.
During the quarter sales were at Rs. 584 Cr. as against Rs.429 Cr. in the same period last year. The profit before depreciation, interest and tax for the quarter was at Rs. 64.97 Cr. against Rs. 3.27 Cr. last year. The third quarter of last year was affected by the downturn in global markets leading to a decline in demand from the key user segment – automotive. The profit before tax and exceptional items for the nine month period was higher at Rs. 125.03 Cr. against Rs. 46.49 Cr. in the previous year representing an improvement of 169%.The net profit for the current year was at Rs. 17.87 Cr. after making an additional provision of Rs. 9.44 Cr. towards the diminution in the value of its investment and financial assistance to its wholly owned subsidiary, Tubular Precision Products (Suzhou) Company Ltd., in China. Mr. L. Ramkumar, Managing Director said, “Good all-round performance by all businesses on the back of new and innovative products, superior service, co-ordinated working with customers and control on costs helped the Company post this performance.”
Review of Businesses – Third Quarter
The Cycles division registered an increase in volume by 61% during the current quarter as compared to the same quarter last year. This was achieved on the back of a strong 70% growth in the “Specials Segment” and 48% increase in the sale of standard bicycles. The division continues its focus on new product launches, superior service and operating efficiencies helping it sustain its premium position in the market. During the quarter the sale of bicycles under the Schwinn brand commenced. These bicycles are positioned as entry level products in the premium segment and have been well received.
Sales of Electric Scooters continue to be consistent. During the quarter three new models were introduced in the market. The superiority of two of the models launched is the higher speed and greater distance that can be covered by these scooters. In addition, a scooter for the physically challenged containing many user friendly features was also introduced. This is a first in the Indian market.
Sale of cold rolled steel strips increased 19% on the back of strong demand. There was also a growth of 66% in volume terms in the sale of precision steel tubes in line with the growth in the auto industry. Tubular components continued to grow and increased during the quarter by 55%. Higher volume and continued focus on operation efficiencies helped us improve our margin. Export volume was flat despite there being no improvement in overseas markets in Europe and North America.
Metal Formed Products registered all round growth with all product lines growing. Significant growth came in the automotive chains segment, (65%) fine blanked products (33%) and Engineering Class Chains. (81%) Sales of car doorframes increased 47% and we continue to grow in the Railway segment at around 100%. Export of industrial chains continued to be lower than in the previous year and declined 38%.
With its focus on growth segments and new value added products and ensuring operating efficiencies in its operations, the Company is confident of a better performance in the coming quarter.
Due to the depressed economic environment and the intense competition in the Chinese market the overseas subsidiary of the Company, Tubular Precision Products (Suzhou) Co Ltd., (TPP) has not been able to operate profitably. A provision of Rs. 30.21 Cr. was created in the second quarter to cover the diminution in the value of the investment. During the quarter an additional sum of Rs. 9.44 Cr. has been provided towards this. The aggregate value of the provision is Rs. 39.65 Cr.
The consolidated profit before exceptional items for the nine month period was at Rs. 106.11 Cr. against Rs. 6.88 Cr. in the previous year. Cholamandalam DBS Finance Ltd, a joint venture company in financial service business achieved a profit before exceptional items of Rs. 18.35 Cr. against a loss of Rs. 81.92 Cr. in the previous year. Cholamandalam MS General Insurance Company Ltd. a general insurance subsidiary of the Company registered a growth of 17% in Gross Written Premium during the quarter.
About Tube Investments of India
Tube Investments of India consists of TI Cycles of India, Tube Products of India, TI Metal Forming (including Chains). In bicycles, TII is the second largest manufacturer with well-known brands – Hercules, BSA and Philips. TII is the market leader in precision steel tubes and roll-formed car doorframes in India. Also, being the second largest motor cycle chain manufacturer in India, TII is a major supplier to the Indian auto / auto- component industry.
About the Murugappa Group:
Headquartered in Chennai, the Rs. 15,907 crores (USD 3.14 billion) Murugappa Group is one of India’s leading business conglomerates. Market leaders in diverse areas of business including Engineering, Abrasives, Finance, General Insurance, Cycles, Sugar, Farm Inputs, Fertilizers, Plantations, Bio-products and Nutraceuticals, its 29 companies have manufacturing facilities spread across 13 states in India. The organization fosters an environment of professionalism and has a workforce of over 32,000 employees. The Group has forged strong joint venture alliances with leading international companies like DBS Bank, Mitsui Sumitomo, Foskor, Cargill and Groupe Chimique Tunisien and has consolidated its status as one of the fastest growing diversified business houses in India.