Tube Investments of India (TII), part of the $4.4 billion (Rs 25,000 crore) Murugappa Group, is planning to cut down its investment plan in Punjab, due to slow down in the automobile sector. The company is setting up a greenfield facility to manufacture tubes in the state of Punjab with an investment of around Rs 200-250 crore.
L Ramkumar, managing director, TII said that “we are now relooking the time and size of the project. Instead of doing it (investment) in single phase, we may plan the investment in two phases. The quantum and time yet to be decided, earlier we had planned around Rs 200-250 crore, which we may downscale now and it won't be fully on the phase I”.
He added that the first quarter results reflect the volatility and turbulence in the economy. "Profits was down due to drop in pricing of railway wagon channels and increasing competition. It was also due to our inability to pass on the input cost (mainly power and raw material) increases due the market conditions. The other factor is also due to big drop in metal form revenue"
The company reported a 23 per cent drop in net profit during the quarter ended June 30, 2012 at Rs 38.43 crore as compared to Rs 50.02 crore, a year ago.
“The current fiscal will also be a tough one, either we will report a marginal growth in revenue or it will be flat,” said Ramkumar. The company had closed fiscal year ended March 31, 2012 at Rs 3,489.77 crore.
“We feel two-wheeler industry will report a moderate growth, while passenger cars would report a single digit and LCV will be doing well , while the commercial vehicle will remain tough”.
Export of cycles from early next year
Earlier addressing the shareholders, company’s Chairman M M Murugappan said that the company is planning to strengthen its position in the leisure and fitness area and to expand in international markets. “We have started catering to international markets in a small way,” he said.
L Ramkumar, managing director, TII said that TI Cycles had set up a facility to make aluminium frame bicycle at Ambattur, on the outskirts of Chennai, and will start catering to domestic market in the next 3-6 months. “We also got some interest from potential buyers from overseas, we had sent some sample, we will get into supply agreement soon with them. Export will start end of this year or early next year”.
The company is looking at Europe to start with, he added. Company’s bicycle division turnover for the quarter was up by five per cent over the same quarter last year. The specials segment registered a volume growth of around seven per cent.