With cycles growth flat, TI to push lifestyle line

Forced by flat market growth in past two-three years, Chennai-based TI Cycles in now moving to promote its lifestyle products.

Having re-entered the export market after a gap of three years, the company is also in talks to buy out branding rights for the countries in Africa that it has started exporting to, a few months ago.

The company is trying to evolve a lifestyle retail network to promote its brand. It is starting this initiative with one retail unit in Chennai on an experimental basis.

"We hope to rope in at least 100 of our existing network of 2500 retailers to convert their showrooms along these lines, " G Hari, president, TI Cycles, informed in the sidelines of the launch of the BSA Cycle Run 2004.

"We currently deploy four per cent of our sales revenue in brand promotions. This is likely to change depending upon the kind of response we get to some of these initiatives we are currently taking", Adhiraj Sarin, managing director, TI Cycles added.

Beyond capturing the mind share of the market through promotional activities and refurbishing its retail chain, TI Cycles is also pursuing developing the accessories market.

To start with it is looking at headgears and is in talk outsource the products. It is also looking at branded T-shirts. "The Indian market has not matured to take on the bigger ticket accessories such as fancy gears and head lamps. We have to wait for the market to open up to them", Hari informed.

On the export front, TI Cycles is no longer looking at the high-end market of the US and Europe that it had earlier operated in. Given the lack of competence of Indian industry in the aluminium bikes' sphere, the company does not want to repeat its earlier mistake. Instead it has now taken to exporting its steel bikes to developing countries in Africa and is also target West Asia.

It is also changing its earlier strategy of being a OEM source for foreign brands to branding its exports. In this direction, it is on the verge of signing a branding agreement.

The division is taking pride that it could hold on to its sales volume at 29.2 lakh cycles in 2003-04 despite the rough market and turn in a revenue of Rs 478 crore (unaudited) as compared to last year's Rs 440 crore. However, the division's share in the revenue pie of Tube Investment of India Ltd (TI) has been shrinking, with the engineering business gaining momentum. Sarin puts the cycles' share in TI's revenue at 30 per cent in 2003-04.

To double capacity at noida:
Meantime, TI Cycles, impressed by the market penetration the disaggregation of its production base has offered, is now gearing to invest another Rs 8-9 crore to double the capacity at NOIDA to one lakh cycles a month.

The company currently has its biggest production facility at Chennai, where it makes 2.5 lakh cycles a month. Cycle being a price sensitive, the company saw wisdom is spreading its production to penetrate the northern markets, where Hero and Atlas offer stiff competition.

It first set up a facility at Nashik and followed this with NOIDA. Both the plant roll out 50,000 cycles a month. The company also invested in a warehouse in Durgapur for the eastern and has recently expanded its capacity to 50,000 cycles from 10,000.