Foraying into the high precision large diameter tubes market, multi-produce company Tube Investments of India Ltd. (TI) will be looking at hydraulic cylinders, propeller shafts and other infrastructure segments business, said a senior company official.
The company will be commissioning its new Rs.250 crore 11,000 tonnes per month (tpm) large diameter tubes plant at Tiruttani near here Thursday, he added.
"In three years' time the plant is expected to generate a revenue of around Rs.450 crore and the payback period of the investment will be seven years," Kalyan Kumar Paul, president tubes products division, said.
Paul said the precision tubes have good export potential and TI would explore overseas markets as well.
"At our new plant we can make precision tubes up to 7.5 inch diameter. Currently the company makes tubes up to 4.5 inch diameter," L. Ramkumar, managing director, told reporters here Tuesday.
According to him, tubes account for a significant portion of the company's top and bottomline.
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Part of the Rs.243 billion turnover Murugappa Group, TI makes bicycles, tubes, chains and other products.
Claiming a market share of 50 percent in the precision tubes segment in the country for TI, Ramkumar said the new plant is to look at newer market segments and also to expand the product range.
He said nearly 30-40 percent of the precision tubes used in the off-highway vehicles and other segments are now being imported and the user segment is looking for localisation of such tubes.
Queried about the company's other investment plans, Ramkumar said TI had signed a Memorandum of Understanding (MoU) with the Tamil Nadu government to invest around Rs.500 crore in three projects.
While the tube project has been realised, the balance two-new plant for bicycles and chains have been deferred owing to poor market conditions.
"The economic sentiment is positive now. If the economy picks up then the group will certainly look at fresh investments," M.M. Murgappan, vice chairman, Murugappa Group said.
He said the prediction by the World Bank that the Indian gross domestic product to grow by 5.6 percent is realistic.