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Home arrow News arrow Business News arrow Tube Investments Of India Ltd's operating profits up 366%
Tube Investments Of India Ltd's operating profits up 366% Print E-mail
Written by Vivek   
Wednesday, 05 May 2010
Chennai: Tube Investments of India Ltd (TII) reported an operating profit growth of 366% during the year ended 31st March 2010. The operating profit of TII before exceptional items grew from Rs. 36.36 Cr. to Rs. 169.45 Cr.

"TII achieved its highest ever operating profit. The Company’s focus this year was on improving operating efficiencies, using existing facilities better to service the increase in demand from our customers, new product offerings and superior customer service. With the economy back on the path of high growth we hope to sustain and improve on the performance of the current year," said L. Ramkumar, Managing Director.

The improvement in the current year comes on the back of a very good performance by all the business segments of the Company. The high growth of around 25% in the auto industry aided the performance.

The Engineering segment reported a volume increase of 20% in the value added precision tubes segment and improved its market share by 2%. Despite this growth in volume terms the revenue for this segment declined by 4% due to the reduction in price of steel. Export of tubes was also lower than the previous year by 12% since the recovery in the North American and European markets has been slower than expected.

The segment was able to improve its profitability through focus on operating efficiencies, better utilization of resources and development of new products.

In the Metal Formed Products segment volume of automotive chains grew 53 % and industrial chains grew at 11%. The market share in automotive chains increased by 10%. Export of chains were however lower by 52%. The volume of car doorframes sold increased by 30% and that of sections for railway wagons grew by 49%. During the quarter two plants for manufacture of sections for railway wagons and wall and roof assemblies for wagons were commissioned at Uttarakhand. The total revenue for the segment grew by 20% and the profitability of the segment improved.

The bicycles segment performed very well and grew in volume by 25% and revenue by 31% and improved its market share. The growth in both the standard and special segments came about due to the new product introductions, many ground level market activation initiatives and continued focus on the expansion of its retail footprint. Today, there are as many as 482 outlets under various formats and the share of business from these channels was at about 20%. The high end bicycles introduced last year did creditably and with the introduction of one more brand at the entry level of the premium segment interest in this niche has picked up further. The Company’s brands continue to enjoy a premium position in the industry.

The electric scooters launched a year ago also performed well and achieved a high market share in South India. In all, 9082 scooters were sold during the year as against 1327 in the previous year. With new product introductions aimed at differentiating our products from those in the industry. The category is expected to do better in the current year.

TII has also made a one time provision for the diminution in the value of its investment in the overseas subsidiary set up to manufacture cold drawn welded tubes in China. The total provision made during the year was Rs. 39.95 Cr. covering the value of its investment and other receivables. After considering this exceptional charge the profit before tax was at Rs. 129.50 Cr. against Rs. 83.02 Cr. in the previous year. The Board of Directors recommended a higher dividend of Rs.1.50 (PY – Rs.1.00) per equity share of Rs.2/- per equity share.

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