Thursday, May 5, 2011

Tube Investments of India Limited = FY 11 vs FY 10 = IMPRESSIVE PERFORMANCE ON ALL FRONTS

Tube Investments of India Limited



TII crosses Rs 3000 Cr turnover and net up by 109 %

Tube Investments of India Ltd (TII) reported a Gross Turnover of Rs.3130 cr. for 2010-11, a growth of 27% over the previous year.

All the business segments performed well. The good performance in the Engineering and Metal Formed Products businesses was on the backdrop of a strong growth of 26% in the auto industry.

TII also booked an exceptional income arising from sale of some of its Land. After considering this exceptional income, the profit before tax stood at Rs. 241 Cr. as against Rs. 129 Cr. after an exceptional charge of Rs. 40 Cr. in the previous year.

Mr. L. Ramkumar, Managing Director said “The year 2010-11 was a year of landmarks with good performances from all business segments.  Despite capacity constraints in two of our businesses, the Company did well to improve its operating profit through a focus on product mix, higher asset and people productivity and benefits of new product introductions”. 


The bicycles segment achieved two milestones; one in terms of  having crossed the 4 million mark in volume and another in having crossed the Rs 1000 cr. mark in turnover.  A combination of initiatives including increased focus on special, premium and performance bike segments and promotion of “Cycling” enabled this segment to achieve this performance.  

The year also marked the introduction, for the first time in India, of an indigenously designed and made carbon frame bike under the “Montra” brand. The company also launched, in the premium segment, GT and Mongoose range of bikes. These have been received well in the market. The division derived as much as 23% of its revenues from new models reiterating its strength in leading growth through new products. On the customer front, the company continues to offer a unique and enjoyable purchase experience through its retail format. 

As of date, there are as many as 647 outlets under various formats and the share of business from these channels is about 25%. The Company continues to maintain a premium position in the industry through its strong quality and brand image. The fitness industry in India continues to grow at a rapid pace and the company’s fitness business turnover increased by 39% over the previous year.

The electric scooters market in India saw a few players, regional as well as importers, exiting the market due to their inability to provide quality products/services. This dampened the consumer’s confidence and resulted in the organized market volume dropping to 40,000 numbers from an estimated 60,000 numbers last year. The announcement of subsidies by the Government coupled with a focused approach in areas of quality and after sales service should help the division, to perform better in the years to come.

The Profit before interest and tax in this segment was at Rs.78 Cr. against Rs. 69 Cr. in the previous year, representing a growth of 14%.


The Engineering segment also achieved a milestone in having crossed the Rs. 1000 cr. turnover mark. The division reported a volume increase of 20% in the precision cold drawn welded tubes.  Export of tubes grew at 15%. In cold rolled steel strips business, the growth at 7% this year was better than that of the last year. The division also supplies valued added tubular components to the auto industry. This business grew by 40% in volume terms.

The Profit before interest and tax in this segment was at Rs.113 Cr. against Rs. 85 Cr. in the previous year, representing a growth of 32%.

Metal Formed Products

In this segment, volume of automotive chains grew at 30% - better than the 26% growth in the two wheeler industry, while the industrial chains grew at 11%. Exports of chains picked up and grew by 60%.The volume of car doorframes sold touched the 1 million mark and grew by 17% over last year. The plant in Uttarakhand became fully operational and the revenues from the railway segment grew by 42% over the last year. The total revenue for the segment grew to Rs. 775 Cr. from Rs. 580 Cr., a growth of 34%.

The Profit before interest and tax in this segment grew by 26% and was at Rs. 101 Cr. as compared to Rs. 80 Cr. in the previous year. 

Performance of major subsidiaries

Cholamandalam MS General Insurance Company Ltd, the insurance subsidiary of the Company achieved a Gross Written Premium of Rs. 968 Cr. against Rs. 785 Cr. last year. This represents a growth of 23%. Despite the growth, the company reported a loss of Rs. 22.59 Cr. against a profit before Tax of Rs. 1.85 Cr. in the previous year. The loss of Rs. 22.59 cr is after reckoning   Rs. 61.40 Cr a charge in the profit and loss account attributable to its share of losses from Indian Motor Third Party Insurance Pool (IMTPIP) in line with the results circulated by GIC Re, the Pool Administrator.

Cholamandalam DBS Finance Ltd (CDFL) became a subsidiary of the Company in April 2010 and is now Cholamandalam Investment and Finance Company Limited (CIFCL).  The Company now holds 60.56% of the equity of CIFCL. Disbursements for the year grew by 48% from Rs.3866 Cr. to Rs.5731 Cr.  the highest since inception. All the existing business verticals recorded their highest growth / profits since inception. Profit before tax recorded for the year by the Asset financing businesses amounted to Rs.348 Cr, a growth of 246% over the previous year. After considering all the potential losses in the Personal Loan portfolio, the Profit before tax was at Rs 123 Cr, a growth of 76% over the last year.

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. In the recent times, the Company has introduced E- Scooters.


Net Sales ON STAND ALONE  (or SA) Basis was Rs.2966.17 cr – up by 26.45% from FY 10. Sales on consolidated basis (Or CS) was Rs.4922.18 cr – up by 58.72% from FY 10.

Total Expenditure      on SA basis was Rs.2710.77 vr – up by 25.28% from Fy 2010;  The same on CS basis was Rs.4010.66 cr – up by 41.03% from FY 10.

Profit from Operations on SA basis was Rs.270.33 cr – up by 38.79% from FY 10. The same on CS basis is Rs.1034.20 cr – up by a huge 210.65% from FY 10.

Profit before tax on SA basis was Rs.241.30 cr – up by 86.33% from FY 10.. The same on CS basis was Rs.334.78 cr – up by 101.4% from FY 10. Higher interest burden has reduced the profit at this stage.

Net Profit  on SA basis is Rs.169.66 cr – up by 108.92% from FY 10; The same on CS basis is Rs.223.92 cr – up by 98.37% from FY 10.

Consolidated Net Profit      for FY 11 has been Rs.   195.90 cr – up by 74.51% from FY 10.

Dividend (%) has been        75& for FY 11 – which is same as for FY 10.

Against a FV of Rs.2/- per share; the Basic EPS (in Rs.) has been Rs.9.16 for Fy 11 against Rs.4.39 on stand alone Basis. The same on CS basis has been Rs.10.58 – against Rs.6.08 for FY 10.

Thus the performance of Tube Investments of India ltd in FY 11 has been quite impressive.

The Rs.2 share is trading at around Rs.139, on the EPS of Rs.10.58, giving PE Ratio of 13 – but, the stock deserves significant re-rating based on its performance and growth trajectory. Its sales is growing every quarter consistently.


04-05-2011 : "TII crosses Rs 3000 Cr turnover and net up by 109%".

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