Chennai, July 31 (Inditop.com) Bicycle and engineering product manufacturer Tube Investments (TI) is looking at various options, including tying up with a new company, to save its loss-making Chinese unit.
The Chennai-based company, part of the $3-billion Murugappa group, said the Chinese unit, which manufactures steel tubes, posted a net loss of around Rs.8 crore in 2008.
“The company board has given its approval to look for viable options. It could be turning into a contract manufacturer or tying up with another company,” said L. Ramkumar, managing director of TI.
If these options do not work, TI would even exit from the Chinese venture, Ramkumar told IANS.
The Chinese unit, located at the Suzhou Industrial Park, 80 km west of Shanghai, manufactures cold drawn welded (CDW) steel tubes and has an annual capacity of 12,000 tonnes.
“Around Rs.40 crore has been invested in the Chinese operations and last year the net loss was around Rs.8 crore,” Ramkumar said.
TI entered the Chinese market in 2006 mainly attracted by that country’s booming passenger car market and started commercial operations a year later.
Asked about the company’s Indian expansion plans, Ramkumar said TI was now setting up a car door frame plant for Tata Motors’ Nano small car at Sanand in Gujarat.
“The outlay will be around Rs.12 crore. We had invested in a similar door frame project at Singur in West Bengal before Tata shifted its car plant to Gujarat,” he said.
“We were told that Tata Motors will compensate for our earlier investment in Singur.”
Ramkumar added that the TI was now in the process of expanding its distribution network from the current 49 dealers to 100 by year-end.
Meanwhile, the company has posted a net profit of Rs.28.45 crore for the quarter ended June 30, down from Rs.48.29 crore reported in the like period last year.
“The profit for the first quarter of the previous year included profit on sale of investments amounting to Rs.31.84 crore,” Ramkumar said.
Its turnover for the quarter stood at Rs.542.94 crore as against Rs.531.98 crore in the year-ago period.
TI’s flagship division TI Cycles registered a 22 percent sales growth in the value-added special segment while the sales of its standard cycles grew by 12 percent.
He added that the company was selling around 1,000 electric bikes per month.
