Financial Daily from THE HINDU group of publications
Tuesday, Apr 13, 2004
Corporate - Performance
TI to pump up cycle exports
Chennai , April 12
THE Chennai-based TI Cycles, resuming exports after a lull, has earned Rs 5 crore by selling over 30,000 cycles to Africa and West Asia last fiscal.
A unit of the Murugappa group's Tube Investments, TI Cycles, had, in its peak, earned over Rs 90 crore from exports but non-tariff barriers, set by some European countries, shut out this earnings avenue a few years ago.
TI Cycles' President G. Hari told Business Line that the company's strategy is to focus, initially, on exporting to developing countries, which it does through its own brands. "The advantages of selling our own brands is that we can ensure product quality and earn healthier margins," he said.
The company exports standard variety cycles to West Asia and Africa; the latter is also supplied with `specials,' which include the mountain terrain bikes.
The export target for next year is one lakh cycles, which will translate into a revenue of Rs 15-20 crore, said Mr Hari.
In the domestic market, the company's strategy of having assembly units in Nasik and Noida, along with centralised buying, has helped it price its cycles more competitively, especially in the North where it is fighting well-established brands such as Hero and Atlas, he said. In the standard segment, for instance, the company's cycles are priced only Rs 50-60 over its competitors' due to the savings in freight costs, compared with Rs 150 and above before the decentralised set-up, according to Mr Hari. "Our service to dealers has also improved."
While the Noida and Nasik plants each have a capacity of 50,000 cycles a month, the Chennai facility's monthly output is 2.5 lakh. The company has also increased the capacity of its warehouse in Durgapur, West Bengal, to 50,000 from 10,000.
It has also revamped its paint shop in its Chennai factory, investing Rs 10 crore in bringing in German technology, he said.
As a result of increasing steel prices, manufacturers had to increase the price of each cycle by Rs 80-85 between January and March, Mr Hari said.
The cycles business, with brands such as BSA and Hercules, is expected to have earned the company nearly Rs 500 crore for the year ended March 2004, over 13 per cent higher than its revenues of Rs 440 crore last fiscal.
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