Tube Investments of India Ltd:Annual Report 2023-24 Analysis

Tube Investments of India Ltd. - A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History #

Tube Investments of India Ltd. (TII) was established in 1949 as a joint venture between Tube Investments Group, UK, and Murugappa Group, India.

Headquarters Location and Global Presence #

The company’s headquarters are located in Chennai, India. TII has a global presence through exports and collaborations, primarily in select countries. The extent of global presence beyond exports can vary based on specific business segments.

Company Vision and Mission #

• Vision: To be a leading engineering company, creating value for all stakeholders through sustainable growth and innovation.
• Mission: To provide high-quality products and services to meet the evolving needs of customers, while adhering to ethical business practices and fostering a culture of excellence.

Key Milestones in Their Growth Journey #

• 1949: Established as a joint venture.
• Diversification: Expanded product portfolio beyond tubes to include bicycles, engineering, metal formed products, and more.
• Acquisitions: Grown through strategic acquisitions to expand market reach and product offerings (e.g., Shanthi Gears).
• Demerger: Demerged its financial services arm, Cholamandalam Investment and Finance Company, focusing on engineering businesses.

Stock Exchange Listing Details and Market Capitalization #

TII is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The market capitalization fluctuates based on market conditions. Refer to current financial data sources for accurate market capitalization figures.

Recent Financial Performance Highlights #

• (Please consult financial reports for the latest data) Key indicators to consider include: Revenue growth, Profit margins, Earnings per share (EPS), Debt-to-equity ratio, Return on equity (ROE)

Management Team and Leadership Structure #

The company is led by a board of directors and a management team with experience in engineering, finance, and business strategy. The leadership structure typically involves a Managing Director or CEO responsible for day-to-day operations.

Notable Awards or Recognitions #

TII has received awards and recognitions for its manufacturing excellence, quality, and corporate governance. Specific awards vary from year to year.

Their Products #

Complete Product Portfolio with Categories #

TII’s product portfolio includes:

• Engineering: Cold rolled steel strips, precision tubes, and chains.
• Metal Formed Products: Automotive, industrial, and other engineered components.
• Bicycles: Under the brand “Hercules,” “BSA,” and “Montra.”
• Gears: Industrial gears and gearboxes.
• Mobility: Electric three-wheelers and components.

Flagship or Signature Product Lines #

• Bicycles: Iconic brands like Hercules and BSA have a long history in the Indian market.
• Engineering: Precision tubes and strips are known for their quality and reliability.
• Gears: Shanthi Gears is a recognized leader in the industrial gears segment.

Key Technological Innovations or Patents #

The company has patents related to its manufacturing processes, product designs, and technological advancements in engineering and metal forming. Specific details of patents are proprietary.

Manufacturing Facilities and Production Capacity #

TII has multiple manufacturing facilities across India. Production capacity varies for each product segment and is adjusted based on market demand.

Quality Certifications and Standards #

TII maintains quality certifications such as ISO 9001, ISO 14001, and IATF 16949 across its various manufacturing units.

Unique Selling Propositions or Technological Advantages #

• Established Brand Reputation: Strong brand recall and customer loyalty, especially for bicycles.
• Engineering Expertise: Deep engineering capabilities in precision tubes, strips, and metal forming.
• Quality Focus: Commitment to quality and adherence to international standards.
• Diversified Product Portfolio: Reduces risk and allows them to cater to multiple industries.

Recent Product Launches or R&D Initiatives #

TII has focused on expanding its presence in electric vehicles, particularly three-wheelers. Further R&D initiatives are focused on improving efficiency and developing more sustainable products.

Primary Customers #

Target Industries and Sectors #

• Automotive: Supplies components to automotive OEMs.
• Engineering: Serves industries requiring precision tubes and strips.
• Industrial: Provides gears and other engineered components.
• Infrastructure: Supplies products for construction and infrastructure projects.
• Retail: Sells bicycles through retail channels.

Geographic Markets (Domestic vs. International) #

The primary market is India, with a growing focus on exports to select international markets.

Major Client Segments (agricultural, industrial, residential, etc.) #

• Industrial: A significant portion of revenue comes from supplying components to industrial manufacturers.
• Automotive: A key customer segment through their metal formed products business.
• Retail: Bicycles are sold to individual consumers through a distribution network.

Distribution Network and Sales Channels #

TII utilizes a multi-channel distribution network, including:

• Direct sales to large industrial customers and OEMs.
• Dealer networks for bicycles and other consumer products.
• Distributors to reach smaller customers and regional markets.
• Online channels for select products.

Major Competitors #

Direct Competitors in India and Globally #

• Engineering: Tata Steel, Jindal Steel & Power
• Bicycles: Hero Cycles, Avon Cycles
• Gears: Elecon Engineering, Bharat Gears

Comparative Market Share Analysis #

Market share varies across different product segments.

Competitive Advantages and Disadvantages #

• Advantages: Strong brand, diversified portfolio, engineering expertise.
• Disadvantages: Competition from cheaper imports, vulnerability to economic cycles, reliance on specific industries.

How They Differentiate from Competitors #

• Quality: Emphasizes superior quality and reliability.
• Brand Reputation: Leverages the heritage and trust associated with brands like Hercules and BSA.
• Customization: Offers customized solutions to meet specific customer needs.

Industry Challenges and Opportunities #

• Challenges: Raw material price volatility, economic slowdowns, increasing competition.
• Opportunities: Growing demand for automotive components, infrastructure development, increasing bicycle usage, expansion in electric vehicles.

Market Positioning Strategy #

TII positions itself as a provider of high-quality, reliable engineering products and solutions, targeting both industrial and consumer markets.

Future Outlook #

Expansion Plans or Growth Strategy #

• Capacity Expansion: Investments in expanding manufacturing capacity to meet growing demand.
• New Product Development: Focus on developing new products and technologies, particularly in electric vehicles.
• Strategic Acquisitions: Potential acquisitions to expand product portfolio and market reach.
• Exports: Increasing focus on exports to diversify revenue streams.

Upcoming Products or Innovations #

Focus on developing new electric vehicle models and components and also new metal-formed products.

Sustainability Initiatives or ESG Commitments #

TII is focusing on reducing its carbon footprint and improving energy efficiency. This may include renewable energy adoption, waste reduction, and sustainable sourcing practices.

Industry Trends Affecting Their Business #

• Electric Vehicle Adoption: Growing demand for EV components and vehicles.
• Infrastructure Development: Increased demand for steel and engineering products.
• Sustainability: Increasing focus on sustainable manufacturing practices.
• Technological Advancements: Adoption of automation and digital technologies.

Long-Term Vision and Strategic Goals #

TII aims to be a leading engineering company in India, recognized for its quality, innovation, and sustainable practices. They are focused on expanding their presence in high-growth sectors and creating value for all stakeholders.

Financial Performance Analysis #

3-Year Trend Analysis of Key Financial Metrics #

Revenue #

Standalone revenue grew from ₹6,359 crores (FY 2021-22) to ₹7,611 crores (FY 2023-24), a growth of 5% year over year growth. Consolidated revenues increased from ₹14,430.95 crores in FY23 to 16,334.92 for FY24.

Profitability #

Standalone Profit Before Tax (PBT) increased from ₹628 crores (FY 2021-22) to ₹970 crores (FY 2023-24) and was up from ₹928 crores. PBT margins were flat. Consolidated Profit After Tax was at 1,722.53 for FY24, up from 1,325.00.

Return on Invested Capital (ROIC) #

Standalone ROIC was 54% in FY 2023-24, down from 55% in FY 2022-23 but up from 47% in FY 2021-22.

Free Cash Flow (FCF) #

Standalone FCF decreased from ₹608 crores (FY 2022-23) to ₹376 crores (FY 2023-24), due to higher capital expenditures. FCF to PAT ratio was at 51% compared to prior year at 91%.

Debt to Equity Ratio #

Standalone 0.1, FY23-24.

Business Segment Performance #

Engineering #

FY 2023-24 revenue grew to ₹4,921 crores (₹4,562 crores in FY 2022-23), PBIT increased to ₹617 crores from ₹549 crores. Growth was driven by domestic and export markets, with focus on the automobile and general engineering segments.

Metal Formed Products #

Revenue rose to ₹1,519 crores in FY 2023-24, a 7% increase, driven by the buoyant auto market, PBIT up from 174 to 187.

Mobility #

A decline in the bicycle industry impacted this segment, with revenue decreasing to ₹664 crores (₹800 crores in FY 2022-23) and an 18 crore PBIT loss compared to 17 crore profit in the prior year.

Other Business (Including Industrial Chains) #

Revenue increased to ₹834 crores from ₹768 crores, with PBIT rising to ₹65 crores from ₹48 crores. The segment is consolidating growth and adopting a market-in approach.

Subsidiaries #

CG Power and Industrial Solutions Limited #

Standalone revenue increased by 16%, and PBT grew by 24% year-on-year.

Shanthi Gears Limited #

Revenue increased 20% to ₹536 crores; PBT was ₹110 crores, up 22%.

TI Clean Mobility Private Limited #

Reported revenue of ₹123 Cr. and registered loss before tax of ₹98 Cr.

TI Medical Private Limited #

Reported revenue of ₹164 Cr. and registered profit before tax of ₹22 Cr.

3xper Innoventure Limited #

Reported revenue of ₹0.03 Cr. and loss before tax of ₹15 Cr.

Major Strategic Initiatives and their Progress #

Electric Vehicle (EV) Focus #

TI Clean Mobility Private Limited (TICMPL) is pursuing electric three-wheelers, tractors, and small commercial vehicles. TICMPL has raised ₹3,000 crores. The electric three-wheeler is performing well in Southern markets and expanded into the North. EV heavy commercial trucks are in early sales. Homologation and reliability testing continue for tractors and SCVs.

Medical Consumables #

Acquired Lotus Surgicals (now TI Medical Private Limited), enhancing capabilities and introducing new products.

CDMO for APIs #

Established 3xper Innoventure Limited, focusing on Contract Development and Manufacturing Operations (CDMO) for Active Pharmaceutical Ingredients (API). 3xper’s kilo lab is commissioned, the pilot plant is under construction and has begun receiving orders.

OSAT Facility #

CG Power & Industrial Solutions is establishing an Outsourced Semiconductor Assembly and Test (OSAT) facility in Sanand, Gujarat, through a subsidiary (CG Semi Pvt. Ltd.) with a planned investment of ₹7,600 crore.

Risk Landscape Changes #

Increased Geopolitical Tensions #

Affecting export markets, raw material prices, and supply chains.

Climate Change #

Increased temperature and potential impact on agricultural produce and inflation, indirectly affecting investment activities.

Logistics Crisis #

Ongoing disruptions in the supply chain, leading to potential impact on global trade.

Competition #

Influx of low-priced products in the bicycle segment from the unorganised sector, impacting the Mobility Division’s performance.

ESG Initiatives and Metrics #

Environmental #

Focus on energy conservation and emission reduction. Initiatives include the use of alternate fuels, low-energy lighting systems, right-sizing of motors, and energy monitoring via IIoT. Wastewater recycling, effluent treatment plant upgrades, and waste management measures guided by 3R principles (Reduce, Reuse, Recycle).

Social #

Emphasis on employee engagement, fostering a high-ambition culture, and talent development. Initiatives include ‘Advantage Club’ and ‘Shine Awards’ to recognize contributions. Focus on health and safety with medical camps, training programs, and EHS awareness. CSR initiatives include skill development and medical outreach.

Governance #

Commitment to high standards of corporate governance, ESG approach integrated into operations, independent Audit Committee, and a Risk Management Committee.

Management Outlook #

• The company is in a transformational phase, leveraging core competencies for securing new opportunities in existing and new domains.
• The Indian economy is projected to continue growth, driven by consumption and private investments, supported by government infrastructure spending.
• The automotive industry shows satisfactory performance and EV segment is expected to get a boost from government support, holding potential for the Engineering and Metal Formed Products Divisions.
• Modernization of the Indian Railways presents a significant opportunity.
• The company is prepared to leverage opportunities in the EV market through TI Clean Mobility across 3-wheelers, SCVs, tractors, and M&HCVs.
• New ventures like TI Medical and 3xper are consolidating and preparing for future growth.

Detailed Analysis #

Tube Investments of India Limited - Segment-Wise Financial Analysis #

3-Year Comparative Analysis (Consolidated) #

Assets #

(₹ in Crores)

Liabilities #

(₹ in Crores)

Equity #

The report provided does not present disaggregated data for Equity at segment level. Total Equity can be reconsiliated as:

Significant Changes in Major Line Items (>10% YoY) #

• Engineering Segment Assets: Increased by 7.86% (FY24) and by 18% (FY23), indicating growth in the core precision tubes and steel strips business, potentially driven by demand from automotive sector, which could include expansion, or acquisitions.
• Mobility Segment Assets: Decreased by 16.94% (FY24) reflecting possible market challenges and industry consolidation .
• Electric Vehicles Assets: Not reported for previous year, so that no comparision could be done.
• Power Systems Assets: Increased by 27.19%, driven by improved performance in power and industrial solutions, potential investment for semiconductor business.
• Medical Segment Assets: Not reported for previous year, so that no comparision could be done.
• Others Segment Assets: Increased by 15.35% indicating growth in the industrial chains and new ventures (optic lens, TMT bars).
• Total Liabilities: Increased by 20.84% (FY24) and by 8.95% (FY23), which includes borrowings and lease liabilities, suggesting an increase in financial obligations.

Asset Quality Metrics #

• Impairment allowance on receivables and advances for the year ended 31-Mar-2024, indicating an increase in credit risk or potential collection issues.

Debt Structure and Maturity Profile #

The following table shows the maturity profile for short term borrowings:

The following table show the maturity profile for Lease Liabilities:

• The data indicated a mix of short-term and long-term debt, with a notable portion of the debt being short-term borrowings.
• Lease liabilities maturity are splitted in various periods including short term and long term.

Off-Balance Sheet Items #

• Contingent Liabilities: Include disputed income tax, sales tax/VAT, excise duty, and other claims. The amount for FY24 is not explicitly quantified in a single sum but exists across various categories of disputes.
• Commitments: Capital expenditure commitments and export obligations are mentioned, however, details are not provided in the financial tables.

Tube Investments of India Limited: Financial Performance Analysis FY24 #

Revenue Breakdown by Segment (Standalone) #

• Engineering: FY24 revenue: ₹4,921 crore, up 8% from ₹4,562 crore in FY23. Domestic tubes volume grew by 12%, export market by 25%, and cold-rolled steel strips business grew by 16%.
• Metal Formed Products: FY24 revenue: ₹1,519 crore, up 7% from ₹1,424 crore in FY23.
• Mobility: FY24 revenue: ₹664 crore, down 17% from ₹800 crore in FY23, attributed to adverse market conditions.
• Other Business (including Industrial Chains): FY24 revenue: ₹834 crore, up 9% from ₹768 crore in FY23.
• Consolidated Revenue: FY23-24 revenue, 16,334.92, increased by 13.19% from 14,430.95 in 2022-2023.

Revenue Breakdown by Geography #

Standalone (Engineering) #

• Domestic Market: Tubes volume grew by 12%.
• Export Market: Volume grew by 25%.

Consolidated #

• India: FY24 revenue was reported at ₹14,446.99, with the rest being 1032.57 crore.

Cost Structure Analysis (Consolidated) #

• Cost of Materials Consumed: Increased to ₹10,458.14 crore in FY24 from ₹9,192.99 crore in FY23.
• Employee Benefits Expense: Rose to ₹1,493.24 crore in FY24 from ₹1,204.83 crore in FY23.
• Finance Costs: Increased to ₹52.26 crore in FY24 from ₹42.46 crore in FY23.
• Other expenses: Increased to 2,441.13 in 2024 from 2,042.06

Margin Analysis (Standalone) #

• PBT to Sales Ratio: 13.6% in FY24, a slight improvement from 13% in FY23.
• PAT to Sales: 10.3%, up from 9.8%.

Non-Recurring Items (Consolidated) #

• Exceptional Items: A net gain of ₹0.08 crore in FY24, compared to a net gain of ₹8.06 crore in FY23.
• FY23 Exceptional Items: Included a reversal of excess provision for settlement of corporate guarantee obligation (₹22.15 crore gain), offset by impairment provisions on assets (₹29.27 crore loss) and investments (₹23.45 crore loss).
• FY24 Discontinued Operations: Profit from discontinued operations after tax was 535.65, FY 23 was 166.64

EPS Analysis (Standalone) #

• Basic EPS: ₹38.00 in FY24, up from ₹34.46 in FY23.
• Diluted EPS: ₹37.95 in FY24, up from ₹34.39 in FY23.

Cash Flow and Liquidity Analysis #

Detailed OCF, ICF, FCF Components (Consolidated, FY 2023-24) #

• OCF: ₹675.15 Crores, primarily driven by Profit Before Tax of ₹1,682.83 Crores, adjusted for non-cash items (depreciation, finance costs) and changes in working capital.
• ICF: ₹(1,657.82) Crores, major outflows attributed to purchase of property, plant and equipment, investments in subsidiaries and acquisitions.
• FCF: ₹(982.67) Crores (calculated as OCF + ICF).

Working Capital Management Efficiency (Consolidated, FY 2023-24 vs. FY 2022-23) #

• Debtors Turnover Ratio: Decreased from 10.4 (FY 2022-23) to 9.4 (FY 2023-24) on a standalone basis, indicating a slightly less efficient collection of receivables.
• Inventory Turnover Ratio: Increased from 7.5 (FY 2022-23) to 7.8 (FY 2023-24) on a standalone basis.
• Trade Payables Turnover Ratio: Increased from 4.46 (FY 2022-23) to 4.83 (FY 2023-24) on a standalone basis.
• Net Capital Turnover Ratio: Decreased from 39.04 (FY 2022-23) to 32.53 (FY 2023-24) on a standalone basis.
• Days Payable Outstanding: 76 days on a consolidated basis (FY24) up from previous period.

Dividend and Share Buyback Trends #

• FY 2023-24: Total dividend of ₹3.50 per share (interim ₹2.00, final ₹1.50 proposed).
• Dividend payout is in line with the dividend distribution policy.
• No share buyback activity mentioned.

Debt Service Coverage (Consolidated) #

• The Debt Service Coverage Ratio(DSCR) significantly increased from 8.94 to 19.49 on a standalone basis, indicating improved capacity to meet debt obligations due to higher operating income.

Liquidity Position and Cash Conversion Cycle #

• Current Ratio (Consolidated): 1.14 for FY 2023-24.
• Cash and Cash Equivalents: Decreased from ₹872.91 crores (FY 2022-23) to ₹536.49 crores (FY 2023-24).
• Undrawn committed borrowing facilities: ₹870.92 Cr. as at 31st March 2024, up from ₹836.15 Cr. in previous period.

Operational Metrics: Tube Investments of India Limited Financial Analysis #

Profitability Ratios (3-Year Trends) #

• Return on Invested Capital (ROIC) - Standalone:

  • FY2023-24: 53.6%
  • FY2022-23: 54.5%
  • FY2021-22: 46.5%

• Return on Net Worth (Standalone):

  • FY 2023-24 : 20.2%
  • FY 2022-2023: 22.2%
  • FY 2021-2022: 17.6 %

• PBT Margin (Standalone):

  • FY2023-24: 13.6%
  • FY2022-23: 13.7%
  • FY2021-22: 10.5%

• PAT Margin (Standalone):

  • FY2023-24: 10.3%
  • FY2022-23: 9.8%
  • FY2021-22: 7.9%

• Operating Profit Margin (Standalone):

  • FY 2023-24: 12.9%
  • FY 2022-23: 13%

Liquidity Metrics (Standalone) #

• Current Ratio:
  • FY2023-24: 1.1
  • FY2022-23: 1.1

Efficiency Ratios (Standalone) #

• Asset Turnover (Sales / Fixed Assets):

  • FY2023-24: 5.7
  • FY2022-23: 6.4
  • FY2021-22: 5.7

• Inventory Turnover:

  • FY2023-24: 7.8
  • FY2022-23: 7.5

• Debtors Turnover (times):

  • FY2023-24: 9.4
  • FY2022-23: 10.4

• Sales/Net Working Capital:

  • FY2023-2024: 15.1
  • FY2022-2023: 21.7
  • FY 2021-2022: 24.7

Leverage Metrics (Standalone) #

• Debt-Equity Ratio:

  • FY2023-24: 0.1
  • FY 2022-2023: 0.1
  • FY2021-22: 0.1

• Interest Coverage Ratio:

  • FY2023-24: 38.6
  • FY2022-23: 50.7
  • FY2021-22: 60.4

• Long Term debt Equity Ratio (Times):

  • FY2023-2024: 0.0
  • FY2022-2023: 0.0
  • FY2021-2022: 0.0

Segment-wise ROIC (Consolidated Data - FY 2023-2024) #

• Engineering: 64%
• Metal formed product: 55%
• Others: 47%

Working Capital Ratios (Consolidated - FY 2023-2024) #

• Debtors Turnover: 6.32
• Inventory Turnover: 9.36
• Creditors Turnover: 6.36

Tube Investments of India Limited (TII) - Segment-wise Financial Analysis #

Engineering Division #

• Revenue and Profitability: FY2023-24 revenue was ₹4,921 crore (8% growth). PBIT was ₹617 crore (12% growth).
• Market Share and Competitive Position: Market leader in precision tubes and telescopic front fork inner tubes.
• Key Products/Services Performance: Strong performance in domestic and export markets. Products include propeller shaft tubes, rear axle tubes, and hydraulic cylinder tubes.
• Geographic Distribution and Market Penetration: Establishing regional capacities. Exports contribute one-third of revenue, focusing on US markets.
• Segment-wise ROIC: ROCE% is 64% for 2024.
• Operational Efficiency Metrics: Implemented Lean practices for productivity, reduced working capital, and improved quality.
• Growth Initiatives and Challenges: Venturing into new product developments. Facing challenges in the European market.

Metal Formed Products Division #

• Revenue and Profitability: FY2023-24 revenue was ₹1,519 crore (7% increase). PBIT was ₹187 crore (8% increase).
• Market Share and Competitive Position: Holds about 21% share of the organized trade market.
• Key Products/Services Performance: Strong growth in 2W and 4W segments. Includes fine blanking, auto components, doorframes, and car body parts.
• Geographic Distribution and Market Penetration: Enlarged aftermarket presence in micro-markets and Tier 1 & 2 cities.
• Segment-wise ROIC: ROCE% 55% in FY24
• Operational Efficiency Metrics: Balancing short lead times with internal efficiencies and new process technologies.
• Growth Initiatives and Challenges: Expanding presence in the auto space, focusing on exports and new products/technologies.

Mobility Division #

• Revenue and Profitability: FY2023-24 revenue was ₹664 crore (17% decline). PBIT was a loss of ₹18 crore.
• Market Share and Competitive Position: Holds about 21% of the organized trade market. Facing pressure from unbranded players.
• Key Products/Services Performance: Focused on standard and special bicycles, accessories, and fitness equipment.
• Geographic Distribution and Market Penetration: Expanding into new geographies. Exploring export opportunities.
• Operational Efficiency Metrics: Implementing productivity enhancements and localized sourcing.
• Growth Initiatives and Challenges: Targeting growth through new geographies and product lines. Facing challenges due to subdued domestic bicycle industry performance.

Other Business (Including Industrial Chains) #

• Revenue and Profitability: FY2023-24 revenue was ₹834 crore (9% increase). PBIT increased to ₹65 crore (36% growth).
• Market Share and Competitive Position: Reinforcing market leadership in the motion, drive & conveying space.
• Key Products/Services Performance: Launches over 60 new products annually.
• Geographic Distribution and Market Penetration: Strengthened position in Europe and the US, focusing on emerging markets.
• Segment-wise ROIC: ROCE% is 47% in FY24.
• Operational Efficiency Metrics: Focused on efficiency through Lean, 5S, safety, IIoT, and ESG initiatives.
• Growth Initiatives and Challenges: Exploring new markets, adopting a market-in approach. Challenges faced in the European export market.

TI Clean Mobility Private Limited #

• Revenue and Profitability: FY 2023-24 revenue was ₹123 crore, with a loss before tax of ₹98 crore.
• Market Share and Competitive Position: Montra Electric 3 Wheeler captured market share in southern India.
• Key Products/Services Performance: Montra Electric 3 Wheelers performing well. E-tractors are undergoing testing.
• Geographic Distribution and Market Penetration: Montra Electric 3 Wheelers present in southern India, planning to enter the Northern market.
• Growth Initiatives and Challenges: Expanding the product line with new offerings.

TI Medical Private Limited #

• Revenue and Profitability: FY2023-24 revenue was ₹164 crore, with a profit before tax of ₹22 crore.
• Key Products/Services Performance: Manufacturing medical and surgical devices.
• Geographic Distribution and Market Penetration: Participated in global expos.
• Operational Efficiency Metrics: Focus on manufacturing facilities and trained personnel.
• Growth Initiatives and Challenges: Embarking on MedTech projects.

3xper Innoventure Limited #

• Revenue and Profitability: FY2023-24 revenue was ₹0.03 crore, with a loss before tax of ₹15 crore.
• Market Share and Competitive Position: Newly established for CDMO of APIs.
• Key Products/Services Performance: Offers chemistry solutions across the drug lifecycle.
• Geographic Distribution and Market Penetration: Establishing a manufacturing plant at Naidupeta.
• Operational Efficiency Metrics: Focus on process & analytical chemistries and technology transfer.
• Growth Initiatives and Challenges: Building capability and capacities.

CG Power and Industrial Solutions Limited #

• Revenue and Profitability: FY2023-24 revenue (standalone) was ₹7,609.91 crore (16% growth). PBT growth was 24%.
• Key Products/Services Performance: Excelling across all business segments.
• Growth Initiatives and Challenges: Incorporated a subsidiary for semiconductor assembly and testing.

Tube Investments of India Limited: Segment-Wise Financial Risk Analysis #

Engineering Division #

Strategic Risks #

• Severity: High. Significant exposure to the auto sector (key customer base).
• Likelihood: Medium.
• Trend: Increasing auto sector volatility.
• Mitigation Strategies:
  • Developing new products/applications for existing customers.
  • Expanding into non-auto sectors.
  • Regional capacity balancing.
  • Setting up new offices and warehouses in America, Europe, and Asia-pacific.
• Control Effectiveness: Moderate. Diversification and regional expansion are ongoing, but dependency remains.
• Potential Financial Impact: Revenue and PBIT highly sensitive to auto sector performance.

Operational Risks #

• Severity: Medium. Technology obsolescence risk due to cheaper alternatives in auto applications.
• Likelihood: Medium.
• Trend: Stable.
• Mitigation Strategies:
  • Embracing new and relevant technologies.
  • Equipment upgrades for lightweighting and high-strength tubes.
  • Ultrasonic testing machines implemented across all manufacturing units.
• Control Effectiveness: Moderate, dependent on continued R&D investment.
• Potential Financial Impact: Reduced competitiveness, potential write-downs of obsolete assets.

Financial Risks #

• Severity: High. Volatility in steel prices (raw material risk).
• Likelihood: High.
• Trend: Increasing.
• Mitigation Strategies:
  • Strategic sourcing, including developing new grades by suppliers.
  • Back-to-back arrangements with customers for timely recovery of steel price increases.
• Control Effectiveness: Partially effective, dependent on market conditions and negotiation power.
• Potential Financial Impact: Fluctuations in profit margins, increased working capital requirements.

Compliance/Regulatory Risks #

• Severity: Medium, risk of increased protectionism.
• Likelihood: Low.
• Trend: Increasing, due to reliance on exports.
• Mitigation Strategies:
  • Participation in US AD/CVD reviews to reduce duty rates.
  • Identifying new export markets and customers.
• Control Effectiveness: Dependent on external factors (trade policy, regulatory changes).
• Potential Financial Impact: Increased tariffs impacting export profitability.

Emerging Risks #

• **Severity:**Medium, disruption from global events.
• Likelihood Medium.
• Trend: Increasing
• Mitigation Strategies: Global Sourcing
• Control Effectiveness:
• Potential Financial Impact: Raw material price fluctuations, supply disruptions.

Metal Formed Products Division #

Strategic Risks #

• Severity: Medium. Slowdown in 2W industry growth.
• Likelihood: Medium.
• Trend: Stable.
• Mitigation Strategies:
  • Expanding OEM roster with new 2W models.
  • Customized offerings for 4W segment.
  • Growing aftermarket presence.
  • Enlarged its aftermarket presence with a strategic rationalisation of the channel structure.
• Control Effectiveness: Moderate, dependent on overall auto industry growth.
• Potential Financial Impact: Constrained revenue growth if 2W segment underperforms.

Operational Risks #

• Severity: Medium. Risk of product failures in model-specific revenue streams.
• Likelihood: Low
• Trend: Stable.
• Mitigation Strategies:
  • Continuous engagement with customers.
  • Indigenization of equipment.
  • Pursuing options for other businesses using the same facilities.
  • Model specific investment by OEM.
• Control Effectiveness: High, due to quality control measures.
• Potential Financial Impact: Limited to specific product lines, potential warranty costs.

Financial Risks #

• Severity: Medium. Year-on-year price reduction expectations from customers.
• Likelihood: High.
• Trend: Stable,
• Mitigation Strategies:
  • Relationship building with OEMs for price increase settlement.
  • Maximizing benefit from sourcing and consolidated buying.
  • Value Analysis/Value Engineering (VAVE) initiatives.
• Control Effectiveness: Moderate, reliant on customer negotiations.
• Potential Financial Impact: Margin pressure, potential need for cost reduction measures.

Compliance/Regulatory Risks #

• Severity: Low direct impact.
• Likelihood: Low
• Trend: Stable.
• Mitigation Strategies: Standard compliance monitoring.
• Control Effectiveness: High.
• Potential Financial Impact: Minimal.

Emerging Risks #

• Severity: High, shift to EV.
• Likelihood Medium.
• Trend: Increasing
• Mitigation Strategies: Engaging with major EV players, Focusing on adjacencies and exports.
• Control Effectiveness:
• Potential Financial Impact: Revenue might be impacted.

Mobility Division #

Strategic Risks #

• Severity: High. Decline in revenue due to competition from the unorganized sector.
• Likelihood: High
• Trend: Increasing.
• Mitigation Strategies:
  • Focus on value-based product offerings.
  • Cost competitiveness through lean operations.
  • Indigenization and component substitution.
  • Expanding into E-bicycles.
• Control Effectiveness: Uncertain, market conditions are highly competitive.
• Potential Financial Impact: Significant, as evidenced by revenue and PBIT decline in FY2023-24.

Operational Risks #

• Severity: Medium. Product obsolescence risk in standard bicycles.
• Likelihood: Medium
• Trend: Increasing
• Mitigation Strategies:
  • Adaptation to product alternatives like E-bikes.
  • Focus on exports and lifestyle/fitness categories.
  • Monitor NPD (New Product Development) cycle.
• Control Effectiveness: Moderate, dependent on successful new product launches.
• Potential Financial Impact: Inventory write-downs, reduced sales of traditional bicycles.

Financial Risks #

• Severity: Medium. Raw material supply chain issues.
• Likelihood: Medium.
• Trend: Volatile
• Mitigation Strategies:
  • Continuous upgrading of vendor capabilities.
  • Rationalizing supply base.
  • International range licensing.
• Control Effectiveness: Moderate, subject to external supply chain factors.
• Potential Financial Impact: Inventory holding costs, potential price increases passed on to customers.

Compliance/Regulatory Risks #

• Severity: Low direct impact.
• Likelihood: Low
• Trend: Stable.
• Mitigation Strategies: Standard compliance monitoring.
• Control Effectiveness: High.
• Potential Financial Impact: Minimal.

Emerging Risks #

• Severity: Medium, lack of manufacturing capacity to handle large-scale shift to alloy bikes.
• Likelihood: Medium.
• Trend: Increasing
• Mitigation Strategies: Frame alloy manufacturing and Water Decal establishing.
• Control Effectiveness:
• Potential Financial Impact: Revenue might be impacted.

Other Business (Including Industrial Chains) #

Strategic Risks #

• Severity: Medium, dependency on core segments.
• Likelihood: Medium.
• Trend: Stable.
• Mitigation Strategies:
  • Expanding into new markets in adjacencies.
  • Market-in approach for step-out product groups.
  • Strengthening OEM partnerships.
• Control Effectiveness: Moderate, dependent on market diversification success.
• Potential Financial Impact: Revenue fluctuations based on core segment performance.

Operational Risks #

• Severity: Low.
• Likelihood: Low
• Trend: Stable
• Mitigation Strategies: Focus on operational efficiency through Lean, 5S, safety, IIoT & ESG initiatives.
• Control Effectiveness: High due to ongoing initiatives.
• Potential Financial Impact: Minimal.

Financial Risks #

• Severity: Medium. Export business challenges in European market due to geopolitical situation.
• Likelihood: Medium
• Trend: Increasing.
• Mitigation Strategies:
  • Building stronger customer base in US markets.
  • Exploring new geographies and distribution channels.
• Control Effectiveness: Moderate, dependent on global economic conditions.
• Potential Financial Impact: Reduced export revenue.

Compliance/Regulatory Risks #

• Severity: Low direct impact.
• Likelihood: Low
• Trend: Stable.
• Mitigation Strategies: Standard compliance monitoring.
• Control Effectiveness: High.
• Potential Financial Impact: Minimal.

Financial Analysis of Tube Investments of India Limited (TII) #

Engineering Division #

• Long-Term Strategic Goals and Progress: Establishing regional capacities to meet growing domestic and export demands, particularly in America, Europe, and Asia-Pacific. Successfully completed capacity balancing for plants in the northern region, ongoing for the western region, and plans to gear southern plants towards exports.
• Competitive Advantages and Market Positioning: Foremost supplier of precision tubes (ERW and CDW) to leading automotive manufacturers. Market leader in telescopic front fork inner tubes and cylinder bore tubes for two-wheeler shock absorbers.
• Innovation Initiatives and R&D Effectiveness: Venturing into new product developments, including higher diameter and aluminium tubes.
• Capital Expenditures: Focused on critical growth.

Metal Formed Products Division #

• Long-Term Strategic Goals and Progress: Expanding presence in the dynamically evolving auto space with products for both 2W and 4W. Enlarge Aftermarket presence and launching high end products.
• Competitive Advantages and Market Positioning: Trusted vendor status with major auto manufacturers, strong engineering expertise. Consolidated preferred vendor ranking among OEMs and auto majors.
• Innovation Initiatives and R&D Effectiveness: Expanded OEM roster with products for new two-wheeler models (scooters, motorcycles). Customized offerings in the four-wheeler segment (fine blanking, auto components, doorframes, car body parts). Introduced value-added products in the aftermarket segment.
• Railways Segment: Anticipating growth, driven by Gov participation in express fleet.

Mobility Division #

• Long-Term Strategic Goals and Progress: Focus on value-based product offerings, cost competitiveness, and product quality. Expanding into new geographies and E-bicycles category.
• Competitive Advantages and Market Positioning: 21% share of the total organized trade market. Addressing online consumer purchases through website sales.
• Innovation Initiatives and R&D Effectiveness: Developing and launching E-bicycles tailored for the domestic market, scheduled for FY 2024-25.
• Challenges: Faced challenges from unorganized sector with revenue declines, it is implementing strategies for export and premium segment.

Other Business (Primarily Industrial Chains) #

• Long-Term Strategic Goals and Progress: Strengthened position in Europe & US markets, focusing on material handling, agriculture, and construction. Focusing on Southeast Asia and Middle East markets.
• Competitive Advantages and Market Positioning: Market leadership in the motion, drive & conveying space. Extensive product portfolio (14,000 SKUs) with regular new product launches.
• Innovation Initiatives and R&D Effectiveness: Developed new products for multi-level car parking, warehouse automation, escalators, material handling & construction. Shifting from component supplier to a complete solution provider. Launched high-performance roller & leaf chains.
• Investment: For a greenfield for manufacturing of leaf chains.

TI Clean Mobility Private Limited (Subsidiary) #

• Long-Term Strategic Goals and Progress: Complete electric mobility solutions, Focuses on vehicle integration, capacity building, and software capabilities.
• Competitive Advantages and Market Positioning: Leading player in the Southern markets for electric three-wheelers.
• Innovation Initiatives and R&D Effectiveness: Developing E-tractors (three variants) for agricultural and haulage needs. Introduced India’s pioneering EV truck for cement and steel sectors. Developing E-Small Commercial Vehicles (E-SCVs).
• Funding: Raised 3000 Cr. from TII and Investors.

TI Medical Private Limited (Subsidiary) #

• Long-Term Strategic Goals and Progress: Aims to deliver one-stop medical technology solutions globally. Operates a state-of-the-art manufacturing plant.
• Competitive Advantages and Market Positioning: Focus on medical consumables.
• Innovation Initiatives and R&D Effectiveness: Embarking on revolutionary MedTech projects.
• Strategy: Acquisition aligned with the “Make in India, Make for the World” strategy.

3xper Innoventure Limited (Subsidiary) #

• Long-Term Strategic Goals and Progress: Established for Contract Development and Manufacturing Operations (CDMO) of Active Pharmaceutical Ingredients (APIs).
• Competitive Advantages and Market Positioning: Catering to global pharmaceutical, healthcare, agri, nutritional and specialty chemical companies.
• Innovation Initiatives and R&D Effectiveness: Commissioned a state-of-the-art R&D facility in Chennai. Setting up a greenfield manufacturing plant.
• Ventures: New ventures established for CDMO, with initial orders received for custom synthesis orders.

CG Power and Industrial Solutions Limited (Subsidiary) #

• Long-Term Strategic Goals and Progress: CG Semi Private Ltd was incorporated with Renesas Electronics Corporation (Japan) and Stars Microelectronics (Thailand), to establish OSAT Facility.
• Competitive Advantages and Market Positioning: Significant revenue and PBT.
• Capital Expenditure: of 7600 cr for a semiconductor plant.

Shanthi Gears Limited(Subsidiary) #

• Revenue and PBT increase, with a focus on enlarging its market presence

ESG Framework #

Environmental Metrics and Targets #

• The Group aims to achieve a 10% reduction in specific energy consumption by FY 2024-25.
• The Group is targeting a 50% reduction in Greenhouse Gas (GHG) Emissions by 2030.
• Water intensity reduction is a target, with strategies like rainwater harvesting and effluent treatment plant upgrades in place.
• Waste management focuses on the 3R principles (Reduce, Reuse, Recycle) and reducing waste generation, converting waste to energy.

Social Responsibility Programs #

• The ‘One TII’ initiative is fostering a unified and purpose-driven team.
• A ‘High Ambition Culture’ initiative is in place, which started with a Culture Visioning Workshop.
• The ‘Advantage Club’ and Murugappa Group level ‘Shine Awards’ were introduced.
• Employee engagement surveys were deployed, strategic actions formulated to address the identified concerns.
• The ‘10K Challenge’ wellness initiative was introduced for promoting employee health.
• ‘TI Skill Development - Learning and Transformation Hub (TILTH)’ was established, specifically at Avadi, to skill youth. In 2023-24, 260 out of 278 certified trainees were placed in various industries.
• TI Medical Outreach Centre (TIMORC) at Tiruttani, established in 2018, increased patient footfall to over 12,000 in 2023-24, a significant rise from 2,500 in the prior year, and included the operation of daily medical camps.

Governance Structure and Effectiveness #

• The Board of Directors includes a Risk Management Committee that met multiple times during FY 2023-24 to review risks and mitigation plans.
• An Audit Committee, comprising mainly independent directors, reviews audit plans, internal controls, and compliance.
• A Nomination & Remuneration Committee formulates criteria for director qualifications, remuneration, and Board diversity.
• A Stakeholders Relationship Committee and a Corporate Social Responsibility Committee are in place, aligned with statutory requirements.
• The Board of Directors has laid down a Code of Conduct for all the Board members and the Senior Management of the Company.
• Internal controls include a Whistle Blower Policy and Vigil Mechanism.

Sustainability Investments and ROI #

• Engineering: Investments in ultrasonic testing machines have been made across all manufacturing units. Regional capacity balancing initiatives are in progress, with completed projects in the northern region and ongoing efforts in the western region. The division has invested in a greenfield plant near Chennai for the manufacture of leaf chains.
• Metal Formed Products: Investments were made in new process technologies aligned with customer needs.
• Mobility: Investments are directed towards indigenizing components to reduce costs and import reliance.
• Other Business: The Industrial Chains (IC) Division has invested in a greenfield plant near Chennai for the manufacture of leaf chains.

Regulatory Compliance and Future Preparations #

• Compliance with SEBI Listing Regulations and the Companies Act, 2013, is reported.
• Compliance with applicable Secretarial Standards (SS-1 and SS-2) is maintained.
• A Business Responsibility and Sustainability Report is included, complying with SEBI requirements.
• A policy on the prevention of sexual harassment at the workplace is in place, aligned with the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013.
• The document does not state direct plans in anticipation of upcoming regulations, except noting preparations for compliance with the Bureau of Indian Standards (BIS) in the Mobility Division.