Cost increase squeezes Tube Investments'' profits

01 August 2007

The company attributes the dip in profits to non-absorption of cost increase by big customers, change in product mix, rupee appreciation (for steel tubes) downward trend in two-wheeler industry (for chains) and lower intake of doorframes by car manufacturers.

According to the company despite the downturn in the two-wheeler industry, the off-take of tubes was marginally higher compared to the corresponding quarter of the previous year. The exports market is also encouraging.

The company''s wholly owned tube manufacturing Chinese subsidiary Tubular Precision Products (Suzhou) Co. Limited will commission its plant during the second quarter.

In respect of its chains division, Tube Investments experienced lower intake by the domestic two-wheeler manufacturers while the sale of industrial chains picked up significantly.

The sale of car doorframes was marginally lower on account of lower sales of older models of cars of our customers. The doorframe sale of the new models is expected to pick up in the forthcoming quarters. The Company is confident that the revenue stream from the new products would stabilise later this financial year.

According to Tube Investments the bicycles division showed improved sales and margins. The focus in the bicycle business continued to be on restructuring the distribution network.