After EVs, TII now eyeing Medical Devices and Electronics

Company plans to launch electric 3Ws (2QFY23) and Tractors in FY23

After foraying into Electric Vehicle segment, Tube Investments, part of Murugappa Group, is now looking at foraying into Medical Devices and Electronics.

M A M Arunachalam, executive chairman of the company said that one of the growth engines that the company has identified was clean mobility. The company has incorporated a wholly owned subsidiary viz., TI Clean Mobility Private Limited (TICMPL) to pursue and engage in clean mobility and in the Electric three wheeler space.

During the year, TI Clean Mobility Private Limited (TICMPL) acquired a 70% stake in Cellestial E-Mobility Private Limited, a manufacturer of Electric Tractors, as part of the Clean Mobility alignment. 

"This augurs well with our plans to look at growth avenues. We have also decided to foray into newer businesses in Medical Devices and Electronics in the near future," he said in a communication to the shareholders.

According to Motilal Oswal, the management is focused on the productive end of the spectrum, where the vehicle is used as an asset to earn income. It has chosen 3Ws and Tractors for its venture, where the value accrual to the owner is greater. This will accelerate the adoption and market penetration of electric products in their served segments. 

It plans to launch electric 3Ws (2QFY23) and Tractors in FY23. It has set up an e-3W plant in Chennai. While e-Tractors will be initially manufactured at Bengaluru, it will eventually be produced from its plant in Chennai.

TII's e-3W products will be launched under the brand Montra Electric, with an exclusive and expansive distribution and service network, and by accessing B2B channels. e-Tractors will be launched under the brand Cellestial Egati.

For e-3W, the company initially plans to have three variants each in the Passenger/Cargo and e-Rickshaw segment. For e-Tractors, it is developing two variants to address the varied power needs.

Cellestial E-Mobility is currently building seven prototypes, with different mechanical variants catering to different customer and industry segments. While product testing is underway, a roadmap has been prepared for product variations and new product/platform development. Distribution partners are also being on boarded.

Vellayan Subbiah, executive vice chairman, TII said that the company is focused on delivering across the four metrics we have set ourselves - Revenue Growth, Profitability, Return on Invested Capital and Free Cash Flow.

"We witnessed a strong demand uptick across all business segments other than Mobility,

where bicycle demand was lower during the year. Our ‘Engineering’ business, focused on premium tubular products and solutions for automotive and off-highway sectors, witnessed strong revenue and profit growth across domestic and export markets," he said. 

He added, growth in company's ‘Metal Formed Products’ business was primarily driven by the automotive segment. Demand from the Railway segment was muted. However, this is expected to rebound driven by the Railway’s portion of the ‘Gati Shakthi’ master plan. The ‘Mobility’ business, despite reduced sales volumes, has gained market share in the domestic market.

The year 2021-22 was a good year for exports, which is aligned to our strategy of increasing the share of  exports in each of our businesses.

"We have been focused on developing both OEM partnerships and distributor channels to increase our presence in the overseas markets. Majority of our export has been to US and European markets," said Subbiah.

The company has reported that growth in the Metal Formed products business was driven by the Auto segment. Demand from the Railways segment was muted due to the impact of the COVID-19 pandemic.

Doorframe sales grew 11%, led by good traction in select models from its key OEM customers. Apart from bagging an order for a new model of doorframes, it is also focusing on increasing volumes in cross car beams, divisional challenges, etc. to boost growth.

In Fine Blanked products, it has a three-pronged approach for customer engagement, product innovation, and value addition to enhance growth. An innovative range of safety-critical products for the Auto industry enabled the business to grow in the domestic and overseas markets, according to Motial Oswal recent report.

In Auto Chains, TIINDIA consolidated its preferred vendor ranking with OEMs and Auto majors. The management's strategic approach on aftermarket delivered growth, with region-wise, product-wise, density-mapped expansion into the under-served Tier I and II cities, and increasing channel bandwidth to address growth clusters in micro markets.

The Railway segment will benefit from the 'National Rail Plan for India - CY30' to create a fully modernized Railway system. TIINDIA's IRIS certification, an international accreditation necessary to serve the Railway industry globally, will enable access to global markets.

Export-led growth in Cycles, despite a decline in the domestic market.

The domestic Cycle industry (trade) declined by 13% in FY22 as both Standards and Specials fell at a similar rate. Domestic trade volumes for TIINDIA fell 6.6% to ~2.06m cycles, whereas exports/e-commerce grew 23%/over 100% in FY22. As a result, its market share expanded by 1.8% to ~26% in FY22, said in the report.

The decline in the domestic Trade segment was due to: a) a lack of sustenance of the cycling euphoria seen in CY21, and b) downtrading due to price hikes in the Mass/Economy segment benefiting unorganized players, it added.

Its thrust on the Specials segment continues with frequent product launches, product innovations, enhanced digital marketing, and superior consumer experience via exclusive retail outlets under its exclusive retail brand 'Track & Trail'.

The management's focus on increasing the share of exports in each of its businesses translated into a 141% growth in export revenue, with exports constituting 20%/40% of revenue from the Engineering/Industrial Chain business.

It is developing OEM partnerships and distributor channels to increase its presence in overseas markets. The majority of its exports are to the US and EU markets. In the Engineering business, it is working closely with global Auto manufacturers and OEMs in the development of new-gen tubular products and solutions, using new grades of steel and innovative process design to address emerging demands in light-weighting and fuel efficiency. The business expanded its global footprint in North America, EU, and ASEAN markets.

It increased exports from the Cycle business by capitalizing on opportunities in the Micro Mobility Vehicle and Fitness space. It has also boosted its manufacturing capability to aggressively push the export of cycles into new geographies.

In the Engineering business, it has established a tube mill at its plant in Chennai using advanced process technology to manufacture premium tubular products, with close tolerance and high tensile strength, to offer light-weight solutions. This capacity unlocking will help meet its growing export order pipeline. To meet domestic demand, it has embarked on Phase III expansion for CDW tubes at Rajpura (Punjab), given its close proximity to the Auto OEM cluster in North India.

In the Auto Chains business, it began operations at its new assembly center in Aurangabad in FY22 to meet demand from OEMs and the aftermarket in the northern region.

For industrial Chains, it is investing in a new greenfield plant at Tiruttani, near Chennai, with advanced process technology for manufacturing leaf chains. A new assembly line for the high-performance series was established at Ambattur, Chennai.

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