TUBE INVESTMENTS

Tube Investments Ltd of TIL as is popularly recognized, posted a 22% rise in consolidated net profit at Rs.76 crore on a 21% rise in net sales at Rs.1823 crore. Its Bicycle division’s revenue for the quarter was up by 18% (YoY) largely due to the servicing of institutional orders.  But EBIT margins continued to be under pressure due to inability to pass on the cost increases fully in a competitive environment. Its engineering division recorded a revenue growth of 7% but margins were affected by increase in power & fuel cost. Its Metal formed products unit revenue dropped by 1%.

During the quarter, the company acquired 44.12% of Shanthi Gears for Rs.292 crore. Consequently, in accordance with the SEBI Regulations, it made an open offer to the shareholders of Shanthi to acquire 26% stake at Rs.81/share. Post this, TIL now holds 70.12% in Shanthi. The takeover of Shanthi Gears is expected to help TIL get into the power and infra space as Shanthi Gears manufactures a range of standardized and customised gears for the steel, textiles, cement, infrastructure, power and wind energy sectors. It hopes to improve the capacity utilization of Shanthi from the current 30-40% to 80-90% in FY13 and expects to get earnings accretive from FY14.