MIRA INFORM REPORT

Report Date :

16.05.2007

IDENTIFICATION DETAILS

Name :	TUBE INVESTMENT OF INDIA LIMITED
Registered Office :	"Dare House", 234 N S C Bose Road, Chennai - 600 001, Tamilnadu
Country :	India
Financials (as on) :	31.03.2006
Date of Incorporation :	09.09.1949
Com. Reg. No.:	18-2905
CIN No.: [Company Identification No.]	L35921TN1956PTC002905
TAN No.: [Tax Deduction & Collection Account No.]	CHET00142C
PAN No.: [Permanent Account No.]	AAACT1249H
Legal Form :	It is a public limited liability company. The company's shares are listed on the Stock Exchanges.
Line of Business :	Manufacturing of cycle components such as tubes, chains and metal strips.

RATING & COMMENTS

MIRA’s Rating :

Aa

RATING		STATUS	PROPOSED CREDIT LINE
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large

Maximum Credit Limit :	USD 21000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	The company is a part of Rs. 42000 millions Chennai based, Murugappa Group. Subject is a well established and reputed company having satisfactory track. General financial position of the company is satisfactory. Business is active. Payments are usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions.

LOCATIONS

Registered Office :	“Dare House”, 234 N S C Bose Road Chennai – 600 001, India
Tel. No.:	91-44-42177770
Fax No.:	91-44-42110404
E-Mail :	info@tiindia.com rajagopalu@tii.murugappa.com customercare@ticyclesindia.com tube@tii.murugappa.com marketingstrips@tii.murugappa.com tubesindia@tii.murugappa.com powertransmission@tidc.murugappa.com businessdev-timf@tii.murugappa.com
Website :	http://www.tiindia.com
Factory :	Cycles Division: TI Cycles of India Post Bag No. 5, Ambattur, Chennai 600 053 Tel: 91-44-4209 3434 Fax: 91-44-4209 3345 TI Cycles of India Plot No. E - 8, MIDC, Malegaon, Sinnar, Nashik District 422 103 Tel : 91-2551-230472 Fax: 91-2551-230183 TI Cycles of India A-32, Phase II Extension, Hoisery Complex, Opposite NEPZ Dadri Road, Gautam Budh Nagar, Noida 201 305 Tel : 91-120-2462201/203 Fax : 91-120-2462397 TI Cycles of India Jadavendrapanja Avenue, Durgapur 713 211 Tel: 91-343-255 3522/255 3988 Engineering Division: Tube Products of India Avadi, Chennai 600 054 Tel : 91-44 -4229 1999 Fax : 91-44- 4229 1990 Tube Products of India Shirwal Post, Khandala Taluk, Satara District 412 801 Tel : 91-2169 -244080 Fax : 91-2169 -244087 Tube Produds of India A-16 & 17, Industrial Focal Point, Phase VI, SAS Nagar, Mohali 160 051 Tel: 91-172 -4510209 Tube Products of India Ambattur, Chennai 600 053 Telefax : 91-44 - 4229 2900 Metal Formed Products Division: TIDC India Ambattur, Chennai 600 053 Tel : 91-44 - 4223 5555 Fax: 91-44- 4223 5406 TIDC India Kazipally Village, Plot No.1, Jinnaram Mandal, Medak District 502 319 Tel : 91-8458 - 277240 Fax : 91-8458 - 277241 TI Metal Forming Chennai - Tiruvallur High Road, Tiruninravur RS PO 602 024 Tel: 91-44 -26390194 / 26390437/ 2639 0504 Fax: 91-44 - 2639 0634 TI Metal Forming 80/81, SIDCO Industrial Estate, Kakkalur, Thiruvallur 602 003 Ph. 91-44 -27667104 TI Metal Forming Bawal Plant, Plot Nos. 302 – 329, Bawal Investate, Riwari District 123501 Tel : 91-1284 - 260707, 260708 Fax: 91-1284 - 260426 TI Meta! Forming Plot No.501 - B & C, Halol Industrial Area / Estate, Block No. 32 & 34, Village Dunia Taluka Halol, District Panchmahals, Baroda 389 350 Tel : 91-2676 - 224647 Fax: 91-2676- 224035

DIRECTORS

Name :	Mr. M A Alagappan
Designation :	Chairman
Name :	Mr. M M Murugappan
Designation :	Vice Chairman
Name :	Mr. Sumit Banerjee
Designation :	Managing Director
Name :	Mr. Adhiraj Sarin
Designation :	Managing Director
Name :	Mr. Amal Ganguli
Designation :	Director
Name :	Mr. D Jayavarthanavelu
Designation :	Director
Name :	Mr. Pradeep Mallick
Designation :	Director
Name :	Mr. Ram V Tyagarajan
Designation :	Director
Name :	Mr. S Sandilya
Designation :	Director
Name :	Mr. R Srinivasan
Designation :	Director
Name :	Mr. Tapan Mitra
Designation :	Director

KEY EXECUTIVES

Name :	Mr. S Suresh
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

Names of Shareholders	No. of Shares	Percentage of Holding
Promoters Holding	15776045	42.69
Mutual Funds and UTI	2589407	7.01
Banks, Financial Institutions, Insurance Companies	1729700	4.68
Foreign Institutional Investors	2689009	7.28
Private Corporate Bodies	3884530	10.51
Indian Public	6828707	18.47
NRI / OCB	106752	0.29
Bank of New York [DR Holders’ Depository]	3351850	9.07
TOTAL	36956000	100.00

As on 31.03.2007

Names of Shareholders	No. of Shares	Percentage of Holding
Individuals / HUF	17588715	10.47
Bodies Corporate	54590865	32.49
Any Other	11550500	6.87
Mutual Funds / UTI	11347182	6.75
Financial Institutions / Banks	909560	0.54
Insurance Companies	7601025	4.52
Foreign Institutional Investors	12183585	7.25
Non – Institutions :
Bodies Corporate	16042523	9.55
Individuals :
Individual shareholders holding nominal share capital upto Rs. 0.100 million	27077084	16.12
Individual shareholders holding nominal share capital in excess of Rs. 0.100 million	8103258	4.82
Non Resident Indians	704289	0.42
Trust	97710	0.06
Clearing Members	224454	0.13
Shares held by custodians and against which depository receipts have been issued	16759250	--
TOTAL	184780000	100.00

BUSINESS DETAILS

Line of Business :

Manufacturing of cycle components such as tubes, chains and metal strips.

Products :

Item Code No.	Product Description
721119 00	Cold Rolled Steel Strips
730690 01	ERW / CDW Tubes
871200 01	Bicycles

Exports :

Countries :

Australia, Germany, Italy, Russia, UK and USA

Imports :

Countries :

Germany, Japan, Korea and Singapore

PRODUCTION STATUS

Particulars	Unit	Installed Capacity	Actual Production
ERW / CDW Tubes	Tonnes	154450	89285
Cold Rolled Strips	Tonnes	100120	67562

GENERAL INFORMATION

Customers :

Maruti Udyog Limited

Hyundai Motor Limited

Toyoto Kirloskar Automobiles Limited

Mahindra & Mahindra

Ashok Leyland

Tata Motors

Hero Honda

TVS Motor Company

Bajaj Auto Limited

Yamaha Motor

Thermax

Kayaba, Malaysia

Dana Australia

Delphi - India

No. of Employees :

3762

Bankers :

Bank of America

Bank of Baroda

Standard Chartered Bank

State Bank of India

The Hongkong & Shanghai Banking Corporation Limited

Facilities :

	As on 31.03.2006 [Rs. in Milions]
SECURED LOANS :
Loans and Advances from Banks :
Foreign Currency Term Loans	500.000
Rupee Term Loans	550.000
Cash Credit and other borrowings	667.100
Other term loan	1.400
UNSECURED LOANS :
Short Term Loans and Advances from Banks :
Foreign Currency Loan	156.200
Other Borrowings	300.000

Banking Relations :	Good
Auditors :
Name :	Deloitte Haskins & Sells Chartered Accountants
Memberships :	Confederation of Indian Industry
Associates :	TI Diamond Chain Limited Tichain Investments Private Limited Cholamandalam Investment and Finance Company Limited Presmet Private Limited
Subsidiaries :	Teeaye Investments Limited Cholamandalam General Insurance Company Limited
Joint Venture	Borgwarner Morse TEC Murugappa Private Limited Cholamandalam MS Risk Management Services Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
43,000,000	Equity shares	Rs. 10/- each	Rs. 430.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
36956000	Equity shares	Rs. 10/- each	Rs. 369.500 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2006	31.03.2005	31.03.2004
SHAREHOLDERS FUNDS
1] Share Capital		369.500	369.500	184.700
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		4951.500	4112.400	3768.300
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		5321.000	4481.900	3953.000
LOAN FUNDS
1] Secured Loans		1718.500	1921.900	1957.100
2] Unsecured Loans		724.500	374.700	199.300
TOTAL BORROWING		2443.000	2296.600	2156.400
DEFERRED TAX LIABILITIES		415.000	327.100	317.900
TOTAL		8179.000	7105.600	6427.300
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		3015.700	2830.700	2256.500
Capital work-in-progress		804.900	218.100	136.600
INVESTMENT		2358.600	1897.100	2041.700
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	1657.200	1498.000	1054.700
	Sundry Debtors	2063.500	2952.000	2430.300
	Cash & Bank Balances	919.100	201.400	359.100
	Other Current Assets	0.000	0.000	0.000
	Loans & Advances	619.200	604.100	563.600
Total Current Assets		5259.000	5255.500	4407.700
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	3006.400	2800.800	2421.100
	Provisions	252.800	295.000	208.400
Total Current Liabilities		3259.200	3095.800	2629.500
Net Current Assets		1999.800	2159.700	1778.200
MISCELLANEOUS EXPENSES		0.000	0.000	214.300
TOTAL		8179.000	7105.600	6427.300

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2006	31.03.2005	31.03.2004
Sales Turnover		14609.400	14497.400	11840.600
Other Income		1340.700	183.700	0.000
Total Income		15950.100	14681.100	11840.600
Profit/(Loss) Before Tax		2456.300	1261.800	1053.000
Provision for Taxation		627.000	276.300	228.100
Profit/(Loss) After Tax		1829.300	985.500	824.900
Earnings in Foreign Currency :
	Export Earnings	1521.200	1801.600	458.600
	Commission Earnings	0.000	0.000	0.000
	Other Earnings	0.000	0.000	0.000
Total Earnings		1521.200	1801.600	458.600
Imports :
Raw Materials		958.200	384.200
Stores & Spares		49.100	31.000	826.500
Capital Goods		419.100	87.600
Others		104.000	0.000
Total Imports		1530.400	502.800	826.500
Expenditures :
	Raw Material Consumed	8889.200	8970.400
	Accretion to Stock	[218.700]	[65.000]
	Salaries, Wages, Bonus, etc.	973.100	862.700	11107.100
	Operating and other costs	3232.800	3128.000
	Depreciation & Amortization	485.600	378.100
	Other Expenditure	131.800	145.100
Total Expenditure		13493.800	13419.300	11107.100

SUMMARISED RESULTS

PARTICULARS	31.03.2007 Full Year
Sales Turnover	16150.400
Other Income	927.400
Total Income	17077.800
Total Expenditure	14507.900
Operating Profit	2569.900
Interest	112.900
Gross Profit	2457.000
Depreciation	503.900
Tax	369.400
Reported PAT	1557.800
Dividend (%)	750.000

KEY RATIOS

PARTICULARS		31.03.2006	31.03.2005	31.03.2004
PAT / Total Income	(%)	11.46	6.71	6.96
Net Profit Margin (PBT/Sales)	(%)	15.39	8.59	8.89
Return on Total Assets (PBT/Total Assets}	(%)	29.68	15.60	18.50
Return on Investment (ROI) (PBT/Networth)		0.46	0.28	0.26
Debt Equity Ratio (Total Liability/Networth)		1.07	1.20	1.21
Current Ratio (Current Asset/Current Liability)		1.61	1.69	1.67

STOCK PRICES

Face Value	Rs.10/- each
High	Rs.75.50/-
Low	Rs.72.00/-

LOCAL AGENCY FURTHER INFORMATION

History

Subject, the flagship company of Murugappa Group, was founded under the name TI Cycles of India in 1949. It is the largest integrated manufacturer of cycles and the market leader in special cycles with 30% market share. Its cycles are marketed under the BSA brand name. Further the company has its presence in Engineering and Metal Formed Products and also in Insurance through its subsidiary. The company also manufactures precision steel tubes and strips, car doorframes, automotive and industrial chains. 

The company is the market leader in precision tubes with 61% market share and in rolled formed car doorframes with 57% market share. The company is also the market leader in automotive chain with 35% market share. 

Three of its divisions hold the prestigious ISO 9002 certification and the export-oriented steel tubes unit is armed with QS 9000 certification. Cholamandalm MS General Insurance Company Limited is a subsidiary of the company. 

A group company, Tube Products of India and TI Miller which manufactured cycle lamps and dynamo sets was merged with the company in 1959 and 1984 respectively. TII set up a cold-rolled formed metal sections unit at Nemilicherry near Chennai, which was augmented in 1990-91 by the acquisition of Press Metal Corporation of India (a BIFR company). Later it acquired Sathavahana Chains, a sick unit, making bicycles and light-duty chains. Further to finance a major expansion-cum-modernisation programme, it came out with a GDR issue.  

A new plant at Shirwal, Maharashtra, to manufacture ERW and CDW tubes was commissioned and for the export market, it set up a 100% EOU at Avadi, Madras, for the manufacture of ERW and CDW tubes. The roll form division commissioned the two door frame projects, one near Chennai and another in Haryana for supply of door frames to be used in some of passanger cars made by Hyundai Motors and Maruti Udyog. 

TI International Holdings(a wholly-owned subsidiary of the TI Group Plc, UK) has sold its entire holding of 0.992 million equity shares in TII to the Murugappa group. It's holding represents 4.03% of the equity in the company and is a former joint venture partner of the company. The company has launched 48 new models during 2001-02 and also successfully implemented new model of operations by replacing manufacturing with outsourcing at Nashik. 

In 2002-03 the company made a buy back programme of 25% of its equity at Rs.100 per share. Subsequent to this the share capital stands reduced to Rs.18.47 millions The company's Bawal unit in Haryana and Chennai Plant received the Qs-9000 certification and ISO-14001 certification in 2002-03. Since majority of components were sourced from Ludhiana in North India, the company set up an manufacturing unit at Noida and also at the same time it can cater to the growing northern market. 

During September 2004 the company issued bonus equity shares to its share holders in the ratio 1:1. In 2003-04 the company commissioned the Noida plant and also a painting plant at Ambattur benchmarked with the international standards. Further the company has established a new plant in Halol, Gujarat for the supply of doorframes to General Motors. 

The Company has merged TIDC India Limited (TIDC), a subsidiary of the company with itself with effect from 1st April 2004. According to the Scheme of Merger the company has issued 4 equity shares of Rs.10/- each of TII for every 5 equity shares of Rs.10/-each held by the shareholders in TIDC.  

The company has increased the installed capacity of ERW/CDW tubes by 15350 tonnes during 2004-05 and with this expansion the total installed capacity of ERW/CDW tubes has increased to 142200 Tonnes. During 2004-05 the company has entered into a Memorandum of Understanding with the Government of Orissa for setting up a steel plant with a capacity of 1.2 million tonnes.  

During December 2005 the company has divested its entire shareholding in Parry Agro Industries Limited to other Murugappa Group Entities for a total consideration of Rs. 210.20 Million.

OVERVIEW

Subject has three major operating segments, viz., Engineering (steel tubes & strips), Metal Formed Products (metal chains & car doorframes) and Bicycles.

• Tl is a pioneer and market leader in high-end Cold Drawn Welded (CDW) tubes. Enjoying a sizeable share of

the Indian auto market, it has subsequently increased its exports to developed markets.

• Tl is the second largest supplier of automotive chains to two wheeler manufacturers with a major share of the

replacement market. In Industrial Chains, Tl is a supplier to major chain manufacturers in Europe, thereby

aspiring jo become a tier-1 supplier to the OEMs.

• Tl is a market leader in metal formed car doorframes catering to a majority of the auto manufacturers.

• In steel strips, Tl is one of the most reliable sources aside from the integrated steel mills.

• In Cycles, Tl is the second largest player in India and a leader in the 'specials segment', which addresses needs

of the younger generation.

Over the last few years, the Indian economy has been growing at a healthy rate, with the automobile sector outstripping this pace. During this period, the Company has made concerted efforts to align its business with this sector, capitalising on the obvious growth opportunities. Today, the Indian auto sector accounts for more than 60 percent of the Company's turnover and profitability. Looking ahead, the Company has also set its goals on raising exports from the current levels of 11 percent to 25 percent of its sales.

Tl currently has on-going business-driven R&D projects in the field of new generation steels, their processing and metal forming. It has also established an Engineering Design Centre (EDC) to complement the R&D initiatives.

The EDC concentrates on development of tooling for new products, product & process modeling for hydroforming and roll-forming of tubes.

Tl also has strategic investments in the fast paced financial services sector. Cholamandalam MS General Insurance Company Limited is a 74 percent owned subsidiary of Tl. Besides, Tl holds 49.50 percent equity in Cholamandalam MS Risk Services Limited, a Company engaged in consulting services in the areas of risk assessment and mitigation. Tl also has 30.93 percent equity holding in Cholamandalam DBS Finance Limited, one of the well known NBFCs in India.

Business Review:

ENGINEERING

Industry Scenario

The product categories of the engineering division are welded precision steel tubes and steel strips. Market size of the precision tubes in India is presently estimated to be around 0.325 million tonnes per annum. Cold Drawn Welded (CDW) and Electric Resistance Welded (ERW) precision tubes have extensive applications in the auto industry. There are four major players in the market and Tl is the pioneer in the critical auto applications segment. The growth in this business is directly proportionate to the growth in the Indian auto sector. The increase in auto component exports from India to global markets has been encouraging.

Steel strips comprise of narrow (below 350 mm) and wide (350 mm to 1000 mm) width categories, The user industries are automobiles, bearings, cycles, fine blanking, stamping, chains and general engineering. The size of their addressable market is estimated to be around 1.2 million tonnes per annum. The industry has about 10 players, each with a regional focus. Tl has a dominant share in Southern India. While integrated steel mills have an advantage in terms of cost and volumes, their strength lies in their ability to handle a variety of grades and sizes with lower volumes and smaller order quantities.

Operational Review of 2005-06

In the year under report, turnover of the Engineering business was Rs.7593.6 Millions Profit before interest and tax (PBIT) was Rs.108.54 Millions, an increase of 18.42 percent over last year In the tubes market, Tl maintained its leadership position through high quality standards and delivery capabilities while increasing its market share in the category. Tl has embarked on new initiatives that foster long term relationship with key customers through close interactions in product development and process improvements.

In the year under review, capacity expansion plans in Tl were delayed on account of statutory clearances. With these clearances now in place, Tl's capacity enhancement plans are back on track and are expected to start delivering results f/om 2006-07. New initiatives include dedicated manufacturing lines for key products and change in its logistics plans to meet demanding schedules of the customers.

As regards export of tubes to USA, Tl is revisiting its distribution strategy in line with its increased capacity and technical capability. Tl has also increased its focus on the fast growing ASEAN market and the quality conscious European market.

In Strips, Tl is realigning production of wide width and narrow width strips to achieve better production planning, inventory management and reduction in overheads.

The Engineering business won the EEPC award for best exporter from southern India, in recognition of achieving highest export performance during 2003-04 in the category of prime metal (Ferrous & Non Ferrous).

Volatility in the price of steel is a major concern for the business, which has surfaced once again after a brief period of stability.

METAL FORMED PRODUCTS

Industry Scenario

Metal forming is a multi-faceted industry. Tl is engaged in the manufacture of chains, cold roll-forming of car doorframes and fine-blanked components.

Chains can be categorised into automotive and industrial chains. Tl is one of the major suppliers of automotive chains for two-wheelers in India. Automotive chains are also marketed in the replacement market through a wide dealer network. Industrial chains cater to the needs of the cement, fertilizer, steel, sugar, elevators and power transmission industry in general. Tl is one of the two major players in India in this field. India's volume of exports is at present low compared to the size of the international market and there are opportunities here for a quality and cost leader.

In Roll-forming, Tl's focus is on the manufacture of modelspecific car doorframes. Tl is one of the two major players in India for roll-formed car doorframes. The challenge in this business is in meeting the quality standards of the car manufacturers as well as their precise delivery requirements. ,Also, success here is directly associated with the success of the specific car models being serviced by the Company.

In Fine Blanking, Tl's focus is on manufacture of sprockets, power-transmission related products and other auto components. Fine blanking is considered a high potential business in view of its relevance to the growing Indian auto industry, although currently the market size is small.

Operational Review 2005-06

In the year under review, turnover of Metal Formed Products business was Rs.269.18 Millions. Profit before interest and tax (PBIT) was Rs. 469 Millions. an increase of 18.82 percent over previous year.

In automotive chains, the market was characterised by aggressive pricing strategy of competitors and aftermarket imports from China. With sustained efforts, their exports showed improving trend in the latter part of the year.

In doorframes, the overall off-take by the customers was marginally higher than in the previous year. Considering its technical capabilities and cost effectiveness, the Company intends to put up a car doorframe plant near Pune to cater to the requirements of another major car manufacturer. The existing plants at Nemilicherry (near Chennai) and Bawal are also geared to take up the manufacture of doorframes for new car models of existing customers, with the help of sizable investments. A new hydro-forming facility has been commissioned at the plant in Kakkalur (near Chennai) to cater to the auto component requirements involving intricate value-based designs. Hydro-forming, as a process route of metal forming, is expected to offer a reliable alternative to multiple and complicated metal fabrication processes to meet emerging design requirements of auto and auto component manufacturers.

CYCLES '

Industry Scenario

India is the second largest manufacturer of bicycles in the world with an annual production of 9-10 million bicycles. Though the bicycle industry in India is largely organised, the presence of smaller players in the unorganised sector has been increasing. There are three major players in the organised sector, while Ludhiana is the main hub for manufacture of cycles and components in the unorganised space.

Cycles can be primarily classified into 2 segments - standards and specials. The standard cycles are used for light transportation of humans and goods. Special category bicycles are differentiated by design & features and cater to the needs of kids, students and younger generation consumers, as well as health & leisure segments.

Overall, the organised sector of the bicycle industry has witnessed a decline in demand growth in the past few years. Increased urbanisation, improved public transport and increased affordability of motorised vehicles are the primary causes for this downward trend. One other major factor that affects the bicycle industry is non availability of road-space for the bicycles. The bicycle however, continues to be the first vehicle of a child and a utility product for the rural population. Apart from this, there has also been an encouraging trend in usage of cycles for health and leisure activities.

Review of performance 2005-06

In the year under report, turnover of the bicycle business was Rs. 4658.6 Millions. Profit before interest and tax (PBIT) was Rs. 127.3 Millions. a decrease of 37.96 percent over last year.

Introduction of new models, vendor, brand & distribution management are the key imperatives for success in this business. The stiff competition and declining demand encouraged indiscipline in the distribution system and led to higher dealer outstanding and bad debts. Tl's efforts in the last year have been to reduce exposures to the market and bring down stock levels with dealers and to move closer to the market through monitoring of actual sales to the end customers. These efforts helped us to rationalise the dealer network, and improve dealer outstanding from 65 days to 42 days. Other major players have followed suit in these directions, recognising the Company as the leader in this initiative. However, proliferation of unorganised players has also left its impact on the market. Institutional orders, with low margins, accounted for nearly 10 percent of Tl's volume. These factors have contributed to the drop in Tl's sales and profits.

To improve cycling habits, Tl associated itself during the year with the Cycling Federation of India for organizing cycling events and also organised other appropriate events to promote and encourage cycling among the urban youth.

Review of Performance 

The overall turnover showed marginal improvement. Engineering and Metal Formed Products businesses continued their good performance. However, turnover and profits of the Cycle business were lower than last year due to difficult market conditions. The profit before tax of Rs. 2456.3 millions (Previous Year Rs. 1261.8 millions) includes Rs.1105 millions (Previous Year Rs. 64.5 millions) being profit on sale of long term investments, land & buildings. 

Engineering business improved on its profits during the year, primarily due to optimisation of product mix and a conscious shift to higher value-added products. To retain leadership in speciality product segments, the business has initiated further thrusts in quality and delivery. Capacity expansion plans are progressing well now, though there is some delay on account of statutory approvals. 

The Strips business continued to focus on new product development and niche segments with relatively lower volumes. As expected, competition from integrated steel plants intensified in the base grades. Aggressive cost reduction measures and re-alignment of production capabilities are underway. 

The Metal Formed Products business comprises of automotive chains, industrial chains, fine blanked products and roll-formed car doorframes. In the automotive chains business, there was stiff competition in the auto dealer market, primarily due to aggressive pricing strategy of the OEMs. Imports from China adversely affected market sentiments in the auto after market segment. However, export of industrial chains improved in the latter part of the year. In car doorframes business, overall off-take by customers was marginally higher than in the previous year. As expected, there has been a decline in off-take of some of the long standing models. New initiatives have been launched to widen the customer base as well as the range. In line with its capability enhancement drive, the business has commissioned its first hydro-forming facility in Kakkalur, near Chennai. 

The bicycle industry in India is faced with multiple challenges in the form of declining demand, imports from China and mushrooming of players in the unorganised sector. With lack of substantial support from government, the industry is having to grapple with these challenges with consequent and inevitable erosion in profitability. Their focus has been on strengthening the sales & distribution systems and enhancement of our vendor capabilities. 

Steel Project  :

The Company has entered into a Memorandum of Understanding with the Government of Orissa for setting up a 1.2 million tonne steel plant. The project is under evaluation. 

The company has collaboration with Dong Won Metal Industrial Company Limited, Korea and Edward Rose Limited, UK.

The company has been awarded with ISO 9002 Certification.

The company is in trade terms with :

+ Ace Industrial Gases (Private) Limited

+ Amrith Metal Industries

+ Anu Extrusions Private Limited

+ Cute Cycles Private Limited

+ Duro Forge (Private) Limited

+ Futuro Components (Private) Limited

+ Hartex Tube Private Limited

+ Hyderabad Ammonia & Chemicals Private Limited

+ K. Dhandapani & Company Limited

+ Karamchand Rubber Industries Private Limited

+ Kum-Chem Pretreatments Private Limited

+ Madras Swastik Engineers Private Limited

+ Maharashtra Classic Paints Chennai Private Limited

+ Meenakshi Engineering Works

+ Mid Field Steels Private Limited

+ Omax Bikes Limited

+ Paper Pack Packaging Industries

+ Rajindra Industries

+ Sai Industries

+ Srinivasa Cartons and Containers Private Limited

+ Sundar Shyam Industries

+ Surindera Cycles Limited

+ Thirumala Press Components (Private) Limited

+ Tushar Engineers

+ Tushavi Poly Sacks

+ Vishivkarma Industries (Private) Limited

+ Western Pressed Components

List of Promoters Belonging to the Murugappa Group :

BID Parry (India) Limited

Godavari Fertilisers & Chemicals Limited

Parry Chemicals Limited

Parry Enterprises India Limited

Parry Agro Industries Limited

New Ambadi Estates Private Limited

Ambadi Enterprises Limited

Carborundum Universal Limited

Cholamandalam DBS Finance Limited

The Coromandel Engineering Company Limited

AMM Arunachalam & Sons Private Limited

AMM Vellayan Sons Private Limited

MM Muthiah Sons Private Limited

Murugappa & Sons

Kadamane Estates Company

Yelnoorkhan Group Estates

AMM Foundation

AMM Medical Foundation

AMM Educational Foundation

MM Muthiah Research Foundation

AR Lakshmi Achi Trust

Presmet Private Limited

Til Shareholding Trust

M V Murugappan and Family

M V Subbiah and Family

M A Alagappan and Family

A Vellayan and Family

M M Murugappan and Family

M M Venkatachalam and Family

A Venkatachalam and Family

S Vellayan and Family

Arun Alagappan and Family

M A M Arunachalam and Family

The company's fixed assets of important value include leasehold land, freehold land, buildings, plant & machinery and equipment, plant and machinery & equipment given on lease, furniture & fixtures and vehicles.

Press Releases :

27th April, 2007

The Board of Directors of Tube Investments of India Limited (TII) met today to approve the audited financial results for the quarter and year ended 31st March, 2007.

In Q4, the sales were Rs. 4682.8 Millions, as against Rs.3842 Millions for the same period last year. The net profit for the quarter was at Rs.194.1 Millions (previous year 906.8 Millions), which includes one time income of Rs. 3.9 Millions (Previous year Rs.894 Millions). The Board of Directors of the Company have recommended a dividend of Rs.1.50 per equity share of face value Rs.2/-, for the year.

The turnover for the year was Rs. 17618.4 millions, which is 11% higher than that of the previous year. The increase came through higher volumes in all businesses. However, due to the increase in the cost of inputs and reduction in prices of certain products this did not translate into a corresponding increase in profits. The profit before tax (PBT) for the year was at Rs.1953.1 millions as against a PBT of Rs. 2456.3 millions in the year 2005-06. The profit for the year also includes a one time income of Rs. 717 millions mainly on account of the sale of a part of the long term investments (Previous year Rs. 1105 millions). The Profit after tax was Rs.1557.8 millions (previous year Rs.1829.3 millions)

Turnover in the bicycles business crossed the Rs. 5000 millions mark for the first time and touched Rs. 5110 millions against Rs.4660 millions in the previous year, representing a growth of 9.7%. This was possible due to the higher volumes achieved in the trade segment through new retail initiative under the brand “BSA Go”. During the year, a range of fitness equipment was launched under the brand “BSA Workout” and the initial feedback has been encouraging.

The engineering business grew in turnover from Rs.9950 millions to Rs.11040 millions with growth in all major product lines namely strips, tubes, automotive & industrial chains and car doorframes. The supply of cold rolled formed sections for the Indian Railways commenced during the year. The performance on the export front was encouraging in industrial chains but was lower in steel strips and tubes. The domestic industry continued to be characterised by intense competition, availability of alternatives through cheaper imports, particularly in tubes, higher input cost, mainly steel which could not be passed on, even in part, to the customers. As a consequence, margins were lower and the operating profit for the year was at Rs.1380 millions against Rs.1550 millions last year. Aggressive cost reduction measures, reduction in rejections/wastage and improvement in yields continue to be main focus areas.

The company has plans to set up a plant at Uttarkhand to manufacture industrial and automotive chains and another plant at Pune to manufacture car doorframes. The tube plant being established by the wholly owned overseas subsidiary at Suzhou, China is expected to start commercial production from July’07.

About Tube Investments of India Limited

Tube Investments of India consists of TI Cycles of India, Tube Products of India, TI Metal Forming (including Chains). In bicycles, TII is the second largest manufacturer with well-known brands - Hercules, BSA and Philips. TII is the market leader in precision steel tubes and roll-formed car doorframes in India. Also, being the second largest motor cycle chain manufacturer in India, TII is a major supplier to the Indian auto / auto- component industry.

About the Murugappa Group:

Headquartered in Chennai, the $1.6 billion Murugappa Group is one of India’s leading business conglomerates, which fosters an environment of professionalism for its strong workforce of 28,000 employees. The group has 29 registered companies, which are market leaders in diverse areas of business viz. engineering, abrasives, finance, general insurance, sanitary ware, cycles, sugar, farm inputs, fertilizers, plantations, bio products and nutraceuticals. The Group has manufacturing units in 12 states.

The Group has forged strong joint venture alliances with leading international companies like Roca of Spain, Cargill of Geneva, Cerdak of South Africa, Jingri Diamond Industrial Company of China, DBS Bank of Singapore, Mitsui Sumitomo of Japan and Groupe Chimique Tunisien of Tunisia and has consolidated its status as one of the fastest growing diversified business houses in India.

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.40.90
UK Pound	1	Rs.80.78
Euro	1	Rs.55.18

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	8
PAID-UP CAPITAL	1~10	8
OPERATING SCALE	1~10	8
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	8
--PROFITABILIRY	1~10	8
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	8
--RESERVES	1~10	8
--CREDIT LINES	1~10	8
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		72

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions