29th April, 2005

The Board of Directors of Tube Investments of India Limited (TII) met today to approve the audited financial results for the year ended 31st March, 2005.

At Rs 1563 Cr, the turnover for the year increased by 24% over the previous year. The profit before tax at Rs. 126.18 cr represents an increase of 56% over the previous year, without taking into account the non-recurring income of Rs.24.76 cr received in the previous year. After the provision for tax of Rs.37 cr (previous year Rs.23 cr), the profit after tax was Rs.98.55 cr (previous year Rs.82.49 cr).

Mr Adhiraj Sarin, Managing Director, said, Despite the steel price increase and the decline in Bicycles market, the operational performance was strong owing to strategic shift in product mix of the Engineering business, improved customer satisfaction, focus on quality and working capital management. Exports at Rs 190 Cr grew at 32% over last year. These results are a direct outcome of high employee commitment. The amalgamation of TIDC has added to the profitability and will continue to contribute significantly to the business.

Strong demand from the auto sector and sizable increase in exports propelled the performance of the Engineering business which contributed to 49% of turnover and 73% of profit. The Company enhanced its productivity in high-end precision tubes, consumed mainly by the auto sector. Despite frequent price increases necessitated by steel cost escalation, Customer satisfaction improved owing to focus on quality. Encouraged by the growth in demand, the Company is doubling it’s tube making capacity.

The Company is a Tier-1 supplier to auto industry for supply of automotive chains and car doorframes. The export of chains grew by 35% owing to consistent quality and improved delivery time to global customers. The supply of doorframes from the new plant at Halol, Gujarat to General Motors India commenced January 2005 and has stabilised.

The Indian bicycle industry declined for the third year in succession. In a declining market the company reduced dealer stocks and cut back market credit. Consequently there has been no increase the sales of cycles business. The business maintained its market share through rapid new product introduction and investment in brands.

The Directors have recommended a dividend of 70 % (Rs. 7 per equity share of Rs.10 each) for the year on the post bonus (1:1) capital enhanced capital.

TII consists of: TI Cycles of India, Tube Products of India, TI Metal Forming and TIDC India. 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 car doorframe in India. Also, being the second largest motor cycle chain manufacturer in India, TII is a major supplier to the Indian auto component industry.

TII is a part of the Rs.5200 crores Murugappa Group, which has a strong presence in engineering, bio-products, sanitaryware, plantations, sugar, farm inputs, finance, general insurance and nutraceuticals. Murugappa Group is a pioneer and market leader in several fields with operations across 12 States in India.