Tube Investments of India Ltd. (TII), a ₹38,100-crore Murugappa Group company, said its priority is to bring the recently acquired CG Power and Industrial Solutions Ltd. back on track with a post-merger integration model.
“We strongly believe that there is a fair amount of value creation opportunity by improving profitability and increasing the company’s growth trajectory,” MD Vellayan Subbiah said in the annual report.
He said the rationale for the acquisition of CG Power was not only to drive inorganic growth, but also to de-risk it from the auto business and its cyclicality. This is in alignment with TII’s core strategy to be a leading industrial player in the country, he pointed out.
Going forward, TII is pinning hopes on exports, new product development and service revenues in the existing business. “We strongly believe, our line of prudent financial management, coupled with strong and transparent corporate governance standards will benefit CG Power in the long-term,” he said.
The acquisition was a major step-up in size, scale and scope for TII, accelerating the company’s forward bound growth strategies for redefining the future, said chairman M.A.M. Arunachalam.
“A challenging business environment sometimes serves as a spur for driving transformational change, for reinventing new methods, for exploring greater possibilities. At TII, the year 2020-21 propelled the company to take on greater challenges, to forge ahead on a dynamic trajectory of growth for redefining the future, Mr. Arunachalam said.
TII said it is currently looking at various new business opportunities for growth and for maintaining its revenue and profitability trajectory, by developing new growth opportunities/lines of business and revenue streams. In this regard, it has identified certain fields of business including electric vehicles, power generators, alternate fuels, environmental sustainability, energy storage systems, IoT, medical devices, smartphone components, advanced driver assistance systems (ADAS), and micro-grid.
Recently, TII established a manufacturing facility for optic lens. The scaling up of the plant was deferred due to the non-availability of overseas technology partners arising from the pandemic-induced travel restrictions.
Other ventures such as TMT bars and the truck body building businesses are at the incubatory stage, which need time to fructify and grow, Mr. Subbiah said.
During the year, TII’s interest cost reduced to ₹19 crore from ₹29 crore mainly on account of lower borrowing and better management of net working capital. With strong focus on cash generation, it achieved a significant level of net debt reduction of ₹159 crore. TII ended the year with a cash surplus of ₹10 crore against net borrowing of ₹149 crore, Mr. Arunachalam said.
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