Tube Investments of India Ltd. (TII) is adopting a three- pronged strategy to insulate itself from the cyclical nature of the auto sector.
“We want to reduce our dependence on auto because being an auto-component supplier, we feel there are two challenges to it,” said Vellayan Subbiah, MD.
“One, it is very capital intensive and two, it is very cyclical and cyclicality does not create an ability to generate consistent and constant cash flows.”
The Murugappa Group firm has identified three growth engines. TI-1 refers to the existing divisions, TI-2 to a venture capital-led approach to growth such as expansion into optic lenses and electric three-wheelers and TI-3, growth through acquisitions such as CG Power.
According to him, TI-1, which are organic businesses, might grow 6%- 8% and it was not fair to put too much pressure on them. TI-2 is ‘yet to become operational’ and TI-3 will kick in with the CG Power numbers next year. Recently, TII had announced its maiden foray into electric three-wheelers at an outlay of ₹200 crore. It had roped in a Korean firm for design and technology.
“We are going to start manufacturing and selling electric three wheelers. It will be around, perhaps, the December to January timeframe. We already have a working prototype.”
TII had also forayed into the manufacture of optic lenses. Operations may start by the end of Q1 of FY22.
