Chennai, Jul 19: Unveiling a slew of models across
The kids, standard and MTB segments, TI Cycles has embarked on an aggressive market penetration and branding strategy to drive growth, tap overseas markets and explore the fitness, spares and accessories markets, a top company official said.
This was part of the restructuring exercise after the company made a strategic exit from institutional business, which led to a drop in sales volumes and revenue at Rs 781 crore (FY20) as compared to Rs 1,238 crore in the 2018-19 fiscal, company Managing Director Vellayan Subbiah said.
The new business model has seen a 17 per cent improvement in Return on Capital Employed (ROCE) in FY20 against six per cent for the last year, predominantly driven by reduction in working capital and overall capital employed, he said.
The new range of 70 cycles and 53 refreshed models was in line with the company’s ambitious road map for growth and resurgence, he said.
Subbiah said the business has been restructured in three phases — with focused cost management and efficiency initiatives, lean and flexible manufacturing schedules and revamping entire logistics infrastructure across locations.
TI Cycles also ‘recalibrated’ the working capital, besides bringing down inventories which improved cash flow and profit before tax despite a major dip in sales volume due to exit from the institutional segment and industry slowdown, he said.
Company chairman M M Murugappan said the bicycles division ‘reinvented’ itself and despite the strategic exit from the (capital intensive) institutional segment, it managed to emerge stronger and more resilient with a road map for growth going forward.
In 2019 the bicycle segment continued to ride in slow track with overall trade volume impacted due to ‘low secondary demand’ by registering a degrowth of 17 per cent over the previous year, the company said in its annual report.
The market for premium cycles dropped significantly due to the economic slowdown and poor customer sentiment, it said.
In the geared cycles segment, margins were ‘further eroded’ with an over run of low priced, poor quality alternatives in the unorganised space.
The commuting segment showed a marked decline in sales in the absence of government support for promoting dedicated cycling lanes in urban cities, TI Cycles said.
The company deployed Toyota Production System (TPS) and Just in Time (JIT) manufacturing model to optimise operational efficiencies at both its plants in Ambattur (Tamil Nadu) and Rajpura (Punjab) with a flexible manufacturing schedule and rationalised working shifts.
They also adopted cost reduction initiatives like process improvement, vendor rationalisation and streamlining logistics with integrated supply chain servicing customers directly from plants instead of warehouses, contributing to profitability and resilience.
To tap the potential in cost competitive products, it expanded the entry level, economy range portfolio with six new models in the kids category, ‘Shurveer’ in standard segment, ‘Kombat Series’ and ‘Thrasher’ in the MTB segment.
Fifty three models were refreshed and launched to increase demand. The bicycles business has ‘mapped out’ ambitious plans to accelerate growth through exports and expand presence in spares, accessories and fitness
segments, the company said.
TI Cycles holds a market share of 25 per cent of the organised trade market with much higher share in the premium segment.
The company sold 19.8 lakh bicycles during the year (FY20), which was 16 per cent lower compared to the previous year. (PTI)
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