Thursday, January 12, 2017

Murugappa’s TI Cycles on the right track


With production at TI Cycles’ largest bicycle plant in Punjab stabilising, exports of international brands growing and the company emerging a “clear market leader” in the premium segment, the Murugappa Group company is optimistic.
Since last year, it has also rebranded its retail outlets under the Track & Trail umbrella for its own brands and the imported high- end cycles. Over 50 stores have been redone and by next year 110 stores will come under the Track & Trail format.
Premium and exports segments are bright spots in an overall sombre mood as demonetisation has hit volumes.
Arun Alagappan, President, TI Cycles, said the company has constituted a “Premium Cycles Group” to focus on the range – cycles that cost upwards of about ₹8,000-10,000 each and going up to a few lakh rupees, including the international brands that it sells here such as the Cannondale, Ridley, Schwinn and the GT.
The launch of new cycles, growth in premium segment and rejigging retail format to target the evolving market conditions have contributed to “stemming the slide,” says Alagappan. People are now willing to test a cycle for regular use. Even those normally using motorised transport are considering buying a cycle.
Since 2011, the overall market has stagnated around 16 million cycles annually. The premium segment constitutes a fraction at about 400,000 cycles a year but growing fast at about 35 per cent.
For TI Cycles, the premium segment growth is closer to 50 per cent. Its Chennai unit where cycles are made for international brands based in the UK, exports have doubled during 2016-17 over that of last year, he said.
The specific numbers will soon be formally announced, Alagappan said.
TI Cycles now has a capacity to manufacture a total of 60 lakh cycles annually spread across three units. The Rajpura unit at Punjab, which went on stream last year, has an annual capacity of 30 lakh units; the one at Nasik 12 lakh; and at Chennai about 18 lakh.
The Punjab unit was built in 11 months and stabilised within six months of opening and will reach budgeted monthly capacity of about 1.5 lakh cycles next month, he said. This is one of the fastest such roll outs which was supported by the components hub in nearby Ludhiana, he said.
Demonetisation had hit the volume segment hard in the initial days in November. But the industry is now “fighting the sentiment” as people spend cash only on essentials.

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