Tube Investments of India Ltd, one of Murugappa Group's major businesses, has entered into an agreement to acquire 80% stake in two Colombo-based premium bicycle makers for $3.34 million (Rs 21.5 crore) in an all-cash deal, it said in a stock-exchange disclosure.
The two companies, Great Cycles (Pvt) Ltd and Creative Cycles (Pvt) Ltd, are promoted by Shuyuan Gan, who holds 100% stake in them.
The acquisition is part of Tube Investments' strategy to secure the backend supply chain for its bicycles division, it said. “With this acquisition, we will be able to grow the market for premium cycles and our market share in the premium segment even more aggressively,” said L Ramkumar, managing director of Tube Investments.
The acquisition is likely to be completed before 31 March 2018.
Creative Cycles and Great Cycles have manufacturing facilities in the Katunayake Export Processing Zone in Colombo. They manufacture a wide range of bicycles, from steel to alloy bikes. The combined turnover of the two companies was $3.35 million (Rs 21.5 crore) in the fiscal year 2016-17.
Tube Investments of India operates in three business divisions: engineering, bicycles and metal-formed products. The bicycle division of the company is called TI Cycles of India, and it sells brands like BSA, Hercules, Mach City and Montra.
The company has manufacturing plants in Chennai, Nashik and Punjab's Rajpura.
In the year through March 2017, Tube Investments of India’s total revenue from operations was Rs 4,820 crore and net profit was Rs 167.62 crore.