TI to peddle premium cycles for niche market

June 18th, 2008 - 8:06 pm ICT by IANS  

By Venkatachari Jagannathan
Chennai, June 18 (IANS) The Rs.23.48-billion Tube Investments of India Ltd (TI) is negotiating with three foreign companies to enter the ultra premium cycle segment - price range starting from Rs.13,000 and going up to Rs.160,000. “Though the market size is small we cannot afford to be absent in this segment,” TI Cycles senior vice-president Arun Alagappan told IANS.

The proposed range will be in addition to the division’s existing premium range bikes sold under the Hercules brand.

The deal is expected to be finalised by September, Alagappan said, while declining to name the companies — believed to be based in Europe and USA. “The idea is to import the higher end products as completely built units (CBU) and assemble the lower end of the premium product range in our plants,” he added.

TI will also make some of the components for the ultra premium end cycles.

Premium models apart, TI Cycles is also negotiating with another European company to ship out cycles and components.

“This deal is also expected to be finalised by September. The plan is to export 300,000 cycle kits over a three-year period. The buyer will assemble and sell the cycles under his own brand,” he said.

Last week TI Cycles inaugurated its Rs.200 million electric scooter plant in Chennai and announced its plans of launching low- and high-speed BSA brand models.

The division’s new plans - electric scooters, ultra premium cycles - and the already launched BSA WorkOuts exercise equipment are part of the division’s strategy to take it to the next level.

Contributing Rs.5.77 billion to the company’s turnover last fiscal, TI Cycles last year sold around 2.8 million units comprising 1.8 million specials, including mountain terrain and racing bikes, and one million units of the standard variant.

The target for the current year is 3.1 million units, Alagappan added.

India is the world’s second largest cycle manufacturer after China, rolling out around 10 million units a year, but its growth is stagnating. The growth is only in the specials and the children’s bikes segment, he added.

The top four players in the market are Hero Cycles, Atlas Cycles, Avon Cycles and TI Cycles. In addition there are several small regional brands.

TI Cycles’ current focus is on increasing its retail presence with three format stores - BSA Go (located in cities retailing BSA branded products), Hercules Express (tier-II cities) and Hercules-BSA Zone (multi-brand outlets).

“By the end of this fiscal, we will have 55 BSA Go outlets, 70 Hercules Express and 200 Hercules-BSA Zone,” Alagappan said.

The challenge in growing the market is to create excitement amongst the kids as well as the adults.

“We are now focusing on getting back the adults to ride cycles by organising adventure rides,” senior vice-president of the bicycles and fitness division D. Raghuram said.

TI Cycles plans to formalise such activities by forming cycling clubs soon.

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