Tube Investments of India

The Directors are pleased to present the performance of the Company
 for the year ended 31 st March 2008.
 
 Financial Highlights
 
                                                     Rs. in Crores
                                              2007-08      2006-07
 
 
 Gross sales and processing charges           1926.70      1761.84
 
 Less: Excise duty on sales                    164.37       146.80
 
 Net sales and processing charges             1762.33      1615.04
 
 Operating Profit before depreciation and 
 interest                                      148.82       185.30
 
 Less: Interest                                 18.15        11.29
 
 Depreciation                                   53.15        50.39
 
 Operating Profit before tax                    77.52       123.62
 
 Add: Profit on sale of long term 
 investments & non-operating assets
                                                 5.92        71.69
 
 Less: Provision for taxation                   26.94        39.53
 
 Prof it after taxes                            56.50       155.78
 
 Add: Surplus brought forward                  256.21       143.66
 
 Dividend on Own Shares held through Trust       1.52         4.77
 
 Profit available for appropriation            314.23       304.21
 
 Less: Transfer to general reserve              15.00        15.58
 
 Dividend - Proposed 50% (previous year 75%)    18.48        27.71
 
 Tax on dividend                                 3.14         4.71
 
 Balance carried to Balance Sheet              277.61       256.21
 
 Review of Performance
 
 The Financial Year 2007-08 was a difficult year on account of
 unprecedented increase in the price of steel, the base raw material for
 all our products. Though the Company was able to achieve a reasonable
 growth in revenue, the profitability was significantly impacted. The
 total revenue grew by 9% from Rs. 1615.04 Crores to Rs. 1762.33 Crores,
 on account of higher sales in all product lines, barring precision
 steel tubes. The operating profit before tax was
 
 lower at Rs. 77.52 Crores compared with Rs. 123.62 Crores achieved last
 year.
 
 The bicycles business consolidated its position this year and improved
 market share. Turnover increased to Rs. 577.07 Crores, registering a
 growth of 13%. The off-take of bicycles by the trade segment was 16%
 higher than the previous year leading to improved profitability. The
 volume of institutional sales remained almost at the same level as the
 previous year. Considering the business opportunity and the need of the
 commuting public, your Company is committed to making an entry into the
 E-bike segment (electrically powered bicycles, scooters etc).
 
 The Engineering business grew to Rs. 815.51 Crores, registering a
 growth of 5%, due to higher sales of Cold Rolled Steel Strips. The
 efforts to enlarge the user industry base helped offset, to a certain
 extent, the decline in sales of cold drawn welded tubes. The exorbitant
 increase in steel price affected the operating profit of the division
 the most. Despite the best efforts, the increase in input cost could
 not be passed on to the customers in full.  Integration and
 modernisation of manufacturing facilities, cost reduction initiatives
 and productivity improvement measures are being pursued actively to
 improve margins, The expansion of capacity at the International
 Business Plant has been completed. The sharp and sudden appreciation of
 the Indian Rupee impacted the realisation and profits, despite a fair
 portion of the exports having been hedged at better rates.
 
 The metal formed products business grew to Rs. 369.75 Crores,
 registering a growth of 14%. Higher sales across all product lines
 viz., automotive & industrial chains, car doorframes, fine blanked
 products and roll formed railway wagon sections made this possible.
 Despite the slump in the two wheeler industry, the sale of automotive
 chains was higher by 8% due to increased off-take by OEMs for the
 replacement market. The off-take of car doorframes, fine blanked
 products and roll formed sections grew on account of strong demand.
 However, the profitability in this business also was under pressure due
 to steep increase in steel price. The export of chains was higher by 6%
 on  account of improved quality and marketing efforts, despite the
 appreciation of the Rupee.
 
 Dividend
 
 Your Directors have recommended a dividend of Re.1 per equity share of
 Rs.2 each (50%).
 
 Directors
 
 Mr. L Ramkumar was appointed Managing Director for a period of 5 years
 with effect from 1 st February 2008. The appointment and terms of
 remuneration of Mr. L Ramkumar is being placed before the shareholders
 for their approval at the ensuing annual general meeting.
 
 Mr. Ram V Tyagarajan has resigned from the Board and his resignation
 would take effect from 2nd May 2008. The •Board places on record its
 appreciation of his contribution as Director, over a decade.
 
 Messrs Amal Ganguli, Pradeep Mallick and S Sandilya retire by rotation
 at the ensuing annual general meeting and being eligible, offer
 themselves for re-appointment.
 
 Employees Stock Option Scheme
 
 In accordance with the approval accorded by the shareholders at the
 58th Annual General Meeting held on 31st July 2007, the Compensation
 and Nomination Committee of the Company has granted of 33,60,840
 options (each option, when exercised, would result in one equity share
 of Rs.2 each) - of which 33,53,940 options are in force as on 31st
 March 2008 - under Tube Investments of India Ltd Employees Stock
 Option Scheme 2007. Details of the Employees Stock Option Scheme, as
 required under SEBI Guidelines, are annexed to this Report.
 
 Management Discussion and Analysis
 
 Management Discussion and Analysis, which forms part of this Directors
 Report, sets out an analysis of the individual businesses including
 industry scenario, performance, outlook, risk, concerns etc.
 
 Corporate Governance
 
 Your Company is committed to maintaining high standards of corporate
 governance. A report on corporate governance along with a certificate
 from the statutory auditors on corporate governance in the Company is
 part of this annual report.
 
 Human Resources
 
 Your Company gave special and specific emphasis on imparting
 contemporary technological & managerial skills to its management staff.
 
 Your Company has been able to attract top talent from outside and also
 retain talent within. The Company continues with the practice of
 rewarding high performers and providing a well planned career path to
 them.
 
 Employee relations continue to be cordial. The basic philosophy
 followed in employee relations is mutual trust, respect for individuals
 and growth with the Company. Long term wage settlement was signed at
 our Nashik Unit with emphasis on productivity increase and multi
 skilling.
 
 Social Commitment
 
 As in the previous years, your Company contributes a small portion out
 of its profits to AMM Foundation (Rs. 30 lakhs) and Shri AMM Mumgappa
 Chettiar Research Centre (MCRC) (Rs.15 lakhs). AMM Foundation is a
 philanthropic organisation and manages nine institutions in the field
 of education and health care. The education wing consists of one
 polytechnic college and four schools. The health care wing comprises of
 four hospitals. All institutions are run on a non-profit basis. MCRC is
 a non-profit research organisation related to improvement in rural
 areas and also executes consultancy work and research projects in the
 areas of fisheries development, environmental education etc.
 
 Subsidiaries
 
 Cholamandalam MS General Insurance Company Ltd (CMSGICL) has achieved a
 Gross Written Premium of Rs. 522.34 Crores. (Previous year Rs.311.73
 Crores) recording a growth of 67% over previous year. During the year,
 this subsidiary achieved a PAT of Rs.7.24 Crores (Previous year Rs.
 1.24 Crores).
 
 The operations of Tubular Precision Products (Suzhou) Co.  Ltd, a
 wholly owned subsidiary in China, resulted in a loss of RMB 8,655,892
 (Rs.4.95 Crores) for the year ended 31st December 2007. This includes
 pre-operative expenses of the previous year amounting to RMB 2,176,525
 (Rs.1.25 Crores). This company has started commercial production and
 samples have been submitted to leading auto and auto component
 manufacturers in China.
 
 Auditors
 
 Messrs. Deloitte Haskins & Sells, Chartered Accountants retire at the
 ensuing annual general meeting and being eligible offer themselves for
 reappointment.
 
 Cost Auditors
 
 Messrs. D Narayanan and V Kalyanaraman have been appointed as cost
 auditors for cycles and tubes respectively for the financial year
 ending 31st March 2009.
 
 The other information required to be furnished in the Directors Report
 under provisions of Section 217 of the Companies Act, 1956 relating to
 conservation of energy, technology absorption, foreign exchange earning
 and outgo, particulars of employees and Directors Responsibility
 Statement are annexed and form part of this report.
 
 The -Directors thank customers, vendors, financial institutions, banks
 and investors for their continued support to your Companys performance
 and growth. The Directors also wish to place on record their
 appreciation of the contribution made by all employees of the Company
 for the performance in the year under discussion.
 
 
 
                                 On behalf of the Board
 
 Chennai                         M M Murugappan
 1st May 2008                    Chairman