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Wednesday, Apr 28, 2004

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TI buys rights for Hercules brand in Africa, West Asia

M. Ramesh

Chennai , April 27

TUBE Investments (TI) of India, the country's second largest bicycle manufacturer, has bought over the rights to sell bicycles under the Hercules brand name in Africa and West Asia, from Raleigh of UK.

While the deal for Africa has been signed, negotiations for West Asia are over and the deal is to be signed shortly.

Mr M A Alagappan, Chairman, Tube Investments of India, said the company would cater to these markets from India. He did not want to disclose the price at which the rights to the brand name were bought.

Tube Investments, part of the Murugappa group, sold almost 30 lakh bicycles last year, of which about 20 lakh were under the `Hercules' brand name. "We will do more this year," Mr Alagappan said.

He scoffed at rumours that TI was planning to get out of the cycles business and pointed out that the company's deal with Raleigh proved that TI intended to be in the business.

The value of the Indian bicycle market is Rs 1,500 crore and there are four main players — Hero, TI, Atlas and Avon. Each year, around one crore cycles are sold in India. Hero, which sells about 50 lakh vehicles (including exports), is the market leader.

Mr Alagappan said the company was able to neutralise the impact of increase in steel prices by passing on the burden to the customers. "No company can absorb a 40 per cent rise in input prices," he said.

On the performance of the company last year, Mr Alagappan did not want to say anything except that "we had a good fourth quarter".

Meanwhile, the Murugappa group continues to look for a buyer for its TIAM House property, which has been fully vacated and is lying as an idle asset.

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