There is a fantastic group in South India – the Murugappa group – for me they have made money. That is a good test of management. I have been an investor in EID Parry, Cholamandalam Investment and Finance, Carborundum Universal and Coromandel Fertilizers. All these have been in my portfolio for long periods of time. All of these my first purchase (when they were of a face value Rs. 10) are below the price of Rs. 20 – which means they have been around with me for the past 25 years + and have given me a great return.

Recently I was doing some research on Tube Investments – they make steel tubes and other steel products like doors for Hyundai Santro and Nano. Of course their brand which is really famous is Hercules and BSA. Their most expensive cycles are in the region of Rs. 12000. Now this may sound high to a ‘doodhwala’ kind of an attitude towards cycling, but it is really at the bottom of the market. The middle and upper class which has taken to cycling is forced to look at bikes like Trek, Raleigh, Firefox, – and they are in the Rs. 25,000 range.

Reminds one of the Bajaj Auto family fight – where Rahul started making motorcycles just to keep Rajeev in the family business. Today Bajaj Auto is prospering because of motorcycles. There is in fact a M’knsy report on why Bajaj Auto should not make motorcycles. LOL.

It takes an upstart to teach an old foggy a new trick or two – a Nano (made by a company constantly reinventing itself – Locomotives, Trucks, Cars, worlds cheapest car, luxury car……Nirma teaching HUL, Hero Honda teaching Bajaj auto that there is a market for a HIGH end motorcycle priced upwards of Rs. 100,000.

Will Tube Investment start making alloy vehicles, aluminium cycles, disc brakes, and the like or will it be slowly ground to the ground?

The Murugappa group is normally proactive – they were the first to get out of the money sucking Mutual fund business. Surely they will get out of the equity brokerage and mutual fund distribution business soon (however these businesses do not bleed)…let us hope to see a Tube Investment 21 gear alloy body Mountain bike with disc brakes – at a price of Rs. 18000. Trek 4300 and 3700 can go for a ride!

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