Global companies across industries continue to see India as a strong production and export base as part of their de-risking strategy, a result of the global supply chain realignment, said Srivats Ram, Managing Director of Wheels India, a unit of the TVS Group.
“India is seen as one of the potential hubs to set up a production base and export to other parts of the globe as several companies across Europe and North America seek to establish hubs alternative to China. Some of our new export orders have come as a result of the global companies’ de-risking plans,” he said while discussing company’s performance in September 2020 quarter.
The company’s export business has been reasonably robust and it managed to bag new orders, which will reflect in next year’s performance of the company. Exports make up about 20 per cent of its sales, with a diversified customer base with over 40 customers globally. “We have been able to build and grow relationships with export customers and expect this to auger well as we move into the next year,” he said.
As indicated in June this year, the company is going ahead with its capex plans is likely to incur a capex of ₹72 crore in this fiscal — about ₹41 crore will be spent for industrial components business, which supplies parts to windmill, railways and other heavy engineering segments where demand remains strong.
Lowered profit
Wheels India reported a net profit of ₹7.43 crore for the quarter ended September 30, 2020. In the year-ago quarter, it posted a net profit of ₹28.67crore, which had a one-time write-back of deferred tax liability of ₹19.80 crore and hence not comparable. Its revenue stood at ₹510.84 crore as against ₹595.63 crore in the same period last year.
Even as the company reached about 90 per cent of its pre-Covid production levels in September, Wheels India is cautiously optimistic about the growth outlook for the second half of this fiscal. “There has been some build-up of demand towards the festival season, in most segments barring the CV segment. The current momentum that we are seeing augurs well and should build into growth in FY22,” he added.
Earlier this week, the company began production at a newly commissioned cast aluminum wheel plant at Thirvoy Kandigai near Chennai. The plant, which has come up at an investment of ₹177 crore, has an annual capacity of 7.5lakh wheels. Initially, the company plans to export its products to customers overseas.