Leading auto parts major Wheels India Ltd plans a capex of ₹155 crore this fiscal as it seeks to take advantage of strong demand potential in some of the business segments amid a rise in the industrial inflation and uncertainty caused by the Russia-Ukraine war.
Srivats Ram, Managing Director, Wheels India, said amid challenges by way of unprecedented steel price increases (to the extent of ₹400 crore of the topline over 12 months), there were some milestones. For the first time, the company’s exports crossed ₹1,000 crore mark in FY22, which saw the company recording ₹80 crore profit (₹7 crore in FY21) and posting revenues of ₹3,687 crore (₹2212 crore).
The board recommended a dividend of 83 per cent (₹8.3 per share). “This percentage takes us to pre-Covid and pre-commercial vehicle slowdown period levels,” he added.
New plant
Earlier this month, the company opened a new plant at Thervoy Kandigai near Chennai for machining of large wind turbine castings. It has already invested ₹75 crore in this site and will invest another ₹25 crore in this fiscal.
Srivats Ram said the proposed investment of ₹155 crore for FY23 will be spent on the expansion of construction equipment fabrication related business, aluminium wheels, completion of phase 1 investment in Thervoy Kandigai site and some will be for maintenance capex.
Ram said Wheels India is a major supplier to all leading construction equipment OEMs. The demand in the CE segment is extremely strong as most countries, including India, have been spending on infrastructure development in the post-Covid period as part of economic recovery measures. CE demand remains quite strong and is likely to continue. But they are also affected by supply chain issues on account of the zero-Covid policy of China. Demand in the wind power segment is stable, he added.
Stating that export momentum would continue in FY23, he said Wheels India benefitted from China’s de-risking strategy of global companies with the cast aluminium business being an opportunity arising out of that. However, it is also expanding business with existing customers.
Also, with the exit of the JV partner two years ago, the restrictions on expanding into segments and geographies have been removed and the company has been aggressively foraying into newer segments and geographies that they could not earlier.
The company reported an 8 per cent growth in its net profit at ₹28 crore in March 2022 quarter as compared to ₹26 crore in March 2021 quarter. Revenue grew 29 per cent at ₹11,01.3 crore (₹852 crore).