Leading auto part maker Wheels India is making a fresh investment of ₹37 crore in expanding the capacity to serve the booming export business even as the domestic business continues to improve across automotive segments.

The Chennai-headquartered company’s export business, which makes up about a quarter of the revenue, has been recording positive growth for the last 6 quarters. It expects the momentum in exports to continue for a while.

“Today, our Board has cleared a fresh capex of ₹37 crore to enable us to serve the export demand in the coming months. The capex will largely be spent on expansion of wheel capacity meant for the construction equipment sector and also for ramping up capacity for supply of parts in the wind mill segment,” Srivats Ram, Managing Director of Wheels India, said here.

The company had proposed a capex of ₹99 crore during March 2021 for the current fiscal. Now it has planned additional capex on back of growing orders from the export markets.

Business volumes up

In the domestic market, Wheels India witnessed a notable increase in business volumes from almost all segments. Since its exposure to the passenger vehicle segment is very low (at about 10 per cent), the company has not been impacted severely like several others due to semiconductor shortage, but its subsidiary that supplies to the passenger vehicle segment has been hit.

“Q2 of this fiscal was basically a little bit of return to normality. We had decent volumes across segments. It has been a pretty good quarter in terms of revenue growth and all businesses have grown. But our export businesses were particularly strong in construction equipment, tractors and windmills,” he added.

While demand side things are quite positive, major concerns are rising steel and aluminium prices. The company has witnessed an unprecedented increase of 40-50 per cent on commodity prices over a 12-month period. Spike in fuel costs also added to cost increases. The company’s new plant for catering to the wind mill segment will be operational by January 2022.

Q2 & H1 results

For the quarter ended September 30, the company reported close to three-fold increase in net profit at ₹21.2 crore compared to ₹7.4 crore in the year-ago quarter. Revenues for reporting quarter was up 78 per cent to ₹911.2 crore compared to ₹510.9 crore in the year-ago quarter.

For the half year ended September 30, Wheels India registered a net profit of ₹31.3 crore compared to a loss of ₹30.8 crore in the first half of the previous fiscal. Revenues more than doubled to ₹1,585.8 crore compared to ₹722.9 crore.