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G. Madhan

THE fixed deposit programme of Wheels India is open for fresh investment and renewal. At Rs 21,000, the minimum deposit amount is higher than the average for corporate FDs.

While the rates offered for the one- and two-year tenures are in line with the industry average, an investment in the three-year deposit tenure could be a more attractive option, given the company's strong fundamentals and growth potential.

Schemes and features: Wheels India offers cumulative and non-cumulative schemes. The interest rates for both are 6 per cent for 12 months, 6.5 per cent for 25 months and 7.5 per cent for 36 months. The minimum deposit for both the schemes is Rs 21,000.

The interest rate for non-cumulative scheme is paid at quarterly intervals. The cumulative scheme is compounded at quarterly rests. Hence, the annual yields for the same are 6.14 per cent for 12 months, 6.91 per cent for 25 months and 8.32 per cent for 36 months.

Further details can be had from the company's registered office at 21, Patullos Road, Chennai 600 002.

Business prospects: Promoted by the TVS Group, Wheels India makes steel wheels for passenger cars, utility vehicles, trucks, buses, agricultural tractors and construction equipment. It has presence in both the domestic and international markets.

The company's earnings hinges on the fortunes of the automobile industry. However, considering the robust growth rate registered by the auto sector at present, the company has good growth prospects for growth in the long term.

However, the four-percentage-point increase in the excise duty of steel may increase the cost of raw materials and in turn put pressure on the company's profit margins.

Financials: In 2003-04, the company's net sales grew 42 per cent to Rs 519.6 crore over the previous year. The post-tax profits grew 84 per cent to Rs 21.5 crore. Profits, at the operating level, however, grew 38 per cent to Rs 57.1 crore.

The drop in the profit growth at the operating level is on the back of sharp increase in raw materials costs.

Profit margins at the net level have risen by about one percentage point to 4.2 per cent. The bottomline has, however, improved at the net level due to the sharp fall in interest expenses.

Wheels India's ability to payout interest charges also appears to be good as the interest coverage ratio is 6.2 ( against 2.8 in 2002-03). The debt-equity ratio now stands at 1.39 (1.44).

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