Barring the passenger car segment, Wheels India expects muted growth from the domestic automobile market.
“We are concerned about commercial vehicles and tractors and expect a slowdown in the current year. However, we see a single digit growth in passenger cars, as we are present in a number of new models,” said Mr Srivats Ram, Managing Director, Wheels India.
Last year, the domestic auto market – under inflationary pressure and high interest rates – “did not see tremendous growth”, said Mr Ram. Continuing inflation and high power tariff will continue to haunt the industry this year too, he said.
Revenues for the financial year 2011-12 rose 22 per cent to Rs 2,078 crore. Net profit grew 39 per cent to Rs 34.35 crore.
For the fourth quarter, revenues were Rs 578 crore, at a 22 per cent growth. Net profit, however, dipped 37 per cent to Rs 7.05 crore, on the back of a high tax “burden”.
While exports growth last year was 34 per cent at Rs 320 crore, the domestic market grew only 15 per cent. This year too, Wheels India expects exports to be strong.
The company exports wheels for off-road construction and mining equipment to Japan, Korea, the US, Brazil, China, Indonesia and Europe. Wheels India has a 20 per cent global share in this market.
Despite strong exports, the rupee volatility is a cause for concern, “since we also have imports”. “Plus packing credit when you export is also a cost,” said Mr Ram. The impact of the rupee fall was 1.2 per cent of the turnover last year.
Non-wheel businesses
Given the subdued automobile scenario, the company is placing its bets on non-wheel businesses in the domestic market. Wheels India supplies air suspensions to buses. It also makes steel structural components for thermal power plants and wind mill manufacturers.
The power sector business is “profitable” in the second year of operations. Air suspensions have also done “reasonably well”. These are still in the nascent stage with good growth potential, said Mr Ram.
This year, the company's capex will be Rs 80 crore. This will mainly go into exports and domestic passenger cars.
Wheels India has recommended a final dividend for the year Rs 6 (60 per cent) per equity share of Rs 10 each. With the interim dividend of Rs 4 per share paid in March 2012, the total dividend for the year comes to Rs 10 per share.