Leading auto parts player, Wheels India Ltd, has indicated that it is likely to hold back a portion of the capex planned for this fiscal due to sluggish export demand and a spike in costs.

The company reported a net profit of ₹15.14 crore for the quarter ended September 30, 2022, as against the ₹21.2 crore in the same period the previous year. However, revenues for this September quarter went up by 22 per cent to ₹1,109 crore from ₹911 crores a year ago, driven by the commercial vehicle market.

For the half-year period ended September 30, 2022, net profit was lower at ₹26 crore when compared with ₹31 crore in the year-ago period. Revenues stood at ₹2,166 crore as against ₹1,586 crore, an increase of 37 per cent.

Drop in exports temporary

The drop in profit was due to sudden fall in some of the export businesses, notably in August and September. Exports have been impacted especially more in retail-related segments in the US and Europe. “It is more of a temporary trend. Exports will improve from the current level from December this year,” Srivats Ram, Managing Director, Wheels India said.

Also, the impact was due to an increase in interest cost, on account of rate increase and a spike in working capital. “We were planning higher sales, but volumes dropped. So, we are planning to deplete the stocks over the next 3 months. We also looking at to what extent we can hold back our capex earlier planned,” he added.

The company had planned a capex of about ₹200 crore for the current fiscal. It is likely to cut the capex by 25 per cent due to the said reasons.

Meanwhile, the company has commenced production of machining of large castings for the windmill business, at its plant in Thervoy Kandigai near Chennai. “We hope to achieve break even by the early part of next year. This is for machining of large castings, which vary from 3 tonnes to 23 tonnes, for windmill segment,” he added.

Ram said the construction equipment business was doing well globally and the company expected the trend to continue in this fiscal.

Wheels India is bullish on the domestic growth outlook across all business segments. It also expects the air suspension business to do well in the second half due to a recovery in bus demand.