Wheels India Ltd, a TVS Group company, reported a net profit to Rs 29 crore for the second quarter ended September 30, 2019 as against Rs 23 crore in the corresponding quarter last year.

During the September quarter, the company had exercised the option to pay corporate income tax at 22 per cent plus applicable surcharge and cess. Accordingly, an amount of Rs 19.30 crore, arising from the re-measurement of the deferred tax liability, has been written back. But for this, the profit would have been in the range of Rs 10 crore.

Revenue declined by nearly 34 per cent to Rs 593 crore (Rs 796 crore) due to severe slowdown in commercial vehicle and passenger vehicle segments affecting the automotive components demand. However, this was partially offset by strong growth in the industrial components business, said Srivats Ram, Managing Director, Wheels India.

‘Slowdown to continue for some time’

When asked if this the worst slowdown that he is witnessing, Ram said, “I have been in this industry for nearly 25 years. This is probably a prolonged slowdown that I have seen in my career. During the Lehman crisis, we came back quickly. However, this may take a longer time to come back.”

While the truck industry had a quarter of severe slowdown accompanied by a similar trend in the light vehicle and construction equipment industry, there are also signs of global demand affecting the company’s business. However, the company has been able to grow its bus air suspension business; railway and windmill revenues, where the company has started executing export opportunities. Of the total sales, nearly 82 per cent was contributed by automotive components business and the balance 12 per cent by industrial components, he told newspersons.

Ram said while the company had re-looked at the some of the investments announced at the start of the year, it was going ahead with the setting up of a cast aluminum wheel plant at Thervoy Kandigai, near Gummudipoondi, in outskirts of Chennai at a cost of Rs 140 crore. The plant is expected to start operations next financial year starting with an annual production of 7.5 lakh wheels for a large customer in the US, he said.

Wheels India manufactures steel wheel for light vehicles, commercial vehicles, agricultural tractors, construction and mining equipment, air suspension systems for business and trucks. It also produces components and structures for windmill, railways and thermal power plants. Exports constitute nearly 20 per cent of total sales, he said.

The company’s stock price on the Bombay Stock Exchange closed at Rs 645, down by Rs 7.55, or 1.16%.

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