Auto parts maker Wheels India expects the demand for tractors to be stable as all the major factors affecting rural demand continue to remain strong at the moment despite the second wave of Covid-19 pandemic.

“If the rural side gets hit, definitely there will be an impact (on tractor sales) but if you look at all the factors that drive demand, they are still very strong,” Srivats Ram, MD, Wheels India said, adding, “The MSPs (minimum support price) are strong, the water levels are fairly good, there is an expectation of good to normal monsoon, finance availability is there for the segment. So, given all these factors we believe that demand for tractors will continue to at least be stable if not strong.”

Ram was addressing a virtual press conference to announce the Q4 results of Wheels India on Friday.

Wheels India, a TVS Group company, is a leading manufacturer of wheels for trucks, buses, agricultural tractors, construction equipment, utility vehicles and passenger cars with manufacturing plants at Tamil Nadu, Maharashtra, Uttar Pradesh and Uttarakhand with a combined overall annual capacity of 10.3 million wheels.

“One domestic segment that has done outstandingly well last year is the agricultural tractors business. We saw fairly strong growth in the tractor industry, and we are able to grow our business not only in the domestic but also in the exports market,” Ram said.

Q4 performance

Meanwhile, the company posted a standalone net profit of ₹25.54 crore in the fourth quarter of FY21 against a net profit of ₹4.62 crore in the year-ago period. The sharp increase in profit was on account of low base last year. Standalone revenue, on a year-on-year basis, grew 57 per cent to ₹853 crore (₹545 crore) during the comparable quarters.

For FY21, the company’s standalone revenue fell 9 per cent to ₹2,216 crore (₹2,439 crore). Ram said that the contribution of exports to total sales went up to 25 per cent in FY21, from 20 per cent in the previous year. In value terms, exports increased to ₹565 crore (₹487 crore) during this period.

“While we have strong export demand for products, the domestic business and to some extent execution of exports will depend on the state of lockdown in the regions where our plants are,” Ram said.

On a consolidated basis, net profit in FY21 fell to ₹12 lakh from ₹47.32 crore while consolidated revenue fell by 10 per cent to ₹2,416 crore (₹2,680 crore).

“This year has been largely unprecedented because there was a national lockdown for the first 45 days so during the first quarter the company registered a loss of ₹51 crore, which is a significant difficulty that we had to overcome over the succeeding three quarters,” Ram said.

 

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