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Wheels India, an auto components firm of the TVS Group, said on Wednesday it is going ahead with its capex plans despite a sluggish automotive market scenario.
“We have not held back on capex as we see robust demand in the cast aluminium business,” said Srivats Ram, Managing Director, Wheels India Ltd. “The ₹120-crore cast aluminium plant near Gummidipoondi will go on stream in September this year. We will slowly ramp up here. We expect the prospects for this business to go up from Q3 of this year. There is export demand and we will be able to service this demand from this new plant.”
On China-related opportunities, he said companies are looking at de-risking global sourcing. As existing customers look at realigning their procurement to de-risk their businesses this could throw up opportunities for Indian companies, he said.
Full-year results
Meanwhile, the company’s net profit for FY20 fell 29 per cent to ₹54.1 crore, from ₹75.7 crore in the previous fiscal.
Revenues stood at ₹2,438.7 crore, down about 24 per cent (₹3,188.8 crore), on the back of a sluggish automotive market.
“The slowing economy resulted in a decline in sales of major industry segments, with the commercial vehicle segment being the worst affected. The declining sales along with the Covid-19 lockdown impact in the last month affected sales and profits,” said Ram.
“While we have been adversely affected by the lockdown over the first two months of the year, and expect a decline in the automotive industry, we expect sales of agricultural tractors and our windmill business to remain at around the previous year levels,” he added.
Industrial segment
In the windmill segment, Wheels India has started participating in global tenders in a bid to become a part of the supply chain for global manufacturers. However, this is expected to fructify only from 2022 onwards. The overall industrial segment contributes around 18 per cent to its sales.
The company secured revenues of about ₹498 crore from the industrial products business that includes supplies to railways and wind power. It hopes to maintain the same level of revenue during this fiscal as well due to a favourable order outlook.
Ram said the company’s capacity utilisation level was 25-30 per cent in May and is hoping to reach 55-60 per cent this month.
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