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Wheels India Ltd (WIL) has planned a capex of ₹122 crore for the current fiscal as TVS Group’s auto parts company has been, for the first time in the past six years, faced with capacity constraints to meet the surge in demand in both auto and non-auto segments.
The proposed capex will be spent on enhancing capacity across segments.
The company expects the overall capacity to go up by 20 per cent from 10 million wheels a year, though the increase will vary from segment to segment.
“We are struggling to meet the demand at the moment. From having a very low capacity utilisation level, suddenly we have moved to hitting full capacity and the present challenge is to meet the demand surge by ramping up capacity,” Srivats Ram, Managing Director, said here.
The company sees robust demand both in domestic and export businesses. “The domestic demand is driven by replacement demand in the commercial vehicle market, government infrastructural initiatives and pro-agriculture policies,” he said.
On the export side, WIL expects stronger growth this fiscal due to revival of demand in segments such as construction equipment in several markets. However, raising commodity and fuel prices are likely to put pressure on costs.
For 2017-18, the company reported a 23 per cent increase in its net profit ₹71.8 crore (₹58.4 crore 2016-17). The slump sale of its passenger car business also contributed to the growth in net profit in 2017-18.
Revenues (net of excise duty) grew by 14 per cent at ₹2469.5 crore (₹2176.1 crore), driven largely by a demand increase in the CVs and passenger car segments and a recovery in the overseas markets for its business segments in the second-half of the year.
Its net profit for the quarter ended March 31, 2018, grew 13 per cent at ₹19.5 crore (₹17.3 crore). Revenues went up 27 per cent at ₹705 crore (₹557.7 crore).
The board has recommended a final dividend of ₹9 per share. This along with the interim dividend of ₹6 per share, the total dividend for the year is ₹15 per share.
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