Auto components maker Wheels India Ltd is looking at cutting planned capital expenditure by 25 percent this financial year because of an increase in interest costs, Managing Director Srivats Ram said on Tuesday.
“The second quarter profit number was impacted especially by interest cost increase,” Ram said at a virtual conference.
Asserting that the cost of money had gone up substantially, he said: “We are looking at holding back some of the CapEx for the moment.
Wheels India had planned to spend Rs. 200 crore in capital expenditure this year and is cutting it by about 25 percent.
“A fairly large chunk of the Rs. 150 crore capex this year will be for the new machining plant in Thervoy Kandigai. We are looking at improving operational efficiency,’’ Ram added.
The company has already commenced production of machining of large castings -- of the size of 3 tonnes to 23 tonnes -- for the windmills at its plant in Thervoy Kandigai.
Ram expects the volumes at the plant to break even before the end of the financial year.
Wheels India registered a lower net profit of Rs. 15.14 crore in the quarter that ended September 30 from Rs. 21.2 crore in the corresponding quarter for the same period last year. Revenue went up by 22% to Rs. 1,109 crore from Rs. 911 crore in the corresponding quarter of the previous year.
“The revenue growth was driven by a good recovery in the domestic commercial vehicle market. Exports have been impacted especially in retail segments in the US and EU,” he said.
On the outlook for Wheels India, Ram said: “We expect air suspension business to do well in the second half on the back of the recovery in the bus segment. It is expected that Q4 revenues will be decent across segments.”
To a query, he said the construction equipment segment did well for the company globally in the first half and expected this to continue into the second.
“We have been talking to large customers in Japan and the US They are positive about the prospects of growth in the next year,” he added.
He reckoned that the windmill segment would do well in the second half. “Calendar year 2023 and 2024 will see better growth in the windmill business,” he added.
Wheels India is a leading manufacturer of wheels for trucks, tractors, passenger vehicles and construction equipment. It also makes air suspension systems for trucks and buses and industrial components for the construction and windmill industry with manufacturing plants in Tamil Nadu, Maharashtra, Uttar Pradesh and Uttarakhand.
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