Wheels India keeps capex plan on course

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Chennai-based Wheels India Ltd has drawn up a Rs 155-crore capital expenditure (capex) programme for the current financial year.

A part of this will go into expansion of the construction equipment and aluminium wheels businesses.

The company has already invested Rs 75 crore in a new plant at Thervoy Kandigai in Tamil Nadu for machining of large wind turbine castings. This year, the company will invest an additional Rs 25 crore in that plant.

Srivats Ram, Managing Director of Wheels India, said, “We are investing because we are seeing clear opportunities and there is customer demand on hand.”

He indicated that Wheels India could go for a term-loan to meet its funding needs. He, however, hastened to add that the quantum of the term-loan would not be very significant. “We have to invest to retain our customers,” he added.

Ram said Wheels India had benefited from the ‘China de-risking strategy’ of global companies with cast aluminium business being an opportunity arising out of that. “But we are also expanding business with existing customers,” he added.

On the exports market, Ram said that there was strong demand from Japan, Korea, Europe and North America. With the exit of the JV partner two years ago, the restrictions on expanding into segments and geographies had been removed, he said. The company had been aggressively foraying into newer segments and geographies where it could not enter earlier, he added.

“The fact that we have invested well over Rs 150 crore in the cast aluminium plant in the last year or two and our current investment of Rs 100 crore in the new plant for machining of large wind turbine castings shows that we are making large investments and that we are optimistic about growth in these new areas from zero base,” Ram said.

On the commercial vehicle (CV) segment, he said that heavy commercial vehicles (HCVs) had been very strong in FY22 with demand for multi-axles going up. The light commercial vehicle (LCV) segment, too, has been showing strong demand. He said the momentum in CVs was back. He expected the overall CV segment to be strong this year.

He did however, concede that the zero-COVID policy of China had created some uncertainty. Nevertheless, he saw some opportunity coming out of that too. Though rising inflation had impacted consumer products, he felt that the infrastructure thrust given by the government would have a positive fallout on demand for industrial products. Clearly looking at growth opportunities, Ram hinted at stepping up hiring this financial year.

Wheels India, in the meanwhile, has registered a 9 percent rise in net profit for the fourth quarter (Q4) ended March 2022 at Rs 27.8 crore compared to Rs 25.5 crore in the corresponding quarter of the previous year. Revenues for Q4 ended March 2022 went up 29 percent to Rs 1,101.3 crore compared to Rs 852 crore registered in the same period of the previous year.

In FY21, Wheels India had begun production of cast aluminium wheels from its plant in Thervoy Kandigai near Chennai. Earlier this month, the company inaugurated a new plant for machining of large wind turbine castings in Thervoy Kandigai.

“We expect the positive trend in the CV segment seen in

Q4 of FY22 to continue this year, benefitting both our wheel and suspension businesses. While the demand outlook is positive, there continues to be industrial inflation. The positive trend of export growth is likely to continue this year.”