Steel Strips Wheels Ltd. (SSWL) is specialising in steel wheel rims catering to various segments of the automobile industry. Its production facilities are located at Dappar in Punjab and at Oragadam near Chennai, where the company produces passenger car wheels. It also produces truck wheels at its Jamshedpur facility.
SSWL turns out steel wheels for tractors, trucks and off the road (OTR) vehicles, as well as two- and three-wheelers. It is also a supplier to OEMs and exports to countries such as Russia, Brazil, Thailand, Japan, Germany, Romania, France, the UK, Morocco and Italy.
SSWL’s gross income for FY14-15 increased by 9.12 per cent to Rs. 12,994.51 million as compared to Rs. 11,908.27 million in FY13-14. The company achieved a sale of 12.47 million wheel rims against 11.03 million in the previous year, representing an increase of 13.06 per cent. EBIDTA moved up to Rs. 1281.95 million in FY 2014-15 from Rs. 1186.60 millions in 2013-14, registering a growth of 8.04 per cent. Profit before tax during the year increased to Rs. 486.72 million from Rs. 251.62 million, recording a growth of 93.43 per cent. Profit after tax also increased to Rs. 394.04 million from Rs. 243.30 million, showing a growth of 61.96 per cent.
For the quarter ended September, the company reported a standalone total income from operations of Rs. 299.27 crores and a net profit of Rs. 15.03 crores.
Manufacturing capacity
The total installed capacity of SSWL comprising the Jamshedpur, Dappar and Chennai plants at present is 16 million wheel rims. The company has decided to set up a specially designed hot rolling mill (HRM) facility at Seraikela in Jharkhand for rolling of profile bar under its backward integration policy. Profile bar is the raw material for side ring and lock ring required for the truck wheel rim. Presently the company is sourcing profile bars from other sources.
With the commissioning of this mill, the company expects a substantial saving in its raw material purchase cost. Production is expected to start by the end of the third quarter of 2016. It expects to consume 75 per cent of its production in-house and the remaining will be sold to other wheel manufacturers in the first two years. The total cost for setting up this hot rolling mill is about Rs. 55 crores.
Segment-wise growth
SSWL gained a significant market share in the passenger vehicle segment along with the M&HCV segment in FY14-15. The company expects to carry the momentum and put up a good show in the next financial year as well. It expects a 10-12 per cent volume growth in FY 2015-16 with all its facilities working at very high utilization rates. The domestic passenger volumes grew 20 per cent YoY far exceeding the industry growth, indicating a strong market share increase in the last FY.
In the current year, SSWL will be present in 60 per cent of the new launches in the passenger vehicle segment, indicating strong momentum continuing for the company. The company grew 24 per cent in two- and three-wheeler segments with an increase in its footprint with the existing customers due to extreme quality conscience in the highly competitive market. It is in talks with some more domestic players for initiating business and is hopeful of making some inroads in the current FY. The domestic tractor volume is expected to kick-start from the second half of FY 2015-16 on the back of good rainfall and severe inventory control by the domestic manufacturers in the last six months.
The export volumes for the tractor segment saw a growth of 26 per cent with the entry of new customers and developments coming on stream for the company. SSWL expects a double-digit growth in tractor exports in the current FY. The CV & OTR segment saw a growth of 38 per cent and was thrice the industry growth with a lot of new developments. This helped the company gain market share by more than 10 per cent, and the same trend is expected in the next financial year.
SSWL is targeting a growth of 30-35 per cent in the CV segment which would be at least double the industry growth.