Wheels India Ltd., a leading steel wheels manufacturer, registered a 34 per cent growth in net profit at Rs. 39.99 crores for the year ended March 31, 2016, as compared to Rs. 29.74 crores in the previous year ended March 31, 2015. Revenues for the year moved up by two per cent to Rs. 2,018 crores as compared to Rs. 1,982 crores registered in the previous year, despite the deflationary effect of low commodity prices. The Board has recommended a final dividend of Rs. 5.50 per share (previous year Rs. 4.50).
Net profit for Q4 ended March 31, 2016, went up by 151 per cent to Rs. 16.97 crores as against Rs. 6.76 crores registered in Q4 ended March 31, 2015. Revenues for the quarter increased seven per cent to Rs. 536 crores from Rs. 500 crores registered in the same period of the previous year.
Over 50 per cent of Wheels India’s revenue comes from wheels for commercial and passenger vehicles. The company is a leading manufacturer of wheels for agricultural, construction and mining equipment globally.
Non-wheels business
Over the last decade, Wheels India diversified into non-wheels business. It registered a good growth in its energy equipment component business following good growth in domestic windmill installations.
In the trucks segment, the company started manufacture of lift air suspension for trucks in the second half of the year. This new business has helped the air suspension part of the business register growth.
Commenting on the performance, Mr. Srivats Ram, Managing Director, Wheels India Ltd., said: “Our revenue growth was driven by the strong recovery in the CV sector, as replacement demand driven by operational efficiencies of higher tonnage vehicles, imminent regulatory changes and some core industry activity drove growth in the CV market.”
On the exports front, construction equipment and mining segments, which contribute to 70 per cent of the company’s export business, have been hit globally.
Mr. Srivats said: “Despite a cyclical downturn in its main export industry segments, Wheels India has been able to consolidate its presence through the introduction of new products which will benefit the company when the industry segments recover.”
Challenges in the coming year
On the challenge areas for the company, Mr. Srivats said: “The rural economy has struggled in the last two years due to poor monsoons and low commodity prices. Some focus by the Government on this area, along with rural infrastructure development, could help revive the rural economy. The prediction of a normal monsoon would also help the sector. The other concern is that the policies that protect the steel industry have raised the input prices, in recent months, affecting the export competitiveness of both the auto component and vehicle industry. This would limit the upside for export-driven growth in our industry.”
On the growth areas for the year ahead, Mr. Srivats said: “The CV segment is likely to continue to grow in the coming year, albeit at a lower rate than last year. We also expect road development and mining to revive in the later part of the year, helping our construction and mining wheel business. There is also expected to be some growth in the energy component business, with the Government’s focus on renewables.”