Wheels India Ltd. (WIL) of the TVS Group has announced that its net profit for the year ended March 31, 2014, was Rs. 28.41 crores, a 11 per cent decline compared to Rs. 31.88 crores registered in the previous year. The company’s overall revenue for the year declined 5.3 per cent at Rs. 1,825 crores as against Rs. 1,923.84 crores.
Commenting on the performance of the company, Mr. Srivats Ram, WIL Managing Director, said: “The truck industry had its second successive year of negative growth that affected utilization levels and growth in the last fiscal, and the automotive industry as a whole saw negative growth. The reduction in sales in the passenger car segment was made up by a 19 per cent growth in the tractor segment, but the real dampener was the truck industry where volumes slumped from 3.25 lakh units a couple of years ago to two lakhs in the last financial year.”
Stronger exports, contributing to nearly 20 per cent of the company’s total revenue, and increasing domestic demand driven by the tractor segment helped the company offset to some extent the decline in the auto segment.
Mr. Ram gave the break-up of the company’s overall sales, according to which nearly 26 per cent of Wheels India’s revenue comes from wheels for commercial vehicles, 27 per cent from passenger cars, 23 per cent from the agricultural tractor segment, 15 per cent from the construction and mining industry and about five per cent from air suspension systems. But he asserted that the worst is over, and the industry should start seeing growth from the second half of this fiscal. For the current fiscal, the company has plans to invest Rs. 70 crores towards cost reduction and new product development.
On the growth prospects for FY15, the Managing Director observed: “We expect increased investment in infrastructure projects and that should drive growth in the auto segment this year. On the back of the overall economic recovery, we are targeting a moderate growth in FY15, both in the domestic and export business. With the new government coming to power, we expect increased investments in infrastructural projects, which will drive growth in the automobile industry. However, projects need to get cleared faster and some money needs to be invested in capital formation in the country.”
WIL has its manufacturing plants at Padi, Sriperumbudur, Pune, Rampur, Bawal and Pantnagar with a combined overall annual capacity of 16 million wheels, of which 13 million units go for the passenger car segment, two million for the CV segment, a million and-a-half for the tractor segment and the rest for construction equipment and other segments.
Talking about the current level of capacity utilization by various segments at its plants, he said the tractor segment utilizes 90 per cent of the capacity, the construction segment 80 per cent, the passenger car segment 75 per cent and trucks 60 per cent.
The company has been trying some new initiatives and developing new markets in Asia to boost its exports. Exports of forged aluminium truck wheels have been on the rise with a growth of 25 per cent, and lightweight wheels for the European and American markets have also been doing very well. In addition, the company exports wheels for off-road vehicles for agricultural operation to countries such as Japan, Korea, the US, Brazil, Belgium, South Africa, China and Indonesia.
Mr. Ram also said the challenge ahead for his company in the coming year is to manage costs, with no requirement for large capacity expansion, and come up with interesting new developments to cater to growing market requirements.