Driven by strong overseas business and a partial recovery in the CV business, Wheels India has reported encouraging revenue figures in FY15. The company’s non-wheels business was a prime growth driver during the year, rising from an eight per cent contribution to the turnover last year to 11 per cent and is expected to further grow to 13 per cent in FY16.
The company’s net profit for FY15 has risen five per cent to Rs. 29.74 crores from Rs. 28.41 crores in FY14, while its revenues for the year increased nine per cent to Rs. 1,980 crores from Rs. 1,823 crores the previous fiscal. Exports continued to be a growth driver in FY15, accounting for over 20 per cent of its business.
Commenting on the company performance, Mr. Srivats Ram, Managing Director, Wheels India Ltd., said: “A reasonable recovery in the CV segment along with strong export business contributed to the revenue growth. The revenue growth is especially significant as the tractor segment saw a steep fall of 16 per cent in FY15 from the 19 per cent growth registered in the previous year.”
Non-wheels business
Over half of Wheels India’s revenue comes from wheels for CVs and passenger cars, with the rest coming from construction equipment and agricultural tractor segments, mining industry and air-suspension systems. Being a dominant player in the wheels space, the company is stepping up focus on its non-wheels business where it is showing strong growth. “Since we are the market leader in most products in the wheels business, we felt the need to focus on non-wheels business, and the 8 to 11 per cent increase in our non-wheel business is part of our strategy”, added Mr. Ram.
Under the non-wheels business, the company has made steady progress in the area of air suspension systems, which is mainly driven by the bus segment today. The company will also be supplying its first truck lift-axle system this year and considers the segment to be a highly potential one. “Our air-suspensions business grew from Rs. 80 crores last year to about Rs. 98 crores in FY15, essentially due to city bus orders during the latter part of the year. The truck air suspension is a promising segment, and though we feel it is about two years away from becoming a reasonable volume space, we will start seeding our products in the market soon. We had entered into a technical tie-up with the Turkish firm EGE Endüstri a couple of years ago and have a new plant near Chennai from where we will start supplying lift axles to an OEM in two to three months’ time. We believe that there is potential to achieve a business of about Rs. 100 crores over a three year period from the new facility”, he explained.
Aftermarket and exports
The aftermarket business that Wheels India had launched a few years ago has made good progress with its achieving business of Rs. 51 crores in FY15 as compared to Rs. 33 crores in FY14, through its aftermarket brand ‘WILGO’. It expects a similar growth in the coming year with the aftermarket business likely to touch the Rs. 100-crore mark in a couple of years.
With its exports growing by around 12 per cent from Rs. 358 crores to Rs. 400 crores in a year, Wheels India is confident of taking the export contribution to 25 per cent of its total business in the coming years from the current figure of just over 20 per cent. It exports wheels for off-road construction equipment and agricultural applications to Japan, Korea, the US, Brazil, Belgium, South Africa, China and Indonesia.
Investment plans
Wheel India plans to invest a total of Rs. 70 crores this year towards capital expenditure, one-fourth of which will go towards new product development to help it retain and grow its market share. The company is also working on several steps to ensure its profits keep swelling in order to maintain its strong market position for the long term. “While the top line growth this year may be in single digit, we are aspiring to show a reasonable growth in profit through a change in product mix and a few cost-cutting measures that would include rationalizing capacity, combining lines and optimizing use of resources”, Mr. Ram shared.
Wheels India is confident that the commercial vehicle segment will be back on the track this year while it also hopes for some positive signs in the tractor space. “After a prolonged slowdown in the automotive sector that lasted for well over two years, we are hoping to see some recovery in the domestic market, especially the CV space this year. The CV segment business could grow in double digit for us and we also expect a recovery in the tractor segment this year. The mining segment is likely to open up, at least a little bit, so we expect our mining truck wheels to see an increase in demand probably from the second half of the year. We are also looking at other Asian regions for our tractor wheels business”, he concluded.