Auto components player Wheels India Ltd. posted a net profit of ₹7.43 crore for the second quarter ended September 30.
The company had recorded a net profit of ₹28.67 crore a year earlier. In a statement, the firm said these numbers were not strictly comparable as the year-earlier profit had a one-time write-back of a deferred tax liability of ₹19.8 crore.
Revenue dropped 14% to ₹510.84 crore from ₹595.63 crore a year earlier.
“ After the lockdown [began] in March, we started running our plants at some level only towards the end of the first quarter,” Srivats Ram, MD, said. “With the unlocking of the economy, we reached around 90% of our pre-Covid production levels in September,” he added.
He said demand for exports had been encouraging and that annual growth would reappear starting from the next financial year. “There is also some benefit we have got out of the realignment strategy adopted by global customers (especially those in North America and Europe). Customers are also looking at increasing the production base in India for exporting from India in the coming years, in a move away from China centric production base.”
Exports currently contribute to about 20% of the company’s sales.
On the outlook for the second half of the year, Mr. Ram said, “There has been some build-up of demand [in] the festival season in most segments, barring the CV segment. The current momentum we are seeing augurs well and should build into growth in FY22.”
He said the firm had reached 90% of pre-covid turnover by September, “which is a significant improvement. Customers have been placing robust orders with us. Tractor demand has been high compared to last September. The demand in this sector follows a seasonal trend and we expect a pick up again in February after a slowdown in the next few months.”
“[About] 20% of revenues in H1 has come from the industrial components segment where the Railways and the windmill segments have done particularly well. We saw a sharp demand in the windmill segment even during the lockdown. We expect the growth to continue into the second half too.”
As to whether there were any bright spots within the commercial vehicles (CV) segment, he said, “While Q1 was dormant, intermediate commercial vehicles and tippers, driven by infra investment, are showing signs of growth.”
Wheels India has planned for capital expenditure of ₹72 crore this fiscal, including ₹41 crore in the windmill segment.
Asked if the economy had improved irreversibly, he said, “Overall, the scenario is better but we have to see if demand continues post the festival season. We hope the momentum will carry into next year. The mood is of cautious optimism.”
On the newly commissioned cast aluminium wheel plant, he said, “We will start shipping cast aluminium wheels shortly. Initially, it will be for exports but we will look at the domestic market as well, going forward.” The firm has invested ₹177 crore into this project, which has annual capacity for 7.5 lakh wheels. The company has overall annual capacity of 10.3 million wheels.