Chennai: Wheels India Ltd, a TVS Group company, has entered into a technical collaboration agreement with Topy Industries, a manufacturer of steel wheels in Japan, for improving the design, process and development of steel passenger car wheels.
"The technology tie up with Topy Industries will enable us to have a presence at the model design stage itself with the manufacturers," said Wheels India Managing Director, Srivats Ram. "The Indian car market is dominated by manufacturers based out of Japan and Korea. Though they may launch their cars here, their design happens overseas."
With many Japanese and Korean car makers setting up production facilities and looking at India as a major hub for global product launches, it was imperative for Wheels India to benchmark itself to world standards and increase its capacity to garner new business from Japanese and Korean companies.
With this agreement, Wheels India is looking to be a part of the early stage development of steel wheels for passenger cars. Srivats Ram said that the agreement with Topy would help Wheels India get closer to customers.
The company has plants in Chennai, Sriperumbudur, Pune, Rampur, Bawal and Pantnagar with a combined capacity to produce 13 million tonnes per year. The company plans to increase its total capacity to 15 million tonnes by next year with an investment of Rs 70 crore. Most of the capacity expansion will happen in the company's manufacturing facilities located in Sriperumbuder and Chennai. The expansion will be funded with a mix of debt and internal accruals.
A significant part of the capex will go towards expanding presence in the exports market. The company will be completing the expansion over the next six-nine months.
"Almost 30 per cent of the sales growth contribution in Q2 came from exports business, with a strong traction for mining truck wheels," said Srivats Ram. While over 80 per cent of the company's business came from the domestic market, the company exports wheels for off-road construction equipment and agricultural applications to Japan, Korea, the U.S., Brazil, Belgium, South Africa, China and Indonesia. He said exports would remain strong for the second-half of the current year.
He expects the domestic market to start improving in the fourth quarter. "The domestic automotive market has not grown much, but we were able to realise better margins from construction and mining equipment segments (export)."
One-third of the company's revenue comes from the commercial vehicle segment, 22 per cent from passenger car, 15 per cent from construction and mining fields and 5 per cent from air suspension.
Wheels India reported a net profit of Rs.10.98 crore for the quarter ended September, 2011 up from Rs.5.14 crore in the same quarter last year. Revenue for the quarter was up 19 per cent at Rs.496 crore (Rs.417 crore).
The net profit for the first-half year ended September 2011, also more than doubled to Rs.18.17 crore from Rs.7.77 crore during the same period last year. Revenue for the first-half increased by 19 per cent to Rs.956 crore (Rs.802 crore).
Srivats Ram said that the company's manufacturing plant at Wardha in Maharashtra, where it is diversifying into power sector, would manufacture critical structural parts like auto-weld beams, boxes, columns and girders for large boilers in the first phase. The plant is expected to break even by the fourth quarter of 2011.
Wheels India, earlier predominantly looking at bus suspension, also plans to enter into manufacturing of air-suspension for trucks and trailers. It manufacturers TVS-Wilride Air Suspension Systems in Chennai in a technical agreement with Trelleborg, Australia. |