Non-auto segments registering a strong growth in the H1 of the year, have helped Wheels India Ltd to register a net profit of Rs 28.67cr for the Q2 ended September 30, 2019 against Rs 22.67 cr registered in the corresponding period last year.
Srivats Ram, MD, Wheels India, said, “While there was a severe slowdown in the CV and PV industry affecting the automotive component business, it was partially offset by strong growth in the industrial component business.”
The company is setting up a cast aluminium wheel plant, at Gummidipoondi near Chennai, with an investment of Rs 140 cr that is expected to start operations next year. “Our overall investments for the year are on track. Since the exports business and industrial component sectors are doing well, we are continuing to invest for the long-term. The new plant with an annual capacity of 7.5 lakh wheels will go on stream next financial year,” he said.
Srivats said “The truck industry had a quarter of severe slowing down accompanied by a similar trend in the light vehicle and construction equipment industry. There are signs of slowing global demand affecting our business. We grew our bus air suspension business and our railway and windmill business, where we have started executing export opportunities.”
Exports contributes over 20%
In the first half, windmill, railways and air suspension had shown positive outcome. According to him, the automotive segment is bottoming out and “we should see some growth beginning to happen in the future. I do not see great visibility in the immediate term in the CV sector. But since it has hit a real low base, it should turnaround sometime soon. Once the government investment in infrastructure happens, there will be improvement in the construction equipment segment.”
Pursuant to the Taxation Ordinance, 2019, issued by the Ministry of Law & Justice dated September 20, 2019, which is effective April 1, 2019, domestic companies have the option to pay corporate income tax at 22 pc plus applicable surcharge and cess.
The company has exercised this option and accordingly an amount of Rs 19.80 cr arising from the re-measurement of the deferred tax liability has been written back, which is expected to reverse in future to the statement of profit and loss.