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Wheels India Ltd., a steel wheels manufacturer has reported a 40.99% increase in net profit during the quarter ended September 2016 at Rs 13.07 crore as compared to Rs 9.27 crore, a year ago. Revenues during the second quarter ended September 2016 increased by 5.41% to Rs 546 crore as compared to Rs 518 crore registered in second quarter ended September 30, 2015.
Srivats Ram, managing director, Wheels India Ltd., said that while there was a slowdown in the commercial vehicle business in second quarter, the non-wheel business contributed to the Company's growth in sales and profitability.
Over 50% of Wheels India's revenue comes from wheels for the CVs and passenger cars with the rest coming from tractors, construction and mining equipment, air suspension systems, and energy equipment parts.
On the outlook for the second half of the year, Srivats said that the company expects the revenues in the second half to be in line with the first half.
On the company's prospects in the CV sector, Srivats said, "It looks likely that the government will implement GST from April 1, 2017. At the same time, there is a price hike that is expected with BSIV implementation from April 2017. The GST rates and implementation dates for the schemes would decide whether there is a pre-buy or not in the CV segment prior to March 2017."
He said air Suspension is a big growth area for the company. Within that, lift axle, where the company began production in the second half of last year, has done well and is expected to continue to do well into the second half of this year.
Overall the company is investing around Rs 75 crore this year including a significant investment in capacity expansion of both the aluminium wheels and wind energy components.
"This should reflect in higher volumes next year. We are expanding Aluminium wheels capacity by 25%. In the wind segment, revenues are likely to increase by 15% next year," he said.
Ram, said the company is also focusing on non wheels business as an area of growth. More than 50% of the top line growth in the first half has come from the non wheels business.
Next year, the company expect exports to grow as a result of the demand for Aluminium wheels.
The export business, which leans on the global demand for agricultural and construction equipment wheels, has declined with the cyclical downturn in these businesses globally. Its contribution to sales is about 16%.