The commercial vehicle market is showing signs of recovery, initially boosted by the stimulus package

Written by Alokananda Chakraborty | Malabika Sarkar | Malabika Sarkar | Updated: Nov 1 2009, 03:02am hrs
Promoted by the TVS Group, Wheels India started manufacturing automobile wheels in the sixties. Today, the Rs 1,128-crore company is a leading manufacturer of steel wheels for passenger cars, utility vehicles, trucks, buses, agricultural tractors and construction equipment in India. The company claims to have more than 50% of the car and truck wheel markets and more than 70% of the tractor wheel market. In this interview, Srivats Ram, executive director, Wheels India, and chairman, Acma (southern region) talks to FEs Alokananda Chakraborty and Malabika Sarkar about the companys new initiatives and the about the travails of the auto component industry in India.

How are you coping with the downturn in the commercial vehicles market, sales to which account for major chunk of companys business

The commercial vehicle market is showing signs of recovery, initially boosted by the stimulus package (JNNURM buses) and now by the improvement in the general economy. We see the industry ending at marginally higher than last year. This has also been boosted due to some advanced purchases expected ahead of the introduction of the new emission norms. The last two months have seen a significant improvement in volume among commercial vehicle manufacturers compared to the first four months of the financial year.

The companys capex has been to the tune of Rs 100 crore a year over the past few years. In view of the uncertainty over demand in the commercial vehicle sector, are you downsizing the plans for the year

We have decided to limit our capex to Rs 40 crore, which is well within our cash profits for the current year. We would also look at managing capex within these limits in the coming year. We had downsized and shut down lines related to commercial vehicle wheels earlier this year, but are now in the process of getting those lines on-stream to meet the demand.

What is the status of your plans in the wind sector The company was setting up a new plant at Deoli, Wardha district, Maharashtra, at an investment of Rs 40 crore to manufacture structural components for power plant manufacturers. Has the plant commenced operations

We will be starting production of structural components for thermal power plants at Deoli, next month. On the windpower front, we will start supply of components to an international windmill company in December. Both the projects are going as per schedule and should hold the company in good stead in the coming years.

How much do you expect your new initiatives to contribute to your topline over the next two-three years

We expect the power sector component divisions to contribute Rs 300 crore to our topline over the next three years.

Are Chinese companies a major threat in your product segment

We faced a major threat from Chinese companies on truck wheels and lost business in 2007 and 2008. However, the government has assisted the industry by imposing an anti-dumping duty on truck wheels.

What are the major challenges to growth for you

As we have high market share in all our wheel segments, with increased competition, growth will be limited. In the wheel business, increasing steel prices is a major challenge, as it can affect margins. In addition, our ability to introduce new products and enter new segments (for example, power sector components) is a challenge we would need to overcome.

What is your annual production capacity How much of that is aimed at the export market

Our current wheel production capacity is more than 10 million. Our exports in the last year was close to 20% of the total sales.

Which are your key export markets Which are the important domestic markets for Wheels India

The major export markets are the UK, Japan, Europe and Korea. In India, we supply wheels to truck, car, tractor and construction equipment segments of the market. In addition, we supply air suspension systems to bus manufacturers.

What is your projection for the Indian auto component industry in the next two-three years

The automotive market in India has been growing well across segments especially in the last two months. We expect this to continue over the next two-three years. In addition, with global economies expected to recover over the next one year, the export businesses of auto component companies that have been severely hit in the current year should rebound. It is expected that the industry will have double-digit growth in the years ahead.