Steel Strips Wheels Ltd. expects to post a “better” performance in the financial year ending March 2021 on higher exports and complete transition to the new emission standard.
“We expect our exports to be in the range of Rs 260-265 crore in the next financial year, overshooting the previous guidance [of Rs 250 crore],” Mohan Joshi, executive director at the automotive wheels maker, said in a conversation with BloombergQuint. “We expect some green shoots to come in the quarter ending June as only one technology will be available then and customers won't have two choices.”
That comes as the Supreme Court mandated sale of only Bharat Stage-VI compliant vehicles from April 1, 2020.
For the quarter ended December, Joshi said the company's performance was impacted because of the weak demand for commercial vehicles. The segment is still grappling with high inventory amid a prolonged sales slowdown, and buyers are confused about the transition from BS-IV to BS-VI, he said.
Makers of cars and two-wheelers to commercial vehicles recorded a record fall in sales in 2019 as buyers are yet to loosen their purse strings amid a slowing economy. That impacted suppliers of auto parts as well. Sales of commercial vehicle sales fell close to 15 percent year-on-year to 8.54 lakh units in 2019, according to Society of Indian Automobile Manufacturers. Also, Rajan Wadhera, president of the automakers' lobby, said 8-10 percent increase in costs due to rollout of new BS-VI emission standards will add to the slowdown.
Steel Strips Wheels (Q3, YoY)
- Revenue fell 28.8 percent to Rs 343.6 crore.
- Net profit declined 67.9 percent to Rs 6.3 crore.
- Ebitda dropped 30.8 percent to Rs 42.7 crore.
- Margin stood at 12.4 percent against 12.8 percent.
Shares of the Punjab-based company fell as much as 1.2 percent to Rs 756.85 apiece. That compares with a 0.64 percent gain in the benchmark Nifty 50 Index.
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