WHEELS INDIA LIMITED
ANNUAL REPORT 2009-2010
Ladies and Gentlemen,
I welcome you all to the 51st Annual General Meeting of your Company.
The Indian economy's growth overall at 7.5% last year was commendable
considering the severity of drop in demand in most countries and low
agricultural production in India.
A major segment of your Company's business, viz. wheels to Commercial
Vehicles segment continued at the low level demand in the first quarter of
the year under review. With the support extended by the Government through
reduction in excise duty and easy availability of credit helped the
Commercial vehicles segment grow from the second quarter. Passenger car
production saw robust growth partly due to increased exports. In spite of
poor agricultural production, the demand for agricultural tractors improved
due to better availability of credit for the farm sector. To a certain
extent, the growth of economy during the year under review was sustained by
the effective steps taken by the Union Government in terms of excise duty
reduction and making available credit to various segments including for
renewal of fleets by State Transport Undertakings which helped your
Company's Air Suspension business. Your Company is seeing improvement in
demand in all segments being sustained in the current year. With regard to
Air Suspension business, your Company saw high growth from Government
support for State Transport Undertakings. Availability of loans from the
Central Government to the STUs, appears to be unlikely in the current year.
Suspension systems are now being incorporated in buses running in metros
and larger towns.
Availability of power has been a major constraint especially in your
Company's main plant at Padi. High cost of power generation from captive
diesel gensets is significantly affecting our cost of production.
Volatility in steel prices continued to be a major factor affecting your
Company's cost structure. While steel prices maintained steady when demand
slackened in the first half. With revival of demand in the second half of
the year, steel prices were put up by 12% in October 2009 followed by a
further revision of 18% in April 2010. The high cost of steel has made
steel based products expensive. To remain competitive, your Company will
undertake measures to reduce other cost. We may need to restructure our
operations to achieve this objective.
Due to global recession, the year under review saw steep fall in your
Company's exports for wheels for construction and mining equipment. The
present year is seeing revival of markets especially for mining equipment
wheels. Higher infrastructure spending in India planned by the Government
is likely to revive construction equipment wheels. Your Company's exports
in the current year are expected to improve substantially compared to the
depressed exports in the year under review.
Your Company commenced manufacturing and supply of steel structurals for
power plants to a major customer from March 2010. In 2011, the output from
this unit is expected to gradually improve and reach break-even by middle
of the year. The demand in this segment appears to be significant and your
Company is likely to see steady improvement in the sales.
Your Company's performance in the current year is expected to be an
improvement over the previous year in terms of sales and profits. With the
steel cost increases being recouped from all customers, it is expected that
there would be less volatility in steel prices in the current year.
I would like to mention that it has been through team work and efforts of
the employees that your Company has been able to manage the difficult
operating condition during the year under review. We need to rededicate
ourselves for improvement in efficiency and reduction in cost to meet
I wish to thank the Company's bankers for their continued support. I also
wish to convey my appreciation of the good work done by all the employees
of the Company.
Speech delivered by
Shri. S. Ram