Automotive wheels manufacturer and designer Steel Strips Wheels delivered a good set of numbers in the first quarter, albeit on a low base with operational performance seeing a sequential improvement. The year-on-year revenue was up at Rs 678 crore versus Rs 120 crore and EBITDA was at Rs 98 crore Rs 2 crore. Margins were up at 14 percent versus 2 percent year on year and the reported net profit was Rs 51 crore versus a loss of Rs 38 crore, in the same period.
To give us the fine print and the outlook going forward - we are now joined by - Dheeraj Garg, the managing director of the company. The debt for the company stands around Rs 850 crore and Garg said that the target is to reduce by around Rs 200 crore this year.
"This would also assume we would to some capex for acquiring a company which is under NCLT. Assuming all that and given that we target to do Rs 450 plus EBITDA, we should be looking at reducing our debt by Rs 200 crore,” Garg elaborated.
Steel Stips is planning to come out with a dividend policy by the end of its calendar year and is also planning a similar debt reduction next year. "In FY23 also we should see a similar reduction in debt but don’t plan to do extra capex on steel wheels business as of now, so you should see a further reduction of Rs 200 crore in FY23 the term debt. All in all, we are a descending curve in terms of reduction in long-term debt,” said Garg.
Garg said the company is positive about the company's growth plans. They are confident of delivering Rs 300 crore plus revenues and EBITDA margins to remain around 15 percent if raw material prices remain stable. "Exports are going well, the margins too are healthy there. So, the company hopes to do 28 percent of sales in exports. The alloy-wheel business is also expected to do well," he said.
Steel Strips is also planning an acquisition to increase its global footprint.
"Post this acquisition the company plans to be very aggressive," Garg said, adding that they are already at no 2 in the world as a steel wheel producing company and soon aim to be no.1 post the acquisition.For the full interview, watch the video