Wheels India
A TVS group company, Wheels India is a leading supplier of steel wheels for cars, commercial vehicles, tractors and mining/construction vehicles. Its numbers for Q3FY14 have been disappointing. YoY, its net profit halved down 54% at Rs.4 crore and this was on the back of a 4% drop in net sales at Rs.386 crore. Though the company managed to keep a lid on its expenses, its gargantuan interest expense at Rs.14.5 crore and tax outgo of Rs.3 crore pushed down the bottomline further. Net profit at end of 9MFY14 stood at Rs.20 crore and it would require an exceptional quarter with robust demand to push it above FY13’s net profit of Rs.32 crore. The company’s equity is pretty small at Rs.9.87 crore. Reserves as at 31st Dec’13 stood at Rs.249 crore. Typical of south based sound companies.
Finally, the company has decided to pay heed to SEBI’s minimum holding norm. As at 31st Dec 2013, promoters stake stood at 91.44%, in fact it had gone up from 85.62% at end of Q4FY13. Titan Europe holds 41.73% stake while the TVS group holds 49.71%. Floating stocks, which is non-institutional is only 8%. The company in Dec’12 had planned to revisit the capital market with an IPO of Rs.100 crore, 37 years after its first IPO in 1975 and this was also aimed at bringing down its holding to SEBI’s minimum threshold. This did not happen due to poor market conditions and it has thus decided to come with a rights issue at a nearly 50% discount to the current market price of the share. To be issued at Rs.400/share, issue ratio would be 51 equity shares for every 20 shares held by eligible shareholders as on the record date. The company would be offering 21,62,835 shares as part of the rights offer. Promoters and promoter group shareholders would forego their rights entitlement, as allowed by SEBI rules.