Wheels India Limited (NSE: WHEELS) Q4 2026 Earnings Call dated May. 15, 2026
Corporate Participants:
Srivats Ram — Chairman and Managing Director
P. Ramesh Srinivas — Chief Financial Officer
Analysts:
Ronak Mehta — Analyst
Vivek Gautam — Analyst
Sarveswara Sarma Venkata Chavali — Analyst
Rohan Ranteri — Analyst
Rajkumar Vaidyanathan — Analyst
Dev Mehta — Analyst
Chetan Falke — Analyst
Ankur Agrawal — Analyst
Shubham Jain — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Wheels India Limited’s Q4FY26 earnings conference call hosted by ICICI Securities. As a reminder, all participant lines will be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes.
I now hand the conference over to Mr. Ronak Mehta from ICICI Securities. Thank you. And over to you, Mr. Mehta.
Ronak Mehta — Analyst
Good afternoon everyone. On behalf of ICICI securities we would like to welcome you all to Wheels India Q4 in FY26 earnings conference call. Today we have with us from the management team Mr. Srivat SRAM, Managing Director, Mr. P. Ramesh and Chief Financial Officer. We’ll start the call with a brief opening remarks from the management team. And then we’ll proceed with the Q and A session.
Thank you. And over to you, sir. Thank you.
Srivats Ram — Chairman and Managing Director
Yeah. Good afternoon everyone and welcome to Wheels India’s Q4 and Q4 and full year earnings call. We have a presentation. I hope you can all see it as an overview. We are part of the TSF Group. The TSF Group was formed as part of the out of the family arrangement of the TVS group. We are about $3.2 billion in terms of consolidated turnover for FY25. The group is basically in auto components dealership and distribution and financial services. We have strong global connects across supply chains. And we believe in long term partnership customer for connect and focus and work and have very strong corporate governance and sustainability practices.
An idea of the companies in the group. On the manufacturing side we have Brakes, India Wheels, India Turbo Energy Axles India Sundam, Dynacast and Sundam Composites. In distribution we have Sundar Motors, Madras Auto Service and India Motor Parts and accessories. And in financial services we have the Sundam Finance Group. Vierjindia was established in 1960 and we are part of the TSF Group. We are listed company where the promoters have 58.31% of equity. And our value systems are relationships. Integrity, customer centricity and excellence.
Gives you some overhead of the products that we make. Tractor and earth mover wheels, aluminum and steel for cars and trucks. Windmill related components, Air suspension system fabrications and hydraulic cylinders. We also have a joint venture with Topi for making passenger car steel wheels for multinational car companies. We have 10 manufacturing units, 8,400 people and our turnover in the last. This 540 million is the reason. 540 Million is our Current turnover on. On the devalued rupee With 141 million of exports and we are a preferred OE supplier. Gives you some idea of the time frame in which we’ve entered various businesses. If you look at it actually after 2020 we have entered into quite a few businesses and it’s also. We are also consistent in terms of our. We are also consistent in terms of our strategy over the last few years. This gives you an idea of the products that we make. We have currently 10 manufacturing plants and these are key customers both in the domestic market and in the global markets.
We have, you know, been accredited not only by customers but also Ecovadis. I think currently the rating is gold. This is the previous rating of silver. On sustainability we are quite strong. We have a gold certification from CI Greencore as well and we’ve continuously win awards in these areas. Of course our customers. Acknowledgement from customers is most important. This gives you an idea of some of the customer awards that we have won in recent years. And of course these are some other awards both from customers as well as from the government and the industry body.
So briefly speaking, you know we have two. The way the company is organized, we have two segments. One is car, truck, tractor wheels, construction wheels and then you have fabrications, hydraulic cylinders and for the windmill sector we make both fabricated and machined parts as well as making doing machining of large casting. The air suspension division is really around trucks and buses. Few other points. We are one of the largest manufacturers of wheels for construction equipment and agriculture tractors in the world with about 20% market share in both.
And our subsidiary as I mentioned is for steel wheels for light passenger vehicles. So if you look at Q4 we had fairly strong growth, about 23% growth with 1,471.49 crores of sales and 400 crores of export. And if I look at the full year, we’ve crossed 5000 crores for the first time. About 16% growth compared to last year takes us to 5124 crores with 134142 crores of exports. This gives you some sense of the improvement. Revenue improvement in Q4 was 23% with a 45% improvement in PAT. Number of, number of factors, if I can just comment briefly, number of factors resulted in this performance in Q4 and also for the financial year.
If you look at it are as I said, almost 16% improvement in sales and our PAT is improved by around 30% 31%. Few factors to explain what has happened last Year a year of two halves. GST 2.0 turbocharged. The domestic industry and almost all the segments car, truck, tractor, even our suspension business got a big boost from that. Fortunately our exports have also been doing reasonably well and that also saw growth. So we actually had a lot of favorable tailwinds behind us last year. Added to that fairly stable commodity prices and relative lowering of interest rates over the 12 month period.
On the consolidated basis, if you look at it both on the quarterly side, on the quarterly side for the first time our consolidated part has exceeded 50 crores. We did 58.81 crores on 1573 crores of sales in the consolidation. Let me just explain. Major elements which are consolidated to the standalone are subsidiary wheel car Wheels which is a passenger car steel wheel manufacturer supplying the Indian auto market and also Axles India which is an associate company which makes axle housings for the commercial vehicle segment.
So really if you look at the console improvement over and above the Wheels India improvement the other major change was the subsidiary which two years back was loss making turned around last year and showed a good improvement. In the current year. On the segmental reporting our industrial component division while the growth in top line was 12% the EBIT improvement was 91% largely due to the fact that last year both the hydraulic cylinder and the fab division were loss making but in the fourth quarter of this year both of them were positive.
So basically that’s which resulted in a disproportionate increase in EBIT and on a consolidated basis for the year if you look at it it is more even keeled but really the fourth quarter was strong in that area. In terms of CapEx last year we basically spent about 261 crores towards CapEx which is both in terms of investment towards the windmill business, aluminium business and little bit of the off road businesses and some routine capex and cost savings totaling 261 crores and we expect in the current year it will be between 280 to 300 crores of capex.
Our debt has been stable to declining debt, equity has improved, debt to EBITDA has improved and free cash flows are reasonably strong especially when you compare it to the COVID period and immediate post. Here are some metrics that give you an idea of how we’ve worked together on a consolidated basis. Also the free cash flows have remained reasonably good. Our strategies and you know every time we make a presentation it’s essentially the same because we do believe we need to focus on strategy for at least five years before we look at reviewing it.
We want to grow export our means for construction equipment and agriculture tractors. We have made investments towards that. We are making progress, good progress on construction, started making progress on agriculture tractors, wheel export. We’ve ramped up main investments last year to ramping up machining of large castings for windmills. And that should rectify in terms of business this year. And we also stepped up, you know, both capacity and volumes for fabricated structures for windmills, including the offshore windmills.
Hydraulic cylinder business is a business that we will continue to look at growing. The aluminium wheel business is a business that we are ramping up. And the BASA suspension is a business which has grown well last year and will continue to grow and we’ll continue to invest there. Above and beyond that, actually what we have done reasonably well over the last few years is look at working capital management. We have substantially reduced our inventory and our debtors and have managed it in reasonable ways so that we enable free cash flows which allow us to make the investments that are required for our growth. So largely we’ve gone based on internal accruals, holding debt at around the same level and continuously work on cost optimization. As you can see, the results bear out in both the rows as well as the return on net worth.
Now that is briefly the presentation. I’m open to any questions that any of you may have. Look forward to the introduction.
Questions and Answers:
Operator
Thank you very much, sir. Ladies and gentlemen, we will now begin with a question and answer session. Anyone who wishes to ask questions may click on the raise hand option. You may also type in your text questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Please click on a raise hand option to ask questions at this time.
The first question is from the line of Vivek Gautam from GS Investment. Please go ahead, Mr. Gautam. I have. Yes, sir, Please proceed.
Vivek Gautam
Yeah, basically I wanted to know what happened to this company, such an old company and sort of was out of the radar for quite some time. What have been the trigger and what is the story behind the recent improvement and the numbers and are these numbers sustainable? And basically few background about the promoters also because visibility about the. Our company is slightly on the lower side somehow. Thank you.
Srivats Ram
Sure. So I’ll. I’ll. I’ll first tackle the first part of the question. Mr. Gautam. The promoters, the initial promoters of the company were the TVS Group. Now following the family arrangement, the promoters are the TSF Group. But essentially we are. We are from the erstwhile TVS group and the promoters, the shareholders. It’s a pretty much a promoter managed company with active involvement in the management of the company. If you ask me what has happened in the recent past. Basically post Covid we came out to the strategy as is there on the slide in front of you.
We basically worked on free cash flows and we identified certain areas that we believe that we can grow faster than the market because these are areas which we are relatively small or relatively new in and where we see the largest scope for growth because otherwise we were very much, you know, car, truck, tractor business and we will only grow as much as the industry grows. So we wanted to identify some segments that we can grow faster than market and that’s how we came up with this strategy. And really what you’re seeing over the last, I would say last two to three years. Two years really because it took us some time to come out of COVID the last two years consistently. We are sticking to our strategy and we have been fortunate also that you know fairly benign commodity prices over the last year and despite all the chaos which is around, you know, tariffs and all that stuff, we’ve been able to perform reasonably well. I hope that answers your question.
Vivek Gautam
Yeah, few question about these new second generation promoters also taking more interest Mr. Amshri Vatsa or sort of that is been there.
Srivats Ram
So I’ve been in the company for more than 30 years so I’m hardly a newbie but thank you. You are in the minority along with my mother who doesn’t classify as me as middle aged. I do appreciate that but yeah, I’ve been in the business for 30 years and so very much part and parcel of the business and I’ve been the managing director from. Maybe 15 odd years. So very much, very much in the seat. But yes, we refocused on strategy and that is probably the reason why we are doing well.
Vivek Gautam
Sir. Any impact of Middle east crisis and rising commodities crude prices and also on the tariff impact. The US market and EU FTA signing positive for us, sir?
Srivats Ram
Yeah, FDA is a too early to call West Asia crisis. Of course, you know we are like everybody else in India we are affected. The effect is basically one is fuel costs have gone up. Industrial fuel costs went up far ahead of what has happened for the citizens of the country. So we had increases even as far back as March. So we had fuel cost increase. Fuel availability was an issue. Fortunately now it is only inflation that’s an issue. Not so much fuel cost aluminium. We were buying major quantities from the Middle east so we had to resource and also Aluminum prices have gone up. So basically all commodities, steel, aluminum for us Steel, aluminium, paint, cutting tools, fuel, freight and manpower, all the elements have gone up. Some of them, you know, some of them, like material costs are. Normally there’s a pass through with the customer. The others will be negotiated. But given the reasonably high inflationary level of some of the factors of production, there will be some amount of pass through that will happen.
Vivek Gautam
Okay, sir, and sir, a few words about the opportunity size before us and the expected growth rate in time to come and our differentiators if you can highlight, because visibility also of our company needs to increase.
Srivats Ram
Yeah, See essentially as I say, we manage the company based on the values, relationship, customer centricity, integrity and whatever you do, do the best that you can. Essentially this is what drives decision making and we are driven by our customers to make improvements and we are just doing that and following the strategy. The opportunities were huge. Honestly, if we did not have West Asia crisis, I would have be more confident talking about projections and things like that. But currently, if you ask me, the visibility is about one month.
Much as we do make budgets for our boards and things like that. The visibility right now is fairly low because of the continuously changing environment. We are really a derived demand. With our demand coming from the automotive, truck, tractor and construction segments. We can’t throw any numbers in terms of growth. All we can say is that we are on the same trajectory. We are a small boat in a big river and it depends on how high the tide goes or how low the tide goes. So we will ride along with the economy as it happens.
Vivek Gautam
The opportunity size over two to three years remains large and expected growth rate can be 15, 20% over a longer time period, sir. But these crises are temporary. Hopefully some solution will come.
Srivats Ram
Yeah, I feel the effect of this may be there for a year at least. That’s what at least experts are saying. But yeah, without that, if you look at it, supposing there’s no West Asia crisis, we have lot of opportunities just riding on the points which we have here in front of us. So just these segments alone I think will give us enough of growth opportunity where we can definitely do, you know, double digit type of growth over successive years. So if you’re looking at a five year period. Yeah, definitely that’s something that we will look at.
Vivek Gautam
Yeah, I believe sir, you need to meet more companies, analysts participate in the analyst conferences also. So that such a good company of US visibility unfortunately in front of analysts is sort of low. Sir, if you can, that will really help us.
Srivats Ram
I I appreciate it. We are. I do recognize the fact that we are normally a bit low key but. Yes, your point is duly noted sir.
Vivek Gautam
Thank you sir.
Operator
Thank you. The next question is from Sudhir Kedia from Value Wise. Please go ahead. Mr. Kdr I have unmuted your line. Please proceed. Sir, I would request you to kindly check your connectivity and rejoin the queue. We’ll move on to the next question from Sarveswara Sharma Chavali, an individual investor. Please go ahead. Mr. Chawali, please proceed.
Sarveswara Sarma Venkata Chavali
Hello.
Srivats Ram
Yes sir, please go ahead sir.
Sarveswara Sarma Venkata Chavali
Yeah, yeah. Congratulations on good set of numbers. My question is regarding the hydraulic cylinder. Sir, this design is our own or we are procuring from anybody else sir,
Srivats Ram
No, by and large the design is worked on by us along with our customers. So customers basically have requirements and we basically look at designing cylinders to meet their requirements. In some cases the design comes from the customer. In some cases we design it ourselves. So we have both. Because if you look at the. On the global side of things very often we are coming in as a second source or third source or something like that. So there it’s an existing design. But you know domestic customers we design the cylinder ourselves.
Sarveswara Sarma Venkata Chavali
In general hydraulic cylinders are really great.
Srivats Ram
I’m sorry if I Can just complete.
Sarveswara Sarma Venkata Chavali
Yeah, yeah. We also
Srivats Ram
Have a technical agreement with a Korean cylinder manufacturer called SH Pack. Sometimes you get business also also through them and they will be.
Sarveswara Sarma Venkata Chavali
Hello.
Operator
Sorry sir, you are not audible. Yes sir, please proceed. You are audible now. Sir, please unmute yourself and speak. Shrivat. Sir. Sir, please unmute yourself and speak. We can hear you sir.
Srivats Ram
Yeah, yeah we are. We are waiting for the. For the investor to ask the question. I answered the question.
Sarveswara Sarma Venkata Chavali
Yeah, yeah. I thought you are continuing sir. Sorry. My. Another question is actually the seal kit is very critical part of a cylinder. Where from your getting sir, are you manufacturing or outsourcing these components? Sir,
Srivats Ram
So it varies sir. Actually no we are not manufacturing seal kits. In some cases we are buying from the authorized supplier for the oem. So the vehicle, the equipment manufacturer will specify the seal kit. In some cases like where we are working with a Korean partner we get the seal kits from them. So typically depends on the customer. The customer very often also specifies the circuits.
Sarveswara Sarma Venkata Chavali
Thank you sir. Thank you very much.
Srivats Ram
Thank you.
Operator
Thank you. We’ll take the next question from Sudhir Kedia from Value wise. Please go ahead. Mr. Kdr please unmute yourself and proceed. Sir, I’m sorry there was no response. Again I would request the participants to also type in their text questions and in case you have any audio questions, please raise your hand. We’ll take the next question from Rohan Ranteri, an individual investor. Please go ahead.
Rohan Ranteri
Hi, good afternoon. Thank you for taking my question. Am I audible? Yes, we can hear you. Please go ahead. So my question is around, you know, you all have increased your stake in Excels India where you all also have, you know, some synergies in the business. But at the same time there is a lot of, not a lot, but a reducing amount of debt on the Wheels India balance sheet. So what is the reason for, you know, using, instead of reducing debt, using, using money to increase the stake in Axles? So what is the capital allocation decision? Just wanted to know more about that and how, you know, the future value unlocking can happen for investors.
Srivats Ram
Yeah, so essentially, you know, when Axles India was promoted by Wheels India, when it was started, there was capital from Wheels India, Sudham Finance at that time and then Eaton Corporation. These were the founding promoter companies because Eaton then became Dana Sundam. Finance became TSF Investments. Wheels India took, reduced their stake in Axles India because Wheels India got a joint venture partner who was not necessarily friendly to outside investments. So that is the reason why our stake in Axles India came down.
Subsequently, after Covid, we bought out our joint venture partner in Wheels India and Axles India has now also subsequently bought out the joint venture partner. So the idea was that if Wheels India can improve its stake. So we’re looking at maybe something like 15%, maybe slightly higher, 20, 25% over a period of time. But yes, there are synergies between the companies. So it’s not unreasonable to say that at some point or the other there may be a way of, you know, making the companies closer together.
Rohan Ranteri
Okay, I get. Okay, thank you. Thank you. One more question that you were guiding for, you know, a double digit EBITDA at some point in the future. But with the headwinds that you mentioned, do you still think it’s a realistic number for maybe the next two years?
Srivats Ram
Yeah, with headwinds, you know, you have to put your head down and move forward. So I guess we’ll have to do that. But at the same time, you know, we do feel that the strategy, actually the, the double digit part of it will happen from strategy and from businesses which are losing money to become faster. So I think as and when that happens, I think we’re probably, you know, two years away, one or two years away from double digit ebitda. I don’t think it should take longer than that.
Rohan Ranteri
Okay, thank you so much. Thank You.
Operator
Thank you, sir. The next question is from Rajkumar Vaidyanathan from RK Invest. Please go ahead.
Rajkumar Vaidyanathan
Yeah, good afternoon sir, can you hear me?
Srivats Ram
Yes, go ahead.
Rajkumar Vaidyanathan
Yeah, thanks a lot for the opportunity. So, just few questions. So the first one, you know, just extending the question from the previous participant. You mentioned that you are looking at double digit EBITDA. So currently you’re at about I think 8 and a half percent if I’m correct. So yeah, just sort of
Srivats Ram
Just short of 8% the whole year.
Rajkumar Vaidyanathan
Yeah. So that’s a, that’s a big leap, right, if you’re looking at a double digit number. So you said it’s, you’re looking at in next two years, is that, is that what you mentioned?
Srivats Ram
Yeah, I think in the next couple of years. Because it also depends on how this, how the economy is affected by this West Asia crisis, for how long it lasts and all that. But yeah, barring that two years is probably what it should take.
Rajkumar Vaidyanathan
Okay, so in other words, you are saying if, if volumes happen then the operating leverage will help you to post better EBITDA numbers. Is that, is that the correct. My understanding is correct.
Srivats Ram
Correct.
Rajkumar Vaidyanathan
Okay. Okay, got it, sir. And this slide that you are showing on Rosie and Row, that’s a good slide, sir. So, and it’s very nice to see that you have already hit the return on net worth of more than 15%. Kind of. I asked in the previous call. Yeah, so, and mentioning the slide that these, these are expected to improve. So can you give some more color as to how much you are expecting this day?
Srivats Ram
I, yeah, it’s, it’s very, very difficult to call out a number. But you know, I would look at our rows being 18 plus. I would look at our return on equity to be 15 plus. The rest of it is it’s not like, no, no, it’s not like we’re working towards a target that we’re working towards a target in terms of where we want the company to be, what we want the profitability to be. And these are more byproducts, these are more ratios which are byproducts of that. But yeah, we’re very close to, you know, what we would call as a comfortable area. But there are headwinds so we will have to do significant amount of work to fight the inflation in the current year. And also judging by the investor calls of our customers who are also known to your community, they are not super positive about the immediate future. So, so we’ll also need to be slightly cautious, bearing in mind that we supply to them. And so their forecast is more relevant to us.
Rajkumar Vaidyanathan
Okay. Okay. So you would expect to maintain this return of equity of almost. We already hit 15.5 in 25, 26. So you would probably kind of be in this level for a couple of years before you kind of improve further.
Srivats Ram
We hope, you know, God willing. Lot of it is dependent also on how the external factors play. Assuming nothing too adverse and assuming that the Indian economy continues to move at a you know, reasonable rate of growth. I think that’s a. That’s a reasonable assumption.
Rajkumar Vaidyanathan
Okay. Got it sir. And lastly one housekeeping question. Sir. In the cash flow I see almost 26 crores of you know, line item against provision for bad debts. Visa we. Almost 2,3 crores for the previous year. So any reason for the spike in the current year?
Srivats Ram
It’s not a provision for the bad debt. 26 years, Mr. Rajkumar.
Rajkumar Vaidyanathan
Yeah.
Srivats Ram
Yeah. So can you just say it again?
Rajkumar Vaidyanathan
I mean there is nothing like a provision of 26 crores for bad debts in the Cash flow.
Srivats Ram
If you see provision for inventory and doubtful debts. 26.16. Okay.
Rajkumar Vaidyanathan
The. The inventory provisions are higher. Okay. Though it is grouped together and inventory provisions are higher because company has adopted a more stringent rule for provisioning. As a consequence, the provisioning for inventory has. Has been higher in this quarter as well as for the whole year.
Srivats Ram
Okay. Mr. Rajman, we followed a principle where we look at, you know, very similar to an ECL applied to inventory where you know, we currently have a policy where after three years the inventory is completely provided for. But you know, followed something where after six months, after one year, after one and a half years there’s a gradual phased provisioning. So this is a policy that we kind of introduced in the third quarter of. Of FY26. And that is kind of what is reflecting in this lot of. It will be, you know, like a one time hit.
Subsequently as you convert that inventory to sale value you. It will reflect in the profitability. It’s a. It’s a conservative view that we’ve taken in terms of inventory management. Largely driven by the fact that we also want to improve our cash flows. And to signal to the businesses that they need to control the inventory we have introduced this provisioning.
Rajkumar Vaidyanathan
Oh, got it, sir. And sir, I have one more question. Can I go? Can I ask?
Srivats Ram
Yes, please. Okay.
Rajkumar Vaidyanathan
So the question is this. We saw significant rupee depreciation in this quarter. So I just want to know how much upside we got due to that. And also on the steel prices also it kind of increased in the last quarter. So. So any timing difference on that you would have held. I mean, you know, you must have had a low cost inventory. Is that helping you in terms of better margin this quarter?
Srivats Ram
Mr. Rajkumar? I only wish that was true. Unfortunately the steel people are lot smarter than us. So they don’t allow us to run up high inventories ahead of the increases. So we don’t really get a benefit from that by and large. Yes, if there’s a significant increase in steel price normally there will be some impact in the immediate quarter. But we don’t think that over the longer term we are able to get a complete pass through on material cost. I don’t think that’s an issue. On the currency side. While you may get immediate benefit of any sudden devaluation of the rupee, there’s also process of sharing currency gains with customers over a longer term. There’s a lag effect in terms of that. So you don’t actually get any sustainable advantage from devaluation.
Rajkumar Vaidyanathan
Okay. So this quarter since we saw a significant deposition. So is it fair to assume that some, some margin upside we are seeing due to that as well.
P. Ramesh Srinivas
Devaluation of rupee had an impact in marginally on the overall profitability. But we also import and we also have some forward covers because we don’t know which side which direction the rupee would go. So it is not that entire devaluation would come as a bottom line thing. So yeah, so we in fact in the current quarter we had a profit of about 4 crores as a net thing on the forex And For the whole year it is about close to 10 crores as the forex.
Rajkumar Vaidyanathan
Yeah. Thank you so much sir. And I’m looking forward to Wheels India getting to WG debit in the years to come.
Srivats Ram
Thank you for your patience, Mr. Rashmi.
Operator
Thank you. The next question is from the line of Dave Mehta from Unique pms. Please go ahead.
Dev Mehta
Yes sir. Am I audible?
Srivats Ram
It’s very feeble. Can you increase your volume sir?
Dev Mehta
Hello. Is it better now?
Srivats Ram
Yeah, yeah, much better. Please go ahead.
Dev Mehta
Yeah. So I just wanted to check whether we have a non core land bank with us.
Srivats Ram
Yeah, we don’t have a non core land bank. Do we have a land bank where. Which we are currently not occupying? Yes. But is there a plan to occupy it in. In the medium term? Yes. So we don’t have any spare land as to say that we. We have land that we don’t know what we want to do with. There’s nothing they do
Dev Mehta
Fair Enough. So we don’t have any plans to monetize that, right?
Srivats Ram
No neutral.
Dev Mehta
Okay. And sir, with respect to export, as a split of our total top line, what are we going, going to see in FY27 or FY28? Any direction on that?
Srivats Ram
Yeah, our exports we expect will continue to grow. So if you look at last year it was 26% of our sales. Last year we had very strong domestic growth. So despite the strong domestic growth we were able to grow our export From 25% to 26%. So I would say that there will be growth in FY27 but probably more growth in FY28.
Dev Mehta
Okay, fair enough.
Srivats Ram
But It’s very difficult because geopolitics and all that is happening. So our customers are affected by that. But as of now it looks reasonably okay unless things deteriorate.
Dev Mehta
Fair enough. And sir, if you can just quantify the acres of that non core land and also maybe current market value per acre.
Srivats Ram
I don’t know the market value of the, of the land but the land is about 30 acres on the Chennai Bangalore highway.
Dev Mehta
Okay. Okay, got it. Yeah. Thank you so much.
Operator
Thank you. The next question is from Chetan Falke from Tirthan Capital. Please go ahead.
Chetan Falke
Yeah, good afternoon and thank you for the opportunity. Sir, over the last three years we have done capex in various divisions like wind machining, even our number two plant and everything. So with this capex falling in place, what is the optimum revenue potential of the company? Let’s assume what we utilize our existing assets to its fullest.
Srivats Ram
Yeah, you need to make some incremental investment. But you know, I think I answered this question in the last, the last investor call. If I, I don’t, I don’t recall exactly But I think 6,000, 6,500 crores or so is what we said. But we will continue to invest. So I would probably say about 6,000 to 6,500 crores goals. Some of the areas like, you know, notably cast aluminum wheels, we need to add more equipment so that we maximize on certain, you know, like paint plant and utilities and things like that. But yeah, I think something like that is clearly visible out of existing investments and existing plant. No new plant, that is no new site.
Chetan Falke
Okay. Okay. And sir, with respect to our expansion in global markets or exports per se, a lot of these European or Japanese companies are looking for, you know, Indian partners or JV partners either to enter India, manufacture from India and then support their global operations or either help them, you know, manufacture globally as well. So any of such Opportunities which are opening for us or what’s happening on that front, if you can.
Srivats Ram
We are, you know, we are actually already in that. For example, if you take the windmill industry, most of our supplies, most of our supplies go to European manufacturers who have module assemblies in India which are exported. We also supply to Europe directly. We as a matter of fact do an assembly in Denmark to supply some of the customers there are. So it is especially for the windmill business, you know, Europe is a big part of it. We have European customers also on the automotive side. So it is definitely something that is part of our strategy and I do believe that we have some amount of alignment with some of those customers going forward as well.
Chetan Falke
Okay. Okay. Because last year I think we formed a subsidiary, a German subsidiary. So I was just wondering, I mean if you can just help us understand what’s happening there or what are the thoughts on that. Yeah,
Srivats Ram
So currently it is more, you know, sales, marketing and support type of functions which are coming out of the sub. We also have a subsidiary in US and US also recently we are appointing a country manager and we believe that by having a local presence we can also generate more business. So that would be probably going forward the way would be initially doing that. But there is pressure also to have, you know, as they call it, India plus one manufacturing strategy. And we are contemplating whether it’s possible to in a cost effective way add capacity in those geographies more to answer de risking questions that the sourcing guys ask us.
In some cases we are collaborating with other manufacturers in other countries where we are each other’s, you know, de risking source. But in some cases we may have to set up capex at some point of time overseas. It is not part of the CAPEX that I mentioned here. But at some point we may have to do that and if we do that, we will do it in a cost effective way so that it makes financial sense for us.
Chetan Falke
Okay. Okay. And sir, if you can talk about a bit on our cost controls or changes in cost structure going forward, any relocation of our manufacturing facilities from high cost to low cost locations or anything. Because most of the margin expansion from what I hear is going to come from the volume growth or revenue growth, but any, anything on the cost side that will also contribute to this margin expansion.
Srivats Ram
Yeah, we are looking at consolidating number of plants. We, we have suspension. So for example, in the air suspension business we had two plants. We bought some land next to one of the existing plants and moved the second plant into this plant so that we get savings Otherwise we were paying rent in that facility. So we are open and are looking at opportunities where we can move out of rented facilities into owned facilities. And by and large we will look at consolidation of plants to the extent possible unless there is a cost. There is a site which improves our cost structure and opportunities by being in that site. Either it is customer facing and so you get additional business because of it and or you get cost savings in terms of freight cost by being there.
Chetan Falke
Okay, got it sir. Thank you very much and wish you all the best.
Srivats Ram
Thank you.
Operator
Thank you. The next question is from Ankur Agrawal from RC Business House Private Limited. Please go ahead. Mr. Agrawal, please proceed.
Ankur Agrawal
Hello. Hello.
Srivats Ram
Yes, Please, Please Go ahead. Yeah.
Ankur Agrawal
Sir, as you said, double digit margin within next two year. So what is the top line in that time frame? How much
Srivats Ram
Top line will depend on how they see. Top line will depend on two things. One, it will depend on commodity prices because if the steel price and aluminum price goes up, our price also goes up and that pushes up top line. Second thing is it depends on how the Indian economy grows. See, we’ve been very fortunate that you know, the last two years we’ve had almost 7/ percent growth in the Indian economy, fairly strong growth in India vis a vis the rest of the world. Now with this West Asia crisis, how much growth will actually happen this year in India and how will it be next year will actually determine how we grow because we have very much a derived demand. Our customers depend on the economy growing for them to grow. So we will grow as and when the economy grows. So it’s very difficult to put a timeline because I don’t, I think even projections for India’s growth, every month there’s a different number which is being thrown up by the experts.
Ankur Agrawal
Okay. And sir, your top line growth from the for March quarter is 15% but other expenses grown by 40%. Can you throw some light on it?
Srivats Ram
Yeah. So other expenses growth is really, you know, the other, Your other colleague, Mr. Had asked this question. We’ve actually made a very fairly aggressive provisioning on inventory where we are doing a kind of phased inventory provisioning where inventory which is more than six months, there’s a certain amount of provision. More than one year provisioning is so, so much more than one and a half years, more than two years. So we have a phase provisioning. It is more a one time provisioning. It is not as if all this is bad inventory but as and when those get converted it will add to the profit of the company. But we want to actually drive inventory reduction within the company. And that is actually the reason why we have this aggressive inventory provision
Ankur Agrawal
That means next quarter that other expenses will not like that.
P. Ramesh Srinivas
Yeah, yeah, please see I am Ramesh here. See apart from this there are other reasons for the other expenses increase because from the 1st of January CBAM was introduced in Europe. So one of our products which we export to Europe has a CBAM tax liability which is provided and it is grouped under other expenses. And the other thing is that we also have an assessment of the fixed assets and some obsolescence have to be provided which is again a one time impact which is also providers. He’s talking about other export. So these are some of the major thing. And we have also provided for certain warranty expenses for the our windmill business in Europe. So which or some of these are one off and some of this could be coming in the subsequent quarters to a lesser extent
Srivats Ram
Like CBAM will continue because as and when we make exports to Europe we have to make the provision for cbap.
Ankur Agrawal
Okay. And can you share the breakup industry wise how much your sale from personal vehicle and from commercial vehicle and tractor industry?
Srivats Ram
Sure, we can do that. Would you like it for fourth quarter? You want for full year
Ankur Agrawal
Fourth quarter.
Srivats Ram
So fourth quarter CV is 22%. Tractor is 16%. Passenger car if I include 11. Yeah, yeah. 14 to 15% is passenger car construction. Construction wheels is 17%. Fabrication is about 14%. Cylinders 5%. Air suspension is 10%.
Ankur Agrawal
Okay then where we see the growth from which industry more
Srivats Ram
It depends on which industry grows. Because you know, honestly last year Even in the first half we never expected industry to grow in the second half. The government intervened with GST 2.0 and suddenly everything took off and even our customers. Now if you look at Tatas or Mahindas who have both been in the news recently, they’ve been very guarded about the growth in the coming year. So we’ll be kind of governed by what they do. So as they grow, we will also grow.
Ankur Agrawal
Well, thank you. That’s all from my side.
Srivats Ram
Thank you sir.
Operator
Thank you. We’ll take the next question from Shubham Jain from NB Alpha Fund. Please go ahead.
Shubham Jain
Am I audible?
Srivats Ram
Yes Mr. Jain, go ahead.
Shubham Jain
Thank you so much for the opportunity. I had two questions. My first question was on the windmill business for which we’ve invested about 90cr in terms of capex. Just wanted to understand how big can this business be for us in the next couple of years? What’s the kind of tailwinds we’re seeing in terms of Outsourcing more to India in this piece of the business specifically.
Srivats Ram
Yeah. So there are two parts of it if you look at the 90cr investment. First of all you have to understand sir that the investment made like last year will come into play only this year. There’s a lag because the equipment is all fairly huge as I mentioned even in the last meet. So it takes about 12 months really for the equipment to come and with commissioning maybe 12 to 15 months. So we do feel that in the machining side of the business there is lot of opportunity which is there. We are co located with a large casting manufacturer so we are working along with them of course with the windmill customers but also looking at other segments which require such large machine castings.
And we believe that that company is currently doing about say 3,500 tons a month and they believe that over a three to four year period they’re going to 10,000 tons a month. It’s a conversion business. So the profit is, you know, much better than the wheels India profit profile because it’s on conversion. Sorry, sales. Sales value will be less because it’s conversion. Not. Not material. Yeah,
Shubham Jain
Understood, understood. So just a follow up on this. The company that you mentioned which we co located with has done a massive expansion or in December 25th. So like you mentioned, in this three four year period they will go to three and a half thousand to ten thousand. Are we the sole supplier for the machining? Part of it
Srivats Ram
About, let me say about 85 to 90% is us.
Shubham Jain
Got it? Understood.
Srivats Ram
Please go ahead.
Operator
Yes sir. So give me a moment please. Let me check. Sir, I would request you to kindly rejoin the queue. Mr. Jain, please rejoin the queue. We’ll take the next question from Chetan Falke from Tirthan Capital. Please go ahead.
Chetan Falke
Yeah, thank you for the opportunity again. Sir, Siri just mentioned that we have some excess land on Chennai Bangalore highway. Though we don’t have any plans to monetize it. I get that. But just one small query. Is it a urban land and is it viable for manufacturing in future if at all?
Srivats Ram
No, no, it is, it is. And we are on, we are on a lot of rented premises. So the, the long term plan is to you know, reduce our engagement in rented facilities and move into an own facility and consolidate operations from a number of different sites to one site so that we get both scale and efficiencies. So that is kind of what that land parcel is kind of earmarked. We’re not planning to do it this year and even if it happens, it Will happen in a phased manner as their ongoing sites that have to be relocated here.
Chetan Falke
Okay. Okay. So this will be more for internal adjustments or internal use case this particular island passes.
Srivats Ram
Correct.
Chetan Falke
Okay. Okay. Okay. And sir, I think amongst our many manufacturing locations the Chennai party locations from what I understand is a pretty old or a high cost location. Any. Any plans were there for that relocation of that facility?
Srivats Ram
Not at the moment.
Chetan Falke
Okay, sir, sure. That’s it from answer. Thank you.
Srivats Ram
Thank you.
Operator
Thank you. Sir, can we take one more last question for today?
Srivats Ram
No, definitely.
Operator
Okay. Ladies and gentlemen, this will be the last question for today from Rajkumar Vaidyanathan from RK Invest. Please go ahead.
Rajkumar Vaidyanathan
Yeah, so can you hear me?
Srivats Ram
Yes, go ahead.
Rajkumar Vaidyanathan
Yeah sir, thanks for the follow up. Sir, just two questions. So I just want to know what is the CAPEX plan for financial year 2627 and what is the guidance on the finance cost? These two numbers
Srivats Ram
On the. On the finance cost as. As in interest rate or what? I didn’t understand the second the value
Rajkumar Vaidyanathan
Absolute. Well I think you were in finance is almost straight line compared to last year. It’s more or less same number.
Srivats Ram
So two things. One is the capex approved for the board is about 280 crores at the moment. And on the. On the finance cost maybe Ramesh, you can answer. But one of the things is also depend on what happens to the RBI interest cost. They have not made any change at the moment. Given the inflation we have to see what happens. So there’s just a. You know, a caution on the interest cost. But Ramesh, you can go ahead.
Rajkumar Vaidyanathan
Thanks. See the present interest cost is around 26, 27 crores a quarter totaling about 110 crores for the whole year. And I mean our operations are expanding and we are able to hold the interest cost broadly at the same level. There was an inflation of about less than 2%. But you know you. If you see the recent news there is a. There is a lot of people who say that on the June 5 meeting MPC meeting there could be a report rate increase. So if there is a report rate increase then probably to that extent it will have an impact. But I mean at least I don’t see that as a major impact. But it would marginally kind of push up our interest cost from the present level of unwanted crores. It could marginally go up. Okay, okay. No, but it is nice to see that the finance cost is kind of remaining steady state despite you know, good increase in your turnover. So is it due to better working capital management or what is driving this? Yeah, we’ve,
Srivats Ram
Yeah, we’ve reduced, you know, we’ve, we’ve reduced all elements. We’ve reduced the inventory I think from 76 to 56. Yes.
Rajkumar Vaidyanathan
Yeah,
Srivats Ram
Just, just one, one second Mr. Rajma, let me give you actually correct numbers.
Rajkumar Vaidyanathan
So we, we’ve
Srivats Ram
Reduced our inventory from, from 76 days to 63 days. We reduce our data days from 61 to 54 and the creditor is, you know, pretty much the same.
Rajkumar Vaidyanathan
Okay, yeah, that explains. Yeah, it’s really nice to see all the cylinders are firing, sir. Very nice,
Srivats Ram
Thank you. I think good fortune, God’s graces, little bit of luck.
Rajkumar Vaidyanathan
Okay, sir. So all the best for the next year, sir.
Srivats Ram
Thank you.
Operator
Thank you, sir. So we have few text questions. I’ll just read out them. You can quickly answer them as well. We’ll take two to three text questions. The first question is from Ajit Darda from Nirzar Enterprises. And the question is considering good cash flows and multiple tailwinds in the industry like GST 2.0, are we considering any inorganic or organic expansion in our business?
Srivats Ram
Yeah, organic Expansion is the capex that we’re doing on the inorganic expansion. Not immediately but I did mention that, you know, if we are looking at overseas, if you are looking at an overseas location in the, you know, medium term, we would either look at Greenfield or we’ll be open to Brownfield as well which would be, you know, acquisition.
Operator
Thank you sir, but it’s not an immediate.
Srivats Ram
Sorry,
Operator
Please proceed. Yeah,
Srivats Ram
Oh you go ahead, I’m done.
Operator
Sure sir. Thank you. We’ll be taking the last text question from Nishit Khatri from Aureus Capital and the question is what is our current capacity in steel and aluminum wheels and what can be the capacity going forward,
Srivats Ram
So on. So it, it varies from segment to segment. So let me give you a sense of, of the way we count it. So if we take passenger car, steel wheels between us and our subsidiary, if I look at it combined, I think wheels India has got a capacity of about, about 4 million and the subsidiary has got a capacity of about 7. So about, you know, 11, 11 to 12 million is a capacity. We are adding capacity in the subsidiary so it go to maybe 13 and a half to 14 million. So there’s armor expansion there. We are trying to also, you know, add capacity in a way where it’s flexible to make multiple products because we don’t know which industry will go up, which industry will come down.
So to that degree I think even on the tractor side, so they take the tractor industry, if you count it in terms of the larger wheels as opposed to the smaller wheels, we have a capacity of lakh and 50,000amonth and we’ll probably increase that by maybe 10, 15%, but largely through, through, you know, productivity improvement and things like that. Commercial vehicle space, if you look at it, we have a capacity, including the light commercial vehicle, if you look at it, we have about 250,000 capacity and we’ll probably look at increasing that to, you know, 300,000 capacity. Aluminum wheels, we. So in aluminum wheels we currently have a capacity of about 40, 40, 2000 Per Month. We are increasing it almost in a couple of few months we are increasing it to 60 and then by half year we’ll increase it to 80 and we are contemplating whether we need to increase it to 100 or 120 in the next year. So broadly and on construction wheels we have a capacity. On the medium to heavy duty, we have a capacity of about 16,000 wheels, we will not really add capacity, but just do productivity improvement. In the light construction wheels we have a capacity of about 25 to 30,000, depending on the mix. This broadly covers in all capacities.
Operator
Thank you, sir for answering all the questions. Ladies and gentlemen, as that was the last question for today, I would now like to hand the conference back to the management for closing comments. Thank you. And over to you, sir.
Srivats Ram
Thank you. Thank you all for joining the call. You know, we have personally learned a lot through the, through our interactions with you and it is something that we look forward to. Of course, this time we had good results, so it made for a decent interaction. But we always look forward to feedback from investors who can probably guide us and highlight areas for improvement that we haven’t thought of already. We are fairly consistent in the way that we work and we will continue to make investments so that we can grow our company. At the same time work on our core competencies to see how we can take it forward on a constant strategy that we have spelled in front of us. Thank you very much and look forward to our continued interactions. Thank you.
Operator
Thank you, sir. Thank you members of the management, on behalf of ICICI securities limited that concludes this conference. Thank you for joining us and you may exit the meeting now. Thank you.