South Korean conglomerate GS Global Corp is picking 2.5% stake in automotive steel wheel manufacturer Steel Strips Wheels Ltd (SSWL) for Rs 22.4 crore(~$ 4.9 million). A two decade old company, SSWL makes wheels for passenger cars, multi-utility vehicles, tractors, trucks, OTR vehicles as well as 2 & 3 wheelers in its two production facilities in Dappar (near Chandigarh) and Oragadam (near Chennai).

GS Global, a $ 130 billion giant has interests in steel trading, petrochemicals, real estate among other businesses and the investment in SSWL will allow the Indian company to source competitive steel and also to develop high strength steel with their principals. SSWL would also look to source technology for its future projects through them(GS Global) it said on Tuesday.

SSWL has a total capacity of 10 million wheels per annum in its two existing plants and the third facility that has just been inaugurated and is designed to produce truck wheels in Jamshedpur will expand capacity by 10% initially.

This plant’s capacity will be doubled to 2 million wheels in mid-2011 with its main customers being Tata Motors and Ashok Leyland besides export markets in Japan and Europe.

In September the company had said, to cater to the fast growing demand of steel wheel rims in both exports and domestic market, it is also increasing the capacity of its Chennai Plant by 4 million wheels by March 2011.

For the fiscal ended March’10, SSWL had revenues of Rs 419 crore with net profit of Rs 14.35 crore.

SSWL competes with the likes of Wheels India that is almost three times bigger in revenues but has much lower margins. This probably explains how Wheels India has almost half market capitalisation compared with SSWL.

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