Steel Strips Wheels has received a Show Cause Notice from the Office of the Principal Commissioner of Customs, Custom House, Mundra Port, alleging violations of Section 65 of the Customs Act, 1962. The customs department has accused the company of unlawfully availing Duty Drawback and RoDTEP Scrips for exported goods between November 9, 2023, and July 8, 2025. The notice demands a response within 30 days.

The authority has alleged that the company availed Duty Drawback claims worth ₹1,37,80,184 and RoDTEP Scrips worth ₹32,38,451. Additionally, an amount of ₹13,13,752 in RoDTEP scrips remains unutilized by the company to date. The customs department has proposed penalties under Section 113, Section 114(iii), 114AA, and 117 of the Customs Act, 1962, though the specific penalty amount has not been quantified in the notice.

Financial Implications

Steel Strips Wheels disclosed that it has already deposited the Duty Drawback amount of ₹1,37,80,184 and the RoDTEP amount of ₹32,38,451 along with applicable interest prior to the issuance of the Show Cause Notice. The company stated that as of now, it does not expect any financial liability arising from the matter.

Company Response

The company is currently evaluating the Show Cause Notice and plans to submit a detailed reply to the authority within the prescribed 30-day timeline. Management stated that while the principal amounts and interest have been paid to avoid litigation, the exact financial implications cannot be determined until the completion of the proceedings. The company affirmed that there shall be no impact on its operational or other activities at this stage.

Steel Strips Wheels has provided financial guidance for FY27, targeting an EBITDA of INR 650 crores with an upward bias, driven by near-full capacity utilization. The company expects PAT growth of 15% to 20% for the year, supported by robust domestic demand and a recovery in exports. Management outlined these projections during its Q4FY26 earnings conference call held on June 2, 2026, where it also detailed expansion plans for its new Bhuj facility.

Financial Guidance and Performance

For FY27, the company projects EBITDA per wheel to reach approximately INR 300, compared to INR 272 in FY26. Total EBITDA is expected to be around INR 650 crores, with potential to reach INR 700–750 crores in FY28. The guidance assumes 95% utilization of steel plants and almost 100% utilization of all commissioned assets. Export revenue is anticipated to recover to INR 600 crores in FY27, which would be the second highest in the company's history, aided by rationalized tariffs and diversified market access.

Expansion and CapEx Plans

The company is executing a INR 500 crores CapEx plan at its new Bhuj facility to manufacture aluminum wheels and knuckles. The facility will have a capacity of 1.2 million units for aluminum wheels and 1.1 million units for knuckles. Trial production is scheduled from October to January, with significant utilization of 70% or higher expected in FY28. At full utilization, the facility is expected to add INR 700–800 crores in revenue. To fund this expansion, debt is projected to increase by approximately INR 200 crores in FY27.

Operational Outlook

Management highlighted the EV segment, particularly scooters and 3-wheelers, as a key growth area, guiding for 25% to 40% growth. The company holds a near-monopoly supplier position for EV scooter wheels. Additionally, brownfield expansion in steel wheels will increase tractor capacity by 15% to 20% OTR, with new paint shops and rim lines expected to come online around October to December. The company confirmed that no unpublished price sensitive information was shared during the interaction.