Steel Strips Wheels has announced plans to expand its manufacturing capacity by establishing a new alloy wheels production unit in Gujarat. This expansion represents the company's strategic move to strengthen its position in the automotive components sector.

Expansion Details

The company plans to set up a new alloy wheels manufacturing unit in Gujarat, which will add to its existing production capabilities. This facility expansion is expected to enhance Steel Strips Wheels' capacity to serve the automotive market.

Subsidiary Agreement

As part of its operational restructuring, Steel Strips Wheels has executed a lease agreement with its subsidiary AACL. This agreement appears to be aligned with the company's expansion plans and operational optimization efforts.

Conclusion

The planned Gujarat facility addition demonstrates Steel Strips Wheels' commitment to expanding its manufacturing footprint in key industrial regions of India. This expansion initiative underscores the company's focus on growth and its efforts to meet the demand in the automotive sector. The strategic decision to set up the new unit in Gujarat may potentially strengthen the company's market position and production capabilities in the alloy wheels segment.

Steel Strips Wheels Limited has entered into a significant lease agreement with its wholly owned subsidiary AMW Autocomponent Limited (AACL) to establish new manufacturing capabilities in Gujarat. The transaction involves leasing an entire manufacturing facility on an "as is where is basis" for setting up production units for alloy wheels and aluminum steering knuckles.

Lease Agreement Details

The lease agreement covers a substantial property located at Administrative Building, Bhuj-Bhachau Road, Near Village Kannaiyabe, Kachchh, Bhuj, Gujarat. The facility spans an area of 288,793.19 sq. mt. and includes land, buildings, sheds, structures, rights, fixtures, utilities, and facilities.

Manufacturing Capacity Plans

AACL plans to establish two distinct manufacturing units at the leased facility, each targeting different automotive components with specific production capacities.

Alloy Wheels Production Unit

The alloy wheels manufacturing unit represents the larger of the two planned facilities, designed to serve both domestic and export markets.

Aluminum Steering Knuckle Production Unit

The aluminum steering knuckle facility focuses on lightweight components for passenger vehicles, addressing the growing demand for weight reduction in automotive applications.

Investment and Financing Strategy

The total estimated capital expenditure for both manufacturing units amounts to ₹420.00 crores. The company plans to finance this investment through a flexible approach that includes debt financing, internal accruals, or a combination of both financing methods.

Strategic Rationale

The capacity addition aligns with the company's growth strategy in the automotive components sector. For alloy wheels production, the expansion addresses estimated growth in the automotive industry and rising demand from both domestic and export markets. The aluminum steering knuckle unit targets the increasing penetration of aluminum components in the domestic market, particularly for light-weighting applications in passenger vehicles to improve efficiency and performance.

Regulatory Compliance

The transaction has been disclosed under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. As a related party transaction with a wholly owned subsidiary, the agreement is structured on an "arm's length" basis. Both manufacturing units are subject to receipt of necessary statutory and regulatory approvals and clearances before commencing operations in Q4 of FY 2026-27.