By IANS
Sriperumbudur (Tamil Nadu) : In an effort to go up further in the castings value chain, the Hinduja group’s Ennore Foundries Ltd (EFL) has decided to set up a machining unit at the SIPCOT Industrial Estate in Sriperumbudur.
“The investment outlay for the machining unit will be around Rs.500 million ($12.7 million). The company is in talks with four prospects for doing the machining work,” V. Mahadevan, managing director, told reporters here Tuesday.
Normally, machining work is done by the castings buyer.
“When we do that the positive impact on the company’s top and bottom line will be high,” he added.
Setting up a new design lab, Mahadevan said the company will also start offering design services to automobile manufacturers in order to deepen its involvement with clients.
Apart from this, EFL will set up a low pressure aluminium die casting unit at Sriperumbudur at an outlay of Rs.1.2 billion ($30 million) and also a new ductile iron castings unit at Hyderabad spending Rs.1.5 billion ($38 million).
EFL will also expand its new foundry unit at Sriperumbudur by 22,000 ton per annum (tpa) to 72,000 tonne.
According to Mahadevan, after the new investments, the company’s total capacity would be over 200,000 tpa in three years’ time.
The investments come at a time when the parent company Ashok Leyland Ltd has entered into a joint venture with Nissan Motor Company to make commercial vehicles.
There are strong possibilities of Ennore Foundries supplying cylinder blocks and heads to the proposed venture, Mahadevan said.
“The funding of the new investments will be made with a mix of debt, internal accruals and equity issue,” said V. Sankar, chief financial officer.
EFL will raise Rs.1 billion ($25 million) through an issue of global depositary receipt (GDR) with listing on the Luxemburg exchange.
The promoting company, which holds over 80 percent stake in EFL’s Rs.162.9 million ($4.1 million) equity capital, has to bring it down to 75 percent before April as per Securities and Exchange Board of India (SEBI) guideline.
Asked whether EFL would shift its workers to Sriperumbudur unit from Ennore facility, Mahadevan said, “We will transfer some workers depending on the skill sets required in the new plant.”