The company intends to increase its capacity to 2.30 lakh tonne per annum from the current levels of around 1.50 lakh tpa at an investment of Rs300 crore. Ennore Foundries would complete the expansion project in three years time from now.

The additional capacity will become ready in three years.

The capacity increase comes at a time when parent Ashok Leyland Limited is proceeding with a joint venture with Japan''s Nissan Motor Company to make commercial vehicles in India.

However, V Sankar, chief financial officer, Ennore Foundries says, "There are strong possibilities of Ennore Foundries supplying castings for our parent''s commercial vehicle joint venture. But the decision to expand is not mainly for that alone."

Adds V Mahadevan, managing director, Ennore Foundries, the proposed expansions will be for making ductile iron and grey iron castings including blocks and heads, low pressure aluminium die castings, cast iron, aluminium castings and also for setting up of a machining unit.

According to him the ductile cast iron unit will be set up in Hyderabad while the company is considering various options for locating the aluminium castings facility.

The company plans to fund the expansion by mix of equity and debt.

Speaking about the equity portion Prabal Banerji, group president finance and group CFO says, the company would first go for private placement. This will be followed by debt.

"The debt : equity ratio would be maintained at 1:1," he adds.

According to Dheeraj Hinduja, president, Hinduja group, the company ruled out going in for a rights issue as the current promoters have to bring down their holdings in Ennore Foundries to 75 per cent from 80 per cent by April next year, in accordance with SEBI guidelines.

The proposed expansions apart, Ennore Foundries is looking at inorganic growth through overseas acquisitions, as well.

"Many overseas automobile manufacturers are putting their foundries on the blocks. We are looking at them," adds Hinduja.

Meanwhile, Ennore Foundries commenced trial production at its Rs200 crore, 50,000 tpa greenfield foundry unit located at Sipcot Industrial Estate, Sriperumbudur near Chennai.

According to Mahadevan the company''s new plant at Sriperumbudur would make cylinder blocks and heads used in automobiles.

"40 per cent of the production will be exported from this unit," he said.

On the likelihood of the company making high pressure die castings, Mahadevan says, "The high pressure die casting business is risky and needs heavy investments."

Adding further he says the decision of not entering the segment has nothing to do with Ashok Leyland''s joint venture with Finnish Alteams to make high pressure aluminium die castings.

For the first half of the current year Ennore Foundries posted a turnover of Rs.215 crore and a net profit of Rs8.77 crore.