Ennore Foundries to add capacity
06 Feb 2008
Chennai: Ahead of parent Ashok Leyland having entered in to a joint venture with Nissan Motor Company to make commercial vehicles, the Chennai-based castings major Ennore Foundries Limited had firmed up its plans to invest in raising its capacity.
Thought its expansion was not directly linked to the tie up between Ashok Leyland and Nissan, when their joint venture company commences its production, Ennore Foundries can be sure of getting sizeable orders.
It is learnt Leyland is also negotiating with General Motors and Renault to supply cylinder heads and blocks for their cars to be produced in India.
Accordingly, Ennore Foundries setting up a Rs50-crore machining unit and investing another Rs120 crore in a low-pressure aluminium die casting unit at the SIPCOT Industrial Estate at Sriperumbudur, near Chennai and setting up a new ductile iron castings unit at Hyderabad at an investment of Rs150 crore.
Moreover Ennore Foundries will also expand its Sriperumbudur facility by 22,000 ton per annum (tpa) to 72,000 tpa. As a result of these investments, Ennore Foundries' total capacity will rise to over 2 lakh tpa in the next three years.
Commentin on the investment in the machining unit, V Mahadeven, managing director, Ennore Foundries, said, "The company is in talks with four prospects for machining projects and the investments will be client specific." He said the company would also start offering design services to automobile manufacturers for which it has set up a separate lab at its Sriperumbudur plant.
V Sankar, chief financial officer disclosed that the funding of the new investments would be through a mix of debt, internal accruals and equity issue. He said Ennore Foundries plans to raise Rs100 crore through an issue of global depositary receipt (GDR) with listing in the Luxemburg exchange.
With an over 80-per cent stake in Ennore Foundries' Rs16.29 crore equity capital, the promoters are required to bring down their holding to 75 per cent before April as mandated by SEBI guidelines.
The company's Ennore unit has around 1800 workers and the Sriperumbudur unit would need around 450 workers at full operations. Queried about shifting of workers to Sriperumbudur unit from its Ennore facility Mahadevan said, "We will transfer some workers depending on the skill sets required in the new plant."
