Ennore Foundries mulls overseas acquistions

Chennai: Foundry major Ennore Foundries Limited is mulling setting up of a machining unit. With the vehicle manufacturers wanting to focus on their core activity, there is an opportunity for foundries to get into machining, says managing director V Mahadevan.

According to him, Ennore Foundries might set up a machining facility for Ashok Leyland Limited, its parent company. On the other hand the company has put on hold the plans to make castings for windmills.

The company's 50,000 tonne per annum greenfield project at Sriperumbudur is nearing completion and commercial production will start during the second quarter of the current fiscal. During the first year of operations the plant will cast around 20,000 tonne and the volume will increase in the subsequent year. With good order book position, the company hopes to see nearly 50-per cent increase in the topline for the current fiscal.

According to him, the new facility would enhance production capabilities for products in the higher end of the automotive value chain viz cylinder blocks and heads to meet the future emission norms.

"Such products demand intricate thin walled blocks and heads and foundries have a crucial role to play in making them. We are looking at compacted graphites for such castings instead of grey iron," he adds.

The design centre, which is also coming up in Sriperumbudur, will be operational soon. The centre is expected to shorten product development time and enhance the company's design capabilities. "Modernisation of existing units - Ennore and Hyderabad- are progressing as per schedule," he adds.

Queried about the possibilities of deploying part of the Ennore foundry workforce at its Sriperumbudur facility, Mahadevan denied having any such plans.

Meanwhile for the FY07 the company has posted good results. The sales and net profit went up to Rs395 crore and Rs16 crore respectively as against the previous year figures of Rs329 crore and Rs13.96 crore. The company exported $2 million worth of castings to Italy.

"We have paid the preference share dividend arrears as well as the dividend for the current year," remarks chief financial officer V Sankar. According to him the company may start declaring dividend on its equity shares.

Reducing its dependence on heavy commercial vehicle segment alias Ashok Leyland to 40 per cent, Ennore Foundries has increased sales to segments like tractor, cars, industrial engines and others. "Last year Ashok Leyland contributed 54 per cent of our turnover and this will further come down this year," says Mahadevan. But that does not mean there will be reduction in volumes sold to the vehicle maker. "We will meet all the needs of Ashok Leyland," he adds.

Today the company supplies castings to all the three major car manufacturers viz, Maruti Udyog Limited, Tata Motors Limited and Hyundai Motors.

Meanwhile the company is scouting for suitable acquisitions overseas. "We are actively on the lookout," Mahadevan adds.