Ennore Foundries casts Rs150 crore ambitious growth plans
02 May 2006
Chennai: Chennai''s Ennore Foundries Limited has cast ambitious growth plans. It includes expansion of capacity by setting up new units as well as upgrading the existing ones, diversifying its customer base and increasing exports.
According to managing director V Mahadevan, the company has acquired 40 acres at the Sipcot Complex, Sriperumbudur for the new facility. We have also applied for an additional 42 acres." The Rs120 crore project is expected to go on stream during the second quarter of 2006-07. The orders for long lead time machinery has been placed. The proposed foundry will have a 50,000-tpa capacity and would produce grey and S G Iron castings starting from 25kg to 250kg.
In addition the company is upgrading its existing facilities that would also increase their capacities. "The present grey iron and aluminium casting capacity of 48,000 tpa and 3,000 tpa respectively will be increased to 55,000 tpa and 4000 tpa. Similarly the 24,000 tpa Ductran Castings Unit acquired from Ashok Leyland will be increased to 36,000 tpa." In all the company is moving towards a total capacity of 145,000 tpa. The expansion of the existing units is expected to be over this fiscal.
Some of the proposed areas of strengthening the existing foundry at Ennore include:
Expansion of the moulding line to achieve additional 60 tonne inmould cooling:
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Change of sand cooler.
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Addition of cold box core shooter.
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Improving the fettling shop facilities.
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Quality improvement using new software.
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Replacing of old tooling, addition of online testing and inspection equipments.
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Addition of force and handling facilities in core shop, fettling shop etc.
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Re-layout of various shops for free movement of materials, improvement of working ambience etc.
A new hand moulding line with part automation for producing heavy castings / low volumes to meet the domestic and export requirements, is also being proposed.
Looking ahead Mahadevan says, in this fiscal we expect a growth of 25 per cent. "As per the customer indications we can see a growth of 15 per cent this fiscal." During the current fiscal the company will give increased thrust to exports. Last year Ennore Foundries earned around Rs10 crore from exports. "This year we will export around 5,000 tonne as we have added some facilities for that purpose."
According to chief financial officer V Sankar, the expansions will be funded out of internal accruals.
The company''s equity base has been enlarged from Rs6.7 crore to Rs16.2 crore last fiscal.
Presently catering to the needs of heavy commercial vehicle (HCV), tractor and car producers, Ennore Foundries is now looking at other segments like the light and medium commercial vehicle makers. The company is in talks with another leading car maker and supplies are expected to start soon.
According to Mahadevan, the company gets 60 per cent of its business from Ashok Leyland and the non Ashok Leyland business is 40 per cent. "Soon the ratio of Ashok Leyland and non Ashok Leyland business will get reversed."
Meanwhile the company closed FY 2006 with a total revenue of Rs335.5 crore and a net profit of Rs13.9 crore. Despite the 20 days production shut down due to a fire accident, the company produced 65, 938 tonne of castings last year. The production went drastically up as the company acquired the Ductron Castings Unit, Hyderabad from Ashok Leyland.
"We will be getting around Rs5 crore from the insurer towards loss of profit and asset damages due to the fire accident," Sankar said.
Dr A Jangan, plant director, disclosed that last year the company had optimised its production processes resulting is reduction in per ton cost. "We started the third shift last year. This resulted in efficient use of the facility. The power cost too went down. From 2,000 units per tonne of casting produced the power consumption came down to 1,600 units," said Janagan,.
The company has wiped out its accumulated losses and has started paying dividend to its preference shareholders. The company didn''t pay dividend to the preference shareholders since 1999. The preference share capital is Rs25 crore.