Auto components company MM Forgings plans to invest Rs 65 crore this year on capacity building at its manufacturing plants and wind farm.
About Rs 40 crore will go into expanding capacity and debottlenecking at its forging plants in Chennai, Tiruchi and Madurai. Last year, the total production across the three plants was around 28,000 tonnes. This year, it is expected to hit 30,000 tonnes, said Mr Vidyashankar Krishnan, Managing Director.
The peak capacity of the plants is around 40,000 tonnes.
MM Forgings will also invest Rs 25 crore in its wind power business, which currently contributes about 4 per cent of total revenues. “The current capacity at our windmills, near Tirunelveli, is around 20 million units a year. We will add 10-12 million units this year,” said Mr Krishnan.
Steel shortage
The company plans to step up sourcing steel from suppliers in Orissa and Andhra Pradesh due to short supply of steel from Karnataka.
“With the ban on iron-ore mining in Karnataka, steel availability from this region is in a precarious situation. Over 60 per cent of our needs come from suppliers dependent on Karnataka. Hence, we plan to step up sourcing from Orissa and Andhra Pradesh, although this is more expensive,” said Mr Krishnan.
Q2 results
For the second quarter ended September 30, 2011, the company posted a 12 per cent rise in net profit at Rs 6.01 crore. Net sales rose 26 per cent to Rs 83.47 crore.
Mr Krishnan attributed this to the export markets, which contributed to 60 per cent of revenues last quarter. “Trucks and passenger car business have been good for us, particularly in the US and Europe.”
Going ahead too, MM Forgings is betting big on the export markets. “But we also expect the domestic market to play a big role in the months to come, despite the slowdown.”