Faced with power shortage woes and a voluntary retirement scheme that “depressed” results, Hinduja Foundries had a tough year in FY11. Even as manpower and power issues continue to haunt the company, it hopes to meet the demands of the auto industry.
The company's order book at present is 1.4 lakh tonnes of casting iron parts. It is planning a capex of Rs 70 crore for capacity expansion at its Sriperumbudur plant from 50,000 tonnes to 72,000 tonnes.
Additional infusion
Hinduja Foundries is also looking to bring in additional capital infusion of Rs 125 crore through a rights issue of 1,66,63,812 equity shares of Rs 10 each at a premium of Rs 65, in the ratio of 29 equity shares for every 50 equity shares held.
For the year ended March 31, 2010, Hinduja Foundries had clocked net sales of Rs 551 crore and a net profit of Rs 7.48 crore. The VRS cost the company nearly Rs 12 crore across 128 employees.
“The foundry industry is difficult industry and needs skilled labour and sustained availability of power. With the growth in the auto sector, the demand for quality castings will grow and Hinduja Foundries is in the forefront of technological capability to meet this demand,” said Mr Seshasayee, Chairman, Hinduja Foundries.
The company has plants in Ennore, Hyderabad, and a “modern” factory in Sriperumbudur near Chennai. The old factory in Ennore (in Tamil Nadu) will also be modernised, said Mr Seshasayee.
Hinduja Foundries supplies to marquee clients such as Ashok Leyland, Hyundai, Maruti, Mahindra and Caterpillar in the country. It is also looking to tap the export market. The company has already despatched around one lakh sample blocks to Renault for testing at its Turkey plant, said Mr V. Sankar, CFO. JCP and Cummins could be potential customers, he said.