Coimbatore-based L G Balakrishnan & Bros Ltd (LGB), a leading manufacturer of two-wheeler automotive chains, is all set to invest about ₹40 crore in expanding capacity for auto parts at its Oragadam factory near Chennai.
The company is expanding the manufacturing area by more than 9500 sq metre to produce sprockets, precision machining components, automotive chains, assembled engines and aluminium die-castings and machined aluminium die-castings, among others, according to the company’s application submitted to the State Environment Ministry.
Current expansion plans
The Vallam Vadagal factory at Oragadam produces fine-blanked components, sprockets, precision machining components, automotive chainsand aerospace parts. To date, the company has invested ₹76.64 crore in this facility. With the proposed additional outlay of ₹39.78 crore, the total investment at the site will rise to ₹116.42 crore.
In FY24, LGB reported consolidated revenues of ₹2,346 crore, with the transmission business contributing ₹1,851 crore and the remaining coming from the metal forming business. Profit after tax (PAT) stood at ₹271 crore. For the half-year ending September 30, 2024, the company reportedconsolidated revenues of ₹1,232 crore (compared to ₹1,139 crore in H1 FY24) and a PAT of ₹143 crore (up from ₹131 crore).
New factory in Nagpur
The company is also establishing a new factory in Nagpur to manufacture power transmission chains and related products for both automotive and industrial applications.
The company, which markets its products under the brand name Rolon, has a market share of over 60 per cent in the domestic two-wheeler chain segment, with a healthy share of business across 2W OEMs. Further, it derives over 30 per cent of its revenues from the domestic aftermarkets, thus insulating its revenues to an extent from any downturns in the domestic 2W space. LGB’s operating margins continue to be healthy at 16.8 per cent in FY2024 (PY: 17.4%) and it has remained net debt negative, with unencumbered cash and bank balances of ₹632.4 crore as of March 31, 2024, according to rating agency ICRA.
The company operates 24 manufacturing facilities across Tamil Nadu, Maharashtra, Uttarakhand, Karnataka, Haryana, Rajasthan and Pondicherry and one facility in the US.