Auto parts maker MM Forgings Ltd has chalked out a total capex of ₹550 crore for the next two years for expanding its machining operations and electric vehicle business, among others.
The Chennai-headquartered company is investing ₹100 crore in the electric vehicle business. It is targeting to supply its products for electric 3-wheelers and 4-wheelers and will also enter the electric two-wheeler space. In the EV space, it will start with motors and will get into the supply of gearboxes and controllers. The company has already received orders for these products.
The money will be spent largely on testing, prototyping, batch production, and a serial production facility. “We will initially set up operations on a leased property and then move into our facility,” Vidhyashankar Krishnan, Vice-Chairman & Managing Director, MM Forgings, said during the Q2FY23 post-results conference call.
MM Forgings pegs the revenue from EV business at sub-₹25 crore during the next fiscal and may reach ₹100 crore by FY25.
The proposed overall capex of ₹550 crore will be funded through a debt of ₹250 crore and ₹300 crore of internal accruals.
A major portion of its planned capex will go into machining and very little is earmarked for the capacity increase – from 120,000 tonnes to 130,000 tonnes. Over the last 24 months, MM Forgings transitioned from being a forger with the machine shafts to a supplier of machined parts and the company has seen the impact of the transition in its operations.
The company produced 36,000 tonnes during the first half and it expects to cross 75,000 tonnes for the full year. In the next fiscal, it expects the production to cross 90,000 plus tonnes.
MM Forgings expects its revenue to touch ₹2,000 crore in the next two years supported by a buoyant order outlook on the back of increasing momentum for the China+1 strategy and improving business prospects in the Indian market. The company reported ₹1,123 crore revenue in FY22.
“Amid the overall macroeconomic situation, looking at the way things are shaping, China plus one is becoming a reality and even a trickle will mean MM Forgings will be flooded with orders. I think I expect the situation to be very positive for the company,” said Krishnan.
Recently, the company has won orders from North American firms which are looking to procure more from India. It expects to end this fiscal with about ₹1,400 crore. It is continuing to launch and develop new parts for both domestic and export customers.
Krishnan said the company was seeing huge traction across the board and with a strong domestic economy it would touch the ₹2,000-crore revenue mark in FY24.