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Chennai , Dec 16

EL Forge Ltd, which produces automotive forgings, proposes to invest Rs 12 crore in expanding its capacities from 9,000 tonnes a year to 21,000 tonnes over the next three years. This is because the business is good, and getting better.

"A UK-based company, that used to compete with us, has now agreed to buy forgings from us," the El Forge's Chairman, Mr V Srikanth, told Business Line.

The boom in the automotive forgings industry has enabled El Forge to turnaround— the company reported a net profit of Rs 28.24 lakh for the first half of the current year, compared to a net loss of Rs 34.30 lakh for the same period last year.

"We have wiped off all of our accumulated losses," Mr K V Ramachandran, Managing Director, El Forge said.

Mr Srikanth said the prospects for the forgings industry looked good because of the "shift" in production, from the developed to developing countries. Currently, Europe has a capacity of 2.92 million tonnes, Japan has 1.9 m.t., the US and Canada 1.55 m.t. and China 1.5 m.t. In contrast, India has a capacity of just under 0.5 m.t.

Thanks to forging plants closing down in the developed world and those capacities shifting to countries like India, there are bright prospects for forging companies here.

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