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R.Y. Narayanan

Mr B. Vijayakumar

Coimbatore , May 30

COIMBATORE-BASED L.G. Balakrishnan & Bros Ltd (LGB), an auto component and forging company, whose fortunes have been on an upswing after it reorganised its operations, is planning to acquire manufacturing facilities in Europe and the US to cater to its clients there.

If the company is not able to identify potential targets in these two regions by the end of this fiscal, it will go for greenfield projects, according to Mr B. Vijayakumar, Managing Director, LGB, Coimbatore.

LGB had hived off smaller and time-consuming businesses into other entities so that its results were transparent and efforts were clearly towards one end, he told Business Line. The company has identified metal forming as its core area and the chain business has given it competence in metal forming. He said if necessary LGB would have to go for larger expansion and find the money for it. During the current fiscal, the company would be investing Rs 35-40 crore for ramping up capacity and for acquisition. It has bought a plant at Pasur, about 45 km from here, to meet its fine blanking requirements. The total cost, including fresh investments to be made in machinery in the plant, would be about Rs 10 crore.

For expansion of cold forging facility, it will be establishing a Rs 10-crore greenfield project at Vyampalayam. For establishing a hot and warm forging plant, the company is close to concluding the purchase of 30-40 acres of land near Coimbatore and this plant would need an investment of about Rs 8 crore. The rest of the capex planned would be spent on the existing units. Mr Vijayakumar said that before 2001, the chain business accounted for nearly 80 per cent of LGB's turnover. Now, its share has come down to 50-55 per cent. He said by shifting the focus, he was `de-risking' the company. Now LGB is on a `distinct platform' and would leave the cost-conscious chain market for Chinese manufacturers to cater to and focus on highly technical and life-cum-safety related areas.

Mr P.S. Balasubramanian, Joint Managing Director, LGB, said that while the chain business would grow 15-20 per cent during the current year, in other products it would be 30-35 per cent.

Mr Vijayakumar said the company will establish a full-fledged plant in Pune to cater to the needs of customers such as Bajaj. Work on the project will begin this year and be completed by next year. The company is looking at overseas opportunities now. The LGB MD said the company has set a time target of 2007 to start global operations.

The important issue is finding a company without baggage. He expected each acquisition to cost about Rs 30-35 crore.

He said the export earnings, including deemed exports (to foreign clients who have set up operations in India), during this year would be around Rs 100 crore.

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