NELCAST to increase exports

NELCAST Ltd, a castings and component manufacturing company catering mainly to commercial vehicle and tractor industries, is increasing its exports from the present 10.2 per cent to almost 30 per cent for the financial year 2007-08.

The company, which specialises in manufacturing Spheroidal Graphite (SG) iron casting, is getting into expansion and modernisation mode as well at its units at Gudur and Ponneri.

Although the company boasts a client base which includes Tata Motors, Ashok Leyland, Eicher Motors, Tata Cummins, Mahindra and Mahindra, TAFE, International Tractors and New Holland India, NELCAST is looking to strengthen the client base by tying-up with heavy commercial vehicle and construction major Caterpillar and John Deere of USA, among others.

"We are already an established supplier of castings and components in USA, Europe and Australia. We would want to stick to these countries only but are looking to increase our client base. That is why we are tying up with Caterpillar, John Deere and International Truck and Engine Corporation of USA and Scania and ZS of Europe, among others," said P R K Reddy, Founder and Deputy Chairman of NELCAST.

On the company's competition with developing countries like China and Brazil, Reddy said, "Prices of castings and components in China are around 10-15 per cent cheaper than Indian prices but we are most consistent in quality which is why all the major automobile companies prefer to source from us."

For the expansion and modernisation at its two units, NELCAST has planned to enter the capital market through a fresh issue of 43,50,000 equity shares of Rs 10 each at a price band of Rs 195 to Rs 219. The issue, made through 100 per cent book building process, will open on June 4, 2007 and close on June 8, 2007.

The proceeds of the issue, Reddy added, will be utilised to finance the expansion of its capacity from 72,000 MT to 1.02 lakh MT by end of FY 2007 and further to 1.5 lakh MT by 2008-09 in phased manner.

The company manufactures around 200 different castings in SG and Grey Iron, Cylinder Blocks, Flywheels, Flywheel Housings, Housings, Hubs, Spring Shackle, Brackets, and Axle Housings among other components.