L G Balakrishna to set up three facilities

L G Balakrishnan & Bros Ltd, a leading supplier of transmission chains to both automobile and industrial segments, is expanding its operations by setting up new facilities at three places - Coimbatore, Pune and Uttaranchal.

Speaking to Business Standard, B Vijayakumar, managing director of the company, said the company has plans to set up its forging plant in the north Coimbatore and two chain plants at Pune and Uttaranchal. "We have identified and acquired lands in all these places. We have also placed orders for the machineries, and this may take some time," he added.

The company plans to import forging machinery from Korea and Japan. The company's forging plant in Coimbatore would become fully operational in the next six to eight months and the chain plants at Pune and Uttaranchal are likely to start their operations by the end of next financial year, a company source told.

The company has considered the proposal of issuing equity shares on preferential allotment to International Finance Corporation (IFC), the private lending arm of the World Bank, towards equity participation of amount not exceeding the equivalent of $ 5 million.

The management is also considering the proposal for the issue of optionally convertible bonds (OCBs) of Rs 101 each, aggregating Rs 100 crore to be used for repayment of existing high cost debt. The OCBs shall be issued on a rights basis to the shareholders of the company as on a record date to be fixed by the committee.

"For the next two to three years, we plan to invest around Rs 150 crore in the capacity expansion and in setting up new facilities. As such, we expect IFC to provide us a loan amount of Rs 90 crore and the remaining amount would be raised through the issue of OCBs," Vijayakumar added.

The company's combined annual capacity of producing chains is around 62.5 million feet a year and that of forging is around 3 million pieces per year. The company's production capacity of forged and precision components is close to 7,300 tonnes per month.

LGB expects the revenues to increase from Rs 460 crore in this financial year to Rs 777 crore by 2008.