Foundries to invest Rs 2,000 cr

Demand for castings triggers huge investments by the country's foundry sector.

The Indian foundry industry, the world's fourth largest, is making large investments on the back of huge demand for castings and casting components in the domestic and international markets.

Over the last couple of years, the southern part of the country alone has attracted a couple of thousand crores of investments in new foundries and creation of higher capacities for intricate castings and quality improvements to meet global needs.

The industry has found demand not only from the automotive sector, but across several other sectors such as industrial engines, windmill, engineering, railways, earth moving, mining equipment and machine tools applications.

Export prospects are also bright for foundries as several developed countries, like the US and Europe, are keen on sourcing castings from low-cost regions. A number of global orignal equipment manufacturers (OEM) have opened their sourcing centres in India.

"The steel and foundry industries have the potential to grow 2.5 times more than the GDP rate," Hugo Schippmann, executive director, SEForge, Coimbatore, said.

In one of the largest investments in the sector, SEForge, promoted by wind power major Suzlon Energy, is stablishing a ductile iron castings unit in a 58-acre SEZ in Coimbatore for Rs 1,000 crore.

The unit will have an annual production capacity of 120,000 tonnes of specialised ductile iron castings and will cater to high volume casting requirements ranging between one and 50 tonnes. "This capacity will make SEForge one of the biggest foundries in the world," he added.

A major chunk of the output from the Coimbatore castings unit will be exported to Europe and the US while the rest will be supplied to equipment exporting companies in India.

Ennore Foundries, a part of the Hinduja Group, is focussing on opportunities in the industrial engines segment, besides automotives. It has embarked on a major expansion drive involving investment of Rs 350 crore.

"Automotive OEMs tend to sell more engines to the industrial market when there is slow down in vehicle sales. A lot of powertrain companies are also coming to India," V Mahadevan, managing director, Ennore Foundries, said.

A number of existing foundries in south are also ramping up their capacities to cater to the growing demand. India's castings production has more than doubled since 2002 and the country has surpassed the US in iron production in 2006, according to Mahadevan, who is also the president of the Institute of Indian Foundrymen.

India's total castings production grew 17.5 per cent to 7.1 million tonnes, amounted to $9-10 billion in value terms, in 2006. The country exported $1 billion worth of castings in 2006. The industry has been growing 15 per cent annually over the past seven years.

The total production of castings in India is forecast to go up to 15 million tonnes in the next few years and the foundry industry needs an investment of at least $2 to 3 billion in the next three to four years to achieve such production levels.