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Home arrow News arrow Business News arrow Bharat Forge Ltd. gains Strong momentum in the Non Auto business
Bharat Forge Ltd. gains Strong momentum in the Non Auto business Print E-mail
Written by Vivek   
Wednesday, 25 May 2011
Mumbai: The non-auto business has become one of the major drivers for Bharat Forge Ltd., the flagship company of the USD 2.5 billion Kalyani Group and a provider of components to automotive & industrial sectors.

In this financial year, it has become the single largest business segment for it's Indian operations. The company expects the non automotive business to continue to be strong with tremendous traction from global clients & new order wins. Non Auto contribution to the standalone business has increased from 30% in FY2010 to 37% in 2011.

"FY 2011 saw the company come back on the growth path with strong momentum for the Indian operations within India & its Exports business & significant improvement in performance of the overseas subsidiaries," said Baba N Kalyani, Chairman and Managing Director of Bharat Forge Ltd.

The company's domestic revenues grew by 50.3% in FY2011 to Rs 1,728 crores on continued momentum in the Indian automotive market while Exports grew by an impressive 72.6% to Rs 1,219 crores on back of recovery of CV market in Europe & North America. For the quarter domestic & Export revenues registered growth of 34.5% & 63.6% respectively.

EBITDA % for the full year came in at 25.5% as compared to 24.9% in last year while PBT for the year at Rs 448 crores was higher by 147.7% as compared to last year.

PAT for the quarter & Full year were Rs 100.4 crores & Rs 310.6 crores, a growth of 63.8 & 144.5% respectively.

The Overseas operations witnessed a strong revival in performance in CY10 in correlation with the increase in automobile production globally and also have benefitted from the restructuring initiatives carried out in CY09.

The overseas subsidiaries registered topline of Rs 2,163 crores, YoY growth of 45.2%. EBITDA for the year was Rs 104 crores as against negative EBITDA of 80 crores for CY09. The subsidiaries registered a profit of Rs 11.1 crores at the PBT level as against a loss of Rs 188.1 crores in CY 2009.

"Despite some signs of softness in the domestic automotive market, we are quite confident of continuing the growth trajectory in the coming year on the back of strong global demand," Kalyani added.

Capacity Expansion

BFL is operating at fairly high utilization levels on both forging & machining front. Anticipating growth over the next few years, the company is expanding capacity by setting up a heavy press line which will increase capacity and simultaneously improving productivity by de-bottlenecking existing lines. This is expected to increase forging capacity by 15%.

On the machining front, the company is witnessing tremendous demand from OEM’s, both global & Domestic for supplying value added products for both auto & non auto applications. To cater to this requirement, BFL has initiated expansion of machining capacity for crankshafts.

The capacity expansion programme will require investment of around Rs 2,500 – 3,000 million over the period of 2 years.

Facilities at Mundhwa & Baramati

FY11 was the 1st full year of commercial production at the dedicated manufacturing facilities at Mundhwa & Baramati. The facilities have seen a strong ramp up of production during the year and have contributed Rs 4,273 million to the topline in FY11 as against Rs 1,907 million in the previous year.

In order to address the non automotive space in a meaningful manner, BFL has enhanced its capabilities and capacities to address the various verticals. The company has invested in technology & talent to cater to niche high value segments with high entry barriers like large crankshafts for Marine engines, rotor forgings for power sector etc.

Capital Goods Business


BFL, as part of its strategy to stage an aggressive foray into capital goods sector, has embarked comprehensive partnerships across value chain in power sector. Two Joint Venture companies with Alstom and another Joint Venture with NTPC are focused to provide world-class competitive solutions across value chain.

The Joint Venture with Alstom for manufacture of supercritical Turbine Generators & related auxiliaries is coming up at Mundra, Gujarat & will have a capacity to manufacture 5 GW of power plant equipments. Commercial production is expected to begin from early 2013. The Joint Venture participated in the 11X660 MW tender placed by NTPC and was adjudged L1 in all 5 projects. Accordingly, an order for 5 turbines of 660 MW with an approximate value of Rs 4,455 crore is slated to be awarded soon by NTPC.

The Joint Venture with NTPC is for manufacture of critical Balance of Plant (Bop) mainly High Pressure Pumps, Valves, pipings & castings for power & other sectors. The facility is coming up in Solapur, Maharashtra. Commercial production is expected to begin in 2012.

As of March 31, 2011, BFL has invested Rs 115 crores in to the Joint Ventures. The EPC division is currently executing an Rs 1,800 crore project, setting up a 3X150 MW power plant. The project will be executed over a span of two years starting from FY 2012.

The Indian subsidiaries / associates of the Company, namely - B F NTPC Limited, Alstom Bharat Forge Limited, Kalyani Alstom Power Limited, Impact Automotive Solutions Private Limited are in initial start up phase and commercial production for these projects has yet to start.

Joint Venture with David Brown

As a continuation of BFL’s strategy to diversify into non auto business sectors and provide world class technology to the fast growing core infrastructure market in India, the company has entered in to a 50:50 Joint Venture with David Brown Group, UK based gear box manufacturer.

The Joint Venture will manufacture gear boxes for various industries, supplying both new build gearboxes and comprehensive aftermarket services to high growth, high demand sectors including power, mining, defense, wind, rail and steel.

This Joint venture will increase traction in the non auto business with the demand for forgings in gearboxes being catered to by Heavy Forge Division at Pune & Centre for Advanced Manufacturing, Baramati.

Outlook

- Growth momentum on the domestic front might slowdown on account of macro headwinds but should be compensated by Buoyancy on the export front with strong growth forecasted for North American CV markets and continuation of demand pick-up in Europe.
- Acceleration of non auto ramp up from the new facilities with strong traction from domestic & global clients.
- Continuation of improvement in Performance of overseas subsidiaries with increase in capacity utilization on back of global auto recovery.

Last Updated ( Wednesday, 25 May 2011 )
 
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