Bharat Forge Ltd. (BFL), a leading powertrain and chassis component manufacturer with a customer base of global automotive OEM Tier-1 suppliers and various OEMs in the industrial segment, is extending its expertise in the automotive business across other industrial verticals by exploring further opportunities in high value, high growth sectors.
BFL’s total revenue grew by 33.8 per cent from Rs. 33,993 million in FY 2013-14 to Rs. 45,481 million in FY 2014-15, a healthy 47.2 per cent growth in exports and 17.8 per cent in domestic revenue. Profit after tax grew by 79.8 per cent to Rs. 7,190 million from Rs. 3,999 million in 2013-14. The top line growth was driven by a 47.2 per cent growth in exports with robust demand for Class 8 trucks in North America and strong traction from the oil & gas sector. Domestic revenues grew by 16 per cent primarily assisted by recovery in Indian M&HCV volumes. Other operating income moved up from Rs. 939 million to Rs. 1,374 million.
BFL’s state-of-the-art manufacturing facilities are spread across India (four facilities), Germany (four facilities), Sweden and France. The company manufactures an extensive range of value-added critical and safety components for several sectors, including commercial and passenger vehicles, oil & gas, aerospace rail and marine, energy (across renewable and non-renewable sources), construction, mining and general engineering.
The company’s consolidated revenues increased 13.5 per cent from Rs. 67,158 million to Rs. 76,248 million driven by growth in standalone operations and revenue generation from the Alstom JV executing the NTPC order.
Goal 2018: 2X 2014
Bharat Forge has charted out an ambitious plan to double the standalone operations topline from Rs. 3,400 crores achieved in FY 2013-14 to about Rs. 7,000 crores by FY 2017-18, a 20 per cent CAGR over the defined period. It plans to achieve this through several growth initiatives like improving the market share and creating a broader product offering in industries it serves currently. Its in-house Innovation & Technology Centre will be a key catalyst in almost all the growth initiatives. “With the performance reported in FY 2014-15, I am happy to inform you that your company is on track to achieve the targets set,” said Mr. Baba N. Kalyani, Chairman and Managing Director.
Growing auto business
Bharat Forge’s business in the domestic market spans the full spectrum of the automotive industry (excluding two wheelers) diesel engines, construction and mining, power, oil & gas, tractors and the general engineering space like sugar, cement and steel, among others.
In FY 2014-15, the automotive industry trend of the past three years reversed, with volumes increasing 21 per cent to 268,553 units. Around 43 per cent of BFL’s domestic revenues are contributed by commercial vehicles. Though the CV market volumes grew by 21 per cent, BFL revenues from this space grew by 25 per cent mainly on account of the expanding customers base. The auto sector contributes around 50 per cent of the total exports. The revenues from the auto segment in export markets in FY 2014-15 were higher than in FY 2013-14 mainly on account of expanded customer base and a ramp-up in passenger vehicle orders.
The company is keen on expanding automotive by focusing on new product development, providing solutions such as light weighting, fatigue enhancement and increasing the market share with the existing customers while simultaneously working on adding new customers and markets.
Technology trends and innovation
What really makes a company successful over the long term is its ability to identify technological trends from an early stage and to tap the emerging opportunities for growth. The Kalyani Centre for Technology and Innovation (KCTI) has been conceived with this very objective and strategy based purely on innovation. KCTI’s role is to develop and implement innovation and technology strategies to develop newer products.
The company’s focus with regard to advanced manufacturing is on four key activities, namely, 3D printing, electron beam welding, laser welding and nanotechnology carried out at KCTI which has already started making prototypes using both plastic and metal. Its other activities are at an early stage and will ramp up over the next few months and quarters.
BFL believes that the next round of growth will be propelled by creating opportunities through innovation which is at the heart of everything the company does. Its in-house R&D team remains committed to working on various projects, including developing technologies to minimise carbon footprint and manufacture light-weight products requiring lower energy consumption. Innovation for new products is being carried out by the company not only for products in the automotive space, but in the non-automotive space as well.
Bharat Forge has endeavoured to develop fossil-free technologies that aim at providing greener technologies that its automotive clientele can capitalise on.
A total of seven patent applications were filed in 2014-15 bringing the number of patents filled till date to 13. BFL has already been granted two while the remaining have been submitted and are awaiting examination. These patents have largely been for process and product improvements. In the coming year as well, BFL has a healthy pipeline of patents on which work is being carried out.