The Pune-based Kalyani group company is clearly on the fast track. Industry watchers say the company should post an impressive growth in topline as well as bottomline in the current fiscal. In 1998-99, the company had managed to buck the downtrend in the forging industry and post a marginal growth in net profit due to financial restructuring, cost-cutting anda rationalisation of its customer segment.

With the fortunes of the automobile sector (the user industry) looking up this fiscal, the company can hope to end the year with a double digit topline growth rate in the range of 15-20 per cent. According to analysts, the domestic industry is expected to grow at around 10 per cent, while exports are likely grow at 30 per cent. Bharat Forge, they say, should have no problem in beating the industry average.

Apart from increased volumes in the domestic market, Bharat Forge is looking at expanding its presence in the global market in a big way. It has charted out an export thrust for itself and, towards this end, plans to take the M&A route. Bharat Forge is learnt to be in the final stages of negotiations with a US-based forging unit for a buy-out. At present, Bharat Forge exports 25 per cent of its production; of this as much as 60 per cent is to the US. The acquisition will help Bharat Forge create a physical presence in the US and European markets. The companyhas drawn up a strategy which will enable it to expand its export content to 50-60 per cent over the next 5 years from 25 per cent at present.

According to sources tracking the industry, export turnover of the company should go up to Rs 400 crore from the current level of Rs 130 crore during this period. This export thrust will not only improve the bottomline, but will also help Bharat Forge overcome any slowdown in the domestic market, thereby improving its valuations.

Bharat Forge will also benefit of its expansion programme (expected to be in place by December 1999). The effects of the expansion should be felt in the last quarter of the current fiscal. In the first-quarter itself, the company had posted a triple digit (122.88 per cent) rise in net profit to Rs 16.07 crore as against Rs 7.21 crore in the corresponding period last year. Sales grew by 26 per cent rise to Rs 139.78 crore. The annualised earning per share (based on the Q1 profit) works out to Rs 17.2, which gives a compelling discountingof 9.

Bharat Forge's customers are heavy commercial vehicle and medium commercial vehicle manufacturers - a sector whose domestic market sales are expected to increase in the current fiscal by about eight per cent. Efforts are also on to tap the tractor and agricultural equipment segments, where the growth is higher, in order to improve its margins. Plans are also afoot to expand the foreign client list.