BFL to acquire US facility for aluminium forgings

Pune, July 29 | Updated: Jul 30 2006, 05:30am hrs
In these days of skyrocketing fuel prices, the world is demanding lighter and faster cars that promise fuel efficiency. Automotive manufacturers are already trying to replace steel with aluminium in an attempt to make driving cheaper than what it is today.

Leading the pack is Bharat Forge Limited (BFL) which has announced that it will soon manufacture aluminium forgings required for such vehicles it is setting up a facility in the US that will commence operations in the late 2007. The company is also eyeing another acquisition in the US, said Baba Kalyani, CMD, BFL.

Major restructuring is likely to happen in the US next year. Several companies are likely to come up as Chapter 11 cases. We are keeping a close watch, Kalyani added. BFL is planning to bring its existing aluminium forging technology from Germany to the US plant. By 2010, the company is targeting sales worth $300 million from the new facilities. In Germany, BFL is expanding its plant and bringing about a shift in its product mix. Kalyani said the company would manufacture forged pistons that meet emission norms by next year. It will also manufacture forged crankshafts from Germany.

As part of its derisking strategy, the company is also planning to increase focus on the non-auto sector. Huge investments are coming into the energy sector, hydrocarbon exploration, mining, metals and aerospace. A capital outlay of Rs 350 crore will be invested in the next two-and-half years to ramp up presence in this sector, Kalyani announced. The company is targeting an incremental global revenue of Rs 1,000 crore from the non-auto sector in the next four years. BFL is positioning itself as a aerospace supplier to benefit from the 30% offtake programme in the sector by the centre.

BFL, meanwhile, posted an increase of 5.31% in net profit at Rs 51.51 crore for the quarter ended June 30, as compared to Rs 48.91 crore for the same quarter in 2005-06. The net sales of the company and income from operations rose by 15.6% to Rs 420.5 crore for the first quarter. Profits before tax and exceptional item increased by 14.9% to touch Rs 84.5 crore as compared to Rs 73.5 crore for the same quarter last year. The groups consolidated net profit touched Rs 73.61 crore for the quarter ended June 30, as compared to Rs 63.13 crore for the same quarter last year.