Bharat Forge America, the 100% US subsidiary of Bharat Forge (BFL) that makes steel parts for vehicles, is in the final stage of either shutting down the operations or an imminent sale.

Media reports from Lansing Michigan have quoted the company president and CEO, Stu McGowan, saying the unit will shut down by November 30, barring a last-minute sale. McGoawn, the reports said, had written to the employees represented by the United Auto Workers Local 724, informing them about the plans.

A spokesperson for BFL, reacting to reports in 6WLNS and Lansing State Journal, maintained that the company had been looking at opportunities for “restructuring or selling off” and these efforts are continuing and they did not want to comment on these reports.

At the company AGM, BFL chairman BN Kalyani had said that they were taking various measures to restructure its North American operations, Bharat Forge America.

Bharat Forge America is the only loss-making business in its international portfolio.

For year ended December 31, 2011, Bharat Forge America had posted a net loss of R24.34 crore on a turnover of R135.92 crore ? 2010, too, had seen almost similar levels of loss. The company also has debt on its books, which matures starting November 2012.

BFL had acquired Federal Forge in June 2005 and this was their second global acquisition when it started expanding its global footprint. The acquisition was made to give BFL a foothold in the US market along with a manufacturing base there. Federal had filed for bankruptcy and BFL had bought the company in an all cash deal for Rs 40 crore. At that time Federal had revenues of US $ 60 million.

However, the downtrend in the US market and fall in demand has led to Bharat Forge America becoming a loss making business. Bharat Forge America never recovered fully from the 2008-09 crisis that hit the US.

Bharat Forge America supplies forgings for components in chassis and in engines to the US tier I suppliers. It produces hot and near-net steel (carbon, allow and stainless) forgings for automotive, light truck, construction, agriculture and military markets mainly in North America. It sells indirectly to General Motors through Lemforder Corporation and Mahle, Inc., are amongst its customers.

Media reports said the company has not revealed where exactly the American subsidiary is headed. BFL has been talking of restructuring its North American operations for some time now.

BFL had last year created provisions of R70.4 crore towards diminution in the carrying cost of its investment and the charge for it and had made further provisions of R26 crore this year too.