Bharat Forge(s) a global footprint

Updated: Jan 2 2006, 05:30am hrs
Bharat Forge Ltd (BFL) was promoted by Kalyani Group in 1961 and currently the promoter group owns 35% stake in the company. BFL has its manufacturing facilities across nine locations- two in India, three in Germany, one each in Sweden, Scotland, North America and China. On a standalone basis, revenues from India contributed to 58% of BFL's revenues in FY2005, followed by USA (18%), Europe (14%) and Asia Pacific (10%). However, on a consolidated basis, 64% of BFL's revenues in FY2005 came from global markets (this includes revenues from its subsidiaries as well as BFL's own exports). To establish a global footprint BFL has undertaken significant investments both for organic as well as inorganic growth. BFL is currently undertaking a capacity expansion with its forging capacity at Mundhawa to increase to 240000 MT by last quarter of 2005-06. Additionally, BFL is also increasing the number of forging presses and its capacity to manufacture finished crankshafts to rise from 4.13 to 6.5 lakh units. Further, BFL would also have a capacity to manufacture a million front axle components.

Four acquisitions in the past two years by BFL point to increased focus on growth through inorganic route. BFL acquired Carl Dan Peddinghaus and CDP Aluminiumtechnik both in 2004. These acquisitions allowed BFL diversify across product segments by expanding the product portfolio (to cater to passenger car, diesel engine and several non-automotive applications), access to customers and enhanced technological capability. Continuing with its initiatives to expand global presence, BFL acquired Federal Forge, Lansing, Michigan, USA in June 2005 and thereafter, it acquired Imatra Kilsta and Scottish Stampings, a European forging group in September 2005. The company also entered into a joint venture agreement with FAW Group China.

The company's initiatives towards establishing a global presence have allowed it to offer a comprehensive product mix, geographic diversification, scale up its technological expertise in various product segments and gain direct access to global clients.

Notwithstanding the issues associated with the acquisition strategy, the acquisitions in developed automotive markets may allow BFL strengthen its partnerships with the customers. Thus, its relationship with customers may extend beyond mere component supply.