Bharat Forge reported a consolidated net loss of Rs 90 crore for the June quarter. The company had reported a profit of Rs 284 crore in the year-ago period. The company attributed the loss to the impact of restructuring its German subsidiary, which included Rs 330 crore in manpower-reduction-related expenses. This is to be paid over six to 12 months as employees get released. BFL’s consolidated revenue rose 18.7% to Rs 4,640 crore while EBITDA margins compressed by 160 basis points to 16.2% or rising energy and input costs. EBITDA was up 10.3% to Rs 752 crore.
Amit Kalyani, vice chairman and joint managing director of BFL, said this was a blip and that margins would return. He remained positive about the outlook for FY27, especially a better performance in the second half of the year.
The Indian operations won new orders worth Rs 1,352 crore, including Rs 681 crore from defence during the quarter. The outstanding orderbook for defence was Rs 11,196 crore. The company signed one of its largest orders on the Naval side for 12 Marine Gas Turbine Generator sets from the Ministry of Defence. The defence production-focused facility in Pune at Jejuri would enter serial production soon.
The company announced capex of Rs 1,800 crore across its existing business and new business, Kalyani said. “We are building capacity slightly ahead of the demand,” Kalyani said at the investor call on Monday.
The company board has approved raising Rs 2,500 crore through equity. While it had cash on its balance sheet, the company was raising funds to conserve resources for M&As. These investments will be made over the next 12-18 months. Investments will be going into sunrise sectors including the energetics plant in Andhra Pradesh, aerospace, large engines, semiconductor and defence businesses. These investments are expected to be revenue accretive.
BFL’s German subsidiary, Bharat Forge CDP GmbH (BF CDP), is facing market challenges and associated cost disadvantages, so the company was restructuring BF CDP. Around Rs 23.59 crore was spent on this restructuring. CDP has reached an in-principle understanding with the Works Council for implementation of a social plan for employees. It had to provide Rs 330.42 crore for this. All this is reflected in the consolidated numbers. Kalyani said the entity will cease to exist at the end of the restructuring exercise
BFL chairman and managing director, Baba Kalyani, maintained a growth outlook for FY27. The Indian manufacturing business was expected to grow at 20-25%.