Bharat Forge guns for growth

With a very successful year behind it, Bharat Forge is confident of stepping up its growth and profitability in the years ahead despite a downturn, or signals of one, in its biggest markets.

The company is tooling up to exploit “nonconformities” within those markets by focusing on winning – or growing existing relationships with – customers that it sees are outperforming their peers.

In Europe it is looking to capitalise on the spreading economic distress in the component industry, which predominantly consists of suppliers owned by small entities.

While it already counts the high-end carmakers in Europe as customers, it is engaged in discussions with a number of other OEMs that are seeking to “realign” with “technologically strong” and financially stable partners.

In its aggressive quest for topline growth the company has also widened its focus domestically from the medium and heavy truck business to encompass the light and small commercial vehicle segments.

Moreover, it is “putting a lot of effort” into building its business with passenger car and utility vehicle OEMs, executive director Amit Kalyani told the AGM last fortnight.

Bharat Forge is 18 months into a two-year investment programme totalling Rs 500 crore to set up new machining lines in Baramati for light-duty diesel engine crankshafts. This will add 40 percent to its overall machining capacity. As Indian OEMs “enhance the capabilities of their vehicles to European levels”, they need a supplier with the depth of development capability that only Bharat Forge has, executive director SubodhTandale said, citing as an example the “shrinking” crankshaft tolerances for Euro-IV-generation engines that it has long mastered as co-development partner for several global OEMs.

One likely new project is a forging plant at Pithampur on 60 acres the company has been allotted together with associate Automotive Axles Ltd, a joint venture with Meritor Inc. This plant, which could be up and running in two years, will make products “we don’t do at our existing locations”, Kalyani said.

Its diversification target of 40 percent of revenues from non-automotive businesses by 2012 has been met, and Kalyani expects this proportion to grow to “more than 50 percent” eventually, even as he projects the core automotive business growing strongly.

The aerospace project, begun in 2007, is now beginning to gain traction, Kalyani added — the company is engaged in trials and certification of a variety of airframe and turbine parts “for all aircraft and engine manufacturers”. Following the downturn of 2009 there will be no investment in dedicated facilities; instead these parts, made of titanium and speciality steel, will be produced at Bharat Forge’s existing facilities, which already have the ability to forge these exotic materials.

Crucially, the entry into aerospace provides this already very capable company exposure to a sector with far more exacting performance and reliability demands than what it’s been used to in its five decades to date, and will help take its engineers to the “next level” of capability, Tandale pointed out.

Photograph: Bharat Forge supplies fully machined crankshafts for the MAN D2676RT race engines in the European Truck Racing Championship from its Chakan facility near Pune. They are engineered to transmit torques of up to, and possibly in excess of, 7,000 Nm, as in Antonio Albacete’s Cepsa MAN.