For the Rs 7,625 crore Kalyani
group controlled by Baba Kalyani, ‘Make in India” has been a way of life. For
long, this group which has business interests in the fields of automotive,
energy, rail, marine, aerospace, defence and construction & mining, ‘Make
in India’ has just been one part of its growth strategy. ‘Making for the World’
has been the other critical part of its strategy.
Bharat Forge Ltd (BFL) is the
flagship company of the Kalyani Group and is amongst the largest forging
companies globally. The company is
entering into the 50th year of operations, and according to Baba N Kalyani,
Chairman and Managing Director, BFL, “the best is yet to come”.
For the financial year
2014-15, the total revenue of BFL stood at Rs 4548.10 crore with profit after
tax of Rs 719 crore. The Company is India’s leading exporter of value added
safety and critical powertrain and chassis components for automotive and
industrial applications. Powertrain components include crankshafts and
connecting rods, while chassis components include front axles and steering
knuckles. It has four manufacturing facilities in India, four in Germany and
one each in Sweden and France. Critical components for several sectors include
those for commercial and passenger vehicles, oil & gas, aerospace, rail and
marine, energy (across renewable and non-renewable sources), construction,
mining and general engineering.
In the last one year it made
an entry into the Aerospace segment with 4 marquee customer contracts and also
expanded manufacturing footprint in Europe with acquisition of Mécanique
Générale Langroise, France.
BFL also manufactures transmission
parts and other automotive products like pistons, rockers arms, control arms,
swivel hubs, wheel carriers and brackets
According to Kalyani, BFL is
extending its expertise in the automotive business across other industrial
verticals. In order to do so, it is exploring further opportunities in high
value, high growth sectors like Oil & Gas, Power & Nuclear, Thermal,
Wind, Hydro, besides Rail, Marine and Aerospace.
In the automotive segment,
BFL’s global customers include the likes of Daimler, Ford, General Motors,
Volkswagen, Toyota, Volvo, Renault, Dana, ArvinMeritor, Caterpillar, Cummins,
and Iveco. The Kalyani group, through the company Kalyani Strategic Systems Ltd
(KSSL) has now undertaken a key initiative in the field of Artillery Gun
Systems. The group hopes to realise the aim of becoming a leading defence
player in the world. The Indian Gun Programme (IGP), one of KSSL’s star projects
in the defence sector, is its key initiative in the field of Artillery Gun
prospects for BFL
Bharat Forge’s business in the
domestic market spans the full spectrum of the automotive industry (excluding
two-wheelers), diesel engines, construction & mining, power, oil & gas,
tractors and the general engineering space like sugar, cement and steel, among
others. Around 43pc of BFL’s domestic revenues are contributed by the
commercial vehicles. From financial year 2010-11 to 2013-14, it was a
challenging period for the Medium and Heavy Commercial Vehicle (M&HCV)
segment, with volumes declining from the peaks of 384,801 units in FY 2011-12
to 221,699 units in FY 2013-14 due to several macroeconomic headwinds such as
decline in GDP from 8.9pc in FY 2010- 11 to around 6.9pc in FY 2013-14, halt in
mining activities in Karnataka and Goa, sharp reduction in infrastructure
capex, increase in interest rates and fuel price among many other factors,
notes the company.
In FY 2014-15, the industry trend of the past
three years reversed with volumes increasing 21pc to 268,553 units. This
increase in demand was a result of culmination of various factors such as
decreasing fuel prices, decline in Interest rates, lower excise duty, and
resumption of mining activity in Karnataka and initial signs of recovery in the
Indian economy. Though the CV market volumes grew by 21pc, the revenues of BFL
from this grew by 25pc mainly on account of the growing customers and increased
penetration in the existing customers. The passenger vehicle segment also
witnessed positive demand in FY 2014-15 after almost two years of sluggishness.
The return of the first time buyer and a positive sentiment in the urban
markets resulted in the passenger vehicle volumes increasing by 4pc. Revenues
for the company from the passenger vehicle segment grew by 5.3pc compared to FY
2013-14, says the company’s Annual Report 2014-15.
Unlike the commercial vehicle
sector which witnessed positive demand growth in FY 2014-15, the same was not
visible in the industrial sector. Decline in infrastructure-related capex, sluggish
IIP (Index of Industrial Production) numbers through FY 2014-15 impacted the
sector across all major segments. BFL’s presence across many sectors and its
relationship with key marquee OEMs enabled domestic industrial revenues to grow
despite a challenging demand environment, says the company.
recent steps taken by the Government to revive the capex cycle in India by way
of allocation of coal blocks, resumption of Iron ore mining, focus on public
sector investment in the Road and Railways sector augurs well for the
Commercial Vehicle sector and also for the resurgence of the capital goods
sectors. Says Amit Kalyani, Executive Director, Bharat Forge Ltd, “ These
measures coupled with the Government’s ‘Make in India’ programme, aimed at
creating a vibrant manufacturing sector and an import substitution market opens
up a potentially huge opportunity for technology-focused manufacturing
As a part of the ‘Make in
India’ programme, focused efforts and activities have been undertaken to
address the programmes of the Government in the Rail, Power, Defence and
Aerospace sectors. “BFL’s focus on
technology, innovation along with a strong R&D approach should assist in
positioning it at the forefront to address these new opportunities,” adds Amit
Amit Kalyani also serves on
the Boards of several group companies such as Kalyani Steels Limited, BF
Utilities Limited, Automotive Axles Ltd., Khed Economic Infrastructure Pvt.
Limited (KEIPL), among others.
the US auto industry showing signs of revival and the country registering a robust
economic growth, the year gone by has been good for BFL. The class 8 truck (The
Class 8 trucks are those with gross vehicle weight rating (GVWR) exceeding 14969
kg) production volumes grew by around 20pc while the Passenger Vehicle segment
also witnessed growth. In the November 2014 to February 2015 period, a sharp
uptick in Class 8 trucks net orders was witnessed, causing a jump in production
backlog from normal levels of 100,000 units to around 190,000 units.
car sales in 2014 rose for the first time in seven years, but the sales gains
were primarily driven by discounting, state-backed incentives, fleet sales and
change in consumer spending pattern rather than a genuine recovery of consumer
confidence as consumers needed to replace their cars regardless of economic
conditions. The overall CV market also showed marginal growth because the
strong growth in the LCV’s was negated by a 7pc decrease in M&HCV volumes.
The auto sector contributes around 50pc of the total exports of BFL. The
revenues from the auto segment in the export markets in FY 2014-15 grew as
compared to FY 2013- 14 mainly on account of new customer addition and a ramp
up in the passenger vehicles orders.
to the BFL report, in 2015-16, growth in the auto industry is expected to be
led by the NAFTA region, strong orders, long backlogs, better freight volumes,
a healthy economic outlook, an old playing fleet, rising profitability of fleet
operators and the sharp plunge in crude prices can be the contributing factors
for a sustainable year forward, if not better. Looking ahead, the expected
continuation of Eurozone economic recovery bodes well for the automotive
expect the Heavy Truck segment volumes to grow by 2-5pc over the next two
years. We expect to continue to grow our export business on the automotive side
by focusing on new product development, working on providing solution such as
light weighting, fatigue enhancement, increasing our market share with existing
customers while simultaneously working on adding new customers and markets,”
says Amit Kalyani.
Company’s presence in the international industrial segment extends across three
verticals namely Energy (Oil & Gas, Power across sources), Transportation
(Aerospace, locomotive & Marine) and Materials (Construction and Mining). The
year 2014 was a difficult year for the
oil and gas sector with crude oil prices rapidly declining from peak levels of
US$ 120 per barrel to as low as US$ 55 per barrel in the span of few months.
Company made tremendous progress in its journey of further developing the
industrial business. In the aerospace sector, BFL has achieved all the
requisite approvals. The Company has entered into relationship with four global
OEMs to develop a portfolio of products over the next few years,” says Kalyani.
As part of its latest
acquisition, BFL’s German subsidiary, CDP Bharat Forge GmbH, has acquired 100pc
equity shares of Mécanique Générale Langroise (MGL) for EUR 11.8 Million. MGL,
based in Saint Goesmes, France, is focused on precision machining and other
high value added processes. MGL primarily caters to global Oil & Gas
industry and supplies turnkey components for drilling application. The
acquisition further consolidates BFL position in the Oil & Gas space by
enhancing service offerings and geographical reach.
Innovation and Intellectual Property Rights (IPR)
strongly believes that the next round of growth will be propelled by creating
opportunities through innovation. “Innovation is at the heart of everything BFL
does. Our in-house R&D team has been committed to work on various projects
including developing technologies to minimise carbon footprint and manufacture
light weight products that result in lower energy consumption. Innovation is a
continuous on-going process in the Company which has helped us explore new
ideas and deliver solutions for transformation consistently. Innovation for new
products is being carried out by the Company not only for products in the
automotive space, but in the non-automotive space as well,” points out Amit
Forge has endeavoured to develop fossil free technologies that aim at providing
greener technologies that its automotive clientele can capitalise on. Innovative
application of latest technologies has helped the Company develop critical and
high value added products for the non-automotive sector. Today, BFL is an
indigenous supply source for some of these products which were largely imported
earlier. “With innovation at its heart, BFL continues its endeavour of
venturing through diversification and manufacturing of high-quality products
that drive change and sustainability,” notes Amit Kalyani.
In his address to shareholders
of BFL, Baba Kalyani says, “...Using our state-of-the-art Research &
Innovation centre, and a talented resource pool, I am happy to inform that in
FY 2014-15, your Company has completed the requisite quality homologation
process to supply forgings. Our progress has been rewarded — your Company has
successfully entered into relationships with four global OEMs. We are working
on developing a roadmap to transform this relationship from single product to a
portfolio of products over the next few years. Goal 2018: 2X 2014 Your Company
has charted out an ambitious plan to double the standalone operations topline
from Rs 3,400 crore achieved in FY 2013-14 to about Rs 7,000 crore by FY
2017-18, a growth of 20pc CAGR over the defined period. Your Company plans to
achieve this through several growth initiatives led by improving market share
and creating a broader product offering in industries we currently serve. Your
Company’s in-house Innovation & Technology Centre will be a key catalyst in
almost all the growth initiatives.
encapsulates a wide spectrum of activities and processes. Your Company’s focus
with regards to advanced manufacturing centres on four key activities namely 3D
printing, Electron Beam Welding, laser welding and nanotechnology. All these activities
will be carried out at our world class Technology Centre, KCTI. I am happy to
share with you that we have already started making prototypes using both
plastic and metal while the other activities are at an early stage and will
ramp up over the next few months and quarters.”
Baba Kalyani’s words are
obviously music to the ears of the company’s shareholders, for they know the
company has in the past weathered many a storm and come out unscathed.
STRATEGIC SYSTEMS LTD
The Kalyani group has
formulated a new defence holding company under the name of Kalyani Strategic
Systems Ltd (KSSL). The Indian Gun Programme (IGP), one of KSSL’s star project
in the defence sector, is its key initiative in the field of Artillery Gun
Systems. KSSL is a one stop solution for Artillery systems, offering
comprehensive solution which includes processing of raw material (special grade
ESR steel), cross disciplinary domain knowledge across verticals like
metallurgy, material science, mathematical modeling, servo-electrical,
hydraulics, electronics, etc, design & engineering capabilities, state of
the art barrel manufacturing plant, fabrication facility, assembly, integration
Bharat-52 is a long-range 155mm/52 calibre gun. It is the first indigenous
solution of its kind designed and developed in India. Bharat-52 is a futuristic
towed gun, providing a highly maneuverable field artillery solution. It has
been designed for accuracy, stability and reliability during moving and firing
maneuvers, and is based on the requirements of the Indian Army. Bharat-52 is
capable of a range exceeding 40km and utilises self-propelling capability and
automatic laying mode. The Anti-backlash drive for elevation and traverse make
it a truly unique system and a robust solution for superior battlefield
operation. It is designed to operate as an all- weather system and has superior
all-terrain mobility. Extremely easy to deploy, it takes a team of six crew
members to deploy the system within one minute during day time and 1.5 minutes
during night time. Bharat-52 in self-propelled mode is capable of achieving a
mobility of 30kmph using its own diesel engine and electronic steering system.
Garuda 105 is ultra-light gun
system which utilises the high end Soft Recoil Technology. This allows the
weapon (gun) to be placed on light vehicles and nonstandard platforms,
including aircraft and coastal and river patrol watercraft.
BEAS is a 130mm M46 to
155mm/45 calibre gun which has been designed and developed by with proven track
record of Elbit Systems.
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