BHARAT FORGE

The World originated in India

 Type Private (BSE & NSE)
Industry Forging
Metals
Machinery
Engineering
Founded by in 1961 by Dr.N.A. Kalyani
Headquarters Pune, Maharastra, India
Key people Baba Kalyani Chairman
Products front axle assembly and components
THE COMPANY

general engineering equipment

hydraulic and mechanical presses
bandsaw machines for cutting metallic
rounds
couplings and material handling equipment
Revenue 1,888.74 crore (US$421.19 million)(2010)
Operating income 776.96 crore (US$173.26 million)(2010) 2

Net income 82.61 crore (US$18.42 million) (2010)

VISION AND PHILOSOPHY

3
PRODUCT PROFILE

4
THE GROWTH PATH
35000

29935.47
30000

25000
22849
21062.65
19953.86
20000 19452.97 18887.36 Total Income
PBDIT
15103.56 15272.11 PAT
14732.77
15000
13267.95 Net Worth

10000
7664.39

5459.85 5845
4937.5 4693.38
5000
2735.89 3105.67
2409.53
1270.46
5
1032.85

0
2007 2008 2009 2010 2011
Rupees Million
 WHATS MY SHARE
Revenue Break Up by Revenue Break Up By
Geography Segments

9.60% Non Auto

21.80% 21.40%
22.10% Asia Pacific
CV Chassis
52.60% India
15.60% US Disel Engines
Europe 29.40% 27.40%
Passenger
Vehicles

#Source:BharatForgeAnnualReport,2010-1 6
 Acquisitions Joint Ventu

GLOBAL PRESENCE

7
# Source: www.bharatforge.com/global_presence Head
Quarters
GLOBAL PRESENCE

8
P.E.S.T. ANALYSIS
Political
Liberalization measures taken by Government of India.
Banking Liberalization.
Increased cost of O.E.M.s in Russia, UK, U.S.A. and Germany.
Economical
Automobile sector growth @ 20-25%.
Expected growth rate of the industry @ 18%.
Discounted ( almost at 20%) variable cost in India.
Reduction in Custom duty (30% to 25%) by GO.I.
Reduced special Excise duty on Motor Cars (16% to 18% reduction) by
G.O.I.
Social
Increased acceptance of Made in India brand across the globe.
Increased trend towards strategic alliance in R&D.
Increased global pressure to move up value chain.
Technological
Increased emphasis on Research, design and Development.
Increased use of customized I.T. Enterprise Resource (E.R.P).
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Integration in Supply Chain management.
Use of sophisticated Hydraulics and Processes.
PORTERS FIVE FORCES
Barriers to Entry : Medium
Low capital requirement.
S.M.E.s can cater to individual projects.
This industry is highly export oriented.
Huge design and development capabilities required to meet global standards and
demands.
Bargaining power of buyers: High
Auto OEMs exercise huge bargaining power to forging industry as forging industry
majorly depends upon auto industry.
Many customers possess in house captive forging plants posing a threat of
Backward Integration.
In sluggish demands, buyer becomes reluctant to cut cost.

Bargaining power of Suppliers: Low

The major raw material used in this industry is carbon and steel which are not
differentiated. This reduces bargaining power of the suppliers.
Little threat of Forward Integration.

Internal rivalry among incumbent firms: Medium

Most of firms in the industry are small compared to big daddy Bharat Forge. 10
However, the market prices sludge in the souring markets due to increased pressure
for capacity utilization and increased pressure due to high fixed costs.
 S.W.O.T.

Strengths Weaknesses Opportunities Threats

largest Exports Over dependance on Huge demand in Rising input costs;

across the globe US markets automobile industry particularly steel and
High Economies of Over dependance on Auto OEM -----> Electrical Power.
Scales automobile segment outsourcing for cost Demand for new
Strong and Trusted Lack of in-house R & cut products, specially
Brand D Demand-----> from forign OEM's
Technology. Less focus on small Nuclear, Power and which may not
forging equipments. Refinery Sectors. match by Economic
Highly efficient
Demand -----> Order Quantity
production cycle. Sales contribut 20%
of passenger cars Construction, Threat of Light
Global Presence
and 60% of Infracture. Weight Synthetic
Integrated Supply forging material
Chain system commercial vehiles,
while the passenger competition
Closely related value
car market is 4 times High debtor days
chain system.
of C.V. market. against low creditor
days
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THE RACING HORSE - ACQUISITIONS

CDP IMATRA KILSTA

Kristall Forge, UK CDP ALUMINIUMTECH FEDERAL FORGEAB & SCOTTISH
2000 AD 2003 - 2004 AD IK 2005 AD STAMPINGS
$4.5 million $50 million 2003 - 2004 AD $10 million 2005 AD
$8 million $55 million

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HINDSIGHT OF GLOBAL EXPANSIONS
Federal Forge Inc (USA)
To expand the dual shore manufacturing base through strategically located
complimentary facilities around the world.
Manufacturing base near to Ford, G.M.
Stronghold in the US passenger car market and LCV market.

CDP AT (Germany)
Entry in high end and fast growing aluminum auto-component business.
Strong position in chassis component business.
CDP Customer base : BMW, Audi, Volkswagen, Ford etc.

Imatra Kilsta AB ( Scotland)

Access to core production like front axle beams, crankshafts, knuckles and pistons.
strengthens the companys dual shore supply capability across
Engine & Chassis components to both Global Passenger Car & Commercial
Vehicle manufacturers.

FAW Corporation (China)

Joint Venture to capture biggest forging market of the world. 13
Learnt low labor cost effective operation modules.
Enhancement in the C.V. segment.
THE LEADERSHIP
What makes Baba Kalyanis new
game plan noteworthy? At the turn of
the century, Bharat Forge was just
another company in the $1 billion auto
ancillary industry. Following a
slowdown in the Indian commercial
vehicle sales during 1997-2002,
Kalyani had pushed hard to increase
his exports. Six years after that plan 14

which took the companys sales

DE- RISKING STRATEGY

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 DE- RISKING THE BUSINESS
90%

80%

2014 -15, 75%

2008 -09, 72%
70%

60% 2011 -12, 60%

50%

40% 2011 -12, 40%

30%
2008 -09, 28%
2014 -15, 25%
20%

10%
16
0%
0 0.5 1 1.5 2 2.5 3 3.5
REFERENCES AND BIBLIOGRAPHY
www.bharatforge.com
Business standard ( July 2009,
September 2010)
The Business line ( Jan 2008)
The Financial Chronicle ( May 2011)
The Wall street journal ( E - Journal)
(2010)
Www. Ibdf.org
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