Bharat Forge focuses non-automotive sector for growth

The company is setting up new plant of aluminum based auto parts manufacturing in Germany and it will mainly cater to auto makers like Volkswagen in Germany

Despite the global slowdown, forging major Bharat Forge Ltd (BFL) is investing significantly in creating new capacities for non-automotive sector across globe for new business development. The results are gradually becoming evident for BFL.

Bharat Forge is setting up a new plant of aluminum based auto parts manufacturing in Saxony, Germany and it will mainly cater to automobile manufacturers like Volkswagen in Germany. The demand for aluminum has increased and the company will make components for chassis of passenger cars. However, Kalyani has not disclosed the investment details saying that it will be operational in the beginning of 2104. The annual capacity of this plant is of producing 2.5 million components.

To reduce the impact of cyclicality, the company is aiming business verticals such as passenger vehicles, commercial vehicles and industrial across North America, Europe and Asia. BFL's presence across these segments will largely insulate it from the cyclicality in the automotive sector.

"We have entered into five high growth verticals which include  oil & gas, construction and mining equipment, railways, marine engines and aerospace.  We are large suppliers to oil and gas industry in North America. In railways, we focus on locomotives, supplying components for locomotives around the world including in India, US, Russia and Europe. In aerospace segment, we have built relationship with material suppliers for specialized raw materials despite the criticality of the components", said Kalyani. All the products are being manufactured at its Mundhwa and Baramati facilities.  BFL's 40 per cent business comes from non-automotive sectors which was 20 per cent few years ago.  Kalyani expects the share of non-automotive components to increase further. He also stated that there are tremendous opportunities in automotive space as the passenger car segment will drive the growth and globally, it will grow from 55 million cars to 90 million cars annually.

However, BFL has completed the restructuring of its North American manufacturing operations in Lansing, Michigan. Despite sluggish market conditions, its Europe operations have registered top line growth of 10.6 per cent. But the Chinese JV with FAW Corporation has registered weak performance due to slump in demand for commercial vehicles in China.

Speaking about BFL's decision of de-notifying Special Economic Zone at Khed near Pune, he said, "There is no demand for SEZs now and we are developing domestic industrial park at Khed. De-notification is very complex process and will take another three months. Few customers have shown their interest in this park."