Bharat Forge net plunges 54% on falling demand

Revenue also plunged 28.5% to Rs 673 cr

Auto components maker Bharat Forge today reported nearly 54% decline in net profit for the three months to December, 2012 at Rs 47.5 crore, driven down by sluggish domestic demand and lower exports.

The company had posted Rs 103 crore net profit in the same quarter previous fiscal.

Revenue also plunged 28.5% to Rs 672.6 crore over the same quarter last year due to 33.1% drop in exports which stood at Rs 310.5 crore, the company said in a release here.

Domestic sales declined 24% to Rs 362.1 crore amid continued slump in automobile demand coupled with a drop in components sales to the industrial sector, it said.

"On the back of continued weak and uncertain macroeconomic fundamentals globally, the company witnessed a sharp drop in demand across all sectors, customers and geographies in the export market in addition to the continued weakness in the domestic market," Bharat Forge Chairman and Managing Director Baba N Kalyani said.

Exports dropped due to the global decline in demand coupled with production cuts and block closure by OEMs to avoid inventory pile up, the release added.

The demand drop saw inventory de-stocking at OEMs which led to decrease in capacity utilisation in the reporting quarter, the company said, adding it undertook manufacturing cuts to reduce inventories and match its production levels with the new demand environment.

The non-automotive business, which has been a key growth driver over the past two-three years was also impacted by reduction in demand globally for infrastructure related products and solutions.

The company has initiated series of measures aimed at tight cost control and productivity improvements which has given some benefit in the quarter, he said.

"But we expect the full benefit to flow in the coming quarters. The overall macro environment is still volatile. However, we expect demand in Q4 to continue at the same level as in Q3 but still lower than on a y-o-y basis," Kalyani said.