Forging industry aims to reduce dependency on auto sector

Currently it follows the global trend which has always been 70: 30% ratio (auto: non auto sectors)

Due to global economic slowdown especially in automotive sector, the forging industry seems to be very cautious. The Industry is not too optimistic of growth in forging production in the ensuing fiscal too, especially with ever growing energy costs, which has shown a steep 36 to 38 per cent increase. Additionally, diesel prices have been hiked thrice since the partial deregulation in January 2013.

According to Association of Indian Forging Industry(AIFI), the sector is aiming to reduce dependency on the auto sector. Recently, Pune based forging giant, Bharat Forge is also investing significantly in creating new capacities for non-automotive sector across globe for new business development. 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.

“The sector, which had grown by 18 per cent during the year 2011-12 over the previous financial year, is set to see a flat business during 2012-13, mainly impacted by the slowdown in the automotive industry,” said Asheet Pasricha,  the newly appointed president of Association of Indian Forging Industry.  The forging industry has installed capacity of 3.75 million tonnes a year and achieved 75 per cent capacity utilisation at 2.8 million tonnes.      

Pasricha added, "With this current scenario, the industry is now trying to water down its dependence on the auto sector, which still accounts for a share of about 70 per cent of total forging production. In anticipation of reduced growth from the auto sector and imports from Indian auto component businesses, the forging industry as a whole had consciously taken steps to reduce their dependence on the auto sector and grow opportunities from other sectors."

Currently it follows the global trend which has always been 70: 30 per cent ratio (auto: non auto sectors).

Sectors like power, aerospace, defence, aviation, infrastructure and heavy engineering have been on the industry radar. Following that significant investments were made by both big established and new players towards the same.