Hybrid, connected vehicles to drive Bharat Forge growth

It gets half of its revenue from commercial vehicles and another 40% from industrial buyers

Leading automobile component maker Bharat Forge is looking at growing business from emerging areas like electric, hybrid and connected vehicles. This will allow the Pune-headquartered company to expand the revenue share from passenger vehicles (PV) beyond the current 10-12 per cent.

The component maker currently gets half of its revenue from commercial vehicles and another 40 per cent from industrial buyers. “The automobile as we know today is going to change. Because of youth, India will adopt change faster than many countries. We are doing a lot of work on hybrid and electric. We’re looking at various options to grow this,” Amit Kalyani, executive director, told Business Standard in a recent interaction.

The component maker has already commenced production for hybrid parts for high-end passenger cars in its European operations. It is developing several new components for hybrid and electric vehicles for customers in India and abroad. Such parts will also be exported from India.

The firm, Kalyani said, is looking at several new products and technologies that will allow it to increase the revenue per vehicle in the PV segment. “We definitely expect it to go up”. Bharat Forge is waiting for harmonisation of standards in the hybrid-electric vehicle space before it firms up investment plans. 

“Today everybody’s technology for electric and hybrid is different. Once harmonisation happens, one can tune investments in that direction,” he added.

A foot into these new areas will help the company go beyond its traditional products, such as engine and chassis components, and enhance the value chain. The firm gets about 60 per cent of its consolidated revenue of $1.2 billion (FY16) from foreign markets.

Talking about connected automobile space and related emerging areas, Kalyani said the company had to work in these areas. It may have to look at getting into joint ventures or acquiring firms in these areas.  “Wherever we have technology gaps and we think we can’t bridge those organically, we will look at opportunities. We are looking at world as our resource.” The firm sits on a cash reserve of Rs 1,800 crore. Connected automobiles are equipped with internet access, and usually also with a wireless local area network. 

To widen its portfolio, the firm has recently ventured into industrial spaces like mining, oil & gas and aerospace. Revenues from industrials are up to 40 per cent against seven-eight per cent three-four years ago. “If we had not done that, the impact in this downturn would have been severe,” said Kalyani.