Bharat Forge Ltd. Business Report FY ended Mar. 2020

Financial Overview

-In the fiscal year ended March 31, 2020, the Company's consolidated sales declined by 20.6% to INR 80,558 million against INR 101,457 million in 2019. A major portion of the decline was attributable to the slump in the Indian M&HCV production volumes, demand declining across major geographies and segments due to structural and regulatory changes in the automobile industry, such as the switch to higher emission standards and vehicle electrification. -The Company’s EBITDA of INR 11,388 million in the fiscal year ended March 31, 2020 down by 43.9% against the EBITDA of INR 20,284 million in the previous fiscal year.

Outlook

-For Commercial vehicles, the Company is focusing on right-sizing production levels and reducing costs. There is now increased focus on R&D and innovation to develop new BS-VI compliant products, improve vehicle efficiency, and increase content per vehicle. With the industry transitioning from BS-IV to BS-VI standards from April 1, 2020, the Company is fully prepared to capture this opportunity and to maintain its leading position in the domestic market.
For passenger vehicles, it will continue to focus on its growth trajectory in PVs by introducing value-added products, enhancing focus on R&D and building relations with new OEMs. For EMobility , it is strategically targeting the two- and three-wheeler, commercial vehicles and buses segments, given that very few players are operating in this space.

Award

-During the Financial year 2019-20, Bharat Forge was recognized by following OEMs

OEM	Award
TATA MOTORS	Quality Excellence Award
VE Commercial Vehicles Ltd	SCM Award
Mahindra & Mahindra	Best Product Development
Mahindra & Mahindra	Best Overall Supplier
General Motors	Supplier Quality Excellence
PACCAR/DAF	LEADER Award

R&D Expenditure

(in million INR)

	FY ended Mar. 31, 2020	FY ended Mar. 31, 2019	FY ended Mar. 31, 2018
Overall	474.7	547.5	374.3

-Total R&D expenditure in fiscal year ended March 31st, 2019, is 1.0% of total turnover.

R&D Activities

-In the fiscal year ended March 31, 2020, the Company's R&D activities focused on design innovation of suspension components from casting to Aluminum forging for heavy commercial vehicle, In-house software development for Gear design, technology development for cold forgings and Precision / near net shape forgings and forging components design innovation for Light weighting.

-With acquisition of REFU Elektronik, coupled with the Company’s competent design and development center in Pune, Maharashtra, it started development of power electronic components for Indian customers. Products such as motor controllers, DC-DC converters, and on-board chargers for electric vehicles are expected to be launched in FY 2021.
The Company, with the support of Tevva, has started road trials of commercial electric trucks in India to understand the performance of key components such as battery and motor, and is engaged with multiple customers for developing electrified trucks and buses.

Patents

-During the fiscal year ended March 31, 2020, the Company filed 11 patent applications. The Company has filed a total of 70 patents in its lifetime.

Investments in India and Overseas

India
-In April 2019, Bharat Forge entered into a Share Subscription Agreement with Eternus Performance Materials Private Limited (Eternus), Kolhapur, India and existing shareholders of Eternus. The Company has acquired 51 % of equity shares of Eternus and consequently Eternus has become subsidiary of the Company. Eternus is in the business of high-end research and development oriented manufacturing of Advanced Composite Products and precision machined metallic components.

-In May 2019, Bharat Forge has entered to acquire 26% stake in Aeron Systems for INR 100 million. Aeron Systems Private Limited is engaged in the business of manufacturing of technology products such as inertial navigation systems (INS) and loT devices for industries such as aerospace and defense, automotive, renewable energy and industry 4.0.

-In June 2019, Bharat Forge increased its stake in Pune-based electric motorcycle start-up Tork Motors to 48.86%. The Company has subscribed 1,895 equity shares at a premium of INR 21,103 per equity share of TORK which amounts for INR 40 million.

-In August 2019, Bharat Forge completed the construction on its Centre for Light Weighting Technology in Nellore is complete and it has begun final installation and fine tuning of the equipment at the center.

-In September 2019, Bharat Forge invested EUR 11.35 Million and acquired 50% stake in Refu Drive GmbH. REFU has incorporated a company under the laws of Germany in the name of Refu Drive GmbH. In June 2019, Bharat Forge entered into a Joint Venture with Refu Electronik GmbH, Germany for developing, manufacturing and selling on board controllers and components mainly - drives, invertors, converters (including AC/DC) and all kind of auxiliary applications, related power electronics and battery management (BMS), etc. for hybrid and electric 2-wheelers, 3-wheelers, cars and commercial vehicles.

-In December 2019 Bharat Forge announced that it has promoted and incorporated a wholly owned subsidiary company Kalyani Centre for Precision Technology Limited (KCPTL) for machining of engineering products. KCPTL will be engaged in the business of manufacturing, machining, fabricating, assembles, forgings, castings, supplier of engines, crankshafts, gears, machinery, vehicles, trucks, and other engineering products.

Germany
-Bharat Forge has set up an aluminum forging line in Bahrat Forge CDP Germany plant with an investment of EUR 30 million. It is also setting up a brand-new aluminum forging plant in the eastern part of Germany which will see investment of EUR 55 million.

USA
-In September 2019, Bharat Forge announced that Bharat Forge America, Inc., a wholly owned subsidiary of the Company is setting up a green-field forging and machining facility in North Carolina. The modern facility will address the Aluminium opportunity and have state of the art technology and processes. The 1st phase of the project involves approx. USD 56 million capital investment. This investment is backed up by orders already secured from prestigious OEM’s and has been achieved by leveraging its R&D capabilities.