Kalyani Group Business Report FY ended Mar. 2020

Recent Years

Bharat Forge Ltd.

Financial Overview (FY ended Mar. 31, 2020)
-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% to 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 E-Mobility , it is strategically targeting the two- and three-wheeler, commercial vehicles and buses segments, given that very few players are operating in this space.

Awards & Recognition
-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 INR million)

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


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. Oroducts 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 2020, Bharat forge announced that it will increase its stake in Pune-based electric motorcycle start-up Tork Motors to 48.86 percent. The Company has subscribed 1,895 equity shares at a premium of INR 21,103 per equity share of TORK which amounts for INR 400 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.
 

Automotive Axles Ltd.

Business Overview (FY ended Mar. 31, 2020)
-In the fiscal year ended March 31, 2020, Automotive Axles Ltd. consolidated sales decreased by 50.6% to INR 9,596.8 million, compared to INR 19,420.0 million in year previous. The decline in revenue was a direct result of low production among its key OEM clients. This decline in production is due to an extremely weak demand scenario in the Commercial Vehicle (CV) industry, as OEMs remain cautious in ramping up BS-VI vehicles production.

-EBITDA decreased by 56.5% to INR 1010.1 million in FY 2019-20 against INR 2320.5 million in FY 2018-19.

Investment in India
-In the fiscal year ended March 31, 2020, Automotive Axles Limited (AAL) inaugurated a new state-of-the-art assembly line, which uses cutting-edge technology and contemporary equipment like robotic painting line and IoT-enabled processes. This new assembly line is Industry v4.0 enabled and offers world-class manufacturing of axles with process and product traceability, real-time data acquisition enabling monitoring of process and operations dynamically and data-based decision-making.

-Housing line capacity was enhanced by improving existing processes and infusing high technology processes like robotic welding cells and multi-machining machines.

-Gear Set capacity improves by adding cutting-edge close-loop machines, which facilitate the production of benchmarked-quality offerings

Awards
-During the fiscal year ended March 31, 2020, Automotive Axles Limited (AAL) has won following awards

OEM Award
TATA MOTORS Best support for Vehicle off road
Ashok Leyland Gold Award for Business Alignment
Volvo Specialty Vehicle Build & Support
VECV ‘KATA’ initiative