Bharat Forge Ltd. Business Report FY ended Mar. 2018
Financial Overview
-In the fiscal year ended March 31, 2018, the Company's consolidated sales increased by 27.4% to INR 85,566.8 million compared to INR 67,174.4 million in the previous fiscal year. The Company's sales were increased by contributions from passenger vehicles due to new customer additions and value-added products.
-The Company’s EBITDA of INR 17,787 million in the fiscal year ended March 31, 2018 was up by 39.9% compared to the EBITDA of INR 12,717 million in the previous fiscal year. EBITDA percentage increased from to 21.3% compared to 19.9% in the year previous.
-In the fiscal year ended March 31, 2017, the Company's consolidated sales were down by 5.8% to INR 65,981.6 million compared to INR 70,015.6 million in the previous fiscal year. The Company's sales were negatively affected due to weak export demand and disappointing growth in the Indian M&HCV space.
-The Company’s EBITDA of INR 12,717.8 million in the fiscal year ended March 31, 2017 was down by 12.1% compared to the EBITDA of INR 14,475.8 million in the previous fiscal year. EBITDA percentage declined by 300 bps from 30.1% in FY 2015-16 to 27.1% in FY 2016-17 as a result of a decline in total income.
-In the fiscal year ended March 31, 2016, the Company's consolidated sales remained flat at INR 77,801 million compared to the INR 77,589 million in the previous fiscal year. The Company's sales were negatively affected due to the slowdown in the North American Class 8 truck market. However, growth in the passenger vehicle segment offset those losses.
-The Company’s EBITDA of INR 14,745 million in the fiscal year ended March 31, 2016 remained level compared to the EBITDA of INR 14,750 million in the previous fiscal year. EBITDA margins were also flat at 19.3% as the increase in project related costs were negated by favorable input prices.
Restructuring
-During the fiscal year ended March 31, 2018, the Company announced a strategic investment of GBP 10 million in Tevva Motors (Jersey) Limited. The company is setting up a Center for Light Weighting Technology (LWT), a fully automated state-of-the-art manufacturing plant in Andhra Pradesh focused on aluminum and magnesium component and products.
-During the fiscal year ended March 31, 2017, its wholly-owned subsidiary, Bharat Forge America has completed the acquisition of two U.S. companies, Walker Forge Tennessee LLC (WFT) and PMT Holdings Inc.
-During the fiscal year ended March 31, 2017, the Company divested its 49% stake in its joint venture with Alstom, Alstom Bharat Forge Power Private Limited (ABFPPL).
-During the fiscal year ended March 31, 2016, the manufacturing operations of CDP Bharat Forge GmbH were transferred to a new subsidiary company in Germany called Bharat Forge CDP GmbH (BF CDP).
-In the fiscal year ended March 31, 2016, Bharat Forge Aluminiumtechnik GmbH & Co. KG changed from a partnership firm to a limited liability company named Bharat Forge Aluminiumtechnik GmbH.
Divestiture of stake in hybrid system joint venture
-The Company divested its 50% stake in the joint venture Impact Automotive Solutions Limited to its joint venture partner, KPIT Technologies Limited. Impact Automotive Solutions was formed in 2010 for the development and manufacturing of automotive hybrid solutions. The Company's stake was sold to KPIT Technologies for INR 108 million. (From an announcement on September 8, 2014)
Contracts
-During the fiscal year ended March 31, 2018, the Company has secured long term orders of INR 7 billion across various segments & geographies. Over the past two years, new business wins of INR 15 billion have been secured, 90% of the wins being from the passenger vehicle segment.
-During the fiscal year ended March 31, 2017, the Company has secured USD 120 million worth of new business wins spread across geographies and business verticals. A majority of these wins are for new products developed over the past 2 years.
-The Company announced that its German subsidiary Bharat Forge Aluminiumtechnik GmbH & Co KG (BFAT) has won a multi-year contract approximately worth EUR 250 million from a German OEM for the supply of suspension components. BFAT will add a new press line to produce additional components for this contract. (From a press release on May 8, 2014)
Outlook
-The Company has plans for a greenfield investment to increase forging and machining capacity, improve free cash flow, maintain a strong balance sheet, improve return ratios, and focus on creating a footprint in new strategic businesses.
-The Company will establish a core platform for Smart Manufacturing under an Industry 4.0 program.
Awards & Recognition
-In Feb. 2017, Bharat Forge was awarded the Daimler Supplier Award 2016 for the international supply of best quality crankshafts and front axle beams in the Global Procurement Trucks and Buses section.
-In April 2017 , Bharat Forge was named a GM 2016 Supplier of the Year by General Motors during its 25th annual Supplier of the Year awards ceremony.
-In July 2016, Bharat Forge was awarded a Certificate of Recognition from General Motors by ensuring competitiveness for GM’s Global Business.
R&D Expenditure |
(in million INR) |
| FY ended Mar. 31, 2018 | FY ended Mar. 31, 2017 | FY ended Mar. 31, 2016 | |
| Overall |
374.3
|
333.4
|
396.1
|
- Total R&D expenditure in fiscal year 2017-18 is 0.7% of total turnover
R&D Activities
-In the fiscal year ended March 31, 2018, the Company's R&D activities focused on the development of additive manufacturing, Technology development for precision forging, development of forging parts for hybrid vehicle, development of parts for electric vehicles through economical manufacturing process, development of near net shape components for differential gear box, aluminum forgings for MPV and gear box assembly for large vehicles, and the development of Planet carrier assembly for HCVs.
-In the fiscal year ended March 31, 2017, the Company's R&D activities focused on the development of additive manufacturing, technology development for cold and precision forging, development of parts for electric vehicles through economical manufacturing process, aluminum forgings for MPV, and gear box assembly for large vehicles.
During the fiscal year ended March 31, 2017, the company imported technology for the design, machining & assembly of aluminum impellers for turbochargers.
-In the fiscal year ended March 31, 2016, the Company's R&D activities focused on the development of additive manufacturing through technologies such as 3D printing, electron beam welding, laser welding, metal injection molding, and nanotechnology. The R&D team is working on various projects, including developing technologies that reduce the Company's carbon footprint, manufacturing lightweight products, and lowering energy consumption.
Patents
-During the fiscal year ended March 31, 2018, the Company filed 14 patent applications. The Company has filed a total of 47 patents in total.
-During the fiscal year ended March 31, 2017, the Company filed 10 patent applications. The Company has filed a total of 34 patents in total.
-During the fiscal year ended March 31, 2016, the Company filed 12 patent applications. The Company has filed a total of 22 patents in total.
Investments outside India
<UK>
-In June 2018, the Company acquired Tevva Motors (Jersey) Limited for GBP 10 million. Based in Chelmsford, UK, Tevva provides electric powertrain solutions for commercial vehicles & buses in the 7.5 -14 ton weight category.
-In January 2018, the Company opened a research and development facility in UK, in the MIRA Technology Park. The company will develop component and sub-systems focused on electric vehicles.
-In August 2016, the Company acquired shares of its UK-based subsidiary, Bharat Forge International (BFIL), from Bharat Forge Global Holding GMBH for USD 4,544,000. Consequently, BFIL has become a wholly-owned subsidiary of the Company.
<U.S.>
-In December 2016, the Company acquired 100% of Walker Forge Tennessee LLC & PMT Holdings Inc. USA (WFT) for USD 14 million through its U.S. subsidiary, Bharat Forge America Inc. USA. WFT is a leading supplier of complex and high-strength alloy steel engine and chassis components to a diverse group of customers across the automotive and industrial sectors.
<Germany>
-The Company's subsidiary, Bharat Forge Aluminiumtechnik GmbH & Co. KG (BFAT), is increasing its production capacity due to a new EUR 250 million contract to provide suspension components for a German OEM. BFAT is adding a new press line with auxiliary equipment and capabilities including melting. The new press line was commissioned in January 2015 and was established in the state of Saxony at Brand-Erbisdorf. A total of EUR 31 million was invested into the new line. (From a press release on May 8, 2014)
<Israel>
- In January 2018, the Company has incorporated a wholly-owned subsidiary‘Indigeneous IL’in Israel. It is started with the object of exploring targets in the technology space and also tie ups with universities/technology institutions to further upgrade its research and developmental initiatives in various new technologies.