Bharat Gears Ltd. Business Report FY ended Mar. 2017

Recent Years

Financial Overview

FY ended March 31, 2017

-Net sales in the fiscal year ended March 31, 2017 increased by 2.3% to INR 4,067.8 million y/y. This was a result of increased sales to domestic OEMs which was partially offset by the impact of demonetization of the Automotive Component segment.

FY ended March 31, 2016
-Net sales in the fiscal year ended March 31, 2016 decreased by 4.2% to INR 3,974.9 million y/y. This was a result of a weakening of the tractor market in India as well as general global slowdown in the demand for agricultural machinery, leading to a decrease in exports to overseas customers.

FY ended March 31, 2015
-Net sales in the fiscal year ended March 31, 2015 decreased by 1.2% to INR 4,148.9 million y/y. This was due to the sharp fall in the Company's primary market comprised of tractors in India. The reduction in domestic sales was largely offset by the increased growth of exports.

FY ended March 31, 2014
-The Company's net sales in the fiscal year ended March 31, 2014 increased by 6.9% from the previous year to INR 4,198.7 million. The increase in sales was driven primarily by higher demand in domestic tractors and exports, while being offset by weaker sales in the commercial and passenger vehicle markets.

FY ended March 31, 2013

-In the fiscal year ended March 31, 2013, the Company's net sales were INR 3,926.2 million, representing a decrease of 8.8% from the previous fiscal year. The decrease in sales was due to a drop in the market demand for vehicles in India.

Business Strategy

-Over the past few years, the Company has committed to a long term strategy that focuses on growing exports. The share of exports in net sales has been increasing steadily from 20% in the fiscal year ended March 31, 2012 to 34% in the fiscal year ended March 31, 2016.

Awards

-The Company received the “Best supplier award” from Escorts Limited and the Quality award from TMA for the fiscal year ended March 2017.

-The Company's Lonand plant received the “zero defect supply award" from Toyota Kirloskar for the fiscal year ended March 2017.

-The Company’s Faridabad plant won a Supplier Excellence Award, achieving “Partner” level status, for the fiscal year ended March 2016 from one of its overseas customers.

R&D Activities

FY ended March 31, 2017

A new low-cost, auto-loading mechanism for gear shaping machines was installed and the same is planned for gear hobbing machines. Mechanical de-buring/buffing machinery was installed to reduce manual work.

FY ended March 31, 2016
-A new coordinate measuring machine was installed in the Company’s Faridabad Plant to upgrade the inspection facility.

FY ended March 31, 2014
-The Company introduced and implemented an Outer Diameter (OD) grinding process with multi-gauge capabilities that reduced cycle times by approximately 90%.

FY ended March 31, 2013
-The Company developed a new process to manufacture shafts and planetary gears to improve the compressive strength of components.

Product Development

FY ended March 31, 2016
-The Company developed a state-of-the-art crown wheel and pinions for a variety of applications.

FY ended March 31, 2013
-The Company developed two types of straight bevel gears which contain differential locks used in axles.

Capital Expenditure

(in million INR)

FY ended in Mar. 31, 2017

FY ended in Mar. 31, 2016

FY ended in Mar. 31, 2015

Total

78.2

76.6

52.8

Investment Within India

FY ended March 31, 2017
-The company installed a Viper 500 - grinding machine in its Lonand plant. It also entered into an agreement with Klingelnberg, Germany for procuring a C30 Gear Cutting Machine and a P40 Gear Measuring Machine for the Faridabad Plant.

FY ended March 31, 2016
-The Company installed a hobbing machine to cut worm gears. The Company also installed new software for its P–40 machine.

FY ended March 31, 2014
-First stage construction at the Company's new facility in Satara, Lonand was completed in the fiscal year ending March 31, 2014. Commercial production at the plant began on March 31, 2014. The Lonand (Satara) plant initially produced gears for transmissions.

FY ended March 31, 2013

-In May 2012, the Company started construction on its third plant in Lonand, Maharashtra. The plant was scheduled to be inaugurated in May 2013, including the process of testing and commissioning various machinery. This will then be followed by trial production. Commercial production at the new plant was scheduled to begin in the fiscal year ended March 31, 2014. The plant initially focused on manufacturing transmission gears.

-The Company ordered a Klingelnberg CNC gear cutting machine and a Gleason shaving cutter sharpening machine to increase its gear production capacity.