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Sudha Menon

PUNE, May 23

THE Pune-based forgings company, Bharat Forge, has bagged an approximately $20 million order for supply of engine components from a forging company based in Wuxi city of China's Jiangsu province, top company sources told Business Line on Thursday.

The company would supply crankshafts and knuckle assembly parts, among other things, under a strategic alliance with the Chinese company, which is a major supplier to the country's vehicle manufacturers, sources said. The contract will initially be in effect for a period of five years. The Chinese company also runs a consortium of other auto-related businesses, sources said.

Bharat Forge officials remained unavailable for comment despite repeated attempts to meet them, but a company statement said: "A leading Chinese auto OEM has awarded Bharat Forge Ltd a large contract for supply of engine components."

Sources said the two companies had been exploring the possibility of doing business over the last six months. "At least six delegations from the Chinese company visited our manufacturing facilities in this period, since they had serious concerns about quality which they wanted to clarify," the sources said, adding that the final seal of approval was received a couple of weeks ago. Trial shipments of the components have commenced recently and the company expects to start shipments in the current fiscal.

China has a large automotive and commercial vehicle industry, but does not have a high quality forgings industry to support it. Sources at Bharat Forge said the Chinese partner with whom it had entered into an alliance till recently used the conventional castings method for its components, but was now in the process of switching over to more contemporary forgings technology which it does not possess.

The Pune company is believed to have bagged the order against the backdrop of stiff competition from other forging companies in India, which were also considered by the Chinese company. For Bharat Forge, the Chinese connection is likely to be a shot in the arm since it has been exploring ways to increase its exports business, tapping new markets in Europe and even the non-automotive sector, to offset the slump in the domestic market.

The company's business went into downward spiral when both the US and the domestic market nose-dived almost immediately after it made a major investment in a new, large capacity press line in fiscal 2000. Till January this year, the company was utilising only 50 per cent of its installed capacity.

Bharat Forge, it may be recalled, entered into an agreement in January this year with the US-based Dana Corporation whereby it supplies forgings to customers of the latter's Kirstall, Leeds-based forgings business, under a seven-year contract. The company's export earnings in the fiscal ended March 2002 recorded a 30 per cent increase at Rs 110.3 crore over the last fiscal when export earnings stood at Rs 85.1 crore.

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