Financial Daily from THE HINDU group of publications
Tuesday, Sep 03, 2002
Financial Daily from THE HINDU group of publications Tuesday, Sep 03, 2002 |
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Corporate
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Restructuring Bharat Forge to cut interest cost by retiring part of debt Vipin V. Nair
NEW DELHI, Sept. 2 IN line with its continuing efforts to rein in costs, the Pune-based auto component maker, Bharat Forge Ltd, is planning to reduce its debt by Rs 60 crore in this fiscal that will help it pare interest burden, a top company official has said. "As part of our strategy to cut costs, we will pay back a part of our debt this year, to the tune of Rs 60 crore," said Mr Amit Kalyani, Director of the company. Speaking to Business Line after receiving the Automotive Component Manufacturers Association (ACMA) award for excellence in exports, Mr Kalyani said Bharat Forge would continue to reduce the debt by Rs 60 crore annually for the next two-three years. Bharat Forge, which makes forgings for commercial vehicles and cars, has been striving to trim expenses to boost profitability as its business was hit in the last couple of years due to the downturn in the auto sector. The company's revenues came down to Rs 434.4 crore in 2001-02 from Rs 483.07 crore in 2000-01 and Rs 511.69 crore in 1999-2000 while net profit shrunk to Rs 22 crore in the last fiscal from Rs 32.65 crore in 2000-01. However, the company has been effectively cutting costs in this period through reducing the number of employees, adopting technology to lessen cycle times and retiring high cost debt. During 2001-02, Bharat Forge achieved a 21 per cent reduction in interest expenses by reducing its debt from Rs 412.9 crore to Rs 3,882. 2 crore.Interest costs were whittled down by Rs 12 crore to Rs 45.4 crore from Rs 57.3 crore a year ago. The company had incurred the debt for capacity expansion in1999-2000. Exports to grow further Mr Kalyani said Bharat Forge aims to earn 50 per cent of its revenues from exports by 2005-06 by aggressively tapping new countries such as China, from where the company recently bagged a substantial order. Currently, exports account for 30 per cent of Bharat Forge revenues. "Our exports have grown by 50 per cent and we are now completely focussed on this market," Mr Kalyani said, adding that he expected to garner more orders from Europe and other parts of the world during the current year. The US currently accounts for over 80 per cent of the company's exports. Clients of the company include Toyota, Daimler-Chrysler, Renault, Caterpillar and Cummins.
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