Financial Daily from THE HINDU group of publications
Tuesday, Oct 22, 2002
Financial Daily from THE HINDU group of publications Tuesday, Oct 22, 2002 |
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Corporate Results
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Bearings, Castings & Forgings Bharat Forge Q2 net jumps 580 pc on higher exports Our Bureau
Mr Baba Kalyani, Chairman and Managing Director, Bharat Forge Ltd, at a press conference in Mumbai.
MUMBAI, Oct. 21 HIGHER exports with better margins facilitated a six-fold increase in the net profit of Bharat Forge Ltd for the second quarter of the current fiscal. Net profit jumped 580 per cent to Rs 17.35 crore (Rs 2.55 crore) for the second quarter and by 343 per cent to Rs 43.98 crore (Rs 9.95 crore) for the first-half period. Increase in sales, primarily because of a spurt in exports and higher margins on overseas sales, contributed to the bottomline, company officials said. Of the second quarter sales of Rs 156.39 crore, exports account for Rs 71.6 crore, a jump of 165 per cent. Increase in operating margins to 30 per cent from 23.2 per cent was mainly because of higher exports. "Export orders are so huge that we manage to get economies of scale, that's why margins are higher in exports,'' Mr Amit B. Kalyani, Vice-President, Chief Technology Officer, Bharat Forge Ltd, said. The company has been able to secure a 25 per cent share in the world axle component market, emerging as the leading supplier. In the engine component segment, Bharat Forge was the second largest in the world, Mr Baba Kalyani, Chairman and Managing Director of the company, said. Bharat Forge is targeting to increase its export share in total revenue to over 50 per cent. The company's agreement to supply forgings to Dana Corporation's Spicer Europe Ltd will bring in Rs 40 crore to the revenue this fiscal.
The company does not rule out the possibility of setting up manufacturing facility in Europe in the future. The company has been working on key focus areas - value addition, cost reduction, margin expansion and exports. Going in for finished machine products had helped the company reduce costs as well as achieve margin expansion, Mr Kalyani said. As part of cost reduction exercise, Bharat Forge has been reducing its debt. "This year we have a target of loan repayment of Rs 60 crore, so far we have paid back Rs 35 crore,'' he said, adding that the average cost of debt has been brought down to 9.5 per cent. In a bid to de-risk its businesses, the company was looking at expanding geographically, sectorally and product-wise, Mr Kalyani said. In terms of geography, the company is expanding within its existing export markets of North America, Europe and also looking at China. "We are increasing our presence in oil and gas opportunity, primarily in North America,'' Mr Kalyani said. In terms of product diversification, small forgings for passenger cars and SUVs is another area the company is keen on. Currently, the company supplies transmission component from Toyota's Indian arm. In China, the company has secured a long-term contract from an OEM. Supplies in Q2 were to the tune of Rs 15 crore.
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