Description
It explainstalks about Industry Trends, PEST Analysis of Industry, Competitor Analysis, SWOT analysis, Company Description, General Information about Bharat Forge, it's Finance performance, SWOT analysis of Bharat Forge and Various Strategies employed.
Report on
BHARAT FORGE
Industry Analysis:
1. Industry trends: Indian and Global perspectives, recent happenings: Bharat Forge Limited (BFL), the Pune based Indian multinational is a technology-driven global leader in metal forming, trans-continental presence across a dozen manufacturing locations, serving several sectors including automobile, power, oil and gas, rail & marine, aerospace, construction & mining, etc. With manufacturing facilities spread over 11 locations and 5 countries – 4 in India, 3 in Germany, 1 each in Sweden, North America and 2 in China, Bharat Forge Limited, today is a global corporation with world-class engineering capabilities, state-of-the-art manufacturing facilities, high levels of service and a global customer base. Its customers include Daimler Chrysler, Toyota, BMW, General Motors, Volkswagen, New Holland, Audi, Renault, Ford, Volvo, Caterpillar – Perkins, Iveco, Arvin Meritor, Detroit Diesel, Cummins, Dana Corporation, Honda, Scania and several others. BFL is now starting to manufacture its products in non-automotive space and is currently spearheading a major up scaling of its capacity in forging, casting, fabrication, machining and assembly to launch its multi-sectoral growth plans across sectors such as Energy (Oil & Gas, Power), Transportation (Railway, Marine, Aerospace) and Construction & Mining.
2. PEST Analysis:
? Political: ? ? ? Liberalization measures taken by Government of India. Banking Liberalization. Increased cost of O.E.M.’s in Russia, UK, U.S.A. and Germany.
? Economical: ? ? ? ? Automobile sector growth by 20-25%. Expected growth rate of the industry by18%. Discounted (almost at 20%) variable cost in India. Reduction in Custom duty (30% to 25%) by G.O.I.
? Social: ? ? ? Increased acceptance of Made in India brand across the globe. Increased trend towards strategic alliance in R&D. Increased global pressure to move up value chain.
? Technological: ? ? ? ? Increased emphasis on Research, design and Development. Increased use of customized I.T. Enterprise Resource (E.R.P). Integration in Supply Chain management. Use of sophisticated Hydraulics and Processes.
3. Competitor Analysis: ? ? The biggest competitors of BFL are Kalyani Forge & Ahmednagar Forgings. The BSE prices are aboutBF 297.00 KF 173.65 AF 132.50 ? Kalyani Forge :- Their major clients are Cummins Komatsu Engine Comapny Inc., DMI Automotive Spain, S.L.U. & Honeywell Turbo Technologies SARL. In 2011 they partnered with Zenotech, Japan, to increase their cold forging expertise. Ahmednagar Forgings :- It is the second largest manufacturer of forged automotive components, cold forged parts and high tensile fasteners in India. AF have Joint Ventured with Neumayer Tekfor, Germany; Machining Magna Powertrain, Canada & Machining Sumitomo Metals, Japan.
?
4. SWOT Analysis of Industry:
? Strengths: ? ? ? ? ? ? High economies of scale. Strong & trusted Brands. Technology & man-power cost advantage. Integrated supply chain system. Closely related value chain system. Comprehensive CAD/CAM/CAE and product development capability.
? Weakness: ? ? ? Over-dependence on Automobile segment. Lack of in-house R&D. Less focus on small forging equipments.
? Opportunities: ? ? ? ? High demand in automobile industry. Demand in Nuclear, Power & Refinery sectors. Access to better technology & work practices across globe. Demand in Construction & Infrastructure.
? Threats: ? ? ? Rising input costs, particularly steel & electrical power. Demand for new products, especially from foreign OEM’s which may not match by Economic Order Quantity. Competition from low cost component manufacturing countries such as Thiland & China.
Company Analysis:
1. Company description : Bharat Forge is a flagship company of Kalyani group. BFL is a service supplier of forged & machined-engine & chassis components. It is a primary exporter of auto components from India & chassis component manufacturer worldwide.
2. General information about the company: ? Location of Headquarters:
India Pune Cantonment Mundhwa Pune - 411 036 INDIA Tel: +91-20-26702777 Fax: + 91-20-26822387 Email: [email protected]
Plant at Ennepetal CDP Bharat Forge GmbH Mittelstr. 64 D-58256 Ennepetal Phone: ++ 49 (0)2333-796-0 Fax: ++ 49 (0)2333-796-388 E-mail: [email protected]
Plant at Daun CDP Bharat Forge GmbH Julius Saxler - Str.4 D-54550 Daun / Vulkaneifel Phone: ++ 49 (0) 6592 - 9501- 0 Fax: ++ 49 (0) 6592 - 9501 -11
Plant at Brand - Erbisdorf Bharat Forge Aluminiumtechnik GmbH & Co. KG Berthelsdorfer Str. 8 09618 Brand-Erbisdorf (Germany) Tel. 0049 37322 16389 Fax 0049 37322 16333 Email: [email protected]
Bharat Forge America 2807 South Martin Luther King Jr. Blvd Lansing, MI 48910 Telephone: 517.393.5300
Bharat Forge Kilsta AB P.O. Box 428, SE-69127 Karskoga, Sweden Telephone: ++ 46 58663200
Bharat Forge Scottish Stampings Limited Neptune Works, East Park Road, Ayr Scotland KA8 9HR Telephone: ++ 44 (0) 1292 613400 Fax : ++ 44 (0) 1292 6134333
FAW Bharat Forge (Changchun) Company Ltd 118-1 Dong Feng Da Jie Changchun Municipality Jilin Province PRC
? Year of Founding: The company was incorporated on June 19, 1961 & commenced its business in 1966. It was originally promoted by Kalyani family headed by Dr. Neelkanth Kalyani.
? Shareholding pattern: The equity shares of the Company is of a face value of Rs. 2 each.
Shareholders
6% 9% 42% Promoters Individuals 12% 12% 10% 9% FIIs Banks, Fis, Insurancs Cos. Corporate Bodies Mutual Funds/UTI Others
? Number of Employees: Employees of BFL is 10,000 globally.
? Top Management: Baba Kalyani is the Chairman of the Kalyani Group of companies and Chairman & Managing Director of the group’s flagship – Bharat Forge Limited - India’s largest manufacturer and exporter of automotive components. Born on 7th January 1949, Mr. Kalyani is a Mechanical Engineer from the Birla Institute of Technology and Science at Pilani, Rajasthan. He also has an M.S. in Engineering from the Massachusetts Institute of Technology, USA. As on 22nd December, 2011, the Board of Directors of Bharat Forge comprised of Sixteen Directors. The Board consists of Six Executive Directors including the Chairman and Managing Director, who is a promoter Director and Ten Non-executive Directors, Nine of whom are Independent Directors. Details are as given below: Details about Bharat Forge’s Board of Directors:Sr.No Name the Director 1 2 3 4 5 6 7 8 9 10 11 12 13 Category
B.N. Kalyani Chairman & Managing Promoter, Executive and Managing Director Director S.M. Thakore S.D. Kulkarni P.G. Pawar Dr. Uwe Loos P.C. Bhalerao Lalita D. Gupte P.H. Ravikumar Alan Spencer Naresh Narad Dr. T. Mukherjee G.K. Agarwal Deputy Managing Director Amit Kalyani Executive Director Non-executive, Independent Non-executive, Independent Non-executive, Independent Non-executive, Independent Non-executive Director Non-executive, Independent Non-executive, Independent Non-executive, Independent Non-executive, Independent Non-executive, Independent Executive Executive
14 15 16
B.P. Kalyani Executive Director S.E. Tandale Executive Director Sunil Kumar Chaturvedi Executive Director
Executive Executive Executive
3. Financial performance of the company for the past year:
? Sales: For the past one year i.e. Sales as on 31st March, 2012 is as shownWithin India 202,085 lacs Outside India 432,779 lacs Total Sales 634,864 lacs Less: Excise Duty 16,832 lacs Total Net Sales Rs.618,032 lacs
? Net Profit: Net Profit of the company is Rs. 42,022 lacs.
? Segment wise Revenue: i) ii) Forgings 625,801 lacs General Engg., Trading, etc. 2,881 lacs Total Rs.628,682 lacs
4. SWOT Analysis of Company:
? Strengths: ? ? ? ? ? ? ? One of the largest exporters across the globe. Strong group comfort of Kalyani Group. Diversified & de-risked business model. High economies of scale. Strong & trusted Brands. Large Global presence. Strong growth of 32% in Non- automotive business.
? Weakness: ? ? ? ? Over-dependence on US markets. A sale contributes 20% of passenger cars & 60% of commercial vehicles; while the passenger car market is 4 times of that. Frequent equity dilution. Exposed to currency fluctuation risks.
? Opportunities: ? ? ? ? High demand in automobile industry. Demand in Nuclear, Power & Refinery sectors. Demand in Construction & Infrastructure. Presence in developed as well as high growth developing economies to supplement topline as well as bottom-line.
? Threats: ? ? ? Demand for new products, especially from foreign OEM’s which may not match by Economic Order Quantity. Integrating subsidiaries operations & delay in ramping up of new capacities. Political & economical conditions in India.
5. Various strategies employed by the company in the course of conducting business: ? The US $2.4 billion giant ventured into the high-growth Indian energy market in 2011 with plans to become a leading supplier of generation equipment for thermal and nuclear power plants. The power sector provided the perfect opportunity to Bharat Forge as the nation embarked on an ambitious plan to add 78,000 Mw in the 11th plan. Bharat Forge, along with its Joint Venture partner Alstom, is setting up a manufacturing base in Mundra with an investment of Rs 1,500 crore, and the first turbine and generator units are expected to roll out by the end of 2012. Thus with that, they are bringing in the most modern technology, super critical technology, which has capability to run at 610-615 degrees temperature. They are bringing in modern technology, which produces less CO2, uses less fuel for the same amount of power generation and that plant is coming up near Mundra. So, it will be a plant which will produce about 5000 megawatts worth of equipments every year. Elsewhere, the foundation stone for the company’s JV with NTPC for manufacturing BoP near Solapur in Maharashtra was laid earlier in 2011. Thus, with that they will produce balance of plants, all the ash handlings, coal handling, water systems, pumps and valves and everything that goes in a power plant. The company has also Joint Ventured with David Brown Systems for opportunities in the heavy engineering sector. Bharat Forge is also partnering French nuclear giant Areva for the heavy forgings required for erecting nuclear power plants. The proposed facility will have a state-of-theart 14,000 tonne open-dye forging press and will be operational by end of 2012. The company formed a JV in 2010 with Pune-based technology firm KPIT Cummins to offer low-cost hybrid solutions for the auto industry and automobile owners. BFL is presently focused on creating a position of Global Leadership in the Engine & Chassis components for Passenger Cars and Commercial Vehicles. The company has therefore embarked upon a three-pronged strategy to offer the customers : Dual Shore Design capability Dual Shore Forging manufacturing capability Dual Shore machining capability
? ?
?
? ? ? ?
? ?
? ? ?
?
BFL has now completed the “Dual Shore” model for design and engineering and forging manufacturing. Following chart illustrates the same.
GLOBAL DUAL SHORE MANUFACTURING CAPABILITY Key Products Passenger Vehicles - Engine Component - Chassis Component M & HCV - Engine Component - Chassis Component Light Truck Parts - Engine Component - Chassis Component Key Services - Design & Engineering ? ? Represents the capability to manufacture the components. Being implemented. India Germany USA Sweden UK China JV with FAW
?
Company has aggressive plans to increase share of non-automotive revenues from 18% in 2007-08 to 40% in 2011-12.
It has definite plans for comprehensive foray into five strategically chosen verticals: The Power business unit would be a one stop power equipment supplier, offering BTG package, BOP Service and EPC. BFL is also entering in power generation and setting up a large generating capacity for supporting robust growth of the Indian economy. The Railways business unit would be a leading manufacturer of wheel sets, truck frames and locomotives components in India with sales across geographies. We aim to be top 3 railway component suppliers in the world over the next decade. The Oil and Gas business unit aims to be a global player in the upstream of equipment market. The primary product focus would be on valves, drill bits, surface flow and sub sea equipments.
The Aerospace business unit plans to be a leading supplier of various components - airframe, structural and engine parts for the aviation sector. The Marine business unit will be supplying various products to global ship builders. Key products include crankshafts, connecting rods and propeller shafts.
doc_646473063.docx
It explainstalks about Industry Trends, PEST Analysis of Industry, Competitor Analysis, SWOT analysis, Company Description, General Information about Bharat Forge, it's Finance performance, SWOT analysis of Bharat Forge and Various Strategies employed.
Report on
BHARAT FORGE
Industry Analysis:
1. Industry trends: Indian and Global perspectives, recent happenings: Bharat Forge Limited (BFL), the Pune based Indian multinational is a technology-driven global leader in metal forming, trans-continental presence across a dozen manufacturing locations, serving several sectors including automobile, power, oil and gas, rail & marine, aerospace, construction & mining, etc. With manufacturing facilities spread over 11 locations and 5 countries – 4 in India, 3 in Germany, 1 each in Sweden, North America and 2 in China, Bharat Forge Limited, today is a global corporation with world-class engineering capabilities, state-of-the-art manufacturing facilities, high levels of service and a global customer base. Its customers include Daimler Chrysler, Toyota, BMW, General Motors, Volkswagen, New Holland, Audi, Renault, Ford, Volvo, Caterpillar – Perkins, Iveco, Arvin Meritor, Detroit Diesel, Cummins, Dana Corporation, Honda, Scania and several others. BFL is now starting to manufacture its products in non-automotive space and is currently spearheading a major up scaling of its capacity in forging, casting, fabrication, machining and assembly to launch its multi-sectoral growth plans across sectors such as Energy (Oil & Gas, Power), Transportation (Railway, Marine, Aerospace) and Construction & Mining.
2. PEST Analysis:
? Political: ? ? ? Liberalization measures taken by Government of India. Banking Liberalization. Increased cost of O.E.M.’s in Russia, UK, U.S.A. and Germany.
? Economical: ? ? ? ? Automobile sector growth by 20-25%. Expected growth rate of the industry by18%. Discounted (almost at 20%) variable cost in India. Reduction in Custom duty (30% to 25%) by G.O.I.
? Social: ? ? ? Increased acceptance of Made in India brand across the globe. Increased trend towards strategic alliance in R&D. Increased global pressure to move up value chain.
? Technological: ? ? ? ? Increased emphasis on Research, design and Development. Increased use of customized I.T. Enterprise Resource (E.R.P). Integration in Supply Chain management. Use of sophisticated Hydraulics and Processes.
3. Competitor Analysis: ? ? The biggest competitors of BFL are Kalyani Forge & Ahmednagar Forgings. The BSE prices are aboutBF 297.00 KF 173.65 AF 132.50 ? Kalyani Forge :- Their major clients are Cummins Komatsu Engine Comapny Inc., DMI Automotive Spain, S.L.U. & Honeywell Turbo Technologies SARL. In 2011 they partnered with Zenotech, Japan, to increase their cold forging expertise. Ahmednagar Forgings :- It is the second largest manufacturer of forged automotive components, cold forged parts and high tensile fasteners in India. AF have Joint Ventured with Neumayer Tekfor, Germany; Machining Magna Powertrain, Canada & Machining Sumitomo Metals, Japan.
?
4. SWOT Analysis of Industry:
? Strengths: ? ? ? ? ? ? High economies of scale. Strong & trusted Brands. Technology & man-power cost advantage. Integrated supply chain system. Closely related value chain system. Comprehensive CAD/CAM/CAE and product development capability.
? Weakness: ? ? ? Over-dependence on Automobile segment. Lack of in-house R&D. Less focus on small forging equipments.
? Opportunities: ? ? ? ? High demand in automobile industry. Demand in Nuclear, Power & Refinery sectors. Access to better technology & work practices across globe. Demand in Construction & Infrastructure.
? Threats: ? ? ? Rising input costs, particularly steel & electrical power. Demand for new products, especially from foreign OEM’s which may not match by Economic Order Quantity. Competition from low cost component manufacturing countries such as Thiland & China.
Company Analysis:
1. Company description : Bharat Forge is a flagship company of Kalyani group. BFL is a service supplier of forged & machined-engine & chassis components. It is a primary exporter of auto components from India & chassis component manufacturer worldwide.
2. General information about the company: ? Location of Headquarters:
India Pune Cantonment Mundhwa Pune - 411 036 INDIA Tel: +91-20-26702777 Fax: + 91-20-26822387 Email: [email protected]
Plant at Ennepetal CDP Bharat Forge GmbH Mittelstr. 64 D-58256 Ennepetal Phone: ++ 49 (0)2333-796-0 Fax: ++ 49 (0)2333-796-388 E-mail: [email protected]
Plant at Daun CDP Bharat Forge GmbH Julius Saxler - Str.4 D-54550 Daun / Vulkaneifel Phone: ++ 49 (0) 6592 - 9501- 0 Fax: ++ 49 (0) 6592 - 9501 -11
Plant at Brand - Erbisdorf Bharat Forge Aluminiumtechnik GmbH & Co. KG Berthelsdorfer Str. 8 09618 Brand-Erbisdorf (Germany) Tel. 0049 37322 16389 Fax 0049 37322 16333 Email: [email protected]
Bharat Forge America 2807 South Martin Luther King Jr. Blvd Lansing, MI 48910 Telephone: 517.393.5300
Bharat Forge Kilsta AB P.O. Box 428, SE-69127 Karskoga, Sweden Telephone: ++ 46 58663200
Bharat Forge Scottish Stampings Limited Neptune Works, East Park Road, Ayr Scotland KA8 9HR Telephone: ++ 44 (0) 1292 613400 Fax : ++ 44 (0) 1292 6134333
FAW Bharat Forge (Changchun) Company Ltd 118-1 Dong Feng Da Jie Changchun Municipality Jilin Province PRC
? Year of Founding: The company was incorporated on June 19, 1961 & commenced its business in 1966. It was originally promoted by Kalyani family headed by Dr. Neelkanth Kalyani.
? Shareholding pattern: The equity shares of the Company is of a face value of Rs. 2 each.
Shareholders
6% 9% 42% Promoters Individuals 12% 12% 10% 9% FIIs Banks, Fis, Insurancs Cos. Corporate Bodies Mutual Funds/UTI Others
? Number of Employees: Employees of BFL is 10,000 globally.
? Top Management: Baba Kalyani is the Chairman of the Kalyani Group of companies and Chairman & Managing Director of the group’s flagship – Bharat Forge Limited - India’s largest manufacturer and exporter of automotive components. Born on 7th January 1949, Mr. Kalyani is a Mechanical Engineer from the Birla Institute of Technology and Science at Pilani, Rajasthan. He also has an M.S. in Engineering from the Massachusetts Institute of Technology, USA. As on 22nd December, 2011, the Board of Directors of Bharat Forge comprised of Sixteen Directors. The Board consists of Six Executive Directors including the Chairman and Managing Director, who is a promoter Director and Ten Non-executive Directors, Nine of whom are Independent Directors. Details are as given below: Details about Bharat Forge’s Board of Directors:Sr.No Name the Director 1 2 3 4 5 6 7 8 9 10 11 12 13 Category
B.N. Kalyani Chairman & Managing Promoter, Executive and Managing Director Director S.M. Thakore S.D. Kulkarni P.G. Pawar Dr. Uwe Loos P.C. Bhalerao Lalita D. Gupte P.H. Ravikumar Alan Spencer Naresh Narad Dr. T. Mukherjee G.K. Agarwal Deputy Managing Director Amit Kalyani Executive Director Non-executive, Independent Non-executive, Independent Non-executive, Independent Non-executive, Independent Non-executive Director Non-executive, Independent Non-executive, Independent Non-executive, Independent Non-executive, Independent Non-executive, Independent Executive Executive
14 15 16
B.P. Kalyani Executive Director S.E. Tandale Executive Director Sunil Kumar Chaturvedi Executive Director
Executive Executive Executive
3. Financial performance of the company for the past year:
? Sales: For the past one year i.e. Sales as on 31st March, 2012 is as shownWithin India 202,085 lacs Outside India 432,779 lacs Total Sales 634,864 lacs Less: Excise Duty 16,832 lacs Total Net Sales Rs.618,032 lacs
? Net Profit: Net Profit of the company is Rs. 42,022 lacs.
? Segment wise Revenue: i) ii) Forgings 625,801 lacs General Engg., Trading, etc. 2,881 lacs Total Rs.628,682 lacs
4. SWOT Analysis of Company:
? Strengths: ? ? ? ? ? ? ? One of the largest exporters across the globe. Strong group comfort of Kalyani Group. Diversified & de-risked business model. High economies of scale. Strong & trusted Brands. Large Global presence. Strong growth of 32% in Non- automotive business.
? Weakness: ? ? ? ? Over-dependence on US markets. A sale contributes 20% of passenger cars & 60% of commercial vehicles; while the passenger car market is 4 times of that. Frequent equity dilution. Exposed to currency fluctuation risks.
? Opportunities: ? ? ? ? High demand in automobile industry. Demand in Nuclear, Power & Refinery sectors. Demand in Construction & Infrastructure. Presence in developed as well as high growth developing economies to supplement topline as well as bottom-line.
? Threats: ? ? ? Demand for new products, especially from foreign OEM’s which may not match by Economic Order Quantity. Integrating subsidiaries operations & delay in ramping up of new capacities. Political & economical conditions in India.
5. Various strategies employed by the company in the course of conducting business: ? The US $2.4 billion giant ventured into the high-growth Indian energy market in 2011 with plans to become a leading supplier of generation equipment for thermal and nuclear power plants. The power sector provided the perfect opportunity to Bharat Forge as the nation embarked on an ambitious plan to add 78,000 Mw in the 11th plan. Bharat Forge, along with its Joint Venture partner Alstom, is setting up a manufacturing base in Mundra with an investment of Rs 1,500 crore, and the first turbine and generator units are expected to roll out by the end of 2012. Thus with that, they are bringing in the most modern technology, super critical technology, which has capability to run at 610-615 degrees temperature. They are bringing in modern technology, which produces less CO2, uses less fuel for the same amount of power generation and that plant is coming up near Mundra. So, it will be a plant which will produce about 5000 megawatts worth of equipments every year. Elsewhere, the foundation stone for the company’s JV with NTPC for manufacturing BoP near Solapur in Maharashtra was laid earlier in 2011. Thus, with that they will produce balance of plants, all the ash handlings, coal handling, water systems, pumps and valves and everything that goes in a power plant. The company has also Joint Ventured with David Brown Systems for opportunities in the heavy engineering sector. Bharat Forge is also partnering French nuclear giant Areva for the heavy forgings required for erecting nuclear power plants. The proposed facility will have a state-of-theart 14,000 tonne open-dye forging press and will be operational by end of 2012. The company formed a JV in 2010 with Pune-based technology firm KPIT Cummins to offer low-cost hybrid solutions for the auto industry and automobile owners. BFL is presently focused on creating a position of Global Leadership in the Engine & Chassis components for Passenger Cars and Commercial Vehicles. The company has therefore embarked upon a three-pronged strategy to offer the customers : Dual Shore Design capability Dual Shore Forging manufacturing capability Dual Shore machining capability
? ?
?
? ? ? ?
? ?
? ? ?
?
BFL has now completed the “Dual Shore” model for design and engineering and forging manufacturing. Following chart illustrates the same.
GLOBAL DUAL SHORE MANUFACTURING CAPABILITY Key Products Passenger Vehicles - Engine Component - Chassis Component M & HCV - Engine Component - Chassis Component Light Truck Parts - Engine Component - Chassis Component Key Services - Design & Engineering ? ? Represents the capability to manufacture the components. Being implemented. India Germany USA Sweden UK China JV with FAW
?
Company has aggressive plans to increase share of non-automotive revenues from 18% in 2007-08 to 40% in 2011-12.
It has definite plans for comprehensive foray into five strategically chosen verticals: The Power business unit would be a one stop power equipment supplier, offering BTG package, BOP Service and EPC. BFL is also entering in power generation and setting up a large generating capacity for supporting robust growth of the Indian economy. The Railways business unit would be a leading manufacturer of wheel sets, truck frames and locomotives components in India with sales across geographies. We aim to be top 3 railway component suppliers in the world over the next decade. The Oil and Gas business unit aims to be a global player in the upstream of equipment market. The primary product focus would be on valves, drill bits, surface flow and sub sea equipments.
The Aerospace business unit plans to be a leading supplier of various components - airframe, structural and engine parts for the aviation sector. The Marine business unit will be supplying various products to global ship builders. Key products include crankshafts, connecting rods and propeller shafts.
doc_646473063.docx