MIRA
INFORM REPORT
|
Report Date : |
06.10.2007 |
IDENTIFICATION DETAILS
|
Name : |
BHARAT
FORGE LIMITED |
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Registered Office : |
Mundhwa, Pune Cantonment, Pune –
411 036, |
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Country : |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
19.06.1961 |
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Com. Reg. No.: |
11-12046 |
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CIN No.: [Company
Identification No.] |
L25209PN1961PLC012046 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
PNEB0272E |
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Legal Form : |
A public limited liability company. The company’s shares are listed
on the Stock Exchanges. |
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Line of Business : |
Manufacturing and |
RATING
& COMMENTS
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MIRA’s Rating : |
A |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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56-70 |
A |
Financial & operational base are
regarded healthy. General unfavourable factors will not cause fatal effect.
Satisfactory capability for payment of interest and principal sums |
Fairly Large |
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Maximum Credit Limit : |
USD
46500000 |
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Status : |
Good |
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Payment Behaviour : |
Regular
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Litigation : |
Clear |
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Comments : |
Subject
is a well-established and reputed company having fine track records. The
company is progressing well. Directors are reported as experienced and
respectable businessmen. Trade
relations are reported as fair. Business is active. Payments are usually
correct and as per commitments. Fundamentals
are strong and healthy. The
company can be considered normal for business dealings at usual trade terms
and conditions. The
company can be regarded as a promising business partner in a medium to
long-run. |
LOCATIONS
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Registered Office : |
Mundhwa, Pune Cantonment, Pune –
411 036, |
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Tel. No.: |
91 - 20 – 26702777 / 26702476 / 26702440 |
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Fax No.: |
91 - 20 – 26822163 / 26822387 / 26820699 |
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E-Mail : |
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Website : |
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Factory
1 : |
Mundhwa, Pune Cantonment, Pune - 411 036, |
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Factory
2 : |
Gat No. 635, |
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Factory
3 : |
Opposite Jarandeshwar Railway Station, Vadhuth, District Satara
– 415 011, |
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Factory
4 : |
Kusumbe, |
DIRECTORS
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Name : |
Mr. B. N. Kalyani |
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Designation : |
Chairman & Managing Director |
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Qualification : |
B.E. (Mech.) (Hons.), M.S.
(M.I.T.) |
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Date of Appointment : |
1st April, 1972 |
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Name
: |
Mr. P. H. Ravikumar |
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Designation
: |
ICICI Nominee Director |
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Name
: |
Mr. S. S. Marathe |
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Designation
: |
Director |
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Name
: |
Mr. S. M. Thakore |
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Designation
: |
Director |
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Name
: |
Mr. S. D. Kulkarni |
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Designation
: |
Director |
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Name
: |
Mr. Pratap Bhogilal |
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Designation
: |
Director |
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Name
: |
Mr.
Anil Rege |
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Designation
: |
Director
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Name
: |
Prof.
Dr. Uwe Loos |
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Designation
: |
Director
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Name
: |
Mr.
Pratap G Pawar |
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Designation
: |
Director
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Name
: |
Mrs. Lalita D Gupte |
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Designation
: |
Director |
KEY
EXECUTIVES
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Name
: |
Mr. P. C. Bhalerao |
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Designation
: |
Executive Director |
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Qualification
: |
B.E. (Elect.), M.B.A., D.T.M. |
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Date
of Appointment : |
3rd March, 1987 |
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Previous
Employment : |
Bharat Steel Tubes Limited, |
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Name
: |
Mr. G. K. Agarwal |
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Designation
: |
Deputy
Managing Director |
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Qualification
: |
B.E. (Mech.), M.B.A. |
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Date
of Appointment : |
1st November, 1976 |
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Previous
Employment : |
Guest Keen Williams Limited, |
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Name
: |
Mr. Amit B. Kalyani |
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Designation
: |
Executive Director |
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Name
: |
Mr. B. P. Kalyani |
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Designation
: |
Executive Director |
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Name
: |
Mr. S. E. Tandale |
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Designation
: |
Executive Director |
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Name
: |
Mr. P. K. Maheshwari |
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Designation
: |
Executive Director |
MAJOR
SHAREHOLDERS
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Names
of Shareholders |
No. of Shares |
Percentage of Holding |
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Promoters |
87642073 |
39.36% |
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Financial
Institutions |
9498011 |
4.27% |
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Mutual Funds |
7710846 |
3.46% |
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Insurance
Companies |
11146336 |
5.01% |
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Nationalised Banks |
854053 |
0.38% |
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Foreign
Institutional Investors |
41549005 |
18.66% |
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Bodies Corporate |
21307650 |
9.57% |
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Non Resident
Indians |
968663 |
0.44% |
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Foreign Nationals |
2132521 |
0.96% |
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Indian Public |
39843113 |
17.89% |
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Total |
222652271 |
100.00% |
BUSINESS
DETAILS
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Line of Business : |
Manufacturing and |
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Products : |
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Export: |
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Countries: |
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Imports: |
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Countries: |
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Terms : |
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Purchasing : |
L/C, D/A & D/P terms |
PRODUCTION
STATUS
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Particulars |
Unit |
Licensed Capacity |
Installed Capacity |
Actual Production |
Steel Forging
|
MT |
240000 |
240000 |
165239 |
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Finished Machined Crankshaft |
Nos. |
600000 |
408500 |
347795 |
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Couplings |
MT |
600 |
600 |
--- |
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Front Axle Assembly &
Components |
Nos. |
600000 |
533500 |
423571 |
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Well Head Assembly and Parts |
Nos. |
5000 |
--- |
--- |
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Aluminium Road Wheel |
Nos. |
4000 |
4000 |
3641 |
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General Engineering Equipments |
Nos. |
1100 |
1100 |
5 |
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Material Handling Equipments |
Nos. |
1350 |
1350 |
--- |
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Hydraulic & Mechanical
Presses |
Nos. |
250 |
250 |
--- |
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Bandshaw Machines for cutting
Metallic Round & Square Bars |
Nos. |
50 |
50 |
10 |
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Front Axle Assembly at Dharwad |
Nos. |
50000 |
---- |
--- |
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Finished Machined Crankshaft
(Chakan) |
Nos. |
180000 |
241500 |
174270 |
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Front Axle Assembly and
Components at Chakan |
Nos. |
300000 |
219600 |
148482 |
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Transmission Parts |
Nos. |
3000000 |
2041000 |
2072881 |
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Seal Rings, Clamps and
Hubs |
Nos. |
50000 |
7000 |
350 |
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Rocker Arm Assembly |
Nos. |
100000 |
--- |
--- |
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Bonnets and Key Shaft |
Nos. |
50000 |
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--- |
v
Annual Capacity on maximum utilisation basis.
Under Registration with Government Authority.
v
Since the Company's installed capacity is dependent on
Product mix, which in turn is decided on the basis of actual demand for various
products from time to time, it is not feasible for the Company to give exact
installed capacity. The Company has, however, indicated installed capacity on
the basis of year's Product mix, as certified by the Chairman and Managing
Director and being a technical matter accepted by the Auditors as correct.
v
The installed capacities have been enhanced on
capitalization of expansion projects in a phased manner during the course of
the year.
v
Includes captive consumption 69124 M.T. (2005-06 - 58270
M.T.).
v
Includes captive consumption Band Saws 10 Nos ( 2005-06
- 2 Nos.)
v
The Company has applied for enhancement in the
Licensed capacity from 180000 Nos. M.T. to 300000 Nos
GENERAL INFORMATION
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Customers : |
v
Meritor Automotive, v
Dana Corporation, v
v
New v
Mitsubishi Motor Corporation, v
Volvo Trucks, v
Lister-Petter, v
v
v
v
Kirloskar Group v
Bajaj Auto Limited v
Maruti Udyog Limited v
Premier Automobiles Limited v
Eicher India Limited v
Larsen & Toubro Limited v
Daewoo Motors v
Simpsons Engines v
v
Tata Engineering & Locomotive Company Limited v
Mahindra & Mahindra Limited v
Ashok Leyland Limited v
Bharat Earth Movers Limited v
Greaves Limited v
Swaraj Mazda v
Escorts Limited |
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No. of Employees : |
2,521 |
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Bankers : |
v
Bank of v
ANZ Grindlays Bank PLC, Vereinigtes Konigreich v
Bank of Maharashtra, “Lokmangal”, 1501 Shivajinagar (Head
Office), Pune – 411 005, v
Bank of v
Canara Bank v
State Bank of v
HDFC Bank Limited v
ICICI Bank Limited v
Citibank N A v
Standard Chartered Bank v
ABN AMRO Bank NV v
Axis Bank Limited v
Bank of |
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Facilities : |
[figures are in Rupees
Millions]
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Banking Relations : |
Satisfactory
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Auditors : |
Dalal and Shah Chartered Accountants |
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Associates : |
v
Kalyani Carpenter Special Steels Limited |
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Subsidiaries : |
v
CDP Bharat Forge GmbH v
Bharat Forge Beteiligungs GmbH v
Bharat Forge America Inc v
Bharat Forge Holding GmbH v
Bharat Forge Aluminiumtechnik GmbH & Company KG v
Bharat Forge Aluminiumtechnik Verwaltungs GmbH v
Bharat Forge Hong Kong Limited v
Bharat Forge v
Bharat Forge Scottish Stampings Limited |
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Membership : |
v
Confederation of Indian Industry |
CAPITAL STRUCTURE
Authorised
Capital :
|
No.
of Shares |
Type |
Value |
Amount |
|
300000000 |
Equity Shares |
Rs.2/- each |
Rs. 600.000 Millions |
|
43000000 |
Cumulative Preference Shares |
Rs.10/- each |
Rs. 430.000 Millions |
|
2000000 |
Unclassified Shares |
Rs.10/-each |
Rs. 20.000 Millions |
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Total |
|
Rs. 1050.000
Millions |
Issued :
|
No.
of Shares |
Type |
Value |
Amount |
|
10000000 |
8.25% Redeemable Cumulative
Non-Convertible Preference Shares |
Rs.10/- each |
Rs. 100.000 Millions |
|
222828621 |
Equity Shares |
Rs.2/- each |
Rs. 445.666 Millions |
|
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Total |
|
Rs. 545.666
Millions |
Subscribed
& Paid-up Capital :
|
No.
of Shares |
Type |
Value |
Amount |
|
10000000 |
8.25% Redeemable Cumulative
Non-Convertible Preference Shares |
Rs.10/- each |
Rs. 100.000 Millions |
|
222652271 |
Equity Shares |
Rs.2/- each |
Rs.445.310 millions |
|
172840 |
Forfeited Shares |
|
Rs. 0.090 Millions |
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Total |
|
Rs. 545.400
Millions |
Prior
to subdivision of shares:
9.50% Redeemable
Cumulative Non Convertible Preference Shares of Rs.10/-each were redeemed on
due date during the year, 8.25% Redeemable Cumulative Non Convertible
Preference Shares of Rs.10/- each are to be redeemed in cash on 10th February,
2008.
FINANCIAL
DATA
[all figures are in Rupees Millions]
ABRIDGED
BALANCE SHEET
|
SOURCES OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
SHAREHOLDERS FUNDS |
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|
1] Share Capital |
545.400 |
544.620 |
595.600 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
12722.550 |
11096.680 |
3829.990 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
13267.950 |
11641.300 |
4425.590 |
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LOAN FUNDS |
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|
1] Secured Loans |
3735.720 |
3816.020 |
3832.060 |
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2] Unsecured Loans |
10280.400 |
6108.610 |
346.680 |
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TOTAL BORROWING |
14016.120 |
9924.630 |
4178.740 |
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DEFERRED TAX LIABILITIES |
1127.830 |
966.560 |
811.680 |
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TOTAL |
28411.900 |
22532.490 |
9416.010 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
11513.000 |
7744.110 |
5264.160 |
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Capital work-in-progress |
2748.030 |
3707.040 |
2758.960 |
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INVESTMENT |
4507.060 |
4440.180 |
383.470 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
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TECHNICAL KNOW-NOW |
6.260 |
8.340 |
10.420 |
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CURRENT ASSETS, LOANS & ADVANCES |
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|
|
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|
Inventories |
3027.890
|
2542.660
|
1860.830 |
|
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Sundry Debtors |
2539.520
|
1885.540
|
1430.600 |
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Cash & Bank Balances |
7362.750
|
5054.120
|
281.270 |
|
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Other Current Assets |
836.690
|
913.060
|
664.440 |
|
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Loans & Advances |
4723.260
|
4957.090
|
3610.720 |
|
Total Current Assets |
18490.110
|
15352.470 |
7847.860 |
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Less : CURRENT LIABILITIES & PROVISIONS |
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|
Current Liabilities |
5756.900
|
5114.920
|
4318.230 |
|
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Provisions |
3098.000
|
3617.260
|
2573.650 |
|
Total Current Liabilities |
8854.900
|
8732.180 |
6891.880 |
|
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Net Current Assets |
9635.210
|
6620.290 |
955.980 |
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MISCELLANEOUS EXPENSES |
2.340 |
12.530 |
43.020 |
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TOTAL |
28411.900 |
22532.490 |
9416.010 |
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PROFIT & LOSS ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
Sales Turnover |
18101.270 |
15114.500 |
12264.650 |
|
|
Operating Income |
542.950 |
664.810 |
0.000 |
|
|
Other Income |
808.750 |
530.190 |
0.000 |
|
|
Total
Income |
19452.970 |
16309.500 |
12264.650 |
|
|
|
|
|
|
|
|
Profit/(Loss) Before Tax |
3598.090 |
3148.930 |
2480.790 |
|
|
Provision for Taxation |
1188.560 |
1079.280 |
864.490 |
|
|
Profit/(Loss) After Tax |
2409.530 |
2069.650 |
1616.300 |
|
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FOB
Value of Exports: |
8361.020 |
7187.510 |
5348.650 |
|
|
|
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Imports
: |
|
|
|
|
|
|
Raw Materials
and component for manufacturing |
369.120 |
266.590 |
|
|
|
Die, block, Die Steel, Tool steel, and spares |
615.190 |
321.740 |
|
|
|
Capital Goods |
824.840 |
2234.570 |
|
|
Total
Imports |
1809.150 |
2822.900 |
1398.120 |
|
|
|
|
|
|
|
|
Expenditures : |
|
|
|
|
|
|
Manufacturing Expenses and other expenses |
14789.360 |
12430.160 |
0.000 |
|
|
Exceptional Item of expenditure |
67.500 |
0.000 |
0.000 |
|
|
Depreciation & Amortization |
998.020 |
730.410 |
0.000 |
|
Total
Expenditure |
15854.880 |
13160.570 |
9783.860 |
|
QUARTERLY
RESULTS
|
PARTICULARS |
|
|
30.06.2007 |
|
Type |
|
|
1 st Quarter
|
|
Sales
Turnover |
|
|
4968.700 |
|
Other
Income |
|
|
533.400 |
|
Total
Income |
|
|
5502.100 |
|
Total
Expenditure |
|
|
3956.500 |
|
Operating
Profit |
|
|
1545.600 |
|
Interest |
|
|
233.600 |
|
Gross
Profit |
|
|
1312.000 |
|
Depreciation |
|
|
329.000 |
|
Tax |
|
|
334.900 |
|
Reported
PAT |
|
|
648.100 |
KEY
RATIOS
|
Particulars
|
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt-Equity Ratio |
0.96 |
0.88 |
1.01 |
|
Long Term Debt-Equity Ratio |
0.70 |
0.63 |
0.76 |
|
Current Ratio |
1.29 |
1.08 |
0.86 |
|
TURNOVER
RATIOS |
|||
|
Fixed Assets |
1.33 |
1.49 |
1.42 |
|
Inventory |
7.15 |
7.50 |
7.89 |
|
Debtors |
9.00 |
9.96 |
10.35 |
|
Interest Cover Ratio |
5.38 |
6.74 |
8.39 |
|
Operating Profit Margin(%) |
27.19 |
26.78 |
26.54 |
|
Profit Before Interest And Tax Margin(%) |
22.17 |
22.36 |
22.36 |
|
Cash Profit Margin(%) |
17.12 |
16.96 |
17.02 |
|
Adjusted Net Profit Margin(%) |
12.10 |
12.53 |
12.84 |
|
Return On Capital Employed(%) |
18.08 |
24.52 |
40.65 |
|
Return On Net Worth(%) |
19.44 |
26.11 |
49.53 |
LOCAL AGENCY FURTHER INFORMATION
History
It was originally incorporated under the name and style of subject,
which was subsequently changed to the present.
Subject a part of the Kalyani group is the largest Forging Company
in
Subject promoted by Neelkanth A Kalyani was incorporated in Jun.'1961. The
company has a fully integrated facility with capabilities in design and
engineering, die and tool making, forging a wide range of products, machining
and testing and validation. It is the only company having this capability for a
complete range of engine and chassis components. Being a leader in steel
forging it has diversified presence in other areas such as finished machined
crankshafts, component assembly, sub-assembly of industrial machinery, etc. In
Feb.'1994, the company came out with a rights issue to part-finance the
connecting rod project, to expand financial services division and to augment
long-term resources, totalling Rs 642.900 millions.
Subject has technical tie-ups with Tokoyo Drop Forge,
The company has joint venture with Metalart Corporation,
In 1998-99, the company recalled the Forge expansion project for additional
capacity of 38,000 tpa at Mundhwa, Pune which was deferred for one year. It has
also set up facilities for generating 2 MW Wind Power at a cost of Rs 124.300
Millions, at Thoseghar in Satara Dist.
In 1999-2000, subject has successfully implemented modules of SAP R/3
Enterprise Resource Planning (ERP) package. It has introduced new computer
aided engineering (CAE) based metal flow simulation techniques which is an
important guide to die designers to achieve 'first time right' for new product
development.
The scheme of arrangement between the company and BF Utilites (BFUL) has been
approved. Under this scheme the Investment and Wind Mill division have been
demerged and transfered to BFUL from Mar.'01.
During January,2002 the company entered into an agreement with Dana Corporation
Spicer Europe Limited for supply of forgings. Under this agreement subject will
supply Dana with certain forgings used by its Kirkstall axle operations and its
commercial vehicle axle operations in
The company has acquired CDP Aluminiumtechnik Gmbh during december 2004. CDPAT
belongs to the renowned CDP group and is a significant player in
During July 2004 the company came out with rights issue of equity shares for
its shareholders in the ratio of 1:20 with a premium of Rs.550/- per share with
attached warrants on the basis of one warrant for every two rights equity
shares and in July 2005 the company has sub-divided its equity share face value
from Rs.10/- per share to Rs.2/- per share.
During 2004-05 the company has increased its installed capacity of Steel
Forging and Front Axle Assembly and Components at Chakan by 27,034 MT and
1,03,600 Nos. respectively. With this expansion the total installed capacity of
Steel Forging and Front Axle Assembly and Components at Chakan has increased to
1,30,000 MT and 1,77,600 Nos. respectively. Further the company has installed a
capacity for the manufacture of 4,13,000 Nos. of finish machined Crankshafts at
Mundhwa.
In 2005-06, the company continued to strengthen its position by
making further acquisitions and the following acquisitions have been made by
the company: Through its wholly owned subsidiary, Bharat Forge Beteiligungs
GmbH, Germany, the company, on September 21, 2005, acquired Imatra Kilsta AB,
Sweden along with its wholly owned subsidiary, Scottish Stampings Limited,
Scotland (together called Imatra Forging Group), which are now renamed as
Bharat Forge Kilsta AB (BF Kilsta) and Bharat Forge Scottish Stampings Limited,
respectively. BF Kilsta is the leader in the manufacturing of heavy-duty diesel
engine crankshaft for the European and Scandinavian truck markets.
On December 8, 2005, the company, through its wholly owned subsidiaries, Bharat
Forge Beteiligungs GmbH and Bharat Forge Hong Kong Limited, concluded a Joint
Venture agreement with FAW corporation of China (FAW). The subsidiaries own 52%
stake in the JV and the balance 48% is held by FAW. The JV company, set up
under the name and style of FAW Bharat Forge (Changchum) Company Limited, has
commenced operations from 6th April 2006.
The company has increased its installed capacity of Steel Forging, Finished
Machined Crankshaft and Front Axle Assembly and Components by 70,000 MT, 50,000
Nos. and 2,00,400 Nos. during the year 2005-06. With this expansion the total
installed capacity of Steel Forging, Finished Machined Crankshaft and Front
Axle Assembly and Components increased to 2,00,000 MT, 4,63,000 Nos. and
6,78,000 Nos. respectively.
Fixed Assets
Ř
Land, Free hold
Ř
Land, lease hold
Ř
Buildings
Ř
Plant and Machinery
Ř
Railway sidings
Ř
Electrical installations
Ř
Factory equipments
Ř
Engineering instruments
Ř
Furniture and fittings
Ř
Office equipments
Ř
Vehicles and Aircrafts
Ř
Leased assets ( Plant and Machinery)
Ř
Leased assets (Power line)
Business:
Highlights
Ř
Consolidated revenue surpassed USD 1 Billion mark, one year ahead of the
target of FY 2008
Ř
Consolidated earning per share (EPS) reached Rs. 13.01 (Each share of
the face value of Rs. 2)
Ř
Completed the forging and machining capacity expansion program at
Mundhwa, Pune
Ř
Established the global manufacturing footprint with commencement of Join
Venture operations in
Ř
Further strengthened position with global customers with three large
long term contract, each in excess of USD 50 million annual value.
Ř
Significantly de-risked the
Ř
Launched strategic foray into non automotive component business. To
address key sector such as Aerospace, oil and Gas, Conventional and Non
Conventional Energy, Rail and Marine and Mining, Metals and infrastructure with
initial long term contracts already secured.
Management
Discussion and Analysis
Overview:
The world economy grew at a healthy rate in
2006-07. In its World Economic Outlook, the IMF estimated global economic
growth of over 5.4% in 2006. On the domestic front,
The overall economic environment has been positive for 2006-07. Moreover,
almost all regional and global macroeconomic indicators suggest that optimistic
sentiments and healthy global economic growth should persist over the next few
years. The IMF projects global real GDP growth in excess of 4.5% year-on-year
until 2012. For a global enterprise like Bharat Forge Limited ('Bharat Forge',
'BFL' or 'the Company') with its sizeable international business and a global
manufacturing footprint, this milieu of growth presents a great opportunity to
put into place world class capacities and strategically position itself to reap
even greater benefits in existing as well as new market segments.
Today, subject operates in three
continents: Europe, North America and
These businesses, together with subject's Indian operations form the global subject
group - whose performance gets reflected in the consolidated accounts of subject.
Highlights of subject's financial performance for 2006-07 are:
* Total Revenue crossed USD 1 billion to reach Rs.42752.13 million in 2006-07 -
up by 38.6% over the previous year. The target of USD 1 billion revenue was
achieved a year ahead of their target of 2008.
* Operating profits (PBDIT) was Rs.7,432.72 million in 2006-07 - a growth of
26.2% over 2005-06.
* Profit after tax and minority interest (PAT) increased by 16% to Rs.2905.88
million in 2006-07.
* Earnings per share (EPS) Rs.13.01 (each share of the face value of
Rs.2/-).
While continuing to make the most of the strong prevailing demand conditions in
2006-07, subject laid great emphasis on further developing its internal
capabilities - especially in creating larger production and delivery
capabilities, and ramping up operations to strengthen its position as the
premier player in the global forgings business. In 2006-07, they not only
completed several of their earlier initiatives like the expansion programme in
For 2006-07, the Company defined five
main thrust areas.
These
were:
* The stress on the consolidation process
that focuses on building capacities, ramping up production, developing flexible
production systems, optimising product mix and improving efficiencies across
group companies.
* Leverage overall subject capabilities to broaden the relationship with the
existing customers of the acquired entities, and enhance the level of client
support.
* Develop and commence implementation of the strategy to enter the non-automotive
forgings business.
* Focus on integration of
* Continue to focus on building a de-risked business model.
It is useful to discuss each as they go along.
The
Consolidation Process
Stabilising
new capacities and ramping up production:
During 2006-07 subject completed its forging and machining capacity expansion project at Mundhwa. This project involved setting up state-of-the-art production facilities that had flexible manufacturing capability across a wide range of products and applications. The entire forging capacity expansion program involved setting up two heavy duty press lines, and two additional press lines including a fully automatic transfer press line.
These have been installed and stabilised. This has taken their Indian forging capacity to 240,000 TPA whereas the annual crankshafts and chassis component machining capacity has reached 650,000 and 753,000 numbers respectively.
The ramp up of production on new capacities also progressed well with several
new programmes entering serial production mode. As a result, the company
achieved an overall utilization of 69% of its forging capacity and 80% of its
crankshaft machining capacity.
Launching
initiatives to develop flexible manufacturing processes:
Subject recognises that it operates in a
very dynamic market. It is imperative to set up manufacturing facilities that
can, at any point in time, manufacture the type of product that the market
demands. This exercise is across two levels - within manufacturing facilities in
each plant, as well as across plants in different geographies. To give an
example, the units in
Implementation of dual shore strategy and cross-fertilising 'best practices' within the subject group:
As a part of dual shore strategy, subject
has transferred technologies both from and to some of the international
subsidiaries. For instance, CDP-BF, with the support of subject, has started
the process of extending its product range. This has broadened the scope of
product deliverables across various geographies. It has also begun to improve
operating efficiencies across a wide spectrum of parameters, ranging from
design and engineering to production, utilities and services. The pool of
engineering talent in the subject Group is actively involved in
cross-fertilisation of best manufacturing and quality practices across all its
units. The Centre for Excellence in Research and Development in
Financial
Review:
Subject’s summarised financial performance for the year ended 31 March 2007 is shown in Table 2 and Table 3.
Subject’s consolidated financial performance for 2006-07 is not strictly comparable to 2005-06 as it for the first time includes the 9 month financials of its Chinese joint venture - FAW BF.
The addition of FAW-BF increases the revenues of subject (consolidated) by Rs.1627
million. Although, subject had only nine months of operations of FAW-BF, it has
been able to contain the operating loss of the JV. Subject’s share net of
minority interest of operating losses of FAW-BF was Rs.74 million in 2006-07.
The net loss for the
To get a better understanding of the performance of the company on a
consolidated basis they proceed to analyse the performance of subject and its
wholly owned subsidiaries (see table 4).
Table 4: Financial Performance (subject and wholly-owned subsidiaries): (Rs.
Millions) 2006-07 2005-06 Growth
Total Revenue 41,125 30,850 33.3%PBDIT 7,503 5,889 27.4%PBT 4,594 3,925
17.0%PAT 3,066 2,505 22.4%Key Ratios:PBDIT/Total Revenue 18.2% 19.1%PBT/Total
Revenue 11.2% 12.7%PAT/Total Revenue 7.5% 8.1%
Subject and its wholly-owned subsidiaries recorded a 33.3% increase in total revenues from Rs.30850 million in 2005-06 to Rs.41125 million in 2006-07.
The performance of 2006-07 incorporates the
first full year of operations for their
* Total revenues increased by 19.3% from
16,310 million in 2005-06 to Rs.19453 million in 2006-07.
* This top-line growth, coupled with an increase in PBDIT margins from 27.1% in
2005-06 to 28.2% in 2006-07, contributed to a 23.9% growth in PBDIT.
* Given the investments into capacity
expansions and an increase in USD LIBOR and domestic interest rates, the
interest and depreciation charge as a ratio to total revenues has gone up by
close to 1.5%.
* This increased interest and depreciation expenditure affected the PBT and PAT
margin. Consequently PBT and PAT grew by 14.3% and 16.4% to Rs.3598.09 million
and Rs.2409.53 million respectively in 2006-07.
* Diluted EPS increased from Rs.9.05 in 2005-06 to Rs.10.78 in 2006-07. subject
also successfully concluded its USD 300 million fund raising program with 2
tranches of FCCB offering in April 06 aggregating to USD 79.90 million.
This was in addition to USD 220 million raised in April 2005 through a combination of GDRs and FCCBs
BEL also successfully concluded its USD 300 million fund raiseing program with 2 tranches of FFCB offering in April 2006 aggregating to USD 79.90 millions. This was in addition to USD 220 millions raised in April 2005 through a combination of GDR’s and FCCB’s
Outlook:
Subject has firmly established itself as a global player in automotive
components Business. The company has taken several strategic initiatives and
made significant investments in the last few years, including in 2006-07
towards integrating itself into the global automotive supply chain. Now, the
company has put capacities in place, expanded to most geographies and built
strong client relationships across the board giving it significant competitive
advantage. With proximity to clients, multi-location operational presence and
design and engineering capabilities, the company is in a position to get large
orders from the global OEMs and grow rapidly.
Geographically,
Moreover, the interest rates have hardened
quite a bit and this may also affect the growth of the automobile market in
Though, the company has instituted
significant operational improvements in
The company's de-risked business model along with strong global footprint in
automotive components will keep the company in good stead. Moreover, subject
continues to stress on emerging technologies, strong engineering, design and
delivery capabilities. The company has initiated a series of measures to hire
talented individuals and to retain existing talent. The benefits of a de-risked
business model, strong operational backbone and people focus are likely to
unfold in the coming few years.
PERFORMANCE OF THE COMPANY:
Total Income (on a
stand-alone basis):
Current Year: Rs.19453
Million
Previous Year: Rs.16310
Million %
Increase: 19%
The financial year
2006-07 has been another year of robust overall growth for the Company. Like
the previous year, this year also, the Company has shown growth across various
parameters of performance. The factors which aided this sustained progress were
mainly growth in exports of medium and heavy duty engine parts and increased
presence in passenger car market and strong growth in commercial vehicle
business in
During the year under
review, the total income of the Company touched Rs.19453 Million (Rs.16310
Million) representing an increase of 19%.
Exports Revenue (on a stand-alone basis):
2003-04 : Rs.3331
Million
2004-05 : Rs.5105
Million
2005-06 : Rs.6555
Million
2006-07 : Rs.7513
Million
During the year under review, exports turnover of the Company touched Rs.7513
Million mark, an increase of 15% over previous year (Rs.6555 Million). This is
primarily attributable to:
- Ramp up of supplies
for machined, Heavy Duty Engine Crankshafts to US.
- Commencement of
serial production for new Medium Duty Truck Engine programme for
- Ramp up of supplies
of Passenger Car Crankshafts to US and
During the year under report, the Company continued its strategy of enhancing
its presence in Heavy Duty Engine and Passenger Car Crankshafts segments. The
Company bagged new orders for machined Crankshafts from the
Continued focus on the Non-Automotive sector yielded new business opportunities
during 2006-07.
The Company has been making constant efforts for upgradation in quality and
value addition for existing as well as new customers. As a result, the Company
is increasingly assuming the role of 'Preferred Supplier' with most large
global OEMs, which is likely to substantially strengthen the relationship and
enhance the turnover with each major OEM.
Overall, the Directors
look forward to a continued growth in exports.
OVERSEAS
SUBSIDIARIES OPERATIONS:
The Company has 3 subsidiary companies overseas which in turn have their respective subsidiaries. A summary of their performance is given elsewhere in the Annual Report.
During the year under report, the emphasis has been on improving the operating
efficiency of these direct and indirect subsidiary companies through bench
marking with the best in class manufacturing practices. The Directors are
pleased to report that during the year under review, all these subsidiary
companies have shown improved results across most parameters of performance. A
significant portion of the consolidated revenues is generated by the subsidiary
companies. Detailed analysis of the working of the subsidiary companies is
given in the Management Discussion and Analysis.
SUBSIDIARY COMPANIES' ACCOUNTS:
The Company has received an approval of the Central Government under Section 212(8) of the Companies Act, 1956, vide their letter No. 47/360/2006-CL-III dated 16th April, 2007, which exempts the Company from attaching to the Balance Sheet, the copies of the Balance Sheets, Profit and Loss Accounts, Directors' Reports and Auditors' Reports and other documents required to be attached under Section 212(1) of the Act of its subsidiary companies, namely:
i) CDP Bharat Forge
ii) Bharat Forge Holding GmbH,
iii) Bharat Forge Aluminiumtechnik GmbH and
Company K.G.,
iv) Bharat Forge Aluminiumtechnik
Verwaltungs
v) Bharat Forge Daun GmbH,
vii) Bharat Forge Beteiligungs,
viii) Bharat Forge Kilsta AB,
x) Bharat Forge Hong Kong Limited
(Formerly, Lucrest Limited) andxi) FAW Bharat Forge (
Accordingly, the said documents are not being attached to the Financial
Statements of the Company. A gist of the financial performance of the
subsidiaries is given in this Annual Report.
The annual accounts of the subsidiary companies are open for inspection by any
Member/Investor and the Company will make available these documents/details
upon request by any Member/Investor of the Company/subsidiaries of the Company
interested in obtaining the same.
CAPACITY
EXPANSION:
The Members are aware of the Expansion Plans underway at Company's factories at Mundhwa and Chakan. The work on the Expansion Projects has been progressing as per schedule and the status of implementation is as under:
A. CRANKSHAFTS:
The Company has set up state-of-the-art facility at Mundhwa to manufacture Medium and Heavy Duty Machined Crankshafts for the exports market. 2 Lines were commissioned last year and the 3rd Line has been productionised during the year under review. Equipment has been ordered for the 4th Line which will be commissioned during 2007-08.
Creation of this facility has given subject strong presence in the global
market of Machined Crankshafts for medium and heavy duty applications.
B. FORGINGS:
12500T Press has been fully productionised. Consequently, the installed forging capacity at Mundhwa Plant is now 240000 MTs per annum.
C. FRONT AXLE ASSEMBLY AND
COMPONENTS:
The new expansion programme for machining Axle Beams and Knuckles has been fully completed and has helped in increasing supply of more value added products.
The Company has received the necessary Industrial Licenses or the
acknowledgements in respect of the Industrial Entrepreneurs' Memorandum in
respect of expansion of capacities for the manufacture of
1) Steel Forgings from 200000 MTs. to 240000 MTs. per annum at Mundhwa, Pune;
2) Finished Machined Crankshafts from 400000 Nos. to 600000 Nos. per annum at Mundhwa, Pune;
3) Front Axle Assembly and Components thereof from 300000 Nos. to 600000 Nos. per annum at Mundhwa, Pune; and
4) Front Axle Assembly and Components thereof from 200000 Nos. to 300000 Nos. per annum at Chakan, Pune.
NON-AUTO
BUSINESS
MUNDHWA:
The Company is also installing a 4000T Open Die
Forging Press at its Pune Plant which will have capability to forge Ingots upto
70MT single piece weight and will cater to the requirements of Energy Sector,
Mining and Metal Industry, General Engineering Industry and Capital Goods
Industry. This Plant will be operational in 2008.
TERM
DEPOSITS:
As on March 31, 2007, 77 Depositors having deposits aggregating to Rs.0.884 millions did not collect the amounts due. However, deposits amounting to Rs.0.022 millions (2 Depositors) have been subsequently repaid.
Future
Plan of Action:
i) Manufacture of Aerospace forgings.
ii) Cutting tool life improvement.
iii) Development of software for prediction
of properties on heat treatment and controlled cooling for steels.
iv) Fixture design for full crankshaft torsion test.
PRESS RELEASES:
35 Students pass out of the 1st
batch of B S (Manufacturing Engineering)
Pune 20th August 2007…The Convocation
Ceremony of the First Batch of the B.S.(Manufacturing Engineering) Programme
conducted by subject in collaboration with Birla Institute of Technology and
Science (BITS), Pilani was held at Hotel Le Meridien, on Saturday, 18th August
2007.
The degree was awarded to 35 students for the first batch of B.S.
(Manufacturing Engineering) for the year 2007 by Dr L K Maheshwari, Vice
Chancellor, BITS, Pilani. The ceremony began by awarding the best students of
the year Mr Santoshsingh Thakur, Mr Vishal Phaltankar and Mr Sunil Pawar who
had not only consistently excelled in their theoretical studies but also
obtained the overall 1st, 2nd and 3r d positions respectively. The winners were
then presented with the Gold, Silver and Bronze Medals and a gift cheque by the
Chief Guest Dr L K Maheshwari.
Speaking at the occasion, Dr L K Maheshwari, Vice- Chancellor, BITS
PIlani in his Keynote Address said that “Organisations of today cannot be
organizations of the 19th century. They have to be organizations of the 21st
century, which means that they have to be Learning Organizations”. Talking about
the rapid advances that are being made in technology, he said that it is a
prediction that technology is going to develop every 11 hours, which means that
each one of them has to be a student throughout their life.
Stressing on education he said that it is education and education alone
which can make a company proud and take it forward. It is education which has
always succeeded in the world and in days to come it will be education and
research that will ultimately lead technology, he added.
On March 30, 2004, subject signed a MoU with BITS, Pilani for a
synergistic relationship in Human Resource Development. As a part of the MoU,
BITS was to conduct a program at BFL which would primarily, enable BITS to
offer a degree course equivalent to BE to the Kalyani Group employees.
Earlier in his Opening Remarks, Mr B N Kalyani, Chairman and Managing
Director, subject, said that “I am extremely pleased and happy to see that this
day has arrived. It has been my dream to bring education into their company,
into their system and to provide opportunities to their colleagues for higher
learning”. Congratulating all the 35 graduates, he said that they have very
wonderfully balanced their work, their family and their studies and that’s not
an easy job.
Going ahead he explained the rationale behind this whole programme,
where he said that it was his endeavour to see as to how they could create more
brain power in their company by providing higher education opportunities to
people within the company. He was very convinced of the fact that there is no
substitute for good education and therefore started thinking on how to create
this infrastructure for learning and set up an educational process within the
company to create that enrichment that is required to produce talent in a group
of people who will lead subject in the years to come. And that’s where they
started their Bachelors Program in Manufacturing Engineering. My own vision and
forecast, he said, was that 10 years from now
Subject today spends a huge amount of money and resources on training.
The company started its 1st Batch of B.S. (manufacturing Engineering) in July
2004. Currently the company is running three batches simultaneously. A total of
169 employees have been covered under this programme. The company has also
collaborated with
Dr B R Natarajan, Dean, Distance Learning Programme Division, BITS
Pilani, in his concluding remarks thanked subject for giving them this
opportunity and said that here is a collaboration of perfect understanding.
Both organizations are driven by the passion to achieve excellence. Both
organizations are leaders in their own way. They know the way, go the way and
show the way to achieve excellence.
The Convocation Ceremony was attended by Dr L K Maheshwari,
Vice-Chancellor, BITS Pilani, Dr B R Natarajan, Dean, Distance Learning Programme
Division, BITS Pilani, Mr B N Kalyani, Chairman and Managing Director, subject,
Senior Exceutives of the Kalyani Group, Faculty Members of BITS Pilani, family
members of the passing out Grdauates and the 2nd batch of B.S. (Manufacturing
Engineering) Students.
Dr S V Bhave was the Master of Ceremony while Mr Milind Jadhav proposed
the vote of thanks. For more details
please contact:
Ms Sarita Iyer
Corporate Communications
Bharat Forge Ltd
Tel: 020 - 2682 4666 / 2670 2638
Email: siyer@bharatforge.com
|
Contingent
liabilities: |
31.03.2007 |
|
Sales Bills discounted Of which: |
3938.790 |
|
Bills since realized |
912.350 |
|
Matured , overdue and outstanding since close of the year |
587.560 |
|
b) guarantees given by the Company on behalf of other companies |
|
|
Balance Outstanding |
310.000 |
|
Maximum amount |
(740.000) |
|
c) Claims against the company not acknowledge as Debts to the extent
ascertained |
182.980 |
|
d) Disputed Income Tax matters |
206.670 |
|
e) Excise / Service Tax Demands – matters under dispute |
36.440 |
WEBSITE
DETAIL:
Subject, the flagship company of the USD 2.1 billion Kalyani Group, is a true world leader when it comes to delivering innovative auto-component solutions.
Since commencement of operations in 1966, BFL has achieved several milestones
and is today among the largest and technologically most advanced manufacturer
of Forged and Machined components. As one of
Their customers include the top five Passenger Car and top five Commercial
Vehicle Manufacturers in the world. The list includes virtually every
automotive OEM and Tier I companies.
Backed by a full service supply capability and dual-shore manufacturing model, subject provides end-to-end solutions from product conceptualization to designing and finally manufacturing, testing and validation.
CMT
REPORT [Corruption,
Money laundering & Terrorism]
The
Public Notice information has been collected from various sources including but
not limited to: The Courts,
1] INFORMATION
ON DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against whom
a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court
Declaration :
No records exist to suggest that subject is or was the subject of any
formal or informal allegations, prosecutions or other official proceeding for
making any prohibited payments or other improper payments to government
officials for engaging in prohibited transactions or with designated parties.
3] Asset
Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record
on Financial Crime :
Charges or conviction registered
against subject: None
5] Records
on Violation of Anti-Corruption Laws :
Charges or investigation registered
against subject: None
6] Records
on Int’l Anti-Money Laundering Laws/Standards :
Charges or investigation registered
against subject: None
7] Criminal
Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation
with Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation
Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE
GOVERNANCE
MIRA
INFORM as part of its Due Diligence do provide comments on Corporate Governance
to identify management and governance. These factors often have been predictive
and in some cases have created vulnerabilities to credit deterioration.
Our Governance
Assessment focuses principally on the interactions between a company’s
management, its Board of Directors, Shareholders and other financial
stakeholders.
CONTRAVENTION
Subject
is not known to have contravened any existing local laws, regulations or
policies that prohibit, restrict or otherwise affect the terms and conditions
that could be included in the agreement with the subject.
FOREIGN
EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US
Dollar |
1 |
Rs.39.43 |
|
|
1 |
Rs.80.44 |
|
Euro |
1 |
Rs.55.66 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP CAPITAL |
1~10 |
6 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
6 |
|
--LIQUIDITY |
1~10 |
9 |
|
--LEVERAGE |
1~10 |
9 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
8 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
69 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit
history (10%) Market
trend (10%) Operational
size (10%)
RATING
EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial
base with the strongest capability for timely payment of interest and
principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution
needed for credit transaction. It has above average (strong) capability for
payment of interest and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are
regarded healthy. General unfavourable factors will not cause fatal effect.
Satisfactory capability for payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal.
Capable to meet normal commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors
carry similar weight in credit consideration. Capability to overcome
financial difficulties seems comparatively below average/normal. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of
interest and principal sums in default or expected to be in default upon
maturity |
Limited with full security |
|
<10 |
C |
Absolute credit risk exists. Caution
needed to be exercised |
Credit not recommended |
|
NR |
In view of the lack of information, we
have no basis upon which to recommend credit dealings |
No Rating |
|