Strategy of Bharat forge

1. Bharat Forge Limited
A001 A004 A006 A030 A031 A043
ABHISHEK PRITY APOORVAMAYANKDEEKSHA GOVIND
Presented by:

2. Global Scenario
Global forging industry
Products
Custom forgings
Captive forgings
Catalog forgings
$6 billion – Annual sales for Custom forging
250- No. of custom forging plants in North America
Global Market segmentation by end users
$52.4 billion – Automotive industry
$24.6 billion – Non-automotive industry
Aerospace industry is the second-largest end-user
High-pressure applications in the oil and gas
industry
Geographical Segmentation
APAC
• $46.8 billion (2015)
• 60.8% of the
global output (2014)
• China is the leader
Americas
Valued at
$15.6
billion(2015)
EMEA
• Valued at $14.6
billion(2015)
• Germany is the largest
end user
• Accounts for 50% of
total production in
Europe
Drivers
• Benefits of forging over
casting
• Commercial jet production
• Wind and hydel power
plants
Challenges
• Increase in Variable Cost
• Stagnant growth in
automotive industry

3. Indian Scenario
The Forging market in India
was valued at $3.1 billion in
2013 and is expected to
reach $4.5 billion by 2018,
growing at a CAGR of 7.29%
during the forecast period.
Major Players
Amtek Auto
Bharat Forge
MahindraCIE
Automotive
Ramkrishna
Forgings

4. Bharat Forge : An Introduction
Mission
• To implement projects with entire customer satisfaction
adhering global norms of Quality, Environment, Health & Safety.
• To be a significant player in the field of roads & highways,
industrial & utility projects.
• To achieve an order booking of INR 25bn by FY 2017 – 2018
• To promote work culture that fosters individual growth, team
spirit & innovation to overcome challenges & attain goals.
• To be committed to Integrity, openness, transparency,
teamwork & performance orientation.
Vision:
We’re building India’s economic backbone, strengthening national
capabilities and ensuring a bigger global imprint–for ourselves
and our country.
Bharat Forge Limited (BFL), the Pune based Indian multinational is a
technology driven global leader in metal
• Part of Kalyani Group - a USD 2.5 billion conglomerate with 10,000
global work force;
• World's largest forging company
• Operates through seven business units
Automotive
Power
Oil and gas
Locomotive
Marine
Aerospace
Construction and mining
Core Objectives
To be committed to listening and responding to the needs of our
customers, associates and business partners and honouring their
individual value.
To be committed to an entrepreneurial spirit that fuels the growth
of our companies and increases shareholder value.

5. Bharat Forge : Milestones
1961 - Incorporation of Bharat Forge Ltd.
1966 - Joint VCommercial Production begins. Forge Shop - Hammer
Technology
1990 - Technology Up-gradation at Bharat Forge.
1998 - Joint venture with Carpenter Technology, USA to produce high alloy
Steel
2001 - BFL acquired Order Book of Dana Kirkstall.
2003 - BFL reported highest ever figures for sales, exports and net profit
2003 - India's largest auto-component exporter
2003-05 - Bharat Established Global Manufacturing Footprints across India,
Germany, Sweden and China.
2007 - Centre for Advanced Manufacturing takes shape at Baramati
2008 - Bharat Forge inaugurates its Heavy Forge Division II at its Mundhwa
Plant
2015 - Joint venture, Alstom Bharat Forge Power
CDP Bharat Forge
Bharat Forge Aluminiumtechnik
Bharat Forge Kilsta
FAW Bharat Forge
Global
Manufacturing
Footprint
2003-2005

6. Critical Success factors
1
23
54
786
910
Product
Quality
Good
People
Advanced
Technology.
Strategic
Alliances.
Flexibility
Business
ReputationDistribution
Networks.
Market
Knowledge.
Innovativeness.
Relative
Product Cost
Quality : Focus on quality excellence and customer satisfaction, Won the prestigious TIME
India Global Manufacturer for the Year 2017, Focus on using six sigma methodology,
Compliance with the latest automotive quality system standard, TS 16949 etc.
Cost: Manufacturing side is on par with best anywhere in the world and at a cost that is
lower by almost 20-25%, Implementing new technologies to drastically cut costs,
Restructure finance costs, manage manpower costs, efficient operations etc.
People: Invest in developing team to sharpen their capabilities, Encouraging more people
from our team to take up fundamental research , Tie-ups with leading academic institutions,
Cross functional teams , Actively involve the departmental managers
Technology and Innovation: 12 patent applications were filed in FY 2015-16, bringing the
number of patents filed till date to 22, In house R&D, Light weighting programs, focus on
Industry 4.0, Kalyani centre for technology and innovation
Partnerships: Lot of alliances, ventures, technical agreements and mergers in the past for
technology and cost superiority, Aerospace and defence: Partners Israel's Rafael for defence
manufacturing, Swedish defence and security major Saab to form Joint Venture for air
defence solutions
Change Management: Flexible capacity to accommodate any incremental demand, Cultural
integration and capturing synergies for newly acquired businesses, Cater to market demand
11Information
Systems

7. Product Portfolio
Automotive: Largest exporter of auto components from India and leading chassis components manufacturer
in the world for passenger cars, LCV,HCV,MCV - Power train components: Crankshafts, connecting rods,
Chassis components: Front axels, steering knuckles and Transmission parts
Power : Windmill shafts, turbine rotors and blades, retaining rings and gas engine components
Oil & Gas : Valves, drill bits, surface flow and sub-sea equipment
Rail : Wheel sets, truck frames and rail components - Forged Rail Crankshaft , Machined Rail Crankshaft,
Portal Axle, Connecting Rod, Claw (Clamp) Locks, Aluminium Piston Body
Marine: Supplies various products to global ship builders, including key products like crankshafts, connecting
rods and propeller shafts.
Aerospace: Airframe, structural and engine parts for the aviation sector - Wheel Lever Forging, Fan forging
,Main leg forging
Construction and Mining: Track link, Front Spindle ,Machined Crankshaft

8. Geographical Presence Transcontinental Manufacturing operations
across ten locations and six countries
2 in India,
3 in Germany and
1 each in Sweden, Scotland , UK, USA &
China.
29state-of-the-art fully automated press lines ranging from 1600 MT to 16000 MT
Customer base ranges from the world's largest OEMs to tier-one automotive & non-
automotive suppliers
41automotive customers include all most all major automobile manufacturers across
the world
71 industrial customers across varied sectors like defence, aerospace, rail,
construction , oil and gas etc.
Facilities are strategically located across the
world close to the customers
Mundhawa -
Forging and
machining facility
Satara: General
engineering division
Baramati: Forging
and machining
facility
Chakan: Machining
facility

9. Financial Performance
3,744.97
3,243.06 3,449.55
4,569.25 4,396.41
0.00
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
InCroreRs
Year
Revenue From Operations [Standalone]
Total revenue declined by 5.3% in FY16, driven by continued
weakness in the industrial sector across both, domestic and
international markets and unexpected slowdown in the North
American Class 8 truck market
26.66 25.61
28.78
31.29 32.11
0
5
10
15
20
25
30
35
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
EBDITA Margin(%)
Despite top-line challenges, EBITDA margins expanded by 110 bps
driven by focus on cost control and supported by benign commodity
prices
0.79
0.64
0.54
0.47
0.4
0
0.2
0.4
0.6
0.8
1
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
Total Debt/Equity (X)
D/E has significantly reduced, it stands now at 0.40. The debt
repayment is progressing smoothly as per the Company’s plan to
be net debt free by FY 2017-18
48
36
16
CONSOLIDATED REVENUE DISTRIBUTION FY
2016 (%)
Commercial Non-Auto Passenger
39
36
23
2
CONSOLIDATED GEOGRAPHIC REVENUE FY
2016 (%)
Europe India US Asia Pacific
For FY15 the domestic market share was 32% , the increase by 4%
is owed primarily to Make in India initiatives aimed at reviving the
manufacturing sector
Focus on mining, transportation, aerospace and the defence sector
in the domestic market.
87% growth in Passenger Vehicle export Business in FY
6 – due to focus on increasing presence and
penetration in the passenger vehicle segment during
FY15 - long-term contracts with Global OEMs
0
200
400
600
800
1000
1200
1400
19/Mar/12 19/Mar/13 19/Mar/14 19/Mar/15 19/Mar/16
Stock Price Movement
JV with
Israel
Aerospac
e
Entry into
Railway
business
Acquisition of Mecanique
Generale Langroise and
budget effect
Weighed
down by
lower
demand
Loksabha
Election
Results
2014

10. SWOT Analysis
Strengths
Strong Financials
 High profitability and revenue
 Comfortably placed to pay for its short term
obligations
 Can meet its debt obligations without any
difficulty
Aggressive leadership
Skilled and updated workforce
Wide distribution and sales network
Transcontinental Presence
Barriers of market entry for competitors
Weakness
Threats
Macroeconomic Uncertainty
Geopolitical and other risks
Raw Material Prices
Currency Risk
Opportunities
Increase product portfolio in commercial
vehicle segment
Enhance presence in passenger vehicle
segment
Increase presence in transportation sector
Grow aerospace business
Make in India
Industry 4.0
Slow growth rate in terms of revenues (CAGR
8.8% in last 5 years)
Total revenue declined by 5.3% in FY16
Company operates with high level of debt
and is not placed well to withstand economic
slowdowns

11. Porter’s five forces
Vendors are highly dependent
on metal suppliers, without
which the entire process is
futile. Hence, the bargaining
power of suppliers is high.
The bargaining power of
buyers is low, as most of
the vendors are vertically
integrated.
Bargaining power of
suppliers
There are substitute processes to
metal forging such as casting and
stamping. However, forging is more
reliable and efficient than substitute
processes. Hence, the threat of
substitutes is moderate.
Threat of substitutes
Most vendors use captive
manufacturing operations for metal
forging. Market opportunities for new
vendors are limited
Threat of new entrants
LOW
LOW
HIGH
Threat of rivalry
MODERATE
Competition among vendors
is moderate because of
captive consumption
operations.
Bargaining power of suppliers
MODERATE

12. Strategies adopted
Continuously expanded and upgraded capacity through technical collaboration with foreign players, acquisitions and agreements.
Improved productivity
 Recruiting fresh white collar employees
 System driven management
 Optimizing operations
Customer Acquisition Strategy
 Heavy investments to modernize operations in order to woo abroad customers by adapting latest technologies
 Performed extremely well on all parameters of cost, quality and delivery
 Remove any apprehensions that the customer had for offshore suppliers – resident engineers were posted
 Flexible capacity to accommodate any incremental demand
 Aggressive decision making
 Diversified its product-market portfolio to cater to more and more customers
 Improved its speed to market by establishing delivery centres throughout the world
Risk Mitigation Strategy
 Manage financing costs, mobilizing international debts with lower interest rates, currency risks were mitigated using exports,
improved ROCE by reducing exposure to financial assets which gave lower returns
 Growing exports and enhance global presence to mitigate risks related to economic downturns

13. The way ahead
Focus on new product development
 Expand its footprint in the global aerospace and defence value chain
 New products for the automotive sector
 Developing a new product portfolio under Make in India
Leveraging R&D capabilities
 Develop a highly differentiated portfolio of technology-driven products
 Research of new exotic materials and new additive manufacturing processes
Focus on quality excellence and customer satisfaction: Establish a comprehensive purchasing and quality control
ecosystem
Investment in technologies: Optimize the different manufacturing processes and gain significant operational efficiencies
Focus on key sectors: Railways, Aerospace & Defence
Industry 4.0
 Digital transformation of the manufacturing sector to create a fully integrated, automated and optimized
manufacturing system
 Increase manufacturing productivity, improve efficiency, shift economics and foster industrial growth

14. Thank You