RailEnquiry

Pune-based Bharat Forge is targeting to get 60% of its revenue from non-automotive business especially power, oil and gas, and railway. Amit Kalyani, executive director, Bharat Forge, the flagship company of Rs 12,000-crore Kalyani group, said the company was in talks with all major foreign players in the railway sector for a possible partnership to tap the potential business in the Indian Railways.Amit Kalyani, son of group promoter Baba Kalayani, looks after strategy and finance in the company and is part of group’s core management team. Speaking to Business Standard, he said when the company forayed into non-automotive business about eight years back it was less than 5% of company’s sales but now this segment gave around Rs 1,500 crore in revenue last year.Besides the three, non-automotive business comprises general engineering, marine, aerospace, construction and mining equipment, and defence. It is currently 40% of its revenue but is expected to grow to 60%. “We understand metallurgy, forging and design engineering and systems and quality and we have used these skills by working with our customers to create products and solutions to meet their needs. And that’s how we have grown our business.”The company recently bagged its first railway order of crankshaft for locomotives. These would be manufactured at the Baramati plant where between forging and machinery, the company has invested Rs 200-250 crore. This facility would be used for manufacturing components for railways as well as big marine engines. “Our strategy was to prove to the Indian Railways that an Indian company can do it right first time and do it well. Using this breakthrough, we want to broaden our product portfolio, deepen it and work a lot more with the Railways. We are focussing on creating a technology product solution strategy to support the Indian Railways,” Kalyani said.Over the last four-five years, Bharat Forge exported railway components to Europe and the US. These exports were worth $15-20 million last year. With Indian Railways expected to make investment of around Rs 346,000 crore during the Twelfth Plan period ending 2017, the group is looking at strategic tie-ups with foreign partners.Though the company has identified potential partners for aligning in railway business including opportunities that would be thrown open in diesel and electric locomotive factories, Kalyani did not share details citing confidentiality. On the kind of partnership, “it really depends on who comes as a main partner. It depends on their strategy”. He said production of 300 diesel and 700 electric locomotives in year was a large opportunity.He said though the automotive business was also growing fast but the opportunity in non-automotive business was larger. Currently, at about Rs 50 crore, railway business is just 1% of it business but according to Kalyani it should grow at least 10 times.“Today our assets are running at very low capacity utilisation in non-automotive business. We have huge headroom for growth. At least triple and quadruple this business we do not need to make any business. Even in automotive, our capacity is running at 60%.”Defence is another new non-automotive business where the company is seeing growth. The government recently approved a Bharat Forge proposal to get in 26% Israeli partner in its defence venture. Bharat Forge would continue to hold 74% equity in its subsidiary BF Elbit Advanced Systems set up last year in August. The defence outfit of the group would undertake manufacturing and integration of defense systems particularly artillery guns, mortar gun systems and ammunition.Going ahead, Bharat Forge would continue to be component supplier while its other group companies would get into joint venture for systems. “In defence, we are looking at land systems which are our focus areas. We see ourselves as a component, sub-system and system supplier.”Bharat Forge also has a joint venture with Alstom for power equipment. With orders worth 4000 mw in hand, the joint venture plans to put in Rs 1,600 crore in this business by 2015-16.