Bharat Forge Ltd (BFL), India’s leading auto ancillary exporter and automotive forging company, plans a Euro 66 million (INR 3.5 billion) expansion programme funded through a combination of equity and debt.
The company is adding capacity to its small forging production by setting up two additional presses including a fully automated one. With this addition, BFL’s passenger car crankshaft forging capacity will double to three million units per year. This will be supplemented by a 6,000 tonne and a 2,500 tonne press line the currently being installed.
Future growth will also be fuelled by BFL’s thrust into the heavy-duty crankshaft market. Booming demand will be met by increasing its forging and machining capacities by adding a third forging press. The three machining lines planned will have a production capacity of 200,000-machined crankshafts per annum.
The equity part of the funds will come from the recently announced rights issue which will raise between Euro 19.4 million and Euro 23.4 million (INR 1.03 billion to INR 1.24 billion) and another Euro 21.3 million (INR 1.13 billion) from warrants converted into equity shares. The rest of the funds will be raised through buyer/supplier credit, internal accruals and debt.
Bharat Forge ended the financial year in March 2004 with a 54 percent increase in net profits to Euro 23.58 million (INR 1.25 billion) and a top line growth of 32 percent recorded at Euro 160.6 million (INR 8.51 billion). Growth in the previous year was fuelled by 37 percent rise in domestic demand and 22.5 percent in exports.