Bharat Forge forms holding co to unlocking value

By Sumantra Barooah, CNBC-TV18

Bharat Forge-the world's second largest forging company has embarked on a new strategy to unlock value. It has formed a holding company towards achieving this target.

This holding company will hold all the companies that Bharat Forge has acquired one after another, starting with CDP Peddinghaus, one of Germany’s leading forger way back in 2003. That is where its acquisition spree started. After that, around 4-5 more acquisitions were made and there was another joint venture where Bharat Forge had a majority stake in China with FAW. So, all these will be part of this holding company except Federal Forge, the American forging company which Bharat Forge had acquired earlier. That is because of the legal processes.

“The whole idea is to first of all create an entity by which we can unlock value. The way we have gone acquiring companies since 2003, its on an unusual basis. We did not have an overall game plan. We had a strategy for market penetration and acquisition, but now we have put all that in to one entity and then we will obviously use this entity to unlock value,” said Baba Kalyani, CMD, Bharat Forge.

The company will use this entity to unlock value and part of this company could be the French Forging company-Groupe Sifcor, with which currently Bharat Forge is in negotiations. The process is on but because of legal and regulatory hurdles it’s not yet completed. We can expect it to be completed in the next couple of months and Bharat Forge has already submitted an application to the EU authorities for seeking permission for this.

Will we see this company as holding company is listed?

That is the whole idea and we may see an overseas listing of this holding company because the holding company is based in Germany i.e CDP Bharat Forge GmBH. It is the holding company but at a later stage, it may hive off the company’s capital goods division, which has been created recently. That is also a possibility but when asked the CMD said it is too early to comment on that.