To invest Rs 600cr for defence mfg in Gujarat: Bharat Forge

A: We have created a strategy for our defence business over the last five years where we have identified certain products that have complemented to our capability which we have started with, which are basically on land systems and artillery front. We have developed products including Bharat 52 and three other platforms and now we are expanding our focus to three new areas also which we have been working on for the last three years in association with several global companies as well as on our own and these are in the areas of armoured vehicles, electronics and radars.

The MoU that we have signed is to setup a new facility which will enable us to manufacture these products and taking a cue from ‘Make in India’ thrust, we are trying to do this in Gujarat because Gujarat is giving us quick clearances and they are facilitating this whole process in terms of approvals and land and things like that and they are creating focus for defense manufacturing also. So that’s what our target here.

Latha: What is the timeline for this investment? Do you break ground right away and where is the money coming from. Is it all entirely cash accrual?

A: We have signed MoU now. We will get land, we will get all environmental clearances etc and then we will start breaking ground and building facilities, but all these are for multiple programmes across multiple products, across multiple sectors, so it’s an investment programme that will also happen over a phased period of time inline with the programmes coming on bid or on order.

Latha: How long. At the moment can we expect 300 crore in three years? What is the timeline of investment?

A: First we will setup a basic facility where you can make prototypes and you can do development work and then when the order visibility that is when you will start scaling up, but to answer your other question about where will the funds come from, this will be internally fund it.

Latha: This is under BF Utilities?

A: No, this is a group initiative under a company called Kalyani Strategic Systems Limited.

Sonia: We were speaking with Baba Kalyani a couple of weeks ago and he said that the bidding of these projects eventually getting the orders and it resulting in revenue generation will take at least four-five years?

A: We heard the defense minister on Sunday; speak about bringing out new Department of Industrial Policy & Promotion (DIPP) to streamline and ease this whole process. He said in three months it will be out and we are very confident that based on what he said that this whole process should get streamlined and shortened after that.

Sonia: Can you give us any sense of how much revenue growth could be ballpark in the next couple of years for Bharat Forge. Have you tweaked any of your estimates?

A: We have not tweaked any of our estimates because these are programmes that are still under testing and some of the products that we have offered are now in testing. So, once they finish testing, they will go into final order stage but let’s just say that it is a large opportunity for us and we are very confident that we are well placed in certain of those bids that we have placed or certain of those products that we have offered and in the next year-and-a-half we should start seeing more clarity on where we are going to be successful and what is going to be the order pipeline in those areas.